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Sanjeev Kumar Sanjeev.kumar@e3g.org +32 499 539731. Managing risk: Why the 30% GHG target is important for GDP, political security and economic growth. Climate Summit, Budapest. 19 January, 2011. E3G - PowerPoint PPT Presentation

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  • Managing risk:

    Why the 30% GHG target is important for GDP, political security and economic growth.

    Climate Summit, Budapest. 19 January, 2011

    Sanjeev KumarSanjeev.kumar@e3g.org+32 499 539731

    E3G - Third Generation Environmentalism

  • E3GIndependent, non-profit European organisation working to accelerate the transition to sustainable development. Based in London, Brussels, Berlin, Washington and Beijing.Programmes of work on climate diplomacy, climate security and low carbon economyAdvises on international climate strategy to major EU governments, Most Vulnerable Countries, International NGOs and charitable foundations

    E3G - Third Generation Environmentalism

  • ContentsWhat are the risks?

    The case for doing nothing

    Expectations from the Hungarian Presidency

    E3G - Third Generation Environmentalism

  • Risks facing the EUExternalEconomicCompetitiveness

    E3G - Third Generation Environmentalism

  • Source: Climate Change impacts in Europe. PESETA (2010).

    E3G - Third Generation Environmentalism

  • *Large Uncertainty around Climate Sensitivity mainly on negative sideSource: NOAA, 2009Source: UK CCC, 2008

    E3G - Third Generation Environmentalism

  • *Estimates of likely impacts have been growing over timeSource: Smith et al., 2007 Dangerous Climate Change: An Update of the IPCC Reasons for Concern2C

    E3G - Third Generation Environmentalism

  • Economic: Annual damage to GDP from climate change impactsSource: Climate Change impacts in Europe. PESETA (2010).

    E3G - Third Generation Environmentalism

  • Source: Climate Change impacts in Europe. PESETA (2010).

    E3G - Third Generation Environmentalism

  • Competitiveness: Innovation, markets and wealthProducing products and services to satisfy demand. Protectionism and delaying investment reduces gives competitive advantage to the EUs economic rivals.Global market for low carbon goods & services was worth over 3.4 trillion in 2008/2009 (Source: UK Business Dept for Business & Enterprise 2009). At 467 billion, climate revenues from the equity market have now outstripped the aerospace and defense sector, and could exceed $2 trillion (1.76 trillion) by 2020 (Source: HSBC Annual review index 2009).

    E3G - Third Generation Environmentalism

  • Competitiveness: Investment drivers

    E3G - Third Generation Environmentalism

  • Competitiveness: Chinas importance 14% of EU GDP is dependent on Chinese imports. (Chatham House 2008).China is major export market and greater value to EU than US as of 2008.China plans to spend $300 billion into dedicated high-speed-rail corridors by 2020. (Business Green)2010 target to create 1 million electric cars by 2020 from 10bn Yuan fund. (China Daily)China spending more than any other G20 on low carbon energy (Pew Centre). Most attractive centre for Renewables beating US and Germany.

    E3G - Third Generation Environmentalism

  • External: European security most at risk than other OECD economies

    E3G - Third Generation Environmentalism

  • E3G*External: Africa is extremely vulnerable20002050

    E3G - Third Generation Environmentalism

  • End of cheap conventional oil

    E3G - Third Generation Environmentalism

  • External: Energy geopoliticsOil:EU is major importer of energy. IEA estimates EU energy imports cost 54bn in 2010. OPEC agreed to produce more to keep prices below $100 barrel (18 January 2011 FT). EU produces 14% of oil that it consumes. 44% imported from Russia (29%) and Norway (15%).Since 1998, diesel consumption growing and gasoline consumption falling. Refining capacity has remained split since. So diesel subsidy policy driving closure of gasoline refining capacity increasing oil dependence.Gas: 26% of gas is imported. Main EU producers are UK and Netherlands. Imports come from Russia (42%), Norway (24%), Algeria (18%) and Nigeria (5%).

    E3G - Third Generation Environmentalism

  • ContentsWhat are the risks?

    The case for doing nothing

    Expectations from the Hungarian Presidency

    E3G - Third Generation Environmentalism

  • The case against: Its too costly40-80% of the additional target can be delivered through no cost measures (CE Delft). Additional 16MtCO2 can come from lucrative and high-value electric car market (Ecofys).Energy savings are immense: EU energy import savings of 68bn per year (European Commission). Additional 96bn per can be saved if oil price increases to $148 per barrel (E3G).High-value 30% target should generate 45bn. Additional 30.5bn from health-related benefits (HEAL and HWCH Europe).

    E3G - Third Generation Environmentalism

  • The case against: Our companies will leave if no one else does anything.EU ETS is largest industrial subsidy in the history of the EU with all sectors making windfall profits. Commission estimates 2.4 Gt CO2 of banked allowances and unused international credits in the system by 2020. So ETS not effective until after 2028. (European Commission, May 2010). ETS 3rd Phase oversupplied by 99 MtCO2 of allowances. Even if the EU moves to a 30% reduction target and imposes quality restrictions on CDM credits, it would take until 2017 for the market to absorb the excess allowances from 2nd Phase. (Societe General 2010).PRIMES model estimates EUA price of 16 by 2020 and 18 by 2020. Todays is 14. (PRIMES 2010).Cement, steel, power generation sectors subject to serious cartel abuse which damages the rest of the EU economy. . Other regions are implementing polices: China 5 year plan, Indian energy efficiency scheme, Californian ETS.

    E3G - Third Generation Environmentalism

  • ContentsWhat are the risks?

    The case for doing nothing

    Expectations from the Hungarian Presidency

    E3G - Third Generation Environmentalism

  • Expectations from the Hungarian PresidencyClimateClimateFinanceEnergy

    E3G - Third Generation Environmentalism

  • The priorities for the Hungarian presidencyFunctioning internal market: liberalisation and competition in the cement, steel and power generation sectors. New regulatory system needed to reward energy savings, drive grid investment in electricity markets.Financing transformation: Maximising use of EU Budget to deliver transformative change. Low carbon industrial policy: Electric car market is vanguard of low carbon world. Large source of green jobs, reduces oil dependence, stimulates new regional infrastructure investments.Climate target: Identifying the optimal design of the climate target. Securing Head of State Commitment for unilateral move to a domestic 30% GHG target in the March European Council meeting.

    E3G - Third Generation Environmentalism

    **

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