Climate-energy policies for low-carbon transitions

Many countries around the world are embarking on transitions to sustainable energy systems. Others are already well underway. These transitions will involve fundamental and interrelated changes in technologies and fuels used, infrastructure built, policies employed, markets and institutions. Lessons learned by countries whose transitions are already underway are potentially transferable and could help enhance effectiveness of policy packaging in other jurisdictions.

Real-world policy packages

IEA work on "real-world policy packages" investigates and addresses the complexities of layered energy-climate policy mixes and their interactions. We aim to help national policymakers deliver more effective, realistic, and well-integrated low-carbon climate and energy policies that take account of local political realities. Issues include integration of energy and climate policies with wider policy objectives, exploring the realistic role for moderate carbon prices, and understanding the benefits and trade-offs of "second-best" policy approaches. The work draws upon IEA’s world leading scenario modelling, as well as working directly with government policymakers to understand choices and trade-offs in policy packages in differing national contexts. 

One particular focus will be a partnership with China's National Development and Reform Commission (NDRC) to undertake a project on mapping China's policy mix and policy alignment, including by hosting a visiting staff member from NDRC for this work.

An initial scoping analysis of these topics is presented in the paper “Real-world Policy Packages”, to be released in 2017. This paper includes analysis using IEA World Energy Model scenarios to understand what supplementary policies may be needed to achieve a low-carbon transition if carbon prices are at moderate levels over the next 10-20 years, and a case study of Canada’s low-carbon policy mix.

Real-world policy packages for sustainable energy transitions

Many countries are embarking on transitions to sustainable energy systems. Others are already well underway. Their transitions will require fundamental and interrelated changes in technologies, fuels, infrastructure, policies, markets and institutions.  We provide an initial exploration of the key elements of policy packages for sustainable energy transitions as well as their application in different timeframes. Using the lens of "real-world" policy implementation, an overarching theme of the paper is that there is no single energy transition policy package that fits all countries - national policy objectives and constraints will shape each jurisdiction’s policy mix.

Taking the challenge of implementing robust carbon pricing as one example of a constraint faced in implementation of policy packages, we also quantitatively analyse the role of moderate carbon pricing across different sectors in IEA scenarios. Finally, an in-depth case study of Canada’s low carbon energy transition policy package shows that policy packages are essential - and inevitable - to drive sustainable energy transition in thee real world, but attention must be paid to interactions amongst policies.

Energy, Climate Change and Environment: 2016 Insights

The historic Paris Agreement on climate change sets the course for a fundamental transformation of the global economy over the next decades. The Agreement’s overarching goal of limiting global average temperature rise to "well below 2°C" will entail profound changes in the global energy system. Achieving the deep cuts in global carbon emissions that this vision requires is no small task given the enormous challenge of implementing – and eventually exceeding – current country climate pledges.

This publication examines key sectors, technologies, and policy measures that will be central in this transition to a low-carbon energy system.

Carbon pricing and emissions trading

Carbon pricing is a critical element of energy-climate policy packages. Accurate pricing of energy drives decisions in investment, operations, and consumption across the energy sector by all actors. One form of carbon pricing, emissions trading, is a way of introducing flexibility into a system where participants have to meet emissions targets. These participants may be countries (as in the case of UNFCCC targets), or companies (as in the case of a domestic emissions trading scheme). Participants can buy units to cover any emissions above their targets, or sell units if they reduce their emissions below their targets. The presence of a market for these units creates a value for emissions reductions which stimulates investment in the most cost-effective areas. Emissions trading leads to a reduction in compliance costs compared to meeting the same target through domestic/internal means only.

IEA-IETA-EPRI Annual Workshop on Greenhouse Gas Emissions Trading

Each year, the International Energy Agency (IEA), International Emissions Trading Association (IETA) and Electric Power Research Institute (EPRI) organise an invitation-only workshop on greenhouse gas emissions trading. This annual event brings together over one hundred senior officials from OECD countries, the European Union and other nations, corporate executives from electric companies, energy-intensive industries, brokerage companies and the financial community, analysts and researchers from non-governmental organisations and academia, to discuss developments in GHG emissions trading and related issues around the world. The workshop combines presentations based on recent research with interactive discussions, held under the Chatham House rule. 

Our work on Climate change