Andreas Tuerk

Linking carbon markets. Concepts, case studies and pathways

The barriers to linking greenhouse gas cap-and-trade schemes are assessed, based on an analysis of existing and emerging trading schemes, including those in the USA, Japan, Australia, New Zealand and the EU. The feasibility of different forms of linking and the time frames for their implementation are examined. In particular, the barriers to direct bilateral linking are considered. It was found that only a few direct bilateral links will be viable in the short term, due to the divergent policy priorities of different nations and regions, reflected in critical design features, such as costcontainment measures. However, in the short term, cap-and-trade markets will very likely be indirectly linked via unilateral links to the CDM or new crediting mechanisms, which may be adopted within a successor treaty to the Kyoto Protocol. In order to ensure a harmonization of critical design elements in the mid to long term, early institutional cooperation may become necessary. Necessary policy steps and the appropriate institutional framework for such harmonization and, overtime, further integration of trading schemes are briefly delineated.

Implications of announced phase II national allocation plans for the EU ETS

Abstract We quantified the volume of free allowances that different national allocation plans proposed to allocate to existing and new installations, with specific reference to the power sector. Most countries continue to allocate based on historic emissions, contrary to hopes for improved allocation methods, with allocations to installations frequently based on 2005 emission data; this may strengthen the belief in the private sector that emissions in the coming years will influence their subsequent allowance allocation. Allocations to new installations provide high and frequently fuel-differentiated subsidies, risking significant distortions to investment choices. Thus, in addition to supplying a long market in aggregate, proposed allocation plans reveal continuing diverse problems, including perverse incentives. To ensure the effectiveness of the EU ETS in the future, the private sector will need to be shown credible evidence that free allowance allocation will be drastically reduced post-2012, or that these problems will be addressed in some other way.

Implementing Europe's climate targets at the regional level

Having agreed upon a binding emissions reduction path by 2020, the EU plays a leading role in international climate policy. The EU currently pursues a dual approach through an Emissions Trading Scheme (ETS) at the EU level and also via national targets in sectors not covered by the ETS. The latter include the buildings sector, transportation, agriculture, and waste. Emissions from these sectors are mainly subject to policies at provincial and local levels. A method is presented for elaborating and implementing a long-term climate policy process up to 2030 for the regional (provincial) level. Building on regional GHG inventory data, a set of indicators for each sector is developed in order to arrive at a target path consistent with the deduced regional GHG reduction requirement. Policy measures and their implementation are then settled subsequent to this process. Quantitative regional targets are found to be a prerequisite for the formation of regional climate policy as they increase participant responsibility and commitment. A five-step process of stakeholder participation ensures effective implementation of regional climate action plans. Insights from an exemplary European region are drawn upon, and policy issues are discussed in both quantitative and institutional terms.

Rescuing the concept of solar electricity transfer from North Africa to Europe

Purpose The purpose of this paper is to shed light to the concept of solar electricity transfer from North Africa to Europe in the frame of Article 9 of the European Renewable Energy Sources (EU-RES) Directive 28/2009/EC, to explain why efforts have not been successful up to now and to provide recommendations on how to proceed. Design/methodology/approach The authors have compared the “Supergrid” concept that was pursued by some institutions in the past years with the original “TRANS-CSP” concept developed by the German Aerospace Centre in 2006. From this analysis, the authors could identify not only major barriers but also possible ways towards successful implementation. Findings The authors found that in contrast to the Supergrid approach, the original concept of exporting dispatchable solar power from concentrating solar thermal power stations with thermal energy storage (CSP-TES) via point-to-point high voltage direct current (HVDC) transmission directly to European centres of demand could be a resilient business case for Europe–North Africa cooperation, as it provides added value in both regions. Research limitations/implications The analysis has been made in the frame of the BETTER project commissioned by the Executive Agency for Competitiveness & Innovation in the frame of the program Intelligent Energy Europe. Practical implications One of the major implications found is that due to the time lost in the past years by following a distracted concept, the option of flexible solar power imports from North Africa to Europe is not any more feasible to become part of the 2020 supply scheme. Social implications To make them a viable option for post-2020 renewable energy systems for electricity development in Europe, a key recommendation of the project is to elaborate a detailed feasibility study about concrete CSP-HVDC links urgently. Originality/value The analysis presented here is the first to give concrete recommendations for the implementation of such infrastructure.

Sharing the gains from EU--Western Balkan renewable electricity cooperation

The EU directive on renewable energy sources enables EU Member States to import renewable electricity from non-EU countries and count these imports towards their renewable energy targets. This article investigates whether such cooperation can be beneficial for selected Western Balkan countries and help them to increase their domestic renewable electricity supply: could wind power exports to the EU from Bosnia and Herzegovina, Serbia, Albania and the Former Yugoslav Republic (FYR) of Macedonia enable additional investments in domestic generation, without ‘selling out’ the exporter countries’ best generation sites? Or would exports rather conflict with the Western Balkans countries’ domestic efforts to reach their renewable energy targets and increase the domestic electricity supply? For this, a model was developed in Visual Basic to optimize, from the exporters’ perspective, the optimal export level to trigger investments but maximize the wind power supply for domestic use. The analysis takes into account the wind potential, support and price levels in the EU and Western Balkans, investor requirements and financing conditions in the investigated countries. The article shows that cooperation offers a way both for EU Member States and some Western Balkan countries to expand renewable electricity supply and reach their renewable energy targets in a cost-effective way. Partial exports of wind power would allow Serbia, Albania and the FYR of Macedonia to reach their 2020 wind targets. This would not be possible under their existing support schemes or electricity prices. The results indicate that Bosnia and Herzegovina lacks cost-efficient potentials and cannot achieve its wind target in the base case, with or without exports. Climate policy relevance The results show that wind power cooperation between the EU and Western Balkan countries may simultaneously increase the renewable electricity generation available for the domestic markets in the host countries and help EU Member States to achieve their renewable energy and decarbonization targets. Hence, wind power exports are a way for both the EU and the Western Balkans to provide more carbon-neutral electricity in a cost-effective manner and thus support the achievement of renewable energy and climate targets.

New Market-Based Mechanisms Post 2012: Institutional Options and Governance Challenges when Establishing a Sectoral Crediting Mechanism

The Cancun Agreements in December 2010 have set the basis for the continuing availability of market mechanisms to assist developed countries in meeting their mitigation commitments a post-2010 climate regime. They provide that the introduction of the new market-based mechanisms (NMMs) will be examined at the next COP in Durban. NMMs, refer, in particular, to sector based crediting. There is not yet sufficient consensus on how new market mechanisms could be governed and which role the United Nations (UN) should play. While some countries including Japan and Australia favour more decentralized governance models with only minimun criteria defined be the UN and a strong role of bilateral cooperation, the EU still has a preference for more centeralized UN based governance. This paper gives an overview of current country positions, discusses pros and cons of different accounting and governance frameworks for NMMs, and examines inasmuch the Clean Development Mechanism (CDM) provides a suitable model for centrally governed secortal crediting mechanisms. It concludes that even if decentralized approaches also have their strengths compared to centralized governance models, minimum requirements need to be agreed upon under the UN to guarantee the environmenta integrity of the mechanism.

System complexity as key determinant in achieving efficacious policy transposition and implementation: Carbon Taxes, Energy Subsidies and Smart Instrument Mixes

Policy implementation and transposition do not take place in a “vacuum†, but are influenced by a variety of surrounding factors, stakeholder agendas and by socioeconomic or institutional boundaries. All factors together are shaping the policy performance. Consequently, understanding a policy’s surrounding context is crucial for efficacious policy transposition and implementation. In this chapter we analyse how policies unfold their performance within a pre-existing system using the example of low carbon technology adoption for mobility and heating demand in Austrian households. By using fuzzy cognitive mapping, for both areas, we find a mainly subsidy-based policy framework often lacking innovative solutions and being strongly influenced by surrounding contextual factors and stakeholder constellations. In particular both cases show that barriers for target achievement in the case of low carbon technology adoption are mainly characterized by uncertainties and individual concerns about future benefits, technology effects or financial burdens. Our findings in combination with lessons learned from Europe-wide best practice examples highlight the importance and benefit of smart policy mixes in future policy design. In particular our analysis reveals that smart policy mixes are more robust and more easily adaptable concerning influences of complex system correlations, thus not only in the case of low carbon technology adoption in Austrian households but also for policy design in general.

Policy framework conditions for provision of ancillary services in a distribution network by distributed RES generation

The aim of this paper is to give an overview of the technical and regulatory issues the DSOs are facing when operating the system with rising share of DRES. We follow up with and overview of the current status of the boundary conditions for the provision of ancillary services from DRES, in particular from PV generation in different EU countries and the relevant experiences with policy making. The key policy documents investigated include policy frameworks and grid codes, as they regulate the conditions for connection of DRES and their operation in distribution network. The surveyed industry landscape shows that while facing very similar technological issues of varying and volatile DRES generation output, the DSOs operate on quite different technical and regulatory conditions.

Balancing environmental benefits and damages of small hydropower generation in policy-making: assessing the implementation of a contradicting EU policy framework in Austria and Slovenia

ABSTRACT Hydropower contributes to a higher share of renewables but is also in conflict with environmental legislation aiming to protect natural habitats, wildlife and endangered species. Analysing two neighbouring European countries with similar topographical and hydromporphological characteristics, Austria and Slovenia, allows assessing to what extent a policies’ national context steers possible policy conflicts of EU legislation. The paper shows that hydropower expansion in examined countries is strongly shaped by factors such as financial concerns of investors, diverging opinions of involved stakeholders, available hydro potential and the role of hydropower in national energy strategies. Addressing issues that lead to a lower effectiveness of national policies already at the level of EU policy design or engaging countries to broadening their national energy portfolio by considering emerging technologies such as PV and wind will enable future energy and climate strategies that are more consistent with other environmental goals.

Market-based business model for flexible energy aggregators in distribution networks

The increasing rate of the smart technology implementations in the energy sector brings new control solutions for distributed renewable energy sources (DRES) to tackle the additional challenges on the distribution network that arise from increased integration of renewable energy sources (RES). With these new control solutions, a possibility of new services that could be offered on electricity and ancillary markets emerged, providing a possibility of new source of income for DRES, Demand Response (DR) and Aggregators. This paper presents the main results of the EU FP7 project INCREASE, where innovative controls for DRES and DR units were developed and investigated. The main novelty of the paper is a sensitivity analysis of INCREASE ancillary services and business model applied to representative European grid for overall policy conclusions. The knowledge gained in INCREASE provides the basis for the work in H2020 project STORY, where the demand response strategies will be augmented to encompass small-scale storage solutions.