Christian Azar

1
Near-term technology policies for long-term
climate targets
Christian Azar Based on joint work with Björn
Sandén Chalmers University, Göteborg
Sweden http//www.frt.fy.chalmers.se
Department of Physical Resource Theory
2
Technology change
Changing the technologies we pick from the
shelf Bringing new technologies to the shelf
Department of Physical Resource Theory
3
Changing the technologies we pick from the shelf
(I)
District heating in Sweden
4
Changing the technologies we pick from the shelf
(II)
5
Changing the technologies we pick from the shelf
(II)
6
Changing the technologies we pick from the shelf
(III)

• Higher price on carbon emissions
• Tax, or
• Cap and trade, and
• Removal of existing subsidies to fossil fuels
• Efficiency standards when
• energy prices are insignificant, or
• markets are not expected to work well

7
Technology change
Changing the technologies we pick from the
shelf Bringing new technologies to the shelf
Department of Physical Resource Theory
8
Advanced energy technologies required
Results from the GET model. Azar et al, 2005,
Climatic Change
9
Shares of world primary energy supply 1850-2000
10
Bringing new technologies to the shelf (I)

• New advanced technologies required
• Price signals and long-term committments required
  to make this happen
• but not sufficient because of long time scales
• knowledge spill over
• Long term future discounted by private actors
• Role for government invest in learning!

11
Bringing new technologies to the shelf (II)
Public RD funding in OECD on renewable energy
Source IEA (2003)
12
Bringing new technologies to the shelf (III)

• RD is not sufficient.
• Valley of death needs to be bridged
• Government supported market formation to ensure
  diffusion that enables learning by doing
• Public procurement
• Market share requirements (e.g., green
  certificates, portfolios)
• Technology specific support (subsidies)

13
Governments should not pick the winners but
how?

• EU biofuels directive and green certificates
• versus
• Subsidies

14
CONCLUSION (I)
The important thing with near-term action is not
only the actual reductions that are made, but
equally important, the extent to which the policy
puts us in a position where it is politically
feasible to negotiate, adopt and meet even
stronger targets for subsequent abatement
periods. Our climate policies need not only to
be cost-efficient but they must also bring new
technologies to the shelf.
15
CONCLUSION (II)

• Price incentives for cost efficient carbon
  abatement at present (changing the technologies
  we pick from the shelf).
• Technology specific policies to enable future
  reductions (bringing new technologies to the
  shelf).
• Subsidies warranted only when learning can be
  expected and the technology is promising.

16
CONCLUSION (III)
Let a hundred flowers bloom strategy Governments
should consider the possibility to initiate
large-scale programs, individually or jointly, as
part of the UNFCCC/Kyoto protocol negotiations to
develop the more advanced energy technologies
that are required to meet the long-term objective
of the UNCCC
17
CO2-concentration and temperature
18
(No Transcript)
19
Criteria by which near-term policies should be
judged

• Actual abatement
• Development of institutions and mechanisms
• Impact on technology development
• Impact on actors

Department of Physical Resource Theory
20
Let 2000-2010 the decade of great experiments and
failures tentative list
Solar PV Solar thermal electric Solar
heat (building integrated as standard) Wind
(continued 25/growth, plus large scale testing
of off-shore CO2 sequestration (demonstration
plants storage) Zero energy for heating houses
Gasification of biomass and coal for h2, MeOH
DME Ethanol from woody biomass Prepare for the
hydrogen future NG pipelines should be H2
compatible Fuel cells in cars, buses and local
CHP Storage technologies        
Department of Physical Resource Theory
21
(No Transcript)
22
US public RD expenditures
6000
Renewables
5000
Coal
Oil and gas
4000
Nuclear Fusion
3000
Fission
2000
1000
0
1974
1979
1984
1989
1994
1999
23
Japanese public RD expenditures
24
OECD public RD expenditures on energy
25
Photovoltaics costs and sales