Latest INNOPATHS publications

Adverse effects of rising interest rates on sustainable energy transitions

Increasing the use of renewable energy (RE) is a key enabler of sustainable energy transitions. While the costs of RE have substantially declined in the past, here we show that rising interest rates (IRs) can reverse the trend of decreasing RE costs, particularly in Europe with its historically low IRs. In Germany, IRs recovering to pre-financial crisis levels in 5 years could add 11% and 25% to the levelized cost of electricity for solar photovoltaics and onshore wind, respectively, with financing costs accounting for about one-third of total levelized cost of electricity. As fossil-fuel-based electricity costs are much less and potentially even negatively affected by rising IRs, the viability of RE investments would be markedly deteriorated. On the basis of these findings, we argue that rising IRs could jeopardize the sustainable energy transition and we propose a self-adjusting thermostatic policy strategy to safeguard against rising IRs.

Written by Tobias S. Schmidt, Bjarne Steffen, Florian Egli, Michael Pahle, Oliver Tietjen & Ottmar Edenhofer

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Climate policies and skill-biased employment dynamics: Evidence from EU countries

The political acceptability of climate policies is undermined by job-killing arguments, especially for the least-skilled workers. However, evidence of the distributional impacts for different workers remains scant. We examine the associations between climate policies, proxied by energy prices, and workforce skills for 14 European countries and 15 industrial sectors over the period 1995–2011. Using a shift-share instrumental variable estimator and controlling for the influence of automation and globalization, we find that climate policies have been skill biased against manual workers and have favoured technicians. The long-term change in energy prices accounted for between 9.2% and 17.5% (resp. 4.2% and 8.0%) of the increase (resp. decrease) in the share of technicians (resp. manual workers).

Written by Giovanni Marin and Francesco Vona

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Halving energy demand from buildings: The impact of low consumption practices

Limiting global warming below 1.5 °C requires rapid decarbonization of energy systems. Reductions of energy demand have an important role to play in a sustainable energy transition. Here we explore the extent to which the emergence of low energy consuming practices, encompassing new behaviors and the adoption of more efficient technologies, could contribute to lowering energy demand and thereby to reducing CO2 emissions.

To this end, we design three detailed energy consumption profiles which could be adopted by individuals in current and future wealthy regions. To what extent does the setting of air conditioners to higher temperatures or the widespread use of efficient showerheads reduce the aggregate energy demand? We investigate the potential of new practices at the global level for 2050 and 2100.

The adoption of new, energy saving practices could reduce global energy demand from buildings by up to 47% in 2050 and 61% in 2100 compared to a scenario following current trends. This strong reduction is primarily accounted for by changes in hot water usage, insulation of buildings and consumer choices in air conditioners and heat pumps. New behaviors and efficient technologies could make a significant long-term contribution to reducing buildings’ energy demand, and thus facilitate the achieval of stringent climate change mitigation targets while limiting the adverse sustainability impacts from the energy supply system.

Written by Antoine Levesque, Robert C. Pietzcker and Gunnar Luderer

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Assessing the impacts of setting CO2 emission targets on truck manufacturers: A model implementation and application for the EU

The European Commission introduced in 2018, for the first time, CO2emission standards for truck manufacturers, to incite additional reduction in the road transport CO2 emissions; trucks represent the second major contributor to CO2 emissions in the EU road transport. This paper presents a model based analysis which simulates the implementation of such targets in an energy economic framework and assesses the impacts of such standards using the PRIMES-TREMOVE model. We implement the CO2 emission standards on truck manufacturers as CO2 emission constraints on the new vehicle choice module. The proposed method is formulated as a mixed complementarity problem. The analysis reveals a reduction in road transport CO2 emissions and diesel consumption as a result of an uptake of more efficient truck technologies. In particular, LNG trucks are favored because of the lower emission factor of natural gas relative to that of diesel. Implementing progressively ambitious CO2 standards renders diesel trucks more expensive as their energy efficiency potential reaches its technical limit.

Written by Pelopidas and Yannis Moysoglou

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Professor Benjamin K. Sovacool authors Visions of Energy Futures: Imagining and Innovating Low-Carbon Transitions

INNOPATHS consortium member, Professor Benjamin K. Sovacool has authored a recent book entitled, Visions of Energy Futures: Imagining and Innovating Low-Carbon Transitions, that uses INNOPATHS initial work and findings.

This book examines the visions, fantasies, frames, discourses, imaginaries, and expectations associated with six state-of-the-art energy systems—nuclear power, hydrogen fuel cells, shale gas, clean coal, smart meters, and electric vehicles—playing a key role in current deliberations about low-carbon energy supply and use.

Visions of Energy Futures: Imagining and Innovating Low-Carbon Transitions unveils what the future of energy systems could look like, and how their meanings are produced, often alongside moments of contestation.

Read more about it here.

How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective

With the urgency of climate change, and billions spent globally on renewable energy (RE) support policies, it is crucial to understand which policies are effective. Substantial scholarly research on RE deployment policies has been carried out over the last two decades, resulting in inconclusive findings regarding the effectiveness of mobilizing private finance. Here, we take a novel perspective and review 96 empirical studies concerning the impact of policies on two key investor decision metrics: investment risk and investment return. Only if both metrics correspond to the investors’ expectations are they willing to engage in RE projects. First, our rigorous literature review shows that effective policies address risk and return simultaneously. Second, we find that generic instrument design features, such as credibility and predictability (continuous evaluation and monitoring), considerably impact investment risk. A more focused analysis of the specific design elements of feed-in tariffs, auctions and renewable portfolio standards reveals that these instruments are most effective when they are designed in such a way that they reduce RE project risk while increasing return. We distil important implications for policymakers who aim to foster renewable energy and clean technologies more broadly.

Written by Friedemann Polzin, Florian Egli, Bjarne Steffen and Tobias S. Schmidt

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Energy Injustice and Nordic Electric Mobility: Inequality, Elitism, and Externalities in the Electrification of Vehicle-to-Grid (V2G) Transport

Much research on electric mobility transitions has been descriptive or positive, rather than normative or critical, assessing the deeper ethical, justice, or moral issues that arise. To address this gap, this study qualitatively examines the ongoing transition to Nordic electric vehicles(EVs) and vehicle-to-grid (V2G) systems. It does so through the various lenses of distributive justiceprocedural justice, cosmopolitan justice, and recognition justice. It asks: what are the types of injustices associated with electric mobility and V2G? In what ways do emerging patterns of electric mobility worsen socio-environmental risks or vulnerabilities? Based on original primary data collected from 257 experts across Denmark, Finland, Iceland, Norway, and Sweden, the study finds that electric mobility can erode elements of distributive justice for being accessible only to the rich, and for raising risks related to privacy, hacking, and cyberterrorism. Electric mobility may contravene aspects of procedural justice by reinforcing exclusion and elitism in national planning. It can erode cosmopolitan justice by producing negative environmental externalities, and exacerbating rural (and global) vulnerability. It may threaten recognition justice through unemployment, disruption to traditional businesses, and the entrenchment of patriarchy. Thankfully, the study also proposes a suite of policy mechanisms to address many of these concerns.

By Benjamin K. Sovacool, Johannes Kester, Lance Noel, Gerardo Zarazua de Rubens.

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A quantitative analysis of 10 multilateral development banks’ investment in conventional and renewable power-generation technologies from 2006 to 2015

Multilateral development banks (MDBs) play a pivotal role in the financing of electricity-generation projects in developing countries, thus having a major impact on the emission pathways of these countries. While information about the MDBs’ investments is publicly available, it is dispersed and hard to compare. A comprehensive compilation of all MDBs’ power-generation investments over the years has been missing. To address this gap, here we assess power-generation financing by all ten relevant MDBs during 2006–2015, in different regions, and through different branches of the banks. The study assesses technology choices by compiling a bottom-up dataset drawing information from 841 projects and programmes. We find that MDBs financed a major portion of all power-generation growth in the developing world, with an increasing share of renewables. However, MDBs have ‘greened’ their portfolios to different extents, and the activities of their public- and private-sector branches differ substantially.

Written by Bjarne Steffen and Tobias Schmidt

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The role of intermediate trade in the change of carbon flows within China

In recent years, evaluating the emissions embodied in trade (EEIT) has become an important area of policy and research. Multiregional input-output (MRIO) analysis, which links producers and final consumers, is a widely-used method for quantifying the EEIT. However, the role of intermediate trade in driving changes in the EEIT is still not fully incorporated in MRIO analysis and as a result poorly understood. Here, we present a framework that separately identifies the drivers of the emissions embodied in the trade of final and intermediate products. We implement this framework in a case study in which we analyse the changes in CO2 emissions embodied in interprovincial trade in China from 2007 to 2012. We find that the largest changes are a rising final demand, which is associated with increased emissions that are to some extent offset by decreasing emissions intensity and changing interregional dependency. Regionally, the rising imports and the growth in final demand in less developed regions in the north and central (e.g., Hebei and Henan) reduced the CO2 emissions outsourced by central coastal regions and drove the traded embodied CO2 flows between the central and western regions. The framework enriches our understanding of the role played by intermediate trade in the relocation of emissions.

Written by Jing Meng, Zengkai Zhang, Zhifu Mi, Laura Diaz Anadon, Heran Zheng, Bo Zhang, Yuli Shan and Dabo Guan.

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A dynamic analysis of financing conditions for renewable energy technologies

Renewable energy technologies often face high upfront costs, making financing conditions highly relevant. Thus far, the dynamics of financing conditions are poorly understood. Here, we provide empirical data covering 133 representative utility-scale photovoltaic and onshore wind projects in Germany over the last 18 years. These data reveal that financing conditions have strongly improved. As drivers, we identify macroeconomic conditions (general interest rate) and experience effects within the renewable energy finance industry. For the latter, we estimate experience rates. These two effects contribute 5% (photovoltaic) and 24% (wind) to the observed reductions in levelized costs of electricity (LCOEs). Our results imply that extant studies may overestimate technological learning and that increases in the general interest rate may increase renewable energies’ LCOEs, casting doubt on the efficacy of plans to phase out policy support.

Written by Florian Egli, Bjarne Steffen and Tobias S. Schmidt

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