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Energy-Economy-Environment Policy Analyses for Sustainable Development in Europe - Special Focus on Cyprus

Final Activity Report Summary - E3SD_CY (Energy-economy-environment policy analyses for sustainable development in Europe - Special focus on Cyprus)

The original proposal had two objectives: a) to develop a long-term energy model for Cyprus, and b) to redesign and refine an energy-economy-environment model for the transportation sector in the EU and apply it to Cyprus. Both objectives have been accomplished to a very large extent.

As regards the first objective, an econometric analysis of energy consumption in Cyprus was carried out, the first one of this kind to be performed in Cyprus. Based on this analysis, a long-term energy forecast for Cyprus up to the year 2030 was performed. According to the results of the forecasting work, if past trends continue and no serious energy conservation policies are implemented, energy use in Cyprus will rise considerably in the coming decades. Electricity use in particular is expected to triple in the coming 25 years, with the residential and commercial sectors increasing their already high shares in total consumption. Although all power plants in Cyprus are currently oil fired, oil prices are projected to have a small influence, possibly changing electricity consumption by +-10% in the cases of high or low crude oil prices. These results have been presented to all relevant national authorities and policy makers of Cyprus, who have also participated in discussions and suggestions to the fellow during the execution of the project. Results have been published both as discussion papers of the host institution and in international academic journals.

As regards the second objective, i.e. the transport modelling part of the project, this involved mainly an upgrade of the already existing model and an update of the model's database comprising technological and economic data for vehicle technologies. For this purpose, recent cost and technological estimates from the available literature were taken into account and were translated into meaningful data for the modelling needs. Then, in order to assess the impact of policies on transport-related sustainability indicators, ten policy simulations (scenarios) were applied to the model. Results of these scenarios reconfirm the widely expressed assertion that individual policy measures cannot respond sufficiently to the diverse sustainability concerns associated with transportation. In order to achieve improvements in energy intensity, CO2 emissions, congestion and air pollutant emissions, packages of measures are necessary. Strategies that promote advanced technologies can mainly affect air pollution and to a lesser extent energy demand, whereas traffic-related measures can primarily improve congestion and thus energy intensity and emissions as long as appropriate clean technologies are in place. Therefore, a suite of policies combining promotion of advanced 'conventional' technologies and alternative fuels with interventions to reduce demand for transport would be most suitable to address the variety of sustainability issues.

Furthermore, after the initial training that the fellow received in economic theory and econometric analysis, he started to analyse additional topics that are related to energy and environmental policy in Europe. The primary question the fellow analysed was which factors determine vehicle fuel economy in Europe and whether it is standards or fuel taxation that can be more effective in reducing vehicle fuel consumption in the future. The fellow collaborated with academic staff from the host institution and prepared three papers which are under review in academic journals. This issue is among the most important energy and climate change policy issues around the world, because automobile fuel consumption is expected to continue to rise at fast rates due to increasing motorisation in developing countries. The fellow's research has received very encouraging comments from academics and policy makers in Europe and in the United States, and his work on these issues continues even after the end of the fellowship.