The international economics of resources and resource ... - Index of

How to increase global resource productivity? 351
In a world of low energy prices it will be much more difficult to reach the EU
GHG target. The carbon price will have to reach 120 Euro2008/t in 2020 in scenario
S1L. The GDP loss against the baseline with low energy prices will be 3%. Energy,
material and carbon productivity increases will not much improve EU competitiveness
on international markets, which is reduced as EU prices increase in relation to
NON-EU competitors. The comparison of scenarios S1L and S1H to their respective
baseline demonstrates the importance of international energy prices for fixed volume
(emission) targets.
If part of the revenues is used for investment in low-carbon technologies, the
carbon price in scenario S2H can even be lower (61 Euro2008/t in 2020) and the
GDP loss halved against scenario S1H to only 0.3%, as the investment in renewable
energies is assumed to be additional. Employment impacts will be more positive
than in scenario S1H. The 10% investment in low-carbon technologies will amount
to more than 20 Bill. Euro in 2020.
The EU-Commission (2008) impact assessment reports macroeconomic costs of
0.58% of EU GDP in 2020 to reach the GHG and RES targets in a cost-efficient
scenario. A carbon price of 39 Euro/t and an additional renewable energy incentive
of 4.5 Cent/kWh will be needed in a scenario of low energy prices. Employment
impacts are slightly negative. In a sensitivity analysis of the impact assessment with
higher energy prices, GDP reduction is only 0.4%. The higher carbon price in
GINFORS compared to the EU impact assessment is mainly due to the scenario
assumptions, that the carbon price is the only policy instrument, whereas the EU
implicitly takes efficiency measures and explicitly additional fostering of renewables
into account.
If EU-27 wants to reach its 30% reduction target (i.e. a 25% carbon reduction
against 1990) within an international agreement only by domestic measures, the
carbon price in scenario S3H will have to be 184 Euro/t in 2020 (and 46 Euro/t in
the major emerging economies). The E3ME model, also applied in the study, even
reports a carbon price of 204 Euro/t for the same scenario. Again, these high prices
result as the carbon price is the only policy instrument and reductions are completely
in domestic emissions. Other studies not only with GINFORS suggest that EU will
be better off, if it purchases part of the emission reductions on global carbon
markets. The IEA (2008) reports a global price of carbon of 180 US-Dollar in 2030
to reach the 450 ppm stabilization, which is in line with scenario S3H. GDP
reduction in the EU-27 against the baseline will be 1.9% in 2020, partly due to
lower international trade and production in other parts of the world. Employment
will be 0.77% higher than in the baseline. Scenario S2H clearly shows that a policy
mix, including fostering of renewable energies and energy efficiency measures,
could further decrease the negative impacts on production and jobs. Negative GDP
impacts above average in NON-OECD countries as China and Russia underpin their
demand for technology and financial transfers as part of a global post-Kyoto
agreement.
EU energy, carbon and material productivity will improve in scenarios S1H, S2H
and S3H against the baseline (see Table 2). Labour productivity will decrease mainly
due to the structural shift from energy-and carbon-intensive to labour-intensive
industries. The increase in carbon productivity is higher than in energy productivity
due to the shift towards low carbon energy carriers.