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Vincent Reulet – Head of Advisory Services
Carbonsink Climate-related
Risks &
Scenario Analysis
Carbonsink
Carbonsink’s Methodology
Case Study – Decarbonisation Scenarios Applied To Utilities
Applications of carbonvista
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AGENDA
www.carbonsink.it
Conclusion & Take-aways
Q&A5
Expertise
Carbonsink is a highly specialized consultancy company focused on
the development of sustainability strategies and compensation of CO2
emissions.
Carbon
Management
Sustainability
Solutions
Carbon Finance
Climate Mitigation
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About Us
www.carbonsink.it
4www.carbonsink.it
Our Services
Financethe transition to
a zero-carbon
resilient economy
investing in climate
mitigation projects
Reduce
climate impacts
in line with
scienceAdvocate
for strong
policyframeworks
Measure
+ discloseclimate
impacts and risks
Tools:
CDP
guidelines
Science
Based
Target
Carbon
pricing
Carbon
finance
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Overall Carbonsink’s Approach
www.carbonsink.it
Carbonsink’s
Methodology
www.carbonsink.it 6
Aligned with internationally recognised standards
Integration within the business
Data review & theoretical scenarios modelling
Integration of financial KPIs – Realistic scenarios modelling
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Carbonsink’s Methodology
www.carbonsink.it
Results5
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IPCC Scenarios
www.carbonsink.it
QUALITATIVE
QUANTITATIVE
CLIMATE GENERAL
storylineQuantativescenarios
narrative scenarios
SRES & POST –
SRES SCENARIOS
Section 2.5
GENERAL MITIGATION SCENARIOS
Section 2.3
GENERAL FUTURES SCENARIOS
Section 2.4
EPA: rapid changing & slow changing the world
Beyond the limits:
CO2 emissions scenarios
Polestar: quantitative descriptions
TARGETS: climate scenarios for each Utopia
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Analogy With TCFD
Recommendations
www.carbonsink.it
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SBT Approach Towards Net-Zero
www.carbonsink.it
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Science Based Target –
Below 2 Degrees Scenario
www.carbonsink.it
global
temperature
increase
1.5˚C
Reducing to
CO2 emissions
0 2050
By
Source: IPCC 1.5˚C report: Net zero emission 2050
How to limit to
Technology
Operations
– Assessment of actual
performances (vs. legislation &
peers)
– Feasibility of upcoming
technologies
R&D
– Assessment & integration of new
materials and/or technologies
Quality, Health & Safety
– Assessment & integration of new
materials and/or technologies
Finance
Finance
– Review of past and planned
CAPEX
– Incentive to drive toward a low-
carbon economy
Legal & Compliance
– EU ETS
– Fees associated to failure to
comply
Sales & Marketing
– Brand image
– Competitive advantage
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Relisation with Business Strategy
www.carbonsink.it
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INTEGRATION OF VARIOUS SYSTEM
Data Review & Scenario
Modelling
www.carbonsink.it
Case Study –
Scenarios To
Drive
Decarbonisation
Applied To
Utilities
www.carbonsink.it 15
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• IEA 450• 31% renewable in energy mix by 2030
• IEA 2DS (2030)• 42% renewable in energy mix by 2030
• 57% renewable in energy mix by 2050
• 72% renewable in energy mix by 2060
• IRENA 2050• 66% renewable in energy mix
• 85% CO2 emissions annually for Power sector vs. 2015
International Climate-Related
Scenarios Related to Energy
Sector
www.carbonsink.it
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• EU 2030
• 43% CO2 emissions vs. 2005 for sectors within EU-
ETS
• 32% renewable in energy mix
• SEN 2030
• 28% renewable share in the energy mix
• Coal phase out by 2025
European & National
Decarbonization Scenarios
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EU Energy Mix Forecast
www.carbonsink.it
SOURCE: A Clean Planet for all
A European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy (28/11/2018)
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Net Zero by 2050
18/06/19 www.carbonsink.it
Principal Assumptions
• Constant to slight
increased demand for
electricity: 340TWh in 2030 -Terna
• Increases in electricity
prices (due to cost of gas
and ETS)
• Role of CCGT still strategic
to respond to demand
• Installed capacity of
Renewable Energy
Business Plan
• 2021: Oil phase out
• 2025: Coal phase out
• Refurbishment of some old
CCGT
• Increase of Renewable (low)
• No consideration toward price of Storage
• Low Carbon Pricing bracket
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Assumptions made for
Business As Usual Scenario
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EU Energy Mix
Forecast
BUSINESS AS USUAL
CONSIDERATION
CLIMATE CHANGE
RELATED RISKS
VARIOUS
SCENARIOS
2118/06/19 www.carbonsink.it
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Transition Risks
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POLICY &
LEGAL
TECHNOLOGY
MARKET REPUTATION
Technology
Risks
Decreasing cost of RES
generation technology
• Energy storage - 49%
since 2015
• Photovoltaic and
onshore wind -88%
and -69% since 2009
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Cost Of Storage
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Market
Risks
Implementation Market Stability Reserve in the
EU’s ETS in 2021
CO2 price to increase
8€ in 2008 vs.
28€ in 2019
RES to become cost-competitive vs CCGT
25www.carbonsink.it
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Carbon Taxes
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2008 2018
Source: WORLD BANK, 2018
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EU ETS prices grapgh
18/06/19 www.carbonsink.it
SOURCE: Carbon Tracker; Bloomberg
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Carbon Pricing Corridor for utility
sector
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Marginal Cost
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Disregarded
Carbon Capture & Storage:
→ Technology not cost effective
Revamp of CCGT plants
→ Already highly efficient (best in
class in EU), cost of €/tCO2
saved too high
Fuel switch (coal to gas)
→ High CAPEX and push-back
from investors
Simulated
Overall demand in Italy and
Electrification
→ Source taken from IEA and
Terna
Increase of Renewable
→ XX% per year up to 2050
→ Integration of storage cost
Upgrade of strategic sites to class
H
→ To improve CCGT efficiency
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Scenarios Taken In Consideration
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Application
Of The Tool
18/06/19 www.carbonsink.it 31
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carbonvista Concept
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SCENARIO
EU 2030 Energy Strategy
SEN 2030
IRENA 2050
IEA
EU ETS
SBTi
BUSINESS PLAN
CORPORATE STRATEGY
MATERIALITY ASSESSMENT
KPIs
REGULATIONS
GUIDELINES
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Live Dashboard To Track
Selected KPIs In Time
www.carbonsink.it
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Live Dashboard To Compare
Scenarios
www.carbonsink.it
S C E N A R I O “ A S I S ” S C E N A R I O “ C O N N U O V O C C G T ”
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Dashboard Benchmarking With
International Scenarios &
Legislations
www.carbonsink.it
Conclusion
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• Understanding of their climate situation
regarding Climate Change exposure
• Developed an approach shared with all
departments
• Define the more realistic scenarios taking in
account financial, technological and
policies constraints; not the “Perfect” one
• Learned to use the tool as an instrument in
order to embark the other departments
Results
www.carbonsink.it
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• A concrete tailor made approach
• Work with clients to define objects in order
to customize the tool (on going approach)
• Create a flexible approach that give the
opportunity to play with numbers
• Be consistent with the corporate climate
strategy, constant update and changes in
trends and methodologies
Conclusion
www.carbonsink.it
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• Consolidated with robust and trusted data
• Scalable
• Customisable
• Flexible
• Easy to understand and use
• Applicable to any industry sectors
• A tool that will seize the tangible aspects of your corporate complexity
Take-aways
www.carbonsink.it
Thank You.