Center for Energy Policy and Economics (CEPE)

Its History

The idea of a interdisciplinary centre for energy economics at the Swiss Federal Institute of Technology was first proposed in 1995 at a meeting of representatives of research, business, and public administration. With the filling of the two part-time positions of full professor for economics and energy economics (Nationalökonomie und Energiewirtschaft) by Massimo Filippini and Eberhard Jochem in the summer of 1999, the Centre for Energy Policy and Economics was founded. Daniel Spreng, titular professor at the ETH, joined the centre as one of its three co-directors.

Early supporters of the idea of an energy economics centre at ETH were, among others, Dr. Eduard Kiener, director of the Swiss Federal Office of Energy, he was keen to have a place which would provide impartial expertise in energy politics, Prof. Jakob Nüesch, President of ETHZ, saw energy policy and economics as an ideal field for interdisciplinary applied science and both Prof. Meinrad Eberle, director of the Paul Scherrer Institute, and Dr. Heinz Baumberger, from the electric utility Nordostschweizerische Kraftwerke, were keen to see energy economics to find its due place in Swiss academia.

On August 1^st, 1999, CEPE started with Spreng’s research group, the two new part-time professors and a secretary. At the beginning, Filippini’s appointment was a joint professorship at ETH and at the Università della Svizzera Italiana. Initially he devoted 40% of his time to CEPE. Jochem started with 20% at ETH, the remainder of his time he continued his job as the deputy director of the Fraunhofer Institute ‘Systemtechnik und Innovationsforschung’ in . On August 1 1999, the center had a staff of 10 people, three years later, in summer 2002, 30 employees, 20 scientists, were working at CEPE. In 2004 CEPE had 29 people on its pay-role, corresponding to 19 full time equivalents (FTE), in particular 12 doctoral students. The salaries from ETH corresponded to 9 FTE.

Initially, CEPE was conceived as a centre of the ETH domain. Echoing this idea, one senior scientist has received financing from and one doctoral position 60% financing from PSI. Never the less, institutionally the idea never took off properly. Collaboration with ETH and with the Paul Scherrer Insitute has become close on a project-to-project bases. Up to the summer semester of 2004, Proff. Jochem and Filippini have given lectures at ETH both at the Bachelor and Master level. From fall 2004 on, they will restrict their effort to the Master level.

In 2000, with CEPE being placed in the department of mechanical and process engineering and both Filippini and Jochem increasing their time at ETH, i.e. at CEPE, to 50%, CEPE’s yearly institutional funding became that of one professor. Spreng had not only been active in preparing the setting-up of the centre, but also in raising funds to give it financially a head-start. More importantly, CEPE became successful in attracting considerable funds from other sources. Thus the total annual budget grew within three years to roughly 1.7 million CHF. Institutional support for teaching amounts to approximately 25% of that sum, institutional support for research (including targeted support for dissertations) is 35% and support from industry and public agencies for research make up the remaining 40%.

On October 1, 2004, ETHZ will inaugurate the new department ‘Management, Technology and Economics’. CEPE will become an integral part of this department and be well placed there.

Since its beginning CEPE has had an advisory board composed of representatives from science, business, public administration, and politics. The advisory board has offered critique and suggestions and support and has been able to amplify the results of the center’s work. The advisory board has encouraged and supported the directors to continue moving the center on its emerging path.

High-lights in the CEPE’s activities, so far, are two conferences in 2004. One conference was organized in corporation with novatlantis on the topic of research opportunities in respect to furthering the aim of the 2000 watt-society. The other big conference, the 6^th IEAA European conference, was organized in corporation with the Swiss Association of Energy Economics on the topic “Modelling in Energy Economics and Policy”.

Goals and tasks in research and teaching

Energy services contribute enormously to humanity’s well-being. Producing them in an economically and technically efficient and environmentally friendly manner is a challenge for society as a whole. CEPE accepts this challenge as a guiding principle of its work. Further­more, CEPE’s aims to enlarge the natural science and technically oriented disciplinary spectrum of the ETH domain by contributing to research and teaching in energy policy and economics. Its thematic focus on energy includes both energy supply and energy demand.

CEPE and its professors seek to point out developments in energy technology and economics against the backdrop of existing opportunities, risks, and obstacles. They intend to contribute to technological, entrepreneurial and policy innovations through analysis and recommenda­tions and to put these questions in an economic context. CEPE investigates energy economics and policy questions with the goal of making a contribution to academic research and impro­ving the decision-making basis of the government and of firms.

In the educational realm, the professors have offered ETH students in Zurich and Lausanne lectures and seminars, as well as colloquia for a broad audience from academia, industry and administration since the 2000 summer semester; they have also offered semester, undergradu­ate, and doctoral work in the areas of industrial economics, energy economics, energy effi­ciency, and energy policy. CEPE events thus far have been well received by students and specialists from business and the public administration.

Joint research projects are carried out with several specialized Swiss institutes and consultants and with research institutes in many parts of the world. CEPE is also a member of the European Network for Energy Economics Research (ENER), a research network of leading energy economics institutes with a node in most countries in Western and.

Organisation and research themes

Since its beginning, CEPE is organised in three groups:

• Massimo Filippini leads the groups ‘Energy Economics’,
• Daniel Spreng the group ‘Energy and Sustainability’ and
• Eberhard Jochem the group ‘Rational use of energy and energy politics’.

The groups do research projects they do by themselves, projects in which they collaborate with the other groups at CEPE and projects they do with researchers outside CEPE. In most projects collaboration expresses itself also in financial transactions. Quite a few papers are jointly written by members of more than one group.

The following figure illustrates the overlapping thematic areas and the themes the three groups work on.

The research at CEPE will concentrate on the following topics in the next three to five years:

• Terms and consequences of liberalizing Swiss electricity and gas markets, with a special focus on hydro power, green electricity tariffs, cogeneration, and decentralized power production, development of company structures and services, the specific terms of deregulation, and impacts on efficient use of energy.
• Interactions between the liberalized European energy economy and the Swiss electricity and gas economy, climate policy, trade in green and emission certificates in Europe, as well as technical innovation and innovation diffusion in decentralized electricity generation,
• Analysis of the different regulation methods and application of benchmarking analysis on the energy markets, in particular on the electricity and the gas market, efficiency analysis of firms acting on these markets,
• Developing indicators for characterizing sustainable energy use and supply, and research on the factors determining a limit to demand for energy services in a post-industrial and ageing society,
• Analysis of the potential for using biomass for energy and demonstration of additional potentials for energy efficiency in the service, building and industrial sectors; analysis of potential drivers for increased energy demand in these sectors, as well as the risks and opportunities of a policy oriented towards energy efficiency, protection of resources and control of climate change; empirical evaluation of energy policies in Switzerland and in Europe.
• The evaluation of external costs of transport as well as the external costs of new sources of emissions, like for instance non-ionizing radiation. On the basis of the estimation of the external costs, the willingness to pay for an improvement of the environmental quality respectively for a reduction of the emission level is estimated,
• Analysis of federalism and energy policy, on the basis of the cantonal policy measures in the energy field the impacts on the energy markets will be analysed. This information are useful in order to develop appropriate policy measures in order to promote, for instance, energy efficiency measures or the use of renewable energy sources,
• Finally, continuing to develop existing and new models of simulation and optimization in order to analyze and project the energy demand of various sectors in and abroad, the export opportunities for energy efficient products, technology for using renewable energies, and energy-related services to accompany products.