Developing low carbon policies in the energy sector: timelines, drivers, constraints

1st Capacity Building Workshop on Transferring EU Legislation on Climate Change &

Developing Low Carbon PoliciesMay 24th, 2013 - Graz, Austria

Developing low carbon policies in the energy sector: timelines, drivers,

constraints

Dimitris Lalas

Global emission rates – impervious to crises

Le Quere et al. , 2012

1990-99 ca 1.0%/yr2000-12 ca 3.1%/yr

The result: Atmospheric concentrations

in 1750 – 278ppm, 40% increase

CDIAC data

Who contributes: Large emitter Countries

Global Carbon Project, 2012

Who contributes: Developed and Developing

Peters et al. , 2012

Who is responsible: Various approaches

Global Carbon Project, 2012

Future projections: RCP Scenarios

Δ. Π. Λάλαςe-mail: [email protected]

1,3-1,9οC

4,1-6,1oC

Peters et al. 2012

IPCC AR4/Α1Β: Changes in temperature and rainfall

World reduction effort required

Gross energy consumption (in

Mtoe)

Share of electricity as % of final energy demand

Changes in temperature distributions

Hansen, 2012

Current EU Policy Framework - 2020

EU GHG emissions reduction target of 20% relative to 1990 (with specific targets for each MS for non-ETS emissions for a total 10% reduction relative to 2005 – Effort Sharing Directive)

A 20% target of RES in the energy consumed (specific targets per MS – Directive 2009/28/EC) and a 10% target for energy for transport (for all MS) to be provided by RES plus a 6% decarbonization target of transport fuels.

A 20% savings in energy consumed compared to projections (done in 2007) to be assisted by Energy Efficiency Directive (2012/27/EC) and the Ecodesign, the Energy Labeling & the Energy Performance of Buildings Directives.

Also supported by: • Strategic Energy Technology plan (SET-plan) • Energy 2020 Strategy • Proposed revision of energy products and electricity taxation

National RES & Energy Conservation Targets

2005 2020

Austria 23.3% 34%

Greece 6.9% 18%

Hungary 4.3% 13%

Italy 5.2% 17%

Slovenia 16% 25%

(% on gross final energy consumption)

Directive 2009/28/EC

NREAPs and NEEAPs

Directive 2009/28/EC

Directive 2006/32/EC 9% reduction by 2016

20% reduction by 2020(not to exceed 1074Mtoe of final energy)

Greek NREAP: Input Data

• Macroeconomic data for the national economy• International fuel prices • Emission allowance prices• Technical-economical data of various technologies

(costs, efficiency, life-cycle)• Future commissioning and decommissioning of power

plants

Greek NREAP: Macro-economic and demographic data

2010 2011 2012 2013 2014 2015Demographic Indexes Population (000) 11316.0 11359.6 11400.5 11438.4 11473.2 11504.9Annual growth rate 0.1% 0.0% -0.2% -0.2% -0.1% 0.0%Economic Indexes (million Euro, 2005 prices)GDP (market prices) 204825 199500 201694 205930 210254 215931Annual growth rate -4.0% -2.6% 1.1% 2.1% 2.1% 2.7%Consumption Expenditure 147375 141922 143057 147063 150739 154508Annual growth rate -4.0% -3.7% 0.8% 2.8% 2.5% 2.5%GDP per capita (Euro per capita) 18101 17562 17692 18003 18326 18769Added Value (million Euro, 2005 prices) 174425 171000 172594 175730 178454 182931

Annual growth rate -9.0% -2.0% 0.9% 1.8% 1.6% 2.5%

2015 2016 2017 2018 2019 2020 2025 2030Demographic IndexesPopulation (000) 11504 11533 11559 11581 11601 11618 11674 11699Annual growth rate 0.0% -0.3% -0.2% -0.1% -0.1% -0.2% -0.2% -0.4%Economic Indexes (million Euro, 2005 prices)GDP (market prices) 215931 221545 227306 232988 238813 245738 273178 305754Annual growth rate 2.7% 2.6% 2.6% 2.5% 2.5% 2.9% 2.2% 1.5%Consumption Expenditure 154508 158525 162647 166713 170881 175836 195471 210576Annual growth rate 2.5% 2.6% 2.6% 2.5% 2.5% 2.9% 2.2% 1.5%GDP per capita (Euro per capita)

18769 19209 19665 20117 20585 21151 23400 26135

Added Value (million Euro, 2005 prices)

182931 187687 192567 197381 202316 208183 231429 249314

Annual growth rate 2.5% 2.6% 2.6% 2.5% 2.5% 2.9% 2.2% 1.5%

NREAP: Scenarios Definitions

1. Reference Scenario• The useful energy demand arises from the macro-economic data of paragraph 1.1. • The international fuel prices are presented in paragraph 1.2.• The commissioning and decommissioning of power plants in the interconnected system are

presented in paragraph 1.4. • No additional measures referring to RES and Energy Saving promotion are considered.

2. Compliance Scenario• The useful energy demand arises from the macro-economic data of paragraph 1.1. • The international fuel prices are presented in paragraph 1.2.• The commissioning and decommissioning of power plants in the interconnected system

are presented in paragraph 1.4. • Biomass co-combustion (by 5% mass) in the Florina 1 power plant• Implementation of the measures foreseen in the National Energy Efficiency Action Plan

and achievement of the respective energy saving• Implementation of the measures for meeting the RES targets

3. Accelerated economic recovery scenario • Similarly to the Compliance Scenario but with higher growth rates after 2014

Model Description: MARKAL, WASP, COST, ENPEP

Optimization model of the energy system Demand driven model: the defined is defined externally and refers to input

data Includes many technologies Simulates both available energy and energy consumption Is used for medium/long-termed analyses

TIMES-MARKAL (MARKet Allocation) Model of ΙΕΑ

It is an optimization model for the development of an energy system under the commitment of achieving the different energy and environmental targets set and considering the cost minimization.

Other Models Utilized

ENPEP Balance model matching demand with supply

WASP Energy mix model to specify types & size of power plants to meet demand (IAEA)

COST Simulates the daily operation of system calculating discarded RES (CRES)

Greek NREAP: Power generation sector – compliance scenario

net electricity generation

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2010 2015 2020 2025 2030

MW

h

lignite petroleum natural gas biomass/biogas hydro Wind PV geothermal

Installed capacity (ΜW) 2010 2015 2020 2025 2030

Lignite 4826 3992 3362 2295 2295 Petroleum 2146 1381 1378 1378 1325 Natural gas 3456 5909 7312 8412 9259 Biomass/biogas 60 120 250 370 500 Hydro 3237 3615 4531 4531 4531 Wind 1327 4303 7500 8750 10000 PV 184 1270 2200 3167 3833 Solar thermal 0 30 250 380 510 Geothermal 0 20 120 340 400 Total 15236 20640 26903 29623 32653

Electricity from RES 7.84 16.97 27.27 33.33 37.48 % RES share in electricity generation 13% 28% 40% 44% 47%

Greek NREAP: Final energy consumption – compliance scenario

final energy consumption

0

5000

10000

15000

20000

25000

30000

2010 2015 2020 2025 2030

kto

e

solid fuels petroleum natural gas

electricity biomass/biofuels thermal energy

solar geothermal heat pumps

final energy consumption

0

5000

10000

15000

20000

25000

30000

2010 2015 2020 2025 2030

kto

e

agriculture industry transport residential tertiary

Gross energy consumption for the RE Directive (ktoe)

2010 2015 2020 2025 2030

Gross energy consumption 22418 22251 24114 25265 26308 % RES in G.E.C. 9% 15% 20% 24% 26%

Greek NREAP: Technologies investment costs – compliance scen.

0

500

1000

1500

2000

2500

3000

3500

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

mill

ion

Eu

ro (

20

05

)

biomass/biogas

geothermal

wind

Solar Termal

PV

pumped hydro

small hydro

big hydro

petroleum

natural gas

lignite

NEEAP: Measures adopted by MSs NEEAPs

NEEAP: Importance of measures adopted by MSs

NEEAP: Measures adopted by MSs’ - Effectiveness

Energy Efficiency Watch 2013

NEEAP: Measures adopted by MSs - Effectiveness

Energy Efficiency Watch 2013

Road Maps 2050 EU

A Roadmap for moving to a competitive low carbon economy in 2050 (http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=)

Reduce EU GHG emissions by 20% by 2020 and 80-95% by 2050 (on 1990 revels).Approx. € 270 billion p.a. over 40 years (1.5% of EU GDP p.a. above 2009 investment levels)Savings between € 175–320 billion p.a. (not incl. not including savings on social costs). Political and social change drivers not covered in detailNotes importance of policy innovation, public education and behaviour change.

Energy Roadmap 2050

Roadmap to a Resource Efficient Europe

Roadmap to a single European Transport Area – Towards a competitve and resource efficient transport system

Roadmaps 2050 - countries

UK: Carbon Planhttp://www.decc.gov.uk/en/content/cms/tackling/carbon_plan/carbon_plan.aspx

Reduce UK GHG emissions by 34% by 2020 and 80% by 2050 (on 1990 levels)Total net present cost over lifetime of policies in past carbon budget periods approx £ 9billion. Average cost 0.4% of UK GDP p.a. in period 2008–22 and 0.6% of UK GDP per year over 2023–27Importance of UK Government, industry and citizens ‘pulling in the same direction in order to achievelow carbon transition.

Australia: Clean Energy Futurehttp://www.cleanenergyfuture.gov.au/clean-energy-future/ourplan/

Reduce Australian GHG emissions by 5% by 2020 and 80% by 2050 (on 2000 levels)Carbon price and related measures to raise approx. AUD$ 25.5 billion in the period 2011–15. Further $3.9 billion public funds to augmentCarbon price as central driver of change.Strong emphasis on limited impact of policy measures on Australian economy and lifestyles


Denmark: Our Future Energyhttp://ens.netboghandel.dk/publikationer/publikationsdetaljeraspx?PId=5308989e-ea64-436b-8346-4e29c8a84d62

100% renewable energy in all Danish energy supply by 2050Cost to 2020 approx.DKK 5.6 billion (US$952million). Immediate net costs of < 0.25% GDP in 2020. Average additional costs to Danish households approx. DKK 1,700 (US$ 289) in 2020Assumes strong ongoing role for government inencouraging innovation and community education.

State of California: Scoping Plan & Clean Energy Future Planhttp://www.arb.ca.gov/cc/scopingplan/document/scopingplandocument.htmhttp://www.cacleanenergyfuture.org/

Reduce GHG emissions to 1990 levels by 2020 and 80% of 1990 levels by 2050; 33% of electricity from renewable energy by 2020Ongoing costs approx. US$36 million p.a.Benefits by 2020 (compared to BAU) include increases in economic production of US$33 billion and overall gross state product of US$7 billionActive public participation essential.Emphasis on role for market forces and growing environmental awareness to shift individual choices and attitudes.Targeted public outreach, marketing and education programs.


Germany: Energy Concepthttp://www.bmu.de/files/english/pdf/application/pdf/energiekonzept_bundesregierung_en.pdf

Reduce German GHG emissions by 40% by 2020 and at least 80% by 2050 (on 1990 levels)Additional investment €20 billion p.a., offset by energy cost savingsImportance of public understanding and support for transition. Emphasises importance of accessible information, transparent decision making and opportunities for public dialogue.

Greece: Roadmap 2050http://www.bmu.de/files/english/pdf/application/pdf/energiekonzept_bundesregierung_en.pdf

Reduce German GHG emissions by 40% by 2020 and at least 80% by 2050 (on 1990 levels)Additional investment €20 billion p.a., offset by energy cost savingsImportance of public understanding and support for transition. Emphasises importance of accessible information, transparent decision making and opportunities for public dialogue.

“Developing” Countries Plans – 2020 horizon

India: National Action Plan & Low Carbon Growth Reporthttp://pmindia.nic.in/Pg01-52.pdfhttp://planningcommission.nic.in/reports/genrep/Inter_Exp.pdf

Reduce India’s emissions intensity of GDP by 20–25% by 2020 (on 2005 levels)

People’s Republic of China: 12th Five-Year Plan & Climate Change White Paperhttp://cbi.typepad.com/china_direct/2011/05/chinas-twelfth-fivenew-plan-the-fullenglish-version.htmlhttp://www.gov.cn/english/official/2011-11/22/content_2000272.htm

Reduce Chinese CO2 emissions per unit of GDP by 40–45% by 2020 (on 2005 levels)

Total investment (public and private) in ‘new energy’ of approx RMB5 trillion (US$760 billion)over next 10 years

South Korea: Green Growth Strategyhttp://www.greengrowth.go.kr/english/en-main/index.do/

Reduce Korean GHG emissions by 30% below projected 2020 levels (equivalent to 4% reduction on 2005 levels)Total investment announced as part of Five-Year Plan (2009–13) US$83.6 billion

EU Energy Roadmap 2050: Current Policy Scenarios

• Reference scenario. The Reference scenario includes current trends and long-term projections on economic development (gross domestic product (GDP) growth 1.7% pa). The scenario includes policies adopted by March 2010, including the 2020 targets for RES share and GHG reductions as well as the Emissions Trading Scheme (ETS) Directive. For the analysis, several sensitivities with lower and higher GDP growth rates and lower and higher energy import prices were analysed.

• Current Policy Initiatives (CPI). This scenario updates measures adopted, e.g. after the Fukushima events following the natural disasters in Japan, and being proposed as in the Energy 2020 strategy; the scenario also includes proposed actions concerning the "Energy Efficiency Plan" and the new "Energy Taxation Directive".

EU Energy Roadmap 2050 : Decarbonization Scenarios

High Energy Efficiency. Political commitment to very high energy savings; it includes e.g. more stringent minimum requirements for appliances and new buildings; High renovation rates of existing buildings; establishment of energy savings obligations on energy utilities. This leads to a decrease in energy demand of 41% by 2050 as compared to the peaks in 2005-2006.

Diversified supply technologies. No technology is preferred; all energy sources can compete on a market basis with no specific support measures. Decarbonisation is driven by carbon pricing assuming public acceptance of both nuclear and Carbon Capture & Storage (CCS).

High Renewable energy sources (RES). Strong support measures for RES leading to a very high share of RES in gross final energy consumption (75% in 2050) and a share of RES in electricity consumption reaching 97%.

Delayed CCS. Similar to Diversified supply technologies scenario but assuming that CCS is delayed, leading to higher shares for nuclear energy with decarbonisation driven by carbon prices rather than technology push.

Low nuclear. Similar to Diversified supply technologies scenario but assuming that no new nuclear (besides reactors currently under construction) is being built resulting in a higher penetration of CCS (around 32% in power generation).

Energy savings potential EU

EU Energy Efficiency Ecofys 2013

32

Cost efficient trajectory:-25% in 2020-40% in 2030-60% in 2040

EC Communication March 2011:A Cost-efficient Road Map towards 2050

80% reduction is possible with internal actions with existing technology, with changes in energy use thru price policies all sectors have to contribute

0%

20%

40%

60%

80%

100%

1990 2000 2010 2020 2030 2040 2050

0%

20%

40%

60%

80%

100%

Current policy

Power Sector

Residential & Tertiary

Non CO2 Other Sectors

Industry

Transport

Non CO2 Agriculture

Nordics Roadmap 2050

Nordic Energy Research Report: Pathways to a carbon neutral energy future, 2013

-70%

-85% +15%


Nordic Energy Research Report: Pathways to a carbon neutral energy future, 2013


Wind generation, today some 3% of Nordic electricity generation, needs to grow particularly quickly and alone to account for some 25% of electricity generation in 2050.

This will increase the need for flexible generation capacity, grid interconnections, demand response and electricity storage.

Total investments required in the power sector are equal to some 0.7% of cumulative GDP over the period.

Nordic electricity generation needs to be fully decarbonised by 2050.


At present, Nordic industry is characterised by a high share of energyintensive

Industries.All countries except Denmark use more energy per unit of GDP than the OECD average. Collectively, industry will need to cut the share of fossil fuel in its energy use in half, i.e. to below 20%.

Even combined with very aggressive action to increase energy efficiency,

this is not enough to reduce emissons to the extent necessary. Consequently, 50% of cement plants, and at least 30% of iron and steel and chemical industries, need to be equipped with CCS in 2050. To make this scenario possible, current uncertainty over national positions on CCS must be resolved.

To achieve the necessary 60% reduction in direct industry emissions (from 2010 levels), all sectors must contribute by taking up energy efficiency measures and CCS technologies.


This will require limiting growth in transport demand, substantial reductions in technology costs, securing a sustainable biofuel supply and intelligent modal shifts. Improved fuel economy provides the majority of transport emissions reduction through 2030, with biofuels and electric vehicles becoming more important in the longer term.

By 2050, average fuel consumption of new cars must decrease to about 3 litres per 100 kilometres (L/100km), down from 7 L/100km in 2010.

Electric vehicles including plug-in hybrid, battery and fuel-cell electric vehicles must reach 30% of total sales in 2030 and 90% in 2050.

Long-haul road freight, aviation and shipping remain dependent on high-energy-density liquid fuels even in 2050, resulting in an increased demand for biofuels.

Transport requires the most dramatic emissions slash, from 80 million tonnes of carbon dioxide (MtCO2) in 2010 to just 10 MtCO2 in 2050.


In addition to decarbonising electricity supply, several reduction options exist in the buildings sector itself. Widespread retrofits of older building stock will be needed to achieve the necessary energy efficiency improvements.

In the short term, policies should focus on improving existing building shell performance and on requiring best available technologies (BATs) for space heating.

In the longer term, more advanced building technologies, urban planning, and intelligent systems that empower consumers and encourage behaviour change become the higher priority.

Direct CO2 emissions in the building sector are relatively low, but emissions associated with the energy used in buildings must be reduced from 50 MtCO2 in 2010 to approximately 5 MtCO2 in 2050.

• A current policies (CP) scenario assuming conservative implementation of energy and environmental policies with a moderate reduction of GHG emissions and penetration of Renewable Energy and Energy Efficiency technologies.

• A RES Maximization (RESM) scenario with electricity generation at almost 100 % to achieve GHG reduction of GHG by 60% and 70% in 2050 from 2005 levels.

• An Environmental Measures and Cost Minimization scenario (EMCM), defining the least cost solution for reducing GHG emissions by 60% and 70% through large-scale Renewables penetration.

Greek Roadmap to 2050


(L. Moldechai, 2009)



EU Roadmap: On the way to 2050

Range of fuel shares in primary energy consumption as % wrt 2005 (yellow diamonds)

Problems in the Horizon: Eurelectric warning 2013

Reference scenario cost14.5% projected GDP

Power Choices Reloaded Scenario• Like EC All Options scenario• Meets all 2020 targets, ener effic in 2025• ETS carbon prices and after 2020 uniform price to all• Measures to overcome non-economic barriers• Key grid and infrastructure as planned

Eurelectric Report May2013

Thank you for your attention

Dimitri [email protected]

Documents

Developing low carbon policies in the energy sector: timelines, drivers, constraints