Dear Friend of CPI,

I hope this note finds you well. Since Climate Policy Initiative launched late in 2009 to help policymakers and others make the best decisions for low-carbon growth, we have grown to a staff of more than 40 policy experts and analysts in San Francisco, Beijing, Berlin, Venice, and, most recently, Rio de Janeiro. The CPI team is working closely with policymakers and industry experts to look at what works and what doesn’t when climate and energy policies are implemented, so that nations can improve their policies and implement best practices. The following projects are examples of our work to support policymakers as they pursue policies for low-carbon growth:

China’s Five-Year Plan

As China embarks on its 12th Five-Year Plan, the country’s National Development and Reform Commission (NDRC) has been eager to review low-carbon growth policies of the last five-year period. Our multi-sector analysis of China’s experience from 2006 to 2009 provided information to the agency to support this process. We found that China had made substantial progress towards its 20% energy intensity reduction targets by the end of 2009. However, many of the measures implemented in the 11th Five-Year Plan were top-down administrative measures that used significant resources, and some policies such as plant closures will be more expensive to implement moving forward. As China enters its 12th Five-Year Plan period, it may need to place more emphasis on renewable power generation and consider market-based mechanisms and policies that specifically target carbon emissions rather than energy. You can read about our work in The Guardian and Nature.com.

Smart Power Markets for Europe

The EU has committed to decarbonizing its power system, with a goal of adding 200GW in renewable power by 2020. Such an effort involves more than investment in generation and grid – it requires a smart power market as well. Our review of various market systems across Europe and the US, which we presented to the European Commission’s Directorate General for Energy, as well as national regulators and transmission system operators, revealed that nodal pricing systems (also known as locational marginal pricing) were the most effective in addressing congestion issues and the integration of renewables into the grid. In fact, adopting this best practice would increase EU power transfers by 14-34% and would provide operational savings from improved congestion management of €0.8 to €2.0 billion.

Europe Carbon Pricing

With the EU ETS in place since 2005, policymakers have been considering its effectiveness and how it can be improved. One important aspect under consideration is whether the EU ETS is attracting additional low-carbon investment. CPI’s and Climate Strategies’s joint analysis indicated that the EU ETS facilitates low-carbon investment. However, our findings also suggest that improvements, such as increasing the stringency of permit allocations, limiting CDM use, changing international financial reporting standards, and implementing complementary policies, are needed to accelerate private investment. We presented these findings to the EC’s Directorate General for Climate Action and other policymakers in Brussels in February and to the UK Parliament in March. See the Reuters story for more information.

Tracking and Assessing the Effectiveness of International Climate Finance

The international community’s commitment to raise $100 billion per year for climate change aid to developing nations by 2020 has generated keen interest in international climate finance – in tracking the finance flows as well as ensuring that the money is spent wisely. Our project aims to identify the types and quantities of climate finance as well as the main requirements for adequate, transparent, and productive climate finance. We will be sharing the initial findings of this project, which will describe the current state of public finance, in the next few weeks. In the next phases of this project, we will work with the governments of Norway, Indonesia, and Guyana to support Norway’s funding of projects in these countries.

CPI Projects in 2011

This year, we will also be working on a number of projects that 1) describe the state of policies in select sectors and countries and 2) assess and diagnose implemented policies. In addition to the international climate finance tracking project, our descriptive work this year will include a review of the current state of clean energy finance – how much finance exists, where, and what types of finance, and the types of projects they support (contact: david.nelson@cpisf.org), and cataloging building energy efficiency policies in Germany, China, and the US (contact: karsten.neuhoff@cpiberlin.org).

On the policy effectiveness front, our Beijing office will analyze the effectiveness of selected policies implemented during the last Five-Year Plan period (contact: qi.ye@cpibeijing.org). As mentioned above, our international climate finance project will examine some REDD+ case studies (contact: barbara.buchner@cpivenice.org). We are also undertaking a review of the effectiveness of PV policies in Germany, Italy, China, and the US in reducing PV cost (contact: david.nelson@cpisf.org), and will begin to review reforestation policies in Brazil (contact: juliano.assuncao@cpirio.org). We will also start to examine various nations’ criteria and systems for tracking and measuring the effectiveness of their own climate and energy policies (contact: kath.rowley@cpisf.org).

I will send you more information about these projects in future updates. In the meantime, please feel free to reach out to me or my staff if we can be of assistance as you consider the best policies or paths to low-carbon development.
Best regards,

 

Thomas C. Heller
Executive Director, Climate Policy Initiative