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Institute
Economic crises as critical junctures for policy and structural changes towards decarbonization
(2024)
Crises may act as tipping points for decarbonization pathways by triggering structural economic change or offering windows of opportunity for policy change. We investigate both types of effects of the global financial and COVID-19 crises on decarbonization in Spain and Germany through a quantitative Kaya-decomposition analysis of CO2 emissions and through a qualitative review of climate and energy policy changes. We show that the global financial crisis resulted in a critical juncture for Spanish CO2 emissions due to the combined effects of the deep economic recession and crisis-induced structural change, resulting in reductions in carbon and energy intensities and shifts in the economic structure. However, the crisis also resulted in a rollback of renewable energy policy, halting progress in the transition to green electricity. The impacts were less pronounced in Germany, where pre-existing decarbonization and policy trends continued after the crisis. Recovery packages had modest effects, primarily due to their temporary nature and the limited share of climate-related spending. The direct short-term impacts of the COVID-19 crisis on CO2 emissions were more substantial in Spain than in Germany. The policy responses in both countries sought to align short-term economic recovery with the long-term climate change goals of decarbonization, but it is too soon to observe their lasting effects. Our findings show that crises can affect structural change and support decarbonization but suggest that such effects depend on pre-existing trends, the severity of the crisis and political manoeuvring during the crisis.
The economic context for renewable power in Europe is shifting: feed-in tariffs are replaced by auctioned premiums as the main support schemes. As renewables approach competitiveness, political pressure mounts to phase out support, whereas some other actors perceive a need for continued fixed-price support. We investigate how the phase-out of support or the reintroduction of feed-in tariffs would affect investors' choices for renewables through a conjoint analysis. In particular, we analyse the impact of coordination - the simultaneousness - of policy changes across countries and technologies. We find that investment choices are not strongly affected if policy changes are coordinated and returns unaffected. However, if policy changes are uncoordinated, investments shift to still supported - less mature and costlier - technologies or countries where support remains or is reintroduced. This shift is particularly strong for large investors and could potentially skew the European power mix towards an over-reliance on a single, less mature technology or specific generation region, resulting in a more expensive power system. If European countries want to change their renewable power support policies, and especially if they phase out support and expose renewables to market competition, it is important that they coordinate their actions.
There are considerable differences in the pace and underlying motivations of the energy transition in the different geographical contexts across Europe. The European Union's commitment to climate neutrality by 2050 requires a better understanding of the energy transition in different contexts and scales to improve cooperation of involved actors. In this article, we identify critical issues and challenges of the European energy transition as perceived by stakeholders and investigate how these perceptions vary across geographical contexts. To do so, we couple a policy document analysis with research based on stakeholder engagement activities in three different scales, national (Greece), regional (Nordic Region) and continental scale (European Union). Our findings show that stakeholder perspectives on the energy transition depend on contextual factors underlying the need for policies sensitive to the different transition issues and challenges in European regions. They also reveal cross-cutting issues and challenges among the three case studies, which could lead to further improvement of the cross-country collaboration to foster the European energy transition.
To achieve the European Union's target for climate neutrality by 2050 reduced energy demand will make the transition process faster and cheaper. The role of policies that support energy efficiency measures and demand-side management practices will be critical and to ensure that energy demand models are relevant to policymakers and other end-users, understanding how to further improve the models and whether they are tailored to user needs to support efficient decision-making processes is crucial. So far though, no scientific studies have examined the key user needs for energy demand modelling in the context of the climate neutrality targets. In this article we address this gap using a multi-method approach based on empirical and desk research. Through survey and stakeholder meetings and workshops we identify user needs of different stakeholder groups, and we highlight the direction in which energy demand models need to be improved to be relevant to their users. Through a detailed review of existing energy demand models, we provide a full understanding of the key characteristics and capabilities of existing tools, and we identify their limitations and gaps. Our findings show that classical demand-related questions remain important to model users, while most of the existing models can answer these questions. Furthermore, we show that some of the user needs related to sectoral demand modelling, dictated by the latest policy developments, are under-researched and are not addressed by existing tools.
Friends or foes?
(2020)
Energy efficiency measures and the deployment of renewable energy are commonly presented as two sides of the same coin-as necessary and synergistic measures to decarbonize energy systems and reach the temperature goals of the Paris Agreement. Here, we quantitatively investigate the policies and performances of the EU Member States to see whether renewables and energy efficiency policies are politically synergistic or if they rather compete for political attention and resources. We find that Member States, especially the ones perceived as climate leaders, tend to prioritize renewables over energy efficiency in target setting. Further, almost every country performs well in either renewable energy or energy efficiency, but rarely performs well in both. We find no support for the assertion that the policies are synergistic, but some evidence that they compete. However, multi-linear regression models for performance show that performance, especially in energy efficiency, is also strongly associated with general economic growth cycles, and not only efficiency policy as such. We conclude that renewable energy and energy efficiency are not synergistic policies, and that there is some competition between them.
Green recovery
(2023)
This chapter reviews how the European Union has fared in enabling a green recovery in the aftermath of the Covid-19 crisis, drawing comparisons to developments after the financial crisis. The chapter focuses on the European Commission and its evolving role in promoting decarbonisation efforts in its Member States, paying particular attention to its role in financing investments in low-carbon assets. It considers both the direct effects of green stimulus policies on decarbonisation in the EU and how these actions have shaped the capacities of the Commission as an actor in the field of climate and energy policy. The analysis reveals a significant expansion of the Commission’s role compared to the period following the financial crisis. EU-level measures have provided incentives for Member States to direct large volumes of financing towards investments in climate-friendly assets. Nevertheless, the ultimate impact will largely be shaped by implementation at the national level.
The rapid uptake of renewable energy technologies in recent decades has increased the demand of energy researchers, policymakers and energy planners for reliable data on the spatial distribution of their costs and potentials. For onshore wind energy this has resulted in an active research field devoted to analysing these resources for regions, countries or globally. A particular thread of this research attempts to go beyond purely technical or spatial restrictions and determine the realistic, feasible or actual potential for wind energy. Motivated by these developments, this paper reviews methods and assumptions for analysing geographical, technical, economic and, finally, feasible onshore wind potentials. We address each of these potentials in turn, including aspects related to land eligibility criteria, energy meteorology, and technical developments of wind turbine characteristics such as power density, specific rotor power and spacing aspects. Economic aspects of potential assessments are central to future deployment and are discussed on a turbine and system level covering levelized costs depending on locations, and the system integration costs which are often overlooked in such analyses. Non-technical approaches include scenicness assessments of the landscape, constraints due to regulation or public opposition, expert and stakeholder workshops, willingness to pay/accept elicitations and socioeconomic cost-benefit studies. For each of these different potential estimations, the state of the art is critically discussed, with an attempt to derive best practice recommendations and highlight avenues for future research.
Renewable energy changes the geopolitics of energy: whereas access to fossil fuel resources were key in the past, control over technology and industry will be key in the future. Consequently, different scholars have predicted that a growing focus on renewables will increase or decrease conflict in the energy sector, with no consensus on which is most likely. Here, we investigate the degree of conflict in renewable energy technology (RET) trade by analyzing data on 7041 trade conflicts 1995–2020, guided by two sets of theory-driven hypotheses. We show that RET trade is associated with more, longer, and more intense trade conflicts than other trade conflicts for 1995–2016. This supports the neorealist, geo-economic view of countries being willing to risk conflict to increase their share of a market rather than avoiding conflicts to increase the overall market size. It also contradicts the view that renewables will reduce conflict: at least in the past and regarding trade, it has increased rather than decreased conflict. For 2017–2020, this trend is reversed and RET trade became significantly less conflictive than other trade. Our findings imply that improved conflict-resolution institutions for RET are needed. We also suggest establishing specific institutions to govern trade in immature technologies.
Sustainable electricity systems need renewable and dispatchable energy sources. Solar energy is an abundant source of renewable energy globally which is, though, by nature only available during the day, and especially in clear weather conditions. We compare three technology configurations able to provide dispatchable solar power at times without sunshine: Photovoltaics (PV) combined with battery (BESS) or thermal energy storage (TES) and concentrating solar power (CSP) with TES. Modeling different periods without sunshine, we find that PV+BESS is competitive for shorter storage durations while CSP+TES gains economic advantages for longer storage periods (also over PV+TES). The corresponding tipping points lie at 2-3 hours (current cost), and 4-10 hours if expectations on future cost developments are taken into consideration. PV+TES becomes only more competitive than CSP+TES with immense additional cost reductions of PV. Hence, there remain distinct niches for two technologies: PV+BESS for short storage durations and CSP+TES for longer ones.
As the climate targets tighten and countries are impacted by several crises, understanding how and under which conditions carbon dioxide emissions peak and start declining is gaining importance. We assess the timing of emissions peaks in all major emitters (1965–2019) and the extent to which past economic crises have impacted structural drivers of emissions contributing to emission peaks. We show that in 26 of 28 countries that have peaked emissions, the peak occurred just before or during a recession through the combined effect of lower economic growth (1.5 median percentage points per year) and decreasing energy and/or carbon intensity (0.7) during and after the crisis. In peak-and-decline countries, crises have typically magnified pre-existing improvements in structural change. In non-peaking countries, economic growth was less affected, and structural change effects were weaker or increased emissions. Crises do not automatically trigger peaks but may strengthen ongoing decarbonisation trends through several mechanisms.