transrisk case study analysis
TRANSCRIPT
Magazine
Magazine on climateand sustainability
In this issue
vol. 22, no. 3 • October 2016 ISSN: 1877-606X
In this issue
1A New Wave of Climate Knowledge- Editor's note
2Emissions Trading Scheme Pilot inMexico: Complying with the INDCthrough Market-based MechanismsAndrés Prieto and Eduardo Piquero
4Dutch Pop-up Museum for Bio-based Design
5TRANSrisk Case Study Analysis:Context Analysis for Low-EmissionTransition Pathways
7Energy Efficiency Policy Mixesunder Article 7 of the EU's EnergyEfficiency Directive
9"Cows and Pigs For Sale?"Assessing the Side-Effects of Low-Carbon Transition Pathways inLivestock Farming
11Decarbonising the EU Economy by2050: The Contribution of SmallBusinesses
13Reports
15JIQ Meeting Planner
During the 1980s, cl imate change was largely the domain ofmeteorologist and climatologists. They observed changes in weatherpatterns that were difficult to explain with existing climate models. Basedon this knowledge, biologists, chemists, and physicists started to focuson possible consequences of a changing climate. They were soonfollowed by anthropologists and economists to explore the humandimension of climate change and to express possible cl imate changedamage in monetary terms. Since the 1990s, economists and lawyershave addressed climate policy issues related to costs and responsibil ities.
Now, with the Paris Agreement close to entry-into-force, a new wave ofclimate knowledge brokering is needed. ‘Paris’ commits countries tocommunicate national cl imate plans. However, the main challenge wil l bethe implementation of these plans, which includes acceptance of climatemeasures by people, as part of their everyday life. For that, we need tounderstand how people take decisions, what scares them off, whattriggers them, etc. This new knowledge wave wil l be driven bypsychologist and sociologists, but also by (industrial) designers, as theyare trained to understand their cl ients or end users of their products.
Recently, the Windesheim College (Zwolle, the Netherlands) started acourse on bio-based industrial design. Students collaborate withenterprises on ways to trigger clients and end users to adopt climate-friendly techniques (see page 4). It i l lustrates the role of a new group ofknowledge providers in integrating climate solutions in people’s everydaylife routine.
Wytze van der Gaast
A New Wave of Climate KnowledgeEditor's note
Figure 1. Industrial designers form one of the professions that wil l drive thenew wave of climate knowledge.
2JIQ Magazine • October 2016
Emissions Trading Scheme Pilot in Mexico: Complyingwith the INDC through Market-based Mechanisms
By Andrés Prieto and Eduardo Piquero*
Mexico’s first explicit targets on greenhouse gas(GHG) emission reduction2 and marking the beginningof Mexico’s aspiration for global cl imate leadership.
The subsequent Peña Nieto administration builtfurther on this with several cl imate-related laws andinitiatives, the most notable of which includes thecountry’s first carbon tax (somewhat of a misnomer asthe tax targets CO2 content of fossil fuels instead ofGHG emissions)3 and the Law on Energy Transitionwhich establishes specific targets,4 institutions and anew distribution of responsibil ities in order to ensureMexico’s transition to a low carbon economy.
Moreover, the Peña Nieto administration has madesignificant commitments on an international level bycommunicating the country’s Intended NationallyDetermined Contribution (INDC, see Figure 3),5 whichis amongst the most ambitious in the region.Simultaneously, Mexico has maintained an activeparticipation in climate negotiations, placing strong
On 15 August of this year the Mexican Ministryof Environment and Natural Resources andMÉXICO2
1 announced the development of anational emissions trading scheme (ETS) pilot.This will be the first of its kind in Latin Americawith involvement of a major stock exchangeand a national government. The announcementsurfaces as a result of the common groundbetween MÉXICO2’s mission to developenvironmental market mechanisms and theMinistry’s mandate of designing a detailedstrategy and roadmap to achieve the country’sclimate goals.
The pilot consists of a voluntary, web-basedsimulation of an ETS, with the objective of providingcompanies with insight in how an ETS operates aswell as building capacity in the private sector forparticipating in an ETS. Additionally, valuable policydesign lessons wil l be extracted by studying theparticipants’ interactions within the web platform.
As a cornerstone to commitments surrounding thehistorical Paris Agreement, and in anticipation of the22nd Conference of the Parties to the UNFCCC inMarrakech in November of this year (COP22), the pilotis strongly aligned with Mexico’s and the rest of thedeveloping world’s pledged emphasis on capacitybuilding during the pre-2020 period.
Climate policy in MexicoThe pilot emerges in a context of increasing climateregulations by the Mexican government, which beganduring the Calderón administration with the enactingof the General Law on Climate Change, establishing
* Andrés Prieto is Research Analyst at MÉXICO2, e-mail: [email protected]; Eduardo Piquero isDirector of the same institution, e-mail: [email protected].
1 MÉXICO2 is the environmental markets platform of the Mexican Stock Exchange.2 30% GHG emissions reduction compared to business-as-usual by 2020, and 50% GHG emissions reduction
by 2050 with respect to a year 2000 baseline (Ley General de Cambio Climático, pdf).3 SEMARNAT presentation at Partnership for Market Readiness: Carbon Tax in Mexico (pdf).4 35% share of clean energy in power generation by 2024 (Ley de Transición Energética, pdf).5 Intended Nationally Determined Contribution by the Government of Mexico (INDC Mexico, pdf).
Figure 2. Announcement of the Mexican ETS Pilot, 15August 2016. Speaker in the middle is Rafael PacchianoAlamán, Secretary of Environment and Natural Resources.
3JIQ Magazine • October 2016
emphasis on financial and technological transfers fordeveloping nations. The realisation of these climatetargets requires an ambitious climate strategy, whichalso considers the country’s social, political andeconomic features.
The latter proves particularly crucial in the context ofMexico’s open, export-driven economy facing recenttrends of declining growth and foreign investmentamidst concerns of rising public debt and thepersistence of low oil prices. Any climate solutionmust provide businesses with the certainty that theymay maintain growth and competitiveness on a globallevel.
In l ight of that, emissions trading schemes provide anopportunity for Mexico due to their flexibil ityprovisions and market-based design. In fact, theMinister of Environment and Natural Resources haspublicly stated the Ministry’s interest in launching anETS by 2018.
Figure 3. Greenhouse gas pathway for Mexico 2013-2030, based on the 22% reduction target determined in Mexico's INDC.
Box 1. International examples for the Mexican ETS.
Global examples only strengthen the case for ETSimplementation in Mexico. California’s experiencewith emissions trading shows better than expectedGHG emission reductions while maintainingimpressive economic growth. Furthermore, China(a major competitor to Mexico in several industries)with its experience with ETS pilots and upcomingimplementation of a national carbon market, makethe case for ETS as a viable and even preferablepolicy tool for a growing, developing economy.
In order to prepare for the ETS, the pilot wil l providea valuable opportunity to educate stakeholders on thepotential advantages of regulating carbon throughmarket incentives, and it wil l open communication toexplore the specific challenges and opportunities ofimplementing an ETS in Mexico. Regionally, it wil lsend a signal to Mexico’s trading partners about thedirection of the country’s cl imate policy.
Key features of the pilotThe pilot is a market simulation that reproduces allelements of an ETS. It wil l be managed through adigital platform that users may log into at any time.Each participating company wil l choose arepresentative to manage the emissions trading ontheir behalf. For the most part, companies havechosen either the Head of Sustainabil ity or the Headof Government Relations. The participating companiesmay purchase emission permits either throughauctions or the secondary market. In total, thesimulation wil l run for a period of one year dividedinto different cycles lasting around 2-3 months, eachintroducing a greater degree of complexity in thepilot’s market rules.
Participating companies wil l be encouraged to submitnumbers that best represent their actual emissionsprofile. The end goal of this is to maintain as closeproximity to reality as possible, while using fictionalresources, al lowances and offsets. The end goal ofthis is to maintain as close proximity to reality aspossible whilst also reminding participant that actual,verified emissions data wil l vary and the results of thesimulation are not meant to model the upcoming ETSbut rather to il lustrate its mechanics.
4JIQ Magazine • October 2016
Although the total number of participants is yet to bedetermined, enrollment is expected to be significantas participation is voluntary, non-binding, free of costand responsive to stakeholders’ interest in beinginformed of upcoming environmental regulation. Thetotal number of participating companies is estimatedat 100 stakeholders from a diverse array of pre-selected industries, including: transportation, iron, oilrefineries, cement, paper, glass, ceramics andchemical industries. Certain industries, such astransportation, wil l be targeted through an upstreamapproach in order to reduce the number ofparticipants needed to achieve a large scale ofemissions.
The simulation wil l include price stabil ity mechanisms,different types of offsets, banking, fines,benchmarking as well as other major componentspresent in most of the world’s cap and trade systems.These components wil l be introduced gradually inorder to avoid overwhelming the participants mostunfamil iar with ETS.
One of the goals of the pilot is to achieve increasingsimilarity to the California – Quebec - Ontario model,6
6 Key features that wil l be included: Auction Reserve Floor Price, Allowance Price Containment Reserve,Compliance Offset Protocol, carbon leakage prevention measures.
7 Lack of price controls and banking, al location by grandfathering.
starting from the more austere rules of the earlystages of EU ETS7 for the sake of simplicity. Thereasoning behind this, besides early data suggestingthe success of California’s ETS, is related to Mexico’sclose political and economic ties with California whichmay provide some basis for ful l or partial l inkagebetween the systems.
In parallel, the Ministry shall continue its work on theRENE, the country’s mandatory GHG emissionsinventory. When developing an ETS, Mexico wil l needto construct a national baseline for GHG emissionswhich wil l inform the determination of individualemission caps. This wil l require a strong reporting toolthat includes annual mandatory verification of alllargest emitters. Indeed, the success of ETS in thecountry lies in the strength of this emissions registryprogramme.
A few important aspects of what an ETS would looklike in Mexico cannot be answered by the pilot andwil l thus be excluded, such as policy harmonisationbetween an ETS and the recently introduced carbontax and the interaction with the Clean EnergyCertificates (RECs) market that wil l launch in 2018.
Recently, a Bio-based Pop-up museum has beeninitiated as a collaboration effort by the K&C Centrefor Art and Culture, the Windesheim University ofApplied Sciences, and a number of small and medium-sized enterprises (SMEs) in the Netherlands. Themuseum aims at showing examples of how (industrial)design can be based on use of bio-based materials. Itwil l be a mobile exhibition which wil l ‘pop up’ inseveral places in the northern part of the Netherlands.
In September of this year, the project began with akick-off event to inform (industrial) design students atWindesheim about the importance of using bio-basedmaterials for achieving, among others, the climategoals of the Paris Agreement. At this event, studentsobtained background information from Wytze van derGaast (JIN) about climate change and how use of bio-
based materials can contribute to a low-emissionfuture. SMEs presented their businesses andintroduced the assignments for the students. EachSME had formulated a research question based on adesired improvement of their business operation, tobe addressed by the students during this course year.
In a next phase of the project, results (bio-basedproducts and processes) wil l be presented in the Pop-up museum to a wider audience at several locations.
Dutch Pop-Up Museum for Bio-based Design
More informationMs. Miriam van WeeghelK&C, centre for art and culture (www.kcdr.nl)Assen, the NetherlandsE-mail: [email protected]
5JIQ Magazine • October 2016
TRANSrisk Case Study Analysis: Context Analysis forLow-Emission Transition Pathways
The TRANSrisk project aims to assess low emissiontransition pathways that are technical ly andeconomically feasible and acceptable from a socialand environmental viewpoint. See also the articleon Low-Carbon Transition Pathways in LivestockFarming on page 9, and the project leaflet (pdf).
Co-funded by theEuropean Union
How feasible would it be to have all rooftops inthe Netherlands covered by solar panels forelectricity? What are policy options for lowemission pathways in the Austrian iron andsteel sector? What barriers exist for diffusion ofbio-energy technologies in Indonesia? Theseand a range of similar questions are currentlybeing addressed by the TRANSrisk project in adetailed case study analysis.
TRANSrisk is a research project funded by the EUHorizon 2020 programme, which started in Septemberof last year (for earl ier articles on the project, see theJIQ Magazine issues October 2015 and December2015/January 2016). The goal of TRANSrisk is toexplore pathways towards a low-emission future witha specific focus on uncertainties and risks that maystand in the way of successful implementation. TheTRANSrisk consortium brings together a set ofbottom-up, top-down and agent-based models andparticipatory tools for stakeholder consultation inorder to approach low-emission pathway formulationfrom different (quantitative and qualitative) angles.
Stakeholder engagement is an important aspect of theproject as it aims to mobil ise stakeholders’ tacitknowledge to enable better informed decision-making.For example, while a model-based scenario maypresent a portfolio with (technology and policy)options for a low-emission future, some of theseoptions may be considered risky by domesticstakeholders as it may, for example, require additionalimports of raw materials, lead to grid instabil ity or beconsidered unsafe. By combining stakeholders’knowledge and preferences with model-basedscenarios, low-emission pathway formulation canbecome more robust and implementation morefeasible. At the same time, models help to informstakeholders about the implications of implementing alow-emission technology on a large scale which may(or may not) affect their perceptions.
TRANSrisk’s combined quantitative – qualitativeresearch approach is being applied through 15 casestudies in both developed and developing countries(an overview of case studies in shown in Box 2).According to the approach, for each case study, whichcan be both at the level of a country or a sector, adesired low-emission future is formulated based on a
set of specific research questions. The next step is toidentify possible pathways toward this desired future,including preferred technology and policy options.However, any pathway contains considerableuncertainty and may imply risks, and it is thereforeimportant to formulate ways to identify (and reduce)these uncertainties and pathway risks.
For the latter, TRANSrisk applies the tool of systemmapping. The origins of mapping markets or systemsstem from work by Mark Albu and All ison Griffith in aproject which aimed at ways to improve sustainablel ivelihoods for rural areas in developing countries. 1 Inthese countries, working with stakeholders, a desiredfuture had been formulated with preferred technologyoptions, but it was not clear how well these optionscould be implemented at the desired larger scale:what barriers existed, how certain were the assumedcosts and benefits and what were the risks? In orderto address these and other questions, a stakeholderconsultation was held. The answers were thenpresented in a map which showed the businesscontext for the chosen pathway (incl. policyenvironment, habits, bureaucracy, etc.), the marketvalue chain with actors and their interconnections, aswell as how supportive a country’s legal, financial andeducational institutions were for the pathways. Withthese market or system maps, barriers could beidentified as well as solutions to clear these.
1 Albu, M. and A. Griffith, 2005. Mapping the Market: Aframework for rural enterprise development policy andpractice, Practical Action.
6JIQ Magazine • October 2016
Box 2. List of TRANSrisk case studies.
Austria Steel sector: energy supply and demand.
Canada Fossil fuels sector with a focus on oil sands in Alberta.
Chile Solar PV (heating/cooling); wind, natural gas plus solar storage and sea water desalination.
China Building sector (residential, government, and commercial).
Greece Solar PV, distributed generation, and distributed storage.
India Solar and wind.
Indonesia Bioethanol and biogas production technologies and fuel sources.
Kenya Energy security and access: 1) increasing electricity generation capacity (on and off-grid), 2)diversifying the electricity mix (geothermal, reduced dependence on fossil fuels) and 3)household cooking energy, especial ly charcoal.
Netherlands Biogas from aniimal manure for heating/cooling and electricity (see Page 9), and solar PV.
Poland Energy security: PV, wind, coal (l ignite), and renewable energy.
Spain Solar, wind, and other renewables.
Sweden Road freight transport, and energy supply (biofuels, highways, batteries, etc.).
Switzerland Solar, hydro, nuclear, and the electricity sector.
UK Nuclear power.
In TRANSrisk, a similar system mapping approach isused, for which a software tool has been developedby the project partners. This tool aims to quicklyorganise stakeholder inputs on how they experiencethe relevant system for their sector or country, andwhere they believe barriers exist for realising a low-emission future.
On 4-5 October of this year, TRANSrisk partnerspresented their case studies by explaining:• Research questions, the answers to which wil l, in
the course of the case study, shape the low-emission pathways;
• the political, economic, social, and environmentalcontext and priorities for each case study; and
• the currently existing policy mix relevant for eachcase study.
With this information, for each case study a betterunderstanding has been obtained of the past andcurrent situation in the sector or country, as well as ofpossible futures, including a first assessment of risksfor these futures.
In the next stage, possible futures wil l be simulatedwith help of stakeholder consultation and supportingmodell ing analysis. A key challenge for this stage maybecome whether the desired future(s) in a country orsector wil l be derived from the 2-degree Celsius targetin the Paris Agreement or be based on stakeholder
preferences. In the first option, the climate goal is thelead consideration, and the aim is to find ways forenhanced stakeholder support for that. In the secondoption, a country’s social, economic andenvironmental priorities become lead, with the aim torealise these with the lowest emissions possible. Bycombining modell ing and stakeholder consultationtools, in iterative research steps, TRANSrisk hopes tobring the outcome of both options closely together.Moreover, TRANSrisk partners wil l extend, in theircase studies, the system map analysis in order toidentify and characterise possible risks to successfulimplementation of pathways in the countries and/orsectors. Based on that, solutions wil l be formulated tomitigate these risks.
The results of the case study analysis wil l bepublished on the TRANSrisk website (www.transrisk-project.eu), with the first core publication due at theend of November.
More informationDr. Jenny LieuTRANSrisk project coordinatorUniversity of Sussex, SPRUBrighton, UKE-mail: j. l [email protected]
7JIQ Magazine • October 2016
Energy Efficiency Policy Mixes under Article 7 ofthe EU's Energy Efficiency Directive
• Minimum standards are obligatory energyefficiency levels as set by regulations. Theseshould not be combined with financial incentives,as these could then be used to fund investmentsthat are required by the regulation.
• Underpinning measurement standards arefoundational for other policy instruments tofunction. They help to increase transparency andreliabil ity, and to ensure that the quality oftechnologies adopted is high.
Use of instruments based on technologycost and complexityIn general, the analysis shows (Figure 4) that loansfocus on the most complex and costly technologies,which is in l ine with the evidence on loans being ableto achieve higher leverage effects than directsubsidies. Loans are closely followed by grants andEEOs. Information, advice, bil l ing feedback, and smartmetering are located within the low cost/complexitycategory. However, such instruments also helps tofacil itate implementation of other policy instrumentsfocused on more costly and complex technologies.
Policy mix by sectorENSPOL has analysed the policy instruments for thepurpose of complying with Article 7 of the EED in 14EU Member States,1 with four sectors distinguished:residential, non-residential buildings, industrial, andtransport. In the residential sector the most frequentlyused instrument is grants, fol lowed by regulations andloans. Most policy instruments in the residential sector
Energy efficiency policy is expected to play akey role for meeting the European Union’sclimate and energy targets, particularly forreduced energy demand and reduced CO2emissions. While most analyses have focusedon single policy measures, the ENSPOL projectdeveloped a more generic framework to assessthe effectiveness of policy mixes. Based on anassessment of the interaction of policies of theEU Member States, some policies seem tocomplement others, while in other cases thereare overlaps that hinder the effectiveness. Thisprovides lessons on how policy mixes can bemade more effective and efficient.
EU Member States have produced reports to showhow they wil l meet the targets set by Article 7 of theEnergy Efficiency Directive (EED). They have taken awide range of approaches, with most countries havingemployed a mix of policies, rather than single policies.ENSPOL has demonstrated which types of policyinteractions seem to work efficiently in the variouscountries, which can serve as guidance to EU MemberStates that plan to introduce or amend the existingpolicy instruments they use for the Article 7 targets.
Policy classesAs a starting point, ENSPOL has defined six ‘policyclasses’. For a policy mix, several policies from one ormore of these classes are to be combined. Therefore,it has been analysed to what extent policies fromthese classes are suitable for interaction with otherpolicies, in order to create a policy mix.• Energy and/or CO2 taxes that increase the
cost of (carbon-based) energy. These increaseincentives to reduce energy consumption and touse more efficient technologies.
• Purchase subsidies may include grants or taxrebates, but also Energy Efficiency Obligations(EEOs) are classified as a ‘purchase subsidy’because this is how they appear to beneficiaries.
• Access to capital includes loans and on-bil lfinance. Instruments in this class are analternative to purchase subsidies and shouldgenerally not be used together.
• Information and feedback instruments includecampaigns, education, advice, feedback, andengagement. These instruments are judged to becomplementary with all other instruments.
This article is a summary of the third policy briefpublished by the ENSPOL project. ENSPOL was anEU-funded project (March 2014 - August 2016)aimed at supporting EU Member States in theeffective implementation of Article 7 of the EnergyEfficiency Directive.The policy brief 'Energy efficiency policy mixesunder Article 7', published in July 2016, was writtenby Vlasis Oikonomou (JIN) and Jan Rosenow, TinaFawcett, and Nick Eyre (University of Oxford).
8JIQ Magazine • October 2016
focus on the medium cost and medium complexitysegment. The focus of policy instruments used in thenon-residential sector is very similar, but loans areused to target more complex and costly technologies.
Policy instruments used in the industry sector focuson more complex and capital-intensive technologiescompared to other sectors. Rather than loans, in thissector voluntary agreements are commonly used totarget the most costly measures. The transport sectorcan be characterised by a relatively small number ofpolicy instruments and types (there are no loans andenergy taxes). Final ly, energy and CO2 taxes and EEOschemes are mostly used in a cross-cutting way,targeting not one sector but a range of sectors.
Discussion and conclusionsUsing empirical evidence (alone) to measure theeffectiveness of policy mixes is generally understoodto be problematic, given a lack of sufficient monitoringand evaluation of individual policies. It is particularlydifficult in this case, as most policy mixes consideredhave only recently been put into place. Therefore theanalysis has been made with reference to literature,and using expert judgement across the ENSPOL team.
The analysis suggests that some policy instrumentsonly interact with others in a positive way, meaningthat their inclusion within a policy mix should alwaysbe encouraged in terms of effectiveness. The
universally complementary policies, with the exceptionof taxation, are in most cases already in place at theEU level for energy-using products, buildings andbuilding components. This includes energy labell ingschemes, a requirement to introduce smart meters,and test standards and procedures. The policies whichtend to be neutral in their interactions, such asregulations and voluntary agreements, also have astrong place in the EU as well as on national levelpolicy. Where these policies are missing for sectors orsub-sectors, their introduction should be considered.
While theoretical analysis suggests carbon or energytaxation would be complementary with all other policytypes, countries take very different approaches onenergy taxation across different types and sectors.Some countries, such as Sweden, have high rates oftaxation, while others are as low as EU legislationallows. Theoretical ly useful policies can be political lyunacceptable, or not fit with other policy goals. Thisil lustrates one weakness of this method, which is thatit can only consider the effect of a policy mix on asingle goal (effectiveness), whereas policy is usuallyrequired to deliver multiple goals simultaneously.
Given the many simplifications which were made tocarry out this analysis, particularly the need to look atone success criterion only and to disregard manyimportant contextual factors, it would be wrong toover-claim its potential usefulness to policy makers.However, it does offer a very clear way of thinkingabout policy combinations as well as identifying areasof potential under-performance, and last but not least,highlights policy instruments which can always make apositive contribution to a policy mix.
1 Austria, Belgium, Bulgaria, Denmark, Estonia, France,Germany, Greece, Italy, Netherlands, Poland, Spain,Sweden and the United Kingdom.
Figure 4. Use of policyinstruments based ontechnology cost and complexity.
9JIQ Magazine • October 2016
"Cows and Pigs For Sale?" Assessing the Side-Effects ofLow-Carbon Transition Pathways in Livestock Farming
The objective of the TRANSrisk project is to explorelow emission transition pathways and analyse thepossible associated risks. The project bringstogether quantitative techniques (such as models)and qualitative approaches (such as participatoryconsultations with stakeholders). This combinedapproach enables identification of possible lowemission transition pathways which are technical lyand economically feasible, and acceptable from asocial and environmental viewpoint.
Within the TRANSrisk project one of the Dutchcase studies focuses on low-carbon transitionsin the livestock sector. The first transitionpathway considers IMM (Integrated ManureManagement). IMM combines a set oftechnologies including stable and floorsystems, manure handling-storage systems,anaerobic digesters and manure/digestatetreatment (a possible configuration is shown inFigure 5). IMM results in the production ofbiogas and organic fertilisers, while reducingemissions of methane (CH4) and ammonia(NH3). An alternative to IMM is a reduction ofanimal numbers in the sector. This secondtransition pathway could achieve a similar (notidentical) environmental performance as IMM.
While deliberately decreasing or l imiting the size ofthe important l ivestock sector in the Netherlands(≈3% of GDP) may seem odd, there are clear signalsthat a decline of l ivestock farming is upcoming. Inrecent years, societal concerns and environmentalimpacts have increased in parallel with the growthand industrial isation of the sector. This occurred in anextremely livestock-dense region (Figure 6). Limitingfurther growth of the sector to mitigate the existinghealth, safety and/or environmental risks hardlyseems sufficient, knowing that a substantial reductionof various impacts is needed. In this case study a
Figure 5. IMM as a low-carbon transition pathwayin the livestock sector.
reduction of l ivestock (RL) is considered to be arealistic alternative low carbon transition pathway.
Environmental targetsTable 1 shows key environmental targets relevant forthe livestock sector. It also shows the current statusof achievement for the 2020 and 2030 targets. Asagriculture is the sector with the highest emissions ofCH4 and NH3 (resp. 67% and 87% of the nationaltotal) it is to be expected that a significant share ofthe required mitigation burden wil l fal l on its
Co-funded by theEuropean Union
10JIQ Magazine • October 2016
Involvement of stakeholdersAre you a stakeholder involved in agriculture,l ivestock, manure management, or bioenergy? Feelfree to join the discussion and share your thoughtsand insights with the TRANSrisk project. For moreinformation, please contact Eise Spijker of JINClimate and Sustainabil ity ([email protected]).
subsector: l ivestock. With regards to phosphateexcretion, the Dutch livestock sector is producingconsiderably more manure (i.e. nutrients) than isal lowed to be spread on agricultural soils under theEU Nitrates Directive. On the short term (2020),meeting the NH3 emissions and phosphate excretiontargets appear to be most problematic. In the run upto 2030, it is also likely that reducing CH4 emissionsfrom livestock wil l become more urgent. On thepositive side, manure digestion can significantlycontribute to the production of renewable energy.
Scoring of pathwaysBoth low-carbon transition pathways (IMM and RL)can be ‘scored’ in terms of their contribution tomeeting these environmental targets. The IMMpathway positively contributes to reducing CH4, CO2and NH3 emissions, and increases the production ofrenewable energy, while it has a neutral effect on theexcretion of nutrients. The RL pathway results inreduced emissions of CH4, NH3, as well as reducedexcretion of phosphates and nitrogen. On top of theseenvironmental effects both pathways also have a
Table 1. An overview of key national/sectoral environmental targets relevant for the agricultural sector in the Netherlands.
* At the EU level. National targets are not foreseen. # EU level target for GHG is -40%, but an effort sharing decision withnational targets for the Non-ETS sectors at the Member State level is foreseen.
number of other socio-economic and environmentalside-effects. The RL pathway would result in a directloss of GDP as meat and dairy output decreasessubstantial ly, while the IMM pathway could beconsidered more suitable for animal health as the in-stable climate improves due to shorter manurestorage times. The RL pathway could also lead to alower level of international cost-competitiveness ofthe Dutch agricultural sector (i.e. cropping), as atsome point a shortage of cheap soil nutrients mightarise. This could result in higher use of fossil fertil isersand cover crops. Also in terms of domesticemployment both pathways have a different impact.
For a more detailed overview of the effects and side-effects of the transition pathways, see the table in therecently published JIQ Special with an elaboratedversion of this article, that can be published from theJIN.ngo publications section (also in Dutch).
Next stepsThe next step within the TRANSrisk project is toquantify these (and other) effects in Table 2with thehelp (macro-)economic models and to further explorethe relative importance of these side-effects when itcomes to implementing a certain low-carbon transitionpathway. With a better understanding of the key side-effects of alternative pathways it wil l be easier todevelop a more robust and integrated policyframework to foster a low-carbon transitions in thelivestock sector.
Figure 6. Livestock density in the EU-28 in 2013 (Eurostat).
11JIQ Magazine • October 2016
Decarbonising the EU Economy by 2050:The Contribution of Small Businesses
This article is a summary of the fourth policy briefof the GreenEcoNet project. GreenEcoNet was anEU-funded project (June 2013 - May 2016) thataimed to connect small and medium-sizedenterprises for a green economy. Key output hasbeen the GreenEcoNet.eu online platform.The policy brief 'Decarbonising the EU economy by2050: the contribution of SMEs to thedecarbonisation of the transport sector', publishedin May 2016, was written by Corrado Topi, ChrisNeale, Roberto Rinaldi, José Manuel Vega Barbero(SEI at University of York), Danai Manoli(University of Piraeus), and Chris Hopkins (GreenEconomy Coalition).
In Europe, there are about 23 million small andmedium-sized enterprises (SMEs). Theycomprise 99% of all businesses, providing two-thirds of private-sector employment, more thantwo-third of new jobs in the last five years, andmore than 50% of the gross value added. Thisimportant role in the economy also leads to asignificant contribution to environmentalpollution and greenhouse gas emissions.However, SMEs are often exempted fromemission reduction policies, which means thatthe potential contribution of SMEs todecarbonisation pathways is underexploited.
The EU aims to decarbonise its economy by 2050,reducing greenhouse gas emissions by 80-95% below1990 levels. This has a widespread impact on theeconomy, and would require contributions by allsectors to implement low-carbon solutions. This articleidentifies how SMEs can contribute to thedecarbonisation of the EU (specifical ly in the transportsector), the barriers that SMEs face in this, and howthis could be overcome.
European policy frameworkThe EU policy framework covering transportdecarbonisation is composed of a wide range ofinitiatives and policy measures which are intertwinedwith Member States national level mechanisms. A setof 11 of the key policy measures have been analysedand scored with an ‘SME support rating’, describingthe level of support offered to SMEs in contributing todecarbonisation of the EU transport sector (e.g. bydeveloping, providing, adopting, or promoting low-carbon solutions).
None of the 11 policy measures that have beenanalysed could be rated ‘Excellent’, as they do notinclude specific targets and policy support aimed attransport SME decarbonisation and relevantexemptions recognising the special importance andcircumstances of SMEs. Two policy measures couldhowever be rated ‘Good’, as they include some policysupport and exemptions for SMEs: the ‘RegulationReducing CO2 from New Cars’ and ‘Regulation on CO2from Vans’. All other measures analysed, including theFuel Quality Directive and emissions limits regulations,did not specifical ly refer to SMEs and decarbonisationand covered SMEs within the broad transport sector,
and were rated ‘Acceptable’, ‘Minimal’, or ‘None’ forSME support.
The analysis of the policy measures suggests that thecurrent level of policy support for SMEs in Europe inregard to their contribution to the decarbonisation ofthe transport sector is inadequate. In particular, thissupport does not seem to keep into account the realworld barriers SMEs face when attempting tocontribute to the decarbonisation of the transportsector or the economy at large.
BarriersAlthough the contribution of SMEs is essential to thenational economy of each country by providing jobs,opportunities and creating wealth, the attention whichis paid to them in terms of the environmentalmanagement might not be commensurate with itsimportance. As discussed above, there are currentlyvery few regulations that directly impose guidelines onEU SMEs in relation to decarbonisation in thetransport sector. In addition to this lack ofgovernment guidance, SMEs are often reluctant toimplement ‘green solutions’ as a result of several‘barriers’.
In fact “most SMEs lack the understanding that higherenvironmental performance can be a competitive
12JIQ Magazine • October 2016
advantage” (OECD, 2015, p. 9) and so little effort ismade to ensure compliance in decarbonisation.Moreover, “even when they are aware of the potentialof better environmental performance to improve afirm’s competitiveness”, lack of expertise combinedwith lack of financial incentives “often leads to SMEsbeing risk-averse and less wil l ing to invest” (OECD,2015, p. 3).
Another issue for consideration is the influence thatother companies in the supply chain have on SMEs.To ensure the efficiency of the procedure it is vitalthat al l the players in the supply chain contribute tothe transition, because the SMEs both depend oninput by their suppliers and requirements of theircustomers.
SolutionsNevertheless, there are also various SMEs that havesucceeded in implementing green solutions, and havethus overcome the barriers. The GreenEcoNet onlineplatform (www.greeneconet.eu) al lows SMEs topublish case studies of the green solutions they havedeveloped or implemented. 14 of the case studies onthe platform concern solutions related to thedecarbonisation of the transport sector, such as theuse of natural gas vehicles at a transport company, orthe implementation of flex-parking for bicycles andcars.
Aiming to overcome the barriers, SMEs must takeadvantage of the benefits offered to them andrecognise the “potential for improvements”particularly in the “area of green collaboration inbuyer and supplier relationship” (Evangelista, et al. ,
2012, p. 9). As the case studies show, theimplementation of green solutions often leads toadvantages such as reduced costs or marketingopportunities. It is therefore essential for thegovernment to facil itate the implementation of suchsolutions and help SMEs to overcome key barriersincluding the lack of understanding of the benefitsand the lack of expertise.
ConclusionsBased on the research in the GreenEcoNet project, akey conclusion is that there strong incentives for SMEsto implement green solutions. However, in manycases the barriers are stronger. Governments cansupport SMEs to overcome these barriers, which areoften related to a lack of knowledge and expertise anda lack of resources. Obviously, these barriers can alsobe overcome without government support. One of themethods for this is through networking among SMEs,so that companies can support each other and ensuremutual learning. See the article 'The Importance ofNetworking for SME Innovation in a Green Economy'in the previous issue of JIQ Magazine for more detailson this.
Box 3. Example of a 'green solution' by an SME.
Reducing CO2 emission by improvingthrough driving behaviour
The Dutch SME GreenStar Statistics enablesorganisations to achieve significant savings on fueland CO2 emissions. By instal l ing a device invehicles, data is collected about driving behaviour,which enables continuous feedback to drivers viareal-time alerting, gamification or training, resultingin structural improvement of driving behaviour. Thedevice immediately leads ot about 5% fuel savings,but in the longer term this increases to 10-20%,because the data can be analysed, and for exampleused to create personalised training courses.
ReferencesEvangelista, P. , Huge-Brodin, M. , Isaksson, K. & Sweeney,E. , 2012. Purchasing Green Transport and LogisticsServices: Implications for Small Business. Small Business,Issue 2, pp. 43-62.
OECD, 2015. Environmental Policy Toolkit for GreeningSMEs in EU Eastern Partnership Countries, Paris: OECDPublishing.
13JIQ Magazine • October 2016
demand shocks for emission allowances. Furthermore,introducing a carbon tax in addition to the EU ETSdecreases the price of allowances, resulting in welfaregains for net buyers of allowances while net sellersare worse off.
Deutsche Gesellschaft für InternationaleZusammenarbeit (GIZ) GmbH, 2016. ImpactEvaluation Guidebook for Climate ChangeAdaptation Projects, GIZ, Bonn and Eschborn,Germany.This guidebook supports project managers byproviding an overview of various impact evaluationmethods, and explaining how these can be appliedspecifical ly to climate change adaptation projects.According to the guidebook, one of the crucial aspectsof impact assessments is the establishment ofcausality: can observed changes be linked to theproject? The guidebook covers five evaluation designsfor climate change adaptation projects: experimental,quasi-experimental, regression discontinuity, thepipeline approach, and panel design. An adaptationproject in Bangladesh has been used throughout theguidebook to il lustrate the application of theevaluation designs.
Drews, S., and J.C.J.M. van den Bergh, 2016.What explains public support for climatepolicies? A review of empirical andexperimental studies, Climate Policy, vol. 16,no. 7, pp. 855-876.The lack of broad public support prevents theimplementation of effective climate policies. Thearticle aims to examine why citizens support or rejectcl imate policies, and divides factors influencing policysupport into three general categories: (1) social-psychological factors and climate change perception;(2) the perception of climate policy and its design;and (3) contextual factors. The acquired insights canassist in improving policy design and communicationwith the overarching objective to garner more publicsupport for effective climate policy.
IEA Bioenergy, 2016. IEA BioenergyCountries' Report: Bioenergy policies andstatus of implementation, IEA Bioenergy andIEA Energy Technology Network.The report provides current bioenergy data on the 22member countries of the IEA Bioenergy group, as wellas the EU. For each of the countries, the report gives
Andresen, S., J.B. Skjærseth, T. Jevnaker,and J. Wettestad, 2016. The Paris Agreement:Consequences for the EU and Carbon Markets?,Politics and Governance, vol. 4, no. 3, pp. 188-196.Although the Paris Agreement is a strong signal ofgrowing international commitment, it remains to beseen whether the good intentions wil l translate intoactual emissions reductions. The article discusses thepotential effect of the agreement on the EU andinternational carbon markets, with specific attentionfor the EU ETS. The article concludes that thedynamic structure of the agreement may trigger afollow-up process in the EU that could lead to greaterambitions beyond 2030, and increase the pressure onlaggards within the EU. In addition, the authorsexpect that 'Paris' can create momentum for actorsfavouring carbon market instruments.
Brewer, T.L., H. Derwent, and A. Błachowicz,2016. Carbon Market Clubs and the New ParisRegime: Paper fro the World Bank Group'sNetworked Carbon Markets Initiative, ClimateStrategies.The paper looks at climate clubs that bring togethergroups of governments and business organisations inpursuit of joing plans for climate change mitigation,and considers how these clubs might adopt emissionstrading or develop into carbon markets. Preliminaryanalysis suggests that key aspects of the ParisAgreement can be seen as fostering newopportunities for the creation of novel internationalinstitutional modalities such as carbon market clubs(CMCs). The paper analyses how these CMCs can becompatible with, and could assist the development of,cl imate clubs.
Brink, C., H.R.J. Vollebergh, and E. van derWerff, 2016. Carbon pricing in the EU:Evaluation of different EU ETS reform options,Energy Policy, vol. 97, pp. 603-617.The paper studies various options to supportal lowance prices in the EU Emissions Trading System,such as adjusting the cap, an auction reserve price,and fixed and variable carbon taxes in addition to theEU ETS. It is found that tightening the cap providesan ad hoc solution to the fundamental issue of therobustness of the effective carbon price, whileintroducing a price component to the ETS bringsstructural carbon price support in times of negative
Reports Open access /free of charge
14JIQ Magazine • October 2016
a short (5-page) overview of national renewableenergy targets and relevant legislation, bioenergystatistics including the contribution of differentbiofuels, the research focus related to bioeenergysuch as relevant funding programmes, and majorrecent bioenergy developments.
Marchiori, C., S. Dietz, and A. Tavoni, 2016.Domestic politics and the formation ofinternational environmental agreements,Journal of Environmental Economics andManagement.In the article, the effect of domestic politics onreaching international environmental agreements isinvestigated. The results of the study suggest thatgovernments make decisions not only based on asingle set of public-interest motivations, but are alsoinfluenced by lobbying. It is also shown that thingschange radical ly when lobbying bears directly on themembership decisions, suggesting that both theobject and timing of lobbying matter for the way inwhich membership decisions, emissions and welfareare affected.
Mikolajczyk, S., D. Brescia, H. Galt, F. LeSaché, T. Hunzai, S. Greiner, and S. Hoch, 2016.Linking the Clean Development Mechanismwith the Green Climate Fund: Models forscaling up mitigation action, Climate Focus,Perspectives, and Aera Group.The report contributes to the debate of how linkagesbetween the Clean Development Mechanism (CDM)and Green Climate Fund (GCF) can be achieved, andwhy this should be considered. The report suggestssix engagement models of how the two institutionscan be linked: grant financing, debt funding, greenbond financing, equity financing, guarantees, and anon-financial engagement model where CDMmethodologies are used to streamline MRV activitieswithin GCF-funded activities. According to the authors,formal discussions should be initiated between theCDM Executive Board and the GCF Board to showcommitment and communicate confidence towardsthe market participants that progress can be made.
Sandbrand-Nisipeanu, J., 2016. MediaCoverage on Climate Change: An Analysis of theRelationship between Newspaper andGovernment Frames, PhD thesis submitted tothe University of Kent, Canterbury, UK.The thesis compares newspaper and governmentframes in the UK, Germany, the US, and India, suingqualitative content analysis. The study finds thatrather than based on 'political paral lel ism',
newspapers (in al l four countries) seem to follownational loyalty when covering international cl imatenegotiations. This national focus stays in contrast withthe global character of the issue of climate change.The results also shed a negative light on the fulfi lmentof the normative duties of the media, as climatechange coverage seemingly depends on the amountof government communication on the issue, ratherthan covering the global scale of the issue.
Witjes, S., and R. Lozano, 2016. Towards amore Circular Economy: Proposing a frameworklinking sustainable public procurement andsustainable business models, Resources,Conservation and Recycling, vol. 112, pp. 37-44.The paper proposes a framework to include technicaland non-technical specifications of product/servicecombinations that improve resource usage efficiencythrough recovery in public procurement processes.The framework proposed is based on collaborationbetween procurers and suppliers, in improving theircontribution to the ciruclar economy. The researchshows that collaboration between procurers andsuppliers throughout the procurement process canlead to reductions in raw material util isation andwaste generation, whilst promoting the developmentof new, more sustainable, business models.
ZhongXiang Zhang, 2016. Are China'sclimate commitments in a post-Parisagreement sufficiently ambitious?, Centre forClimate Economics and Policy Working Paper1607, Crawford School of Public Policy,Australian National University, Canberra,Australia.China's role in the international cl imate negotiationshas evolved from playing a peripheral role to thecentre stage. The article discusses the evolution ofChina's stance in the lead-up to and at the ParisConference, and post-Paris issues in China's context.With a legally-binding international agreement,including hard commitments for China, the Chinesecentral government can pressure local governmentsand enterprises to meet their energy andenvironmental goals in name of fulfi l l ing nationalcommitments to the international agreement.Nevertheless, the author argues that China'scommitment is not sufficiently ambitious to meet the2°C target, and suggests two ways for China toincrease ambition: to indicate a CO2 peaking level (inaddition to the pledged peaking time), and to setemissions targets for 2025, to avoid the risk of lockingin insufficient actions.
15JIQ Magazine • October 2016
JIQ Magazine (Joint Implementation Quarterly) isan independent magazine with backgroundinformation about the Kyoto mechanisms,emissions trading, and other climate policy andsustainabil ity issues.
JIQ is of special interest to policy makers,representatives from business, science and non-governmental organisations, and staff ofinternational organisations involved in climatepolicy negotiations and operationalisation ofclimate policy instruments.
Chief Editor:Prof. Catrinus J. Jepma• Chairman of JIN Climate and Sustainabil ity• Professor of Energy and Sustainabil ity at
University of Groningen, the Netherlands
Editors:Anna van der Gaast-WitkowskaWytze van der GaastErwin Hofman
JIQ contact information:JIN Climate and Sustainabil ityLaan Corpus den Hoorn 3009728 JT GroningenThe Netherlandsphone: +31 50 5248430e-mail: j [email protected]: www.jin.ngo
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