The wider socioeconomic considerations on changes in the energy system

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The wider socio-economic considerations on
changes in the energy system

• Prof. Mikael Skou Andersen
• NERI, Dept. of Policy Analysis,
• University of Aarhus (DK)

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Overview

• Politics and economics of energy supply
• Ranking of renewable energy in a CBA-perspective
• Some EVA results and implications for biomass
• Bottom-up versus top-down approaches
• Vision linking of energy systems model with
  macro-economic perspective

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The economics of energy supply

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The politics of energy supply

• Besides oil price other drivers of energy policy
• supply stability
• broader international security considerations
• environmental aspects (modest role)
• Energy policy tightly regulated and subsidised
• in EU a prerogative of the member states
• large-scale subsidies for nuclear energy
• some liberalisation to promote efficiency
• not primarily an economic issue
• Considerable vested interests in energy sector

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20-20-20 A new target in energy policy

• EU Council of Ministers, March 2007
• 20 per cent reduction of CO2
• 20 per cent renewable energy
• in 2020
• Denmark
• negotiations on new energy policy stalled in June
  2006 have resumed now
• EU requires 30 per cent renewables in DK in 2020,
  up from 15 per cent

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Energy Agency Biomass more efficient than wind
energy
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EVA External costs in DKK- high and low
estimates
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EVA Fuel mix and scrubber dependencyfor
external cost per kWh
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Amagerværket a closer look
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CBA of wind-energy(NPV with r3)
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Bottom-up energy sector modelling vs.top-down
macro-economic perspective

• Bottom-up modelling is appropriate from a
  technical point of view to capture detail of
  energy system
• In case of non-marginal changes in energy system
  a need to understand broader macro-economic
  implications and feed-back on the energy sector
  itself
• e.g. impacts in agricultural and forestry sectors
• second-order impacts on economic growth,
  employment etc.

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Model availability for wider analysis of
fossil-fuel phase-out

• RAMSES Bottom-up model of Nordic energy sector
  of DK Energy Agency
• BALMOREL Bottom-up model of Nordic-German energ
  sector
• EMMA Energy-model as a satelitte model to ADAM
  DK-macro-economic model
• general equilibrium model principles
• E3ME Energy-Economy-Environment model of EU-27
  including Denmark with high sector and fuel
  resolution
• econometric time-series estimated model

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THE ENDwww.DMU.dk
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