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Covid-19, Energy Transition &Climate. Prof. Adreas Loschel

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El pacto verde europeo, clave contra el COVID-19. Recomendaciones de la comisión de expertos del gobierno alemán "Energía del Futuro".
Webinar organizado por Funseam y la Cátedra de Sostenibilidad Energética-UB.
06/07/2020

Published in: Economy & Finance
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Covid-19, Energy Transition &Climate. Prof. Adreas Loschel

  1. 1. COVID-19, Energy Transition & Climate Prof. AndreasLöschel University of Münster Head of German Expert Commission „Energy of the Future“ Aurora Energy Research
  2. 2. 2CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 2,9 2,3 1,2 0,6 1,3 0,3 2,0 1,4 6,1 -6,0 -7,3 -9,1 -6,6 -11,4 -11,5 -2,6 12 -12 0 -6 6 -18 ChinaWorld Output United States Euro Area Germany -3.7 France Italy Spain United Kingdom India -11.3 -11.1 4.2 Sources: IMF, OECD 1) Annual GDP % change projection by OECD Economic Outlook published in June 2020. Numbers shown are based on single-hit scenario 2) Numbers shown are for all advanced and emerging economies within the OECD June 2020 Economic Outlook not just those on the slide. 2019 20201 2008 Financial CrisisWorld Economic Outlook annual GDP growth projections for selected countries1, annual % change - 7.9 p.p. - 5.8 p.p.Change for all advanced economies2 Change for all emerging economies2 COVID-19 impact on GDP
  3. 3. 3CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION COVID-19 impact on sectors Impact of each month of containment measures on expected annual GDP by sector, % Sector Global 1-year trend (Jun-19 - Jun 20)1 Communication Services Consumer Service Consumer Goods Energy (Oil & Gas) Financials Health Care Industrials Information Technology Materials Utilities -5% -1%-2%-3%-4% 0% United Kingdom Germany Italy France Spain United States Australia India World China Hotel, restaurants and other services Agriculture, mining and quarrying Business, trade and public services Transport services Manufacturing, utilities and construction Overall GDP +15.49% -0.57% -25.5% +6.54% -2.35% +8.45% +35.47% +4.14% Daily stock market performance by sector, % +1.94% +2.06% Sources: Aurora Energy Research, IEA, ADB Asian Development Outlook 2020 (April 2020), CEBR (March 2020), Dorn, F. et al. (March 2020), INSEE (April 2020), ISTAT (April 2020), OECD (March 2020), Fidelity 1) Daily global stock performance index, including all public companies globally grouped by sector, performance as of 05/ 06/ 2020.)
  4. 4. 4CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION COVID-19 impact on energy demand & emissions -20 -15 -10 -5 0 5 10 15 20 25 30 35 19201910 1930 1940 5 1960 19701950 1980 -15 25 20 -20 -10 2020 -5 2010 0 2000 10 1990 15 30 35 1900 8 % Yearly change in global primary energy demand, % Evolution of energy demand and global emissions through financial crises Global energy related emissions, Gt Spanish flu Great Depression WorldWarII Firstoil shock Secondoil shock GlobalFinancial Crisis Covid-19 Sources: Aurora Energy Research, IEA, UN Environment Programme
  5. 5. 5CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION COVID-19 impact on prices Average monthly German baseloadpower price, EUR/ MWh (nominal) Min-max corridor (Jan 10 - Jun 19) Preliminary for June 2020 Mar- 20 Dec- 19 Jun- 20 Sep- 19 0 40 45 50 35 0 10 20 30 Mar- 20 Dec- 19 Jun- 20 Sep- 19 Average monthly gas price, EUR/ MWh (nominal) Average monthly EUA price, EUR/ tonne CO2 (nominal) 0 10 20 30 Jun- 20 Mar- 20 Dec- 19 Sep- 19 (Jul 15 – Jun 19) Sources: ENTSO-E, Aurora Energy Research 1) ENTSO-E data (actual demand). Data does not include demand from embedded renewables or BTM/ storage.
  6. 6. 6CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION Two Degrees World 60 71 42 3 5 8 9 10 11 0 2 4 6 8 10 0 10.000 20.000 30.000 40.000 50.000 60.000 0 2 4 6 8 10 12 14 16 18 20 22 US China Germany Spain France UK India Italy GDP per capita, 2020 USD constant PPP CO2 emission and GDP per capita by country, 1991 - 2014 Correlation = 0.991 Correlation = -0.432 China USA India Europe Decrease in CO2 intensity of GDP in Two Degrees world, % GDP growth and CO2 intensity required for Two Degrees Annual GDP growth in Two Degrees world, % 2000 - 2020 2021 - 2050 Carbon emissions per capita, tonne Sources: IEA, Aurora Energy Research 1) Average correlation of emission and growth for emerging countries. 2) Average correlation of emission and growth for developed countries.
  7. 7. 7CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION Economic stimulus policies & environment benefits C A B H E D F GI L JP K M N O Q R S T U V W X Y PotentialClimateImpact Long-Run Multiplier HighLow High positive impact High negative impact Number of experts rating policy in Top 10 157 experts 34 experts Speed of implementation Fast Slow Policy is green in nature Policy is brown in nature Source: Aurora Energy Research, Stiglitz, Hepburn, Stern et al. (2020) A. Temporary waiver of interest payments B. Assisted bankruptcy C. Liquidity support for large corporations D. Liquidity support for households, start-ups and SME’s E. Airline bailouts F. Not for profits, education, research, health inst. Bailouts G. Reduction in VAT and other goods and services taxes H. Income tax cuts I. Business tax deferrals J. Business tax relief for strategic and structural adj. K. Direct provision of basic needs L. Education investment M. Healthcare investment N. Worker retraining O. Targeted direct cash transfers or temporary wage increases P. Rural support policies Q. Traditional transport infrastructure investment R. Project based local infrastructure grants S. Connectivity infrastructure investment T. Clean energy infrastructure investment U. Building upgrades (energy efficiency) V. Green spaces and natural infrastructure investment W. Disaster preparedness, capacity building X. General R&D spending Y. Clean R&D spending
  8. 8. 8CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION German rescue and economic stimulus package Source: German Ministry of Finance 1) Including spending for the public health system, digitisation, 5G, Quantum Technologies and Artificial Intelligence. 2) Including: innovation and facilitation for EVs and charging infrastructure, innovations for busses and trucks, ships, aircrafts. Aid for trains, and public transport, 3) RES buildout is part of the recovery package, but not quantified therein. We estimate CAPEX costs of the stated measures at 29 bn Euro. Alternatively, feed-in-tariffs would amount to 15 bn Euro approximately.
  9. 9. 9CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION German rescue and economic stimulus package Sources: Aurora Energy Research, Öko-Institut, Stiglitz, Hepburn, Stern et al. (2020) 1) Bubble sizes for suggested measures are to be discussed. The measures ‚Reduction of power tax‘and ‚Buildout quota for 65% target‘are Aurora estimates. 2) Bubble size represents the amount stated in the recovery package or the necessary CAPEX investments for RES bulidout in case of the measures ‚Solar cap‘and ‚Offshore target raise‘.
  10. 10. Promoting climate protection, enhancing prosperity – Comments on central fields of action for the German energy transition in the European context Berlin · Münster · Nuremberg · Stuttgart, June 2020
  11. 11. 1. Enhance European added value and ensure international integration 3. Align certification with the Green Deal 4. Phase-out coal efficiently and improve the effectiveness of market signals 5. Expand renewable energies more quickly 6. Develop key global technologies for hydrogen and synthetic energy carriers 7. Accelerate industrial transformation through climate-neutral production 8. Expand infrastructures in a coordinated manner 9. Deal systematically with energy efficiency 10. Intensify activation of private capital for Green Finance 11. Formulate governance of the Energy Union coherently 2. Address CO2-based energy price reform rapidly and design it appropriately Agenda 15.06.2020 Commission on the Monitoring Process ‘Energy of the Future‘ 11
  12. 12. ① Increase resilience of the EU economy (diversify critical dependencies, strengthen European markets, increase competitiveness) ② Create climate-neutral value chains in the EU ③ build international cooperations. ④ Check possibilities of international compensation and ⑤ monitor international energy and climate policy. 1. Enhance European added value and ensure international integration 12Commission on the Monitoring Process ‘Energy of the Future‘ ② Stylized stages of an exemplary, climate-neutral value chain for synthetic energy sources ① Production Distribution Processing Final consumption Komponenten- Produktion Stylized stages of other value chains Distribution ③ EU International ⑤ Production ④
  13. 13. 2. Address CO2-based energy price reform rapidly and design it appropriately 13Commission on the Monitoring Process ‘Energy of the Future‘ Reform and expand European climate protection instruments. Design and communicate energy price reforms correctly. Reform the German energy price system. CO2 ○ • Take distributional effects into account. • Use income in a targeted and transparent manner. • Communicate reforms convincingly. • Secure and tighten CO2 price path. • Elimination of levies on electricity and partially compensation via revenues from CO2 pricing • Reduce electricity tax to the minimum rate of the EU energy tax directive. • Energy tax directive • European emissions trading • Border carbon adjustments
  14. 14. 5. Expand renewable energies more quickly 14Commission on the Monitoring Process ‘Energy of the Future‘
  15. 15. Renewable generated electric power Heat heat pump fuel cell high-temperature process heat … Industry refineries steel production fertilizer production … Mobility battery fuel cell synthetic fuels … Electricity pumped-storage power plant fuel cell gas turbine … Examples of sector coupling: Coupling via electricity Coupling via hydrogen Coupling via synthetic energy carriers H2 H2 H2 H2 H2 H2 H2 H2 H2 6. Develop key global technologies for hydrogen and synthetic energy carriers 15Commission on the Monitoring Process ‘Energy of the Future‘
  16. 16. 7. Accelerate industrial transformation through climate-neutral production 15.06.2020 16Commission on the Monitoring Process ‘Energy of the Future‘ Pull measures (industry): - Strategic corporate goals - Carbon disclosure - Certification - Commitment of suppliers - … Push measures (politics): - European emissions trading scheme (ETS) - Non-ETS measures - Carbon border adjustment - Research, development and demonstration - Financial compensation for green products - Investment in infrastructure - Training of skilled workers - …
  17. 17. 8. Expand infrastructures in a coordinated manner 17Commission on the Monitoring Process ‘Energy of the Future‘
  18. 18. 11. Formulate governance of the Energy Union coherently 15.06.2020 18Commission on the Monitoring Process ‘Energy of the Future‘ Dimensions*) Regions**) Sectors***) Technologies****) Important regulatory levels of governance of the Energy Union ④ Use local knowledge and strengthen participatory processes. ① Make use of centralized, market- based mechanisms. ② Resolve conflicts between individual political instruments. ③ Align counterparts of European and national regulations. *) Dimensions of the Governance Directive (see text) **) EU, member states, subnational political entities ***) For example, EU ETS vs non-EU ETS sectors, energy intensive vs other sectors, energy sector, steel industry, automobile industry, pharmaceutical industry, … ****) For example, renewable energies, energy efficiency, energy storage, sector coupling
  19. 19. Thank you for your attention • Prof. Dr Andreas Löschel • Tel. +49 176-18300202 • Email loeschel@uni-muenster.de • Twitter andreasloeschel • Expert Commission on the Monitoring Process "Energy of the Future": Promoting climate protection, enhancing prosperity, June 2020 • Download: https://www.loeschel.org/app/download/7723549411/EWK_Stellungnahme_2020+EN. pdf?t=1593811459 19Commission on the Monitoring Process ‘Energy of the Future‘

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