View
214
Download
1
Category
Preview:
Citation preview
Extra midterm office hours
Today only change: 12-1:30, not 2-3:30Next week Monday 1-3 Tuesday 12-2
Sustainable Energy Policy 2
Policy Instruments in Context actions, policies, governance
actions – behavioural actions▪ energy choices by firms, consumers
policies – rules produced by government that influence actions▪ Objectives (increase renewable
electricity)▪ Instruments (renewable portfolio
standard)▪ Settings (10% by 2012)
governance – who decides the rules
February 8, 2012 Energy Sustainable Energy Policy 3
Toolbox of Policy Instruments – Jaccard
command and control regulation financial disincentives (taxes) financial incentives (subsidies) voluntarism and information market oriented regulations –
emissions cap and tradable permits (ECTP)
market oriented regulations – artificial niche market regulations
February 8, 2012 sustainable energy policy
Evaluative Criteria
environmental effectiveness economic efficiency administrative feasibility political feasibility
February 8, 2012 sustainable energy policy
Command and Control Regulation
Legally binding forces particular action does not encourage
actions beyond that required
require same actions from actors with different marginal costs of control
Example: automobile or appliance efficiency standard
February 8, 2012 sustainable energy policy
Command and Control Regulation – example – proposed coal GHG regs
Performance standard: coal plants can’t exceed 375 tons of CO2 per Gigawatt-hour
Current not possible with carbon capture and storage (CCS)
Starts in 2025 for new plants + those that have reached end
February 2, 2012 sustainable energy policy
Financial Disincentive - Taxes Does not prohibit action, but
taxes it Can’t guarantee a particular
outcome Sensitive to diversity of producer
costs and consumer preferences Example: tax on tonne of carbon
emitted – BC 2010: $20 per tonne of CO2
equivalent 2011: $25 2012: $30
February 8, 2012 sustainable energy policy
Financial Incentives (Subsidies) Government spending
reduces cost of action Examples:
rebate for fuel efficient cars (Canada’s ended)
ecoENERGY Retrofit Grants and Incentives
Royalty breaks for fossil fuel production
Research – see Post Partisan Power
February 8, 2012 sustainable energy policy
Voluntarism and Information Can produce more
informed decisions about costs and efficacy
Example: One Tonne Challenge
February 8, 2012 sustainable energy policy
market oriented regulations – emissions cap and tradable permits (ECTP)
Caps total amount of emissions Distributes allowances (permits) to
polluters Polluters can trade permits Effective in that you get greater certainty
over emissions Design issues in startup – should initial
permits be auctioned off or “grandparented”
Example: European Uni0n’s Emission Trading System Western Climate Initiative
February 8, 2012 sustainable energy policy
Stavins: Key design elements
Gradual trajectory of emission reductions
Tradeable allowances Upstream regulation with economy-
wide effects Mechanisms to reduce cost
uncertainty Allowance allocation Provisions for offsets Linkage with other countriesFebruary 8, 2012 Sustainable Energy Policy 12
market oriented regulations – artificial niche market regulations
Require a certain % of the market to have performance characteristics
Can “force” innovation Examples
Renewable portfolio standard
February 8, 2012 sustainable energy policy
Missing Instruments?
direct provision “Crown”
corporations National Oil
Companies increasingly important Klare: 81% of proven
reserves controlled by NOCs
February 8, 2012 sustainable energy policy
1990: Mulroney privatized, but kept 19% share
2004: fully privatized
Evaluative Criteria
environmental effectiveness economic efficiency administrative feasibility political feasibility
February 8, 2012 sustainable energy policy
Because of different marginal costs of control, market-based regulations are more cost-effective
February 8, 2012 Sustainable Energy Policy 16
Pre-mitigation Regulation: 30% reduction Cap and trade: 30% reduction
Coal Plant
Costs: $20/t
Emissions: 1000 t/yr
Costs: 0
Emissions: 700 t/yr
Costs: $6,000
Emissions: 400 t/yr
Costs: $0
Cement Plant
Costs: $40/t
Emissions: 1000 t/yr
Costs: 0
Emissions: 700 t/yr
Costs: $12,000
Emissions: 1000 t/yr
Costs: $12,000 (to coal
plant)
Total Emissions: 2000 t/yr
Costs: 0
Emission: 1,400 t/yr
Cost: $18,000
Emission: 1,400 t/yr
Cost: $12,000
Evaluating energy sustainability policy instruments
February 8, 2012 Sustainable Energy Policy 17
effectiveness efficiencyAdministrative feasibility
political feasibility
Info/persuasion
subsidy
Emission tax
Cap and trade
C&C Regulation
Policy-Politics Mismatch
Politicians prefer non-compulsory policies
History shows us they are insufficient Market-based instruments are more
cost effective Policy trend:
Failure of Congress to enact cap and trade leading US to pursue regs
Canada committed to harmonizing - Canada slowly pursuing regs
February 8, 2012 Sustainable Energy Policy 19
Recommended