preliminary results · 24,844 41,163 avoided tax total light bulbs distribution light bulbs avoided...

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IN + Tiago Domingos Ricardo da Silva Vieira Ana Gonçalves Cristina Marta-Pedroso Conferência Internacional sobre Fiscalidade Verde: Um contributo para a sustentabilidade Fundação Calouste Gulbenkian, Lisbon April 30,2013 PRELIMINARY RESULTS

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Page 1: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

April 16, 2012

IN+

Tiago Domingos

Ricardo da Silva Vieira

Ana Gonçalves

Cristina Marta-Pedroso

Conferência Internacional sobre Fiscalidade Verde: Um contributo para a sustentabilidade

Fundação Calouste Gulbenkian, Lisbon April 30,2013

PRELIMINARY RESULTS

Page 2: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

2 May 2013

Effective Carbon Prices

2

INTRODUCTION

Electricity Generation

Road Transport

Households’ Energy Use

Summary

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Introduction

2 May 2013

Effective Carbon Prices

3

Assessing carbon prices in different sectors allows for: determining the efficiency in terms of climate change of the

overall policy framework

reviewing or introducing new policy instruments for dealing with climate change

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Introduction

2 May 2013

Effective Carbon Prices

4

What is the cost of CO2? Abatement (ton CO2) the difference between the emissions in the situation with no policy and the lower emissions induced by the policy instrument Subsidy equivalent (M€) “(…) the outlays required to ‘buy’ certain amounts of abatement from particular sources (…) the economic costs of the policies designed to promote lower-emissions generation.” (Productivity Commission report, pp. 72-73) Implicit abatement subsidy (€/ton CO2) the ratio between the costs of reducing CO2 emissions and the actual abatement of CO2 emissions

Source: Productivity Commission Report

These definitions were used throughout this presentation, unless otherwise indicated.

Page 5: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

Methodology

2 May 2013

Effective Carbon Prices

5

Counterfactual Policy

Estimation of emissions and equivalent subsidies for 2010* by comparing to a Counterfactual scenario.

What would have happened if no policy was in place

What really happened

* 2010 was used as the Productivity Commission’s Report considered this year as reference and there were several Portuguese official data documents published using 2010 as reference year.

Page 6: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

Where to apply it?

2 May 2013

Effective Carbon Prices

6

ELECTRICITY GENERATION ROAD TRANSPORT

PULP & PAPER AND CEMENT HOUSEHOLDS´ ENERGY USE

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2 May 2013

Effective Carbon Prices

7

Introduction

ELECTRICITY GENERATION

Road Transport

Households’ Energy Use

Summary

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Electricity Generation:

policies

2 May 2013

Effective Carbon Prices

8

17,838 n.a. 180

PRODUCTION INCENTIVES EMISSIONS TRADING SCHEMES

Electricity generators surrend 1 EU allowance per 1 tonCO2

Total number of allowances is capped

Coal plants are more emissions intensive than NG and renewable – they are “taxed” at higher rate

… subsidy to NG and renewable elctricity

RECS

Renewable Energy Certificate System

Certification of the source/ technology of electricity

Sold as premium energy

CAPITAL SUBSIDIES

Fixed public investments for renewable energy technologies

48,906

* Includes micro-generation

PRODUCTION IN SPECIAL REGIME (PRE)

Feed-in Tariffs

Wind, hydropower (<20 MW), solar PV, wave, bioenergy*

Waste incineration

CHP*

Priority in satisfying demand

PRE electricity is put into the grid with no need to go to the MIBEL

Indirect subsidy to PRE in terms of CMECs

Source: ERSE, EDP and REN

Electricity generated in 2010 (GWh)

Page 9: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

2 May 2013

Effective Carbon Prices

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Counterfactual Policy

No feed-in tariffs AND PRE = 0 GWh

Electricity demand is satisfied through electricity from fossil fuels and large hydropower

Powerplants with CMECs (coal plant in Sines) achieve enough revenues to cover all operation and maintenance costs

Marginal electricity production is usually electricity from natural gas (due to the availability of the technology to increase electricity generated)

Production in Special Regime

Feed-in tariffs for PRE

Actual PRE production

Reduced electricity demand on non-PRE displaces first:

Scenario 1: Coal based powerplant with CMECs [high abatement]

Scenario 2: natural gas based powerplant (marginal production) [low abatement]

PRE: Definition of the

scenarios

Page 10: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

PRE: Results

2 May 2013

Effective Carbon Prices

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Displacing CMECs (coal)

Production in Special Regime

Displacing marginal elect. (nat. gas)

5119 5199

Displacing average elect.

14,707

Emissions abatement 1000 ton CO2

PER COUNTERFACTUAL

Subsidy equivalent M€

PER COUNTERFACTUAL

Total Without CMEC cost

1067.1 10.3

CMEC cost

1077.4

Implicit Abatement Subsidy 71.6 €/tonCO2 (205.3-208.5 €/tonCO2)*

*Over-estimation (subsidies, including CMECs, are provided to more than GHG reduction), Values do not take into account that electricity is different during the day and during the night Base data sources:

Electricity generated and costs: ERSE Emission factors: APA and ERSE

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PRE: Results

2 May 2013

Effective Carbon Prices

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€/ton CO2eq

ton CO2eq

200

SOLAR PV

HYDRO-MINI

CHP-RENEW.

WIND

CHP-OTHER

BIOGAS

BIOMASS

USW

Page 12: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

0

100

200

300

400

500

600

Imp

licit

ab

ate

me

nt

sub

sid

y (

€/t

CO

2)

PRE: Results

2 May 2013

Effective Carbon Prices

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Production in Special Regime

Cross-country comparison

CHP Biogas Solar PV Hydro Biomass Wind

Source: Own calculations (Portugal), Productivity Commission Report (remaining countries)

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2 May 2013

Effective Carbon Prices

13

Introduction

Electricity Generation

ROAD TRANSPORT

Households’ Energy Use

Summary

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2 May 2013

Effective Carbon Prices

14

Introduction

Electricity Generation

Road Transport

HOUSEHOLDS’ ENERGY USE

Summary

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Households’ energy use:

policies

2 May 2013

Effective Carbon Prices

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13,739 4900 1975 25,432 15,338

RENOVE CASA*

Fridge & freezer substitution

Incentives for the acquisition of A+ and A++ fridges and freezers

ENERGY EFFICIENCY STANDARDS AND CERTIFICATION IN BUILDINGS

Mandatory certification for all new buildings

Tax reduction for more efficient buildings (A or A+)

Mandatory certification for existing houses when sold

RENOVÁVEIS NA HORA

Light bulbs substitution

Distribution of CFL lamps

Tax on incandescent light bulbs

Other programs

Washing devices substitution

Efficient windows

Efficient insulation

Installation of heatpumps

Micro –production

Incentives for the installation of micro renewable energy production

Solar thermal

Reduction of fuels consumption

Tax reduction for the installation of solar thermal

Mandatory installation in new buildings

46,495

* No distinction between the residential and service sectors

Saved energy (toe)

Source: ADENE

Page 16: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

Light Bulbs Substitution:

Results

2 May 2013

Effective Carbon Prices

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Renove Casa

AVOIDED TAX ON

INCANDESCENT LIGHT BULBS

CFL DISTRIBUTION

1,860,713

2,832,720

Free distribution of CFL light bulbs

Abatement emissions due to saved

energy with increase on efficiency

Subsidy equivalent to price of a CFL

light bulb

Source: ADENE

Creation of a inefficiency tax on

incandescent light bulbs

Abatement emissions due to saved

energy with increase on efficiency

Subsidy equivalent to avoided tax on

sold light bulbs (0.41€)

# of CFL Light Bulbs

Page 17: PRELIMINARY RESULTS · 24,844 41,163 Avoided Tax TOTAL Light bulbs distribution Light bulbs Avoided Tax TOTAL distribution Abatement Subsidy 13.9-24.3 €/tonCO 2 eq Subsidy equivalent

Light Bulbs Substitution:

Results

2 May 2013

Effective Carbon Prices

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Emissions abatement Ton CO2eq

Renove Casa

11,333

28,586 17,253

MINIMUM MAXIMUM

16,319

41,163 24,844

TOTAL Avoided Tax

Light bulbs distribution

TOTAL Avoided Tax Light bulbs distribution

Abatement Subsidy 13.9-24.3 €/tonCO2eq

Subsidy equivalent k€

MINIMUM MAXIMUM

436 572 136 530

695 165

TOTAL Avoided Tax TOTAL Avoided Tax

Light bulbs distribution

Light bulbs distribution

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2 May 2013

Effective Carbon Prices

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Introduction

Electricity Generation

Road Transport

Households’ Energy Use

SUMMARY

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Uncertainties

2 May 2013

Effective Carbon Prices

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Significant uncertainties and gaps in data

Counterfactual depends on the circumstances

Discount rate of 5%

All sales of efficient devices (e.g. vehicles, fridges, CFL bulbs) are due to implemented policies

Estimates are a snapshot for 2010. Some programs are ramping up over time, but others have now stopped

Costs and abatement are attributed to some policies that have multiple objectives (or for which carbon abatement is only a side-effect) and there is uncertainty about how much might reasonably be apportioned to each.

LIMITATIONS POSSIBLE IMPACTS/SOLUTIONS

Sensitivity analysis

Sensitivity analysis

Sensitivity analysis with interval (3-7%)

Abatement is overestimated Abatement subsidy is underestimated

Values are overestimated

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500

€/ton CO2eq

Electricity generation

Households energy use

Road transport

Overview

2 May 2013

Effective Carbon Prices

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ETS

MINI-HYDRO

CHP-RENEW.

WIND

CHP-OTHER

ton CO2eq RENOVE CASA

VEHICLES TAX

SOLAR PV

MODAL SHIFT

MICRO-GENERATION

SOLAR THERMAL

BIOGAS

BIOMASS

USW

Total Subsidy 1302 M€

0.62% of GDP

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Conclusions

2 May 2013

Effective Carbon Prices

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Different policies lead to very different carbon prices

The resources committed to the different emissions-reduction policies

vary between 0.001 and 0.5% of GDP

Costs and abatement are attributed to some policies that have multiple

objectives (or where carbon abatement is only a side-effect)

Different policies have different scopes for further abatement

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2 May 2013

Effective Carbon Prices

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Thank you