The following is a guest blog by Anthony Gilbert, specialist in real estate and real estate marketing, and owner of The RealFX Group. Improving the energy efficiency of Europe’s buildings is a key element of a successful low-carbon transition. An important focus of the work of INNOPATHS is an examination of the barriers to achieving this objective, and how to overcome them. The blog focusses on the recent revisions to the EU’s Energy Performance of Buildings Directive (EPBD), which currently sits at the heart of European policy to encourage energy efficiency in buildings.
The EU has recently changed its Energy Performance of Buildings code to encourage the efficiency of older buildings in the union. This move is just one of eight different proposals that seek to reduce the amount of energy used in EU structures. Right now, the building sector accounts for 40% of all energy use in the EU. With 75% of all buildings in Europe described as energy inefficient, these new proposals seek to renovate buildings in an effort to lower energy consumption by up to 6% and CO2 emissions by up to 5%.
These revisions state that smart technology is to be implemented whenever possible to inefficient buildings. Ultimately, this translates to more automation and better control systems. The larger goal for the EU is to hit 0% emissions by the year 2050. Professionals are instructed to use readiness indicators to determine how easy it will be to integrate the new technology into the building.
Ideally, they’ll be able to piece the resulting data together to determine the best renovation strategies for future structures. The EU is trying to capitalize on just how adaptable technology can be. They see these methods as a chance to stabilize the electricity and to drive the union away from the use of fossil fuels and carbon emissions.
The Role of Member States
The directives of these revisions are deliberately vague to account for the many anomalies and incongruities of renovation and retrofitting. Member States are given the freedom to accomplish these objectives as they see fit. Each neighborhood is allowed to decide the best way to implement the changes based on not only the physical infrastructure but also the environmental obstacles that may stand in the way of ideal working conditions. The larger EU bureaucracy will only interfere if they feel that Member States are not honoring the revisions or otherwise failing to promote sustainability. As they begin promoting more renovations, homeowners and tenants should start to see their energy bills fall.
A Rise in Jobs
The rate of renovation in the EU is currently between .4 – 1.2%, so there’s a lot of room for growth when it comes to installing smarter energy systems. The construction industry in Europe puts 18 million people to work and is responsible for 9% of Europe’s GDP. These new directives give experts in renovations and retrofits more opportunities to put their knowledge to good work, and it gives novices a chance to learn on the job and transform themselves into the energy protectors of tomorrow. These types of radical turnarounds tend to boost jobs in related sectors. The rise in competition usually results in better products and services, which is truly a win-win for both people and the planet.
Building inefficiency doesn’t just hurt the environment, it can also hurt the people who reside in the buildings. Humidity, dust, and pollutants can hang in the air of a building that lacks the necessary components to circulate it. Vulnerable groups like children and the elderly are particularly susceptible to illness after repeated exposure. The smarter a building is, the more breathable the air will be and the more comfortable the residents will feel. Ultimately, the EU wants everyone to start taking their energy consumption seriously. By starting with the buildings people live and work in, they hope to spur a larger movement that makes it easy to hit their greenhouse gas goals.
The EU fully understands that is has a long way to go if they’re hoping to stamp out energy inefficiency in a sector as large as the building industry. However, these revisions are truly a step in the right direction. By encouraging Member States to put their energy into smarter building, they inadvertently create demand for green building. As homeowners, building owners, and tenants start to see their health improve and their energy bills become much more affordable, it will create a new standard of living. Leaders believe that this strategy will help them achieve global leadership in promoting renewable energy.
Every country is responsible for promoting their own version of energy efficiency, but the EU seems to have the right idea by dreaming big. Benefits like job creation, better health, and lower utility bills are developments that everyone can support, regardless of their personal views about our responsibility to preserve the planet for future generations.
Anthony Gilbert is the owner of The RealFX Group. Anthony specializes in real estate and real estate marketing, and likes to follow and promote advancements in accessible and efficient technology for homeowners.
Implementing the Paris agreement to prevent dangerous climate change requires energy system transformation and rapid diffusion of low-carbon innovations. In this paper we investigate both the temporal and spatial dynamics of formative phases by which energy technologies prepare for growth. Drawing on a review of diverse literatures, we offer a definition of the formative phase which clarifies its scope and duration, and identifies its main technological and economic determinants. We use parametric hazard models to assess the relative strengths of these determinants on formative phase durations for a sample of 15 energy technologies diffusing over time in their respective initial markets. We find that substitutability has stronger effects in accelerating the end of formative phases than installed capacity and prices. We extend our analysis using nonparametric models to analyze the spatial diffusion of formative phase durations from initial to follower markets. We find that formative phase durations are long outside initial markets as well, showing only signs of acceleration in latecomer regions. Our results imply risks for policies trying to accelerate the diffusion of large innovations without ready markets in both initial and follower markets.
Nuno Bento, Charlie Wilson and Laura Diaz Anadon
On 11 November, Professor Paul Ekins, Project Co-ordinator of INNOPATHS, was invited to speak at a COP23 side event session titled ‘Low Carbon Europe 2050 – The vision and beyond’.
The EU is set to reduce GHG emissions by 80-95% by 2050 and plans to bring a new long-term climate strategy on the table in 2018. Professor Ekins’ talk was part of a session which covered insights from ongoing H2020 and other research on low carbon transitions, ranging from the essential elements and scenarios to exploring future strategies and governance frameworks.
Three other short introductory presentations were given by Jürgen Kropp (PIK) on EUCalc as an analytical tool and experiences from policy interaction, Lars J. Nilsson (Lund University) on low-carbon Europe, and Guido Knoche (UBA) on the role of science and research. These introductory presentations led to an interactive scholarly debate between a panel and the audience on ways forward and the role of science in shaping policy and governance frameworks.
The panel discussed mitigation options and pathways, key opportunities, barriers and lock-ins, policy and governance implications seen from research, and the roles and responsibilities in science-policy interaction and co-design.
The event was organised by the German Federal Environment Agency and Lund University and co-organised by University College London, Potsdam Institute for Climate Impact Research, Ecologic Institute, Fraunhofer Institute for System and Innovation Analysis.
For an overview of the event, please click here.
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.
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.
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.
This article was originally posted on the University of Sussex website.
Click here to read the full paper in Science.
Rapid and deep reductions in greenhouse gas emission are needed to avoid dangerous climate change. This will necessitate low-carbon transitions across electricity, transport, heat, industrial, forestry, and agricultural systems. But despite recent rapid growth in renewable electricity generation, the rate of progress toward this wider goal of deep decarbonization remains slow. Moreover, many policy-oriented energy and climate researchers and models remain wedded to disciplinary approaches that focus on a single piece of the low-carbon transition puzzle, yet avoid many crucial real-world elements for accelerated transitions (1). We present a “sociotechnical” framework to address the multi-dimensionality of the deep decarbonization challenge and show how coevolutionary interactions between technologies and societal groups can accelerate low-carbon transitions.
Written by Frank W. Geels, Benjamin K. Sovacool, Tim Schwanen and Steve Sorrell
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.
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.
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.
By Dr. Robert Pietzcker, Post-doctoral researcher, Potsdam Institute for Climate Impact Research (PIK)
The Smart Meter Implementation Program (SMIP) lays the legal framework in the United Kingdom so that a smart gas and electricity meter, along with an in-home display, can be installed in every household by 2020. Intended to reduce household energy consumption by 5–15%, the SMIP represents the world’s largest and most expensive smart meter rollout. However, a series of obstacles and delays has restricted implementation. To explore why, this study investigates the socio-technical challenges facing the SMIP, with a strong emphasis on the “social” side of the equation. It explains its two primary sources of data, a systematic review of the academic literature coupled with observation of seven major SMIP events. It offers a history of the SMIP rollout, including a summary of 67 potential benefits as well as often-discussed technical challenges, before delving into pertinent non technical challenges, specifically vulnerability as well as consumer resistance and ambivalence. In doing so, the paper not only presents a critique of SMIP, it also offers a review of academic studies on consumer responses to smart meters, an analysis of the intersection between smart meters and other social concerns such as poverty or the marginalization of rural areas, and the generation of policy lessons.
Written by Benjamin K. Sovacool, Paula Kivimaa, Sabine Hielscher and Kirsten Jenkins
For some time in discussions about a global transition towards a low-carbon economy the unacknowledged elephant in the room was the financial sector. Various estimates from the International Energy Agency and others suggest that annual investment in a low-carbon energy system to mid-century will need to average USD2-3 trillion, with two thirds of that comprising a shift in investment from high-carbon to low-carbon infrastructure, and the other third being extra low-carbon investments. The 100 trillion dollar question about the elephant, which is now at least being increasingly acknowledged, is how such a dramatic shift in investment finance can be achieved.
Part of the problem for the investors who will need to make this shift is that it is not yet clear precisely which technologies should be the recipient of this investment. Innovation in new energy technologies, and corresponding changes in business models and consumer behaviour, are proceeding at a bewildering rate; however most projections indicate that current (financial) commitments fall short in achieving a 2° world. Trying to understand such innovation, and where it may lead, is at the heart of the INNOPATHS project, which was presented to a full house in Brussels on June 22 as part of Sustainable Energy Week.
An early output from INNOPATHS, the construction of which is being led by Aalto University in Finland, is a Technology Assessment Matrix, the purpose of which is to provide online insights into how technologies are developing, what their potential might be in terms of cost and scale of deployment, and how they might fit into the low-carbon energy system of the future.
Stimulating investment on the scale required to come anywhere near the 1.5-2oC temperature target of the 2015 Paris Agreement will require, in addition to technologies that offer large-scale energy efficiency savings or low-carbon energy supply, measures that will address institutional, regulatory, informational and business constraints on investment, as well as a supportive policy environment to pull through low-carbon investment that do not yet meet normal criteria of risk-adjusted rate of return.
These are among the topics addressed by the finance workstream of the INNOPATHS project, led by Utrecht University in the Netherlands, ETH in Switzerland and The Potsdam Institute for Climate Research in Germany, the first workshop of which will be held in Utrecht in September. Here, experts from the financial sector will meet and discuss the challenges ahead with energy company representatives and policy makers. These topics were also the subject of the recent meeting of the European Commission’s High-Level Panel of the European Decarbonisation Pathways Initiative, which will be producing a report in 2018 on research needs in Europe to ensure that the European Union can make the most of the many economic and other opportunities offered by deep decarbonisation of the energy system.
Another initiative that brought the financial sector into full focus was the workshop at UCL on July 5th, organised by the European Horizon 2020 Green-Win project, entitled ‘The Risk Transition: shifting investment to a low carbon economy’. The Keynote Speaker was Russell Picot, Special Adviser to the Financial Stability Board’s Climate-related Financial Disclosures Task Force, the final report and recommendations from which were published on June 29. Its areas of core recommendations were governance, strategy, risk management and metrics and targets. While the suggested measures were intended to be voluntary at present, it is clearly possible that they will become mandatory as experience with how best to disclose climate risk is acquired and the need for the great energy transition investment becomes appreciated as increasingly urgent.
INNOPATHS finance workstream colleagues also contribute to the New Pathways for Sustainable Finance process, led by the Brussels-based institution Finance Watch, the Global Alliance for Banking on Values, and Mission 2020, which over the next few will explore a financial market design conducive to a low-carbon transition and specific actionable areas to be addressed by 2020.
Such projects, initiatives, events and publications at least mean that the various parts of the elephant of transition finance for a low-carbon future are being recognised put together, so that the shape of the whole challenge ahead is becoming apparent. What is now required is determined action on the various insights that are being generated being the temperature targets of the Paris Agreement slip quite out of reach.
By Paul Ekins, Professor of Resources and Environment Policy and Director, UCL Institute for Sustainable Resources