Impacts of German energy policies on the competitiveness of national energy intensive industries

Transcription

1 Impacts of German energy policies on the competitiveness of national energy intensive industries Robert Beestermöller Ulrich Fahl (IER), University of Stuttgart EcoMod2013 International Conference on Economic Modeling Czech University of Life Sciences, Prague

2 Agenda (1) Background and motivation (2) Methodology a. Computable general equilibrium model b. Competitiveness indicators (3) Scenario analysis and results a. Reference scenario (REF) b. Electricity technology restriction scenario (TECH) c. Electricity cost distribution scenario (DISTR) (4) Summary and conclusions 2

3 Background and motivation Diverse energy and climate policy framework in Germany (embedded in EU 2020 policy) Climate policies targets on emission reductions and renewables quotas Multiple measures: Emissions Trading (EU-ETS), Feed-in-tariffs (EEG), carbon emission standards for passenger cars, energy efficiency standards for buildings, Limited societal acceptance of dirty nuclear and coal power plants Discussion on EEG cost apportionment and industry protection (exemptions = 1.5 bn in 2010) Economic agents are affected by these policies in different ways One important (indirect) transmission channel is the electricity price, because it passes on changes within the electricity generation technology portfolio to electricity consumers and goods producers Electricity costs play a crucial role for the competitiveness of energy intensive industries (metals, minerals, chemicals, paper) Risk of losing production facilities, jobs and knowledge! Research questions: 1. How does the German energy policy framework affect the German electricity price? 2. How does the electricity price affect the competitiveness of (German) energy and electricity intensive industries in a globalized world? What are the macroeconomic implications? 3. What are the macroeconomic and competitiveness implications of different electricity cost distribution concepts? 3

5 The CGE model NEWAGE University of Stuttgart Special / hybrid features: Imperfect Labor Market: Rigid wages, wage curve Differentiation by qualification (skilled, unskilled) Electricity Generation: Technology based modeling: portfolio with 18 generation options Capital Labor Resources Carbon Factor markets Fossil Fuel Production Production Aggregation Pool (Armington) Sectoral Production Exports Internat. Transport Imports Foreign trade 16 sectors: Coal, Gas, Crude oil, Mineral oil, Electricity Chemicals, Metals, Iron & steel, Minerals, Pulp & paper, Machinery, Rest of industry Construction Transport Agriculture Services 10 regions: Dynamics: Recursive-dynamic, , 5-year steps Technological Change: Autonomous energy efficiency index (AEEI) Data: GTAP7, IEA, et al. Savings Investments Households and Government Representative Agent Consumption Tax Revenue Implicit tax system Germany EU-15 (w/o Germany) NMS-12 Other Europe Annex-B Rest of Annex-B Russia USA China + India OPEC Rest of world 5

6 Measurement of competitiveness Besides absolute imports, exports and trade balance, there are relative indicators such as the Relative World Trade Share (RWS) or the Revealed Comparative Advantage (RCA) The RWS relates the share of national/regional (R) exports and world exports of a sector (I) to the share of total national and total world exports: RWS R I = EX R I R EX R I / I I EX R I,R EX I R Example: RWS Machinery Germany = The RCA relates the national export/import-ratio of one sector to the total national export/import-ratio: Example: RCA Maschinery Germany = Machinery exports (Germany) Exports (Germany) / World machinery exports World exports RCA R I = EX R I IM R I / If > 1, the respective industry is of above-average importance for the country I I EX R I IM R Machinery exports (Germany) Machinery imports (Germany) I / Exports (Germany) Imports (Germany) 6

7 Economic structure in the base year (GTAP7, 2004) a) Sectoral shares of Germany's exports MAC CHM ROI SER PPP TRN IRS NFM NMM AGR BUI OIL ELE GAS COL CRU OEU b) Regional shares of Germany's export destinations ROW USA NEU EAB BUI PPP MAC CHM ELE NMM IRS ROI NFM SER TRN AGR OIL GAS COL CRU SER ROI MAC CHM TRN OIL PPP AGR ELE NMM GAS BUI COL IRS NFM CRU CHI MAC NMM CHM PPP IRS BUI ELE NFM ROI SER TRN OIL AGR COL GAS CRU RAB NFM IRS NMM PPP OPE CHM OIL GAS AGR CRU COL TRN ROI SER MAC BUI Dominance of machinery exports RUS Most trade with EU-15 6 a) Shares in household expenditures in Germany 8% b) Electricity share of sectoral production costs in Germany Electricity less important 4 2 6% 4% 2% Electricity intensive industries 1,5 a) RWS, Germany 1,5 b) RCA, Germany 1 1 0,5 0,5 0 0 Most competitive industries 7

8 Agenda (1) Background and motivation (2) Methodology a. Computable general equilibrium model b. Competitiveness indicators c. Reference data (3) Scenario analysis and results a. Reference scenario (REF) b. Electricity technology restriction scenario (TECH) c. Electricity cost distribution scenario (DISTR) (4) Summary and conclusions 8

9 REF: Reference scenario Exogenous macroeconomic drivers Labor force development in countries/regions: Autonomous energy efficiency improvements (AEEI): o Improves by 0.1 % p.a. World oil prices: o Rise by 60 % until 2030 compared to 2005 (relative to numeraire) 2,5 2 1,5 1 0,5 0 Labor force development in the EU (Index) DEU OEU NEU 2010 Climate policy constraints German Renewable Energies law (EEG): o Excess costs of renewable energies in electricity generation are added to the electricity price European Emissions Trading Scheme (EU-ETS): o Emissions cap decreases by 40 % until 2030 compared to 2005 (in line with a 75 % reduction until 2050) 9

11 TECH: Technology restriction scenario Double-sided technology constraint: Promote clean renewables: impose a renewables share in electricity generation of 5 in 2030 in Germany Penalize dirty fossils: prohibit new coal power plant investments in Germany TWh 100 a) Electricity generation: new plants TWh 400 b) Electricity generation: sum of new and existing plants REF: Coal REF: CCS TECH: Coal TECH: CCS 11

12 TECH: Electricity price, demand and costs Two contrary effects determine additional electricity costs in Germany Price goes up (+22% in 2030) Demand goes down (-11% in 2030) Costs increase (+7 % in 2030) Minor changes in the rest of the EU Electricity price, demand and costs changes in the EU (TECH in % to REF) 25% 2 Electricity price 25% 2 Electricity demand 25% 2 Electricity costs Germany 15% 1 15% 1 15% 1 EU-15 5% 5% 5% NMS-12-5% -5% -5% % -15% -15% 12

13 TECH: Competitiveness of German industries (vs. REF in %) Competitiveness effects of German industries The metal industries (IRS, NFM) lose the most: imports rise, exports fall, trade balance weakens, RWS and RCA fall (up to 12 % in 2030) Other energy intensive industries lose less; consumer goods industry profits slightly 2% -2% -4% -6% -8% -1-12% IM EX TV TB RWS RCA CHM PPP IRS NFM NMM MAC ROI Germany s overall trade balance improves against most countries, mainly because of the major importance of machinery exports 25% 15% 5% -5% -15% -25% EAB NEU OEU OPE RUS ROW CHI USA RAB 13

14 TECH: Worldwide competitiveness (vs. REF in %) Non-ferrous metals Germany loses strongly (1) EU countries win 5% -5% -1-15% b) Worldwide RCA of NFM NFM-DEU NFM-OEU NFM-NEU NFM-EAB NFM-RUS NFM-RAB NFM-USA NFM-OPE NFM-CHI NFM-ROW Chemicals Germany and Russia lose EU countries win Machinery Germany wins EU countries and Russia lose 2% 1% -1% -2% 1, 0,5% 0, -0,5% -1, b) Worldwide RCA of CHM CHM-DEU CHM-OEU CHM-NEU CHM-EAB CHM-RUS CHM-RAB CHM-USA CHM-OPE CHM-CHI CHM-ROW b) Worldwide RCA of MAC MAC-DEU MAC-OEU MAC-NEU MAC-EAB MAC-RUS MAC-RAB MAC-USA MAC-OPE MAC-CHI MAC-ROW 14

15 TECH: Macroeconomic impacts University of Stuttgart In Germany, employment, GDP and overall welfare fall by up to 1.5 % in 2030 compared to the reference scenario Only minor changes in the rest of the EU Macroeconomic impacts in Germany (%-changes to REF) GDP (real) Employment Welfare 0,5% 0,5% 0,5% 0, 0, 0, Germany -0,5% -0,5% -0,5% EU-15-1, -1,5% -1, -1,5% -1, -1,5% NMS-12-2, -2, -2, 15

17 DISTR: Cost distribution scenario Calculating a mark-up on electricity output that exhibits the same additional electricity costs as scenario TECH in Germany Modeled as output tax Calculating mark-ups for different electricity consumers that exhibit the same additional electricity costs as scenario TECH in Germany Modeled as input taxes for the economy (firms), industry and residential Compared to the output tax, an input tax for the economy is almost the same, an input tax for industry is twice and that for residential consumers up to 5 times higher % 10 75% 5 25% Output mark-up Economy Industry Residential 17

18 DISTR: Competitiveness of German industries A residential input tax compared to REF improves the competitiveness of energy intensive industries, especially the metal industry (up to 3% in 2030 for both indicators) and deteriorates that of machinery and rest of industry Input taxes for firms exhibit opposite effects: the competitiveness of energy intensive industries deteriorates, that of machinery and rest of industry improves RWS (2030, in % of REF) RCA (2030, in % of REF) 5% -5% -1-15% -2-25% -3 Residential Economy Industry Output 5% -5% -1-15% -2-25% -3 Residential Economy Industry Output Chemicals Paper Iron & steel Non-ferrous metals Non-metallic minerals Machinery Rest of industry Note: Economy (Firms) + Residential = 10 of national electricity consumption; Industry is part of Economy 18

19 DISTR: Macroeconomic impacts in Germany In terms of macroeconomic production (real GDP), employment and welfare, electricity input taxation performs worse than electricity output taxation A residential input tax performs worst: Production (real GDP), employment and welfare decrease by up to 1.5 % in 2030, compared to REF Macroeconomic impacts in Germany (%-changes to REF) GDP (real) Employment Welfare 0,5% 0,5% 0,5% Economy 0, 0, 0, Industry -0,5% -0,5% -0,5% Residential -1, -1,5% -1, -1,5% -1, -1,5% Output -2, -2, -2, 19

21 Summary and conclusions Electricity generation technology constraints University of Stuttgart Electricity price increases by 22 %, demand decreases by 11% costs increase by 7 % in 2030 Competitiveness of German industries German metal industries lose most competitiveness (up to 12 % until 2030) Other energy intensive industries lose competitiveness proportionally, but less, whereas machinery and rest of industry are able to improve competitiveness Competitiveness of worldwide industries Despite global trade, competitiveness shifts in other regions responding to the German occurrences mainly take place in EU countries and Russia Distribution of excess electricity costs GDP, employment and welfare deteriorate most in case of a residential distribution in Germany Conclusions and outlook Distributing electricity costs to consumers equally exhibits lowest welfare losses (e.g. output tax) More electricity trade: a single European electricity market helps balancing different policy or technology induced price pressures from different national energy systems Further research on the competitiveness of renewable energy industries 21