promotion of sustainable energy

Question 1

• what at the aims conflicting in energy regulation?

- what is the key aim?

Answer 1

Aims conflicting:

• economic efficiency (cost/price)
• security of supply
• sustainability
• public acceptance (new)

Key aim:
-suistainability

Question 2

To what refers sustainability in energy economics?

why are the activities such as generation, transformation, transport and utilisation of energy not sustainable?

Answer 2

• mostly refers to environmental sustainability.

- becase they have a negative environmental effect (economically seen as external effect)

Question 3

what are externalities?
from what result externalities in a energy market context?
in what result externalities in energy markets?

Answer 3

• are the effects of someone’s action on third parties, for which third parties are not compensated.
• result from: emissions, pollution, technical risks, land use, noise.
• they result in external cost

Question 4

explain externalities in a energy markets context

because the energy supply comes along with externalities and external cost that are economically inefficient, how can an Economic Optimum be reached?

Answer 4

energy supply come with externalities such as pollution and technical risk that society has to bear, for with neither consumers and the energy industry pay for. This is not only negative for the environment but also economically inefficient

-an economic optimum can be reached by internalising the external costs.

Question 5

what is the most relevant external effect of the energy industry at a global level?

Answer 5

CO2 emissions

Question 6

what the the energy source with the highest CO2 emission in GERMANY?

Answer 6

Braunkohle>Steinkohle>Heizöl>Ergas>Biomasse>PV

Question 7

How the external cost of Co2 emission are being internalized?

Answer 7

C02 Certificates

Question 8

which region or country has the largest number of emissions? Which is the sequence of countries with Co2 emissions ?

Answer 8

China and it is supposed to increase even more
China>USA(suppose to decrease)>India(supposed to increase)>EU(suppose to decrease)>Middle East(will increase)> South east Asia(will increase) >Japan, where

Question 9

which are the main air pollutants?

Answer 9

combustion of oil, biomass and coal

Question 10

EU targets for a low-carbon economy, are what are the milestones to achieve the targets?

Answer 10

• By 2050 EU should cut GHG to 80% below 1990’s levels,

- 40% emissions cuts by 2030 and 60% by 2040 AND ALL SECTORS NEED TO CONTRIBUTE!!

Question 11

what are 3 key target for the 2030 climate and energy framework?

Answer 11

• At least 40% cuts in GHG
• At least 27% share for renewable energy
• At least 27% improvement in energy efficiency

Question 12

What is the key for decarbonisation?

Answer 12

Renewables!!!!

Question 13

what are renewable sources of energy available
Sum up what ist their tech potential and what the actual shared used for energy supply?
and what is the worlds demand?

Answer 13

Biomass
Hydro power
geothermal energy
Wind energy
Ocean energy
Solar radiation 

Summed up 67- 294 and actual share is 82

demand: 557

Question 14

How can policy makers make that energy supply and consumption become more sustainable?

Answer 14

1. Find mechanisms to internalised external effects

2. Directly support sustainable technologies on competing with non sustainable technologies

Question 15

What is the optimum of emissions?

Answer 15

The optimum of emission is where the marginal cost and the marginal external cost meet

Question 16

Describe the Coase Theorem
What are the problems of Coase?
What are some partial solutions?

Answer 16

Problem: there is no incentive for factories causing external cost, to maximise total’s welfare (E*), but rather maximise their profit and emit high emissions (E0)

The coase theorem allows emitting a limited number of property rights which legally allow to cause negative effects (emissions).
By trading this rights coase shows Pareto efficiency E*

Problem of coase:

• transaction cost might be hight if each individual negotiates
• hard to identify what causes the negative effect
• effects can be subject to long-time lags

Partial solution: protection of the environment is a public good and thus the state must ensure that external costs are internalized! Problem however is to find out the exact external cost

Question 17

What are some mechanisms for reducing emissions?

Answer 17

Pigou taxes on emissions: tax payment for each unit of emission produced (tax payment= state’s best estimate for external effect )-> focus on precise internalisation of external effects

Emission norms: ind. emission volumes are cap by law e.g., tucks or power plants ->focus on local emissions

Emission cap and trading scheme for emission rights
cap= maximum amount of emissions for an economy, set by politics.
The corresponding emission rights is issued to the market and traded by emitters (who can create most economic from emitting -> marginal profit per ton of C02 is decisive.
->focus on cap

Question 18

what are some problems with the internalisation of externalities in reality ? and what are the political consequences of the problems?

Answer 18

Problems with mechanisms:

• even with fully inter. of external cost some ecologically non sustainable energy can remain (examples)
• precise determination of emitter is challenging
• difficult to determine the economically efficient tax/norm/cap

The political consequence: Direct support sustainable technologies, however a combination of internalisation and direct support can result in inefficient over-regulation unless they are coordinated