1. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis M.Sc. in Engineering Policy and Management of Technology Fundamentals of Energy Policy Analysis Prof. Manuel Heitor mheitor@ist.utl.pt Maria João Rodrigues mjrodrigues@dem.ist.utl.pt

2. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis CLASS STRUCTURE @ Fundamentals of Energy Policy Analysis @ Home Assignment PARTE I 09h00-11h00 PARTE II PARTE II 11h30-13h00 Intervalo: 11h00-11h30 António Castro, EDP Energy Market Restructuring: Merging the electricity and natural gas businesses

3. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis KEY FIGURES World TPES 2001 10.000 Mtoe Portuguese TPES 2000 26 Mtoe World TPES Fuel Mix 2001 80% Fossil Fuels Portuguese TPES Fuel Mix 2000 85% Fossil Fuels Top Primary Energy Exporters Oil Middle East (Saudi Arabia) NG Europe&Eurasia (Russia) Coal Australia

4. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis KEY FIGURES World TFC 2001 7.000 Mtoe Portuguese TFC 2000 18 Mtoe World TFC Fuel Mix 2001 67% Fossil Fuels 15,5% Electricity Portuguese TPES Fuel Mix 2000 67% Fossil Fuels 18% Electricity World Electricity Generation 15.000 TWh Portuguese Electricity Generation 43 TWh

5. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis OUTLOOK Source: IEA (2003)

6. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis KEY ELEMENTS AND CONCEPTS OF THE ENERGY SYSTEM Energy supply Power plants Heat plants Gas supply Oil supply... End-Use Energy Heating Oil Gasoline Electricity Natural Gas... Energy Service Demand Car-km Motive Power Light Indoor Heat... Fuel Mix Supply Conversion Efficiency Fuel Mix Energy Intensity ENERGY SYSTEM UTILITY

7. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis KEY ELEMENTS AND CONCEPTS OF THE ENERGY SYSTEM Economy GDP Population Income Prices... Activity Structure Climate Energy supply Power plants Heat plants Gas supply Oil supply... End-Use Energy Heating Oil Gasoline Electricity District Heating... Energy Service Demand Car-km Motive Power Light Indoor Heat... Fuel Mix Supply Conversion Efficiency Fuel Mix Energy Intensity ENERGY SYSTEM UTILITY Environment Governmental Intervention Adapted from: IEA, 2000

8. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis ENERGY SERVICES DEMAND

9. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis ENERGY SERVICES DEMAND Test Fuel Intensity for New Cars Source: IEA, 2000

10. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis ENERGY SERVICES DEMAND On-Road Fuel Intensity for Cars and Household Light Trucks Source: IEA, 2000

11. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis ENERGY SERVICES DEMAND Car/Light Truck Use per capita per GDP per capita (1970-1998) Source: IEA, 2000

12. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis ENERGY SERVICES DEMAND Source: IEA, 2000 Impact of Changes in Energy Intensity in Energy Use

13. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis ECONOMY STRUCTURE Data Source: INE, 2003

14. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis ENERGY PRICES Source: IEA, 2001

15. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis THE POLICY MAKING PROCESS Objectives Instruments Evaluation

16. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis GENERAL ENERGY POLICY OBJECTIVES Security of Supply and Diversification of Sources @ Environmental Protection @ Competitive Energy Systems @ Minimizar os riscos e impactos na economia e sociedade resultantes de uma disrupção de abastecimento Assegurar baixos custos de energia para produtores e consumidores por forma a contribuir para a competitividade industrial e outros objectivos sociais mais latos Minimizar o impacto ambiental associado quer à produção quer ao consumo de energia por forma a manter os equilíbrios ecológico e geofísico da natureza

17. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis INSTRUMENTS Source: UNEP/IEA, 2002 Government intervention Example How the subsidy usually works lowers cost of production raises cost of production lowers price to consumer Direct financial transferGrants to producers Grants to consumers Low-interest or preferential loans to producers Preferential tax treatmentRebates or exemptions on royalties, duties, producer levies and tariffs Tax credit Accelerated depreciation allowances on energy- supply equipment Trade restrictions Quotas, technical restrictions and trade embargoes Energy-related services provided directly by government at less then full cost Direct investment in energy infrastructure Public research and development Regulation of the energy sector Demand guarantees and mandated deployment rates Price controls Market-access restrictions

18. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis REFERENCES & FURTHER READING IEA (2000), The IEA Energy Indicators Effort – Increasing the Understanding of the Energy/Emissions Link, presented at COP6 meeting, 13-24 November 2000, The Hague http://www.iea.org/envissu/cop6/eneinl.pdf http://www.iea.org/envissu/cop6/eneinl.pdf IEA (2003), Key World Energy Statistics http://www.iea.org/statist/key2003.pdf IEA (2000b), World Energy Outlook 2000 http://www.worldenergyoutlook.org/weo/pubs/weo2000/weo2000.asp IEA (2001), Energy Price Volatility – Trends and Consequences http://library.iea.org/dbtw-wpd/exec/dbtwpcgi.exe UNEP and IEA (2002), Reforming Energy Subsidies http://www.iea.org/envissu/johannesburg/reforming.pdf Directorate-General for Energy (1999), The Shared Analysis Project – Economic Foundations for Energy Policy, European Commission, Brussels http://www.shared-analysis.fhg.de/Pub-fr.htm

19. Energy Management and Policy 04/10/2003Fundamentals of Energy Policy Analysis REFERENCES & FURTHER READING II Diário da República – I-B, N.º 98 – 10 de Maio de 2003, Resolução do Conselho de Ministros n.º 68/2003 Define as linhas gerais do quadro estratégico e organizativo do sector energético Português Diário da República – I-B, N.º 98 – 28 de Abril de 2003, Resolução do Conselho de Ministros n.º 63/2003 Official Journal of the European Union L176/37, 15.07.2003, Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 Concerning common rules for the internal market in electricity and repealing Directive 96/92/EC Official Journal of the European Union L176/57, 15.07.2003, Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 Concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC