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INNOPATHS holds a workshop for European policymakers

How might Europe achieve deep decarbonisation? The INNOPATHS project is using a process of stakeholder engagement and co-design to develop decarbonisation pathways for Europe to 2050 – each of which explores a different route to deep decarbonisation. On Tuesday 9th July the project brought together policymakers from across Europe to think through how decarbonisation

Will incumbent industries and infrastructures (like gas networks) play a big role in shaping technology choices, or will upstart newcomers disrupt and reshape the business landscape for energy? Will populist movements cause some countries to fall behind, while others press ahead towards net-zero, leading to a Europe with “two speeds” of decarbonisation? How might a “circular” or “sharing” economy change patterns of energy demand?  These are important issues for long-term energy strategy, and are explored through the narrative scenarios being developed within the INNOPATHS project. Each narrative highlights knowledge gaps, where more research might help, and each one highlights challenges for policymakers.

The workshop discussions helped the INNOPATHS team to further develop the narrative scenarios. The key aspects of these narratives will then be quantified using the project’s suite of integrated assessment and energy modelling tools, and then made available to explore via an interactive decarbonisation simulator. The final narratives—and associated modelling—will be completed in March 2020. Watch this space!

Low-carbon transition in European carbon-intensive regions: mission impossible or indispensability?

The role of carbon-intensive regions in the EU

Coal production has been in decline in the EU in recent years; production decreased by over 30% between 2000 and 2015. However, unlike renewables, solid fossil fuel production is not evenly distributed on the continent. Coal is mined in more than 40 EU regions across 12 Member States and it is burnt in over 200 power plants. Approximately a quarter of a million Europeans are directly employed in the coal mining and coal power sector. In terms of employment, Silesia – located in southern Poland – is the largest coal-based region in the EU.

The coal path of Silesia – widening the road or striving for a cul-de-sac

Poland is the largest European coal-based economy with hard coal being the main energy resource, although its share has been decreasing. The latest governmental draft on “Energy Policy for Poland till 2040” assumes a 60% share of coal in the energy mix in 2040 as well as an increase in energy generation from offshore wind farms and the replacement of lignite by nuclear energy after 2030. It is crystal clear that in the next two decades, coal will still be a major source of energy although its consumption by the power sector is to decline by nearly 20%. For years, Silesia has been the region with the second highest contribution to the national GDP, exceeded only by the Masovia Voivodeship with Warsaw – the capital city of Poland. Nevertheless, the importance of Silesia for the Polish economy has been gradually decreasing. Similar to other carbon-intensive regions, a low-carbon transition entails more risks than opportunities according to regional stakeholders. Limited technical potential to deploy renewable power plants, poor air quality, regional dependence on traditional industries as well as limited financial resources pose significant challenges to the low-carbon transition in this Polish region. Let us not forget big politics behind the screen and politicians who have always played a key role in favouring or depreciating Polish mining and to whom coal is alternatively ‘black gold’, or ‘not everything that glitters is gold’. At present, Polish authorities seem to be a guardian angel of Polish coal as they perceive it as a natural and strategic resource and a guarantor of the Polish national interest. Perhaps, it is only a political gambit to hush down Polish miners’ discontent and their worrying about losing employment or benefits (after all promises to keep Polish mining safe and sound were made in 2015 during the election campaign). Yet, isn’t it a bit symptomatic that the Polish President stated adamantly that he will not allow the decline (actually, he used the verb “murder”) of Polish mining, and this statement is being made at the very same time COP24 in Katowice is being held?

So is a low-carbon transition of carbon-intensive regions feasible?

At first glance, the answer to the above question is affirmative, but it will take time to make it happen. From the very beginning reforms in the energy sector should be an essential part of a sustainable transition of coal-dependent regions where the costs may be high, especially in the short-term perspective. The reforms must be wide-ranging, based on a left-to-right political consensus and not biased against the coal sector. To have success in this bold and long-awaited endeavour, the future energy mix and corresponding technologies should be carefully designed, matched and should remain stable in the long-term. At the same time, the right incentives for the energy transition should be clear and acceptable for all stakeholders.

Looking at the future (because there must be one…)

The multi-stakeholder approach is widely promoted by the Paris Agreement and the European Union. The implementation of this policy line is supported by numerous international measures aimed at helping the countries to meet their obligations. These include mainly financing instruments targeted at the activities streamlining the low-carbon transition and the ones to relieve financial barriers of the process and to bring benefits to the society. According to the European Commission, the transition to clean energy in the European Union will require €177 billion in additional investment per year from 2021 onwards. If the right investments are not stimulated now, there is a risk of locked-in high-carbon infrastructure and stranded assets. Moreover, the cost of delaying this transition may be much higher that the costs of the transition itself.

How to step this path to success?

The path to success in the field of decarbonizing European regions deeply laced with coal seems to be bumpy with all its uncertainties and question marks, with dos and don’ts, with negotiations and settlements. The experience and mistakes made by many countries have proved that the energy mix and the technological transition should be designed and implemented on the basis of transparent and well-thought-out schemes and it should remain stable for long time. It is crucial to gain the willingness of the whole coal-based industry to actively participate in the transition with a prerequisite for success being a full political and social consensus over a coal-based regional transition. However, no matter how painful or backbreaking the process turns out to be, we owe this to young and future generations, to people like 16-year old Greta Thunberg, a worldwide known Swedish activist, who in one of her thought-provoking speeches on climate change and the detrimental influence of coal to the environment states that we (“we” read as adults, policy-makers, lobbyists, governments) are stealing our children’s future in front of these children’s eyes and it is a crisis which, if unsolvable on the basis of the existing system, should be managed and overcome by new rules embedded in a new system. Don’t we see that Greta has just thrown down a gauntlet? Should we feel chided or embarrassed by this young and climate-conscious person? The former may not be Greta’s intention but the latter for us to feel is definitely right. Once our cheeks lose the redness of embarrassment, we should stand up, pick up the gauntlet and act. Perhaps, no one will feel like a thief any more.

No simple answer to carbon complexity

“These are the times that try men’s soul” wrote Thomas Paine in his famous pamphlet American Crisis in the heat of the American Revolution. These words well describe the present time too – in their broadest meaning. The political systems in the western world are under unprecedented pressure not witnessed since the dark times of the 1930’s.

But we also see the raise of a quite new kind of awareness among people and businesses on climate change. The public discourse on emissions has jumped to another level compared to just a few years ago. Our leaders are being challenged to move from just talking about the issue, to undertaking stronger measures to cut carbon emissions quickly.

At the same time, bottom-up popular movements are entering the political arena reflecting our political systems’ inability to adequately reflect on timely issues. However, they also reflect the failure of our politicians to equip the people with the tools and skills required to handle with wicked problems such as climate change.

The climate change movement is obviously getting stronger in several member states of the EU, and also resonated in the recent European Parliament elections. It may, however, still be too early to claim a coming leapfrog in climate policies due to the shifting political landscape in Europe, though all scientific evidence univocally speaks for its urgency.

But let’s make a ‘gedankenexperiment’ by assuming that in spite of all the uncertainties, Europe would soon make a shift towards a stricter climate policy. Instruments for emission cuts are in place (e.g. the price of emission allowances in ETS could be better regulated, among others). Scenario tools such as those used in the Horizon 2020 INNOPATHS project can help to construct least-cost technology trajectories to reach a zero-carbon energy sector in Europe. From a techno-economic point-of-view, we could well find a feasible deep decarbonization solution for Europe.

But would society be prepared for such a quick energy transition?  Deep decarbonization equates in practice to a huge technology disruption similar to the industrial revolution. It goes beyond the techno-economic realm. It involves profound social issues. It is essentially a social-technical transition in which institutions and business models supporting present technologies need to be changed to enable adoption of new clean technologies and practices.

Consumers also need to adapt and engage in new ways. How to deal with distributional effects? A change involves winners and losers. For example, a high carbon tax may sound like a perfect tool for cutting emissions as it forces those who pollute to pay and it could motivate the polluters to change their behaviours. But from a justice point of view, it could also legitimize those who can afford to pay to pollute (even more) and not to change their lifestyles, whereas those who cannot pay or afford non-polluting solutions, could face large challenges in their everyday lives. A just climate legislation would therefore strive for measures which treat each of us equally in relation to our capabilities.

There are multiple ways to frame the energy and climate problem1. Importantly, the way we frame it would also prioritize the values and factors against which we make our decisions, which in turn will shape the solutions. Personally, I would prefer to see the more fundamental factors being prioritized in any type of climate framing, namely the Science (laws of nature), the Planet (planetary boundaries), and the Ethics (universal values).

Though a lot of research has already been done on policy and social dimensions, also within the INNOPATHS project, the complexity of the issues involved is so profound that this would call for much stronger efforts for this area of research in the coming Horizon Europe R&D programme.

Thomas Paine ended his pamphlet with the words “…the harder the conflict, the more glorious the triumph”. For me his inspirational words sound in today’s terms more like where there’s a will, there’s a way – also in the quest of solving the carbon question.

1 Sun-Jin Yun, John Byrne, Lucy Baker, Patrick Bond, Goetz Kaufmann, Hans-Jochen Luhmann, Peter Lund, Joan Martinez-Alier, and Fuqiang Yang. 2018. Energy and Climate Change. In: Rethinking Environmentalism: Linking Justice, Sustainability, and Diversity, ed. S. Lele, E. S. Brondizio, J. Byrne, G. M. Mace, and J. Martinez-Alier. Strüngmann Forum Reports, vol. 23, J. Lupp, series editor. Cambridge, MA: MIT Press, 2018 ISBN 9780262038966.

Dr Elena Verdolini explains decarbonising the energy sector

CMCC and EIEE senior researcher Elena Verdolini explains how the energy sector, the largest producer of greenhouse gases, is surprisingly one of the easiest areas to decarbonise.

Electrification is growing fast as it becomes increasingly low-carbon or carbon-free entirely. Dr Verdolini explains how variability is a major obstacle to increasing the use of renewables and goes on to talk about the best ways to tackle the increasingly difficult obstacles this sector faces.

Read the full article here.

 

Impact assessment of climate policy on Poland’s power sector

Abstract

This article addresses the impact of the European Union Emissions Trading System (EU ETS) on Polands conventional energy sector in 2008 – 2020 and further till 2050. Poland is a country with over 80% dependence on coal in the power sector being under political pressure of the European Unions (EU) ambitious climate policy. The impact of the increase of the European Emission Allowance (EUA) price on fossil fuel power sector has been modelled for different scenarios. The innovation of this article consists in proposing a methodology of estimation actual costs and benefits of power stations in a country with a heavily coal-dependent power sector in the process of transition to a low-carbon economy. Strong political and economic interdependence of coal and power sector has been demonstrated as well as the impact caused by the EU ETS participation in different technology groups of power plants. It has been shown that gas-fuelled combined heat and power units are less vulnerable to the EU ETS-related costs, whereas the hard coal-fired plants may lose their profitability soon after 2020. Lignite power plants, despite their high emissivity, may longer remain in operation owing to low operational costs. Additionally, the results of long-term, up to 2050, modelling of Polands energy sector supported an unavoidable need of deep decarbonisation of the power sector to meet the post-Paris climate objectives. It has been concluded that investing in coal- based power capacity may lead to a carbon lock-in of the power sector. Finally, the overall  costs of such a transformation have been discussed and confronted with the financial support offered by the EU. The whole consideration has been made in a wide context of changes ongoing globally in energy markets and compared with some other countries seeking trans-formation paths from coal. Poland’s case can serve as a lesson for all countries trying to reducecoal dependence in power generation. Reforms in the energy sector shall from the very beginning be an essential part of a sustainable transition of the whole nation’s economy. They must scale the power capacity to the future demand avoiding stranded costs. The reforms must be wide-ranging, based on a wide political consensus and not biased against the coal sector. Future energy mix and corresponding technologies shall be carefully designed, matched and should remain stable in the long-term perspective. Coal-based power capacity being near the end of its lifetime provides an economically viable option to commence a fuel switch and the following technology replacement. Real benefits and costs of the energy transition shall be fairly allocated to all stakeholders and communicated to the society. The social costs and implications in coal-dependent regions may be high, especially in the short-term perspective, but then the transformation will bring profits to the whole society.

Written by Tadeusz Skoczkowski, Sławomir Bielecki, Arkadiusz Węglarz, Magdalena Włodarczak and Piotr Gutowski

Read full publication online

INNOPATHS workshop on the ‘Dynamics of low-carbon energy finance’

On 21 September, Utrecht University School of Economics (U.S.E.) hosted the workshop “Dynamics of low-carbon energy finance” as part of the EU commission sponsored Horizon 2020 project INNOPATHS.

In three consecutive sessions, 18 participants from the financial sector, international organisations and academia discussed the financial implications of a low-carbon transition of the European Economy until 2050.

Future energy scenarios and corresponding technology mixes have differential implications for the sources of finance. Especially energy efficiency projects pose challenges to banks and other institutional investors. But also renewable power projects still face technology operation risks and political risks. In addition to debt-providers, the energy transition requires risk-bearing capacity. In this regard state investment banks that prove the investment case are crucial for financing innovative energy technologies.

Read the summary here

 

We must accelerate transitions for sustainability and climate change, experts say

We must move faster towards a low-carbon world if we are to limit global warming to 2oC this century, experts have warned.

Changes in electricity, heat, buildings, industry and transport are needed rapidly and must happen all together, according to research from our partners at the Universities of Sussex. The new study, published in the journal Science, was co-authored by INNOPATHS’ Benjamin K. Sovacool.

To provide a reasonable (66%) chance of limiting global temperature increases to below 2oC, the International Energy Agency and International Renewable Energy Agency suggest that global energy-related carbon emissions must peak by 2020 and fall by more than 70% in the next 35 years. This implies a tripling of the annual rate of energy efficiency improvement, retrofitting the entire building stock, generating 95% of electricity from low-carbon sources by 2050 and shifting almost entirely towards electric cars.

This elemental challenge necessitates “deep decarbonisation” of electricity, transport, heat, industrial, forestry and agricultural systems across the world.  But despite the recent rapid growth in renewable electricity generation, the rate of progress towards this wider goal remains slow.

Moreover, many energy and climate researchers remain wedded to disciplinary approaches that focus on a single piece of the low-carbon transition puzzle. A case in point is a recent Science Policy Forum proposing a ‘carbon law’ that will guarantee that zero-emissions are reached. This model-based prescription emphasizes a single policy instrument, but neglects the wider political, cultural, business, and social drivers of low carbon transitions.

A new, interdisciplinary study published in Science presents a ‘sociotechnical’ framework that explains how these different drivers can interlink and mutually reinforce one another and how the pace of the low carbon transition can be accelerated.

Professor Benjamin K. Sovacool from the University of Sussex, a co-author on the study, says:

“Current rates of change are simply not enough. We need to accelerate transitions, deepen their speed and broaden their reach. Otherwise there can be no hope of reaching a 2 degree target, let alone 1.5 degrees. This piece reveals that the acceleration of transitions across the sociotechnical systems of electricity, heat, buildings, manufacturing, and transport requires new conceptual approaches, analytical foci, and research methods.”

The Policy Forum provides four key lessons for how to accelerate sustainability transitions.

Lesson 1: Focus on socio-technical systems rather than individual elements

Rapid and deep decarbonization requires a transformation of ‘sociotechnical systems’ – the interlinked mix of technologies, infrastructures, organizations, markets, regulations and user practices that together deliver societal functions such as personal mobility.  Previous systems have developed over many decades, and the alignment and co-evolution of their elements makes them resistant to change.

Accelerated low-carbon transitions therefore depend on both techno-economic improvements, and social, political and cultural processes, including the development of positive or negative discourses. Professor Steve Sorrell from the University of Sussex, a coauthor of the study, states: “In this policy forum we describe how transformational changes in energy and transport systems occur, and how they may be accelerated. Traditional policy approaches emphasizing a single technology will not be enough.”

Lesson 2: Align multiple innovations and systems

Socio-technical transitions gain momentum when multiple innovations are linked together, improving the functionality of each and acting in combination to reconfigure systems.  The shale gas revolution, for instance, accelerated when seismic imaging, horizontal drilling, and hydraulic fracturing were combined.   Likewise, accelerated low-carbon transitions in electricity depend not only on the momentum of renewable energy innovations like wind, solar-PV and bio-energy, but also on complementary innovations including energy storage and demand response.  These need aligned and then linked so that innovations are harmonized.

Prof. EU INNOPATHS consortium researching low-carbon transitions for Europe, comments: “One of the great strengths of this study is the equal emphasis it accords to technological, social, business and policy innovation, in all of which governments as well as the private sector have a key role to play.

“European countries will become low-carbon societies not only when the required low-carbon technologies have been developed but when new business models and more sustainable consumer aspirations are driving their deployment at scale. Public policy has an enormous role to play at every step in the creation of these changed conditions.”

Lesson 3: Offer societal and business support

Public support is crucial for effective transition policies. Low-carbon transitions in mobility, agro-food, heat and buildings will also involve millions of citizens who need to modify their purchase decisions, user practices, beliefs, cultural conventions and skills. To motivate citizens, financial incentives and information about climate change threats need to be complemented by positive discourses about the economic, social and cultural benefits of low-carbon innovations.

Furthermore, business support is essential because the development and deployment of low-carbon innovations depends upon the technical skills, organizational capabilities and financial resources of the private sector. Green industries and supply chains can solidify political coalitions supporting ambitious climate policies and provide a counterweight to incumbents.  Technological progress can drive climate policy by providing solutions or altering economic interests. Shale gas and solar-PV developments, for instance, altered the US and Chinese positions in the international climate negotiations.

Lesson 4: Phase out existing systems

Socio-technical transitions can be accelerated by actively phasing out existing technologies, supply chains, and systems that lock-in emissions for decades. Professor Sovacool comments that: “All too often, analysists and even policymakers focus on new incentives, on the phasing in of low-carbon technologies. This study reminds us that phasing out existing systems can be just as important as stimulating novel innovations.”

For instance, the UK transition to smokeless solid fuels and gas was accelerated by the 1956 Clean Air Act, which allowed cities to create smokeless zones where coal use was banned. Another example is the 2009 European Commission decision to phase-out incandescent light bulbs, which accelerated the shift to compact fluorescents and LEDs. French and UK governments have announced plans to phase-out petrol and diesel cars by 2040. Moreover, the UK intends to phase out unabated coal-fired power generation by 2025 (if feasible alternatives are available).

Phasing out existing systems accelerates transitions by creating space for niche-innovations and removing barriers to their diffusion. The phase-out of carbon-intensive systems is also essential to prevent the bulk of fossil fuel reserves from being burned, which would obliterate the 2oC target. This phase-out will be challenging since it threatens the largest and most powerful global industries (e.g. oil, automobiles, electric utilities, agro-food, steel), which will fight to protect their vested economic and political interests.

Conclusion 

Deep decarbonization requires complementing model-based analysis with socio-technical research. While the former analyzes technically feasible least-cost pathways, the latter addresses innovation processes, business strategies, social acceptance, cultural discourses and political struggles, which are difficult to model but crucial in real-world transitions. As Professor Geels notes, an enduring lesson is that “to accelerate low-carbon transitions, policymakers should not only stimulate techno-economic developments, but also build political coalitions, enhance business involvement, and engage civil society.”

Additionally, the research underscores the non-technical, or social, elements of transitions.  Dr. Tim Schwanen from the University of Oxford, a coauthor, states that “the approach described in this Policy Forum demonstrates the importance of heeding insights from across the social sciences in thinking about low-carbon transitions.”

While full integration of both approaches is not possible, productive bridging strategies may enable policy strategies that are both cost-effective and socio-politically feasible.

Further links

This article was originally posted on the University of Sussex website.

Click here to read the full paper in Science

Is the IEA still underestimating the potential of photovoltaics?

Photovoltaics (PV) has become the cheapest source of electricity in many countries. Is it likely that the impressive growth observed over the last decade – every two years, capacity roughly doubled – will be sustained, and is there a limit to the growth of PV? In a recently published article (Creutzig et al 2017), we tackle this question by first scrutinizing why past scenarios have consistently underestimated real-world PV deployment, analyzing future challenges to PV growth, and developing improved scenarios. We find that if stringent global climate policy is enacted and potential barriers to deployment are addressed, PV could cost-competitively supply 30-50% of global electricity by 2050.

A history of underestimation

Any energy researcher knows that projecting energy use and technology deployment is notoriously challenging, and the results are never right. Still, the consistent underestimation of PV deployment across the different publications by various research groups and NGOs is striking. As an example, real-world PV capacity in 2015 was a factor 10 higher than projected by the IEA just 9 years before (IEA, 2006).

A main reason for this underestimation is strong technological learning in combination with support policies. PV showed a remarkable learning curve over the last twenty years: On average, each

doubling of cumulative PV capacity lead to a system price decrease of roughly 20%. With substantial support policies such as feed-in-tariffs in many countries including Germany, Spain and China, or tax credits in the USA, the learning curve was realized much faster than expected, which in turn triggered larger deployments. These factors together have led to an average annual global PV growth rate of 48% between 2006 and 2016.

Can continued fast growth of PV be taken as a given? We think not. Two potential barriers could hinder continued growth along the lines seen over the last decade, if they are not addressed properly: integration challenges, and the cost of financing.

Integration challenge: Many options exist

Output from PV plants is variable, and thus different from the dispatchable output from gas or coal power plants. However, power systems have always had to deal with variability, as electricity demand is highly variable. Thus, a certain amount of additional variability can be added to a power system without requiring huge changes, as examples like Denmark, Ireland, Spain, Lithuania or New Zealand show: In these countries wind and solar power generates more than 20% of total electricity, while maintaining a high quality of power supply (IEA, 2017).

Under certain conditions wind and solar can even increase system stability. In fact, the size of the integration challenge largely depends on how well the generation pattern from renewable plants matches the load curve. Accordingly, in regions with high use of air conditioning such as Spain or the Middle East, adding PV can benefit the grid: On sunny summer afternoons when electricity demand from air conditioning is high, electricity generation from PV is also high.

As the share of solar and wind increases beyond 20-30%, the challenges increase. Still, there are many options for addressing these challenges, including institutional options like grid code reforms or changes to power market designs in order to remove barriers that limit the provision of flexibility, as well as technical options like transmission grid expansion or deployment of short-term  storage (IEA, 2014a). None of these options is a silver bullet, and each has a different relevance in different countries, but together they can enable high generation shares from photovoltaics and wind of 50% and beyond.

Financing costs: international cooperation needed

Many developing countries have a very good solar resource and would benefit strongly from using PV to produce the electricity needed for development. However, because of (perceived) political and exchange rate risks as well as uncertain financial and regulatory conditions, financing costs in most developing countries are above 10% p.a., sometimes even substantially higher.

Why does this high financing cost matter for PV deployment? One of the main differences between a PV plant and a gas power plant is the ratio of up-front investment costs to costs incurred during the lifetime, such as fuel costs or operation and maintenance costs. For a gas power plant, the up-front investment makes up less than 15% of the total (undiscounted) cost, while for a PV plant, it represents more than 70%. Thus, high financing costs are a much stronger barrier for PV – the IEA calculated that even at only 9% interest rate, half of the money for PV electricity is going into interest payments (IEA, 2014b)!

Clearly, reducing the financing costs is a major lever to enable PV growth in developing countries. Financial guarantees from international organizations such as the Green Climate Fund, the World Bank or the Asian Infrastructure Investment bank could unlock huge amounts of private capital at substantially lower interest rates.

Such action could help to leapfrog the coal-intensive development path seen, e.g., in the EU, US, China or India. Replacing coal with PV would alleviate air pollution, which is a major concern in many countries today – in India alone, outdoor air pollution causes more than 600,000 premature deaths per year (IEA, 2016a).

Substantial future PV growth possible if policies are set right

How will future PV deployment unfold if measures to overcome the potential barriers integration and financing are implemented? To answer this question, we use the energy-economy-climate model REMIND and feed it with up-to-date information on technology costs, integration challenges and technology policies. The scenarios show that under a stringent climate policy in line with the 2°C target, PV will become the main pillar of electricity generation in many countries.

energy-economy-climate model REMIND

We find a complete transformation of the power system: Depending on how long the technological learning curve observed over the past decades will continue in the future, the cost-competitive share of PV in 2050 global electricity production would be 30-50%! Our scenarios show that the IEA is still underestimating PV. The capacity we calculate for 2040 is a factor of 3-6 higher than the most optimistic scenario in the 2016 World Energy Outlook (IEA, 2016b).

We conclude that realizing such growth would require policy makers and business to overcome organizational and financial challenges, but would offer the most-affordable clean energy solution for many. As long as important actors underestimate the potential contribution of photovoltaics to climate change mitigation, investments will be misdirected and business opportunities missed. To achieve a stable power system with 20-30% solar electricity in 15 years, the right actions need to be initiated now.

References:

Creutzig, F., Agoston, P., Goldschmidt, J.C., Luderer, G., Nemet, G., Pietzcker, R.C., 2017. The underestimated potential of solar energy to mitigate climate change. Nature Energy 2, nenergy2017140. doi:10.1038/nenergy.2017.140. https://www.nature.com/articles/nenergy2017140

IEA, 2017. Getting  Wind  and  Sun  onto the Grid. OECD, Paris, France.

IEA, 2016a. World Energy Outlook Special Report 2016: Energy and Air Pollution. OECD, Paris, France.

IEA, 2016b. WEO – World Energy Outlook 2016. OECD/IEA, Paris, France.

IEA, 2014a. The Power of Transformation: Wind, Sun and the Economics of Flexible Power Systems. OECD, Paris, France.

IEA, 2014b. Technology Roadmap: Solar photovoltaic energy. OECD/IEA.

IEA, 2006. World Energy Outlook 2006. IEA/OECD, Paris, France.

Author

By Dr. Robert Pietzcker,  Post-doctoral researcher, Potsdam Institute for Climate Impact Research (PIK)

The EU energy system towards 2050: The case of scenarios using the PRIMES model

By P. Capros, M. Kannavou, S. Evangelopoulou, A. Petropolos, P. Siskos, N. Tasios, G. Zazias and A. DeVita

Introduction

In November 2016, the European Commission presented the ‘Clean Energy for all Europeans’, (i.e. ‘Winter package’), a set of measures to keep the European Union competitive as the clean energy transition is changing global energy markets. The package proposes policies in line with the 2030 targets agreed by the European Council in 2014 regarding GHG emissions reduction, renewable energy and energy efficiency.

The PRIMES model, developed by E3M, has been used to build the EU Reference Scenario 2016 and support the Impact Assessment studies that accompany the Winter Package [1-4]. Figure 1 shows schematically that individual parts of the Winter Package where the PRIMES model has been used and the various scenarios considered. In addition to the proposals included in the Winter Package, additional framework related to the decarbonisation of transport and the effort sharing amongst Member States towards the reduction of GHG emissions has also been proposed in the context of the targets set by the European Council. PRIMES was also used in those assessments.

PRIMES is a partial equilibrium modelling system that simulates an energy market equilibrium in the European Union and in each of its Member States. The model includes consistent EU carbon price trajectories. It proceeds in five-year steps and uses Eurostat data.

Scenario description

Several scenarios were considered.  The main scenario, EUCO27 is in line 2014 European Council. It considers at least 40% cuts in greenhouse gas emissions (from 1990 levels), at least 27% share for renewable energy and at least 27% improvement in energy efficiency. Four variants to the EUCO27, considering different levels of energy efficiency improvements (30, 33, 35 and 40%) were also considered to assess the impact of the proposed legal framework on energy efficiency. Other scenarios related to the integration of Renewable Energy Sources (RES) and the functioning of the internal energy market were also developed and used to assess the various implications of the winter package.

All EUCO scenarios are decarbonisation scenarios, i.e. they are compatible with a 2oC trajectory and the EU INDC [5] submitted following the COP21 meeting in Paris in 2015. They achieve above 80% GHG emissions reduction in 2050 compared to 1990 levels, in line with the European Commission ‘Energy Roadmap 2050’.

Figure 1: Illustration of European Commission studies which used the EUCO scenarios

The main elements of the EUCO27 and EUCO20 scenarios are shown in Figure 2:

Figure 2: Climate and energy targets used for the EUCO scenarios

Table 1 shows the main policies used for delivering the climate and energy targets in all scenarios.

Policies ETS Increase of ETS linear factor to 2.2% for 2021-30 (2015/148 (COD)
Market Stability Reserve (2014/0011/COD)
Policies RES RES-E policies: new guidelines for auctions
Policies promoting the use of biofuels
Support of RES in heating
Policies efficiency Energy efficiency of buildings: new EED, enhancement of article 7
More stringent eco-design
Support of heat pumps
Best available techniques in industry
Policies transport CO2 car standards (70-75gCO2/km in 2030, 25 in 2050) and for Vans (120 in 2030, 60 in 2050)
Efficiency standards (1.5% increase per year) for trucks
Measures improving the efficiency of the transport system

Key findings

The projections obtained through the various scenarios reveal the following:

(A) Impacts on GHG Emissions (EUCO27)

The energy related CO2 emissions decrease primarily in the energy supply sectors, notably in the power sector, but also in the demand sectors.

The remaining non-abated emissions by 2050 are by order of magnitude due to  the non-CO2 GHG, the residual use of oil in transport and various small scale uses of gas in the domestic sector and industry

The reductions of emissions in the sectors that participate in the Emissions Trading System (ETS)  exceed those in the non-ETS sectors

The ETS drives strong emission reductions in the power sector and promotes the development of RES which benefit from learning-by-doing requiring low or no out-of-the-market support.

 

(B) RES penetration

Variable renewables (e.g. wind and solar)_ are expected to dominate the power generation sector. The projection shows variable RES capacity to more than double in 2030, from 2015 levels, and quadruple by 2050.

RES in heating and cooling also develop, albeit at a slower pace, driven by heat pumps and RES-based production of heat.

The biofuels in transport constitute the main growing market for bioenergy, as biofuels are essential for reducing emissions in non-electrified transport segments (the RES-T includes for electricity used in transport the RES used in power sector).

(C) Electricity supply mix

Due to the increased penetration of intermittent RES, gas-firing capacities acquire a strategic role for balancing and reserve, a role increasingly performed by storage technologies in the long term. Nuclear plant retrofitting is essential to maintain total nuclear capacity, as investment in new nuclear plants suffers from limitations (sites, financing, etc.).

Coal-firing generation is under strong decline with CCS not becoming a major option.

The model results confirm the importance of sharing balancing and reserve resources across the EU countries and the advantages of market coupling in the day-ahead, intra-day and real-time balancing. The scenarios assume minimization of costs over the pan-European market, which in the mid-term becomes fully integrated.

(D) Energy Efficiency

(E)    Renovation of houses and buildings, the Eco-design regulation, the application of the Best Available Technologies (BAT) in the industry are significant enablers to energy efficiency.

(F)     Electricity consumption hardly increases until 2030.  The energy efficiency improvement drives electricity savings in the short/medium term, and energy savings overall.   Transport electrification and increased use of electricity for heat purposes add significant load, but only after 2030.

 

 

(G) Developments in the transport sector

Advanced car technologies (mainly plug-in hybrids and battery electric vehicles) dominate the car market as a result of the CO2 car standards, which continuously tighten.

The biofuels, mostly advanced lignocellulose-based fungible biofuels in the long term, get a significant market share in the non-electrified segments of the transport sector (trucks, ships, aircrafts).

(H) Investments and electricity prices

Investment expenditures are likely to rise considerably in the decade 2020-2030 and beyond.

The projections do not see significant pressures on electricity prices in the medium term, but prices are likely to considerably increase in the long term, mainly due to increasing costs of grids and system services.

Moderate increase in total costs relative to the Reference in EUCO27 and EUCO30. There’s considerable increase in investment in the demand sectors when the energy efficiency ambition increases.  The induced technology progress can offset the increase in the energy costs in the long term. The investment expenditures are likely to rise considerably in the decade 2020-30, a crucial decade for the energy transition, also because of the necessity to extend power grids, upgrade power distribution, build vehicle recharging infrastructure and develop advanced biofuels.

The investment requirements in gas-fired plants are significant after 2025 and until 2050, in contrast to the continuous decrease in the rate of use. The investment in nuclear both for extension of lifetime and new plants is also significant.  The investment outlook is dominated by the massive development of variable RES, notably wind and solar.

On average, the prices of electricity in the EUCO scenarios do not increase in 2030 compared to the Reference projection.  The projections do not see significant pressures on electricity prices in the medium term. The electricity sector restructuring, the sharing of resources in the integrated EU market and the technology learning offset the impacts of ETS. The projection of rising electricity prices in the long term is mainly due to the increasing costs of grids, smart systems and system services. However, the prices increase significantly after 2030.

More information on the winter package scenarios is available online at https://ec.europa.eu/energy/en/data-analysis/energy-modelling

By Pantelis Capros, Professor in the School of Electrical and Computer Engineering, National Technical University of Athens and Director of the E3Mlab/ ICCS.

References

[1] European Commission (2016). http://eur-lex.europa.eu/resource.html?uri=cellar:923ae85f-5018-11e6-89bd-01aa75ed71a1.0002.02/DOC_1&format=PDF

[2] European Commission, COM(2016) 767 final/2, 0382 (COD) (2017) 1–116.

[3] European Commission, COM(2016) 761 final. http://ec.europa.eu/energy/sites/ener/files/documents/1_en_act_part1_v16.pdf.

[4] European Commission, Impact assessment on the revised rules for the electricity market, risk preparedness and ACER, Eur. Comm. Winter Packag. 5 (2016).

[5] The EU’s Intended Nationally Determined Contribution to the UNFCCC.

How economic and social actors can champion CO2 phase-out

Projects funded under the Horizon2020 funding programme contributed to the DG Research and Innovation & EASME coordinated policy session on ‘How economic and social actors can champion CO2 phase-out’ which took place on 22 June in Brussels.

The session was part of the EU Sustainable Energy Week and featured contributions from three EU-funded research projects, which was followed by a panel discussion:

  • INNOPATHS: Innovation pathways, strategies and policies for the Low-Carbon Transition in Europe
  • REINVENT: Realising Innovation in Transitions for Decarbonisation
  • EU-CALC: EU Calculator: trade-offs and pathways towards sustainable and low-carbon European Societies

Prof Paul Ekins, INNOPATHS project coordinator, addressed the following questions during his presentation:

  • Can deep decarbonisation pathways be reconciled with the political objectives of reinvigorating European industries and strengthening economic competitiveness?
  • What does science have to say about the risks and opportunities related to innovation, deployment, financing or public acceptance?

Watch the full presentation below.

INNOPATHS will also contribute to the work of a high-level expert panel, established by the European Commission (DG Research and Innovation), which prepares a report on the research and innovation challenges that will have to be tackled on the way towards the full decarbonisation of the European economy. This report will be published mid-2018.

A copy of the presentation slides are available on the EUSEW2017 website.