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An International Comparison of Energy and Climate Change Policies Impacting Energy Intensive Industries in Selected Countries

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An International Comparison of Energy and Climate Change Policies Impacting Energy Intensive Industries in Selected Countries AN INTERNATIONAL COMPARISON OF ENERGY AND CLIMATE CHANGE POLICIES IMPACTING ENERGY INTENSIVE INDUSTRIES IN SELECTED COUNTRIES Final Report 11 JULY 2012 The Views expressed within this report are those of the authors and should not be treated as Government policy An international comparison of energy and climate change policies impacting energy intensive industries in selected countries FINAL REPORT 11 July 2012 Submitted to: Department for Business Innovation & Skills 1 Victoria Street London SW1H 0ET Submitted by: ICF International 3rd Floor, Kean House 6 Kean Street London WC2B 4AS U.K. An international comparison of energy and climate change policies impacting energy intensive industries in selected countries Table of Contents Page EXECUTIVE SUMMARY ........................................................................................... 1 1. INTRODUCTION ............................................................................................... 17 1.1 BACKGROUND .............................................................................................. 17 1.2 OBJECTIVES AND SCOPE ............................................................................... 18 2. ELECTRICITY AND GAS MARKETS .............................................................. 20 3. QUALITATIVE ANALYSIS OF ENERGY AND CLIMATE CHANGE POLICIES TOWARDS KEY SECTORS IN EACH COUNTRY .................................................. 35 3.1 METHODOLOGY ............................................................................................ 35 3.1.1 Data gathering ................................................................................. 35 3.1.2 Selection of key policies .................................................................. 36 3.2 ANALYSIS OF KEY POLICIES ........................................................................... 36 3.2.1 Introduction ..................................................................................... 36 3.2.2 Overview of key policies .................................................................. 38 3.2.3 China ............................................................................................... 41 3.2.4 India ................................................................................................ 63 3.2.5 Japan .............................................................................................. 77 3.2.6 Russia ............................................................................................. 90 3.2.7 Turkey ........................................................................................... 100 3.2.8 US ................................................................................................. 114 3.2.9 Denmark ........................................................................................ 134 3.2.10 France ........................................................................................... 144 3.2.11 Germany ....................................................................................... 158 3.2.12 Italy ................................................................................................ 170 4. DERIVATION OF QUANTITATIVE METRICS................................................ 187 4.1 METHODOLOGY .......................................................................................... 187 4.1.1 Criteria and selected metrics ......................................................... 187 4.1.2 Determining policy costs ............................................................... 188 4.2 DEVELOPMENT OF METRICS ......................................................................... 200 4.2.1 Indirect policy impacts ................................................................... 200 4.2.2 Indirect and direct policy impacts .................................................. 207 July 2012 i An international comparison of energy and climate change policies impacting energy intensive industries in selected countries Figures Figure 1-1a: Base electricity price and indicative incremental impacts in 2011 on electricity price of energy and climate change policies (£/MWh, 2010 prices) 9 Figure 4-1: Base electricity price and indicative incremental impacts in 2011 on electricity price of energy and climate change policies (£/MWh, 2010 prices) 201 Figure 4-2: Indicative incremental impacts in 2011, 2015 and 2020 on electricity price (£/MWh, 2010 prices) of energy and climate change policies 202 Figure 4-3: Base electricity price and indicative incremental impacts in 2011 on electricity price of energy and climate change policies (£/MWh, 2010 prices) – Sensitivity using market forecasts of EUA prices 204 Figure 4-4: Indicative incremental impacts in 2011, 2015 and 2020 on electricity price (£/MWh, 2010 prices) of energy and climate change policies – Sensitivity using market forecasts of EUA prices 205 Figure 4-5: Steel sector – indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010 prices), 209 Figure 4-6: Aluminium sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010 prices), 210 Figure 4-7: Cement sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010 prices), 211 Figure 4-8: Chlor-alkali sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010 prices), 212 Figure 4-9: Fertiliser sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010 prices), 213 Figure 4-10: Industrial gases sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010 prices), 214 Figure 4-11: Steel sector – indicative incremental costs of energy and climate change polices expressed as % of GVA (2010) prices 216 Figure 4-12: Aluminium sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010 prices) 217 Figure 4-13: Cement sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010 prices) 218 Figure 4-14: Fertiliser sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010 prices) 219 July 2012 ii An international comparison of energy and climate change policies impacting energy intensive industries in selected countries Figure 4-15: Industrial gases sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010 prices) 220 Figure 4-16: Steel sector – indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010) prices - Sensitivity using market forecasts of EUA prices 221 Figure 4-17: Aluminium sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010) prices - Sensitivity using market forecasts of EUA prices 222 Figure 4-18: Cement sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010) prices - Sensitivity using market forecasts of EUA prices 223 Figure 4-19: Chlor-alkali sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010) prices - Sensitivity using market forecasts of EUA prices 224 Figure 4-20: Fertiliser sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010) prices - Sensitivity using market forecasts of EUA prices 225 Figure 4-21: Industrial gases sector - indicative incremental costs of energy and climate change policies expressed as £ / tonne production (2010) prices - Sensitivity using market forecasts of EUA prices 226 Figure 4-22: Steel sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010) prices - Sensitivity using market forecasts of EUA prices 227 Figure 4-23: Aluminium sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010) prices - Sensitivity using market forecasts of EUA prices 228 Figure 4-24: Cement sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010) prices - Sensitivity using market forecasts of EUA prices 229 Figure 4-25: Fertiliser sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010) prices - Sensitivity using market forecasts of EUA prices 230 Figure 4-26: Industrial gases sector - indicative incremental costs of energy and climate change policies expressed as % of GVA (2010) prices - Sensitivity using market forecasts of EUA prices 231 July 2012 iii An international comparison of energy and climate change policies impacting energy intensive industries in selected countries Tables Table 1-1: Selection of key policies 5 Table 2-1: Summary details of electricity markets 21 Table 2-2: Summary details of gas markets 28 Table 3-1: Selection of key policies 39 Table 3-2: Assessment Table - China 41 Table 3-3: Assessment Table - India 63 Table 3-4: Assessment Table - Japan 77 Table 3-5: Assessment Table - Russia 90 Table 3-6: Assessment Table - Turkey 100 Table 3-7: Assessment Table - US 114 Table 3-8: Assessment Table - Denmark 134 Table 3-9: Assessment Table - France 144 Table 3-10: Assessment Table - Germany 158 Table 3-11: Assessment Table - Italy 170 Table 4-1: Methods for developing cost estimates
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