Induced Technical Change in Energy and Environmental Modeling: Analytic Approaches and Policy Implications

▪ Abstract Technical change in the energy sector is central for addressing long-term environmental issues, including climate change. Most models of energy, economy, and the environment (E3 models) use exogenous assumptions for this. This is an important weakness. We show that there is strong evidence that technical change in the energy sector is to an important degree induced by market circumstances and expectations and, by implication, by environmental policies such as CO2 abatement. We classify the main approaches to modeling such induced technical change and review results with particular reference to climate change. Among models with learning by doing, weak responses are only obtained from models that are highly aggregated (lack technological diversity) and/or that equate rates of return to innovation across sectors. Induced technical change broadens the scope of efficient policies toward mitigation, including not just research and development and aggregated market instruments but a range of sectoral-based policies potentially at divergent marginal costs. Furthermore, to the extent that cleaner technologies induced by mitigation diffuse globally, a positive spillover will result that will tend to offset the substitution-based negative spillover usually hypothesized to result from the migration of polluting industries. Initial explorations suggest that this effect could also be very large.

The Evolution of an Energy Analyst: Some Personal Reflections

[Figure: see text] ▪ Abstract The evolution from an electrochemist was motivated by a growing conviction that Indian science and technology should be reoriented. A cell was created in the Indian Institute of Science in 1974 to initiate and promote work of rural relevance as a weapon against poverty. Surveys led to a detailed empirical study of energy consumption patterns in villages and to the design and construction of rural energy centers. The lessons from this village work are described. The principal outcome of the collaboration with J. Goldemberg (Brazil), T.B. Johansson (Sweden), and R.H. Williams (United States) was the book Energy for a Sustainable World that contributed significantly to the new paradigm for energy. The application of this paradigm resulted in a detailed electricity demand scenario for the South Indian state of Karnataka. Following mandatory retirement from the Indian Institute of Science, the International Energy Initiative (IEI) was set up in 1991 as a Southern-conceived, Southern-led, Southern-located South-North partnership. Persisting personal concerns about the ethical implications of science resurfaced through opposition to India's nuclear tests in 1998 and a visit to the concentration camps at Auschwitz. The associated human dimensions of energy were emphasized in the acceptance speech at Göteborg of the Volvo Environment Prize 2000. The penultimate endgame involved retirement.

Household Energy, Indoor Air Pollution, and Health in Developing Countries: Knowledge Base for Effective Interventions

▪ Abstract Globally, almost three billion people rely on biomass (wood, charcoal, crop residues, and dung) and coal as their primary source of domestic energy. Exposure to indoor air pollution from the combustion of solid fuels is an important cause of disease and mortality in developing countries. Despite recent advances in estimating the health impacts of indoor smoke, there are limited studies targeted toward the design and implementation of effective intervention programs. We review the current knowledge of the relationship between indoor air pollution and disease, and of the assessment of interventions for reducing exposure and disease. This review takes an environmental health perspective and considers the details of both exposure and health effects that are needed for successful intervention strategies. In particular, we summarize the emerging understanding of the central role of household energy technology and day-to-day household activities in determining exposure to indoor smoke. We also identify knowledge gaps and detailed research questions that are essential in successful design and dissemination of preventive measures and policies. In addition to specific research recommendations based on the weight of recent studies, we conclude that research and development of effective interventions can benefit tremendously from integration of methods and analysis tools from a range of disciplines—from quantitative environmental science and engineering, to toxicology and epidemiology, to the social sciences.

An Intellectual History of Environmental Economics

▪ Abstract From modest beginnings in the 1960s, environmental economics has grown to be a major subdiscipline of economics. It combines traditional work in the field of welfare economics and the theory of economic growth with more recent perspectives on the political economy of choosing policy instruments and the philosophy of sustainable development. The central tenets are that environmental problems have their roots in the failure of economic systems to maximize human well-being, that environmental quality matters for human well-being and for more traditionally oriented economic growth objectives, and that efficient policy can be achieved through incentive design.

Appliance Efficiency Standards and Labeling Programs in China

▪ Abstract Since the late 1980s, China has developed an extensive program of energy efficiency standards and labeling for household appliances. This development closely traces the rapid growth of appliance ownership and the domestic appliance industry and is an integral part of China's comprehensive energy conservation policy. The implementation of energy efficiency standards and labels for household appliances has not only achieved significant reductions in energy consumption and therefore greenhouse gas emissions in China, but it has also been instrumental in stimulating one of the world's largest appliance markets. This article reviews the historical development of Chinese programs, summarizes the most recent activities, and documents to the extent possible their impact on appliance efficiency and energy consumption.

Sorry, Wrong Number: The Use and Misuse of Numerical Facts in Analysis and Media Reporting of Energy Issues

▪ Abstract Students of public policy sometimes envision an idealized policy process where competent data collection and incisive analysis on both sides of a debate lead to reasoned judgments and sound decisions. Unfortunately, numbers that prove decisive in policy debates are not always carefully developed, credibly documented, or correct. This paper presents four widely cited examples of numbers in the energy field that are either misleading or wrong. It explores the origins of these numbers, how they missed the mark, and how they have been misused by both analysts and the media. In addition, it describes and uses a three-stage analytical process for evaluating such statistics that involves defining terms and boundaries, assessing underlying data, and critically analyzing arguments.

Carbonate Chemistry for Sequestering Fossil Carbon

▪ Abstract Fossil fuels play a crucial role in satisfying growing world energy demands, but their continued use could cause irreparable harm to the environment. Unless virtually all anthropogenic carbon dioxide is captured, either at the source or subsequently from the air, and disposed of safely and permanently, fossil fuels may have to be phased out over the next few decades. Sequestration of waste carbon dioxide will require methods that can safely store several trillion tons of carbon dioxide. Long-term storage of a gaseous substance is fraught with uncertainty and hazards, but carbonate chemistry offers permanent solutions to the disposal problem. Carbonates can be formed from carbon dioxide and metal oxides in reactions that are thermodynamically favored and exothermic, which result in materials that can be safely and permanently kept out of the active carbon stocks in the environment. Carbonate sequestration methods require the development of an extractive minerals industry that provides the base ions for neutralizing carbonic acid.

Appliance and Equipment Efficiency Standards

▪ Abstract Minimum energy efficiency standards are regulations that require products to meet specific energy efficiency requirements. Standards have been adopted in 17 countries plus the European Union. Standards have been set on more than 35 products, with refrigerators, air conditioners, ballasts, and freezers being the most common. Based on the available evidence, standards appear to be a very effective energy-saving policy. They have reduced energy use substantially in the United States and made good initial progress in other countries. The standards that have been implemented thus far appear to be cost effective to consumers and result in minimal adverse impacts on manufacturers. Available evidence indicates that the costs of actually implementing standards are commonly less than estimates made by manufacturers and government agencies during the standard-setting process. Standards are frequently a useful complement to other policies such as product labeling, incentives, and voluntary agreements. However, standards are not appropriate for all products and situations.

Renewable Energy Markets in Developing Countries

▪ Abstract Renewable energy is shifting from the fringe to the mainstream of sustainable development. Past donor efforts achieved modest results but often were not sustained or replicated, which leads now to greater market orientation. Markets for rural household lighting with solar home systems, biogas, and small hydro power have expanded through rural entrepreneurship, government programs, and donor assistance, serving millions of households. Applications in agriculture, small industry, and social services are emerging. Public programs resulted in 220 million improved biomass cook stoves. Three percent of power generation capacity is largely small hydro and biomass power, with rapid growth of wind power. Experience suggests the need for technical know-how transfer, new replicable business models, credit for rural households and entrepreneurs, regulatory frameworks and financing for private power developers, market facilitation organizations, donor assistance aimed at expanding sustainable markets, smarter subsidies, and greater attention to social benefits and income generation.