A QUESTION
31
NOVEMBER 2015
OF DEVELOPMENT SYNTHESES OF AFD STUDIES AND RESEARCH
Bridging Research and Policy in Energy Transition1
http://librairie.afd.fr/filtres/?terms=1085
Modelling energy transition in developing countries The design of energy transition policies is a complex process in which the overarching goal is to modify the consumption and investment behaviour of a huge number of actors that have varying degrees of dependency on fossil energy. At the microeconomic level, these policies need to define economic, financial and regulatory incentives likely to trigger long-term behavioural change (carbon taxes, the phasing-out of fossil energy subsidies, etc.). At the macro-economic level, they need to minimise the aggregate cost of CO2 emissions whilst ensuring that this cost is shared fairly among the economic agents. For some categories of actors, given their direct exposure to the explicit/implicit cost induced by CO2 mitigation policies, the energy transition may have a highly negative impact on their real income. If these policies are to be socially acceptable over time, they must also integrate a redistributive dimension. This aspect raises a serious challenge for the emerging countries whose public policies often lack this social dimension. The analyses presented are the result of research projects headed by AFD’s Research and Knowledge Division and technical cooperation programmes implemented by its Operations Division. The key findings were presented at the ‘Bridging Research and Policy in Energy Transition’ workshop, organised by AFD in March 2015. 1
DEVELO
PM ENT
ON OF TI
The growth model of the 20th century relied heavily on the exploitation of fossil energy and natural resources extracted at low cost. Yet, the depletion of these resources, the upward trend of their prices over the long term and the consequences of their use for the environment and climate are now challenging the sustainability of this model.
The notion of energy transition is directed at rethinking the use of energy resources and natural capital to reach an economic growth that mitigates negative environmental effects, without sacrificing the wellbeing of populations. Turning this idea into action is a challenging task. AFD has designed and funded research and technical cooperation projects in order to inform decisions on the short-term cost and long-term impact of measures designed to accelerate the transition to low-carbon energy regimes. Using tools for empirical economic analysis (particularly “economy-energy” models), these projects have been carried out in several intervention settings, including South Africa, China and Mexico, which are discussed below.
A QUES
CONTRIBUTING TO SHAPE ENERGY AND CLIMATE POLICIES THROUGH ECONOMIC MODELLING AND ANALYSES