Developing Countries in the Context of Climate Change    Mitigation and Energy System Transformation              Rio + 20...
Outline of the talk• A changing climate and developing countries• Economic development, energy use and CO2 emissions• The ...
A changing climate and developing countries
Long term trends show clear evidence                                                                           Source: Ber...
Average temperature anomaly per year                                           ( Peterson and Baringer 2009)   Last decade...
Projections of Global Warming                                   6                                (IPCC 2007)
Tipping Points                 (Lenton et al. 2008)                        7
Impacts            8          (IPCC 2007)
Impacts for Developing Countries                                     9                                   (IPCC 2007)
Where do we stand? – GHG emissions by country today                                                         10            ...
Wealth and carbon emissions                                                          4                                    ...
Economic Development, Energy Use, and CO2 Emissions
Role of developing countries in mitigating climate change                                                    Global emissi...
The scope of the challenge                                         (WDR 2010)Key question for developing countries:      I...
Empirical relationship between economic and emissions growth and            energy consumption in developing countries Ene...
Who’s driving emissions ?                              1971-2007                              Annual effect on CO2 growth-...
Understanding emissions growth      Kaya Identity:   CO2 = pop x                                     GDP                  ...
Drivers of global emissions                        Decomposition of Carbon intensity                                      ...
Renaissance of Coal?                            (IMF 2011)                       19
Fossil Fuel Scarcity vs. Limited Atmospheric Space                                                     20
Conclusions 1st part• Leapfrogging is not taking place• Economic growth particularly in newly industrializing countries dr...
The Energy System Transformation in the Context of Global                         Justice
Fossil Fuels Dominate the World Energy System                                                Traditional biomass 6%       ...
Transformation of the Energy System                                      (Luderer et 24 2011)                             ...
Transformation of the Energy System      models               MERGE             TIMER           POLES                 REMI...
Renewable Energy Potentials                              (Edenhofer et al. 2011)                                      26
Costs of Renewable Energy(Edenhofer et al. 2011)              27
Costs of mitigation                                                                    ( Edenhofer et al. 2011)Costs hinge...
Mitigation costs in developing countries      Global                                                NA-I countries        ...
How to finance mitigation in developing countries?Non-market based mechanisms to disburse climate finance:Coverage of incr...
Non-Market Transfers31     (Jakob et al, submitted.)
Emission Trading   per capita                      per capita                   (Jakob et al, submitted.)                 ...
Transfer payments and long term growth      Negative influence of resource rents on                                       ...
How to Avoid a Climate Finance Curse?• Possible problems with financial inflows: volatility, Dutch disease, rent-  seeking...
Conclusions 2nd part• Leapfrogging is not taking place• Economic growth particularly in newly industrializing countries dr...
Climate Policy and Energy – Reframing model results
Energy Access                                                                 (Edenhofer et al. 2011)Number of people (mil...
Energy and Human Development Index                                                i.    Do countries need to              ...
Energy and development in scenarios                         BAU                                                    $50    ...
Energy and Human Development Index                                                i.    Do countries need to              ...
Infrastructure needs can explain parts of the gap        Cement                             Developed Countries           ...
Energy and Human Development Index                                     Very high                                         H...
Conclusions 3rd part• Leapfrogging is not taking place• Economic growth particularly in newly industrializing countries dr...
Some final thoughts on climate policy and growth                                                   44
Drivers of emissions growthAnnual poverty alleviation                                                Annual emissions grow...
Can climate policy impact growth?                         Growth is beneficial for the poor!                              ...
Mitigation trap in a Solow modelProduction function:             [$]Y = β ⋅ kαCapital formation:                          ...
Conclusions• Impacts from climate change will hit developing countries hardest• Mitigation burden is equally high (or even...
Thank you for your attention!http://www.pik-potsdam.de/members/steckel
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Steckel daad 271112_v012

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Steckel daad 271112_v012

  1. 1. Developing Countries in the Context of Climate Change Mitigation and Energy System Transformation Rio + 20 Workshop / DAAD Webinar Potsdam, November 27, 2012 Dr. Jan Steckel 1
  2. 2. Outline of the talk• A changing climate and developing countries• Economic development, energy use and CO2 emissions• The energy system transformation in the context of global justice• Climate policy and energy – reframing model results• Some final thoughts on climate policy and growth 2
  3. 3. A changing climate and developing countries
  4. 4. Long term trends show clear evidence Source: Berkeley Earth Surface Temperature Project•Temporal slow downs of global warming have occurred already in the past•Recent independent examination of IPCC results (Berkeley Earth Surface Temperature Project) has confirmed results 4
  5. 5. Average temperature anomaly per year ( Peterson and Baringer 2009) Last decade was the warmest since the beginning of industrialization ! 5
  6. 6. Projections of Global Warming 6 (IPCC 2007)
  7. 7. Tipping Points (Lenton et al. 2008) 7
  8. 8. Impacts 8 (IPCC 2007)
  9. 9. Impacts for Developing Countries 9 (IPCC 2007)
  10. 10. Where do we stand? – GHG emissions by country today 10 (World Bank 2010)
  11. 11. Wealth and carbon emissions 4 10P: Fossil CO2 emissions (kg C per person and year) United States Germany Russia France Japan 3 South Africa 10 Mexico China Egypt Brazil 2 India 10 Bangladesh 1 10 Ethiopia Fitting line: ln P=0.987 ln K+c 3 4 5 10 10 10 K: Capital stock (US$2000 per person) 11 ( Füssel 2007)
  12. 12. Economic Development, Energy Use, and CO2 Emissions
  13. 13. Role of developing countries in mitigating climate change Global emissions BAU 550 ppm CO2-e scenario Based on data from Luderer et al. (2012)Non Annex I countries will need to bare a major share of the reduced emissions ! 13
  14. 14. The scope of the challenge (WDR 2010)Key question for developing countries: Is leapfrogging possible? 14
  15. 15. Empirical relationship between economic and emissions growth and energy consumption in developing countries Energy 1971 - 2005 Emissions 1971 - 2005 Developing countries Developing countries Stronger Stronger coupling of coupling of growth and growth and energy emissions OECD countries OECD countries Weaker Weaker coupling of coupling of growth and growth and energy emissions ‚Decoupling‘ should not be expected for (Jakob et al. 2012) developing countries in the near to midterm 15
  16. 16. Who’s driving emissions ? 1971-2007 Annual effect on CO2 growth- Global emissions growth in recent years mainly by newly industrializing and developing countries- China’s role outstanding i. High GDP-growth ii. Slower improvement of energy intensity iii. Scaling effects of traditional coal use in China 16
  17. 17. Understanding emissions growth Kaya Identity: CO2 = pop x GDP x E x CO2 pop GDP EChina India NICsUSA Europe (OECD) OECD (all) 17
  18. 18. Drivers of global emissions Decomposition of Carbon intensity (updated from Steckel et al, 2011) Global Economic Crisis 18
  19. 19. Renaissance of Coal? (IMF 2011) 19
  20. 20. Fossil Fuel Scarcity vs. Limited Atmospheric Space 20
  21. 21. Conclusions 1st part• Leapfrogging is not taking place• Economic growth particularly in newly industrializing countries drives CO2 emissions 21
  22. 22. The Energy System Transformation in the Context of Global Justice
  23. 23. Fossil Fuels Dominate the World Energy System Traditional biomass 6% Modern bioenergy 4% Shares of Primary Energy Supply 2008 23
  24. 24. Transformation of the Energy System (Luderer et 24 2011) al.,
  25. 25. Transformation of the Energy System models MERGE TIMER POLES REMIND E3MG Baseline Many different pathways to transform the energy system400 ppm-eq  Different possibilities to reach low stabilisation (Knopf et al. 2009)  400ppm can be achieved by all models 25
  26. 26. Renewable Energy Potentials (Edenhofer et al. 2011) 26
  27. 27. Costs of Renewable Energy(Edenhofer et al. 2011) 27
  28. 28. Costs of mitigation ( Edenhofer et al. 2011)Costs hinge critically on:• The stabilization target• The biomass potential• The availability of technologies, RE and CCS in particular 28
  29. 29. Mitigation costs in developing countries Global NA-I countries Luderer et al. 2012Mitigation costs in developing countries rather moderate; however this is due tofinancial transfers from developed countries 29
  30. 30. How to finance mitigation in developing countries?Non-market based mechanisms to disburse climate finance:Coverage of incremental investment costsCoverage of total mitigation costsMarket-based mechanisms (International Emissions Trading):Grandfathering, or allocation proportional to GDPEqual per capita allocation of permitsContraction and Convergence 30
  31. 31. Non-Market Transfers31 (Jakob et al, submitted.)
  32. 32. Emission Trading per capita per capita (Jakob et al, submitted.) 32
  33. 33. Transfer payments and long term growth Negative influence of resource rents on Sachs and Warner, 2001 GDP / capita 1970 - 1989 long term growth conceivable (“Resource Curse“) Resource exports in % of GDP, 1970 Climate Finance Range [% of GDP] • Climate rent comparable to resource rent • Transfers might be in the same order of magnitudeData: • Institutional quality of receivingResource Exports, FDI: Year 2009Aid: Year 2008 countries is criticalETS: ReMIND scenario Year 2020 33
  34. 34. How to Avoid a Climate Finance Curse?• Possible problems with financial inflows: volatility, Dutch disease, rent- seeking• Higher risk of climate finance curse with emissions trading; but problem to efficiently deliver non-market transfers• Transfer of rents can be limited by appropriate choice of allocation; but might conflict with notions of equity• Properly designed institutions can reduce risk of climate finance curse (e.g. price corridors, sovereign wealth funds, civil society involvment) 34
  35. 35. Conclusions 2nd part• Leapfrogging is not taking place• Economic growth particularly in newly industrializing countries drives CO2 emissions• A structural transformation of the energy system is possible at modest costs (according to state-of-the art models); but without historical precedent• How to design climate policy in developing countries is a key issue 35
  36. 36. Climate Policy and Energy – Reframing model results
  37. 37. Energy Access (Edenhofer et al. 2011)Number of people (millions) without access to electricity 37
  38. 38. Energy and Human Development Index i. Do countries need to meet a certain level of Very high energy consumption High to reach high development levels? ii. What does that mean for climate mitigation targets? LowThreshold at around 40 GJ per capita10 GJ per capita can be explained by subsistence needsDecoupling of energy consumption and development not oberserved in the past 38
  39. 39. Energy and development in scenarios BAU $50 $30 $10 GDP per capita [$]GDP per capita [$] Final Energy per capita [GJ] Final Energy per capita [GJ] • Decoupling of energy and development is seen in mitigation scenarios • Energy threshold is however ignored 39
  40. 40. Energy and Human Development Index i. Do countries need to meet a certain level of Very high energy consumption High to reach high development levels? ii. What does that mean for climate mitigation targets? LowThreshold at around 40 GJ per capita10 GJ per capita can be explained by subsistence needsDecoupling of energy consumption and development not oberserved in the past 40
  41. 41. Infrastructure needs can explain parts of the gap Cement Developed Countries Developing Countries will catch up (Scenario data in blue) Steel Developed Countries A per capita energy demand of 10 to 20 GJ in developed countries seems to be stable given today’s technologies. 41(Steckel et al. submitted)
  42. 42. Energy and Human Development Index Very high High LowThreshold at around 40 GJ per capita10 GJ per capita can be explained by subsistence needs10 – 20 GJ per capita might be due to infrastructure uptake and maintenance 42
  43. 43. Conclusions 3rd part• Leapfrogging is not taking place• Economic growth particularly in newly industrializing countries drives CO2 emissions• A structural transformation of the energy system is possible at modest costs (according to state-of-the art models); but without historical precedent• How to design climate policy in developing countries is a key issue• Infrastructure can next to subsidiary needs explain an energy threshold for development• Models predicting modest costs do not take this into account or make strong assumptions 43
  44. 44. Some final thoughts on climate policy and growth 44
  45. 45. Drivers of emissions growthAnnual poverty alleviation Annual emissions growth 1980 – 2008 [%] 0% Annual Poverty Reduction 1981 - 2008 -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% -1% 1980 – 2008 [%] -2% -3% [%] Worldbank Data (2012) -4% -5% -6% -7% Annual growth in CO2 emissions 1981 - 2008 [%] Regions with the highest success in poverty East Asia incl. China alleviation also show high growth rates in emissions 45
  46. 46. Can climate policy impact growth? Growth is beneficial for the poor! (Dollar and Kray, 2002) 46
  47. 47. Mitigation trap in a Solow modelProduction function: [$]Y = β ⋅ kαCapital formation: (Steckel 2012) • k = k + s( k ) ⋅ Y − δk K0 KCIn the case of climate policyβ can decrease. The trap gets more likely in the presence of climate policy in the form of βK(s) [Independent from the form of the function s(k)] 47
  48. 48. Conclusions• Impacts from climate change will hit developing countries hardest• Mitigation burden is equally high (or even higher) for developing countries• Technologies might help to mitigate climate change, but …• low carbon technologies are still more expensive than fossil fuels• Models see that mitigation costs are comparably low for developing countries• Transfers to developing countries might impose negative effects on long term growth• Mitigation might impose a poverty trap under certain circumstances, but further research is needed ! 48
  49. 49. Thank you for your attention!http://www.pik-potsdam.de/members/steckel

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