The energy policies in the Nordic countries and the coordination between the energy, environmental and industrial goals and policy measures?

1
Berit Tennbakk, ECON Håkan Sköldberg and Bo
Rydén, Profu
The energy policies in the Nordic countries and
the coordination between the energy,
environmental and industrial goals and policy
measures?
2
Present political goals and measures a
preliminary analysis

• What are the political goals in the Nordic
  countries and in EU?
• Are some goals more important than others?
• What are the similarities and differences in
  goals among the Nordic countries?
• To what extent is there coherence and/or conflict
  between policy goals and measures in the
  respective countries?
• How are the trade-offs made between national and
  international goals?

3
Why do we ask? starting point a Nordic
perspective

• Are current national policies adequate from a
  Nordic perspective, when
• energy markets are highly integrated in the
  Nordic area?
• Is there a need for a more coordinated Nordic
  energy policy?
• Is more coordination possible given national
  differences?

4
Policies significant for the energy sector
Energy policies Efficiency Security of
supply Environmental policies Climate
policies Nature conservation General policy
areas Industrial policies Employment and economic
growth Rural policies Income distribution
policies
Politics is to find solutions where there is
conflict between demands --- Compromises
--- --- Priorities --- in a dynamic and
complex real world
5
Examples of conflicting goals
Environment versus efficiency Expensive wind
power in stead of cheap coal power Environment
versus security of supply Decommissioning of
nuclear power Required CO2 sequestration stops
profitable gas power Conservation of river
systems versus new hydro power Efficiency versus
security of supply Excessive use of expensive
domestic fuels Cheap imports in stead of new
domestic capacity Measures to ensure
availability of effect capacity blurs price
signals on scarcity Efficiency vs. industrial
policy Efficient energy prices versus competitive
industry Cost efficient renewables policy versus
regional policy
6
Conflicting policies between countries
Conflicting priorities Nuclear power (SV/SF) CO2
emissions (N/DK) Natural gas (SFDK/NSV) What
are the national interests? Efficient renewables
policy or domestic industrial policy Complex
political picture ? need to compromise Dynamic
conflict picture tensions between National and
international considerations Environment and
industrial policies/competition Market and
governance
7
The same goal can mean different things
Example Security of supply Sweden Effect
capacity Norway Dry year Finland Import
dependency
National, Nordic or European perspective?
Changes in focus and priorities create
challenges Domestic renewables Administratively
induced investments in effect capacity undermines
the market mechanism New interest in nuclear
power Coal more attractive than gas and oil
(domestic resource/well functioning world
market) New interest in long-term gas contracts
? New dynamics The time of surplus capacity
gone!
8
Discussion points ...

• Are policies balanced ... ?
• What are the most pressing concerns currently ...
  ?
• To what extent are policies determined outside
  the Nordic space ?
• Is there really a need for more Nordic
  coordination ?

9
Changes in priorities over time
?
Changes in public attitudes Changing
governments, cf. gas power in Norway Not just
political parties, but even political
personalities External chocks, e.g. dry years and
black-outs External pressure and directives, e.g.
from the EU
10
Possible trend in prioritiesAreas attracting
most attention in the political debate
Effektivitet
Miljø
11
Does the energy related policy goals cover all
policy areas?
?
Effektivitet
Miljø
12
Do the energy policy goals cover all policy
areas? Yes, they do!
Effektivitet
Miljø
13
But if we use the policy measures as an
indicator?
Effektivitet
Miljø
14
Possible trend in prioritiesAreas attracting
most attention in the political debate
Effektivitet
Miljø
15
A conclusion
Different goals are given different priorities in
the political debate and in the policy measures

• Is this conclusion correct?
• If so, is this normal or not?
• Are policy measures good indicators?
• Is our description of the present political
  debate correct?

16
Goals and policy measures which influence
different policy areas

• Limited emissions of green house gases CO2
  emission trading scheme
• Limited emissions of green house gases CO2 tax
• Increased renewable electricity production
  electricity certificates
• Efficient electricity market deregulation of
  the electricity market
• Reductions in accident risk and radioactive waste
  nuclear phase-out
• Conservation of unexploited river systems hydro
  power moratorium
• Efficient use of electricity voluntary
  agreements, LTA
• Efficient use of electricity electricity tax
• Security of supply expansion of the natural gas
  grid
• Efficient use of electricity ban on electric
  heating

17
Consequences of a policy measure EU ETS

• Security of supply Supports renewable energy,
  which is often domestic-
• Efficiency Most cost effective measures are
  used- Different allocation principles leads to
  suboptimal investments
• Climate, environment Reduces emissions of CO2
  since they lead to costs- No control over where
  the emission reduction takes place- Could lead
  to greater emissions of other substances
• Industry policies - Leads to costs if
  emissions increase- Increases the electricity
  price

18
Tentative summary
An attempt to summarize the most important
effects of different goals/policies/measures in
four different policy areas (Green positive
influence, Orange negative influence)
19
Illustration
An attempt to illustrate simi-larities and
differences in effects of different
goals/policies/measures in four different policy
areas in Finland and Sweden
Finland
Sweden
20
Are consequences of policy measures analysed?

• Systematic analyses of consequences of specific
  policy measures in different policy areas
• Systematic analyses of the combined consequences
  of all relevant policy measures in different
  policy areas

21
EU ETS and certificates in combination with old
policy measures - e.g. EU ETS together with CO2
tax in the trading sector

• Reduced cost-efficiency The same European
  CO2-emissions, but at a higher total cost
• New function for CO2 tax Larger CO2 reduction in
  country using CO2 tax, less in other
  countriesgtThe CO2 tax will not be an
  environmental policy measure any longer!!

22
TGC schemes may be powerful instruments !
Electricity production from Swedish CHP
2015
23
International energy markets and national
policies measures example the Nordic
electricity market

• Swedish nuclear phase-out ()
• Finnish nuclear expansion (-)
• Restrictions on hydro power ()
• Subsidies for conversion from electric heating
  (-)
• Investment subsidies for new electricity
  production (-)
• Swedish electricity certificate system (-)
• Increased transmission capacity between countries
  (/-)
• Allocation of allowances

24
National vs Nordic

• Effects of national policy measures in the
  neighbouring countries is this something that
  the specific country should take into
  consideration when policy measures are developed
  or evaluated?

25
Thank you!
www.NordicEnergyPerspectives.org