2024 TMJC H2 Econs Prelims P1 QP

_________________________________________________________________________ H2 ECONOMICS 9570/01 Paper 1 9 September 2024 2 hours 30 minutes Additional materials Two Answer Booklets _________________________________________________________________________ READ THESE INSTRUCTIONS FIRST Write your name and Civics Group on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use an HB pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, glue or correction fluid. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. Begin each Case Study Question on a new answer booklet. Submit Question 1 and Question 2 separately. _________________________________________________________________________________ This document consists of 8 printed pages. TAMPINES MERIDIAN JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATION

2 Tampines Meridian Junior College 2024 JC2 Prelim H2 Economics 9570 Paper 1 Answer all questions. Question 1: The changing landscape of European Energy Market Extract 1: European Liquefied Natural Gas (LNG) prices reach five-month high Liquefied natural gas (LNG) is natural gas, predominantly methane, converted into liquid form for ease of storage or transport. LNG is increasingly used as an alternative fuel for ships and lorries. Ensuring that all EU countries have access to LNG markets is a key objective of improving EU energy security in the short -term, while more sustainable solutions towards full decarbonisation by 2050 are established. European LNG prices rose to a five-month high due to ongoing geopolitical risk factors and tightness in European LNG supply. Heightened geopolitical tension, especially with the ongoing war in Ukraine and disruption of shipping on the Red Sea, has adversely affected LNG supply. The EU’s 14th package of sanctions against Russia includes measures which target LNG specifically. The EU prohibits all future investments in Russia. Moreover, heat waves in Europe have sparked stronger seasonal demand due to increas ed power demand, as the use of air conditioning climbs. Although EU plans to steadily increase its LNG import capacities by developing new LNG port terminals to combat supply interruptions from the remaining Russian pipeline imports, bottlenecks and infrastructural limitations still exist in some regions. Source: various sources Extract 2: Energy companies in Europe, Repsol and EDF Renewables , to join forces for Iberian offshore wind Spanish oil company Repsol and French power giant EDF Renewables have reached an exclusivity agreement to join forces in anticipation of future bids for offshore wind projects in Spain and Portugal. This collaboration is driven by the significant growth opportunities offered by the Iberian Peninsula, located in southwestern Europe and primarily occupied by Spain and Portugal. The cooperation brings together Repsol's knowledge of the Spanish and Portuguese markets and EDF Renewables' expertise in both fixed and floating offshore wind, and will support Spain and Portugal’s objectives in renewables. EDF Renewables benefits from more than 10 years of experience in offshore wind power and is also one of the pioneers of floating offshore wind technology. The lower costs from the shared resources will see a reduction in energy bills for consumers and increase affordability. As a major player in the energy transition worldwide, EDF Renewables develops, builds, and operates competitive, responsible, and value -creating projects to fight against climate change. Consumers might benefit from the c ollaboration between Repsol and EDF Renewables, two of the most significant energy companies in Europe , by gaining access to better quality renewable energy solutions or more reliable services, resulting in fewer disruptions to renewable energy. However, critics are also concerned that the

3 Tampines Meridian Junior College 2024 JC2 Prelim H2 Economics 9570 Paper 1 exclusivity agreement may reduce competition among these firms, thereby limiting consumer choices. Source: Energy Global, 22 July 2024 Extract 3: Climate Change and the EU Emissions Trading Systems (ETS) In recent years, the global concern over climate change and its environmental impact has grown significantly. The negative impacts that non-renewable energy sources like fossil fuels such as coal, petroleum and natural gas have on climate change, and environmental health have become increasingly clear. Aside from relying on dwindling and expensive resources, fossil fuel combustion creates vast harm by releasing toxic air pollution and greenhouse gases that threaten air quality and climate health. The EU Emissions Trading System (ETS) was initially established in 2005 as a market- based mechanism to tackle greenhouse gas emissions within the European Union. The EU ETS follows a ‘cap -and-trade’ approach: the EU sets a cap on how much carbon dioxide (CO2) can be emitted – which decreases each year – and companies need to have a European Emission Allowance (EUA) for every tonne of CO2 they emit within one calendar year. Companies are therefore incentivised to reduce emissions by investing in energy efficien cy as they can then sell excess allowances. The revenues of the EU ETS mainly go to member states' budgets, or flow into the EU - wide Innovation Fund and the Modernisation Fund. Paying for permits is intended to incentivise companies to invest in technologies that reduce emissions. However, much of the deployment of solar and wind technologies are largely driven by the higher energy costs following Russia’s invasion of Ukraine. Sources: Clean Energy Wire, 23 May 2024 & Bloomberg, 23 Jan 2024 Extract 4: Accelerating Europe's green transition Renewable energy is becoming an increasingly inexpensive, popular, and viable energy source. By increasingly relying on renewable energy sources like wind and solar power, we can reap a wide variety of benefits including reduced air pollution, lower greenhouse gas emission levels, decreased healthcare costs, a more resilient electrical grid, and job generation. The European Green Deal is a package of policy initiatives, which aims to set the EU on the path to a green transition, with the ultimate goal of reaching climate neutrality by 2050. The main purpose of the Green Deal, a 30-year action plan, is to meet climate goals and stop global warming. Its implementation promises benefits such as cleaner air, water and soil due to reduced environmental pollution, more liveable cities due to the development of public transportation and non -polluting forms of mobility , as well as an end to dependence on fossil fuels. Energy efficiency is a key area of action, without which the full decarbonisation of the EU economy cannot be achieved. Within this context, investments in energy-efficient

4 Tampines Meridian Junior College 2024 JC2 Prelim H2 Economics 9570 Paper 1 infrastructure and production processes need to be increased in all sectors of the economy. This is the most cost -effective and sustainable way towards climate neutrality. The European Green Deal provides subsidies for energy efficiency to support research, innovation, technology development, and capacity building of private and public entities. This helps to reduce barriers to entry in the renewable energy industry. However, there are high implementation costs associated with the Green Deal, as it requires significant investment in green technologies and infrastructure, which may make European companies less competitive globally. Source: European Commission Questions (a) (i) Using Extract 1, explain one demand factor and one supply factor to account for the rise in price of liquefied natural