Final Report Summary - CECILIA2050 (Choosing Efficient Combinations of Policy Instruments for Low-carbon development and Innovation to Achieve Europe's 2050 climate targets)
Executive Summary:
The December 2015 Paris Agreement has put the goal of a decarbonised global economy within the realm of conceivable options. Already in 2008, the EU had declared its ambition to build a low-carbon economy by the middle of the 21st century. Achieving this target will require a transformation of the European economy, affecting a range of sectors – power generation, industry and transport, but also agriculture, construction or finance. Governing this transformation in an effective and efficient way is a challenge – a task that includes stimulating the necessary innovations, ensuring public support, encouraging the needed investments, providing for the right infrastructure, and avoiding lock-in into carbon-intensive technologies.
To manage the transformation to a low-carbon economy, a range of policy instruments is necessary. The EU and its Member States already apply a mix of climate policy instruments, yet these are not sufficient for the task, and need to be scaled up drastically. But to increase the scale and ambition of climate policy, it is essential to understand and to manage the interaction of policy instruments, and to overcome constraints on the political, legal and administrative feasibility. Policies that have worked well in an economic niche are not necessarily suited to guide economic development on a broad scale; instruments that have co-existed well on a small scale may conflict when scaled up to an economywide level.
The CECILIA2050 project has taken on this challenge. In a joint research effort by ten partners from eight countries, the research project has investigated how the existing mix of climate policy instruments needs to evolve, in order to transform the EU towards a low-carbon economy. To this end, the CECILIA2050 project combined a backward-looking (ex-post) stocktaking exercise with a forward-looking (ex-ante) analysis of the necessary policy changes in the medium (2030) and long run (2050). The latter combined model-based techno-economic scenarios – to understand the timing and the dimension of change needed in key sectors – with more detailed, empirical analysis of individual policy instruments and their interactions. In the latter analysis, the project placed particular emphasis on the role of economic instruments in the policy mix, understanding their role in a broader policy mix, and finding ways to exploit their potential more fully. This included empirical analyses of major barriers that inhibit more effective and efficient climate policy – such as acceptance by stakeholders and the public at large, distributional effects, availability of finance, physical infrastructure, but also the administrative and legal framework of EU climate policy.
The research confirms that carbon pricing should be at the heart of any climate policy mix aiming to be ambitious and yet efficient. Yet, for a number of reasons, the current pricing tools in the EU do not deliver a strong enough carbon price. Time is of the essence: in light of the time lags and the path dependency in investment decisions, the EU need to have a meaningful carbon price sooner rather than later. Still, a strong carbon price is no panacea either, but needs to be part of a mix, which employs different tools to addresses different target groups. This is bound to lead to instances where policy instruments overlap, which will create friction and may reduce overall efficiency. The challenge is therefore to better anticipate and manage policy overlaps where it occurs.
Project Context and Objectives:
The Paris Agreement adopted in December 2015 under the United Nations Framework Convention for Climate Change, and the good spirits and intentions that made it possible, have put the option of a decarbonised global economy within the realm of the thinkable options. The EU has repeatedly declared its ambition to transform itself to a low-carbon economy by the middle of the 21st century. This transformation process will require an overhaul of the European economy, affecting a range of sectors – not only power generation, industry and transport, but also agriculture, construction or finance. Governing this transformation process is a huge challenge – stimulating the necessary innovations, ensuring public support, encouraging the needed investments, creating the right infrastructure, and avoiding lock-in into carbon-intensive technologies.
The EU is in a special position in this respect: on the one hand, it can build on more than two decades of climate policy, reflected in a number of short- and long-term targets for climate and energy policy, and a suite of climate policy instruments intended to achieve them. On the other hand, there is a gap between the level of ambition expressed in the long-run targets, and the effectiveness of the instruments currently in place. This is confounded by the fact that neither the targets nor the instrument mix are free from inconsistencies, especially when considering interactions with neighbouring policy areas, such as energy or the internal market. And last not least, the EU itself is not a unified actor: between the EU and its 28 Member States, there are diverging visions on the low-carbon future for the EU economy and the policies and instrumentation leading towards it.
To manage the transformation to a low-carbon economy in Europe, a substantial overhaul of the existing mix of climate policy instruments is necessary. In terms of their ambition and reach, existing instruments needs to be scaled up drastically to initiate the necessary changes. But as the scale and scope of instruments increases, it becomes more important to understand and to manage their interaction, as well as the constraints on the political, legal and administrative feasibility. Policy solutions that have worked well in a niche are not necessarily suited to guide economic development on a broad scale; instruments that have co-existed well on a small scale may conflict when scaled up to an economywide level. To evaluate their efficiency and effectiveness, policy instruments thus cannot be viewed in isolation; understanding and managing their interaction becomes key.
The CECILIA2050 project has taken on this challenge: to understand how policy instruments work in interaction, what factors determine their performance, and how the European climate policy instrument mix could evolve to guide the transformation to a low-carbon economy. It places a particular focus on the role of economic instruments in the policy mix, understanding their limitations and finding ways to enhance their performance. The project has researched ways to improve the economic efficiency and environmental effectiveness of the instrument mix, while deepening the understanding of constraints that limit the feasibility of ambitious climate policies, or affect their performance. These constraints include public acceptance, availability of finance and the physical infrastructure, but also the institutional, administrative and legal framework of EU climate policy. To achieve this, the CECILIA2050 project combines a backward-looking (ex-post) and a forward-looking (ex-ante) analysis.
The first, backward-looking part of the project took stock of the existing instrument mix in the EU and its Member States, and has assessed overall their coherence and their past performance. This was achieved in two stages:
First, the initial stage of the project defined the terminology, and created an inventory of the policy instruments already in place. The terminology included both a working definition of the concept of optimality – combining environmental effectiveness and economic efficiency with political, legal and administrative feasibility – as well as a taxonomy of different types of policy instruments. The inventory of policy instruments looked at the suite of climate policy instruments that are currently applied in the eight EU countries that are covered by the CECILIA2050 consortium, as well as at the EU level. Finally, an initial assessment looked at how well the different climate policy instruments were performing, and which interactions could be observed both within and across policy landscapes.
The second stage of the project (Work Package 2) built on the results of the first by taking a deeper look at the functioning of the existing climate policy instruments – either focussing on a particular economic sector, or on particular cross-sectoral policy objectives. Thus, a suite of sectoral analyses looked at the energy sector, the impacts on selected industries, transport, food and agriculture as well as buildings and private households. In addition, cross-sectoral analyses investigated the impact of current climate policies on innovation, international competitiveness and overall economic development. A further analysis looked at the legal and institutional framework of climate policy in Europe, and how this has shaped the existing climate policy mixes in Europe. The different analyses in this second stage of the project applied a range of methods and tools, ranging from literature reviews to different qualitative techniques, including structured interviews with stakeholders, questionnaires, surveys, and to different macro- and microeconomic modelling approaches.
The second, forward-looking part of the project has mapped pathways towards a more ambitious policy mix for 2030 and 2050, starting from the current EU climate policy. With economic instruments at the heart of the mix, it described how the instrumentation could evolve, based on scenarios of the magnitude of change required for the low-carbon transformation. To this end, it combines the state of the art modelling tools with qualitative and participatory methods. The work in the forward-looking part was organised in the following work streams: first, the elaboration and quantification of long-term scenarios for the low-carbon transformation in Europe and internationally, second, the mapping of concrete policy pathways, departing from the current policy mix and leading towards a more “optimal” policy mix for 2030 and beyond, and third, an analysis of the effects of EU climate policies at the global level, as well as the interaction between EU climate policies and global developments.
The first work stream concerns the definition of scenarios for the low-carbon transformation with a view to 2050. This work combined different approaches: first, two modelling frameworks were applied to derive techno-economic transformation scenarios towards 2050. This was done a) with a focus on the energy sector, describing in detail the needed transformation of energy supply and energy use in Europe, and b) in an input-output framework, to understand the types of technological innovation and behavioural change (i.e. changes in consumption patterns) necessary for a drastic reduction of greenhouse gas emissions. These techno-economic scenarios are complemented by policy scenarios – both as idealised ‘building blocks’ for a future European climate policy instrument mix, as well as a set of international scenarios, that describe how the international context for climate policy could evolve in the future. The common feature of all these scenarios – both techno-economic and policy scenarios – is that they represent internally consistent, but idealised projections of how the world (i.e. the political, economic, social and technical systems they describe) might evolve. As such, while the scenarios should have a minimum plausibility, the aim of the research was not to assign probabilities to the scenarios – i.e. to predict how the world will (or should) evolve, but rather to express the magnitude of change that is required in the key sectors to achieve a low-carbon transformation.
The second work stream in the forward-looking part of the project, the mapping of policy pathways to 2030 and beyond, has defined possible pathways for how EU climate policy instrumentation might evolve – taking the current policy mix (and its identified shortcomings and deficiencies) as a point of departure. This part of the project thus aims to connect the stocktaking of current European climate policy with the different techno-economic and policy scenarios: while the stocktaking describes where we stand now, and what problems the existing policy mix is facing, the scenarios offer a perspective on where we need to get in 2050, and illustrates the size of the political, economic, social and technological challenge ahead. The function of the policy pathways is to reconcile these two angles, to show how the current EU climate policy could evolve until 2030 and beyond, in order to move into the direction established in the different scenarios. Based on the current EU climate policy mix, these policy pathways embody different philosophies as to how European climate policy may plausibly evolve. Three main policy combinations were defined, differing in terms of the emphasis placed on particular types of instruments: (i) technology-neutral market-based instruments, (ii) technology-specific regulation and technology support measures, and (iii) policies aimed at changing behaviour by individuals and businesses. In addition, these main combinations were combined with different assumptions about the future of EU governance (towards more centralised vs. decentralised governance) and global climate policy cooperation (towards more coordination vs. fragmentation).
In subsequent steps, these policy pathways and the techno-economic scenarios for decarbonisation previously defined then served as a point of reference for an in-depth analysis of main barriers and constraints for more ambitious climate policies emerging from the current policy mix. This “reality check” analysed a broad range of potential barriers, constraints and bottlenecks, assessing to what extent these represent a limitation for ambitious climate policies, and identified options of resolving, bypassing or overcoming these barriers. In this context, for instance, research investigated the institutional and legal conditions for EU climate policy, including the adequate balance between centralised and decentralised climate instruments; other tasks looked at the necessary instruments to encourage innovation in low-carbon technologies and deliver new energy infrastructure; or the extent to which the availability of material resources may constrain low-carbon development. Other tasks applied empirical methods to research the public acceptance, or the distributional implications of different climate policy instruments. Finally, political science approaches were used to evaluate the political feasibility of implementing different policy instruments, by investigating policy makers’ understanding of and preferences for different policy designs in a serious gaming exercise.
A third work stream then investigated the interactions between EU climate policy and the global economy. This included socio-political and quantitative economic analyses of the future risk of carbon leakage, as well as options to reduce this risk, concluding that energy-intensive industries can be incentivised and supported to improve their energy and material consumption, reduce dependency on fossil fuels and invest in innovative technologies and products, improving their international competitiveness. In addition, model-based decomposition simulated the future trajectory of carbon leakage into energy, terms-of-trade, and investment leakage channels, suggesting that while the energy market channel dominates initially, the terms-of-trade effect and especially the international investment channel gain importance over time. Finally, an integrated assessment model was deployed to model the global distribution of industrial and terrestrial GHG emissions, investigating leakage risks due to differential fuel prices (industrial carbon leakage) vs. those resulting from a shift of carbon-intensive biomass/food production.
To ensure policy relevance and mobilise practitioners’ knowledge, the project has been engaging with stakeholders in different ways throughout the project, particularly through workshops, dedicated events for stakeholder outreach and engagement, and through the continuous guidance of a Science and Policy Board of high-level experts.
Dedicated project workshops and conference organised (or co-organised) by the CECILIA2050 project, targeting a mixed audience of policy makers, stakeholders, academia and think tanks: The headline events of the project were the two project conferences: the mid-term conference (Brussels, March 2014) and the final conference of the project (Brussels, June 2015). In addition, CECILIA2050 featured prominently at the Scientific Conference Research for a Post-Carbon Future (Berlin, September 2014). In terms of workshops, a suite of public workshops was organised throughout the project: including on on the status and future of European climate policy (Brussels, February 2013), a seminar jointly organised with the ENTRACTE project (Dublin, September 2013), a workshop on long-term climate policy scenarios (London, October 2013), as well as a workshop focusing on the public acceptability of EU climate policies (Prague, October 2014). Finally, a suite of dissemination events was held in eight countries in October 2015 .
More academically-oriented dissemination included presentations at am international symposium on emissions trading (Beijing, October 2013), seminars at Johns Hopkins University, DC and Duke University, NC, a policy session at the 14th World Congress of Environmental & Resource Economists (Istanbul, July 2014), and two sessions at the conference “Our Common Future under Climate Change” (Paris, July 2015).
Dedicated outreach to policy makers and stakeholders included several side events organised at UNFCCC Conferences (COP-18 in Doha, COP-19 in Warsaw and SBSTTA meetings in Bonn), internal workshops at the German Federal Environment Agency (Dessau, February 2014) and the European Environment Agency (November 2014), and a presentation at the third European Environmental Evaluators Network Forum (Helsinki, April 2014).
The implementation of the project was supported by a distinguished Science and Policy Advisory Board, comprised of 12 leading experts from European and Member States institutions, academia, business associations, environmental NGOs and trade unions. The Advisory Board has met on six occasions to discuss the project progress, to provide guidance on the direction of the research, and to help maximise the policy relevance and potential policy impact of the research. The project website is available at www.cecilia2050.eu and provides an up-to-date inventory of the research work published by the CECILIA2050 project, as well as documentation of all events.
Project Results:
The S&T results of the CECILIA2050 project are documented in a set of 47 substantive research reports and 7 organisational reports (such as conference proceedings). These documents are organised into 30 Deliverables, all of which have been completed and submitted. With the exception of three internal, purely organisational reports, all these project outputs are available for download on the CECILIA2050 website at http://cecilia2050.eu. In addition, the research results of the CECILIA2050 project have given rise to 17 publications in peer-reviewed journals, two book chapters, one scientific monograph and six theses or dissertations. Finally, the main project results are also documented in a suite of six policy briefs, which summarise key insights from the project and relate them to current EU policy debates.
In terms of evaluating the scientific impact of the project, and the progress achieved beyond the scientific state of the art, the following discussion is structured around key five dimensions. As outlined in the original description of work, the way in which the CECILIA2050 project aimed to advance the state of art, and address identified shortcomings of established approaches in the field of environmental economics and political science was summarised in the following way:
Dimension / Objective 1. CECILIA2050 will take an inter-disciplinary and geographically diverse approach to the evaluation of economic policy instruments to ensure that results are useful to EU policy makers
Guiding question(s) to evaluate project success: Has the project succeeded in drawing on insights from different disciplines, and combining these different perspectives to derive useful and realistic conclusions? Has the project succeeded to mobilise standpoints and experiences from different EU Member States, to reflect the current state of climate policies in Europe?
Dimension / Objective 2. CECILIA2050 will focus attention on the need for radical change required in order to meet the EU’s long-term climate objectives.
Guiding question(s) to evaluate project success: Has the project succeeded to deliver a “radical and realistic” view, i.e. to combine a top-down view of the scale of change that needs to be achieved by mid-century with the bottom-up view of how this transformation can be initiated, departing from the current endowment of European climate policies?
Dimension / Objective 3. In order to assess different policy instruments, CECILIA2050 will adopt a broad notion of optimality, which does not only analyse what looks best in theory, but also what is the most expedient way forward under real-life constraints.
Guiding question(s) to evaluate project success: Has the project succeeded to develop and apply a wider notion of optimality, which extends beyond the narrow criteria of economic efficiency and effectiveness, and also includes aspects of (political, administrative and legal) feasibility in a way that is empirically well-founded?
Dimension / Objective 4. CECILIA2050 will analyse combinations of policy instruments and their interaction, rather than optimising individual instruments. It will draw on insights from different disciplines to understand the constraints that limit the performance of instrument mixes, and derive options to tackle these.
Guiding question(s) to evaluate project success: Has the project succeeded to focus the analysis on combinations of different policy instruments, allowing a realistic assessment of the entire policy mix, and providing recommendations for the effective combination / sequencing of instruments?
Dimension / Objective 5. CECILIA2050 will utilise innovative modelling combinations to enhance the ability of existing quantitative tools to inform policy requirements over the very long run.
Guiding question(s) to evaluate project success: Has the project succeeded in combining the different modelling approaches in a way that supports the analysis by providing a coherent and consistent framework, but allows sufficient flexibility to focus on the most relevant aspects?
The following section is structured around these five dimensions, and explores how the work conducted in the different work packages has served to advance the state-of-the-art.
1. Has the project succeeded in drawing on insights from different disciplines, and combining these different perspectives to derive useful and realistic conclusions? Has the project succeeded to mobilise standpoints and experiences from different EU Member States, to reflect the current state of climate policies in Europe?
The various tasks in WP2 assessed the EU climate policy mix, or aspects of it (including economic instruments, but also regulatory and behavioural instruments), using a range of analytical approaches. It also assessed Member State level policies, and effects of EU policy at the Member State level.
• In particular, the key instruments of the EU ETS and renewable electricity (RES-E) support mechanisms were assessed from a range of perspectives, using different analytical approaches and methods, and for different purposes. Thus, Task 2.6 (documented in Deliverable 2.2) used the economic-environmental model GINFORS to assess the impact of these instruments, both individually and in combination (along with Environmental Tax Reforms in eight Member States), on CO2 emissions, economic growth and employment, for each of the EU Member States. This was supported by a review of econometric evidence undertaken by Task 2.1 (documented in Deliverable 2.1). Task 2.1 provided further insight into RES-E support mechanisms, including original analysis into the effect of RES-E deployment on electricity prices in Germany and Spain, and an assessment of ‘best practice’ approaches to support mechanisms, from past experience.
• Task 2.2 (documented in Deliverable 2.1) and Task 2.7 (documented in Deliverable 2.2) assess the impact of the EU ETS on the competitiveness of EU industry, and whether ‘carbon leakage’ has occurred, using econometric analysis and literature reviews, respectively, condluding that no evidence for carbon leakage from the EU as a result of the EU ETS carbon price exists.
• Other tasks in WP2 investigated more sectoral and Member State-specific issues. Task 2.5b (documented in Deliverable 2.1) investigated the effectiveness and efficiency of combining carbon pricing and retrofit obligations in the domestic sector in France, using a hybrid energy-economy model (Res-IRF), whilst Task 2.4 (documented in Deliverable 2.1) assessed the food and agriculture policy mix in four Member States (UK, Netherlands, Spain and Italy), employing literature review, surveys and interviews, and found that an co-ordinated policy approach across the full supply chain is currently absent, but required to drive significant abatement action in the sector.
• Task 2.7 (documented in Deliverable 2.2) combined both quantitative and qualitative approaches (interviews and econometrics) to assess the effectiveness of different policy drivers on innovation, across different Member States and sectors. It found that economic instruments have historically been effective in stimulating innovation, but that other non-policy market pressures and local ‘systems of innovation’ unique to different Member States and sectors are equally important.
• Task 2.5a (documented in Deliverable 2.1) and Task 2.9 (documented in Deliverable 2.3) focussed on the feasibility of policy instruments and their combinations from different angles. The former conducted a stated-preference survey to elicit public preferences surrounding policy and policy mix choices and design, focusing on the Czech Republic, Poland and the UK. They found that, amongst other things, that the public holds a significant aversion to tax for numerous reasons, and even the label ‘tax’ renders an instrument significantly less acceptable than an identical instrument labelled as something else. Task 2.9 assessed legal and institutional aspects of policies and policy making, focussing on Germany, the UK and Poland, and the EU level. This task used literature reviews, interviews and analysis of legal documents to highlight key legal and institutional conditions for climate policy, such as the role institutional configuration can have on the implementation and effectiveness of policy, that using new regulatory approaches may trigger legal conflict, and that subnational governance levels are often essential in determining the success of policy instrument (or otherwise) in some Member States.
While the previous examples stem from the backward-looking and stock-taking part of the analysis, in the forward-looking part of the project WP 4, Task 4.1 defined three possible combinations of instruments for the key emitting sectors that have both plausibility and a reasonable chance of achieving the desired emission reductions. Building on this, Tasks 4.2-4.9 analysed various constraints, risks and bottlenecks that may affect the performance of different instrument mixes in terms of their effectiveness, efficiency or feasibility. These constraints, risks and bottlenecks are of different natures and, therefore, an inter-disciplinary approach is taken. Task 4.2 for instance, focuses its analysis on the institutional and legal conditions for EU climate policy, and the constraints and challenges the legal and institutional configuration implies for instrument choice, instrument design, and the effectiveness of instruments. In this context, inter alia, the authors analysed the adequate balance between centralised and decentralised climate instruments. In Task 4.3 and 4.5 a financial-economic approach is taken to evaluate the set of instruments which encourage innovation in low-carbon technologies and deliver new energy infrastructure. In task 4.9 a political science approach is used to evaluate the political feasibility of implementing different policy instruments, by investigating policy makers understanding of and preferences for different policy designs in a serious gaming exercise constructed around the issue of EU ETS reform. In this WP, the focus of the analysis is on policy instruments at EU level. Discrepancies between Member States, their political culture and the general attitudes, however, featured prominently in the analysis of public support for different policies (Task 4.7) as well as in the analysis of different political decision makers and their preferences for policies (Task 4.9). In addition, the analysis of energy infrastructure in Task 4.5 discussed the required electricity interconnections between Member States.
WP5 of the CECILIA2050 project focused on the economic and political interactions between EU policies and the rest of the world and the effectiveness, the legal and political feasibility of policy responses to mitigate carbon leakage risk. A good example of the interdisciplinary approach is the approach taken in Sub-task 5.2.2 which looked at instruments to mitigate adverse effects of climate policy on competitiveness and leakage. Two disciplinary approaches were combined in this analysis: a socio-political approach and a quantitative economic (modelling) approach. The results of the two lines of research were documented in Deliverables D5.3a and D5.3b.
2. Has the project succeeded to deliver a “radical and realistic” view, i.e. to combine a top-down view of the scale of change that needs to be achieved by mid-century with the bottom-up view of how this transformation can be initiated, departing from the current endowment of European climate policies?
In the context of WP 3, which quantified techno-economic scenarios for the transitions of the EU to a low-carbon economy, simulations with the economic-environmental model GINFORS modeled pathways towards was a radical 80% reduction of CO2 emissions in the EU (below 1990) till 2050. While radical in ambition, this view was also realistic in the sense that the model has econometrically estimated parameters. The model allows a bottom-up view of how this transformation can be initiated because of its deep sectoral, energy carrier and country structure depicting endogenously the production technologies inside the countries and international trade between them. The resulting policy mix differs markedly from the current endowment of European climate policies.
Building on the quantitative scenarios, WP 4 explores the different choices of policy instruments that the EU could select to achieve the emission reduction scenarios. In addition to their economic efficiency and environmental effectiveness, WP4 analyses various constraints, risks and bottlenecks that may affect the feasibility of enacting different policy pathways. This includes institutional, legal and administrative constraints, the role of energy infrastructure as a bottleneck, the material and financial resources required to implement the necessary investments, the uncertainty arising in terms of the policies’ impacts and interaction, and the political feasibility in terms of distributional impacts, public acceptance and stakeholder support. In this sense, WP 4 embodies the “radical but realistic” approach of the CECILIA2050 project: it takes as its starting point the need for a radical low-carbon transformation, as mapped out in the techno-economic decarbonisation scenarios, and the stylised combinations of policy instruments that are supposed to lead the EU economy onto a low-carbon development trajectory. These three combinations (described in Task 4.1 documented in Deliverable 4.1) have, as a starting point, a reasonable expectation of being able to bring about the desired emissions targets by 2030 and beyond, proposing realistic measures to achieve these objectives. However, the policy pathways have varying degrees of ‘radicalism’. While the Market-driven and the Technology-specific pathways propose a set of instruments that represents essentially an intensification of certain elements in the current climate policy instrument mix (similar instruments, yet at higher level of ambition), a Behavioural-driven pathway would require a more radical departure from the current policy framework. In this pathway emission reduction is mainly driven by a behavioural change of households and companies, which is encouraged and facilitated through a suite of policy instruments. In the following Tasks of WP 4, the techno-economic scenarios for decarbonisation and the potential instrument combinations were then subjected to a “reality check” by analysing a broad range of potential barriers, assessing to what extent these represent a limitation for ambitious climate policies, and identifies options of resolving, bypassing or overcoming these barriers. In this context, a particular interest was whether the different barriers had more or less effect on certain types of regulation, or whether the barriers were largely independent from the chosen regulatory approach.
In the context of the WP 5, examples of the radical and realistic view are the scenario analysis in Task 5.1 and the economic modelling exercises in Tasks 5.2 and 5.3 that that describe, respectively model, radical but feasible 2°C emissions mitigation scenarios for the EU and the world. The research is documented in Deliverables D5.1 D5.3b and D5.4. In terms of adding nuance to existing policy debates, the WP 5 also looked at the validity of claims that ambitious (radical) climate policy would risk de-industrialising the EU, and would therefore be economically detrimental, politically unfeasible, and hence ultimately unrealistic. This questions was investigated from two separate research angles, the results of which are documented in Deliverables D5.3a and D5.3b. Both researches arrived at the conclusion that energy-intensive industries such as the steel sector can be incentivised and supported to improve its energy and material consumption, reduce dependency on fossil fuels technologies and invest in innovative technologies and products which in the long term, would reduce carbon costs as part of the production costs and improve international competitiveness. The European steel sector could thus compete internationally through innovative high value-added products rather than on energy prices and volumes.
3.Has the project succeeded to develop and apply a wider notion of optimality, which extends beyond the narrow criteria of economic efficiency and effectiveness, and also includes aspects of (political, administrative and legal) feasibility in a way that is empirically well-founded?
The Working Definition of Optimality, which covers the dimension of (environmental) effectiveness, short run (static) and long run (dynamic) efficiency, and (political, legal and administrative) feasibility, was developed in the initial phased of the project (Task 1.1) is documented in Deliverable D 1.1 and continued to serve as the conceptual basis for the following work, and in particular as a reference point for optimality assessments conducted in various parts of the project, be it for individual sectors or policy instruments, or for the climate policy mix in its entirety.
For instance, various tasks in WP 2, whilst considering the key criteria of policy and policy mix effectiveness and cost-efficiency, explicitly considered aspects of political, administrative and legal feasibility. Key examples include Task 2.4 (documented in Deliverable 2.1) which viewed the climate policy mix in the food and agriculture sector across the EU against an assessment framework explicitly comprised of ‘effectiveness’, ‘cost-efficiency’ and ‘feasibility; Task 2.5a (documented in Deliverable 2.1) which analysed public preferences regarding policy and policy mix design; and Task 2.9 (documented in Deliverable 2.3) which assessed legal and institutional drivers and constraints to an effective and cost-efficient climate policy mix.
Similarly, the economic modelling conducted in WP 3 also integrated broader real-world notions beyond a pure economistic set of assumptions. This is based on the insight that the observable behavior of consumers, producers and investors cannot be explained by economic efficiency alone, as assumed in a setting of perfectly functioning markets. Real world decisions, by contrast, also reflect considerations of political, administrative and legal feasibility. The econometric estimation of behavioral equations in the model GINFORS includes these aspects in an empirically well-founded way.
In the structure of the project, WP 4 has been set up with the explicit intention of conducting a detailed analysis of various dimensions of political feasibility, by investigating a set of different barriers and constraints on the feasibility of ambitious climate policies. For instance, Task 4.9 analyses the political feasibility of climate policy instruments in the EU. They show that the EU ETS and carbon taxes are exposed to strong opposition if their impact on specific societal groups is evident. The feasibility of a market-based policy pathway would increase considerably if the EU ETS is reformed in order to improve its effectiveness. Likewise, Task 4.2 evaluates the legal feasibility of climate instruments and Task 4.6 addresses the role of uncertainty in the choice and the design of climate policy instruments, as well as their combination in a policy mix. The latter shows that subsidies to renewable energy may be justified as a kind of insurance.
Within the frame of the WP 5, a wider notion of optimality is embodied in Tasks 5.2 and 5.3. In Task 5.2: Instruments to mitigate adverse effects on competitiveness and leakage, the performance of policy instruments has been explicitly assessed against the criteria of environmental effectiveness, dynamic efficiency, political feasibility, and legal feasibility (see D5.3a Section 3.3 on Evaluation criteria and indicators for assessing policy options). The quantitative economic modelling approach also considered indicators of domestic and international political feasibility (see D5.3b Section 7: Optimality assessment).
In the concluding discussion in the frame of WP 6, the broadening of the concept of optimality beyond customary welfare approaches, first conducted conceptually and theoretically in Task 1.1 was further applied and elaborated at several levels in WP6. Thus, the concept of feasibility was further broadened beyond the legal, administrative and political feasibility, to include aspects of economic feasibility (linked to efficiency), social feasibility (linked to political feasibility), and legitimacy, as the broad acceptability of climate policy instrumentation within broader views on governance, including aspects of national autonomy and supranationality. These feasibility aspects allow for a reasoned assessment on how realistic the instruments strategies may be. Together with efficiency they relate qualitatively to the ultimate long-term optimality aspects: risks, costs and welfare.
4. Has the project succeeded to focus the analysis on combinations of different policy instruments, allowing a realistic assessment of the entire policy mix, and providing recommendations for the effective combination / sequencing of instruments?
Various Tasks in WP 2 assessed the effects of policy combinations, from which key insights were drawn. Key examples include Task 2.6 (documented in Deliverable 2.2) which assessed the combined effect of the EU ETS, renewable electricity support mechanisms and Environmental Tax Reforms on CO2 emissions, economic growth and employment in each Member State, Task 2.5b (documented in Deliverable 2.1) which modelled the effect of combining carbon taxes with retrofit obligations in the French domestic sector. Both studies concluded that renewable support mechanisms have thus far induced more CO2 abatement across the EU than the EU ETS. However, the latter concludes that the interaction between the two instruments has thus far not been negative, as the EU ETS cap was set in light of expected RES-E deployment induced by dedicated support mechanisms. Task 2.6 concludes that the combination of these instruments has not had a negative impact on economic growth (and may have been positive). Task 2.7 (documented in Deliverable 2.2) points to the importance of the broader institutional framework and networks for the performance of policy instruments: it observed that economic instruments have historically been effective in stimulating innovation, but that other non-policy market pressures and local ‘systems of innovation’ unique to different Member States and sectors are equally important. Likewise, Task 2.9 highlighted the role of the institutional configuration for the implementation and the effectiveness of climate policy, and suggested that using new regulatory approaches may trigger legal conflict, thus creating a path-dependence for climate policy instrumentation within the legal system.
In WP 3 three models, which together represent a broad methodological spectrum of economic environmental modelling, have been applied. Furthermore, a set of options (building blocks) for coherent instrument mixes in respect to European climate governance and a discussion on international climate policy was developed, defining the overall research framework. These different approaches yielded a common message, that a carbon price alone will not be able to reach a global CO2 emissions trajectory in line with the 2° limit, and will not deliver an 80% reduction in CO2 emissions in Europe. The presented abatement strategy focuses on sectoral approaches to decarbonise electricity production, electrify road transport and improve the energy efficiency of the building stock
Within WP 4, the policy combinations developed in Task 4.1 – which framed the subsequent analysis – in themselves represented combinations of different policy instruments, albeit with each expressing a strong focus on a particular category of policy instruments (market-based instruments vs. technology support, standards and regulation vs. soft measures). The analysis of constraints, risks and bottlenecks in the ensuing Tasks 4.2 - 4.9 then looked both at individual instruments as well as combinations of policy instruments. For instance, Task 4.5 assesses the Market-driven, the Technology-specific and the Behavioural-driven pathway in developing new infrastructure.
Finally, the concluding WP 6 introduced a further structuring element into the analysis of policy mixes, by distinguishing between two abstract and radical strategies, embodying regulatory philosophies and with associated policy instrumentation, with each realistically able in principle to reach the deep reductions by 2050 of in the order of 90% less CO2 emissions. These regulatory philosophies relate to a Planning & Control Strategy and an Institutionalist Strategy for climate policy instrumentation. In the Planning & Control Strategy, instruments regarding specific technologies have primacy. They comprise a combination of subsidies and standards for emission reducing technologies and behaviour, using taxes in specific circumstances for a fast phase out as of older coal fired power stations. National policies have primacy in most fixed investments, with EU primacy for movable products, especially in transport. EU directives and adjoining subsidies give guidance to national developments, including spatial planning. Electricity markets remain national substantially.
5. Has the project succeeded in combining the different modelling approaches in a way that supports the analysis by providing a coherent and consistent framework, but allows sufficient flexibility to focus on the most relevant aspects?
While economic models of different designs have been used to support analytical steps in various parts of the project, most of the modeling efforts conducted in the project were concentrated in the WP 3, which quantified techno-economic scenarios for the transition to a low-carbon economy. Within the WP three models were applied:
• The European Times Model (ETM-UCL) is a dynamic partial equilibrium energy system model with an inter-temporal objective function to minimise total discounted system costs, based on the TIMES model generator. It is a technology rich, bottom-up model with perfect foresight and covers energy flows across supply side and demand side sectors. The model comprises a total of thirty-one countries (EU28 plus Norway, Iceland and Switzerland) grouped into 11 regions along with a “global” region. Each region is modelled with supply, power generation and demand side sectors, and is linked through trade in crude oil, hard coal, pipeline gas, LNG, petroleum products, biomass and electricity.
• GINFORS is a global multicounty/multisector economic–environmental model. All countries in the EU27, all OECD countries, the BRIC countries and a “Rest of the World” region are explicitly modeled. It is a dynamic model which depicts the global economic, social and environmental relations for each country in deep product group detail (59), including the inputs of capital (fixed and intermediate), labour markets and the developments of all components of final demand depending on relative prices. The prices of all products are explained by the unit costs of the 35 sectors. The macro variables are given by explicit aggregation of the sectoral variables determining GDP as the aggregate of sectoral value added. International trade between all countries is depicted bilaterally for 59 product groups with price dependent structures. The energy intensities for heating, mobility and electricity for the use of machinery and household appliances are explained by relative prices for each of the 35 sectors and private households in each of the 39 countries. . The carrier structure also depends on their price relations. All parameters of the model are estimated econometrically.
• The EXIOBASE Input Output model distinguishes 44 trade linked countries with 129 sectors per country. The base year for the structural relations of the model is 2000. For the purpose of the study the countries have been aggregated into four regions: EU27, other High Income Countries, the BRICS and the Rest of the World including most African and Middle Eastern countries. Structural change of the economy and the energy system is given by exogenous assumptions. GDP Growth was taken from OECD growth perspective, and energy efficiency improvements were forecasted by trends.
One key result from the simulations with all three models was that a robust carbon price, while necessary for the transition, is insufficient in an of itself to achieve a transformation. Rather, it needs to be combined with a sectoral strategy that decarbonises electricity production, electrifies road transport and improves the energy efficiency of buildings.
Concerning the decarbonisation of the power sector three technologies can achieve this result: nuclear, CCS and renewables. In the GINFORS alternative policy simulations, due to a lack of public acceptance of this technology, and hence lacking political feasibility, nuclear follows the levels of the baseline. For the EU countries, these were taken from the EU reference scenario, for all other countries the planned capacities of the IAEA country nuclear power profiles 2012 were the data source. In the ETM-UCL simulations the level of nuclear power was held constant.
In the case of CCS such a clear judgement concerning public acceptance and political feasibility cannot be given. While a part of the political spectrum emphasises the risks and potentially dangerous side effects accompanied with the application of CCS, others do not see this or are convinced that further research will avoid these problems. Insofar we need a discussion about the acceptance of CCS, and if the expectation of severe risks cannot be eliminated we need a policy decision. Our simulations have shown that the targets might be met with CCS (ETM-UCL and EXIOBASE) but also without it (GINFORS).
If CCS is excluded subsidies or quotas for renewable energies might be necessary to avoid the ‘lock-in’ of existing installations. In the GINFORS simulations a quota for the total of renewables was introduced leaving the choice of the type of technology open to the market depending from the relation of unit costs. The decarbonisation of other ETS sectors like cement production is difficult to achieve: Even with high carbon prices the low extraction prices (especially for coal) in relation to the relatively low price elasticities will not create high enough shadow prices. This problem might be solved without the use of traditional climate policy instrumentation; the discussion on material inputs in the broader context of resource efficiency has shown that there are substantial inefficiencies in material inputs in all sectors of the economy due to market failures. This discussion will induce the implementation of material efficiency policy instruments including consulting and information programs to reduce the coefficients of material inputs in all stages of production. In the end, demand for basic products and their production will be reduced.
Electrification of road transport has a big potential for decarbonisation (EXIOBASE and GINFORS). How this potential will be used concerning the concrete policy mix that favours “clean” technologies and discriminates against cars driven by fossil fuels has been left open, but it could be shown that the choice of the vehicle technologies will be still open to the market.
The EXIOBASE and the GINFORS simulations have made clear that a core strategy consisting only of decarbonisation of the power sector and the electrification of road transport accompanied by an economy wide carbon price is not able to meet the targets. As the GINFORS simulations have shown the improvement of the energy efficiency of buildings and the improvement of material efficiency can close the gap.
The GINFORS simulations have shown that a combination of an economy wide carbon price with the sectoral strategy described above has the potential to reach the climate targets and at the same time raise GDP. The combination of economic instruments or regulations and their concrete formulation to push e-mobility, the inputs of renewables in the power sector and the renovation rate of buildings in combination with an economy wide carbon price has to be the subject of further considerations.
WP 4 combines qualitative and quantitative assessment. In the latter category, different modelling approaches were deployed to analyse climate policy instrument mixes: Task 4.4 used an econometric model to investigate how financial barriers affect investment in low-carbon technologies. Task 4.6 develops a stochastic model of the European energy sector to analyse how uncertainty may affect climate policy instrument mixes. The analysis of Task 4.9 is combined structured in-depth interviews, focus groups, an online survey and a policy simulation with relevant stakeholders in the EU climate policy domain.
Within WP 5, innovations in economic modelling have been made with respect to the analysis of carbon leakage. Task 2, Deliverable D5.2 decomposed the simulated future trajectory of carbon leakage into energy, terms-of-trade, and investment leakage channels. The simulations suggest that in this scenario the energy market channel dominates carbon leakage initially. However, over time the terms-of-trade effect and especially the international investment channel gain importance.
Task 3, Deliverable D5.4 employed a very innovative integrated assessment model that distinguishes between industrial and terrestrial emissions of greenhouse gases. The model tracks emissions and atmospheric concentrations of GHGs, carbonaceous aerosols, sulphur dioxide, and reactive gases and provides estimates of the associated climate impacts. An important feature of the GCAM architecture is the terrestrial carbon cycle model embedded within the agriculture-land-use system model. Thus, all land uses and land covers, including the non-commercial lands, are fully integrated into the economic modelling in GCAM. This coverage gives GCAM the capability to model policies that jointly cover carbon in all activities in the energy, agriculture, forest, and other land uses. In this study two sources of leakage are considered: one due to the different fuel prices in countries with a carbon target as opposed to countries without one (referred to as industrial carbon leakage or ICL), and the other resulting from a shift of biomass/food production that is carbon intensive out of regions with a carbon target to regions without one (referred to as terrestrial carbon leakage or TCL). The analysis shows the total leakage rates to be significant, in the period to 2050 TCL is the dominant form of leakage but in the period 2050-2100 it is ICL that dominates. The conclusion emerges that it is important to take terrestrial emissions into account, certainly for the medium term to understand leakage effects.
Potential Impact:
Potential strategic impact
European climate policy stretches back for more than 20 years, and over that time it has become increasingly complex, ambitious, pervasive and Europeanised. Since 2008, the European Council has repeatedly confirmed the EU objective of reducing greenhouse gas emissions by 80-95% by 2050 compared to 1990, and has also made reference to this objective in its Intended Nationally Determined Contribution submitted to the UNFCCC in the run-up to the Paris 2015 summit.
In the "Roadmap for moving to a competitive low-carbon economy in 2050" the European Commission sets out a plan to drastically reduce domestic emissions by mid-century. It shows how the sectors responsible for Europe's emissions - power generation, industry, transport, buildings and construction, as well as agriculture - can achieve the transition to a low-carbon economy over the coming decades. However, although there is a policy framework in place for the 2020 targets, the longer-term policy framework for the 2030 targets and beyond is still under development, and is only beginning to take shape. The CECILIA2050 project has responded to this urgent need by fostering the understanding of how the existing policy mix can be further developed and improved so as to ensure that these milestones can be met in the an environmentally effective, efficient and feasible manner, on the way to the 2030 and 2050 targets. It has done so, inter alia, in the following way:
1. In a set of modelling exercises (documented in Deliverables D 3.1 – 3.3) the project has developed techno-economic scenarios for the transformation to a low-carbon economy, providing insights into the scale of the transformation needed in different economic sectors, changes in infrastructure and technologies, and the intensity of policy interventions needed. This comprised economywide scenarios (including global interactions) derived from a global CGE model and an input-output model, as well as detailed analysis for the electricity generation and energy-using sectors.
2. Documented in Deliverable 4.1 the project has developed three distinct, stylised options of how the EU the climate policy mix could evolve in order to achieve the emission reduction scenarios. These three stylisded combinations of policy instruments have, as a starting point, a reasonable expectation of being able to bring about the desired emissions targets by 2030 and beyond, proposing realistic measures to achieve these objectives. However, the policy pathways express varying degrees of ‘radicalism’ in terms of whether they require merely the intensification of existing policies and removal of inconsistencies, or whether they represent a more radical departure from established policies. While the Market-driven and the Technology-specific pathways propose a set of instruments that represents essentially an intensification of certain elements in the current climate policy instrument mix (similar instruments, yet at higher level of ambition), a Behavioural-driven pathway would require a more radical change.
3. In a series of empirical analyses (documented in Deliverables D 4.2 – 4.5) the project has analysed key barriers and constraints that may affect the feasibility of enacting different policy pathways. This includes institutional, legal and administrative constraints, the role of energy infrastructure as a bottleneck, the material and financial resources required to implement the necessary investments, the uncertainty arising in terms of the policies’ impacts and interaction, and the political feasibility in terms of distributional impacts, public acceptance and stakeholder support.
Identify faster and more cost-effective greenhouse gas emissions reductions pathways
The CECILIA2050 project has identified faster, smoother and more cost-effective emission reduction pathways by improving the mix of climate policy instruments that guide economic and social development patterns in Europe. The research has analysed a number of market imperfections, bottlenecks and limitations that limit the efficiency and effectiveness of policy instruments and their combinations.
In particular, the project has taken a critical look at the potential for economic instruments (carbon pricing) to achieve fast and cost-effective emission reduction. It has empirically analysed key barriers and constraints that inhibit economic instruments from exploiting their full potential, but has also critically reflected on the inherent limitations of carbon pricing. In doing so, the research has followed a broad interpretation of economic instruments, including not only explicit pricing tools but also other instruments that affect the economic incentives of decision makers. Furthermore, the project has paid special attention to the interactions between different policy instruments, and analysed ways of optimising these interactions through active management or through smart instrument design.
The relevant findings and research results are documented in the following items:
1. A set of nine empirical studies, documented in Deliverables 2.1 – 2.4 has identified and assessed market imperfections and limitations of the current instrument mixes employed by the EU and at the level of its Member States. These analyses have looked at the limitations encountered a number of key sectors (energy, transport, industry, households, food and agriculture), as well as a number of cross-cutting factors that serve to explain the instrument choice and the functioning of policy instruments and their combinations (such as legal and institutional frameworks, availability of finance and the propensity to innovate).
2. A set of eight empirical investigations, documented in Deliverables 4.2 – 4.5 has identified and assessed market imperfections and limitations that will shape the European climate policy going forward, and which limit the (political, legal and administrative) feasibility of certain reform options. These analyses included institutional and legal conditions for EU climate policy, the availability of finance and the availability of material resources, as well as the importance of physical infrastructure particularly for the energy sector. Furthermore, the project empirically researched constraints on the political feasibility of instrument choices, in terms of the public acceptance of different climate policy instruments, their distributional implications as well as policy makers’ understanding of and preferences for different policy designs.
3. The empirical research has given rise to a set of recommendations to overcome market imperfections and limitations, in order to exploit more fully the potential of economic instruments in climate policy. These recommendations, made both for the short to medium term (towards 2030) and for the medium to long term (towards 2050) are based on the analysis of the performance of existing policies and the identified barriers that inhibit their performance, and suggest ways of resolving, bypassing or overcoming these barriers. For the longer term, the recommendations also aim to provide strategic guidance for the long-run orientation of climate policy, based on different fundamental perceptions of the possible role of climate policy and the distribution or knowledge and responsibilities between the public sector, businesses, consumers and civil society.
Foster faster introduction of highly innovative and low carbon technologies
The transformation to a low-carbon economy will require unprecedented levels of innovation in low-carbon technologies, the subsequent roll-out of these technologies through investments, including infrastructure, but also major changes in behaviour patterns and institutions. Such innovation will not come about through market processes alone – it will need to be driven, stimulated and supported by many facets of public policy. The CECILIA2050 project has determined how the current policy instrument mix has influenced the innovation system in terms of encouraging low-carbon solutions. The project has also improved our understanding of how public policy has stimulated – or should stimulate – innovation and environmental R&D. It has also analysed some of the conditions that determine the speed at which technologies can diffuse throughout the economy, including the availability of finance for low-carbon technologies, the necessary changes of the energy infrastructure, but also the response of consumers and the public at large.
The relevant findings and research results in relation to innovation and low carbon technologies are documented in the following items:
1. Understanding the performance of existing innovation policy frameworks in general, and the effects of climate policy instruments on innovation and diffusion activities, as documented in Deliverable D 2.2.
2. Modelling the need for radical innovation as part of techno-economic decarbonisation scenarios, in order to understand the magnitude of change required in key sectors – resulting inter alia in the observation that a decarbonised economy will also require a massive increase in resource efficiency, in terms of reducing the overall throughput of energy-intensive sectors that form the resource base of the economy, as documented in D 3.2 and 3.3.
3. Empirical analysis of the framework conditions that are decisive for a fast uptake of new technologies, including the availability of finance, material resources, public and private infrastructure and public acceptance / consumer behaviour. These analyses, and recommendations deriving from them, are documented in Delieverables D 4.2 4.3 and 4.5.
4. Recommendation on the design of policy instrument mixes that foster innovation and low carbon technologies key economic sectors, as documented in Deliverables D 6.1 and D 6.2.
Secure increased EU competitiveness on global markets.
The CECILIA2050 project sought to contribute to increased competitiveness of EU firms on global markets in two ways: first, describe radical innovation pathways in key economic sectors commensurate with the goal of decarbonisation, as well as examining policy instrument mixes on their ability to lead key sectors onto those pathways, with the aim to deliver low-carbon technologies that significantly reduce emissions and give European producers a competitive edge on the growing global market for such technologies. In addition, the project also conducted empirical research to better understand of the adverse impacts that climate policies may have on established industries, especially in the short to medium term, and especially if countries outside the EU should not be pursue comparably ambitious climate policies. The research quantified the risk of possible adverse impacts on competitiveness and carbon leakage, it analysed options to contain these risks from an economic, legal and political angle, and looked into options to increase the efficiency of the EU instrument mix through enhanced international cooperation.
The relevant findings and research results are documented in the following items:
1. A quantitative modelling of radical innovation pathways needed in key economic sectors in order to significantly reduce emissions, documented in Deliverables D 3.2 and 3.3
2. Empirical analysis of the competitiveness and carbon leakage risks implied by current climate policies, documented in Deliverable D 2.2
3. Empirical analysis of the competitiveness and leakage risks implied by more ambitious EU climate policies in the future, under various assumptions on the evolution of international climate policy, as well as the discussion of options to address adverse impacts on competitiveness and leakage risks, including an analysis of the economic, political and legal feasibility of such options, documented in Deliverables D 5.2 and 5.3
4. Empirical analysis of the global effects of EU climate policies and the interrelations between EU efforts and efforts abroad, documented in Deliverable D 5.4.
Steps to bring about these impacts
The impacts of policy-relevant scientific research is achieved in many ways over the short and longer term, through the transmission of ideas and opinions from academia into the political process, through the movement of people and through the transfer of data and methods. Projects are able to influence these impacts by being excellent and relevant, by working through formal and informal networks and by communicating well. An essential component of this process is two-way communication: from the side of the researchers, the task is not only to present research findings in a way that connects to policy debates; but equally important to engage with stakeholders and political decision makers to understand their view of the political process, in order to frame the analysis to provide relevant answers to relevant questions, and to be able to connect research findings to the political debate. From this angle, and given the fact that the project’s 2012 – 2015 duration coincided with a decisive period in the formulation of EU climate policies, ongoing exchange with practitioners and their involvement in the framing of the research (to the extent feasible) was of particular importance.
The CECILIA2050 has worked to maximise its impacts through the following activities and approaches:
1. Excellent research: The foundation for being relevant was to base all findings on high-quality science, using state-of-the-art methods and tools, keeping up to date with the cutting edge of research, based on solid and well-documented empirical data and methods, evidenced in excellent publications. This was achieved, inter alia, by regular peer-review of project outputs prior to publication, and is evidenced by a good record of high-quality academic publications emanating from the project.
2. Bridging academic methods and real-life requirements: Out of the researchers who shaped CECILIA2050, several routinely work on the interface between policy and science, and are therefore well versed both in academic debate and discussions with policy makers and civil society. In the practical operation of the project, such exchange was achieved above all through the ongoing interaction with the Science and Policy Advisory Board: the comprised of 12 leading experts from European and Member States institutions, academia, business associations, environmental NGOs and trade unions. The Advisory Board met with members of the research consortium on five occasions to discuss the project progress, to provide strategic guidance to the project, to assist in framing part of the research questions, to provide a sounding board for testing key assumptions and (interim) results, and to help maximise the policy relevance and potential policy impact of the research. In addition, a number of Advisory Board members have reviewed draft project reports, and provided valuable feedback. Furthermore, a four project workshops (Brussels, Dublin, London and Prague) and two project conferences (both in Brussels), which were attended by a mix of academic researchers, policy makers, business stakeholders and civil society, provided room for debate between the research team and the policy community. Finally, smaller events including side events at UNFCCC conferences and meetings, an internal workshop at the European Environment Agency, and a project presentation at the German Federal Environment Agency helped to collect further insights to enhance the policy relevance of the research.
3. Working across disciplines for relevant results: From the outset, the project has sought to combine methods from economics, law, political science and other disciplines, and has brought together researchers with different background. In doing so, the project’s ambition has been not only to identify possible solutions, but to also offer recommendations on how to implement them. This approach is exemplified, inter alia, in the legal and institutional analyses of existing climate policy (Deliverable D 2.3) and the forward-looking analysis of legal and institutional conditions for future climate change (contained in Deliverable 4.2). Other examples include the empirical analyses of the public acceptability of / public preferences for different climate policy instruments, as well as the simulation-based assessment of policy maker’s preferences for different policy design options (both containted in Deliverable 4.5).
4. Involvement of stakeholders in research: This was achieved, in particular, through the Science and Policy Advisory Board referred to above, which had a strong role in aligning the framing of the research (to the extent possible within the limits of the Description of Work) with the policy debates. In several tasks, stakeholder input was an explicit part of, or even the basis for, empirical research – above all in the research on the political feasibility of different policy instruments (Task 4.9 documented in Deliverable D 4.5) which involved 22 stakeholders in a policy simulation exercise (in addition to a series of interviews, focus groups and an online survey). Stakeholder involvement through workshops and interviews also featured prominently in several other tasks, including Tasks 2.7 on Innovation, 4.2 on Institutional and Legal aspects or 4.4 on Finance. In addition, policy makers and other stakeholders were involved as speakers and as participants in all public project events, above all the two project conferences, but also the smaller workshops and other events.
5. Policy-relevant deliverables produced in readable formats: In addition to the scientific output – contained in 47 substantive research reports, organised into 30 Deliverables, as well as17 journal articles and nine other academic publications – the main project results are also documented in a suite of six policy briefs. The CECILIA2050 Policy Brief series were published in tandem with the project progress, summarising key insights for an audience of policy makers and other stakeholders, and where possible relating them to current EU policy debates.
6. National level outreach events: At the end of the project (October 2015), a series of eight half-day events took place in Amsterdam, Berlin, Bilbao, London, Paris, Prague, Rome and Warsaw to disseminate project results in a country-specific way, and to stimulate discussion of how the findings relate to the national discussions.
7. Personal networks with policymakers at EU and national levels: Finally, in addition to the more formalised channels above, continuous engagement with EU and Member State policymakers formed the basis for the science-policy exchange, working to ensure the policy relevance of the research approach and outcomes, feeding information in both directions and ensuring that policy and research networks are made use of efficiently.
Main Dissemination Activities
The CECILIA2050 project facilitated the effective dissemination of its research results by using a variety of communication tools and activities. The dissemination strategy aimed particularly at targeting specific audiences and at making the results easy to access and to grasp. The latter was primarily achieved with the creation of a project website, which made the research reports as well as further information on the project, its members, and project related events publically available. In addition to this, the social media platform Twitter was used to distribute information about research results and project events to relevant climate policy stakeholders. In addition to rhe regular project reports, six Policy Briefs were published, presenting key results of different report packages in a brief and comprehensible manner, to make the research results of the project easy to grasp for policy makers, the media, and the broader public. Additional publications, including articles in peer reviewed journals, monographs and university papers were used as a means to communicate the results of the project to the scientific community. The publication of the research results in scientific publications was an important aspect of the dissemination strategy and aimed connecting the research to the ongoing scientific debate as well as advancing the state of the art and providing links for further research.
The dissemination strategy of the CECILIA2050 project also included the organisation of a number workshops and conferences. If possible the events were organised timely, to connect the current research results with the policy-making process and important political events. The mid-term conference of the CECILIA2050 project serves in this case as good example: it took place March 2013, shortly after the expected publication of the European Commission’s policy package on the 2030 targets and instruments. Senior officials from the European institutions, policy experts and other stakeholders from research institutions, NGOs, and the private sector attended the conference. The event provided thus a opportune moment for presenting the research results from the first phase of the project to a larger audience, connecting them to the public debate, and eliciting feedback and inputs to inform the second phase of the project.
To ensure policy relevance and mobilise practitioners’ knowledge, the project has been engaging with stakeholders in different ways throughout the project, particularly through workshops, dedicated events for stakeholder outreach and engagement, and through the continuous guidance of a Science and Policy Board of high-level experts. The CECILIA2050 project organised, or was represented at, the following workshops and events:
Dedicated CECILIA2050 Conferences and Workshops
Two major conferences and a number of dedicated project workshops was organised (or co-organised) by the CECILIA2050 project, targeting a mixed audience of policy makers, stakeholders, academia and think tanks. The headline events of the project were the two project conferences: the mid-term conference (Brussels, March 2014) and the final conference of the project (Brussels, June 2015), two one-day conferences that presented results and insights from the project in several sessions; in both cases opened by a keynote address from senior officials in DG Climate (Mr. Peter Vis / Mr. Damien Meadows), and in both instances concluding with a panel of senior researchers, policy makers and other stakeholders. For both conferences, individual members of the CECILIA2050 Science and Policy Advisory Board were actively involved as speakers, commentators or panelists. In addition, the CECILIA2050 project was one of three FP7 projects featured prominently at the Scientific Conference Research for a Post-Carbon Future organised by the Ecologic Institute (Berlin, September 2014), which also included contributions from the projects POCACITO and MILESECURE.
In terms of workshops, a number of public workshops was organised throughout the project: an initial one-day policy workshop on the status and future of European climate policy (Brussels, February 2013), a two-day seminar jointly organised with the ENTRACTE project (Dublin, September 2013), a one-day workshop on long-term climate policy scenarios (London, October 2013), as well as a one-day workshop on future options for EU climate policies and their public acceptability (Prague, October 2014). All of these workshops targeted a mix of researchers and practitioners (policy makers and other stakeholders), both as speakers and as participants. Members of the CECILIA2050 Science and Policy Advisory Board contributed actively as speakers and panellists to three of the four workshops.
Finally, a suite of eight half-day dissemination workshops was held in October 2015 in the eight EU countries in which CECILIA2050 consortium partners are based. The events in Amsterdam, Berlin, Bilbao, London, Paris, Prague, Rome and Warsaw to disseminate project results in a country-specific way, and to stimulate discussion of how the findings relate to the national discussions.
Contributions to Other Events: Academic Dissemination
More academically-oriented dissemination included presentations at am international symposium on emissions trading (Beijing, October 2013), seminars on European Climate Policy at Johns Hopkins University, DC and Duke University, NC, policy sessions at the 14th World Congress of Environmental & Resource Economists (Istanbul, July 2014) and at the 15th World Congress of Environmental & Resource Economists (Helsinki July 2015), and three sessions at the conference “Our Common Future under Climate Change” (Paris, July 2015). Furthermore, CECILIA2050 results were presented at presentations and lectures at the International Conference Governance of a Complex World 2014 (Turin, June 2014), at the Annual Conference of the Italian Regional Science Association (Padua, September 2014), at the Annual Conference of the Green Growth Knowledge Platform (Venice, January 2015), at the SENIX Conference (The Role of Social Sciences in a Low-Carbon Energy Mix) (Stockholm, May 2015), and at the Annual Conference of the European Sociological Association (Prague, August 2015). The full list of presentations, lectures, workshop contributions and other speaking engagements can be found in the table of dissemination activities.
Outreach to Policy Makers and Stakeholders
Dedicated outreach to policy makers and stakeholders included side events organised at UNFCCC Conferences (COP-18 in Doha, COP-19 in Warsaw and the June 2015 SBSTTA meetings in Bonn), project presentations and high-level discussions at the German Federal Environment Agency in (Dessau, February 2014), at the European Environment Agency (November 2014) and at DG Energy (Brussels, February 2015), a project presentation at the third European Environmental Evaluators Network Forum (Helsinki, April 2014) and oral contributions based on CECILIA2050 research at the high level conference “Looking Back at Ten Years of the EU ETS” (Florence, May 2015).
The implementation of the project was supported by a distinguished Science and Policy Advisory Board, comprised of 12 leading experts from European and Member States institutions, academia, business associations, environmental NGOs and trade unions. The Advisory Board has met on five occasions to discuss the project progress, to provide guidance on the direction of the research, and to help maximise the policy relevance and potential policy impact of the research. In addition, a number of Advisory Board members have reviewed draft project reports, and provided valuable feedback. Finally, Advisory Board members have had leading roles as speakers, panellists or commentators in the events organised by the CECILIA2050 project.
The project website is available at www.cecilia2050.eu and provides an up-to-date inventory of the research work published by the CECILIA2050 project, as well as documentation of all events.
In terms of dissemination and outreach, the most significant achievements were:
• The continuous, active and high-level involvement of the Science and Policy Advisory Board, representing a range of important relevant stakeholder constituencies, providing additional insights to the project and helping to ensure the policy relevance of its findings.
• Visual identity with high recognisability and applicability across all dissemination products
• Good name recognition among relevant policy stakeholders
• Successful conferences with good external participation, all partners present and several Board members, as well as several additional high-level external speakers
• Broad but targeted outreach via a range of activities and channels, reaching the target audience successfully
List of Websites:
http://cecilia2050.eu
Permanent email address for contact: cecilia2050@ecologic.eu
Coordinator contact information:
Mr. Benjamin Görlach
Ecologic Institute
benjamin.goerlach@ecologic.eu
The December 2015 Paris Agreement has put the goal of a decarbonised global economy within the realm of conceivable options. Already in 2008, the EU had declared its ambition to build a low-carbon economy by the middle of the 21st century. Achieving this target will require a transformation of the European economy, affecting a range of sectors – power generation, industry and transport, but also agriculture, construction or finance. Governing this transformation in an effective and efficient way is a challenge – a task that includes stimulating the necessary innovations, ensuring public support, encouraging the needed investments, providing for the right infrastructure, and avoiding lock-in into carbon-intensive technologies.
To manage the transformation to a low-carbon economy, a range of policy instruments is necessary. The EU and its Member States already apply a mix of climate policy instruments, yet these are not sufficient for the task, and need to be scaled up drastically. But to increase the scale and ambition of climate policy, it is essential to understand and to manage the interaction of policy instruments, and to overcome constraints on the political, legal and administrative feasibility. Policies that have worked well in an economic niche are not necessarily suited to guide economic development on a broad scale; instruments that have co-existed well on a small scale may conflict when scaled up to an economywide level.
The CECILIA2050 project has taken on this challenge. In a joint research effort by ten partners from eight countries, the research project has investigated how the existing mix of climate policy instruments needs to evolve, in order to transform the EU towards a low-carbon economy. To this end, the CECILIA2050 project combined a backward-looking (ex-post) stocktaking exercise with a forward-looking (ex-ante) analysis of the necessary policy changes in the medium (2030) and long run (2050). The latter combined model-based techno-economic scenarios – to understand the timing and the dimension of change needed in key sectors – with more detailed, empirical analysis of individual policy instruments and their interactions. In the latter analysis, the project placed particular emphasis on the role of economic instruments in the policy mix, understanding their role in a broader policy mix, and finding ways to exploit their potential more fully. This included empirical analyses of major barriers that inhibit more effective and efficient climate policy – such as acceptance by stakeholders and the public at large, distributional effects, availability of finance, physical infrastructure, but also the administrative and legal framework of EU climate policy.
The research confirms that carbon pricing should be at the heart of any climate policy mix aiming to be ambitious and yet efficient. Yet, for a number of reasons, the current pricing tools in the EU do not deliver a strong enough carbon price. Time is of the essence: in light of the time lags and the path dependency in investment decisions, the EU need to have a meaningful carbon price sooner rather than later. Still, a strong carbon price is no panacea either, but needs to be part of a mix, which employs different tools to addresses different target groups. This is bound to lead to instances where policy instruments overlap, which will create friction and may reduce overall efficiency. The challenge is therefore to better anticipate and manage policy overlaps where it occurs.
Project Context and Objectives:
The Paris Agreement adopted in December 2015 under the United Nations Framework Convention for Climate Change, and the good spirits and intentions that made it possible, have put the option of a decarbonised global economy within the realm of the thinkable options. The EU has repeatedly declared its ambition to transform itself to a low-carbon economy by the middle of the 21st century. This transformation process will require an overhaul of the European economy, affecting a range of sectors – not only power generation, industry and transport, but also agriculture, construction or finance. Governing this transformation process is a huge challenge – stimulating the necessary innovations, ensuring public support, encouraging the needed investments, creating the right infrastructure, and avoiding lock-in into carbon-intensive technologies.
The EU is in a special position in this respect: on the one hand, it can build on more than two decades of climate policy, reflected in a number of short- and long-term targets for climate and energy policy, and a suite of climate policy instruments intended to achieve them. On the other hand, there is a gap between the level of ambition expressed in the long-run targets, and the effectiveness of the instruments currently in place. This is confounded by the fact that neither the targets nor the instrument mix are free from inconsistencies, especially when considering interactions with neighbouring policy areas, such as energy or the internal market. And last not least, the EU itself is not a unified actor: between the EU and its 28 Member States, there are diverging visions on the low-carbon future for the EU economy and the policies and instrumentation leading towards it.
To manage the transformation to a low-carbon economy in Europe, a substantial overhaul of the existing mix of climate policy instruments is necessary. In terms of their ambition and reach, existing instruments needs to be scaled up drastically to initiate the necessary changes. But as the scale and scope of instruments increases, it becomes more important to understand and to manage their interaction, as well as the constraints on the political, legal and administrative feasibility. Policy solutions that have worked well in a niche are not necessarily suited to guide economic development on a broad scale; instruments that have co-existed well on a small scale may conflict when scaled up to an economywide level. To evaluate their efficiency and effectiveness, policy instruments thus cannot be viewed in isolation; understanding and managing their interaction becomes key.
The CECILIA2050 project has taken on this challenge: to understand how policy instruments work in interaction, what factors determine their performance, and how the European climate policy instrument mix could evolve to guide the transformation to a low-carbon economy. It places a particular focus on the role of economic instruments in the policy mix, understanding their limitations and finding ways to enhance their performance. The project has researched ways to improve the economic efficiency and environmental effectiveness of the instrument mix, while deepening the understanding of constraints that limit the feasibility of ambitious climate policies, or affect their performance. These constraints include public acceptance, availability of finance and the physical infrastructure, but also the institutional, administrative and legal framework of EU climate policy. To achieve this, the CECILIA2050 project combines a backward-looking (ex-post) and a forward-looking (ex-ante) analysis.
The first, backward-looking part of the project took stock of the existing instrument mix in the EU and its Member States, and has assessed overall their coherence and their past performance. This was achieved in two stages:
First, the initial stage of the project defined the terminology, and created an inventory of the policy instruments already in place. The terminology included both a working definition of the concept of optimality – combining environmental effectiveness and economic efficiency with political, legal and administrative feasibility – as well as a taxonomy of different types of policy instruments. The inventory of policy instruments looked at the suite of climate policy instruments that are currently applied in the eight EU countries that are covered by the CECILIA2050 consortium, as well as at the EU level. Finally, an initial assessment looked at how well the different climate policy instruments were performing, and which interactions could be observed both within and across policy landscapes.
The second stage of the project (Work Package 2) built on the results of the first by taking a deeper look at the functioning of the existing climate policy instruments – either focussing on a particular economic sector, or on particular cross-sectoral policy objectives. Thus, a suite of sectoral analyses looked at the energy sector, the impacts on selected industries, transport, food and agriculture as well as buildings and private households. In addition, cross-sectoral analyses investigated the impact of current climate policies on innovation, international competitiveness and overall economic development. A further analysis looked at the legal and institutional framework of climate policy in Europe, and how this has shaped the existing climate policy mixes in Europe. The different analyses in this second stage of the project applied a range of methods and tools, ranging from literature reviews to different qualitative techniques, including structured interviews with stakeholders, questionnaires, surveys, and to different macro- and microeconomic modelling approaches.
The second, forward-looking part of the project has mapped pathways towards a more ambitious policy mix for 2030 and 2050, starting from the current EU climate policy. With economic instruments at the heart of the mix, it described how the instrumentation could evolve, based on scenarios of the magnitude of change required for the low-carbon transformation. To this end, it combines the state of the art modelling tools with qualitative and participatory methods. The work in the forward-looking part was organised in the following work streams: first, the elaboration and quantification of long-term scenarios for the low-carbon transformation in Europe and internationally, second, the mapping of concrete policy pathways, departing from the current policy mix and leading towards a more “optimal” policy mix for 2030 and beyond, and third, an analysis of the effects of EU climate policies at the global level, as well as the interaction between EU climate policies and global developments.
The first work stream concerns the definition of scenarios for the low-carbon transformation with a view to 2050. This work combined different approaches: first, two modelling frameworks were applied to derive techno-economic transformation scenarios towards 2050. This was done a) with a focus on the energy sector, describing in detail the needed transformation of energy supply and energy use in Europe, and b) in an input-output framework, to understand the types of technological innovation and behavioural change (i.e. changes in consumption patterns) necessary for a drastic reduction of greenhouse gas emissions. These techno-economic scenarios are complemented by policy scenarios – both as idealised ‘building blocks’ for a future European climate policy instrument mix, as well as a set of international scenarios, that describe how the international context for climate policy could evolve in the future. The common feature of all these scenarios – both techno-economic and policy scenarios – is that they represent internally consistent, but idealised projections of how the world (i.e. the political, economic, social and technical systems they describe) might evolve. As such, while the scenarios should have a minimum plausibility, the aim of the research was not to assign probabilities to the scenarios – i.e. to predict how the world will (or should) evolve, but rather to express the magnitude of change that is required in the key sectors to achieve a low-carbon transformation.
The second work stream in the forward-looking part of the project, the mapping of policy pathways to 2030 and beyond, has defined possible pathways for how EU climate policy instrumentation might evolve – taking the current policy mix (and its identified shortcomings and deficiencies) as a point of departure. This part of the project thus aims to connect the stocktaking of current European climate policy with the different techno-economic and policy scenarios: while the stocktaking describes where we stand now, and what problems the existing policy mix is facing, the scenarios offer a perspective on where we need to get in 2050, and illustrates the size of the political, economic, social and technological challenge ahead. The function of the policy pathways is to reconcile these two angles, to show how the current EU climate policy could evolve until 2030 and beyond, in order to move into the direction established in the different scenarios. Based on the current EU climate policy mix, these policy pathways embody different philosophies as to how European climate policy may plausibly evolve. Three main policy combinations were defined, differing in terms of the emphasis placed on particular types of instruments: (i) technology-neutral market-based instruments, (ii) technology-specific regulation and technology support measures, and (iii) policies aimed at changing behaviour by individuals and businesses. In addition, these main combinations were combined with different assumptions about the future of EU governance (towards more centralised vs. decentralised governance) and global climate policy cooperation (towards more coordination vs. fragmentation).
In subsequent steps, these policy pathways and the techno-economic scenarios for decarbonisation previously defined then served as a point of reference for an in-depth analysis of main barriers and constraints for more ambitious climate policies emerging from the current policy mix. This “reality check” analysed a broad range of potential barriers, constraints and bottlenecks, assessing to what extent these represent a limitation for ambitious climate policies, and identified options of resolving, bypassing or overcoming these barriers. In this context, for instance, research investigated the institutional and legal conditions for EU climate policy, including the adequate balance between centralised and decentralised climate instruments; other tasks looked at the necessary instruments to encourage innovation in low-carbon technologies and deliver new energy infrastructure; or the extent to which the availability of material resources may constrain low-carbon development. Other tasks applied empirical methods to research the public acceptance, or the distributional implications of different climate policy instruments. Finally, political science approaches were used to evaluate the political feasibility of implementing different policy instruments, by investigating policy makers’ understanding of and preferences for different policy designs in a serious gaming exercise.
A third work stream then investigated the interactions between EU climate policy and the global economy. This included socio-political and quantitative economic analyses of the future risk of carbon leakage, as well as options to reduce this risk, concluding that energy-intensive industries can be incentivised and supported to improve their energy and material consumption, reduce dependency on fossil fuels and invest in innovative technologies and products, improving their international competitiveness. In addition, model-based decomposition simulated the future trajectory of carbon leakage into energy, terms-of-trade, and investment leakage channels, suggesting that while the energy market channel dominates initially, the terms-of-trade effect and especially the international investment channel gain importance over time. Finally, an integrated assessment model was deployed to model the global distribution of industrial and terrestrial GHG emissions, investigating leakage risks due to differential fuel prices (industrial carbon leakage) vs. those resulting from a shift of carbon-intensive biomass/food production.
To ensure policy relevance and mobilise practitioners’ knowledge, the project has been engaging with stakeholders in different ways throughout the project, particularly through workshops, dedicated events for stakeholder outreach and engagement, and through the continuous guidance of a Science and Policy Board of high-level experts.
Dedicated project workshops and conference organised (or co-organised) by the CECILIA2050 project, targeting a mixed audience of policy makers, stakeholders, academia and think tanks: The headline events of the project were the two project conferences: the mid-term conference (Brussels, March 2014) and the final conference of the project (Brussels, June 2015). In addition, CECILIA2050 featured prominently at the Scientific Conference Research for a Post-Carbon Future (Berlin, September 2014). In terms of workshops, a suite of public workshops was organised throughout the project: including on on the status and future of European climate policy (Brussels, February 2013), a seminar jointly organised with the ENTRACTE project (Dublin, September 2013), a workshop on long-term climate policy scenarios (London, October 2013), as well as a workshop focusing on the public acceptability of EU climate policies (Prague, October 2014). Finally, a suite of dissemination events was held in eight countries in October 2015 .
More academically-oriented dissemination included presentations at am international symposium on emissions trading (Beijing, October 2013), seminars at Johns Hopkins University, DC and Duke University, NC, a policy session at the 14th World Congress of Environmental & Resource Economists (Istanbul, July 2014), and two sessions at the conference “Our Common Future under Climate Change” (Paris, July 2015).
Dedicated outreach to policy makers and stakeholders included several side events organised at UNFCCC Conferences (COP-18 in Doha, COP-19 in Warsaw and SBSTTA meetings in Bonn), internal workshops at the German Federal Environment Agency (Dessau, February 2014) and the European Environment Agency (November 2014), and a presentation at the third European Environmental Evaluators Network Forum (Helsinki, April 2014).
The implementation of the project was supported by a distinguished Science and Policy Advisory Board, comprised of 12 leading experts from European and Member States institutions, academia, business associations, environmental NGOs and trade unions. The Advisory Board has met on six occasions to discuss the project progress, to provide guidance on the direction of the research, and to help maximise the policy relevance and potential policy impact of the research. The project website is available at www.cecilia2050.eu and provides an up-to-date inventory of the research work published by the CECILIA2050 project, as well as documentation of all events.
Project Results:
The S&T results of the CECILIA2050 project are documented in a set of 47 substantive research reports and 7 organisational reports (such as conference proceedings). These documents are organised into 30 Deliverables, all of which have been completed and submitted. With the exception of three internal, purely organisational reports, all these project outputs are available for download on the CECILIA2050 website at http://cecilia2050.eu. In addition, the research results of the CECILIA2050 project have given rise to 17 publications in peer-reviewed journals, two book chapters, one scientific monograph and six theses or dissertations. Finally, the main project results are also documented in a suite of six policy briefs, which summarise key insights from the project and relate them to current EU policy debates.
In terms of evaluating the scientific impact of the project, and the progress achieved beyond the scientific state of the art, the following discussion is structured around key five dimensions. As outlined in the original description of work, the way in which the CECILIA2050 project aimed to advance the state of art, and address identified shortcomings of established approaches in the field of environmental economics and political science was summarised in the following way:
Dimension / Objective 1. CECILIA2050 will take an inter-disciplinary and geographically diverse approach to the evaluation of economic policy instruments to ensure that results are useful to EU policy makers
Guiding question(s) to evaluate project success: Has the project succeeded in drawing on insights from different disciplines, and combining these different perspectives to derive useful and realistic conclusions? Has the project succeeded to mobilise standpoints and experiences from different EU Member States, to reflect the current state of climate policies in Europe?
Dimension / Objective 2. CECILIA2050 will focus attention on the need for radical change required in order to meet the EU’s long-term climate objectives.
Guiding question(s) to evaluate project success: Has the project succeeded to deliver a “radical and realistic” view, i.e. to combine a top-down view of the scale of change that needs to be achieved by mid-century with the bottom-up view of how this transformation can be initiated, departing from the current endowment of European climate policies?
Dimension / Objective 3. In order to assess different policy instruments, CECILIA2050 will adopt a broad notion of optimality, which does not only analyse what looks best in theory, but also what is the most expedient way forward under real-life constraints.
Guiding question(s) to evaluate project success: Has the project succeeded to develop and apply a wider notion of optimality, which extends beyond the narrow criteria of economic efficiency and effectiveness, and also includes aspects of (political, administrative and legal) feasibility in a way that is empirically well-founded?
Dimension / Objective 4. CECILIA2050 will analyse combinations of policy instruments and their interaction, rather than optimising individual instruments. It will draw on insights from different disciplines to understand the constraints that limit the performance of instrument mixes, and derive options to tackle these.
Guiding question(s) to evaluate project success: Has the project succeeded to focus the analysis on combinations of different policy instruments, allowing a realistic assessment of the entire policy mix, and providing recommendations for the effective combination / sequencing of instruments?
Dimension / Objective 5. CECILIA2050 will utilise innovative modelling combinations to enhance the ability of existing quantitative tools to inform policy requirements over the very long run.
Guiding question(s) to evaluate project success: Has the project succeeded in combining the different modelling approaches in a way that supports the analysis by providing a coherent and consistent framework, but allows sufficient flexibility to focus on the most relevant aspects?
The following section is structured around these five dimensions, and explores how the work conducted in the different work packages has served to advance the state-of-the-art.
1. Has the project succeeded in drawing on insights from different disciplines, and combining these different perspectives to derive useful and realistic conclusions? Has the project succeeded to mobilise standpoints and experiences from different EU Member States, to reflect the current state of climate policies in Europe?
The various tasks in WP2 assessed the EU climate policy mix, or aspects of it (including economic instruments, but also regulatory and behavioural instruments), using a range of analytical approaches. It also assessed Member State level policies, and effects of EU policy at the Member State level.
• In particular, the key instruments of the EU ETS and renewable electricity (RES-E) support mechanisms were assessed from a range of perspectives, using different analytical approaches and methods, and for different purposes. Thus, Task 2.6 (documented in Deliverable 2.2) used the economic-environmental model GINFORS to assess the impact of these instruments, both individually and in combination (along with Environmental Tax Reforms in eight Member States), on CO2 emissions, economic growth and employment, for each of the EU Member States. This was supported by a review of econometric evidence undertaken by Task 2.1 (documented in Deliverable 2.1). Task 2.1 provided further insight into RES-E support mechanisms, including original analysis into the effect of RES-E deployment on electricity prices in Germany and Spain, and an assessment of ‘best practice’ approaches to support mechanisms, from past experience.
• Task 2.2 (documented in Deliverable 2.1) and Task 2.7 (documented in Deliverable 2.2) assess the impact of the EU ETS on the competitiveness of EU industry, and whether ‘carbon leakage’ has occurred, using econometric analysis and literature reviews, respectively, condluding that no evidence for carbon leakage from the EU as a result of the EU ETS carbon price exists.
• Other tasks in WP2 investigated more sectoral and Member State-specific issues. Task 2.5b (documented in Deliverable 2.1) investigated the effectiveness and efficiency of combining carbon pricing and retrofit obligations in the domestic sector in France, using a hybrid energy-economy model (Res-IRF), whilst Task 2.4 (documented in Deliverable 2.1) assessed the food and agriculture policy mix in four Member States (UK, Netherlands, Spain and Italy), employing literature review, surveys and interviews, and found that an co-ordinated policy approach across the full supply chain is currently absent, but required to drive significant abatement action in the sector.
• Task 2.7 (documented in Deliverable 2.2) combined both quantitative and qualitative approaches (interviews and econometrics) to assess the effectiveness of different policy drivers on innovation, across different Member States and sectors. It found that economic instruments have historically been effective in stimulating innovation, but that other non-policy market pressures and local ‘systems of innovation’ unique to different Member States and sectors are equally important.
• Task 2.5a (documented in Deliverable 2.1) and Task 2.9 (documented in Deliverable 2.3) focussed on the feasibility of policy instruments and their combinations from different angles. The former conducted a stated-preference survey to elicit public preferences surrounding policy and policy mix choices and design, focusing on the Czech Republic, Poland and the UK. They found that, amongst other things, that the public holds a significant aversion to tax for numerous reasons, and even the label ‘tax’ renders an instrument significantly less acceptable than an identical instrument labelled as something else. Task 2.9 assessed legal and institutional aspects of policies and policy making, focussing on Germany, the UK and Poland, and the EU level. This task used literature reviews, interviews and analysis of legal documents to highlight key legal and institutional conditions for climate policy, such as the role institutional configuration can have on the implementation and effectiveness of policy, that using new regulatory approaches may trigger legal conflict, and that subnational governance levels are often essential in determining the success of policy instrument (or otherwise) in some Member States.
While the previous examples stem from the backward-looking and stock-taking part of the analysis, in the forward-looking part of the project WP 4, Task 4.1 defined three possible combinations of instruments for the key emitting sectors that have both plausibility and a reasonable chance of achieving the desired emission reductions. Building on this, Tasks 4.2-4.9 analysed various constraints, risks and bottlenecks that may affect the performance of different instrument mixes in terms of their effectiveness, efficiency or feasibility. These constraints, risks and bottlenecks are of different natures and, therefore, an inter-disciplinary approach is taken. Task 4.2 for instance, focuses its analysis on the institutional and legal conditions for EU climate policy, and the constraints and challenges the legal and institutional configuration implies for instrument choice, instrument design, and the effectiveness of instruments. In this context, inter alia, the authors analysed the adequate balance between centralised and decentralised climate instruments. In Task 4.3 and 4.5 a financial-economic approach is taken to evaluate the set of instruments which encourage innovation in low-carbon technologies and deliver new energy infrastructure. In task 4.9 a political science approach is used to evaluate the political feasibility of implementing different policy instruments, by investigating policy makers understanding of and preferences for different policy designs in a serious gaming exercise constructed around the issue of EU ETS reform. In this WP, the focus of the analysis is on policy instruments at EU level. Discrepancies between Member States, their political culture and the general attitudes, however, featured prominently in the analysis of public support for different policies (Task 4.7) as well as in the analysis of different political decision makers and their preferences for policies (Task 4.9). In addition, the analysis of energy infrastructure in Task 4.5 discussed the required electricity interconnections between Member States.
WP5 of the CECILIA2050 project focused on the economic and political interactions between EU policies and the rest of the world and the effectiveness, the legal and political feasibility of policy responses to mitigate carbon leakage risk. A good example of the interdisciplinary approach is the approach taken in Sub-task 5.2.2 which looked at instruments to mitigate adverse effects of climate policy on competitiveness and leakage. Two disciplinary approaches were combined in this analysis: a socio-political approach and a quantitative economic (modelling) approach. The results of the two lines of research were documented in Deliverables D5.3a and D5.3b.
2. Has the project succeeded to deliver a “radical and realistic” view, i.e. to combine a top-down view of the scale of change that needs to be achieved by mid-century with the bottom-up view of how this transformation can be initiated, departing from the current endowment of European climate policies?
In the context of WP 3, which quantified techno-economic scenarios for the transitions of the EU to a low-carbon economy, simulations with the economic-environmental model GINFORS modeled pathways towards was a radical 80% reduction of CO2 emissions in the EU (below 1990) till 2050. While radical in ambition, this view was also realistic in the sense that the model has econometrically estimated parameters. The model allows a bottom-up view of how this transformation can be initiated because of its deep sectoral, energy carrier and country structure depicting endogenously the production technologies inside the countries and international trade between them. The resulting policy mix differs markedly from the current endowment of European climate policies.
Building on the quantitative scenarios, WP 4 explores the different choices of policy instruments that the EU could select to achieve the emission reduction scenarios. In addition to their economic efficiency and environmental effectiveness, WP4 analyses various constraints, risks and bottlenecks that may affect the feasibility of enacting different policy pathways. This includes institutional, legal and administrative constraints, the role of energy infrastructure as a bottleneck, the material and financial resources required to implement the necessary investments, the uncertainty arising in terms of the policies’ impacts and interaction, and the political feasibility in terms of distributional impacts, public acceptance and stakeholder support. In this sense, WP 4 embodies the “radical but realistic” approach of the CECILIA2050 project: it takes as its starting point the need for a radical low-carbon transformation, as mapped out in the techno-economic decarbonisation scenarios, and the stylised combinations of policy instruments that are supposed to lead the EU economy onto a low-carbon development trajectory. These three combinations (described in Task 4.1 documented in Deliverable 4.1) have, as a starting point, a reasonable expectation of being able to bring about the desired emissions targets by 2030 and beyond, proposing realistic measures to achieve these objectives. However, the policy pathways have varying degrees of ‘radicalism’. While the Market-driven and the Technology-specific pathways propose a set of instruments that represents essentially an intensification of certain elements in the current climate policy instrument mix (similar instruments, yet at higher level of ambition), a Behavioural-driven pathway would require a more radical departure from the current policy framework. In this pathway emission reduction is mainly driven by a behavioural change of households and companies, which is encouraged and facilitated through a suite of policy instruments. In the following Tasks of WP 4, the techno-economic scenarios for decarbonisation and the potential instrument combinations were then subjected to a “reality check” by analysing a broad range of potential barriers, assessing to what extent these represent a limitation for ambitious climate policies, and identifies options of resolving, bypassing or overcoming these barriers. In this context, a particular interest was whether the different barriers had more or less effect on certain types of regulation, or whether the barriers were largely independent from the chosen regulatory approach.
In the context of the WP 5, examples of the radical and realistic view are the scenario analysis in Task 5.1 and the economic modelling exercises in Tasks 5.2 and 5.3 that that describe, respectively model, radical but feasible 2°C emissions mitigation scenarios for the EU and the world. The research is documented in Deliverables D5.1 D5.3b and D5.4. In terms of adding nuance to existing policy debates, the WP 5 also looked at the validity of claims that ambitious (radical) climate policy would risk de-industrialising the EU, and would therefore be economically detrimental, politically unfeasible, and hence ultimately unrealistic. This questions was investigated from two separate research angles, the results of which are documented in Deliverables D5.3a and D5.3b. Both researches arrived at the conclusion that energy-intensive industries such as the steel sector can be incentivised and supported to improve its energy and material consumption, reduce dependency on fossil fuels technologies and invest in innovative technologies and products which in the long term, would reduce carbon costs as part of the production costs and improve international competitiveness. The European steel sector could thus compete internationally through innovative high value-added products rather than on energy prices and volumes.
3.Has the project succeeded to develop and apply a wider notion of optimality, which extends beyond the narrow criteria of economic efficiency and effectiveness, and also includes aspects of (political, administrative and legal) feasibility in a way that is empirically well-founded?
The Working Definition of Optimality, which covers the dimension of (environmental) effectiveness, short run (static) and long run (dynamic) efficiency, and (political, legal and administrative) feasibility, was developed in the initial phased of the project (Task 1.1) is documented in Deliverable D 1.1 and continued to serve as the conceptual basis for the following work, and in particular as a reference point for optimality assessments conducted in various parts of the project, be it for individual sectors or policy instruments, or for the climate policy mix in its entirety.
For instance, various tasks in WP 2, whilst considering the key criteria of policy and policy mix effectiveness and cost-efficiency, explicitly considered aspects of political, administrative and legal feasibility. Key examples include Task 2.4 (documented in Deliverable 2.1) which viewed the climate policy mix in the food and agriculture sector across the EU against an assessment framework explicitly comprised of ‘effectiveness’, ‘cost-efficiency’ and ‘feasibility; Task 2.5a (documented in Deliverable 2.1) which analysed public preferences regarding policy and policy mix design; and Task 2.9 (documented in Deliverable 2.3) which assessed legal and institutional drivers and constraints to an effective and cost-efficient climate policy mix.
Similarly, the economic modelling conducted in WP 3 also integrated broader real-world notions beyond a pure economistic set of assumptions. This is based on the insight that the observable behavior of consumers, producers and investors cannot be explained by economic efficiency alone, as assumed in a setting of perfectly functioning markets. Real world decisions, by contrast, also reflect considerations of political, administrative and legal feasibility. The econometric estimation of behavioral equations in the model GINFORS includes these aspects in an empirically well-founded way.
In the structure of the project, WP 4 has been set up with the explicit intention of conducting a detailed analysis of various dimensions of political feasibility, by investigating a set of different barriers and constraints on the feasibility of ambitious climate policies. For instance, Task 4.9 analyses the political feasibility of climate policy instruments in the EU. They show that the EU ETS and carbon taxes are exposed to strong opposition if their impact on specific societal groups is evident. The feasibility of a market-based policy pathway would increase considerably if the EU ETS is reformed in order to improve its effectiveness. Likewise, Task 4.2 evaluates the legal feasibility of climate instruments and Task 4.6 addresses the role of uncertainty in the choice and the design of climate policy instruments, as well as their combination in a policy mix. The latter shows that subsidies to renewable energy may be justified as a kind of insurance.
Within the frame of the WP 5, a wider notion of optimality is embodied in Tasks 5.2 and 5.3. In Task 5.2: Instruments to mitigate adverse effects on competitiveness and leakage, the performance of policy instruments has been explicitly assessed against the criteria of environmental effectiveness, dynamic efficiency, political feasibility, and legal feasibility (see D5.3a Section 3.3 on Evaluation criteria and indicators for assessing policy options). The quantitative economic modelling approach also considered indicators of domestic and international political feasibility (see D5.3b Section 7: Optimality assessment).
In the concluding discussion in the frame of WP 6, the broadening of the concept of optimality beyond customary welfare approaches, first conducted conceptually and theoretically in Task 1.1 was further applied and elaborated at several levels in WP6. Thus, the concept of feasibility was further broadened beyond the legal, administrative and political feasibility, to include aspects of economic feasibility (linked to efficiency), social feasibility (linked to political feasibility), and legitimacy, as the broad acceptability of climate policy instrumentation within broader views on governance, including aspects of national autonomy and supranationality. These feasibility aspects allow for a reasoned assessment on how realistic the instruments strategies may be. Together with efficiency they relate qualitatively to the ultimate long-term optimality aspects: risks, costs and welfare.
4. Has the project succeeded to focus the analysis on combinations of different policy instruments, allowing a realistic assessment of the entire policy mix, and providing recommendations for the effective combination / sequencing of instruments?
Various Tasks in WP 2 assessed the effects of policy combinations, from which key insights were drawn. Key examples include Task 2.6 (documented in Deliverable 2.2) which assessed the combined effect of the EU ETS, renewable electricity support mechanisms and Environmental Tax Reforms on CO2 emissions, economic growth and employment in each Member State, Task 2.5b (documented in Deliverable 2.1) which modelled the effect of combining carbon taxes with retrofit obligations in the French domestic sector. Both studies concluded that renewable support mechanisms have thus far induced more CO2 abatement across the EU than the EU ETS. However, the latter concludes that the interaction between the two instruments has thus far not been negative, as the EU ETS cap was set in light of expected RES-E deployment induced by dedicated support mechanisms. Task 2.6 concludes that the combination of these instruments has not had a negative impact on economic growth (and may have been positive). Task 2.7 (documented in Deliverable 2.2) points to the importance of the broader institutional framework and networks for the performance of policy instruments: it observed that economic instruments have historically been effective in stimulating innovation, but that other non-policy market pressures and local ‘systems of innovation’ unique to different Member States and sectors are equally important. Likewise, Task 2.9 highlighted the role of the institutional configuration for the implementation and the effectiveness of climate policy, and suggested that using new regulatory approaches may trigger legal conflict, thus creating a path-dependence for climate policy instrumentation within the legal system.
In WP 3 three models, which together represent a broad methodological spectrum of economic environmental modelling, have been applied. Furthermore, a set of options (building blocks) for coherent instrument mixes in respect to European climate governance and a discussion on international climate policy was developed, defining the overall research framework. These different approaches yielded a common message, that a carbon price alone will not be able to reach a global CO2 emissions trajectory in line with the 2° limit, and will not deliver an 80% reduction in CO2 emissions in Europe. The presented abatement strategy focuses on sectoral approaches to decarbonise electricity production, electrify road transport and improve the energy efficiency of the building stock
Within WP 4, the policy combinations developed in Task 4.1 – which framed the subsequent analysis – in themselves represented combinations of different policy instruments, albeit with each expressing a strong focus on a particular category of policy instruments (market-based instruments vs. technology support, standards and regulation vs. soft measures). The analysis of constraints, risks and bottlenecks in the ensuing Tasks 4.2 - 4.9 then looked both at individual instruments as well as combinations of policy instruments. For instance, Task 4.5 assesses the Market-driven, the Technology-specific and the Behavioural-driven pathway in developing new infrastructure.
Finally, the concluding WP 6 introduced a further structuring element into the analysis of policy mixes, by distinguishing between two abstract and radical strategies, embodying regulatory philosophies and with associated policy instrumentation, with each realistically able in principle to reach the deep reductions by 2050 of in the order of 90% less CO2 emissions. These regulatory philosophies relate to a Planning & Control Strategy and an Institutionalist Strategy for climate policy instrumentation. In the Planning & Control Strategy, instruments regarding specific technologies have primacy. They comprise a combination of subsidies and standards for emission reducing technologies and behaviour, using taxes in specific circumstances for a fast phase out as of older coal fired power stations. National policies have primacy in most fixed investments, with EU primacy for movable products, especially in transport. EU directives and adjoining subsidies give guidance to national developments, including spatial planning. Electricity markets remain national substantially.
5. Has the project succeeded in combining the different modelling approaches in a way that supports the analysis by providing a coherent and consistent framework, but allows sufficient flexibility to focus on the most relevant aspects?
While economic models of different designs have been used to support analytical steps in various parts of the project, most of the modeling efforts conducted in the project were concentrated in the WP 3, which quantified techno-economic scenarios for the transition to a low-carbon economy. Within the WP three models were applied:
• The European Times Model (ETM-UCL) is a dynamic partial equilibrium energy system model with an inter-temporal objective function to minimise total discounted system costs, based on the TIMES model generator. It is a technology rich, bottom-up model with perfect foresight and covers energy flows across supply side and demand side sectors. The model comprises a total of thirty-one countries (EU28 plus Norway, Iceland and Switzerland) grouped into 11 regions along with a “global” region. Each region is modelled with supply, power generation and demand side sectors, and is linked through trade in crude oil, hard coal, pipeline gas, LNG, petroleum products, biomass and electricity.
• GINFORS is a global multicounty/multisector economic–environmental model. All countries in the EU27, all OECD countries, the BRIC countries and a “Rest of the World” region are explicitly modeled. It is a dynamic model which depicts the global economic, social and environmental relations for each country in deep product group detail (59), including the inputs of capital (fixed and intermediate), labour markets and the developments of all components of final demand depending on relative prices. The prices of all products are explained by the unit costs of the 35 sectors. The macro variables are given by explicit aggregation of the sectoral variables determining GDP as the aggregate of sectoral value added. International trade between all countries is depicted bilaterally for 59 product groups with price dependent structures. The energy intensities for heating, mobility and electricity for the use of machinery and household appliances are explained by relative prices for each of the 35 sectors and private households in each of the 39 countries. . The carrier structure also depends on their price relations. All parameters of the model are estimated econometrically.
• The EXIOBASE Input Output model distinguishes 44 trade linked countries with 129 sectors per country. The base year for the structural relations of the model is 2000. For the purpose of the study the countries have been aggregated into four regions: EU27, other High Income Countries, the BRICS and the Rest of the World including most African and Middle Eastern countries. Structural change of the economy and the energy system is given by exogenous assumptions. GDP Growth was taken from OECD growth perspective, and energy efficiency improvements were forecasted by trends.
One key result from the simulations with all three models was that a robust carbon price, while necessary for the transition, is insufficient in an of itself to achieve a transformation. Rather, it needs to be combined with a sectoral strategy that decarbonises electricity production, electrifies road transport and improves the energy efficiency of buildings.
Concerning the decarbonisation of the power sector three technologies can achieve this result: nuclear, CCS and renewables. In the GINFORS alternative policy simulations, due to a lack of public acceptance of this technology, and hence lacking political feasibility, nuclear follows the levels of the baseline. For the EU countries, these were taken from the EU reference scenario, for all other countries the planned capacities of the IAEA country nuclear power profiles 2012 were the data source. In the ETM-UCL simulations the level of nuclear power was held constant.
In the case of CCS such a clear judgement concerning public acceptance and political feasibility cannot be given. While a part of the political spectrum emphasises the risks and potentially dangerous side effects accompanied with the application of CCS, others do not see this or are convinced that further research will avoid these problems. Insofar we need a discussion about the acceptance of CCS, and if the expectation of severe risks cannot be eliminated we need a policy decision. Our simulations have shown that the targets might be met with CCS (ETM-UCL and EXIOBASE) but also without it (GINFORS).
If CCS is excluded subsidies or quotas for renewable energies might be necessary to avoid the ‘lock-in’ of existing installations. In the GINFORS simulations a quota for the total of renewables was introduced leaving the choice of the type of technology open to the market depending from the relation of unit costs. The decarbonisation of other ETS sectors like cement production is difficult to achieve: Even with high carbon prices the low extraction prices (especially for coal) in relation to the relatively low price elasticities will not create high enough shadow prices. This problem might be solved without the use of traditional climate policy instrumentation; the discussion on material inputs in the broader context of resource efficiency has shown that there are substantial inefficiencies in material inputs in all sectors of the economy due to market failures. This discussion will induce the implementation of material efficiency policy instruments including consulting and information programs to reduce the coefficients of material inputs in all stages of production. In the end, demand for basic products and their production will be reduced.
Electrification of road transport has a big potential for decarbonisation (EXIOBASE and GINFORS). How this potential will be used concerning the concrete policy mix that favours “clean” technologies and discriminates against cars driven by fossil fuels has been left open, but it could be shown that the choice of the vehicle technologies will be still open to the market.
The EXIOBASE and the GINFORS simulations have made clear that a core strategy consisting only of decarbonisation of the power sector and the electrification of road transport accompanied by an economy wide carbon price is not able to meet the targets. As the GINFORS simulations have shown the improvement of the energy efficiency of buildings and the improvement of material efficiency can close the gap.
The GINFORS simulations have shown that a combination of an economy wide carbon price with the sectoral strategy described above has the potential to reach the climate targets and at the same time raise GDP. The combination of economic instruments or regulations and their concrete formulation to push e-mobility, the inputs of renewables in the power sector and the renovation rate of buildings in combination with an economy wide carbon price has to be the subject of further considerations.
WP 4 combines qualitative and quantitative assessment. In the latter category, different modelling approaches were deployed to analyse climate policy instrument mixes: Task 4.4 used an econometric model to investigate how financial barriers affect investment in low-carbon technologies. Task 4.6 develops a stochastic model of the European energy sector to analyse how uncertainty may affect climate policy instrument mixes. The analysis of Task 4.9 is combined structured in-depth interviews, focus groups, an online survey and a policy simulation with relevant stakeholders in the EU climate policy domain.
Within WP 5, innovations in economic modelling have been made with respect to the analysis of carbon leakage. Task 2, Deliverable D5.2 decomposed the simulated future trajectory of carbon leakage into energy, terms-of-trade, and investment leakage channels. The simulations suggest that in this scenario the energy market channel dominates carbon leakage initially. However, over time the terms-of-trade effect and especially the international investment channel gain importance.
Task 3, Deliverable D5.4 employed a very innovative integrated assessment model that distinguishes between industrial and terrestrial emissions of greenhouse gases. The model tracks emissions and atmospheric concentrations of GHGs, carbonaceous aerosols, sulphur dioxide, and reactive gases and provides estimates of the associated climate impacts. An important feature of the GCAM architecture is the terrestrial carbon cycle model embedded within the agriculture-land-use system model. Thus, all land uses and land covers, including the non-commercial lands, are fully integrated into the economic modelling in GCAM. This coverage gives GCAM the capability to model policies that jointly cover carbon in all activities in the energy, agriculture, forest, and other land uses. In this study two sources of leakage are considered: one due to the different fuel prices in countries with a carbon target as opposed to countries without one (referred to as industrial carbon leakage or ICL), and the other resulting from a shift of biomass/food production that is carbon intensive out of regions with a carbon target to regions without one (referred to as terrestrial carbon leakage or TCL). The analysis shows the total leakage rates to be significant, in the period to 2050 TCL is the dominant form of leakage but in the period 2050-2100 it is ICL that dominates. The conclusion emerges that it is important to take terrestrial emissions into account, certainly for the medium term to understand leakage effects.
Potential Impact:
Potential strategic impact
European climate policy stretches back for more than 20 years, and over that time it has become increasingly complex, ambitious, pervasive and Europeanised. Since 2008, the European Council has repeatedly confirmed the EU objective of reducing greenhouse gas emissions by 80-95% by 2050 compared to 1990, and has also made reference to this objective in its Intended Nationally Determined Contribution submitted to the UNFCCC in the run-up to the Paris 2015 summit.
In the "Roadmap for moving to a competitive low-carbon economy in 2050" the European Commission sets out a plan to drastically reduce domestic emissions by mid-century. It shows how the sectors responsible for Europe's emissions - power generation, industry, transport, buildings and construction, as well as agriculture - can achieve the transition to a low-carbon economy over the coming decades. However, although there is a policy framework in place for the 2020 targets, the longer-term policy framework for the 2030 targets and beyond is still under development, and is only beginning to take shape. The CECILIA2050 project has responded to this urgent need by fostering the understanding of how the existing policy mix can be further developed and improved so as to ensure that these milestones can be met in the an environmentally effective, efficient and feasible manner, on the way to the 2030 and 2050 targets. It has done so, inter alia, in the following way:
1. In a set of modelling exercises (documented in Deliverables D 3.1 – 3.3) the project has developed techno-economic scenarios for the transformation to a low-carbon economy, providing insights into the scale of the transformation needed in different economic sectors, changes in infrastructure and technologies, and the intensity of policy interventions needed. This comprised economywide scenarios (including global interactions) derived from a global CGE model and an input-output model, as well as detailed analysis for the electricity generation and energy-using sectors.
2. Documented in Deliverable 4.1 the project has developed three distinct, stylised options of how the EU the climate policy mix could evolve in order to achieve the emission reduction scenarios. These three stylisded combinations of policy instruments have, as a starting point, a reasonable expectation of being able to bring about the desired emissions targets by 2030 and beyond, proposing realistic measures to achieve these objectives. However, the policy pathways express varying degrees of ‘radicalism’ in terms of whether they require merely the intensification of existing policies and removal of inconsistencies, or whether they represent a more radical departure from established policies. While the Market-driven and the Technology-specific pathways propose a set of instruments that represents essentially an intensification of certain elements in the current climate policy instrument mix (similar instruments, yet at higher level of ambition), a Behavioural-driven pathway would require a more radical change.
3. In a series of empirical analyses (documented in Deliverables D 4.2 – 4.5) the project has analysed key barriers and constraints that may affect the feasibility of enacting different policy pathways. This includes institutional, legal and administrative constraints, the role of energy infrastructure as a bottleneck, the material and financial resources required to implement the necessary investments, the uncertainty arising in terms of the policies’ impacts and interaction, and the political feasibility in terms of distributional impacts, public acceptance and stakeholder support.
Identify faster and more cost-effective greenhouse gas emissions reductions pathways
The CECILIA2050 project has identified faster, smoother and more cost-effective emission reduction pathways by improving the mix of climate policy instruments that guide economic and social development patterns in Europe. The research has analysed a number of market imperfections, bottlenecks and limitations that limit the efficiency and effectiveness of policy instruments and their combinations.
In particular, the project has taken a critical look at the potential for economic instruments (carbon pricing) to achieve fast and cost-effective emission reduction. It has empirically analysed key barriers and constraints that inhibit economic instruments from exploiting their full potential, but has also critically reflected on the inherent limitations of carbon pricing. In doing so, the research has followed a broad interpretation of economic instruments, including not only explicit pricing tools but also other instruments that affect the economic incentives of decision makers. Furthermore, the project has paid special attention to the interactions between different policy instruments, and analysed ways of optimising these interactions through active management or through smart instrument design.
The relevant findings and research results are documented in the following items:
1. A set of nine empirical studies, documented in Deliverables 2.1 – 2.4 has identified and assessed market imperfections and limitations of the current instrument mixes employed by the EU and at the level of its Member States. These analyses have looked at the limitations encountered a number of key sectors (energy, transport, industry, households, food and agriculture), as well as a number of cross-cutting factors that serve to explain the instrument choice and the functioning of policy instruments and their combinations (such as legal and institutional frameworks, availability of finance and the propensity to innovate).
2. A set of eight empirical investigations, documented in Deliverables 4.2 – 4.5 has identified and assessed market imperfections and limitations that will shape the European climate policy going forward, and which limit the (political, legal and administrative) feasibility of certain reform options. These analyses included institutional and legal conditions for EU climate policy, the availability of finance and the availability of material resources, as well as the importance of physical infrastructure particularly for the energy sector. Furthermore, the project empirically researched constraints on the political feasibility of instrument choices, in terms of the public acceptance of different climate policy instruments, their distributional implications as well as policy makers’ understanding of and preferences for different policy designs.
3. The empirical research has given rise to a set of recommendations to overcome market imperfections and limitations, in order to exploit more fully the potential of economic instruments in climate policy. These recommendations, made both for the short to medium term (towards 2030) and for the medium to long term (towards 2050) are based on the analysis of the performance of existing policies and the identified barriers that inhibit their performance, and suggest ways of resolving, bypassing or overcoming these barriers. For the longer term, the recommendations also aim to provide strategic guidance for the long-run orientation of climate policy, based on different fundamental perceptions of the possible role of climate policy and the distribution or knowledge and responsibilities between the public sector, businesses, consumers and civil society.
Foster faster introduction of highly innovative and low carbon technologies
The transformation to a low-carbon economy will require unprecedented levels of innovation in low-carbon technologies, the subsequent roll-out of these technologies through investments, including infrastructure, but also major changes in behaviour patterns and institutions. Such innovation will not come about through market processes alone – it will need to be driven, stimulated and supported by many facets of public policy. The CECILIA2050 project has determined how the current policy instrument mix has influenced the innovation system in terms of encouraging low-carbon solutions. The project has also improved our understanding of how public policy has stimulated – or should stimulate – innovation and environmental R&D. It has also analysed some of the conditions that determine the speed at which technologies can diffuse throughout the economy, including the availability of finance for low-carbon technologies, the necessary changes of the energy infrastructure, but also the response of consumers and the public at large.
The relevant findings and research results in relation to innovation and low carbon technologies are documented in the following items:
1. Understanding the performance of existing innovation policy frameworks in general, and the effects of climate policy instruments on innovation and diffusion activities, as documented in Deliverable D 2.2.
2. Modelling the need for radical innovation as part of techno-economic decarbonisation scenarios, in order to understand the magnitude of change required in key sectors – resulting inter alia in the observation that a decarbonised economy will also require a massive increase in resource efficiency, in terms of reducing the overall throughput of energy-intensive sectors that form the resource base of the economy, as documented in D 3.2 and 3.3.
3. Empirical analysis of the framework conditions that are decisive for a fast uptake of new technologies, including the availability of finance, material resources, public and private infrastructure and public acceptance / consumer behaviour. These analyses, and recommendations deriving from them, are documented in Delieverables D 4.2 4.3 and 4.5.
4. Recommendation on the design of policy instrument mixes that foster innovation and low carbon technologies key economic sectors, as documented in Deliverables D 6.1 and D 6.2.
Secure increased EU competitiveness on global markets.
The CECILIA2050 project sought to contribute to increased competitiveness of EU firms on global markets in two ways: first, describe radical innovation pathways in key economic sectors commensurate with the goal of decarbonisation, as well as examining policy instrument mixes on their ability to lead key sectors onto those pathways, with the aim to deliver low-carbon technologies that significantly reduce emissions and give European producers a competitive edge on the growing global market for such technologies. In addition, the project also conducted empirical research to better understand of the adverse impacts that climate policies may have on established industries, especially in the short to medium term, and especially if countries outside the EU should not be pursue comparably ambitious climate policies. The research quantified the risk of possible adverse impacts on competitiveness and carbon leakage, it analysed options to contain these risks from an economic, legal and political angle, and looked into options to increase the efficiency of the EU instrument mix through enhanced international cooperation.
The relevant findings and research results are documented in the following items:
1. A quantitative modelling of radical innovation pathways needed in key economic sectors in order to significantly reduce emissions, documented in Deliverables D 3.2 and 3.3
2. Empirical analysis of the competitiveness and carbon leakage risks implied by current climate policies, documented in Deliverable D 2.2
3. Empirical analysis of the competitiveness and leakage risks implied by more ambitious EU climate policies in the future, under various assumptions on the evolution of international climate policy, as well as the discussion of options to address adverse impacts on competitiveness and leakage risks, including an analysis of the economic, political and legal feasibility of such options, documented in Deliverables D 5.2 and 5.3
4. Empirical analysis of the global effects of EU climate policies and the interrelations between EU efforts and efforts abroad, documented in Deliverable D 5.4.
Steps to bring about these impacts
The impacts of policy-relevant scientific research is achieved in many ways over the short and longer term, through the transmission of ideas and opinions from academia into the political process, through the movement of people and through the transfer of data and methods. Projects are able to influence these impacts by being excellent and relevant, by working through formal and informal networks and by communicating well. An essential component of this process is two-way communication: from the side of the researchers, the task is not only to present research findings in a way that connects to policy debates; but equally important to engage with stakeholders and political decision makers to understand their view of the political process, in order to frame the analysis to provide relevant answers to relevant questions, and to be able to connect research findings to the political debate. From this angle, and given the fact that the project’s 2012 – 2015 duration coincided with a decisive period in the formulation of EU climate policies, ongoing exchange with practitioners and their involvement in the framing of the research (to the extent feasible) was of particular importance.
The CECILIA2050 has worked to maximise its impacts through the following activities and approaches:
1. Excellent research: The foundation for being relevant was to base all findings on high-quality science, using state-of-the-art methods and tools, keeping up to date with the cutting edge of research, based on solid and well-documented empirical data and methods, evidenced in excellent publications. This was achieved, inter alia, by regular peer-review of project outputs prior to publication, and is evidenced by a good record of high-quality academic publications emanating from the project.
2. Bridging academic methods and real-life requirements: Out of the researchers who shaped CECILIA2050, several routinely work on the interface between policy and science, and are therefore well versed both in academic debate and discussions with policy makers and civil society. In the practical operation of the project, such exchange was achieved above all through the ongoing interaction with the Science and Policy Advisory Board: the comprised of 12 leading experts from European and Member States institutions, academia, business associations, environmental NGOs and trade unions. The Advisory Board met with members of the research consortium on five occasions to discuss the project progress, to provide strategic guidance to the project, to assist in framing part of the research questions, to provide a sounding board for testing key assumptions and (interim) results, and to help maximise the policy relevance and potential policy impact of the research. In addition, a number of Advisory Board members have reviewed draft project reports, and provided valuable feedback. Furthermore, a four project workshops (Brussels, Dublin, London and Prague) and two project conferences (both in Brussels), which were attended by a mix of academic researchers, policy makers, business stakeholders and civil society, provided room for debate between the research team and the policy community. Finally, smaller events including side events at UNFCCC conferences and meetings, an internal workshop at the European Environment Agency, and a project presentation at the German Federal Environment Agency helped to collect further insights to enhance the policy relevance of the research.
3. Working across disciplines for relevant results: From the outset, the project has sought to combine methods from economics, law, political science and other disciplines, and has brought together researchers with different background. In doing so, the project’s ambition has been not only to identify possible solutions, but to also offer recommendations on how to implement them. This approach is exemplified, inter alia, in the legal and institutional analyses of existing climate policy (Deliverable D 2.3) and the forward-looking analysis of legal and institutional conditions for future climate change (contained in Deliverable 4.2). Other examples include the empirical analyses of the public acceptability of / public preferences for different climate policy instruments, as well as the simulation-based assessment of policy maker’s preferences for different policy design options (both containted in Deliverable 4.5).
4. Involvement of stakeholders in research: This was achieved, in particular, through the Science and Policy Advisory Board referred to above, which had a strong role in aligning the framing of the research (to the extent possible within the limits of the Description of Work) with the policy debates. In several tasks, stakeholder input was an explicit part of, or even the basis for, empirical research – above all in the research on the political feasibility of different policy instruments (Task 4.9 documented in Deliverable D 4.5) which involved 22 stakeholders in a policy simulation exercise (in addition to a series of interviews, focus groups and an online survey). Stakeholder involvement through workshops and interviews also featured prominently in several other tasks, including Tasks 2.7 on Innovation, 4.2 on Institutional and Legal aspects or 4.4 on Finance. In addition, policy makers and other stakeholders were involved as speakers and as participants in all public project events, above all the two project conferences, but also the smaller workshops and other events.
5. Policy-relevant deliverables produced in readable formats: In addition to the scientific output – contained in 47 substantive research reports, organised into 30 Deliverables, as well as17 journal articles and nine other academic publications – the main project results are also documented in a suite of six policy briefs. The CECILIA2050 Policy Brief series were published in tandem with the project progress, summarising key insights for an audience of policy makers and other stakeholders, and where possible relating them to current EU policy debates.
6. National level outreach events: At the end of the project (October 2015), a series of eight half-day events took place in Amsterdam, Berlin, Bilbao, London, Paris, Prague, Rome and Warsaw to disseminate project results in a country-specific way, and to stimulate discussion of how the findings relate to the national discussions.
7. Personal networks with policymakers at EU and national levels: Finally, in addition to the more formalised channels above, continuous engagement with EU and Member State policymakers formed the basis for the science-policy exchange, working to ensure the policy relevance of the research approach and outcomes, feeding information in both directions and ensuring that policy and research networks are made use of efficiently.
Main Dissemination Activities
The CECILIA2050 project facilitated the effective dissemination of its research results by using a variety of communication tools and activities. The dissemination strategy aimed particularly at targeting specific audiences and at making the results easy to access and to grasp. The latter was primarily achieved with the creation of a project website, which made the research reports as well as further information on the project, its members, and project related events publically available. In addition to this, the social media platform Twitter was used to distribute information about research results and project events to relevant climate policy stakeholders. In addition to rhe regular project reports, six Policy Briefs were published, presenting key results of different report packages in a brief and comprehensible manner, to make the research results of the project easy to grasp for policy makers, the media, and the broader public. Additional publications, including articles in peer reviewed journals, monographs and university papers were used as a means to communicate the results of the project to the scientific community. The publication of the research results in scientific publications was an important aspect of the dissemination strategy and aimed connecting the research to the ongoing scientific debate as well as advancing the state of the art and providing links for further research.
The dissemination strategy of the CECILIA2050 project also included the organisation of a number workshops and conferences. If possible the events were organised timely, to connect the current research results with the policy-making process and important political events. The mid-term conference of the CECILIA2050 project serves in this case as good example: it took place March 2013, shortly after the expected publication of the European Commission’s policy package on the 2030 targets and instruments. Senior officials from the European institutions, policy experts and other stakeholders from research institutions, NGOs, and the private sector attended the conference. The event provided thus a opportune moment for presenting the research results from the first phase of the project to a larger audience, connecting them to the public debate, and eliciting feedback and inputs to inform the second phase of the project.
To ensure policy relevance and mobilise practitioners’ knowledge, the project has been engaging with stakeholders in different ways throughout the project, particularly through workshops, dedicated events for stakeholder outreach and engagement, and through the continuous guidance of a Science and Policy Board of high-level experts. The CECILIA2050 project organised, or was represented at, the following workshops and events:
Dedicated CECILIA2050 Conferences and Workshops
Two major conferences and a number of dedicated project workshops was organised (or co-organised) by the CECILIA2050 project, targeting a mixed audience of policy makers, stakeholders, academia and think tanks. The headline events of the project were the two project conferences: the mid-term conference (Brussels, March 2014) and the final conference of the project (Brussels, June 2015), two one-day conferences that presented results and insights from the project in several sessions; in both cases opened by a keynote address from senior officials in DG Climate (Mr. Peter Vis / Mr. Damien Meadows), and in both instances concluding with a panel of senior researchers, policy makers and other stakeholders. For both conferences, individual members of the CECILIA2050 Science and Policy Advisory Board were actively involved as speakers, commentators or panelists. In addition, the CECILIA2050 project was one of three FP7 projects featured prominently at the Scientific Conference Research for a Post-Carbon Future organised by the Ecologic Institute (Berlin, September 2014), which also included contributions from the projects POCACITO and MILESECURE.
In terms of workshops, a number of public workshops was organised throughout the project: an initial one-day policy workshop on the status and future of European climate policy (Brussels, February 2013), a two-day seminar jointly organised with the ENTRACTE project (Dublin, September 2013), a one-day workshop on long-term climate policy scenarios (London, October 2013), as well as a one-day workshop on future options for EU climate policies and their public acceptability (Prague, October 2014). All of these workshops targeted a mix of researchers and practitioners (policy makers and other stakeholders), both as speakers and as participants. Members of the CECILIA2050 Science and Policy Advisory Board contributed actively as speakers and panellists to three of the four workshops.
Finally, a suite of eight half-day dissemination workshops was held in October 2015 in the eight EU countries in which CECILIA2050 consortium partners are based. The events in Amsterdam, Berlin, Bilbao, London, Paris, Prague, Rome and Warsaw to disseminate project results in a country-specific way, and to stimulate discussion of how the findings relate to the national discussions.
Contributions to Other Events: Academic Dissemination
More academically-oriented dissemination included presentations at am international symposium on emissions trading (Beijing, October 2013), seminars on European Climate Policy at Johns Hopkins University, DC and Duke University, NC, policy sessions at the 14th World Congress of Environmental & Resource Economists (Istanbul, July 2014) and at the 15th World Congress of Environmental & Resource Economists (Helsinki July 2015), and three sessions at the conference “Our Common Future under Climate Change” (Paris, July 2015). Furthermore, CECILIA2050 results were presented at presentations and lectures at the International Conference Governance of a Complex World 2014 (Turin, June 2014), at the Annual Conference of the Italian Regional Science Association (Padua, September 2014), at the Annual Conference of the Green Growth Knowledge Platform (Venice, January 2015), at the SENIX Conference (The Role of Social Sciences in a Low-Carbon Energy Mix) (Stockholm, May 2015), and at the Annual Conference of the European Sociological Association (Prague, August 2015). The full list of presentations, lectures, workshop contributions and other speaking engagements can be found in the table of dissemination activities.
Outreach to Policy Makers and Stakeholders
Dedicated outreach to policy makers and stakeholders included side events organised at UNFCCC Conferences (COP-18 in Doha, COP-19 in Warsaw and the June 2015 SBSTTA meetings in Bonn), project presentations and high-level discussions at the German Federal Environment Agency in (Dessau, February 2014), at the European Environment Agency (November 2014) and at DG Energy (Brussels, February 2015), a project presentation at the third European Environmental Evaluators Network Forum (Helsinki, April 2014) and oral contributions based on CECILIA2050 research at the high level conference “Looking Back at Ten Years of the EU ETS” (Florence, May 2015).
The implementation of the project was supported by a distinguished Science and Policy Advisory Board, comprised of 12 leading experts from European and Member States institutions, academia, business associations, environmental NGOs and trade unions. The Advisory Board has met on five occasions to discuss the project progress, to provide guidance on the direction of the research, and to help maximise the policy relevance and potential policy impact of the research. In addition, a number of Advisory Board members have reviewed draft project reports, and provided valuable feedback. Finally, Advisory Board members have had leading roles as speakers, panellists or commentators in the events organised by the CECILIA2050 project.
The project website is available at www.cecilia2050.eu and provides an up-to-date inventory of the research work published by the CECILIA2050 project, as well as documentation of all events.
In terms of dissemination and outreach, the most significant achievements were:
• The continuous, active and high-level involvement of the Science and Policy Advisory Board, representing a range of important relevant stakeholder constituencies, providing additional insights to the project and helping to ensure the policy relevance of its findings.
• Visual identity with high recognisability and applicability across all dissemination products
• Good name recognition among relevant policy stakeholders
• Successful conferences with good external participation, all partners present and several Board members, as well as several additional high-level external speakers
• Broad but targeted outreach via a range of activities and channels, reaching the target audience successfully
List of Websites:
http://cecilia2050.eu
Permanent email address for contact: cecilia2050@ecologic.eu
Coordinator contact information:
Mr. Benjamin Görlach
Ecologic Institute
benjamin.goerlach@ecologic.eu
