Energy Innovation and System Transition in India: What Do Models Tell Us?

India stands at a critical juncture in its journey to meet its 2070 net zero ambition. Despite the country’s renewable energy capacity having quadrupled over the last decade, fossil fuels still comprise over 80% of India’s primary energy supply. Meeting India’s increasing energy demand while phasing down fossil fuels will mean more than just scaling up renewable energy. It will require deploying energy storage in the power system, exploring the potential of green hydrogen production, and considering the supplementary role of low-carbon technologies like nuclear and natural gas, all while accounting for associated technology lock-ins. A systematic assessment of risks and opportunities associated with policy choices is key for the effective utilisation of available financial and infrastructural resources.

This report aims (i) to provide the specific context of the energy transition in India, including previous successes and lessons learned, and the potential challenges it faces both in economic development and decarbonisation; (ii) to introduce the Risk Opportunity Analysis (ROA) approach to the policy context in India, which represents the flagship policy appraisal fundamental of the EEIST programme, and (iii) to present results from a modelling comparison exercise with both simulating and optimising models to explain the key differences and complementarities between existing and new modelling approaches through model-specific information and data.

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Power Sector Futures in China: A Multi-Model Approach to Understanding China’s Carbon-Neutral Pathways and Power Sector Reform

This report outlines power sector reforms developing in China and the increasingly complex landscape of climate and energy policies intended to support carbon neutrality. It then presents two different but complementary energy-economy models of the energy transition and power sector in China: the REPO model developed by 3E at Tsinghua University and the E3ME-FTT:Power model developed by the University of Exeter and Cambridge Econometrics.

These models are used to illuminate possible futures for the Chinese power sector. In combination, they show that, whichever modelling approach we take, the impending dominance of solar and wind power in China is clear. However, the implications of this transition for costs and wider macroeconomic impacts are more subtle.

This report is jointly published by Tsinghua University’s Institute of Energy, Environment, and Economy (3E) and other partners in the Economics of Energy Innovation and System Transition (EEIST) project.

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EEIST Research on Road Transport Decarbonisation Presented at COP28

Dr Yaroslav Melekh, an EEIST researcher at University College London, was part of a roundtable discussion that took place in the Renewable Energy Action Pavilion at COP28. He joined other experts for a discussion on how clean-tech solutions like electric vehicles and renewable transportation fuels can be deployed to speed up transport decarbonisation globally.

Dr Melekh highlighted the need to go beyond fuel duties and carbon pricing to achieve transformation in the transport sector, and shared findings from EEIST’s recent policy brief on tipping points for zero-emission vehicles:

‘’Reaching zero emissions in the passenger transport sector is complex and can’t be achieved only by imposing more and higher duty fuels and increasing emission standards. Such measures are rather optimising the system by reducing but not eliminating emissions. To achieve transformational change, a broader policy package is required, including zero-emission vehicles (ZEVs) mandates, bans on sales of ICE vehicles, and sales subsidies for ZEVs, which all together helped to significantly bring the costs down, especially with exponential growth in lithium-ion battery manufacturing. The Economics of Energy Innovation and System Transition (EEIST) research demonstrates that the lifetime cost of ownership of ZEVs has already reached those of ICEs in Europe and China, and soon the same is likely to be for U.S. This, in turn, can activate the so-called ‘positive’ tipping points, whereby consumers prefer buying ZEVs, and the role of support policies is diminishing with increased ZEV fleet.’’

For more information about the event, click here.

 

Policies to Pass the Tipping Point in the Transition to Zero-Emission Vehicles

2023

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Aileen Lam, Jean-Francois Mercure, Simon Sharpe

Summary of EEIST’s COP28 event at the UK Pavilion

On December 11, researchers from the Economics of Energy Innovation and System Transition (EEIST) project presented findings at COP28. You can access a recording of the event below (please note that footage begins playing at 8’30):

Watch the event recording:

Event Summary

Dr. Cristina Peñasco, Assistant Professor at the University of Cambridge, and Senior Research Economist at Banque de France, chaired the event and kicked off the discussion with an overview of EEIST’s work.

Professor Michael Grubb, Deputy Director of the UCL Institute for Sustainable Resources, highlighted that “we are in dynamic economic ecosystems [that] are continuously evolving.” As negotiations about the future of oil & gas, renewable energy, and Just Transitions unfold at COP28 and beyond, insights from complexity-based models that can account for this dynamism are more relevant than ever.

Country-Based Research:
Ulka Kelkar of WRI India discussed policy recommendations for decarbonising India’s industrial sector, including:

• Mandates for fossil fuel substitution with electricity or hydrogen
• Industrial energy efficiency standards
• Material efficiency initiatives
• And the introduction of carbon taxes

Professor Zhang Xiliang of Tsinghua University outlined findings from EEIST’s research in China, including the fact that when externalities like air quality are taken into account, the benefits of decarbonisation are higher than the costs.

The recent publication of the Brazil country report, which includes insights for policymakers, similarly highlights the utility of EEIST modelling tools when developing national transition strategies.

Q&A Session:
EEIST models challenge the status quo by integrating socioeconomic considerations into its models. With this in mind, the Q&A session delved into the role that EEIST models can play in Just Transitions. Simon Sharpe, of United Nations Climate Champions and the World Resources Institute, noted: “Governments are still very unaware of these kinds of [complexity] models, so there’s an opportunity to have an impact.” Ulka Kelkar similarly described the value of EEIST models in the context of Just Transitions given their potential to identify unexpected consequences of policy decisions.

The Future of the EEIST Project:
While the EEIST project is drawing to an end, its aims remain clear. Panellists called for more efforts to disseminate and expand EEIST models (particularly in networks of early career researchers). Simon Sharpe also discussed how EEIST tools can identify tipping points in hard-to-abate material sectors in order to replicate the success seen with the expansion of electric vehicles.

 

You can explore the reports guiding discussions at COP28 below:

The New Economics of Innovation and Transition: Evaluating Opportunities and Risks highlights that some of the greatest successes in the clean energy transition so far, such as dramatic cost reductions in wind and solar power and LED lighting, have come from policies to shape markets that were not generally those recommended by conventional economic analysis. To replicate these successes, the report calls on policy makers to learn the lessons and think differently about the dynamics of change in our economies.

Read more

 

 

Ten Principles for Policy Making in the Energy Transition offers governments new methods to use policy to accelerate clean technology transitions to drive action on climate goals.

Read more

 

 

 

 

 

Through 15 real-world, global, regional and national case studies, developed in partnership with policy stakeholders, New economic models of energy innovation and transition demonstrates how new economic modelling approaches can deliver crucial insights for decision makers. It also provides guidance on how to evaluate and choose between different modelling approaches and how to support their use.

Read more

NEW REPORT: Energy Transition in Brazil: Innovation, Opportunities and Risks

This report summarises work performed during the past three years on innovation in the energy sector and the impact of environmental policies on trade and emissions, as part of an international programme on the Economics of Energy Innovation and System Transition (EEIST), with results from the programme in Brazil.

It illustrates why (and how) the way in which policy is assessed matters for policymakers: specifically, tools that emphasise interactions between policies and an economy in constant evolution can pinpoint risks and opportunities. It draws on extensive knowledge as published in three main reports under the EEIST programme, which address (i) the theoretical underpinnings and implications for risk-opportunity analysis (ROA), from which follow (ii) ten principles for policymaking in the energy transition; and (iii) frames the modelling science around new economic modelling.

This report provides insights on how unique dimensions of the Brazilian landscape and financial situation give scope for effective action towards a low-carbon re-industrialisation. Written for technical and policy teams in Brazil, with particular relevance to the ministerial, development banks and energy regulators, it illustrates in particular that the dynamic nature of low-carbon re-industrialisation offers opportunity, with ROA a more useful tool than traditional (but impractical) cost-benefit analysis (CBA) to assess the green transition via empirical case studies. It supports this with four additional modelling case studies implementing the learning from this work in policy-relevant modelling. An appendix summarises the engagement strategy built upon communities of practice in Brazil, as a potential example to future science-policy interface collaboration.

Download the report

Sustainable Energy Transition in Brazil: Innovation, Opportunities and Risks

Organised by the University of Brasilia as part of EEIST

Available via streaming on the Youtube channel of Ministério da Gestão e da Inovação

Join us for the final EEIST-Brazil stakeholder meeting. This event will include the launch of the final Brazil report: “Energy transition in Brazil: Innovation, Opportunities and Risks​,” and will provide an insightful overview on how new modelling tools can better inform the Brazilian government’s net zero transition strategy and build its leadership role ahead of COP30. 

Agenda: 

15:00 Introduction to the event

Chair: Daniela Freddo, University of Brasilia

• Esther Dweck, Minister, Ministerio da Gestão e Inovação em Serviços Público
• Melanie Hopkins, Deputy-Head of Mission, British Embassy in Brasilia
• Michael Grubb, Professor of Energy and Climate Change, University College London

15:30 Brazil Country level report & EEIST project
Chair: Andrea Roventini, Sant’Anna School of Advanced Studies

• Roberto Pasqualino, Senior Researcher, University of Cambridge
• Marcelo Pereira, Professor of Economics, University of Campinas
• Carlos Eduardo Young, Professor of Economic Development, UFRJ

16:15 Panel Discussion

• Chair: Daniela Freddo, University of Brasilia
• Open discussion

17:00 Close & Coffee

COP28 Event: Unlocking the Potential of Energy Innovation and System Transitions: Effective Models and Policy for a Bright Future

EEIST research in the media spotlight

“Change happens slowly at first – and then faster than we ever thought possible. We’ve seen rapid transformations before in history, from the industrial revolution to the information revolution. Now, we’re at the beginning of the renewables revolution.”

– an excerpt from Richard Branson’s blog: An optimistic look at the future.

Over the past few weeks, the spotlight has been on the EEIST project – with a mention from Richard Branson on the Virgin blog and a mention in the newly released newsletter from Global Optimism: Ahead of the Curve Xpress.

We are delighted that the conversation is growing around the power of economic modelling to shape and inform our fight against the climate crisis.

Press Release: India can become a world leader in green hydrogen – if it connects industry to the grid

New analysis from the University of Exeter-led EEIST project has found that grid-connected green hydrogen and ammonia can help India meet its growing energy demand and clean energy targets.

Read the policy briefs here

Leading researchers from the University of Oxford are using pioneering economic modelling techniques to identify pathways for clean energy transitions in emerging economies. Their new paper – focused on India – finds that green hydrogen, and its product green ammonia, could make up roughly 25% of India’s electricity demand in 2050 by greening heavy industries such as steel, shipping, fertilisers, and oil refining. The model also predicts that a grid-connected green hydrogen system will result in a drastic reduction in costs for consumers: from $4-$5/kg for green hydrogen today to under $1/kg in 2050.

Currently in India, concerns regarding the reliability of energy supply and high connection charges deter industrial energy customers from connecting to the grid. If this continues, it will lead to ‘islanded’ green hydrogen and ammonia facilities that are not connected to the grid. Compared to the ‘island infrastructure’ option, a grid connection is better in terms of:

• Security of supply; reducing the needs for imported energy and the amount of investment needed.
• Affordability of electricity; reducing the need for high tariffs on industry energy users to pay for subsidies for residential and agricultural customers, giving industry a further boost.
• System resilience; improved storage can increase the use of renewables, as energy can be produced and store to respond to changes in the weather.

Lead author of the report Zac Cesaro, University of Oxford, Department of Engineering Science, said:

“The unexpected findings of this study are the sheer magnitude of electrolysis and ammonia capacity needed in India, and the corresponding benefits which could be gained if these plants connect to the grid and operate dynamically. This opportunity will likely be missed unless there is policy intervention in the near term to steer towards this future configuration.”

Anupama Sen, Head of Policy Engagement for the Smith School of Enterprise and the Environment at the University of Oxford, said:

“Hydrogen can contribute to short-term grid balancing, and ammonia to long-term storage, helping to bring more solar and wind energy into the grid. By producing more green hydrogen and ammonia when there is lots of renewable energy and less when the supply is short, a grid-connected approach can take electricity from the grid flexibly. By burning hydrogen or ammonia in gas turbines when needed, it can also bring electricity back into the grid on demand, although the usefulness of this seems limited.”

This research was produced using a Complexity-Extended Energy System Model. These models are more advanced than traditional energy models because of their ability to represent the interaction between different industries, how technology develops over time, and their use of more precise weather data. This kind of modelling can support governments around the world to make more detailed decisions about the transition to clean energy.

Research also published today by the EEIST Project uses a similarly cutting-edge approach to explore the effect of China’s energy transition on jobs and taxes linked to the thermal coal industry. Using asset-level data, the analysis finds that the transition away from coal could be net-positive for China’s public finances, even without accounting for climate change. Also, under current policies, employment in the coal sector will continue to decline due to improving productivity. Coal jobs will disappear even more rapidly under stronger energy and climate targets.

Both reports will be launched at a side event during New York Climate Week on ‘Advancing Net-Zero through Just Energy Transitions’.

NEW REPORT: Crossing the tipping point – Electric Vehicles Case Study

Global electric vehicle (EV) sales are on track to meet or outpace even the most ambitious net-zero timelines and could account for more than two thirds of market share by 2030, according to new analysis.

This analysis is led by RMI, founded as Rocky Mountain Institute, in partnership with the Bezos Earth Fund.

It is one of three separate pieces of research from RMI, Systems Change Lab and the EEIST project, led by the University of Exeter, that highlight the speed and scale of the accelerating transition to EVs.

Following an “S-curve” trajectory, already established by leading EV markets in northern Europe and China, the report implies that EV sales will increase at least sixfold by 2030, to enjoy a market share of 62% to 86% of sales, the analysis shows.

By contrast, current established projections see EVs reaching only around 40% market share by 2030, despite having been consistently revised higher to try and keep up with the exponential growth already under way.

Download the report

Press release: Electric vehicles to pass two thirds of global car sales by 2030

Global electric vehicle (EV) sales are on track to meet or outpace even the most ambitious net-zero timelines and could account for more than two thirds of market share by 2030, according to new analysis.

Read the report

Combustion car sales peaked in 2017, and by the middle of the current decade more will be scrapped than sold, meaning the overall fleet of combustion cars is about to peak and will be in freefall by 2030, the research shows.

The analysis is led by RMI, founded as Rocky Mountain Institute, in partnership with the Bezos Earth Fund.

It is one of three separate pieces of research from RMI, Systems Change Lab and the EEIST project, led by the University of Exeter, that highlight the speed and scale of the accelerating transition to EVs.

Following an “S-curve” trajectory, already established by leading EV markets in northern Europe and China, implies that EV sales will increase at least sixfold by 2030, to enjoy a market share of 62% to 86% of sales, the analysis shows.

By contrast, current established projections see EVs reaching only around 40% market share by 2030, despite having been consistently revised higher to try and keep up with the exponential growth already under way.

As internal combustion cars account for around a quarter of global oil demand and broader road transport accounts for nearly half, the exponential growth of EVs puts all of that demand at risk.

Oil demand for cars peaked in 2019 and will be falling by at least one million barrels per day (mbpd) every year after 2030, eliminating expected growth in oil demand for cars, according to the RMI forecasts.

The analysis reveals economics is now overtaking policy incentives as the core accelerant of EV sales, with falling battery costs the lead driver.

RMI expects battery costs to halve this decade, from $151 per kWh to between $60 and 90 per kWh, making EVs for the first time as cheap to buy as petrol cars in every market by 2030, as well as cheaper to run.

EV dominance in car sales will inevitably drive electrification across other forms of road transport.

Kingsmill Bond, Senior Principal at RMI, said:

“Electric vehicles are on track to dominate global car sales by 2030, signaling the endgame for the largest sector of oil demand. And where cars lead so the rest of transport will follow: exponential change is spreading to two-wheelers across the Global South and to trucks in China. This is good news for cutting emissions and improving public health. But it also shifts money from the hands of petrostates into the pockets of consumers.”

Joel Jaeger, Senior Research Associate at Systems Change Lab, said:

“Not every country is the same, but when it comes to EV sales they are all following a similar pattern of exponential growth. Scandinavia and China have been the leaders up to this point, but they have paved the way for other countries to follow in their footsteps, or go even faster.”

Professor Mei Mei Aileen Lam, from the EEIST project, said:

“Coordinated policy action to phase out fossil-fuelled vehicles by 2035 in the EU, US and China can bring forward EV purchase-price parity by years, in those markets and beyond. It would bring forward the tipping point in India a whole three years from 2027 to 2024. It would enable a faster, cheaper – and therefore fairer – transition for everyone.”

Kelly Levin, Chief of Science, Data and Systems Change at the Bezos Earth Fund, said:

“Several large vehicle markets are proving it’s possible to quickly course-correct on fossil-fueled vehicle sales in favour of EVs. Global momentum towards zero-emission road transportation is clearly building, and these advancements should capture policymakers’ attention to act expeditiously. The complete phase out of fossil-fueled vehicles is in reach.”

Professor Tim Lenton, from the Global Systems Institute at the University of Exeter, said:

“Positive tipping points have the power to bring about rapid, transformative change to reduce greenhouse gas emissions. In the case of electric vehicles, the price-parity tipping point not only accelerates the switch from petrol and diesel cars – it also drives down the price of batteries, which helps in other areas such as the transition to renewable energy, as a renewables-based power grid relies on cheap energy storage.”

Simon Sharpe, Director of Economics for the Climate Champions Team and Policy Impact Lead of the EEIST project, said:

“Strong policy has got the transition to electric vehicles started, and just because the transition is now gathering pace does not mean that any government should take its foot off the accelerator. Zero-emission vehicle mandates, investment in charging infrastructure, purchase incentives, and battery recycling standards can all help people to enjoy the benefits of low-cost, zero-emission, sustainable road transport sooner.”

China is on course for 90% EV sales by 2030, up from a third today, with a growing number of markets on similar S-curves to hit up to 80% market share by the same date, as the race for EV supremacy speeds up, the research from RMI shows.

China sold more EVs last year than the rest of the world combined, thanks to strong policy support, and dominates production of EVs, batteries and other components, which is further driving down battery costs and making EV adoption easier all over the world.

Countries including China, the Netherlands and Norway have already shown that it is possible to grow EV sales fast enough to meet climate goals, according to separate research released today from Systems Change Lab, an initiative convened by World Resources Institute and the Bezos Earth Fund.

Now, a diverse range of countries are showing a similar pattern of exponential growth as EV sales in these countries quickly accelerate up an S-curve once 1% of car sales are EVs.

Later-adopting countries, such as India and Israel, are now seeing EV sales growth at faster rates than the global average due to falling costs and advancing technology, meaning they have a chance to catch up with the front-runners, the Systems Change Lab research shows.

India’s all-electric vehicle sales tripled in one year from 0.4% to 1.5%, a feat that took the rest of the world three years, indicating the country is at the early stages of an S-curve trend.

A rapid shift in purchasing decisions is likely to occur once EVs become cheaper than fossil-fuelled vehicles to buy, according to a third, separate piece of research by the University of Exeter’s Economics of Energy Innovation and System Transition (EEIST) project.

This purchase price-parity “tipping point” is expected as early as 2024 in Europe, 2025 in China, 2026 in the US and 2027 in India for medium-sized cars, and even sooner for smaller vehicles – in China, small EVs are already cheaper than fossil-fuelled equivalents.

When both the costs of operation and purchase are accounted for, EVs are already cheaper to own than petrol or diesel cars in the EU and China, and the US will achieve the same within the next one or two years.

The EEIST project research also finds that coordinated international action, whereby the US, EU and China align their regulatory trajectories so that all their new car sales are zero emissions by 2035, can bring forward this purchase-price parity tipping point by up to three years.

This would not only benefit the transitions of the largest markets but would accelerate cost declines globally, enabling a faster transition for all.

These three large markets have global impact, together accounting for 60% of the global car market.

Meanwhile, under the Accelerating to Zero Coalition, over 220 signatories to the ZEV declaration, which includes countries representing 12% of the global car and van market committed to 100% ZEV sales by 2040 globally and 2035 in leading markets, are helping to drive widespread progress through a shared pathway.

Plus, over 100 corporate members of EV100 are helping to accelerate the transition and driving investment decisions at scale.

As we look ahead to COP28 Transport Day on 6 December, more countries, companies and sub nationals are expected to announce shared pathways and clear phase out dates, acknowledging the critical role the transport sector plays in meeting the goals of the Paris Agreement.

Road transport alone accounts for around 10% of global emissions.

Advancing Net-Zero through Just Energy Transitions: Building a Deeper Understanding of the Socio-Economic Realities of Achieving Global Goals

Join top researchers as they unveil new international case studies based on cutting-edge economic methods. Experts will explore the role of green hydrogen in decarbonising India’s industry and power systems, and the distributional impacts of China’s coal transition. Stakeholders are invited to reflect on how the synergies between energy, industrial, regional development, as well as just transition strategies can help bridge the gap between global goals and local realities.   Thursday 21st September 2023, 10:00 – 11:00 ET / 15:00 – 16:00 BST

The transition towards a net-zero future will have uneven socio-economic impacts, including job displacement in the fossil-fuel industry, and geographic disparities for regions that are heavily dependent on fossil-fuel extraction. Join our enlightening event to hear the latest insights on transformative economic policies that can effectively diversify economies and enable communities to capture the opportunities of the transition. The event will draw insights from EEIST (Economics of Energy Innovation and System Transition) project’s cutting-edge case studies on China’s coal transition and India’s shift to green hydrogen and ammonia, presented by the world-leading researchers.

Tim Lenton, Founder of the Global Systems Institute and Chair in Climate Change and Earth System Science at the University of Exeter, will introduce the event.

Zac Cesaro, PhD researcher at the University of Oxford, will provide invaluable perspectives on the role of green hydrogen and ammonia in a low cost, resilient power system in India.

Alex Clark, PhD researcher at the University of Oxford, will delve into the socio-economic impacts of China’s transition from coal, steering toward carbon-neutrality by 2060.

Matthew Ives, Associate of the Institute for New Economic Thinking, will explore a new perspective on decarbonising the global energy system.

The event will also feature insights from esteemed stakeholders (including Dr. Guncha Munjal, Program Manager-Hydrogen at WRI India, and Conor Gask, IEA) reflecting on the policy options presented by project researchers. The panel discussion will be moderated by Anupama Sen, Head of Policy Engagement for the Smith School of Enterprise and the Environment, University of Oxford . This event will showcase how just transitions can serve as a bridge between global goals and regional realities. Through policy recommendations, we aim to enhance energy efficiency, promote regional development, and fortify system resilience.

About

The Economics of Energy Innovation and System Transition (EEIST) project develops cutting-edge analysis to support government decision making around low-carbon innovation and technological change. By engaging with policymakers and stakeholders in Brazil, China, India, the UK and the EU, the project aims to contribute to the economic development of emerging nations and support sustainable development globally. Led by the University of Exeter, EEIST brings together an international team of world-leading research institutions across Brazil, China, India, the UK and the EU. The consortium of institutions are UK: University of Exeter, University of Oxford, University of Cambridge, University College London, Anglia Ruskin University, Cambridge Econometrics, Climate Strategies, India: The Energy and Resources Institute, World Resources Institute, China: Beijing Normal University, Tsinghua University, Energy Research Institute, Brazil: Federal University of Rio de Janeiro, University of Brasilia, Universidade Estadual de Campinas (UNICAMP) EU: Scuola Superiore di Studi Universitari e di Perfezionamento Sant’Anna. For full institutional affiliations see eeist.co.uk.

Funders

EEIST is jointly funded through UK Aid by the UK Government Department for Energy Security & Net Zero, and the Children’s Investment Fund Foundation (CIFF). The contents of this event represent the views of the EEIST team, and should not be taken to represent the views of the UK government, CIFF or the organisations to which the authors are affiliated, or of any of the sponsoring organisations.

Net-zero transition planning for pension funds and other asset owners

We have left it too late to tackle climate change incrementally. We now require a dramatic acceleration of progress through transformational change across society and the global economy. The pensions industry has an undeniably important role to play in supporting the journey to net zero, not least through investing for a world that its beneficiaries would want to live in. While this paper focuses on the UK, it is relevant for pension funds globally.

Acting on behalf of their beneficiaries, pension funds must rise to the challenge of ‘greening’ their investment strategy and portfolio assets. To do so requires fundamental change to the way investment decision making is framed.

We argue that the current net-zero strategies guiding pension funds and other asset owners (we shall simply refer to ‘pension funds’ here) are too strongly influenced by modern portfolio theory. At the same time, official climate scenarios are increasingly regarded as not being ‘decision-useful’.

This practitioner-focused paper sets out how the Economics of Energy Innovation and System Transition (EEIST) programme – initially targeted at net-zero policymakers – can be applied to catalyse a paradigm shift in transition planning in the investment industry.

Download the report

With net-zero commitments made, credible transition plans will increasingly be expected by beneficiaries, plan sponsors (for defined benefit funds), NGOs and regulators. These plans will need short-term bespoke scenario analysis in order to set interim targets against which reporting will be required.

Drawing on EEIST’s ‘Risks and Opportunities’ methodology, rooted in complexity economics, we recommend that pension funds adopt ‘Decision-Useful Climate Scenarios’. This approach delivers analysis of future investment risks and opportunities through the application of plausible ‘real-world’ narratives.

Inspired by EEIST’s ‘Ten Principles for Policy Making in the Energy Transition”, we propose ‘Ten Transition Planning Principles for Pension Funds’. These principles provide a framework for transformational net-zero decision making and embedding the associated change in risk culture.

The final section provides readers with an overview of the leading transition planning work currently being carried out by the Universities Superannuation Scheme (USS), in which the application of ‘EEIST Thinking’ is clearly visible.

New policy brief on the hidden disparities on the road to net-zero

A new EEIST policy brief shows that aggregated economic data masks the benefits and downsides of climate policy. Instead, it is vital to analyse impacts per sector or region, the authors argue. Read the policy brief.

New EEIST report shows value of new economic models to help policymakers accelerate the energy transition

The EEIST project has launched a new report to demonstrate the value of new economic modelling to accelerate the low-carbon transition. Read the report.

Through 15 real-world, global, regional and national case studies, developed in partnership with policy stakeholders, the report demonstrates how new economic modelling approaches can deliver crucial insights for decision makers. It also provides guidance on how to evaluate and choose between different modelling approaches and how to support their use.

The report will be officially launched on the sidelines of the Berlin Energy Transition Dialogue. Find out more about the event.

Watch: New economic models of energy innovation and transition

Watch a recording of the launch event of our latest report. Download the report from this page.

The most outstanding successes so far in low carbon transitions in China, India, Brazil and Europe were achieved by policies implemented despite, not because of, dominant economic analysis and advice.  That was the striking finding of an EEIST report released at COP26.

Now the same team launched its third report, which represents a major effort to demonstrate the value of new economic modelling to policy questions relevant to the low carbon transition. Through fifteen real-world global, regional, and national case studies, developed in partnership with policy stakeholders, the report demonstrates how new economic modelling approaches can deliver crucial insights for decision makers. It also provides guidance on how to evaluate and choose between different modelling approaches, and how to support their use.

Case studies in the report cover the global energy transition, the power and industrial sectors, transport, agriculture, the economic impact of the transition, national decarbonisation plans, and finance’s role in the transition.

This event launched the report and host a discussion on new economic modelling of the energy transition, and the policy and analysis lessons for Germany and Europe.

Speakers

Dr Peter Barbrook-Johnson

Pete Barbrook-Johnson is a Departmental Research Lecturer at the Institute for New Economic Thinking, Environmental Change Institute, and the Smith School for Enterprise and the Environment at the University of Oxford. His research interests sit at the crossroads of social science and economics, complexity science, and environmental and energy policy. He uses a range of methods in his research including agent-based modelling, network analysis, and systems mapping, to explore applied social, economic, and policy questions, and to support complexity-appropriate policy evaluation, but is equally interested in more theoretical aspects of complex adaptive systems.

Simon Sharpe

Simon Sharpe is Director of Economics for the UNFCCC Climate Champions and a Senior Fellow at the World Resources Institute, and leads policy engagement on the Economics of Energy Innovation and System Transition project. Simon was previously Deputy Director of the UK government’s COP26 Unit, where he led international campaigns on energy, transport, land use, science and innovation.

His other roles in government included leading international climate change strategy, developing the approach to clean growth in the UK’s industrial strategy, and serving as head of private office to Ministers of State for Energy and Climate Change. He also served on diplomatic postings to China and India.

Simon has published academic papers on climate change science and economics, and policy reports on climate change risk assessment, economics, and diplomacy. His current focus is on the Breakthrough Agenda – a process to strengthen international collaboration to accelerate transitions in each emitting sector of the global economy; and on projects to apply new economic thinking to climate change policy.

Dr Cristina Peñasco

Cristina is a University of Cambridge Lecturer in public Policy at POLIS (Department of Politics and International Studies). At Cambridge, she is also a Fellow at Queens’ College, a Centre Fellow at Centre for the Environment, Energy and Natural Resource Governance (C-EENRG), and an associate researcher of the Bennett Institute for Public Policy.

Her research is multidisciplinary in nature, bringing together aspects of environmental economics, innovation policy and energy economics in green and energy efficiency technologies, with a focus on policy instruments enabling the transition to low-carbon economies

Fernanda Senra de Moura

Dr Fernanda Senra de Moura is a Research Associate at the Institute for New Economic Thinking (INET), the Smith School of Enterprise and the Environment, and the Environmental Change Institute (ECI), the School of Geography and the Environment, at the University of Oxford.

Fernanda’s research focuses on political institutions and environmental policy in developing countries. She also studies gender inequality. Fernanda uses both microeconomic theory and applied methods. She has worked in climate risk management with international development and government institutions in Africa, Latin America, Eastern Europe, and Central Asia.

Current projects include: Data-driven systems mapping of SDGs and their interaction with the energy transition; The Heterogeneous Effects of Reelection Incentives: Evidence from Brazil; Gender Gaps in Parliament: Access to Public Funds by Legislators in Brazil; Climate risk financing in developing countries.

Summary of EEIST’s COP27 event at the UK Pavilion

Simon Sharpe, Policy Impact lead on the EEIST project presented the latest report 10 principles for policymaking in the energy transition: lessons from experience at the UK pavilion at COP27 on November 11^th

This event on How to replicate the world’s greatest successes in low-carbon transitions was live-streamed on the UK Government website. Download the event flyer.

The EEIST event was introduced by Stephanie Edwards, Climate Change expert and Head of Sectors at UK Presidency of COP26 Presidency.  Chris Skidmore MP then set the scene and highlighted the relevance of the project to the Breakthrough Agenda currently.  He is a passionate supporter of EEIST’s aims and achievements so far.  Simon Sharpe then presented the latest report, which launched at the Global Clean Energy Action Forum recently in September in Pittsburgh.

The report identifies ten principles of policymaking in the energy transition, and analyses the lessons learnt in the past, and some suggestions for the future.  By way of evidencing the findings, Simon introduced a panel of experts, who then drew examples from their own nations and how their experiences relate to the principles.  From China, Professor Wang Zhongying, The Director General of the Energy Research Institute shared China’s experience with Zero Emission Vehicles.

India was represented by Vidhu Kapur from TERI (the Energy and Resources Institute) who presented the success with LEDs, and Subrata Chakrabarty from World Resources Institute discussed India’s experience with public procurement of electric buses.  Finally, Alistair Phillips-Davies from the UK Pavilion sponsor, SSE, shared his perspective with off shore wind both in the UK and internationally.  The event ended on a very positive note, and Simon thanked the panel and audience, hoping that they could go away with some ideas for policy approaches in the future.

EEIST at COP27: How to replicate the world’s greatest successes in low-carbon transitions

Watch the recording of our COP27 side event in the UK Pavilion on Friday, 11 November

Recording:

The most outstanding successes so far in low carbon transitions in China, India, Brazil, and Europe were achieved by policies implemented despite, not because of, dominant economic analysis and advice.  That was the striking finding of a report released by the Economics of Energy Innovation and System Transition project at COP26.  Now the same team launched a new report, outlining ten principles for successful policymaking on low carbon transitions. Based on detailed empirical evidence, these overturn conventional wisdom and suggest a new way forward that can help countries deliver the Breakthrough Agenda, and accelerate innovation, job-creation, and cost reduction in the shift from fossil fuels to clean technologies.

Brazilian launch of latest EEIST report on policymaking principles

Our latest report “Ten principles for policymaking in the energy transition” will be launched in Brazil with the participation of local researchers who are part of the EEIST Project.

The event will be held in Portuguese and will focus on how Brazil can realise its potential for renewable energies and how to carry out the energy transition in the context of facing the climate emergency.

EVENT: How to Replicate the World’s Greatest Successes in Low Carbon Transitions

Join us on 22 September, 13:45 EDT / 18:45 BST at the Global Clean Energy Action Forum in Pittsburgh.

READ THE REPORT

Recording:

The most outstanding successes so far in low carbon transitions in China, India, Brazil and Europe were achieved by policies implemented despite, not because of, dominant economic analysis and advice. That was the striking finding of our report released at COP26. Now we will launch a new report , outlining ten principles for successful policymaking on low carbon transitions. Based on detailed empirical evidence, these overturn conventional wisdom and suggest a new way forward that can help countries accelerate innovation, job-creation, and cost reduction in the shift from fossil fuels to clean technologies.

India’s energy sector transition to meet the 2070 net zero target

By Saswata Chaudhury and Vidhu Kapur

Tackling the climate emergency is a key priority for governments around the world. However even if nations fully implement their Nationally Determined Contributions (NDCs), which were at the heart of the UNFCCC’s Paris Agreement, and ‘net zero’ pledges under the Glasgow Climate Pact, global temperatures are estimated to rise to between 1.8°C and 2.4°C by 2100.

Since COP26, India has seen significant progress from government and wider stakeholders, including actors in the private sector, to achieve its 2070 net zero goal, but an ever greater effort will be required to keep within the available carbon budget.

A comprehensive review of the empirical evidence by the Economics of Energy Technology and Systems Transition (EEIST) consortium shows that strategic investment and market-shaping policies around new technologies can lead to rapid innovation, cost reductions and technological change to help accelerate progress towards that net zero target.

Decarbonising India’s energy sector

The net zero transition in the Indian energy system requires a range of action, including a rapidly increased share of renewables in the energy mix, the electrification of transport and key processes in heavy industry, and improved energy efficiency. A smooth energy system transition needs to be based on effective coordination between sectors and their specific decarbonisation policies. All of this must be delivered while considering energy security, energy sovereignty, energy access, equity, choice of technology and financing.

Real progress has already been made. In pursuing its commitment to net zero by 2070, India has achieved 25% of its target to produce 450 GW of its renewable energy capacity by 2030, becoming one of the world’s largest generators of renewable energy.

The ground is being prepared for continued growth, with India entering into a Memorandum of Understanding with countries including Chile, Australia, and Argentina to ensure an undisrupted supply of raw materials for renewable energy technologies. Initiatives like Atma Nirbhar Bharat, production linked incentives (PLI) for manufacturers, and imposing barriers on imported components, will help to promote the indigenous production of renewable technologies.

The delivery of uninterrupted, reliable and affordable power supply is also an important election agenda for governments and thus can significantly mobilise political interest for the digitalisation of the grid and distribution network.

Renewable energy can provide the lowest cost route to full electrification and energy security for India. But relying heavily on renewable energy presents a range of challenges that include; battery storage requirements, grid connectivity, land constraints and water availability, which will require nuanced policy decisions.

Currently the domestic production of renewable technology components is not competitive in terms of price or quality, requiring financial investments in research and development to cultivate the industry. However, risk averseness presents another barrier to the renewable energy transition in India.

To break down these barriers, politically viable pathways that deliver impact over the short term are required. Four key measures would help accelerate the renewable transition. Firstly, an expanded and robust digitalization of the electricity grid and transmission network. Secondly, a reform of Intellectual Property Rights. Thirdly, a patent regime to promote indigenous production of renewable technology and battery storage, and lastly, philanthropic investment in infrastructure development.

A new approach to policy making

EEIST’s recent report, The New Economics of Innovation and Transition: Evaluating Opportunities and Risks, highlights that some of the greatest successes in the clean energy transition so far, such as dramatic cost reductions in wind and solar power, have come from policies to shape markets that were generally not those recommended by conventional economic analysis.

Yet the same policy analysis tools and frameworks that often advise against the bold policies that produce this result remain commonplace in policymaking today. EEIST’s analysis on the effect of policy on innovation and low carbon transitions around the world has come to a critical conclusion: Processes for assessing policy to drive decarbonisation, and the analytical tools used to support them, must account for the dynamics of innovation and technological change – including the uncertainty that surrounds them – if they are to achieve their aims.

India is currently in the early stages of energy system transition and is presented with a variety of alternative technology choices – achieving its net zero target will require a careful balance. Informed policy-making is therefore needed to guide India along a sustainable decarbonisation pathway. In making informed decisions, the needs of a variety of stakeholders and sectors must be addressed and the scale of uncertainties understood.

Choice of Technology over Time

While making decisions, policy makers should consider socio-economic impacts, and co-benefits both in the short- and long-term. For example, hydrogen produced using renewable energy is likely to have huge potential for transport and industry, while addressing both net zero and energy security objectives in the long-term. On the other hand, hydrogen use in these sectors is in a nascent stage and is unlikely to be widely used this decade, so focusing on promoting the use of electricity in various industrial processes and decarbonising the transport sector will be more fruitful in the short- and medium-term.

India is the world’s second largest producer, and third largest consumer, of steel. The transport sector is India’s fastest-growing source of carbon emissions. EEIST analysis finds that innovation ‘trump cards’ like hydrogen and EVs can together rapidly transform energy use and carbon emissions in these co-dependent sectors, including in vehicle manufacture, vehicle use and surrouding infrastructure, so should be prioritised.

Regional Choice of Technology

Achieving the optimal policies for the energy transition is also challenging due to India’s regional diversity and the localisation of various sectors and stakeholders. Adapting policies and technologies to the geographical, socio-economic, and cultural context is of utmost importance.

To meet the requirements of different regions, the Indian Government has delivered policies that support different forms of solar technology applications, including solar parks, rooftop solar, combining the production of food and energy via agri-PV, plus using solar to power water pumps.

In making these decisions, Indian policy makers have employed simple cost-benefit analysis and normative rational microeconomic decision-making. However an alternative approach to policy making, based on systems thinking could help to accelerate the deployment of innovative technology to deliver deeper, systemic change across the economy and society.

EEIST is providing governments, including India, new tools and analysis, by supplementing traditional cost-benefit analysis (CBA) with Risk Opportunity Analysis (ROA) in situations where transformational change may result – like transitioning to a low carbon economy. ROA is a more holistic way to appraise policy decisions to develop and scale new technology, by identifying key leverage points, where small interventions can produce rapid and substantial changes, to drive system-level transformation.

These new methods seek to include an extensive understanding of interactions between stakeholders and their dynamic transition, innovation processes, and financial sector responses.

The rise of LEDs

India already has experience of promoting new technologies successfully, that could provide a guideline for accelerating the adoption and scale up of renewable energy technologies in the country.

The explosion of LED uptake during the 2010’s in India is a huge success story that was achieved by fostering synergies between actors and delivering timely policy interventions, that unlocked incremental and cross sectoral change.

India’s bulk procurement policy for LEDs helped prices fall by 85%, with LED sales going from just 3m in 2012 to 670m in 2018. These innovative policy instruments enabled the massive growth of LED technology even in the presence of relatively cheap alternative lighting technologies, while CNG adoption in the transport sector has endured a similar positive experience thanks to a systems thinking approach.

The LED experience has lessons for new low carbon policies. Policies to promote electric vehicles, batteries, and green hydrogen now also seek to build domestic manufacturing industry and supply chains.

By adapting EEIST’s alternative approach to the policy making for the energy transition, India can realise its renewable energy potential and accelerate the energy transition to bring its 2070 net zero target into reach.

How new economic models can support policymakers in boosting climate action

By Nicole Kempis, Climate Strategies

In mid-June, the EEIST team and Climate Strategies hosted an event in Bonn to discuss how new economic models can support policymaking to accelerate the low-carbon transition.

The event aimed to develop relationships between international policy-makers and transition modellers, as well as build understanding within the modelling community. World-renowned modellers, philanthropic organisations, and representatives from national governments attended the hybrid roundtable. International organisations, such as the World Bank, UNDP, and International Energy Agency also joined.

Key technical findings included the need for interdisciplinarity within the modelling community. Moreover, findings confirmed that existing models may fail to predict tipping points, induced innovations, and rapidly decreasing technological costs related to low-carbon technology, such as electric vehicles.

At the national level, experts suggested a number of key policymaking principles that could support a low-carbon transition. These policymaking principles were previewed and tested with the stakeholders at the meeting, ahead of their launch at the Clean Energy Ministerial in Pittsburgh. Policymakers responded by highlighting the importance of contextually specific modelling that considers the impact of net-zero transitions on inequality and poverty.

At the international level, experts highlighted the need to increase international coordination to boost investment in green technologies. Participants also acknowledged that supporting the uptake of green technology and low-carbon investments in the Global South will be a critical part of the transition.

Overarching takeaways included the importance of actively pursuing close relationships between modellers and policymakers, as both groups need to learn to ask the right questions and engage a diversity of stakeholders. Academic modellers agreed on the need to take an interdisciplinary approach to research that responds to country-specific requirements, with the aim of developing accessible findings and impactful tools for policymakers.

EEIST at the Bonn Climate Change Conference

On Wednesday, 15^th June the Economics of Energy Innovation and System Transition (EEIST) project and Climate Strategies will host a roundtable meeting to discuss climate policy and modelling needs. The meeting at the UN Climate Change Conference in Bonn will convene an international community of world-renowned economics researchers, representatives from international organisations such as the World Bank, IMF, International Energy Agency and MDBs, national policy stakeholders, and philanthropic organisations.

Tipping Fossil Fuels out of the Global Economy

Watch a recording of Simon Sharpe’s University of Exeter talk.

Background:

Simon Sharpe is the Director of Economics, UN Climate Action Champions.

He will discuss how evolutionary and complexity economic thinking can guide governments to more effective policy decisions, achieving faster decarbonisation with the same level of political will.

He will also cover how targeted international cooperation can help countries make low carbon transitions more quickly, with less difficulty, at lower cost, and at greater gain.

Simon will draw on experiences of the COP26 campaigns, and insights from the UK-China-India-Brazil collaboration on the Economics of Energy Innovation and System Transition project.

EEIST’s New Report Featured in The Guardian

EEIST’s new report, ‘The New Economics of Innovation and Transition: Evaluating Opportunities and Risks’, has been featured in The Guardian on Tuesday 2nd November.

World leaders announce plan to make green tech cheaper than alternatives

EEIST at COP26: Transformative Energy Innovation Dialogues on 4 November

Thu, 4 November, 19.30 – 21.00 GMT, UK Pavilion, COP26 Venue

Watch the recording of this event at the UK COP26 Presidency Pavilion, on 4, November 2021, where world leading experts in complexity economics, systems thinking, and energy policy introduced our new conceptual model for policy and investment decision making – the Risk-Opportunity Analysis’ (ROA) framework. Download our new report to learn more about the framework.

AGENDA:

Roundtable lunch on identifying risks and opportunities in the low-carbon transition

Tue, 9 November 2021, invite-only event

Climate change related decision-making involves the potential for structural change in the economy; yet the tools we use to make investment decisions are designed to deliver marginal gains to the existing system. The key to low carbon innovation requires bold and intelligent assessment of how to maximise opportunities whilst minimising risks.

At this event, world leading experts in complexity economics, systems thinking, and energy policy will introduce a new conceptual model for policy and investment decision making. The Risk-Opportunity Analysis’ framework, which is part of a programme hosted by the Economics of Energy Innovation and System Transition project, a 3-year Department for Business, Energy & Industrial Strategy and CIFF funded initiative, brings together experts in China, Brazil, India, the UK and EU.

It will be introduced in a new flagship report “The New Economics of Innovation and Transitions” and has the potential to transform how governments across the world make climate policy decisions for years to come.

Supported by the Corporate Leaders Group UK.

EU Communities of Practice Meeting

As part of the EU Energy Week we hosted a workshop for European policymakers, think tanks, NGOs and modellers to discuss the science-policy interface. Participants from the European Commission, Poland, Italy, Germany, North Macedonia, Netherlands, Austria, Bulgaria, Belgium, Russia, Switzerland and the UK attended. Publications on our findings will be published over the next year.

EEIST’s ‘Risk-Opportunity Analysis for transformative policy design and appraisal’ Paper is now available in Chinese (Mandarin) and Brazilian Portuguese

EEIST ROA Paper in Brazilian Jun 21

EEIST Chinese Version of ROA Paper Jun 21 -JR

Strong EEIST Presence at Cimate Exp0 17– 21 May

A number of appearances from the EEIST team are planned at Climate Exp0 which is scheduled to take place between Monday 17^th and Friday 21^st May.  This event will take place fully online, and is an important date in the annual calendar in the lead up to COP26 in November. Climate Exp0 is an opportunity to display the latest thinking and most relevant international research by connecting “policymakers, academics and students across the world and harness the power of virtual collaboration to help deliver a zero-carbon, resilient world.”

The conference centres around five key themes: one each day as follows-

Monday 17^th May – Green Recovery

Tuesday 18^th May – Nature-Based Solutions

Wednesday 19^th May – Mitigation Solutions

Thursday 20^th May – Adaptation and Resilience

Friday 21^st May – Finance and Regulation

Prof Aled Jones from Anglia Ruskin University, Director of ARU’s Global Sustainability Institute and one of EEIST’s Programme Leads is on the event’s organising committee. He is chairing the climate finance discussions on the Friday.

On Wednesday the first and last sessions-which have expert panel discussions-will be chaired by two EEIST professors: Prof Cameron Hepburn at the University of Oxford (Session A, ‘A new perspective on the clean energy transition’ at 09:30) and Prof Laura Díaz Anadon from the University of Cambridge and Programme Lead with EEIST, ‘Policies for driving rapid clean energy transition’(Session G at 16:30).  Dr Cristina Peñasco, also from Cambridge, will be talking at 13:45 about the Economy-wide impacts of the Green Recovery on the Monday.  There will be the opportunity to see Dr Sergey Kolesnikov who works at Cambridge with Laura and Cristina: both work on the EEIST project’s third stage.  Dr Sergey is presenting at 12:00 in the ‘Solution Stars – Mitigation Solutions for green recovery’. 

Dr Matthew Ives from University of Oxford, who is also a Programme Lead for EEIST will give a presentation on mitigation solutions on Wednesday entitled, ‘A new perspective on decarbonising the global energy system’.  This will present encouraging evidence that there should be optimism for those governments looking for greater ambition on decarbonising economies, while providing economic growth opportunities and affordable energy.

For more information and to register go to: https://www.climateexp0.org/home/begin

New Paper published in January 2021: “Systemic review of the outcomes and trade-offs of ten types of decarbonization policy instruments”

New Paper published in January 2021: “Systemic review of the outcomes and trade-offs of ten types of decarbonization policy instruments” by Dr Cristina Peñasco, Prof Laura Díaz Anadón  and Elena Verdolini in Nature Climate Change

The literature evaluating the technical and socioeconomic outcomes of policy instruments used to support the transition to low-carbon economies is neither easily accessible nor comparable and often provides conflicting results. This paper shows how the team have developed and implemented a framework to systematically review and synthesize the impact of ten types of decarbonization policy instruments on seven technical and socioeconomic outcomes.  It shows that the selected types of regulatory and economic and financial instruments are generally associated with positive impacts on environmental, technological and innovation outcomes.  Several instruments are often associated with short-term negative impacts on competitiveness and distributional outcomes.  It is discussed how these trade-offs can be reduced or transformed into co-benefits by designing research and development and government procurement, deployment policies, carbon pricing and trading.  They show how specific design features can promote competitiveness and reduce negative distributional impacts, particularly for small firms. An online interactive Decarbonisation Policy Evaluation Tool allows further analysis of the evidence.

Both the tool and the paper are the result of the INNOPATHS project (H2020 project of the EC).

You can see the paper here

New Paper Published by Aileen Lam and Jean-Francois Mercure: ‘Which policy mixes are best for decarbonising passenger cars?’

Please find the link here

or here

Come and listen to Simon Sharpe’s fascinating talk

‘Deciding how to decide, to accelerate low carbon transitions’
via zoom

Please click here for the recording of this event

Simon Sharpe Talk Flyer 4th March 21