1st Workshop on Policy Design for a Climate-Friendly Materials Sector

Brussels, September 16th, 2016
EU Liaison Office of the German Research Organisations (KoWi), Rue du Trône 98, B-1050 Brussels

 

Materials are central to our economies – but their production also dominates industrial greenhouse gas emissions. It is therefore not possible for Europe to reach an 80-95% emission reduction target without significant emission reductions from the materials sector. While some production efficiency improvements and fuel shifting to lower carbon inputs have been achieved in sectors such as steel and cement, they amount to only modest reductions and their full potential is limited. The large, and necessary, mitigation potential linked to break-through process technologies, new materials, and more efficient material use remains largely untapped. The discrepancy between the policy objective of near complete decarbonization of the economy and only incremental developments in the sector creates uncertainty, thus inhibiting investments and innovation. With this workshop we aim to explore what elements need to be put in place at the European and Member State level to allow for large scale emission reductions from material production through developing a portfolio of innovative processes and materials and providing incentives for their efficient use.

Program

Opening comments: Karsten Neuhoff (DIW Berlin)

Session 1: Technological options for emissions reductions and their economics

In this session, we will explore options of product innovations, process innovations, and more efficient use of materials for the major materials (cement, steel, aluminium and chemicals).

Chair: Heleen de Coninck (Radboud University)

Presentation 1: Tobias Fleiter (ISI Fraunhofer)

A transition pathway for Germany’s industry up until 2050 - Results form a bottom-up modeling study | PDF, 156.92 KB

Presentation 2. Tatiana Vakhitova (Granta Design)

Material substitution for decarbonization | PDF, 1.27 MB

Session 2: Frameworks for adoption of new technologies in practice

In this session, we will discuss policy frameworks that can support the adoption of new technologies in a world of (regulatory) uncertainty once they have reached maturity. In the discussion policy options, such as public procurement, project based carbon price guarantees, and mechanisms to ensure effective carbon pricing like inclusion of consumption, but also new business models for financing shall be explored as well as evaluated.

Chair: Henry Derwent (Climate Strategies)

Presentation1: Richard Baron (OECD)

Role of public procurement for low-carbon innovation

Presentation2: Roland Ismer (University Erlangen)

Inclusion of Consumption of carbon intensive materials in emission trading systems. An option for carbon pricing post 2020 | PDF, 1.02 MB

Presentation3: Maciej Bukowski (WiseEuropa)

The “prime minister perspective” to environmental policy

Presentation4: Jörn Richstein (DIW Berlin)

Project-based carbon contracts: a sketch | PDF, 376.09 KB

Session 3: Innovation support in practice

In this session, the speakers will present policy options supporting climate friendly materials innovation, as well as challenges for their success (e.g. ensuring technology competition, time inconsistency of carbon regulation, avoiding regulatory capture). The discussion/session will in particular focus on options to structure the funding requirements for increasing the scale of demonstration projects for new processes and materials. This may involve national, regional and European programs based on for example national budgets, EU ETS allowance auctions or inclusion of consumption charge and different mechanisms for their disbursement.

Chair: Lars Zetterberg (IVL)

Presentation1:  Craig Hart (Renmin University of China)

Radical Resign of Products and Processes for Sustainability | PDF, 506.71 KB

Presentation2: Olga Chiappinelli (DIW Berlin)

Valley of Death, Technology Pork Barrel, and support for large demonstration projects | PDF, 0.87 MB

Concluding comments: What is needed for a consistent picture across technology pathways, technology innovation and adaptation policies?


Workshop on Auctions for Intraday Trading

Future Power Market Platform

Paris, 4th October 2016

In the last FPM on the blueprint for a European market design intraday auctions with capability bids were identified as a promising next step to further integrate European power markets.

Intraday auctions are foreseen by the CACM regulation at regional level as a complementary measure to the continuous trading. Intraday auctions can increase depth and liquidity of intraday markets and provide a robust price signal as reference price for financial contracts. They also offer the opportunity for the use of capability bids that allow market participants to easily offer the full flexibility of their units or demand according to physical constraints of their facilities and evolving to the complex (and national in scope) products currently implemented in the day ahead market algorithm Euphemia, even without a full 24 hour trading desk. This market based allocation would make more efficient use of transmission capacity than first-come-first-serve approach envisaged for continuous cross-border intraday trading allowing pricing of cross zonal capacity.

However, assuming that there is any will at European level to reconsider the benefits and future role of intraday auctions in practice, many open questions remain regarding the principle design of such auctions, their compatibility with existing national designs, such as continuous trading and how to efficiently coordinate them with ancillary services in general, as reserve margins procurement or congestion management and re-dispatch measures within countries and across borders.
Therefore we structure the agenda into 3 thematic sessions:

  • Intraday auction design
  • How to align intraday auctions with existing power markets
  • Alignment with system needs

Presentations:

Session 1: Introduction / summary

Karsten Neuhoff (DIW Berlin) Auctions for Intraday Trading | PDF, 0.78 MB

Session 2:  Intraday implicit auction design

Fabrizio Carboni (GME) The Italian Intraday Auctions (MIs) complementing the European  cross-border Intraday continuous trading (XBID). Pilot project on the Italian-Slovenian border | PDF, 1.55 MB

Philippe Vassilopoulos (EPEX Spot) Design Elements for Implicit Intraday Auctions. The Future of Power Markets | PDF, 0.96 MB

Session 3: How to align intraday implicit auctions with continuous trading

Julia Bellenbaum (University of Duisburg-Essen) Intraday cross-zonal capacity pricing | PDF, 209.48 KB

Session 4: Alignment with system needs

Anthony Papavasiliou (UC Louvain) Co-Optimization of Energy and Reserves | PDF, 1.13 MB

nach oben


2nd Workshop on Policy Design for a Climate-Friendly Materials Sector

Berlin, January 23rd 2017
German Institute for Economic Research DIW Berlin, Mohrenstrasse 58, 10117 Berlin

 

Background

Materials are central to our economies – but their production also dominates industrial greenhouse gas emissions. It is therefore not possible for Europe to reach an 80-95% emission reduction target without significant emission reductions from the materials sector. While some production efficiency improvements and fuel shifting to lower carbon inputs have been achieved in sectors such as steel and cement, they amount to only modest reductions and their full potential is limited. The large, and necessary, mitigation potential linked to break-through process technologies, new materials, and more efficient material use remains largely untapped. The discrepancy between the policy objective of near complete decarbonization of the economy and only incremental developments in the sector creates uncertainty, thus inhibiting investments and innovation.

Objective

With this project we aim to explore what elements need to be put in place at the European and Member State level to allow for large scale emission reductions from material production through developing a portfolio of innovative processes and materials and providing incentives for their efficient use.

Within this guiding question, we plan to address the following three themes:
(a)  portfolio of mitigation opportunities;
(b)
regulatory framework and private sector choices on adoption of new technology;
(c)
structure of public innovation support.

Based on the insights from the three themes, the project then aims to provide a set of consistent technology and policy perspectives.

In the first workshop we explored and identified the relevant issues under each of the three themes, and we came up with a preliminary set of relevant research questions.

The aim of this second workshop is to present the scope of analysis, initial approaches and methods, and hypotheses we aim to test for discussion with the group of fellow researchers and selected stakeholders with the objective of gather early feedback, and identify opportunities for mutual support in the analysis.

Program

Opening comments: Karsten Neuhoff (DIW Berlin)

Session 1: Portfolio of mitigation opportunities 

 Chair : Andrzej Blachowicz (Climate Strategies)

In this session, we will explore options of product innovations, process innovations, and more efficient use of materials for the major materials (cement, steel, aluminium and chemicals).

Presentation: Tobias Fleiter (Fraunhofer ISI)

Defining a common ground for assessments | PDF, 207.93 KB

Presentation: John Barrett (University of Leeds)

Material Efficiency Strategies – Potential to reduce Greenhouse Gas Emissions | PDF, 0.71 MB

Session 2: Regulatory framework and private sector choices on adoption of new technology

Chair: Christopher Beauman (EBRD)

In this session, we will discuss policy frameworks that can support the adoption of new technologies in a world of (regulatory) uncertainty once they have reached maturity. In the discussion policy options, such as public procurement, project based carbon price guarantees, and mechanisms to ensure effective carbon pricing like inclusion of consumption, but also new business models for financing shall be explored as well as evaluated.

Presentation: Robert Kok (Radboud University)

Enabling environment for technology adoption | PDF, 335.32 KB

Presentation:
Jörn Richstein (DIW Berlin)

Project-based carbon contracts | PDF, 182.28 KB

Presentation: John Barrett (University of Leeds)

Regulatory approach to reducing emissions of carbon intensive materials
| PDF, 1.03 MB

Presentation: Karsten Neuhoff (DIW Berlin)

Inclusion of Consumption in Emission Trading | PDF, 392.06 KB

Session 3: Structure of public innovation support

Chair: Henry Derwent (Climate Strategies)

In this session, the speakers will present policy options supporting climate friendly materials innovation, as well as challenges for their success (e.g. ensuring technology competition, time inconsistency of carbon regulation, avoiding regulatory capture).

Presentation: Heleen de Coninck (Radboud University)

What timing and depth of emission reductions imply for innovation support policy in the materials sector | PDF, 393.54 KB

Presentation: Tomas Wyns (Institute for European Studies VUB)

A low-carbon future for EU industry ‘fostering corporate co-benefits and innovative business models’ | PDF, 4.88 MB

Presentation: Roland Ismer / Manuel Haussner (University of Erlangen Nürnberg)

Public Innovation Support. Coordination and Legal Requirements | PDF, 232.69 KB

Presentation: Vera Zipperer (DIW Berlin)

Emission benchmarks revisited –how to fully restore economic incentives in emission trading | PDF, 0.58 MB

Session 4: Integrating perspective and next steps

Chair: Heleen de Coninck (Radboud University)

This final session will aim to combine the main points emerging in the 3 previous sessions into a consistent picture. In particular we will discuss the two following themes:

  • Interaction of price based and other instruments for innovation and adoption of new materials and their efficient use.
  • Instruments on innovation versus adoption of technologies

 

 


Workshop on Coordinated Balancing

Future Power Market Platform

Berlin, 17th February 2017

Objective

Following our recent debates about intraday markets and implicit auctions, we want to link back to the period post ID gate closure and focus on balancing markets. Article 5 of the proposed new regulation on the internal electricity market envisages that "Marginal pricing shall be used for the settlement of balancing energy. Market participants shall be allowed to bid as close to real time as possible, and at least after the intraday cross-zonal gate closure time.

This offers opportunities to better align and eventually converge procedures pre- and post-gate closures and better integrate system operation and markets, but also raises many questions on how to integrate such an approach with the current setting. At the FPM meeting we would like to discuss the situation from the perspective of regional initiatives (i.e. pilot or reference projects in more recent terms) as well as in a set of European countries to better understand these challenges and opportunities.

For regional initiatives the context has changes - while in our discussions in 2016 it was clear, that each initiative was pursuing convergence towards pre-existing structures of the participating countries, this had been criticized for the risks it creates for lock-in with regional market models that are not compatible for other parts of Europe, resulting in fragmentation rather than integration. The proposal of EU Commission for marginal imbalance pricing with bids close to real time, provides guidance on one of the key questions that was still unresolved in the debates a year (see for example FPM summary from The Hague). Is there now a prospect that regional initiatives will strive to develop a blue-print that is suitable for all of Europe? How is this supposed to happen?

For national power market design, the Winter Package has too often only been assessed for its impacts on bidding zone design. All the more important to consider is the implications of marginal pricing and real-time bids to balancing markets in the context of the existing market designs of different EU member states. We want to explore how it could address existing challenges and what other implications it would have for power market design at the example of selected countries. Is the winter package fully coherent with the EB GLs and the other set of codes?

Presentations:

Session 1: Introduction EU Perspective / Winter package / New balancing code
Uniform non penalizing real time pricing

Session 2:  Update on regional Initiatives turned into European platforms for the exchange of balancing energy

Julian Dyer (National Grid)

Markus Riegler (APG) Balancing & Intraday Markets | PDF, 1.72 MB

Session 3: National experiences – Current existing challenges & new challenges due to uniform pricing and market integration

Frank Nobel (Tennet) Requirements EB GL | PDF, 335.72 KB

Pablo Rodilla (Comillas/IIT)

Session 4: Aligning with intraday markets

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UNFCCC SB’s Side Event Policy Solutions for a Climate Friendly Materials Sector

UNFCCC SB’s Side Event
Policy Solutions for a Climate Friendly Materials Sector

Monday, 8th May 2017
16.45 – 18.15
Location: Kaminzimmer (113)

 

Production of basic materials like steel, cement or aluminium is responsible for the majority of industrial GHG emissions. Yet so far national policies provide very limited support for climate friendly material production and efficient use of materials. In principle, Emission Trading Systems were implemented to provide the desired incentives. In practice, carbon leakage concerns trigger free allocation of emission allowances muting the carbon price incentives for most mitigation options. This event will explore how additional policies like consumption charges on material and innovation support can make climate policy effective for the material sector.

Discussion will focus on how such approaches would benefit from international
cooperation – and how they can contribute to global emission reductions.

16.45 – 16.50 Welcome

Andrzej Blachowicz, Climate Strategies

16.50 – 17.20 Presentations

Karsten Neuhoff, German Institute for Economic Research (DIW Berlin) | PDF, 341.06 KB

Andrew Marquard, University of Cape Town, South Africa

Florens Flues, OECD | PDF, 192.11 KB

17.20 – 17.40 Comments

Aki Kachi, Carbon Market Watch

Rob van der Meer, HeidelbergCement

Fu Sha, China National Center for Climate Change

17.40 – 18:15 Discussion

You can find the agenda here | PDF, 492.89 KB


1st Workshop “Economic Theories and Low-carbon Transformation Policies”

Cambridge, 22nd-23rd June 2017
Jesus College (
Upper Hall), Cambridge University

Objective

The workshop aims to advance analytical research on economic processes and policies for low-carbon transformation: policies meaning the role and tools of government and governance, and transformation as involving significant changes and innovation in (organizational) behaviour, technologies and systems, investment and financing.

The main objective is to incorporate in analytic models lessons learnt (drawing on the underlying empirics) and responses to novel issues raised by the current context of the climate policy. Through this we aim to increase the visibility of this research agenda in economics and to strengthen intellectual foundations to enhance clarity and credibility for policy making.

The format of the workshop will be centred on presentations of about 20 minutes followed by 10 minutes discussion on the specific technical aspects of each paper. These will then be followed by panel discussions on broader insights emerging from the papers and other considerations relevant to each of the themes. Thus we aim to provide an opportunity to explore (i) insights for broader understanding (ii) policy implications (iii) emerging structures and questions.

Programme

Thursday, 22nd June

Scene-setting introduction from the organizers

Olga Chiappinelli & Karsten Neuhoff (DIW Berlin)

Michael Grubb (University College London)

Jean-Charles Hourcade (CIRED)

Session 1: Insights on the Political Economy of Transition

Chair: Toke Aidt (Cambridge University)

Renaud Foucart (Humboldt University): Political economy of climate policy | PDF, 213.01 KB

Olga Chiappinelli (DIW Berlin): Time-consistent carbon pricing | PDF, 306.06 KB

Carmen Arguedas (Universidad Autonoma Madrid): Enforcing regulatory standards in stock pollution problems | PDF, 1 MB

Session 2: Carbon pricing acknowledging political dynamics

Chair: Stephen Smith (University College London)

Luca Taschini (London School of Economics)Dynamic Supply Adjustment and Banking under Uncertainty: the Market Stability Reserve | PDF, 0.87 MB

Karsten Neuhoff (DIW Berlin): Carbon prices and targets | PDF, 364.15 KB

Session 3: Behavioural Dimension of Transition

Chair: Olga Chiappinelli (DIW Berlin)

Karolina Safarzynska (University of Warsaw): Policy lessons from integrating behavioural economics in climate-economy models | PDF, 0.79 MB

Michael Grubb (University College London)
: From macro to micro (and back again): new evidence and behavioural interpretations on the Bashmakov-Newbery constant of energy expenditure | PDF, 1.1 MB

Stefan Lamp (Toulouse School of Economics)
: Sunspots that matter: behavioral biases in solar technology adoption | PDF, 1.68 MB

Panel 1: How can applied theory support policy making for a transition: reflection on the day

Chair: Karsten Neuhoff (DIW Berlin)

Opening comments

Matthew Elliott (Caltech University & Cambridge University)

Will Blyth (Chatham House, Oxford Energy Associates)

Friday, 23rd June

Session 4: Innovation and Investments

Chair: Will McDowall (University College London)

David Newbery (Cambridge University): Learning by doing - how to judge whether supporting solar PV is justified | PDF, 1.16 MB

Pablo Salas (Cambridge University): System of Innovation and Inertia: A mathematical exploration with implications for climate change abatement | PDF, 0.62 MB

Session 5: Transition economics and implications for growth

Chair: Jean-Charles Hourcade (CIRED)

Etienne Espagne (CEPII): Climate, finance and growth: playing DICE with money | PDF, 2 MB

Jean-Francois Mercure (Radboud and Cambridge University): Macroeconomic impact of stranded fossil fuel assets | PDF, 6.13 MB

Simone Borghesi (University of Siena): Emission Trading and Foreign Direct Investments: an evolutionary theoretical model | PDF, 256.21 KB

Panel 2: How to capture policy mixes for transition in analytic frameworks?

Chair: Michael Grubb (University College London)

Opening comments:

Christina Hood (International Energy Agency): “Real-world” low-carbon policy packages for the energy sector | PDF, 1.19 MB

Jean-Charles Hourcade (CIRED)

Lunch policy session: How can climate policy bridge gap between short-term tensions and long-term benefits?

You can download the programme of the workshop here | PDF, 157.98 KB