what would be the effects on the european union economy of new policies to cut co 2 emission?
DESCRIPTION
What would be the effects on the European Union economy of new policies to cut CO 2 emission?. Mathias Mortensen Santiago Nuñez Silva Sean Stevens Wilfried Genest. Plan of presentation. Why does the EU need to cut CO 2 emissions? A case study of a CO 2 emission reduction policy Aims - PowerPoint PPT PresentationTRANSCRIPT
Mathias MortensenSantiago Nuñez Silva
Sean StevensWilfried Genest
Plan of presentation
a) Why does the EU need to cut CO2 emissions?b) A case study of a CO2 emission reduction policy
i. Aimsii. Actions takeniii. Results and Costs
c) The Copenhagen agreementi. Aimsii. Policy proposediii. Possible effects on the European economy
d) Conclusion.
Why does the EU need to cut CO2 emissions?
Kyoto protocol
• Europe is supposed to reduce its annual CO2 emissions by 8% (compared to 1990) by 2012.
• In 2007, the CO2 emissions were 5% smaller than in 1990.
• In 2008, 6.2% smaller.
• By 2012, 13% smaller (estimation from EEA).
Territory size in proportion to annual CO2 emissions
13.5% of world annual CO2 emissions...
Cumulative Carbon Emissions 1900-1999
…but 27.7% of CO2 emissions since 1900.
Existing Measures: a brief case study
Aims: reduce car CO2 emissions
• 2007 reduction goals– Reduce car emissions to 120g/Km by 2012
• Road Transport makes up for 20% of the total EU CO2 emissions– Passenger cars make up for 12%
Repartition by economic sectors• Energy industries 1577.4 tonnes
• Transport 968.8 tonnes
• Industry 944.7
tonnes
• Household 468.6
tonnes
• Services 185.3 tonnes
• Other 112.8
tonnes
Actions taken
Three main pillars - Pressure on European, Japanese and Korean car
makers to reduce CO2 from their new cars sold in the EU to 140g/km by 2008.
- EU directives require the display of labels indicating CO2 emissions on new cars sold.
- Fiscal policies (tax breaks and extra taxes)
Results and Costs
• Cost the manufacturer 1700€ more per vehicle (due to higher investments).
• This leads to an increase of 2450€ for consumers.
• Target not yet achieved. Average emission is currently 140g/Km.
The Copenhagen agreement: new aims.
(to be filled when conference ends around the 18th of Dec.)
Policy proposed
Subsidies, cap-and-trade, tariffs...
More subsidies?
Market for green energy industryAv
erag
e pr
ice
of g
reen
ene
rgy
(€)
Quantity of green energy demanded/supplied (million of tons)
Supply
Supply + subsidies
Demand
P1
P2
Q1 Q2
More cap-and-trade?• Each industry is allowed to emit a certain level
of CO2, these “permits to pollute” can then be sold to and bought from other companies.
A CO2 tariff?
Domestic demand
Domestic supply
Market for industrial goodsAv
erag
e pr
ice
of in
dust
rial g
oods
(€)
Quantity of industrial goods demanded/supplied (million of tons)
0
A CO2 tariff?
Domestic demand
Domestic supply
Market for industrial goodsAv
erag
e pr
ice
of in
dust
rial g
oods
(€)
Quantity of industrial goods demanded/supplied (million of tons)
0
World Supply
Imports
Qsupplied Qdemanded
World Price
A CO2 tariff?
Domestic demand
Domestic supply
Market for industrial goodsAv
erag
e pr
ice
of in
dust
rial g
oods
(€)
Quantity of industrial goods demanded/supplied (million of tons)
0
World Supply
Imports
Qsupplied Qdemanded
World Price
World Supply + tariff
World Price + CO2
tariff
A CO2 tariff?
Domestic demand
Domestic supply
Market for industrial goodsAv
erag
e pr
ice
of in
dust
rial g
oods
(€)
Quantity of industrial goods demanded/supplied (million of tons)
0
New(lower)Imports levels
Qsupplied Qdemanded
World Supply + tariff
World Price + CO2
tariff
Disadvantages?
Emissions trade agreement
• (2005-2007) Too many permits were allocated making them worthless in values
• (2007-2009) Burden moved to consumers. Recession led to lower CO2 emissions. Hence there were still too many permits on the allocation market.
Cost to Europe• Unequal share of the environmental burdens between
national energy suppliers (Western countries already have “greener” energy ).
• Investments could reach as high as 1 trillion €.
• Industrial products will increase in prices which will make them uncompetitive (main export of EU being machinery).
• Could lead to inflation as prices of good will increase.
Higher standards?
Market for machineryAv
erag
e pr
ice
of m
achi
nery
(€)
Quantity of machinery demanded/supplied (million of tons)
Supply + rigid environmental standards
Supply
Demand
P1
P2
Q1Q2
Weakening Europe
• Disagreements upon targets for Copenhagen’s conference- poorer EU countries do not want to pay for the poor countries outside the EU.
• Europe could have to pay up to 15 billion euros a year to the LEDC’s.
• A CO2 tariff could lead to a “trade war”.
Advantages?
Economic Advantages
• Creation of new jobs– New industry would emerge to deal with further
reductions in CO2 emission.– Already employs 300,000 people and has an annual
turnover of 15 billion €.• Could lead to even lower prices for green energy– Improvements in technology and in the industrial
processes.– Economies of scale (Green energy will cost less as
more is produced)
Economic Advantages
• Improvements in health– Lower the costs induced by the diseases caused by
air pollution.
• Help to prevent climate change and the economic damages associated to it.
• Might decrease Europe dependency on foreign energy sources (Middle-East, Russia)
Conclusion
• The EU has the potential of becoming the leading green economy.
• Short-term costs outweighed by long-term profits.
• A significant step forward in the fight against Global Warming.
BibliographyBendib Cartoon - Independent, uncensored, free-speech Political Cartoons. Web. 09 Dec. 2009. <http://www.bendib.com/>.
<http://www.worldmapper.org/display.php?selected=299>
Egenhofer, Christian. The Eu Co2 Emissions Trading Scheme Taking Stock And Future Prospects. Washington, D.C.: Centre for European Policy Studies, 2007. Print.
"Energy: Statistics - European commission." EUROPA - European Commission - Homepage. Web. 09 Dec. 2009. <http://ec.europa.eu/energy/publications/statistics/statistics_en.htm>.
"Environnement : Réchauffement : l’Europe « atomise » les objectifs de Kyoto ! | Developpement Durable." Développement durable | Toute l'actualité sur l'environnement et le développement durable. Web. 09 Dec. 2009. <http://www.developpementdurable.com/environnement/2009/11/A3531/rechauffement-leurope-atomise-les-objectifs-de-kyoto.html>.
Pearce, David W. Blueprint for a green economy. London: Earthscan, 1989. Print.
"Recession benefits the climate - COP15 United Nations Climate Change Conference Copenhagen 2009." Home - COP15 United Nations Climate Change Conference Copenhagen 2009. Web. 09 Dec. 2009. <http://en.cop15.dk/news/view+news?newsid=1996>.
TOONPOOL Cartoons | Cartoons, Caricatures, Cartoon Art | Jokes and Humor. Web. 09 Dec. 2009. <http://www.toonpool.com/>.
"UK announces." IRELAND BUSINESS: FINFACTS IRISH FINANCE & BUSINESS PORTAL - mortgage Ireland, protection, life insurance, Financial Services, Investment, loans, Irish jobs Ireland, Dublin mortgages, Cork, Limerick, Galway, Share, Stock prices,. Web. 09 Dec. 2009. <http://www.finfacts.com/irelandbusinessnews/publish/article_1012056.shtml>.
Volk, Tyler. CO rising the world's greatest environmental challenge. Cambridge, MA: MIT, 2008. Print.
Worldmapper: The world as you've never seen it before. Web. 09 Dec. 2009. <http://www.worldmapper.org/display.php?selected=299>.
"GREEN PAPERA-European Strategy for Sustainable, Competitive and Secure Energy." European Enviromental Agency. A European Strategy for Sustainable, Competitive and Secure Energy, 8 Mar. 2006. Web. 9 Dec. 2009. <http://ec.europa.eu/energy/green-paper-energy/doc/2006_03_08_gp_document_en.pdf>.