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Reunión Científica: Economic Challenges for Energy. 6º Workshop Anual de Economics for Energy

Ciencias Sociales | Madrid, 28 y 29 de enero


En colaboración con Economics for Energy 



Energy demand and energy efficiency
| Ibon Galarraga

Energy transformation and consumption account for a large proportion of anthropogenic greenhouse gas (GHG) emissions. Energy efficiency policies therefore form an essential part of climate policy and are a smart way of reducing the depletion of limited natural resources. Indeed, energy efficiency has been one of the mainstays of energy policy in recent years, be it for reasons of competitiveness in the economy, availability of resources or energy security or for other reasons of a more strategic, geopolitical nature.

Many efforts are currently being made to reduce fossil-fuel use in different sectors (e.g. transport, industry and building). The IEA estimates that energy efficiency measures can reduce global CO2 emissions by up to 10-15% per year at no direct additional cost. The IPCC (2014) suggests that the investment path compatible with the 2ºC scenario requires US$336 billion in the coming 10-20 years in energy efficiency for the transport, industry and building sectors.

The EU Climate and Energy package sets the target of reducing energy consumption by 20% by 2020. However, there are several barriers that make this a highly challenging target. One of these is the so-called Energy Efficiency Paradox, i.e. private investments in energy efficiency that seem to be economically worthwhile are not always made, and at the same time some individuals make investments in EE when economically they would not appear to be worthwhile. This paradox can be explained by many factors such as insufficient information, principal-agent problems, lack of access to capital, divergences between social and private discount rates and consumer behaviour motivated by non-economic factors such as a desire to contribute to the public good.

This presentation will share some evidence that helps to explain this paradox, and some insights regarding policy instruments that can help to overcome it. The evidence will mostly look at the residential and transport sectors in Spain.

Long-term energy prospective - the challenges of constructing a global energy outlook | Paul Appleby

The talk begins with a brief review of the projections from the BP Energy Outlook. This will cover the outlook for global energy demand - by region, by fuel and by sector - and an assessment of how that demand is likely to be met. Then we will look behind the headlines to see how the Outlook is constructed, highlighting the key challenges we face in trying to project the future path of energy markets. What drives the Outlook, and what does it really tell us about the future? What have we learned in the process of building these projections?

Africa Energy Outlook | Dan Dorner

Energy is a crucial enabler of economic and social development, and yet Africa's energy system falls far short of being able to meet the needs and aspirations of its citizens. This presentation by the International Energy Agency (IEA) will explore one of the most poorly understood parts of the global energy system, examining its future prospects - broken down by fuel, sector and sub-region - and show how investment in Africa's energy sector could stimulate more rapid economic and social development across the region.

Public policy and innovation in low carbon technologies: 3 challenges | Gregory Nemet

Addressing people's preferences for cleaner, more affordable, and more secure energy services will require a transformation of the global energy system over several decades. Innovation- the process of creating and adopting novel technologies, processes, and behaviors-is needed to make this transition technically possible, economically affordable, and politically feasible. In this talk I will discuss some of the most important challenges for public policy to enable this transition. To frame the policy issues, it can help to think of the process of innovation as a sequence stages, from basic research to widespread adoption of a technology. Policy makers can influence this process using "technology push" and "demand pull" policies. A first challenge is how to strike a balance between the two. A second challenge is how to enhance incentives when government commitments to future targets may not be fully credible, i.e. what if demand pull is fragile? A third challenge is whether and how governments should support technologies at the demonstration phase, sometimes known as the "Valley of 4 Death." At this crucial phase, incentives for private investments are weak but the track record of governance of past projects is perceived as poor. I conclude with a research agenda, a brief summary of 7 missing perspectives on understanding energy innovation.

Strategic subsidies for renewable energy | Carolyn Fischer

WTO agreements discipline the use of subsidies, particularly for upstream manufacturing or exports. Unlike tariff rules, the Subsidies Code lacks exceptions for transboundary externalities like human health or resource conservation, including those related to combatting global climate change. Yet support policies for low-carbon goods like renewable energy technologies are much more popular internationally than imposing a cost on carbon. Many interventions support downstream deployment of renewable energy technologies; others subsidize upstream development and manufacturing of those technologies. This paper examines the national incentives and global rationales for offering deployment, manufacturing, and R&D subsidies in producer countries, allowing that a sizeable downstream market may lie in third-party countries.

Comprehensive planning and sound regulation: The two key enablers of universal access | Ignacio J. Pérez-Arriaga

What stands in the path towards achieving universal access? I shall argue that the absence of a sound regulatory framework and of a comprehensive electrification planning approach are major impediments for the success of any serious attempt at providing the electricity access that could dramatically improve the lives of so many people.

Why is planning needed? Available tools for rural electrification planning, properly used, can inform policy interventions by governments and support the mobilization of resources (public, private, and donor-funded) behind access initiatives. There are many potential impediments to successful implementation of such initiatives, including political and social barriers. But a case backed by scientific data, rigorously gathered, will always have a better chance of overcoming these barriers.

Why is sound regulation so important? Sound regulation is an indispensable condition to attract the vast amount of investment that universal access to electricity will require. The existence of a "viability gap" between the electrification cost and what the beneficiaries can afford -except for perhaps a bare minimum service of a couple of lights and a phone charger- has to be acknowledged. Sound regulation has to make sure that the viability gap will somehow be filled, and that the risk to private investors of not being able to obtain a reasonable rate of return is acceptable. Furthermore, regulation must be stable, effective and enforceable, and free of major flaws.  

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