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  • 1. Energy Efficiency Ece DINCASLAN Izmir University of EconomicsABSTRACTToday’s renewable energy sources are very important for lots of countries. Therefore, manycountries start to change and implement their policies. Especially, in Turkey and Europe theimportance of solar and wind energies influence the energy policies.In this context, reducing energy use reduces energy costs and reducing energy use is also seenas a key solution to the problem of reducing greenhouse gas emissions. Energy efficiencyand renewable energy are said to be the twin pillars of sustainable energy policy.1 This paperanalyzes that area of general policies, economical activities, advantages and disadvantages ofenergy efficiency policies according to Climate Change and Renewable Energies, especiallyin the sense of China, USA and EU. We can create a more sustainable, cleaner and safer world by making wiser energy choices. Robert ALAN 1. Introduction Many countries have begun the process of implementing energy efficiency policies. Indeed,this process in some countries has been impressive. However, more needs to be done. It hasbecome clear that many countries require technical assistance to understand the details ofwhat is required to implement energy efficiency policies. In order to address globalwarming and reduce whole world’s dependence on limited fossil fuel reserves, and policiesshould encourage and assist major developing countries to improve their energy efficiency.This need for capacity building on energy efficiency policy implementation should includethe policies which shaped around by the IEA and others such as the UN Foundation. Inaddition, the Kyoto Protocol which aimed at fighting global warming and have many effectson energy prices and trends, need to be evaluated because of this agreement was to reducegreenhouse gas emissions by 5.2 per cent below 1990 levels by between 2008 to 2012. Most1 "The Twin Pillars of Sustainable Energy: Synergies between Energy Efficiency and Renewable Energy Technology andPolicy". Aceee.org. 1
  • 2. countries were dealt with individually, except those in the European Union. Thus, it can beseen that somehow EU is more focused on environmental issues and renewable energy. Energy efficiency is attractive in all nations and especially in developing countries becauseit allows existing energy sources to serve a larger population and facilitates universal accessto modern energy services are needed for poverty reduction and sustainable development.Energy efficiency is also cost-effective opportunity to reduce global greenhouse gasemissions. Meeting global energy demand is a complex and expensive task. Achievable gainsin energy efficiency, renewable energy, forest conservation, and sustainable land useworldwide could achieve up to 75 percent of needed global emissions reductions in 2020 at anet savings of $14 billion.2 Developed countries have more obligations to cut greenhouse gas, at the same timeincreasing energy efficiency rates, changing the structures of energy consumption andreducing energy demands. China, for instance, has a rapidly growing economy and is both amajor consumer of energy and a major supplier of energy consuming products on the worldmarket. China is now the worlds largest emitter of greenhouse gases and the second largestconsumer of energy in the world, behind only the United States. Thus, concerns about climatechange and energy security are against the rising costs of energy and the need to power theglobal economic order. However, some developed nations such as members of the EuropeanUnion hope that developing countries will mitigate greenhouse gas emissions by raisingenvironmental criteria. The EU is moving rapidly towards cleaner and renewable energy. It ispossible that all renewable energy sources, wind, solar, hydropower and biomass will play acrucial role in the EU’s energy security challenges, and making a contribution to efforts inareas of climate change and the environment. According to Joint Research Center (JRC)’sreport on renewable energy in the EU, if the current rates are maintained, approximately 35-40 per cent of the overall electricity consumed in the EU would come from renewablesources. 1.1.Greenhouse Gas (GHG) Emissions and Environmental Policies 1.2. The Kyoto Protocol The Kyoto Protocol is an international treaty which has been in force since 2005, in order to reduce greenhouse gas (GHG) emission for global warming. The key feature of the Kyoto Protocol is that it commits developed countries that have signed the protocol to limit2 UN Foundation, Climate Change Report, Oct. 2009 2
  • 3. their emissions to specific levels as compared to their emissions in 1990. Importantly, carbon taxes are the main instrument in order to achieve carbon emission targets as mentioned in the Kyoto Protocol. The Kyoto Protocol binds economically developed countries or nations to a cap and trade system for the greenhouse gasses. Also, under this Protocol, for the 5 year term from 2008 until 2012, nations that emit less than their limit will be able to sell surplus to nations that exceed their limit, which is called Carbon Trade. Moreover, environmental policies, in the Kyoto Protocol, occur about these effects. Some countries, especially developing countries, don’t want to undertake the costs of environmental policies in order to achieve their development targets. Environmental policies seem a deadlock for them. Some developed countries like USA, and China also don’t desire to undertake strict environmental policies in order not to slow down their economic growth. 1.3. Economic Concerns Towards Environmental Policies It tried to be analyzed that whether environmental policies are harmful for economicdevelopment or not. At a first glance, there are those who predict a slowdown and even theeconomic collapse if the societies do not change their capitalist-style economic system and ifthey do not prohibit the emission of stock pollutants and the consumption of natural resources.According to them, environmental policies would be an option to reduce future losses fromenvironmental degradations and policies would bring some positive growth. On the other side,there are some people who think that, at least in the developing countries, the environmentalpolicies tend to inhibit economic growth and thus, it is better to wait (Cordero et all, 2005). 1.4. Environmental Kuznets Curve There is an argument based on the assumption that at the beginning of a growth path in acountry increase in GDP corresponds with high environmental degradation but after a turningpoint increase in GDP corresponds with low environmental degradation. This relationship canbe shown in an inverted U-shaped curve. This relationship is sometimes called as the‘Environmental Kuznets Curve’ (EKC), following the observation of Kuznets (1955).33 Kuznets (1955) illustrated that the shape of the relationship between income per capita and income inequality is inverted-U. 3
  • 4. Figure 1. Environmental Kuznets Curve, Panayotou, 2003, p.3 The composition of economic activity influences environmental quality because of thedifferential pollution intensity of different sectors of the economy. As income grows, thestructure of economy tends to change and gradually increases cleaner activities that produceless pollution. Since the share of industry in GDP first rises with economic growth and thendeclines as the country moves from the pre-industrial to the post-industrial stage ofdevelopment, an inverted U shaped relationship between environmental pollution and GDPexpected to be. On the one hand, some scholars suggest that the burden of environmentalpolicies is harmful for economic growth. Their main finding is that increased production coststhat result forming compliance with environmental policies reduces output, increases pricesand reduces income growth (Christiansen and Haveman, 1982; Siegel and Johson, 1993 ascitied in Feiock and Stream, 2001). Since technological innovations and the rise inproductivity are a major driving force for economic development of countries, environmentalpolicies can also be a win-win-process for developing countries to the extent that they providethe opportunity to develop new export markets and involve improved resource efficiency,reduced pollution intensity and improved public health, thereby also contributing tosustainable development (Hesse, 2007). 2. Sustainable Energy Country’s strategies must be developed concurrently in order to stabilize and reduce carbon dioxide emissions. Efficient energy use is essential to slowing the energy demand growth so that rising clean energy supplies decrease the consumption in fossil fuel. If energy use grows too rapidly, renewable energy development will chase a receding target. Likewise, unless clean energy supplies come online rapidly, slowing demand growth will only begin to reduce total carbon emissions; a reduction in the carbon content of energy 4
  • 5. sources is also needed.4 A sustainable energy economy thus requires major commitments to both efficiency and renewables. It is including all renewable energy sources, such as hydroelectricity, solar energy, wind energy, wave power, geothermal energy, bioenergy, and tidal power. 3. Carbon Capture and Storage Carbon sequestration is the process of removing carbon from the atmosphere and depositingit in a reservoir.5 The emissions avoidance can also be achieved by improving energyefficiency or shifting to nonfossil energy sources (renewables and nuclear). Carbon captureand sequestration complement these traditional areas of research, particularly because theUnited States relies on fossil fuels for more than 85% of its energy needs, and trillions ofdollars are invested in the current energy infrastructure.6 Transitioning away from fossil fuelsuse will be difficult. By reducing CO2 emissions, however, carbon capture and sequestrationallow the use of fossil energy to continue, while buying time to make the transition to otherenergy sources in an orderly fashion. 3.1. Geological and Oceanic Storage If more technological options are available, there will be less difficulty in addressingclimate change. Although the need for carbon capture and storage technologies is evident, theimportance of their role is hard to predict. However, they are extremely compatible withtoday’s fossil energy infrastructure and can help smooth the transition from today’s fossil-based energy system to a more climate-friendly future energy system. These and otheradvanced, innovative technologies are becoming increasingly important to achieve reductionsin greenhouse gas emissions at an affordable price. Although not providing perfect containment, initial analysis suggests that both geologic andoceanic storage of CO2 can be very effective. Because the ocean and atmosphere arepermanently exchanging CO2, some fraction of that which is injected into the ocean willeventually find its way back to the atmosphere—about 15–20% will escape over a period ofhundreds of years, with the rest remaining in the ocean indefinitely.7 For geologic reservoirs,expected residence times are long—at least thousands of years. If the CO2 reacts underground4 The Twin Pillars of Sustainable Energy: Synergies between Energy Efficiency and Renewable Energy Technology andPolicy (American Council for an Energy-Efficient Economy)5 Glossary of climate change acronyms". UNFCCC, Retrieved 2010-07-15.6 The High Cost of Fossil Fuels: Why America Can’t Afford to Depend on Dirty Energy?, Emily Figdor, EnvironmentAmerica, Research & Policy Center, June 20097 Peter Dietze, Carbon Model Calculations, March 2001 5
  • 6. to form carbonate minerals, storage could be even more effective. Environmental impactsmay be the most significant factor in determining the acceptability of ocean storage. 3.2. Protecting The Environment Vs. Promoting Economic Growth It is clear that environmental policies’ main aim is to change consumption and productionpatterns. Thus they increase the costs of production. According to some scholars, this extracost reduces output, increases prices and then reduces income growth and employment. Theysuggest that policies usually increase the price of goods whose share in the low incomehouseholds’ consumption basket are high, thus environmental policies, especially taxes andcharges worsen income distribution. They also suggest that tradable permits and voluntaryapproaches cause windfall profits for firms and thus they also deteriorate income distribution.It is also underlined that removing environmentally harmful subsidies will hurt poor people.Because removing agricultural subsidies cut farmer’s income and removing energy subsidiesincrease the electricity and fuel bills of poor people. Thus governments fear that removingenvironmentally subsidies will hurt people and this will increase social tension. Thusgovernments are on the horns of a dilemma between protecting the environment throughenvironmental policies and promoting economic development. Consequently, these scholarsstate that environmental policies will be harmful for economic development in a roundaboutway and there is a trade-off between protecting the environment and promoting economicgrowth. Improved energy efficiency is an important part of making renewables, which are difficultto introduce at a large scale, more viable. But many other technological options havesignificant drawbacks that make renewable energy relatively attractive. Nuclear power posesthe risk of accidents and creates security and waste disposal issues. Carbon capture andstorage may have potential, at least for addressing part of the problem, but it leaves manyenvironmental problems associated with burning coal unaddressed and may not provide along-term solution to climate change.8 Advances in renewable energy then are important toour future and sustainable development, even though they are not the sole means we have ofaddressing climate change.9 The literature on trading suggests that it encourages innovation,which might lead one to suspect that the trading of carbon credits will stimulate largeincreases in the production of renewable energy. So far, trading does not seem to have doneso. China and India add significant amounts of coal powered-generating capacity to their8 Renewable Energy under the Kyoto Protocol: The Case for Mixing Instruments, David M. Driesen Syracuse University.College of Law9 Intergovernmental Panel on Climate Change, Special Report on Carbon Dioxide Capture and Storage (New York:Cambridge University Press, 2005) at 24, 60–6. 6
  • 7. power grids every year.10 At the same time, China will maintain its increasing demand for oil,coal and gas, and faces a number of structural challenges in improving its energy efficiencylevels. Furthermore, China has announced an intention to fund renewable energy. 11 It is atleast possible that some of the funds for the renewables will come from taxes on less desirableCDM projects. There are positive signs ahead that, recent developments in US-China cleanenergy diplomacy being expected for future enhancement of EU-China dialogue on climatechange. China, then, has created incentives that favor renewable energy, which makes sensefor the climate and economic development. It would be even better policy to tax thegeneration of carbon, rather than carbon reductions, to fund renewable energy. 4. Conclusion In conclusion, policy actions around energy efficiency concerns are vital. Thus, largeinvestment in renewable energy is necessary and predictable policy regime is required. At afirst glance, it needs to be established programs in order to develop and enforce nationalmeasurement, reporting and verification, set efficiency standards. Secondly, establish a fundor set of funds with adequate resources to support specific new technologies. What’s more,nuclear power utilization should be secured and power plants have to be built in saferstandards. Also, clean coal technologies and renewables should be supported by thedeveloped technologies. Large investment in renewable energy is necessary and predictablepolicy regime is required and importantly general understanding of the world energy situationneeds to be promoted.10 See K. Bradsher, ‘China to Pass U.S. in 2009 in Emissions,’ The New York Times (7 November 2006) C1 (discussing newcoal-fired power plants in China, India, Germany, and Britain).11 See BBC News, ‘China Accelerates Construction of Renewable Energy Projects’ (31 July 2006) (reporting that theChinese government will ‘set up special fund to support renewable energy projects, giving assistance to their research anddevelopment as well as favorable tax policies to relevant enterprises’); see also ‘China Sets Up Special Fund for RenewableEnergy,’ People’s Daily Online (14 June 2006), online, http://english.people.com.cn/200606/14/eng20060614_273831.html. 7
  • 8. REFERENCESAbdeen Mustafa Omer, Energy Use and Environmental Impacts: A General Review, JournalOf Renewable And Sustainable Energy 1, 053101 _2009_Abdeen Mustafa Omer, Sustainable Energy: Challenges Of Implementing New Technologies,1985-9406 Online Publication, June 2010Christiansen and Haveman, 1982; Siegel and Johson, 1993 As Citied In Feiock And Stream,2001David D. Driesen, Renewable Energy under the Kyoto Protocol: The Case For MixingInstrumentsDieter Hesse, Environmental Policy and International Competitiveness in a GlobalizingWorld: Challenges for Low- Income Countries in the UNECE Region, November 2007Economic Growth and The Environment, Theodore Panayotou, 2003Energy Policies For Sustainable Development, Chapter 12, Michael Jefferson (UnitedKingdom)Intergovernmental Panel on Climate Change, Special Report on Carbon Dioxide Capture andStorage (New York: Cambridge University Press, 2005)K. Bradsher, ‘China to Pass U.S. in 2009 in Emissions,’ The New York Times (7 November2006) C1 (discussing new coal-fired power plants in China, India, Germany, and Britain)McKinsey & Company (2009). Pathway to a Low-Carbon Economy : Version 3 of the GlobalGreenhouse Gas Abatement Cost CurvePeter Dietze, Carbon Model Calculations, March 2001 8
  • 9. Raúl R. Cordero, Economic growth or environmental protection?: The false dilemma of theLatin-American countries, Volume 8, Issue 4, August 2005, Pages 392-398Renewable Energy under the Kyoto Protocol: The Case for Mixing Instruments, David M.Driesen Syracuse University. College of LawUN Foundation, Climate Change Report, Oct. 2009Víctor Sánchez-Cordero, Place prioritization for Biodiversity Representation, BiodiversityInformatics, 2, 2005, 11-23 9