Peak oil, climate change and energy security john barry
Peak Oil, Climate Change and energysecurity in Europe: Austerity, A GreenNew Deal and decarbonising theeconomyDr. John BarrySchool of Politics, International Studies and PhilosophyQueen‟s University Belfast email@example.com
The contextClimate changePeak oilEnergy securityAusterity and economic recession
Energy Geo-Politics The rise of energy security Crises Economic and Financial Political and Legal Civil and Military Resource Nationalism ‘energy independence’ as new objective of national energy policy-makers Political Instability In key energy producing and transit regions Growing demand Rising Powers (BRICs) Climate Change EU global leader Price instability Spikes and disruptive lows Investment uncertainty Peak oil Peak gas – at least inside the EU Unconventional sources – fracking
EU Energy Politics Framing European Union energy politics ‘Energy Security’ Dependency upon energy imports Concerns with security of supply Environmental stress Governance Developing shared institutions Formal rules, legal systems, binding treaties Informal patterns of cooperation, trust, reputational factors Pipelines do not solve energy security problems Pipelines transfer energy security problems to question of governance in transit states Marketization Need to create competition amongst suppliers Energy prices set by supply and demand to solve energy security issues Promotion of market norms in energy by the European Commission
EU Energy Policy Core objective of EU energy policy is to achieve energy security through: The transformation of energy governance in Europe’s energy partners This is referred to in the broader literature as an ‘EU external governance’ strategy This transformation of energy partners will ensure: Cross-border regulatory harmonisation Crucially: based the adoption of EU standards by energy partners ‘Policy transfer’ at the heart of EU energy policy What policies? Global Best Practices for Energy Sector Reform Unbundling (building a competitive and structurally differentiated energy sector) Generation, Transmission, Distribution Market pricing Energy prices to be determined by supply and demand Private Sector Participation (explicit or implicit) New Regulatory Framework The governance dimension Independent regulatory agencies Clear legal framework so as to ensure a ‘positive investment climate’
EU ETSPermits in the ETS are trading at prices well below the level thoughtnecessary to stimulate green investment and innovation.The target was for the price to be €30/tCO2 in 2020 and rising.Last week prices continued to fall and closed at €6.88/tCO2.In response, the European Commission has announced that new permits willbe withheld, a short term measure that will help prop up the market."The EU ETS has a growing surplus of allowances built up over the last few years. Itis not wise to deliberately continue to flood a market that is already oversupplied"(Connie Hedegaard, European Commission, August 2012)Part of the steep learning curve and constant adjustment for this policyinnovation
European Emissions Trading SystemIn 2005, the EU launched the Emissions Trading System (EU ETS), the first international carbon-trading scheme in the world.Following a three-year pilot period, Phase II of the EU ETS was launched in 2008. Across its 27Member States, the EU ETS covers large plants from CO2-emission intensive industrial sectors,namely power generation, mineral oil refineries, coke ovens, iron and steel and factories producingcement, glass, lime, brick, ceramics, pulp and paper, and all combustion activities with a ratedthermal input exceeding above 20MWh.Bulgaria and Romania joined the trading scheme in 2007, bringing the total number of installations to11,300.Next trading phase to start this year (2013)EU flagship policy on decarbonisation and promotion of green/clean industrial innovationSuccessful…but would a carbon tax have worked better to incentivise decarbonisation?Or a higher floor price for carbon?
Other EU driversLisbon Strategy: “The European Union should becomethe most competitive knowledge-based economy of the worldwith sustainable economic growth and more and betteremployment opportunities and greater social cohesion.”Sustainable Development Strategy: “break the linkbetween economic growth, the use of resources and thegeneration of waste”. DecouplingEU Commission (2011): Roadmap for moving to acompetitive low carbon economy in 2050
UK context UK Climate Change Act (2008)Improve carbon management and help towards alow carbon economy in the UKDemonstrate strong UK leadership internationally-„Green deal‟Investment in renewables (and nuclear)
The dash for gasCurrent gas prices in UK reflect not current gas supply-demand Oversupply due to massive investments based on demand projection prior to the economic crisis Oversupply due to the closure of US market (Shale/Unconventionals) Demand collapse due to economic crisis Yet prices rocketed – due to predictions of cobweb-style future supply shortages?„Fracking‟
AusterityResilience of „green growth‟ and low carbon sectors and initiatives?“The evidence we have seems to suggest that, on the expenditureside, objectives such as promoting green growth are being shieldedfrom austerity: spending cuts in environmental protection tend to bementioned only rarely and to constitute a low share in the overallpackages. At the same time, a number of countries have taken stepsto combine the need for additional government revenue withecological policy goals by raising or introducing various ecologicaltaxes, as well as other measures….In the UK, energy and theenvironment spending will buck the trend to severe cuts, raisingspending in real terms”.(European Trade Union Institute, „Withdrawal symptoms: anassessment of the austerity packages in Europe‟, 2011, pp.26-27)But jobless investment?
„Green New Deal‟ approachCounter-cyclical investment strategy – energy,housing – to create /sustain jobs in low carboninfrastructureFinance – from pension funds, green bonds (localauthorities), green investment bankNot simply a „tax and spend‟ policy – also need toreduce carbon subsidies – politically difficult