View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by NORA - Norwegian Open Research Archives An Integrated Approach to Support Energy Policy Formulation and Evaluation Andrea M. Bassi Dissertation for the degree philosophiae doctor (PhD) at the University of Bergen November 27, 2009 1 2 Scientific environment This thesis uses the System Dynamics methodology to support and analyze energy policy formulation and evaluation. This research was carried out with the collaboration of the Millennium Institute and the System Dynamics Group, University of Bergen, under the supervision of Prof. Pål I. Davidsen. 3 4 Acknowledgements My research has been influenced by various collaborators and friends. I wish to thank them for their support and thoughtful advice. Firstly, I would like to express my gratitude to Prof. Pål I. Davidsen, my thesis supervisor, for his precious advice and guidance throughout the years. This research would have not been possible without Pål’s support. Along with Pål, I wish to thank the System Dynamics Group at the University of Bergen, a constant source of knowledge and a solid group of friends. Further, my appreciation goes to Dr. Hans R. Herren, President of the Millennium Institute (MI). Hans’ support for my research has always been strong and felt, and I deeply appreciate it. Many thanks also to Dr. Matteo Pedercini, which introduced me to MI and with whom I have shared many unforgettable experiences over the last few years. Many thanks also to the co-authors of the work on the proposed studies, with which over time I have developed a friendship and have experienced many life enriching events. Dr. Allan Baer introduced me to the fascinating energy efficiency projects of the Galapagos Islands and Ecuador, and offered me the opportunity to spend some very enjoyable time at Middlebury College in freezing Vermont; William Schoenberg (Billy) and Robert Powers (Bobby), which I had the pleasure to introduce to System Dynamics, supported the intense work on the North America study, together with ASPO-USA in upstate New York; Dr. John (Jed) Shilling, also Chairman of the Board of the Millennium Institute, a daily source of good advice and knowledge, provided key indications on how to develop the USA analysis; Alan Drake, a visionary mind from New Orleans, always ready to help and support others for good causes, was an incredible source of inspiration for the transportation case study; Dr. Joel Yudken, a system thinker fully 5 committed to support policy formulation with rigorous methods and analysis, has been a key collaborator in making the energy intensive industries case study a success. Over time, I have also had the pleasure to encounter exceptional personalities that have strongly motivated me to always do my best in every situation, especially on research and this thesis. I will certainly treasure many of the conversations I had with Hemang, Sanju and Donatella. Finally, a heartfelt thank you goes to my family and Silvia, my future wife. None of this would have been possible without your moral support. This thesis is dedicated to you, always close to me, no matter how far we are from each other. 6 Abstract With the adoption of the Kyoto Protocol (UN, 1997) in 1997 and the recent increase in energy prices, national leaders of industrialized countries have started investigating options for reducing energy consumption and carbon emissions within national borders (UNFCCC, 2008). After ten years debating on whether the global and national economies would have been negatively impacted by the implementation of such measures, rising global concerns on climate change urge policy makers to find ways to reduce the carbon intensity of the global economy (IPCC, 2007). Various proposals for reducing energy consumption and supply cleaner fuels have been examined during the years. Some countries opposed the adoption of drastic measures -such as the US, which has not yet ratified the Kyoto protocol, while others have taken the lead to support the diffusion of energy efficient technology and promote the production of cleaner energy, such as Denmark and Germany. As a matter of fact, different governments find themselves in different energy contexts that direct them towards taking dissimilar positions on energy issues. Evidently, the extent to which society, economy and environment shape policies and react to their implementation change from country to country. The present study investigates whether contextualizing energy issues is relevant to provide support to energy policy formulation and evaluation aimed at finding sustainable longer-term solutions to today’s and upcoming energy and environmental issues. Instead of applying the most widely accepted tools used to support policy formulation and evaluation, this research proposes the utilization of a holistic framework that incorporates social, economic and environmental factors as well as their relations to the energy sector, to better contextualize global, regional and national energy issues. This framework, which accounts for feedback 7 loops, delays and non-linearity, is applied to case studies centered on the US to investigate the longer term performance of selected energy policies under a variety of scenarios. Results of the research work carried out with five case studies, focused on the simulation of various energy and climate policy options, indicate the likely emergence of various unexpected side effects and elements of policy resistance over the medium and longer term, due to the interrelations existing between energy and society, economy and environment. Furthermore, side effects or unintended consequences may arise both within the energy sector and in the other spheres of the model; nevertheless, these behavioral changes influence all society, economy and environment spheres. 8 List of publications Bassi, A.M., A. E. Baer, “Quantifying Cross-Sectoral Impacts of Investments in Climate Change Mitigation in Ecuador”. Energy for Sustainable Development 13(2009)116-123, doi:10.1016/j.esd.2009.05.003 Bassi, A.M., Schoenberg, W., Powers, R., An integrated approach to energy prospects for North America and the rest of the world, Energy Economics, In Press, doi:10.1016/j.eneco.2009.04.005 Bassi, A.M., and J.D. Shilling, “Informing the US Energy Policy Debate with Threshold 21”. Technological Forecasting & Social Change, In Press. Bassi, A.M., A. Drake, E.L. Tennyson and H.R. Herren, “Evaluating the Creation of a Parallel Non-Oil Transportation System in an Oil Constrained Future”. Submitted to Transport Policy and peer reviewed by -and presented at- 2009 TRB Conference: Annual Conference of the Transportation Research Board of the National Academies of Science, Engineering, and Medicine, January 11-15, 2009, Washington DC, USA. Bassi, A.M., Yudken, J.S., Ruth, M., Climate policy impacts on the competitiveness of energy-intensive manufacturing sectors, Energy Policy 37(2009)3052–3060, http://dx.doi.org/10.1016/j.enpol.2009.03.055 9 10 Table of contents Scientific environment ....................................................................................................... 3 Acknowledgements............................................................................................................. 5 Abstract............................................................................................................................... 7 List of publications............................................................................................................. 9 Table of contents .............................................................................................................. 11 1. Introduction.............................................................................................................. 13 1.1 Energy Trends and Issues ______________________________________________ 13 1.2 Challenges to Policy Formulation and Implementation: Renewable Energy _______ 21 1.3 Study Purpose and Overview ___________________________________________ 27 2. Research Motivation ................................................................................................ 35 3. Research Approach.................................................................................................. 47 3.1 Introduction_________________________________________________________ 47 3.2 A Geo-political View of the Energy Sector ________________________________ 55 3.2.1 Global Perspective.................................................................................................................55 3.2.2 Regional Perspective .............................................................................................................57 3.2.3 National Perspective ..............................................................................................................59 3.3 Characteristics of geographical energy contexts: Complexity __________________ 63 3.4 Energy Planning: Methodologies and Tools________________________________ 68 3.4.1 Methodologies Review ..........................................................................................................68 3.4.2 Models Review......................................................................................................................73 4. Research Tools and Analysis................................................................................... 81 4.1 Introduction_________________________________________________________ 81 4.2 Reflections on the Validity of System