1. Henry Sichel, Angela de Michele
Environment and development
Wirtschaftuniversitaet - Wien

2. Catch-up growth Increase in global
but
rate of 6-8% per year temperature max 2C°
We need «creative destruction», driven by massive
investments and innovative technologies
Every delay can lock investment projects
in old technologies, which will make the
emission level stuck at high levels.

3. Environmental
vs Economic goals
objectives
Lack of effective mitigation
action

4. Energy Development
Climate change (60% global challenge
emissions)
NO
mitigation targets’ fulfillment in
Without developed countries
addressing such
an issue: NO
catching up in developing world

5. 430
ppm
310
ppm
Land-use mitigation options (15-40% of potential
reduction)
Abatement
fulfillment
through
Multi-gas emission Lower costs than
reduction addressing only CO2

6. The lower the stabilization target,
the sooner the peak of CO2 and
CO2 equivalent emissions
The role of different scenarios
Predictions’ uncertainty
The higher the limit, the
more uncertain the trend

7. To widespread technology improvements and the adoption of
new techniques
Reduction of the rate of energy intensity and to improve carbon
intensity
To foster changes in the energy system
To enhance energy efficiency (not sufficient alone)
Upfront investments and rapid diffusion of low-emission
technologies
How to reach reduction objectives without jeopardize growth?
• Solar energy;
• CCS;
• Afforestation;
• Biomass;
• Efficiency

8. • Ranking of technologies and industrial processes
according to the net cost of avoiding a ton of CO2
What? emission
• It suggests opportunities for negative costs
emissions reductions where the uprfont capital
Win-win costs are more than paid-back by future savings
• Energy efficiency, low-emissions energy supplies,
Which terrestrial carbon, behavioural change
measure?

11. Renewables
Coal cluster Oil cluster
cluster?

12. Energy intensity has declined
Decarbonization of economy

13. From a policy perspective, significant
investments in «social overhead
capital», such as the provision of
energy services, has long been
advocated by development economists
Strong
investments
Expanding
Rising
income and
productivity
markets
Falling
costs

14. New activities and
Suppliers Power
markets using
of inputs sector
produced outputs
Electricity
Increased
household Motive power,
demand for refrigeration,
electricity lighting, etc.
Increased Increased
earnings productivity

15. 100 kWh per capita
North per day < x < 300
Unequal distribution
of energy
consumption
South < 35

16. Is equal Capacity
Thresold
to a 0.9 What to
of 100 Problems
HDI do?
kWh
value
Affordability
What to do?
100 kWh per capita per day thresold
(minimum target to overcome energy poverty)
Efficiency measures
Energy destitution
China e.g.: Coal use, highly
polluting, not satisfactory

17. Suggestions
To build up the infrastructure…
…together with a decentralized small-scale
technology
Massive investments in renewable energy
sources…
…able to generate backward links

18. The longer we wait to introduce new technologies,
the higher the emissions reductions will be
McKinsey Cost curve
< 60€ per ton of CO2: good opportunities to act in those areas
Oil price
The scenario could even be better if the oil’s price increased,
triggering profitability of other alternatives…
Subsidies
… but this would require direct subsidies to poor countries in
order to offset the impact of high energy prices

19. Two alternatives
• A2: the «bad» one;
• B1: the «good» one Early investments should
• The initial difference in upfront investments is limited to 2 be done in developing
trillion countries, which have low
In the long-run… potential costs and high
mitigation potentiality, to
• The capital costs of enforcing the B1 alternative are lower exploit the learning effects.
than the ones showed in the A1 scenario, because of
technologica changes and learning effects (learning curve)

20. More Attractive No Not enough
Leading
polluting because emissions, resources
resource for
less but waste- invested to
next ¼
Renewables
Nuclear
problem make them able
Oil
Gas
Coal
century polluting
to replace non-
renewable
sources
Upfront …more efficient
investments electrical storage
devices…
Overcoming of
technological hurdles,
like…
…and transmissions
systems

21. The developed world must face diverse challenges, to reduce
the reliance on fossil fuels. The required actions are:
Conservation Innovation Investment
Reduction of the Development of Public and private
consumption more fuel-efficient investments
patterns devices

22. Lock-in risk
• New capacities could
be not build with
recent technologies
Leap-frogging
opportunity
• Advanced
technologies, and
gaps-cutting with the
Capacity expansion in the South is expected to be industrialized world
double that in the North

23. The opportunity coming from the crises to completely change energy production’s
paradigms can be wasted if government chose to subsidize old systems
RD&D is
fundamental to Capacity-
RD&D and building
Investments
Improve Removal of
barriers and
performances provision o
information
Lower the
costs
Transformational changes

24. A policy that obligates companies to «feed into» the grid at a mandate price (tariff)
energy generated by any individual or oraganization from renewable sources
Mandatory supply of a % of energy
from renewable resources
Support
Price-based mechanism (e.g. carbon tax)
mechanisms
Direct/indirect support for renewable
sector
First success in California
Advanced
Renewable Tariff
(ART) example
Subsequent
Germany case-study
modification