Policy case studies for Energy Policy

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Policy case studies for Energy Policy

Narratives selected

Four narratives were selected from a total of 32 narratives (see the Definition Policy Case Studies Milestone report for more information).

Narrative A - Transition to renewable energies.

Europe needs to increase the share of renewable energy by using more solar and wind energy. This is environmentally necessary to fight climate change by reducing CO2 emissions and is socially and economically desirable.

Why was this narrative selected »

This narrative was recurrent in the interviews and was validated as important during the stakeholder consultation (“In line with the societal environmental & economic challenges of the EU Energy Policy,” feedback from EC officer).

Interest in this narrative is linked to the potential of renewables in mitigating climate change (“This is very much indeed a policy narrative, which comes out of a quite combined way of looking at energy and climate change,” (focus group), “The overarching goal for this one, I hope soon is to fight climate change and reduce the emissions overall,” (focus group). The nexus between energy and climate is central to this narrative, and very relevant to MAGIC.

Approach »

Assessment of the feasibility and viability of a transition to renewable energies

We use the social metabolism framework to analyse economic activities from a biophysical point of view, and to account for energy flows and emissions as a function of the economic process. Reductions of 80-95% of CO2 emissions by 2050 (EC target) require major changes to the metabolic pattern of complex socio-economic systems. Our system of accounting can be used to: (i) check how much technologies depend on fossil fuels, (ii) check limitations on the rate at which a transition to renewable energies would be possible, and (iii) check if the EU’s CO2 emission reduction target is feasible and viable.

Narrative B - Intermittency challenge.

Intermittency of supply is a key challenge limiting the greater use of solar and wind energy.More efficient storage systems are a key enabling technological innovation that will have to contribute to solving the problem of intermittency. The magnitude of the challenge for storage needs to be understood with reference to factors such as flexibility (e.g. in demand response) and bottle necks (e.g. in the transport sector).

Why was this narrative selected »

Technological solutions and technological bottlenecks were often mentioned in energy narratives, with regard to, for instance, electricity storage, electric vehicles and biofuels. ("There is also within the energy field a lot of talk on how do you integrate all this electricity, this renewable electricity, in the current systems … we see the most inertia in the transport sector," focus group). In the validation of narratives, the issue of intermittency was considered as a priority on its own ("The most effective and efficient storage solve bottlenecks related to share of the renewable energy sources. Therefore contributes to Europe needs to increase share of renewable energy sources,"feedback from EC officer).

One policy-maker also stressed the importance of demand response policies that can be used to use flexibilities in electricity demand. According to this narrative, intermittency ceases to be a challenge. We chose this narrative because it reveals some of the controversies and knowledge gaps in energy policy.

Approach »

Assessment of the challenges of integrating renewable energies in the electric grid

We have a procedure for the assessment of the electricity sector at different levels, which establishes a link between: (i) the supply – i.e. extraction or import of primary energy sources, (ii) generation of energy carriers – electricity, and (ii) the demand – the different end uses associated with the consumption of electricity. For storage technologies, we can assess: how much storage would be needed for different amounts of renewables in the grid, and what it would mean to install this kind of infrastructure. For flexibilities, we can assess: the extent to which specific functions of the economy can be attended to by different structural elements.

Narrative C - Energy efficiency narrative.

Energy efficiency is a means to achieve energy security and decarbonize the economy. Energy savings from efficiency have the potential of being the first fuel. However, past improvements in efficiency that have reduced unit costs of energy have been more than offset using new and more numerous devices.

Why was this narrative selected »

Efficiency was also recurrent in the interviews, policy documents and in the discussion of the focus group. ("The most important policy measure" (feedback from EC officer), "Energy efficiency is also a very powerful one and if we are aligned together by the joint objective, meaning getting emissions down" (focus group), "It says energy efficiency first and energy efficiency is an energy source in its own right" (focus group).

Although energy efficiency is clearly identified as a priority for energy security, the debate is often linked to the paradoxes of efficiency ("They have all become much more energy efficient, but we use all kinds of other devices on top of it and then we continue to/ to use as much energy as before" focus group) and to the difficulties in the implementation and monitoring of efficiency measures.

Approach »

Assessment of the role of efficiency in security of supply

This narrative highlights the complexity of the EU energy system, and the possible paradoxes and rebounds that may derive from increases in efficiency. Is efficiency an outcome of processes or a direct target for regulation? We can (1) use MuSIASEM to provide an assessment of the quality of efficiency indicators and data availability for energy efficiency, (2) open up debate on how efficiency is conceptualised. The term efficiency is used as a narrative to justify values such as energy security.

Narrative D - Outsourcing challenge.

Outsourcing leads to the externalisation of productive activities and their associated environmental impacts. In making and assessing energy policy, these macroeconomic dynamics need to be considered. If industrial production is outsourced to China and other countries, GHG emissions are not reduced but just geographically relocated.

Why was this narrative selected »

During the interviews and the focus group, policy-makers recurrently mentioned global economic and market pressures and expressed interest in the potential of MAGIC approach to analyse the relation between the sustainability of EU energy use and the outsourcing of industrial and agricultural production to China and Latin America. ("You hinted at what is the elephant in the room. It’s the under, the macroeconomy underneath it all. It’s the elephant in the room, which nobody really tackles because this is the holy grail." (focus group).

Approach »

Assessment of the impacts of outsourcing

MAGIC can examine two arguments. Firstly, we can examine whether the EU can decouple its economic growth from energy consumption. Secondly, we can examine whether the EU can meet its targets for emission reduction without outsourcing energy-, and other resources, intensive activities. Both of these issues can be analysed in MAGIC by examining the “metabolic pattern” of EU economies and the consequential pressures placed on natural and human capital, in and beyond the EU.

For more information:

 

Download the "Definition Policy Case Studies" Milestone report

 

maddalena.ripa
Is externalization contributing to a fictional efficiency?

Is externalization contributing to a fictional energy efficiency?

Critical examination of the ‘externalization narrative’ yields challenging results

According to the in vigour Energy Efficiency Directive (Directive 2012/27/EU), updated few weeks ago (see EU press release STATEMENT/18/3997), the EU has committed itself to a 20% reduction of energy consumption by the year 2020 (updated to 32.5% by 2030 according to the new proposal) compared to baseline projections. This objective is also known as the energy efficiency target. Reportedly energy consumption in the EU gradually decreased between 2007-2014 (https://ec.europa.eu/energy/en/topics/energy-efficiency) in almost all sectors. In fact, most policy-makers expect improved energy efficiency and reduced energy demand to provide a major contribution to tackling global climate change.

Challenging this narrative, MAGIC’s preliminary findings show that improvements in energy efficiency (however measured) do not always reduce energy demand, and that reduced energy demand is not necessarily the result from improved energy efficiency. The latter finding involves what economists call the effect of “externalities”, more commonly defined as outsourcing: a reduction in energy consumption is often linked to outsourcing of energy intensive processes of production (i.e., displacement outside national borders) rather than efficiency improvements per se.

As a sake of example, in 2012, the EU imported 53% of all the energy it consumed, at a cost of more than €1 billion per day. Specifically, it imported: 88% of its crude oil, 66% of its natural gas, 42% of its solid fuels, less than 4% of its renewables (mostly in the form of biomass) and 95% of its uranium. Energy makes up more than 20% in economic value of total EU imports or one fifth of the EU's total import bill (European Commission, 2014). With a significant part of the EU’s energy system being located outside its borders, questions arise as to whether externalization is an acceptable solution towards reaching greater overall energy efficiency in the EU.

MAGIC’s energy policy team is quantifying in detail the externalization of the energy commodities of eight EU countries (Germany, Netherlands, Spain, Sweden, Italy, France, Romania and UK) to evaluate the degree of externalization of their energy sector. The analysis also considers other entangled fund and flow elements relevant for climate (emissions) land, energy, water, and labour (CLEWL) nexus, by integrating data relevant both in biophysical and social terms. The approach used for the analysis is described in the deliverable 4.2.

Externalization of energy commodities and the implications for the CLEWL nexus is one of the narratives that will be discussed with energy modelers and policy-makers during the forthcoming MAGIC focus group at the Energy Modelling Platform for Europe (EMP-E) - 'Modelling Clean Energy Pathways', 25-26 September 2018 in Brussels. The focus group, entitled: Energy Modelling and the Water-Energy-Food Nexus Conundrum, will take the form of a world café around three controversial narratives: outsourcing challenge, energy efficiency, and decarbonization in the transition to renewable energies.

For more details, check the full program: http://www.energymodellingplatform.eu/full-program.html

 

References

European Commission. (2014). In-depth study of European Energy Security. SWD(2014) 330. Retrieved from https://ec.europa.eu/energy/sites/ener/files/documents/20140528_energy_s...

 

 

Raúl.Velasco
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Narrative C - How can we improve energy efficiency measurements?

Efficiency is a central pillar of energy policy in industrialized nations globally. A range of benefits have been attributed to energy efficiency including: reduced energy use, more secure energy supply, reduced greenhouse gas (GHG) emissions, lower costs and improved economic competitiveness. Energy efficiency is a policy priority in Europe. On June 19, 2018 a political agreement was reached on an EU energy efficiency target for 2030 of 32.5% as part of the Energy Efficiency Directive (EED) 2012/27/EU adopted in 2012.

There is a significant body of academic literature that is dedicated to finding solutions to close the “Energy efficiency gap” - the difference between the “optimal” and actual achievement level of energy efficiency improvement. Major challenges to reducing this gap include mechanisms that may reduce expected energy savings from energy efficiency policies, known as the Jevons paradox (Polimeni et al. 2008; Giampietro & Mayumi 2018) or the rebound effect (Herring & Sorrell 2009; Turner 2013) and the fact that headline indicators, such as energy intensity, cannot measure underlying technical efficiency comprehensively. 

It has been widely acknowledged in the literature that the ambiguity of energy efficiency itself has caused problems for achieving robust science and effective policy. However, the simplicity and flexibility of the concept of energy efficiency has enabled its success as an energy-saving tool among diverse stakeholders. Unfortunately, this simplicity comes at a cost. Efficiency as an indicator is unable to measure important aspects of energy conversions, including qualitative aspects of energy consumption, new technologies, and unwanted environmental and societal tradeoffs. It was Sadi Carnot himself, the physicist credited for creating the first successful theory of maximum efficiency of heat engines, who warned in 1824 that “the economy [efficiency] of the combustible” is just one of the relevant issues to consider and “in many cases it is secondary” (Carnot 1897). Carnot argues that the efficiency of an engine should often give precedence to other important considerations including safety, strength, engine durability, physical space and cost of the machines. To measure the overall ‘performance’ of the machine, Carnot suggested, a more sophisticated integrated analysis should be undertaken, based on multiple indicators. Moreover, the accepted assumption behind using energy efficiency policies for decreasing the overall consumption of energy has been debated since the 19th Century. In 1865, William Stanley Jevons indicated that “it is a confusion of ideas to suppose that the economical use of fuel [efficiency] is equivalent to diminished consumption. The very contrary is the truth” (Jevons 1865).

The complex reality behind the efficiency concept generates misleading diagnostics and ineffective policies. An example is the statement of the Executive Director of the EEA when the collapse of the economy in 2008 generate a decrease in the GHG emissions and he stated: “The GHG inventory report shows that the EU is well on track to meet its emission reduction targets with domestic policy measures only. Our policies and tools seem to be working”. Another example is flat subsidies awarded for consumers who continually buy more efficient appliances. These subsidies may increase the efficiency of the consumption of rich people living in large houses, but they do not tend to help poor extended families who cannot afford to buy new appliances, but rather continue using old and less efficiently labeled appliances. The former are subsidized while generating more energy consumed per capita, whereas the less wealthy consumers are not subsidized, even though they typically consume less energy per capita for satisfying their needs.

Given the confusion surrounding energy efficiency measurements, it is clear we need more comprehensive and robust indicators that measure the overall performance, including underlying technical efficiency, of industries and economies. This point has been reiterated in the most recent efficiency research.

MAGIC’s energy policy team is working on new analytical tools for dealing with these complex issues. Rather than generating indicators of efficiency, we use the more comprehensive indicator of performance. Energy performance is a richer indicator than efficiency because it can illustrate multiple aspects of energy conversions of an economy across different scales and dimensions. To measure energy performance, we use an accounting method called the End-use Matrix (EUM) (Velasco-Fernández et al. n.d.) (for more details on progress, see deliverable 4.1 and 4.2). The EUM characterizes the economy of a country across: (i) different hierarchical levels of analysis from the entire society, to manufacturing subsectors, to individual typologies of households; (ii) different scales—overall energy consumption per year or per hour of work; and (iii) different dimensions—integrating useful information from demographic, economic, social, technical, ecological data. As a result, the EUM characterizes energy performance by describing how energy carriers are used, for doing what, which type and how much energy carriers are used, how much labor is required, or how much monetary value added is generated. The same approach is extended to the analysis of the other metabolized flows (water, food) of the nexus.

The implications of this type of analysis for the energy efficiency narrative will be discussed with energy modelers and policy-makers during the forthcoming MAGIC focus group at the Energy Modelling Platform for Europe (EMP-E) event called ‘Modelling Clean Energy Pathways’ on 25-26 September 2018 in Brussels. The focus group, entitled: Energy Modelling and the Water-Energy-Food Nexus Conundrum, will take the form of a world café around three controversial narratives: outsourcing challenge, energy efficiency, and decarbonization in the transition to renewable energies. For more details, check the full program: http://www.energymodellingplatform.eu

References:

Carnot, S., 1897. Reflections on the motive power of fire, and on machines fitted to develop that power, New York: John Wiley & Sons.

Giampietro, M. & Mayumi, K., 2018. Unraveling the Complexity of the Jevons Paradox: The Link Between Innovation, Efficiency, and Sustainability. Frontiers in Energy Research, 6(April), pp.1–13. Available at: http://journal.frontiersin.org/article/10.3389/fenrg.2018.00026/full.

Herring, H. & Sorrell, S. eds., 2009. Energy Efficiency and Sustainable Consumption: The Rebound Effect, London: Palgrave Macmillan.

Jevons, W.S., 1865. The coal question: An inquiry concerning the progress of the nation, and the probable exhaustion of the coal-mines, Macmillan Publishers.

Polimeni, J.M. et al., 2008. The Jevons paradox and the myth of resource efficiency improvements, London: Earthscan.

Turner, K., 2013. “Rebound” Effects from Increased Energy Efficiency: A Time to Pause and Reflect. The Energy Journal, 34(4), pp.25–43.

Velasco-Fernández, R., Giampietro, M. & Bukkens, S.G.F., Analyzing the energy performance of manufacturing across levels using the end-use matrix. Energy, In press.