Our Common Future Under Climate Change

International Scientific Conference 7-10 JULY 2015 Paris, France

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Thursday 9 July - 14:30-16:00 UNESCO Fontenoy - ROOM XI

3305 - Energy efficiency as a core means to decarbonize demand

Parallel Session

Chair(s): L.G. Giraudet (Ecole des Ponts ParisTech, Nogent sur Marne, France), M. Ahman (Lund University, Lund, Sweden)

Lead Convener(s): S. Lechtenböhmer (Wuppertal Institut für Klima Umwelt Energie, Wuppertal, Germany)

Convener(s): L.J. Nilsson (Lund University, Lund, Sweden), J. Sweeney (Stanford University, Stanford, United States of America), M. Fischedick (Wuppertal Institut, Wuppertal, Germany), A. Loeschel (Department of Economics, Muenster, Germany)

14:30

Introduction

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Introduction
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14:32

Debate 1: Energy efficiency opportunities, obstacles and policy implications

L.G. Giraudet (Ecole des Ponts ParisTech, Nogent sur Marne, France)

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Debate 1: Energy efficiency opportunities, obstacles and policy implications
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14:35

Energy Policy, Greenhouse Gas Reduction, and Climate Negotiations

J. Sweeney (Stanford University, Stanford, United States of America)

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Energy Policy, Greenhouse Gas Reduction, and Climate Negotiations

J. Sweeney (1)
(1) Stanford University, Precourt energy efficiency center, Stanford, United States of America

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Nations have legitimate interests in the health and growth of their economy, in their domestic and international security, and in the environment.  These are summarized as the “energy policy triangle.”  International agreements must respect these legitimate interests and nations are unlikely to comply with policy proposals that do not respect these interests.  Nations must address both energy supply – expand low carbon energy sources – and energy consumption – reduce energy use per unit of economic activity.

There are at least seven classes of strategies to motivate energy efficiency and reductions in energy intensity:  1) Normal processes of economic innovation, 2) Information provision, 3) Nudges, 4) Stochastic rewards, 5) Financial incentives, 6) Competitions, 7) Regulation.  There is no “silver bullet” for energy efficiency.  This presentation will discuss these classes.

These options suggest recommended directions for international agreements:  Each nation should 1) set a goal of economy-wide annual energy intensity reduction; 2) set a stronger goal of economy-wide annual carbon intensity reduction; 3) conduct/support energy efficiency and clean energy RD&D and promote open, broad communication of findings; 4) adopt some energy-efficiency behavioral incentives.     Specific incentives will differ among nations, but should include among others: labeling of all major energy using equipment offered for sale; feedback of energy use to consumers; elimination of all subsidies for CO2-intense energy; internal carbon price applied broadly throughout economy.

14:50

A long-term, integrated impact assessment of alternative building energy code scenarios in China

S. Yu (Pacific Northwest National Laboratory (PNNL), College Park, MD, United States of America), J. Eom (KAIST Business School, Seoul, Republic of Korea), M. Evans (Pacific Northwest National Laboratory (PNNL), College Park, MD, United States of America), L. Clarke (Pacific Northwest National Laboratory (PNNL), College Park, MD, United States of America)

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A long-term, integrated impact assessment of alternative building energy code scenarios in China

S. Yu (1) ; J. Eom (2) ; M. Evans (1) ; L. Clarke (1)
(1) Pacific Northwest National Laboratory (PNNL), Joint global change research institute, College Park, MD, United States of America; (2) KAIST Business School, Graduate school of green growth, Seoul, Republic of Korea

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Building energy demand continues to increase globally, generating an unprecedented amount of CO2 emissions from the sector. The trend is not likely to wane anytime soon as a less developed part of the world grows at a rapid pace demanding the standards of living that its predecessors have experienced.

China is already the world’s second largest building energy user. Building energy consumption in China is expected to grow at least for the next several decades, as the country undergoes rapid income and population growth, requiring continued expansion of building floorspace and installation of energy-consuming devices. This poses substantial challenges for the Chinese government to maintain adequate supply of energy and for international society to address global climate change.

Development and implementation of building energy codes in China may be a sensible domestic strategy to fulfill building energy demand in an economically efficient way while at the same time reducing CO2 emissions. Building energy codes intend to promote energy performance of buildings by setting legal requirements on building design and their compliance provisions during construction period. They usually include standards for thermal properties of building envelope and may also cover heating, ventilation, and air conditioning, lighting, electrical power, renewable, and building maintenance. The Chinese government has implemented building energy codes since 1980s with the particular focus on the improvement of envelope insulation. All new urban residential and commercial buildings are currently required to comply with Chinese building energy codes in both design and construction stages.

This paper investigates the potential long-term impact of China’s building energy codes on building energy use and CO2 emissions based on a detailed building energy model nested within the Global Change Assessment Model (GCAM). In particular, the model represents the influence of building code implementation on the improvement of buildings shell efficiency and resulting energy demands. The model disaggregates Chinese buildings into 12 different sectors—three building types in four climate zones. Specifically, the impact of building energy codes is captured through a building stock module that describes the expansion of building floorspace as a result of new construction and retirement at the regional level, as well as the interaction of the building stock with building energy codes in place, code compliance, and the degree of retrofits. This modeling approach allows for assessing the effect of building energy codes on building energy demand and associated CO2 emissions in a consistent manner, while at the same time capturing the effects of regional differences in socioeconomic development, code implementation, climate impact, and fuel choices.

In this study, we focused on the long-term impacts of various types of building energy codes that are being contemplated or could be implemented by the Chinese government. Four distinct but interrelated scenarios of Chinese building energy codes were taken into account to span possible futures of the building sector, to provide broader policy insights, and to guide the development of building codes at the regional and national level. By examining the influence of two major policy variables--the coverage by building type and the stringency of the energy codes--we suggest the pathways that next generation building codes in China are advised to take.

This study draws three important conclusions. First, the implementation of building energy codes may substantially reduce overall building energy consumption in China, and this finding remains unchanged with global climate change, modest assumptions of voluntary technological improvement, and economy-wide carbon policy. Second, the Chinese government can see significant impacts from expanding its efforts to improve building shell efficiency beyond new buildings in urban centers. In particular, promoting retrofits of poorly performing buildings and expanding building energy codes to rural areas may result in earlier and more drastic energy savings. Finally, the potential impact of building energy codes will differ by region and sector. The greatest energy savings will accrue in urban residential buildings, particularly those located in cold regions.

15:00

Directed Technological Change and Energy Efficiency Improvements

W. Jan (Fondazione Eni Enrico Mattei, Milan, Italy)

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Directed Technological Change and Energy Efficiency Improvements

W. Jan (1)
(1) Fondazione Eni Enrico Mattei, Milan, Italy

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This paper applyies the Directed Technical Change (DTC) framework to study improvements in the efficiency of energy use. We present a theoretical model which (1) highlights the drivers of innovative activity in energy intensive sectors and technologies and (2) examines the impact of such activity on the aggregate demand for energy. We then estimate the contribution of these channels through an empirical analysis of patents and energy data. Our contribution is fivefold. First, we show that information about energy expenditures, knowledge spillovers and the parameters governing the R&D process are sufficient to predict the R&D effort in efficiency-improving technologies. Second, we pin down the conditions for a log-linear relation between energy expenditure and the R&D effort. Third, the estimation of the model provides clear evidence that the value of the energy market as well as international and intertemporal spillover play a significant role in determining the level of innovative activity. Fourth, we show that innovative activity in energy intensive sectors shifts down the (Marshalian) demand for energy. Fifth, we show that due to the streamlined modelling framework we adopt, the point estimates from our regression can potentially be used to calibrate any model of DTC in the context of energy consumption.

15:02

Debate 2: Challenges for decarbonising basic industry: Sustainable transition of industries under competition

M. Ahman (Lund University, Lund, Sweden)

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Debate 2: Challenges for decarbonising basic industry: Sustainable transition of industries under competition
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15:10

Industry: The Gordian knot of decarbonisation on the demand side?

M. Fischedick (Wuppertal Institut, Wuppertal, Germany)

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Industry: The Gordian knot of decarbonisation on the demand side?

M. Fischedick (1)
(1) Wuppertal Institut, Wuppertal, Germany

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Industry: The Gordian knot of decarbonisation on the demand side?

Prof. Dr. Manfred Fischedick (Wuppertal Institute)

The industry sector lies at the heart of the many governments decisions regarding the maintenance of wealth and the creation of employment.  On the other hand, the industry sector accounted for over 30% of global GHG emissions in 2010. When compared to the major energy-end use sectors (transport, buildings, AFOLU), industry is currently the largest emitter of greenhouse gas (GHG) emissions. The key energy intensive material-conversion sectors (cement, iron and steel, chemicals, pulp and paper and aluminium) dominate the energy use and emissions in industry. Most scenarios envisage a continuing rise in demand for materials, by between 45% to 60% by 2050, relative to 2010 production levels.

The transition from current patterns of industrial production to a future in which goods are produced sustainably requires a holistic view that goes beyond energy efficiency. From the perspective of climate change mitigation, opportunities can be found over the whole supply chain. Although currently sometimes difficult to quantify, there are significant potentials for reduction in emissions mainly through emissions efficiency (e.g. fuel switch), material efficiency in manufacturing (through reducing yield losses, re-use of materials and recycling of products), material efficiency in product design (less material per product), product-service efficiency (in transport through car sharing) and last but not least sustainable consumption patterns.

Against this background - as we move towards the question of how to achieve sustainable development goals - a more efficient use of energy, materials and products is without alternative in the sector and has to be addressed through appropriate global and sector specific policies.

However, implementation of existing measures is not a self-dynamic process and faces various challenges, even political trade offs. This holds true particularly for more ambitious long-term decarbonisation efforts as they might require not only improvements in existing production structures, but in addition a shift to low carbon electricity, carbon capture and storage or even implementation of completely new approaches (e.g. hydrogen based steel making) or radical product innovations (e.g., alternatives to cement) which might go hand in hand with persistence forces.

The presentation addresses the portfolio of options available, gives a brief overview of their technical and economic potentials, reflects synergies and tradeoffs that mitigation in the industry sector can have with other policy objectives. Discussion of long-term decarbonisation pathways are specifically addressed as they might play a crucial role for solving the Gordian knot.

The presentation will be mainly based on recently published industry chapter of the IPCC WG III report:

Fischedick, M. et al., 2014. Industry. In Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Edenhofer, O. et al (eds.)]. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press, 2014

 

15:25

Half the material for twice as long

J. Allwood (University of Cambridge, Cambridge, United Kingdom)

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Half the material for twice as long

J. Allwood (1)
(1) University of Cambridge, Department of engineering, Cambridge, United Kingdom

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The energy intensive industries, which produce that bulk materials that sustain all contemporary living, are the most energy efficient in the world. They have always paid heavily for energy, so regardless of climate or other environmental concerns, they have pursued efficiency motivated only by cost and have been very successful: the opportunities for future energy efficiency gains in the energy intensive industries are limited. 

However, precisely because of their efficiency, the bulk materials are made very cheaply, and in particular are very cheap compared with labour costs in the supply chains which determine their use.  As a result many decisions in construction and manufacturing are taken to minimise labour costs at the expense of increased material use. For example, in the UK we build commercial buildings with around twice the material required to meet the safety standards of the Eurocodes, and on average we replace buildings after just 40 years, when their structural integrity is absolutely sound. Our research is developing extensive evidence that we could live well by designing our buildings, infrastructure and goods to be made with half as much material and keeping them for twice as long. These two strategies, which would reduce demand for new bulk materials by 75% would be sufficient to achieve most industrial carbon mitigation targets, regardless of any future changes in the energy intensive industries themselves.

The talk will present our evidence about how to live well with much less new material, and present our current understanding of the costs of this change: as the supply chain is already seeking to optimise costs, it will cost more labour to use less material. Policy has not as yet addressed this point, but it may well prove to be a more effective mechanism for reducing industrial emissions than focusing solely on the emissions of material production.

 

The background to this talk is summarised in:

(1) Allwood, J.M., Cullen, J.M. and Milford, R.L. (2010) Options for achieving a 50% cut in industrial carbon emissions by 2050, Environmental Science and Technology, 44(6) 1888-1894 This paper sets out the evidence that there is limited future potential for energy efficiency in the energy intensive (bulk materials) industries.

(2) Allwood, J.M., Ashby, M.F., Gutowski, T.G, Worrell, E. (2011) Material Efficiency: a White Paper, Resources Conservation and Recycling, 55, 362–381. This paper provides a survey of the opportunity to live well with less new material production.

(3) Allwood J.M. and Cullen J.M. (2012) Sustainable Materials: with both eyes open, UIT Cambridge, England, pp 384. This popular science book, which can be downloaded for free at www.withbotheyesopen.com, sets out the detailed case for using less new material, based on a 5-year 8-person project with a 20-partner industrial consortium.

The talk will report the evidence gathered since these three publications about the implementation of Material Efficiency, in business, government and with final purchasers.

15:35

“Joint crossing of the valleys of death” Exploring the need and options for formal collaboration between US ARPA-E and EU ETS' NER 400 to accelerate the commercialisation of low-carbon breakthrough technologies in the energy and industrial sectors

T. Wyns (Institute for European Studies, VUB, Brussels, Belgium)

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“Joint crossing of the valleys of death” Exploring the need and options for formal collaboration between US ARPA-E and EU ETS' NER 400 to accelerate the commercialisation of low-carbon breakthrough technologies in the energy and industrial sectors

T. Wyns (1)
(1) Institute for European Studies, VUB, Brussels, Belgium

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This paper seeks to demonstrate that there exists a policy complementarity between the US ARPA-E and the EU Emissions Trading System (New Entrants Reserve 300) funding programmes for energy innovation. Both programmes seem to be addressing two different  technology market gaps. The next step is to assess if and how this complementarity could be turned into a joined opportunity for the US and the EU to accelerate the commercialisation of low-carbon breakthrough technologies in the energy and (energy intensive) industrial sectors.  

Achieving decarbonisation of the EU and US economies over the next decades will require an accelerated improvement and wide-scale deployment of low-carbon energy and industrial technologies. There are two important market gaps that can impede the further development of promising breakthrough technologies. These gaps are know as the early stage “Technological Valley of Death" and the later-stage “Commercialisation Valley of Death”. These barriers are strongly present in the energy sector. (Jenkins, Mansur 2010, p.3)

In 2007, the US Congress authorised the establishment of the Advanced Research Project Agency - Energy (ARPA-E). The ARPA-E, modeled on the Defence Advanced Research Projects Agency (DARPA), seeks to advance high-potential, high-impact energy technologies that are too early for private-sector investment. Since 2009, ARPA-E has funded over 360 potentially transformational energy technology projects, including projects that aim to significantly reduce energy use and greenhouse gas emissions in energy intensive industries (e.g. the non-ferrous metals and chemical sectors).  However, while successfully moving technologies across the early stage valley of death to the prototype or small scale demonstration stage, the ARPA-E does lack the means to enable the commercialisation of breakthrough technologies that are emerging from its programmes (Bonvillian, Van Atta 2011, p. 471-472). 

In 2008, as part of the legislative review of the EU ETS for the period 2013-2020, a new entrants reserve containing 300 million allowances (NER 300) to be auctioned under the EU ETS New Entrants Reserve was established. The revenues generated through this reserve have the goal to finance low-carbon energy demonstration projects. The programme is conceived as a catalyst for the demonstration of carbon capture and storage (CCS) and innovative renewable energy (RES) technologies on a commercial scale within the European Union. Hence, the EU ETS NER is tackling the second “commercialisation” stage of the technological valley of death. In October 2014, the European Union’s head of state and government agreed to continue this NER after 2020 and to expand it to 400 million allowances and to energy intensive industrial sectors. Successful implementation of this NER 400 will depend on the availability of promising energy and industrial low-carbon breakthrough technologies at pre-demonstration stage. This is relevant since there appears to be a first stage technology market gap in the EU or at least a gap in the development of first stage low-carbon breakthrough technologies in the EU compared to US based developments and in particular the ARPA-E programmes. 

These "commercialisation" and "early stage" technology market gaps, identified respectively under the ARPA-E and the EU's NER 300, can become a policy opportunity if both programmes start working together. Technologies emerging from ARPA-E could make use of the NER programme to enable full-scale commercialisation and vice versa, the EU’s NER could secure a broader (and maybe lower risk) project pipeline from promising low-carbon breakthrough technologies fostered under the ARPA-E. A bilateral "technology" agreement between the U.S. government and the EU’s institutions could be considered. Such agreement will need to address some specific issues, such as the use and sharing of intellectual property rights and the introduction of a waiver under the ARPA-E’ s U.S. manufacturing requirement. The latter element is crucial since ARPA-E requires inventions developed under ARPA-E funding agreements to be substantially manufactured in the United States.  

Jenkins, J., & Mansur, S. (2010). Bridging the clean energy valleys of death. Power.

Bonvillian, W. B., & Van Atta, R. (2011). ARPA-E and DARPA: Applying the DARPA model to energy innovation. The Journal of Technology Transfer, 36(5), 469-513.

15:45

Concluding dialogue: Challenges for decarbonising basic industry: Sustainable transition of industries under competition

M. Ahman (Lund University, Lund, Sweden), L. J. Nilsson (Lund University, Lund, Sweden), S. Lechtenböhmer (Wuppertal Institut für Klima Umwelt Energie, Wuppertal, Germany)

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Concluding dialogue: Challenges for decarbonising basic industry: Sustainable transition of industries under competition

M. Ahman (1) ; LJ. Nilsson (2) ; S. Lechtenböhmer (3)
(1) Lund University, Department of environment and energy systems, Lund, Sweden; (2) Lund University, Department for technology and society / environment and energy systems, Lund, Sweden; (3) Wuppertal Institut für Klima Umwelt Energie, Research Group Future Energy and Mobility Structures, Wuppertal, Germany

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Decarbonizing the energy intensive production of basic materials such as steel, cement, petrochemicals, and aluminum pose specific challenges. 

This session presents the specific challenges for the global basic materials industry in light of the evolving global clime policy framework and discusses the opportunities that material and energy efficiency along the value chain can have. However, we also highlight the long term need for more radical shifts in energy carriers and feedstock changes that an ambitious climate policy will induce.

The energy-intensive production of basic materials are traded on a global market and the production is highly exposed to increasing energy and carbon costs. At the same time, the global framework for climate policy suggest that a level playing field in terms of a global carbon price cannot be expected the short to medium term, if ever. This fact limits the possibilities for policy makers to effectively address industrial emissions with a “price-only“ approach.

The demand for basic materials are set to increase substantially with increasing material standards across the world. Recycling and material efficiency can reduced the demand growth for virgin materials. The circulation in the economy of recycled materials will offer some efficiency gains and change the energy carriers (towards eklectricity). However the production of basic materials from recycled feedstock but will still be considered an energy-intensive industry.

The energy–intensive industry is also unique in that investment cycles are very long, usually spanning over 20 to 40 years between reinvestment opportunities in core process steps.The 2 C target and the year 2050 is thus only 1 to 2 major investment decisions away. Thus, in order to make more substantial changes to process design, a long term strategy is needed.

In order to manage a smooth and both socially and politically acceptable transition for both industrialized, transitional and developing countries, we suggest that focusing on material- and energy efficiency as a win-win option. Efficiency has the potential to boost competitiveness and overall economic performances if implemented properly and should thus be at the center of a global strategy. However, efficiency has to be complemented with a technology strategy focusing on more radical changes that requires major innovation efforts and eventually new investment decisions in new basic process designs such as electrowinining, bio or electro-plastics, CCS in industry e.t.c.