Policy Instruments for the Transformation to a Low-Carbon Energy System in the UK

Mr Paul Drummond, University College London

Paul Ekins, University College London

The recently proposed EU 2030 Framework for Energy and Climate Change has once again brought the issue of decarbonisation pathways and applicable policy mechanisms into sharp focus. The inertia present in the energy system – the heart of a low-carbon economy – requires planning decades in advance for the appropriate transition to be achieved. Such foresight applies to the policy mix required to successfully deliver this transition in an effective, cost-efficient manner, acceptable to all key stakeholders in society.

The recently developed European TIMES Model (ETM-UCL), a bottom-up, technology rich partial-optimisation model which minimises total discounted system costs, has been employed to project the cost-optimal development pathway for the EU’s energy system under an 80% CO₂ reduction target from 1990 levels by 2050 (with a 2010 base year), on the basis of nine regions of the EU – including the UK & Ireland (for which constraints implementing the UK’s Climate Change Act provisions are imposed). Key results include the rapid phase-out of coal, coupled with rapid increases in solar PV and wind (in particular) in the power sector, with gas remaining prevalent in both power and heating applications. Increasing electrification of both heating and transport occurs, with the use of hydrogen rapidly increasing in the latter from 2040.

On the basis of on-going research, three comprehensive, novel and alternative ‘policy packages’ will be laid out to achieve this transformation in the UK. Each will vary by its focus on the three ‘domains of change’ of neoclassical economics, technology and innovation systems, and behavioural economics (Grubb, 2014 – forthcoming). Policy packages will address barriers to change in both the supply and demand side of key energy system sectors (e.g. power, buildings, industry, transport and agriculture), and their evolution from the existing policy landscape will be described via five decadal time periods (beginning in 2010). Each package will be qualitatively assessed against an extended definition of ‘optimality’ developed by the EU FP7 project CECILIA2050. This definition includes static and dynamic efficiency, but also environmental effectiveness and ‘feasibility’ – incorporating political and public acceptability, legal feasibility, and the capacity to deal with risk and uncertainty. The lessons learned from previous research under the CECILIA2050 project, which assessed the existing climate and energy policy mix in the UK against this definition of optimality, will be fed into the proposed policy packages. Areas for which instrumentation options or interactions are weak or untested, and where further research is required, will be discussed.

References

Grubb, M. (2014 – forthcoming) Planetary Economics, Routledge, London

Authors: Paul Drummond (Corr. Author) & Paul Ekins, University College London

Theme: Pathways to Decarbonisation

Keywords: climate change policy, energy policy, energy system decarbonisation