Ex-Ante Evaluation of a New Policy Instrument. Carbon Contracts for Difference in Energy-Intensive Industries

Inhaltsverzeichnis (Table of Contents)

• Abstract
• Kurzzusammenfassung
• Table of Contents
• List of Abbreviations
• List of Tables
• List of Figures
• Introduction
  • Introductory remarks
  • Research problem
  • Research objectives and research question
  • Significance and limitations
  • Structural outline
• Background
  • Decarbonisation of the energy-intensive industry
  • Instruments for the transformation of industry
  • Carbon contracts for difference
• Method
  • Existing complementary policies and proposals
    • Carbon border adjustment mechanism
    • Climate contributions
    • Carbon clubs approach
  • Research design
  • Data collection, data analyses and limitations
• Ex-ante evaluation of instruments
  • Criteria for the policy evaluation
    • Political and diplomatic feasibility
    • Sustainability and policy longevity
    • Administrative feasibility
    • Legal feasibility
    • Technical feasibility
  • Evaluation
    • CCfDs
      • Political and diplomatic feasibility
      • Sustainability and policy longevity
      • Legal Feasibility
      • Administrative feasibility
      • Technical feasibility
    • CBAM
      • Political and diplomatic feasibility
      • Sustainability and policy longevity
      • Legal Feasibility
      • Administrative feasibility
      • Technical feasibility
    • Climate Contributions
      • Political and diplomatic feasibility
      • Sustainability and policy longevity
      • Legal Feasibility
      • Administrative feasibility
      • Technical feasibility
    • Carbon Clubs
      • Political and diplomatic feasibility
      • Sustainability and policy longevity
      • Administrative feasibility
      • Legal Feasibility
      • Technical feasibility
    • Overview of the evaluation
  • Instrument design
    • Possible variants of the instrument design
    • Awarding the contracts
    • Allocation mechanism
    • Technological and sectoral scope
    • Duration
    • Legal practicability
    • Financing of the instrument
    • Hedging other input risks
    • Interaction with other kinds of instruments and support schemes
  • Discussion and conclusions
  • Evaluation

  Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

  This thesis aims to analyze the feasibility of Carbon Contracts for Difference (CCfDs) as a policy instrument to incentivize investments in climate-friendly technologies within energy-intensive industries. The research examines how CCfDs compare to other policy instruments and explores key design elements needed for effective implementation. This study aims to guide policy recommendations for the swift introduction of CCfDs, taking into account the identified design elements.

  • Feasibility and effectiveness of CCfDs compared to other policy instruments
  • Key design elements for effective CCfD implementation
  • Analysis of relevant policy instruments, including CBAM, climate contributions, and climate clubs
  • Evaluation criteria for assessing the feasibility and effectiveness of policy instruments
  • Recommendations for swift introduction of CCfDs, considering identified design elements

  Zusammenfassung der Kapitel (Chapter Summaries)

  • Introduction: The chapter introduces the research problem and objectives, outlining the significance and limitations of the study. It also presents the structural outline of the thesis.
  • Background: This chapter provides context by discussing the need for decarbonization in energy-intensive industries and explores various instruments used for industrial transformation, focusing on the concept of Carbon Contracts for Difference.
  • Method: The chapter describes the methodology employed, including the identification of relevant complementary policies and proposals such as CBAM, climate contributions, and climate clubs. It also details the research design and data collection processes.
  • Ex-ante Evaluation of Instruments: This chapter presents an ex-ante evaluation of different policy instruments, employing a set of criteria to assess their political, diplomatic, sustainability, administrative, legal, and technical feasibility. The evaluation considers CCfDs, CBAM, climate contributions, and climate clubs.
  • Instrument Design: This chapter delves into the design of the CCfD instrument, exploring various aspects such as geographical scope, price of the contract, awarding mechanisms, technological and sectoral scope, duration, legal practicability, financing, hedging input risks, and interaction with other instruments and support schemes.

  Schlüsselwörter (Keywords)

  The primary focus of this thesis lies in the evaluation of Carbon Contracts for Difference (CCfDs) as a policy instrument for incentivizing climate-friendly technologies in energy-intensive industries. Key themes and concepts explored in this work include decarbonization, energy transition, climate-friendly technologies, feasibility analysis, policy instruments, CBAM, climate contributions, climate clubs, and the assessment of political, diplomatic, sustainability, administrative, legal, and technical aspects of these instruments.

  Frequently Asked Questions

  What are Carbon Contracts for Difference (CCfDs)?

  CCfDs are policy instruments designed to reduce risks for companies investing in climate-friendly technologies by guaranteeing a fixed carbon price over a certain period.

  Why are CCfDs necessary for energy-intensive industries?

  These industries face high investment costs and competitive disadvantages due to carbon price volatility; CCfDs provide the financial security needed for decarbonization.

  How do CCfDs compare to the Carbon Border Adjustment Mechanism (CBAM)?

  The thesis evaluates both, noting that while CBAM protects against carbon leakage, CCfDs directly incentivize the adoption of new green technologies.

  What are the key design elements for an effective CCfD?

  Important elements include the awarding mechanism (e.g., auctions), duration of the contract, sectoral scope, and financing strategies.

  What feasibility criteria are used in the evaluation?

  The policy instruments are assessed based on political, diplomatic, legal, administrative, and technical feasibility.