Opportunities and Barriers:
Approaches to sensitive LCS sectors
Co-chairs: Naoya Tsukamoto and Jim Watson
Rapporteurs: Jiang Kejun and Toshi Arimura

3rd UK-Japan Workshop on Low Carbon Societies, Tokyo, 13-15 Feb 2008
Sussex Energy GroupSPRU - Science and Technology Policy ResearchOpportunities and barriers
Our agenda•

What sectors are most sensitive and/or vulnerable in thetransition to LCS?

•What kind of inertia hinders transition to LCSs?

•

What opportunities exist for such sectors in new “green”
markets and what policy measures exist to achieveinternational level playing fields?

Sussex Energy GroupSPRU - Science and Technology Policy ResearchOpportunities and barriers
Question 1
Which sector faces the biggest challenges in the transition tolow carbon societies?
• Electricity• Surface transport• Iron and steel• Forestry conservation• Aviation

Sussex Energy GroupSPRU - Science and Technology Policy ResearchOpportunities and barriers
Question 2
What is the most important challenge for energy intensive
industries such as iron and steel?
• development and deployment of radical low carbon
technologies to low-carbonize its production• closing the efficiency gap between industries in different
countries and to achieve a level playing field• Retain competitiveness as domestic climate change policy
is implemented by restricting import• Securing subsidies to retain competitiveness

Sussex Energy GroupSPRU - Science and Technology Policy ResearchOpportunities and barriers•

Our starting point has been sectors such as iron and steel
which are energy / carbon intensive and are exposed to
substantial international trade•

We have also considered other sectors (e.g. electricity andtransport) which are critical for the transition to a lowcarbon society•

The barriers and opportunities differ between these
sectors – some are more ‘sensitive’ than others•

Key issue of data and transparency: especially if sectoral
approaches to emissions reductions are considered

Sussex Energy GroupSPRU - Science and Technology Policy ResearchOpportunities and barriers
Which sectors are sensitive?
SectorShare of globalemissions

Electricity and heat

25%

Transport

14%

Buildings

15%

Motor vehicle manufacture

10%

Aviation

2%

Chemicals

5%

Cement

4%

Steel

3%

Aluminium
Sussex Energy Group

1%

SPRU
- Science and Technology
Policy Research
Otherindustry
21%

Exposure to internationalcompetition

Energy intensive traded sectors
Characteristics•

Relatively high carbonintensity.

•Increasing demand in
the internationalmarket•

Competition between
developed and newly
emerging economies– potential for carbon
leakage

Sussex Energy GroupSPRU - Science and Technology Policy Research

Energy intensive traded sectors
Opportunities and barriers• Opportunities for engaging within sectors – especially with
developing countries (e.g. through technology transfer)• Technological options require investment – short term
efficiency and long term radical• Policy options include:• Technology incentives (carbon pricing and R,D,D&D funds)• Sectoral approaches have a lot of potential• Links between sectoral approaches and targets / trading
schemes are important in some Annex I countries• Modification of trade policy is an option: but is it
protectionist?
Sussex Energy GroupSPRU - Science and Technology Policy ResearchPower industry•

Low carbon societies require fundamental changes on thesupply and demand side of electricity systems•

There are many existing and potential low carbon optionsin this sector - some could also help energy security•

A key challenge is ‘lock-in’ to established infrastructure,and long timescales for capital stock turnover•

Incentives to develop and deploy low carbon options –there is an issue of consumer acceptance due to costs•

Technology transfer to deploy new technologies indeveloping countries – including efficiency improvements

Sussex Energy GroupSPRU - Science and Technology Policy ResearchTransport (cars)• Transport emissions rising in manycountries.
• Many options for emissions reductions:efficiency increase, low carbon fuels,
modal shift, behavioural anddemographic change• Biofuels have some potential but arecontroversial• New standards on carbon intensity of
new vehicles play a critical role:
manufacturers differ in their attitudes
Sussex Energy GroupSPRU - Science and Technology Policy Research