CLEAN ENERGY FOR ALL EUROPEANSseo.org.pl/wp-content/uploads/2017/02/Clean-Energy-for... · 2017-02-03 · CLEAN ENERGY FOR ALL EUROPEANS • Renewable energy shares in gross final

CLEAN ENERGY FOR ALL EUROPEANS

CLEAN ENERGY

FOR ALL

EUROPEANS

Proposals for amending the EED Energy Working Group, 17 January 2017


2030 Energy Efficiency Target

COHERENCE BETWEEN ALL

2030 ENERGY AND CLIMATE TARGETS


• Energy efficiency scenarios designed to meet all 2030 targets set by the European Council

1) overall GHG emissions reduction (at least 40% compared to 1990), a GHG

emissions reduction in ETS sector (43% compared to 2005), a GHG emissions

reduction in sectors covered by the Effort Sharing Regulation (30% with respect to

2005)

2) Renewable energy shares in gross final energy consumption (at least 27%)

3) Energy efficiency levels with a 27%, 30%, 33%, 35% and 40% reduction compared

to 2007 baseline projections

• Sensitivity performed including 30% RES in addition to 30% EE (EUCO3030)

• Comparing the policy scenarios against REF2016 would show the costs and benefits

necessary to achieve the GHG, Effort Sharing Regulations and RES target together.

• If the policy scenarios are compared to EUCO27 they show incremental changes in

impacts due to scaling up EE target only.

• National PRIMES and macro modelling results are available here:

http://ec.europa.eu/energy/en/data-analysis/energy-modelling

Impact assessment SWD(2016)405: CHAPTER 4.1.1 and Annex 4

COHERENCE BETWEEN ALL 2030 ENERGY AND CLIMATE TARGETS

3









• EUCO27 and EUCO30 achieve, by design,

the same overall GHG reductions in 2030

• More ambitious scenarios overshoot quite

significantly the minimum 40% GHG

reduction target.

• Both EUCO27 and EUCO30 achieve, by

design, ETS and non-ETS emissions

reductions: 43% and 30% – in line with the

targets agreed by the European Council.

• More ambitious scenarios overshoot these

targets.



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Source: PRIMES


• Higher levels of energy efficiency typically lead to extra abatement of GHG emissions:

• Most efficiency measures typically impact the sectors outside of the EU ETS and

tend also to decrease electricity consumption.

• Efficiency policies in industry itself can also reduce the direct exposure to ETS carbon

prices for businesses subject to the EU ETS.

• This tends to lead to a lower demand for ETS allowances with a given ETS cap, notably

from the power sector.

• These interactions are typically expected to reduce the ETS prices.

• As such, the more ambitious energy efficiency policies, the more they reduce both costs

from the ETS, but also the incentives the ETS gives for GHG abatement (for instance for

fuel switching and renewables).



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2030 REF2016 EUCO27 EUCO30 EUCO+33 EUCO+35 EUCO+40 EUCO3030

ETS prices

ETS carbon price (€/t of CO2-eq) 34 42 27 27 20 14 27

Source: PRIMES, GAINS, E3ME, GEM-E3, Eurostat


• Absolute consumption of gas and oil decreases, as energy efficiency measures target the heating and

transport energy consumption where gas and oil is used as one of the main fuels.

• Lower ETS prices allow maintaining consumption of solid fuels.

• Absolute consumption of nuclear decreases in 2030 with increasing levels of energy efficiency.

• RES-shares being kept equal by design: The higher the energy efficiency level the lower the absolute

RES consumption. [Nevertheless, RES investments are needed to maintain RES share of 27% in 2030

in all scenarios]



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Source: PRIMES


• Renewable energy shares in gross final energy consumption (at least 27%) was always achieved by

design to meet all 2030 targets set by the European Council.

• Renewables policies modelling: reflected post-2020 by renewables values applied in electricity, heating

& cooling and transport sectors.

• With more energy efficiency (lower gross final energy consumption) RES consumption in heating and

cooling (in particular from biomass) declines. This was compensated by design with higher RES

deployment in other sectors in order to keep the 27% RES target for 2030.



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Source: PRIMES

2030 REF2016 EUCO27 EUCO30 EUCO+33 EUCO+35 EUCO+40 EUCO3030

RES

Overall RES consumption (Mtoe) 273 292 279 274 261 245 310

Overall renewables shares (%) in gross final

consumption 24 27 27 28 28 28 30

Share in heating & cooling 25 27 26 29 28 28 30

Share in electricity 42 47 49 49 48 51 54

Share in transport 14 18 19 19 20 22 21

Net installed power capacity (in GWe) 571 652 656 646 625 623 712


2030 results unless indicated otherwise

(PRIMES results/features unless indicated otherwise) REF2016 EUCO27 EUCO30 EUCO+33 EUCO+35 EUCO+40

Main features scenarios

GHG emmissions with regard to 1990 (%

change) -35 -41 -41 -43 -44 -47

GHG emissions in ETS sectors with regard to

2005 (% change) -38 -43 -43 -44 -44 -48

GHG emissions in non-ETS sectors with regard

to 2005 (%) -24 -30 -30 -34 -36 -39

RES share in final energy consumption (%

change) 24 27 27 28 28 28

Energy system costs

Total System Costs (bn €'13)

(average annual 2021-30) 1928 1943 1952 1977 2014 2077

Total System Costs (bn €'13)

(average annual 2021-50) 2130 2264 2255 2290 2324 2384

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Source: PRIMES

• All scenarios are in line with long-term decarbonisation objectives.

• Decarbonisation is cheaper with a 30% target in the long run (2021-2050): €9 billion/year

less as energy efficiency investments pay back



CHARACTER OF THE 2030 TARGET


• Options assessed:

Impact assessment SWD(2016)405: CHAPTER 5.2

CHARACTER OF THE 2030 ENERGY EFFICIENCY TARGET

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1. Indicative EU and national

targets with review/what-if-clause

and governance system

2. Binding EU target with

review clause/what-if-and

governance system

3. Binding MS

targets

Effectiveness 0 0 1

Efficiency 0 0 1

Relevance 1 1 1

Coherence 1 1 0

Subsidiarity and proportionality 1 1 0

SUM 3 3 3

• Rational for choosing option 2:

All the options have drawbacks and it is a political decision on how committed Member

States are towards achieving the EU 2030 energy efficiency target and implementing

respective energy efficiency measures.


Option 1:

Indicative EU and national targets with review/what-if-clause and governance system

• Strength:

• National circumstances can be taken fully into account by Member States

• Targets are flexible and can be adjusted

• Better coordination among Member States (Governance proposal)

• Drawbacks:

• No means to ensure that indicative targets are met or to increase national

ambition levels

• More difficult to mobilise the necessary policy effort and investments

• Requirement:

• Early review clause and 'what if' clause needed to increase effectiveness of this

option needed (Governance proposal)



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Option 2:

Binding EU target with review/what-if clause and governance system

• Strength:

• Binding character sends stronger signals to relevant actors about policy direction

(investment security) which could help to reduce costs for energy efficiency

improvements

• Ensures coherency between 2030 EU climate and energy targets

• Ensures that the EU target is met with leaving enough flexibilities to Member States

in setting and adjusting their indicative national contributions

• Better coordination among Member States (Governance proposal)

• Requirement:

• Early review clause and 'what if' clause needed to increase effectiveness of this

option needed (Governance proposal)



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Option 3:

Binding national targets

• Strength:

• Most effective way to ensure that the overall EU target is met

• Ensures that national targets are in line with the overall EU target

• Binding character sends stronger signals to relevant actors about policy direction

(investment security) which could help to reduce costs for energy efficiency

improvements

• Drawbacks:

• Focus on national, fragmented policies would run counter the proposal on EU

cooperation under the governance process and internal market

• Requirement:

• Member States might need more flexibilities on how to achieve their binding national

targets



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FORMULATION OF THE 2030 TARGET


• Options assessed:


FORMULATION OF THE 2030 ENERGY EFFICIENCY TARGET

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2. Primary and final energy

consumption

3. Either primary or final

energy consumption

4. Primary and final

energy intensity

Effectiveness 0 0 1

Efficiency 1 -1 1

Relevance 1 0 0

Coherence 1 1 1

Subsidiarity and proportionality 1 1 0

SUM 4 1 3

• Option 1 'final energy savings' was discarded

• Political decision in 2012 to move away from a saving target

• More difficult to monitor than an energy consumption target

• It does not translate into an energy consumption reduction and, therefore, does not

ensure decarbonisation in 2050


Option 2:

Primary and final energy consumption

• Strength:

• Reaching a certain level of energy consumption in 2030

• Economic developments, changes in economic structure and the energy mix are

taken into account in the modelling exercise for the different 2030 target levels

• Targeting all sectors (incl. generation sector and energy losses)

• Drawbacks:

• Underlying causes not related to energy efficiency are taken into account (e.g.

decrease in energy consumption due to change in temperature or an economic

crisis)

• Economic growth and energy consumption in 2030 (business as usual/reference)

needs to be anticipated correctly for the target setting

• Public consultation:

• 31% of respondents in favour of having a primary and final energy target


FROMULATION OF THE 2030 ENERGY EFFICIENCY TARGET

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Option 3:

Either primary or final energy consumption

• Strength:

• Reaching a certain level of energy consumption in 2030

• Economic developments, changes in economic structure and the energy mix are

taken into account in the modelling exercise for the different 2030 target levels

• Drawbacks:

• Same as option 2

• Having a final energy consumption target only would not tackle the generation sector

and energy losses.

• Having a primary energy consumption target would enable Member States meeting

the target with changes in the generation sector (e.g. energy mix) only without

targeting the final energy sectors.


• 10% of respondents in favour of a primary energy consumption target only



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Option 3:

Primary and final energy intensity

• Strength:

• Lower risk of setting the energy efficiency target not in line with the real economic

developments until 2030 as energy intensity indicators account for economic cycles

• Targeting all sectors (incl. generation sector and energy losses)

• Drawbacks:

• Correlation between energy consumption and economic growth is low in the

residential, services, passenger transport and generation sector

• Does not ensure reaching a certain level of energy consumption in 2030

• Contribution of each Member State is more difficult to measure

• More difficult to understand


• 23% of respondents in favour of having a primary and final energy intensity target



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Formulation of the 2030 target compared to 2007 baseline projections:

• 2007 baseline projections assumed high economic growth and increase of energy

consumption by 2030 (1887 Mtoe in 2030).

• Latest EU 2016 reference projections show that energy consumption drops by 2030

(1451 Mtoe in 2030) taking into account current policies, changes in economic

structures and fuel prices etc.

• Comparison of the energy efficiency target against projections can lead to confusion

• For consistency reasons with the RES and GHG target, also the 2030 energy

efficiency target could be translated into a reduction target compared with 2005

consumption levels.



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2030 REF2016 EUCO27 EUCO30 EUCO+33 EUCO+35 EUCO+40

Change in primary energy consumption compared to 2005

levels (1713 Mtoe in 2005) (% change) -16 -20 -23 -26 -29 -34

Change in final energy consumption compared to 2005

levels (1191 Mtoe in 2005) (% change) -9 -13 -17 -22 -25 -31


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Energy Saving Obligation

Article 7 of Directive 2012/27/EU


Policy options considered (chapter 4.2):

1) Baseline scenario – no regulatory action at EU level; continue with guidance on

regulatory framework and work on enforcement until 2020

2) Extend Article 7 to 2030 (annual rate of 1.5%)

3) Extend Article 7 to 2030; simplify and update

a. of what savings can be counted

b. Allow counting on-building RES

4) Extend Article 7 to 2030; increase the rate of savings (1.75% and 2.0%)

IMPACT ASSESSMENT – ARTICLE 7 (1)

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Estimated impacts of 1st option – no extension of Art.7 (chapter 5.4.1):

• 49 Mtoe in year 2030 (due to long lifetimes of some of the measures - renovation) – this is

'engineering' estimate that do not take into account rebound effects and overlaps, it gives

an indication of the relative magnitude of different options for Art. 7 and are not

comparable with the 'microeconomic' estimates given by PRIMES.

• Even though the impact would continue to take place from the measures implemented, no

new energy savings would be generated (only some Member States will continue putting

in place measures without Article 7).

• Administrative burden would be reduced as no reporting requirements for this policy post

2020 (however, Member States would need to report on progress towards the

achievement of the 2030 energy efficiency target).

• No budgetary consequences for the public authorities of Member States.


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No new savings – resulting in insufficient contribution to the 2030 energy efficiency

target, lower renovation rates.


Estimated impacts of 2nd option (chapter 5.4.2):

• Extension of this policy will allow securing 81 Mtoe of energy savings in year 2030 (or 443

Mtoe in cumulative terms over the new period 2021-2030) – compatible with the 30% EE

target for 2030.

• Costs for the energy efficiency measures range between 0.4 – 1.1 €ct./kWh saved energy

(for some EU Member States having an EEOS).

• No additional budgetary consequences for the public authorities of Member States are

expected if the same level of 1.5% per year is retained for the new period.

• Administrative burden associated with reporting and monitoring obligations will be reduced

thanks to the new integrated governance post 2020.

• Other impacts: will send a positive signal to investors and the energy markets in general,

and trigger the uptake of innovative technologies and further development of new business

models (i.e. energy performance contracting).


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Estimated impacts of 3rd option (chapter 5.4.3):

• No changes in terms of the estimated energy savings (81 Mtoe in year 2030).

• Simplification: would allow reducing administrative burden for Member States and the

undertakings (i.e., obligated parties).

• RES element: growing share of energy generated by buildings (63 Mtoe of thermal energy

and 9 Mtoe of electricity in 2020 (2 Mtoe of electricity - self-consumed) and lower cost of

deploying RES technologies (e.g. solar, heat pumps).


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Total cost of deploying RES (€ct/kWh) 2008 2009 2010 2011 2012 2008-2012

Solar 46 46 41 32 22 31

Heat pumps 0.081 0.052 0.047 0.014 0.000 0.03

Source: Source: Commission services' estimate


Estimated impacts of 4th option – higher saving rates (chapter 5.4.4):


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Impacts Option 1

Option 2 1.5%

Option 3 1.5%

Option 4 (1.75%; 2.0%)

Energy savings (in 2030) 49 Mtoe 81 Mtoe 81 Mtoe

94 Mtoe

108 Mtoe

Unlikely that the higher rates of savings requirement would automatically result in a linear

increase of administrative burden and compliance costs.


Rationale for the option 3 as preferred option:

Extension of policy (1.5%): would require similar effort in terms of achieving the 30% energy

efficiency target (at lower cost) because of the simplification of what savings could count

(additionality).

Will allow attracting private investment for renovations of existing building stock – increase

the renovation rate.

Simplification:

• facilitate the achievement of the required savings (i.e. estimated savings of 81 Mtoe in 2030), as

additionality requirement for renovations will be relaxed.

• reduce administrative burden thanks to the existing calculation methodologies under the EPBD,

and also to the integrated reporting and monitoring under the governance.

RES element:

• cost-effectiveness thanks to the possibility to count savings from measures under exemption (e)

on RES generated on/in building for own use towards the national savings requirement.

• coherence with the amended EPBD and the new RES Directive (increased coherence with the

energy and climate framework).


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ANNEX

Article 1 and 3


WHAT ARE THE POSITIVE IMPACTS COMPARED TO A 27% TARGET?

Less thermal generation

capacities needed

Reduced energy related

costs e.g. for households

and energy intensive

industries

Decarbonisation is cheaper

in the long run (2021-2050):

€9 billion/year less

Security of supply:

avoided cumulative fossil

imports = €70 billion

Lower electricity price for

households and energy

intensive industries

Reduction in pollution

control costs & health

damage costs by €4.5 – 8.3

billion

SAVINGS 2030

(b.a.u.) 27% 30%

158€ MWh

161€ MWh

157€ MWh

SAVINGS

IMPACT ASSESSMENT SWD(2016)405: CHAPTER 5 ON TARGET LEVEL

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WHAT ARE THE POSITIVE IMPACTS COMPARED TO A 27% TARGET?

Up to 400,000 more

jobs in 2030 Up to 0.4% increase of

GDP in 2030 (~ 70 bn €)

Up to 900,000 more

jobs in 2030 SUSTAINABLE

GROWTH

Up to 1% increase of

GDP in 2030 (~ 190 bn €)

SUSTAINABLE GROWTH

WHAT ARE THE POSITIVE IMPACTS OF THE WHOLE 2030 ENERGY AND CLIMATE PACKAGE COMPARED TO

BUSINESS AS USUAL?

IMPACT ASSESSMENT SWD(2016)405: CHAPTER 5.1 ON TARGET LEVEL

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2030 results unless indicated otherwise (PRIMES results/features unless indicated otherwise)

REF2016 EUCO27 EUCO30 EUCO+33 EUCO+35 EUCO+40

Main features scenarios

Primary Energy Consumption (Mtoe) 1,436 1,369 1,321 1,260 1,220 1,129

Change in primary energy consumption in 2030 compared to PRIMES 2007 Baseline levels (% change)

-24 -27 -30 -33 -35 -40

Change in primary energy consumption compared to historical 2005 energy consumption levels (% change)

-16 -20 -23 -26 -29 -34

Final Energy Consumption (Mtoe) 1,081 1,031 987 929 893 825

GHG emmissions with regard to 1990 (% change)

-35 -41 -41 -43 -44 -47

GHG emissions in ETS sectors with regard to 2005 (% change)

-38 -43 -43 -44 -44 -48

GHG emissions in non-ETS sectors with regard to 2005 (%)

-24 -30 -30 -34 -36 -39

RES share in final energy consumption (% change)

24 27 27 28 28 28

Security of supply

Gas Net Energy Imports Volume (2005=100)

116 110 97 84 78 64

Fossil Fuels Import Bill (for REF2016 and EUCO27) and savings compared to EUCO27 (for other scenarios) (cumulative 2021-30) (billion € '13)

4494 4274 -69.6 -147.3 -199.3 -287.5


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Environmental impacts and health

Carbon intensity of power generation (t of CO2/toe of GIC)

0.20 0.18 0.18 0.18 0.19 0.18

Residential and tertiary GHG emissions compared to 2005 (% change)

-28 -38 -43 -54 -57 -65

Sum of reduction in pollution control costs & health damage costs (billion € '10 /year) compared to EUCO27 [GAINS model]

4.5-8.3 15.2-28.4 19.9.-36.6 30.4-55.9

Competitiveness

Ratio of energy related costs (inclusive ETS auction payments) to value added in 2030 for energy intensive industries (%)

40.3% 40.8% 40.1% 40.0% 39.8% 40.6%

GDP impacts (billion € '13 for REF2016 and EUCO27 and % change relative to EUCO27 for other scenarios) [E3ME model, no crowding out]

17,928 18,045 0.39 1.45 2.08 4.08

GDP impacts [E3ME model, partial crowding out]*

17,928 18,045 0.39 1.30 1.58 2.21

GDP impacts [GEM-E3 model, loan-based]*

16,955 16,962 0.26 0.21 0.16 0.06

GDP impacts [GEM-E3 model, self-financing]

16,955 16,907 -0.22 -0.79 -1.35 -2.12

32


* This nuanced assumption is considered more realistic by the Commission




Employment

Employment impacts (million workplaces for REF2016 and EUCO27 and % change relative to EUCO27 for other scenarios) [E3ME model, no crowding out]

233.1 233.5 0.17 0.68 1.04 2.08

Employment impacts [E3ME model, partial crowding out]*

233.1 233.5 0.17 0.63 0.85 1.40

Employment impacts [GEM-E3 model, loan-based]*

216.4 216.6 0.20 0.28 0.36 0.56

Employment impacts [GEM-E3 model, self-financing]

216.4 216 -0.18 -0.51 -0.84 -1.36

Electricity, ETS and international fuel price prices

Net Installed Power Capacity - Thermal power (GWe)

379 369 359 354 352 347

Average Price of Electricity (€ '13/MWh)

158 161 157 158 157 159

ETS carbon price (€/t of CO2-eq) 34 42 27 27 20 14

International oil prices compared to EUCO27 (average annual 2020-2030) (% change) [POLES model]

-0.3% -0.6% -1.0% -1.4%

International gas prices compared to EUCO27 (average annual 2020-2030) (% change) [POLES model]

-1.1% -2.3% -3.0% -4.3%

International coal prices compared to EUCO27 (average annual 2020-2030) (% change) [POLES model]

0.02% 0.01% 0.01% -0.03%

33


* This nuanced assumption is considered more realistic by the Commission




Investments and system cost impacts

Total energy related investment expenditures (bn €'13) (average annual 2021-30)

938 1036 1115 1232 1324 1565

Energy Purchases (bn €'13) (average annual 2021-30)

1448 1415 1388 1363 1360 1329

Total System Costs (bn €'13) (average annual 2021-30)

1928 1943 1952 1977 2014 2077

Total System Costs (bn €'13) (average annual 2021-50)

2130 2264 2255 2290 2324 2384

Impacts on energy poverty*:

• Policies focusing on the improvement of the energy performance of buildings have a

major impact on the affordability of housing and energy poverty as energy savings

and efficiency improvement of the housing stock would enable many households to

escape energy poverty.

• The EPBD proposals could contribute to taking out from energy poverty between 515

000 and 3.2 million households in the EU (from a total of 23.3 million households

living in energy poverty - Eurostat).

* Assessed in EPBD Impact Assessment SWD(2016)414 on pages 24, 25, 38, 40 and 67-69

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CLEAN ENERGY FOR ALL EUROPEANSseo.org.pl/wp-content/uploads/2017/02/Clean-Energy-for... · 2017-02-03 · CLEAN ENERGY FOR ALL EUROPEANS • Renewable energy shares in gross final