Rethinking the BAU energy paradigm

Six principles for change

Liam Salter

Head, Climate Programme

WWF Hong Kong

ICCC May 2007

Outline

• The concept of business as usual energy paradigm• Technology mixes for climate protection• Six principles for reform• Hong Kong and the six principles• Conclusions

Thinking ‘Paradigms’

“At any time in history there is a ruling paradigm within the constraints of which most thinking takes place.”

“When its effectiveness diminishes and it begins to break down, a paradigm shift takes place and a new paradigm comes into being.”

(Reddy, 2002)

Thinking ‘Paradigms’

• GROSSCON – GRowth Oriented, Supply Sided, CONsumption directed

• DEFENDUS – DEvelopment Focused, END Use oriented, Service directed

The late Amulya Reddy

Thinking Paradigms

• Hard energy path – the more energy we use the better off we are

• Soft energy path – energy is a means to social ends. Energy services are tailored to needs.

Amory Lovins

“… any plausible BAU scenario entails continuing increases in global temperatures, well beyond levels previously experienced by humankind …” (Stern Report)

US DOE EIA 2007

IEA WEO 2004

WWF 400 ppm CO2e

WWF Climate Solutions Report (2007) www.panda.org/climate

Ambitious climate scenario technology mixes vary ….

2050

0

200

400

600

800

1000

1200

1400

1600

1800

Tota

l prim

ary

ener

gy u

se (E

J/y)

wind/solar/hydroBiomassSolar H2 + solar electricityRenewables excluding Solarsolar H2 onlyrenewablesCoalOilGasfossilNuclear

Hohne and Hoogwijk, (2005)

Common features of low carbon scenarios

• No technology silver bullet

• In the short to medium term the bulk of emissions reductions come from massive improvements energy efficiency.

• The structural shift towards a low carbon energy supply tends to dominate the reduction potential over the longer term. Preparing low carbon supply technologies for substantial increases in market share post - 2050 was a key priority in the short-medium term.

• Key common supply technologies across many models were renewable energy and carbon capture and storage.

Back to paradigm thinking

• BAU / GROSSCON / Hard Energy Path will not protect us from climate change

• What will it take to bring these technologies to market?• Evidence suggests that there is no ‘policy bullet’ either• Require a comprehensive rethink of BAU / GROSSCON /

Hard Energy Path that delivers on other energy policy objectives such as access to energy and energy security concerns

Rethinking energy system drivers

1. Valuation and pricing

2. Supply vs. demand

3. Consumer participation

4. Infrastructure

5. Planning

6. Technology development

Using principles and techniques already in use today

2 caveats:

Not intended as an exhaustive list

Limitations of power sector oriented analysis

Valuation and pricing:Internalising True Costs

True costing in practice

• Carbon emissions trading• USD 24 billion in 2006 and potentially the world’s largest commodity

market • Can deliver the true cost of carbon only if linked to ambitious

compliance targets

• Suite of measures is required to reflect even partial true cost to all consumers• Taxes• Emissions charges• Technology standards

• Uncertainty often cited as the reason for avoiding a holistic approach to true costing

Supply and demand:Efficiency first

Efficiency first

Packages and tools vary by country and sector

Policy targets critical to evaluate performance of packages e.g. China’s 11 Five Year Plan

Minimum standards – appliances, buildings, automobiles

Sector specific programmes e.g. China’s top - 1000 programme

Consumer engagement and labeling

Financing schemes

Public procurement

True costs

Rethinking the consumer:Promoting participation

“Economics drive customers. Customers drive markets. But first, they must be informed, educated and challenged” Rose McKinney-James, former President and CEO of the Corporation for Solar Technology and Renewable Resources, Nevada.

"We must understand clearly that public participation is the right and interest of the people endowed by law. The government has the obligation to respond to and to protect this right.“ Pan Yue, SEPA Vice-Minister

Participation in practice

• ‘Community Choice’ Laws passed in Massachusetts, Ohio, and New Jersey and Rhode Island in recent years, One programme involving over half a million customers has already achieved a 33% greenhouse gas reduction in its electricity without a rate increase. 12 Californian cities, 3 million residents finalising Ordinance to achieve 40% green electricity from green power

• Civil society watchdogs supporting power sector regulation in Maharashtra, India

1999-2000 - Civil society analysis of MSEB tariff proposals revealed accounting irregularities and allowed the regulator to insist on enhanced energy efficiency

Remaining 3 principles

• Decentralisation• Master planning• Bringing critical technologies to market

Principle Paradigm Checklist

Hong Kong power sector

Rating

0 = no action

1 = pilot activities, policy intention

2 = firm policies and case studies

3 = broad practice

True Costs Voluntary emissions trading

Power plant emissions targets1

Efficiency first Appliance labelling proposed

Out of date building codes

No targets

0

Participation Consultation without implementation 1

Decentralisation Monopoly power providers, no SPP rules, almost no installed capacity

0

Master planning No energy policy or power development plan

0

Bringing critical technologies to market

No significant programme supporting technology choice

1

Total GROSSCON alert!!! 3 (/ 18)

Conclusions

‘Its not that we need new ideas, but we need to stop having old ideas’. Edwin Land

A paradigm shift using DEFENDUS or Soft Energy Path style logic is required to protect the world from climate change. ‘Tinkering around the edges’ will not bring the major shifts in technology required to cut emissions.

Paradigm shift must go beyond technology analysis and understand the system-level issues that drive technology choice

Beyond technology paradigm shift can be defined concretely in terms of specific principles which can be used as the basis for energy policy analysis and development

Can a focus on principles move us out of our ‘technology boxes’? And actually improve our ability to build consensus?

Thank You!

lsalter@wwf.org.hk