TODAY’S STUDY: EUROPE’S AFFORDABLE FUTURE PATH TO NEW ENERGY AND EMISSIONS CUTS

Beyond 2020 — Strategies and Costs for Transforming the European Energy System

Knopf et al, 16 January 2014 (World Scientific)

Introduction

Setting the scene: The European Union’s low-carbon strategy

In 2009, the European Union (EU) set an aspirational target of reducing greenhouse gas (GHG) emissions by 80–95% below 1990 levels by 2050 (European Council, 2009, confirmed in European Council, 2011). This objective reflects the EU’s unilateral commitment to keeping increases in the global average temperature below 2 C. The EU’s long-term goal is grounded in a 2020 mid-term strategy described in the “EU climate and energy package” that aims to achieve: (i) a 20% reduction in EU GHG emissions from 1990 levels, (ii) raising the share of renewables in the EU’s final energy consumption to 20% (including a 10% renewable share in the transport sector), and (iii) a 20% improvement in the EU’s energy efficiency. Taken together, these goals onstitute the 20-20-20 targets.1 While the first two targets are binding, the last one is only indicative. Furthermore, it remains unclear whether and how these targets will be maintained after 2020. An initial idea for a post 2020 framework was circulated in March 2013 with the EU green paper “A 2030 framework for climate and energy policies” (European Commission, 2013a) designed to launch a public consultation.

In 2011, the European Commission began a discussion about the long-term framework of climate and energy policies in Europe, including a strategy leading up to 2050. As a result, three roadmaps have been launched: the “Roadmap for Moving to a Competitive Low Carbon Economy in 2050” (European Commission, 2011d), the “Roadmap to a Single European Transport Area — Towards a Competitive and Resource Efficient Transport System” (European Commission, 2011f) and the “Energy Roadmap 2050” (European Commission, 2011e). Extensive modeling work has supported the three roadmaps, e.g., the impact assessment on the Energy Roadmap (European Commission, 2011c). The analyses of the energy system were mainly based on one model, i.e., PRIMES (E3Mlab, 2010). However, the single-model approach leaves several unanswered questions, particularly in terms of the modeling methodology, uncertainties related to input assumptions, and lack of transparency (see the critique by the Advisory Group on the Energy Roadmap (European Commission, 2011b)). Other single-model analyses of long-term EU climate and energy policies include Hübler and Löschel’s (2013) analysis of the Energy Roadmap with a detailed sectoral analysis. The study “Power Choices” focuses solely on the power sector using PRIMES (Eurelectric, 2009) and the “Roadmap 2050” by the European Climate Foundation (2011), is another example which investigates a number of pathways with different shares of renewables. However, earlier model comparison projects have taught us that mitigation strategies vary significantly across models (Weyant, 2004; Clarke et al., 2009; Edenhofer et al., 2010;Calvin et al., 2012; Luderer et al., 2012). In light of this, it seems that a multi-model perspective is valuable for formulating robust and effective energy and climate policies.

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This paper contributes to the energy and climate debate by presenting the results of the Energy Modeling Forum 28 (EMF28). The project considers how to decarbonize the European energy system and asks whether the technology strategies drawn from the Energy Roadmap are robust when comparing them with the results of several models run by a number of organizations. More specifically, the research questions are:

. Technologies and sectors: Which are the most important technologies enabling the GHG reduction target to be met across the EU in a cost-effective manner? Are some technologies irrelevant or ambiguous? What is the most cost-effective allocation of emission reductions across sectors?

. Targets and timing: What are the implications of different long-term targets for shorter-term actions in terms of the timing of mitigation and for specifying targets? Are the EU 2020 targets sufficient to meet the long-term target of reducing GHG emissions by 80% by 2050? What does this imply for determining appropriate targets in 2030 and 2040? How do the costs of the transformation develop over time?

A total of 13 European modeling teams – including the PRIMES team – are involved in the model comparison under the roof of the Stanford EMF which is documented as the EMF28 study.2 The model typology ranges from global integrated assessment models, where Europe is modeled as one region, to European energy system models, which feature a greater level of spatial detail and an explicit representation of individual Member States. The EMF28 analysis builds upon the scenarios defined in the European Commission’s Energy Roadmap. One set of scenarios considers the continuation of current policies, leading to a 40% reduction of GHG emissions by 2050 compared to 1990. The decarbonization scenarios aim to reduce GHG emissions by 80% by the same date. This exercise has two goals. The first is to identify common technological requirements and technology portfolios by analyzing the various low carbon pathways produced by the models. The second is to understand the extent to which variations in results are due to assumptions inherent in the input data, and the extent to which they are explained by methodological differences. The underlying research question is whether different types of models tell different stories about Europe’s decarbonization pathway, or whether there is a shared view on cost-effective strategies.

The use of a large number of models provides a wider characterization of plausible pathways, thus making it possible to attempt to identify robust strategies (Lempert, 2002).

This paper is organized as follows: The remainder of Sec. 1 introduces the scenarios and the participating models. Section 2 focuses on technology options and sectoral decarbonization strategies. Section 3 discusses the feasibility and costs of decarbonization. Potential EU targets for the period beyond 2020 are analyzed in Sec. 4. Section 5 presents the conclusions of this study and compares them to those of the Energy Roadmap…

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GHG reduction

The analysis compares the current 2020 policies to a pathway that aims to reduce GHG emissions by 80% by 2050 and determines the level of emission reduction required for 2030. The GHG emission reduction targets for 2020 are given as a minimum constraint in all the models (see Sec. 1.2). Since GHG emissions are not reported in all the models, we focus here on CO2 emissions.

Figure 12 shows that in 2020, there is a considerable difference in CO2 emission reduction between the default reference scenario (40%DEF) and the “optimal model responses” in the default mitigation scenario (80%DEF). This is already the case from 2015 and even more evident from 2020 onwards. The 80%DEF scenario requires 28% [26–30%] CO2 reduction by 202016; this is a difference of about seven percentage points in 2020 compared to the 40%DEF scenario with 21% [19–25%]. In other words, the level of effort of 20% GHG reduction that is included in the default reference scenario (40%DEF) up to 2020 is not consistent with the least-cost pathways towards the 80% reduction target in 2050. This supports the finding of the “Low Carbon Economy Roadmap” (European Commission, 2011d) which points out that a reduction of 25% by 2020 would be more in line with ambitious long-term targets.

For 2030, the results of this study can be directly compared to the results of the Energy Roadmap. The Energy Roadmap indicates that “in 2030, energy-related CO2 emissions are between 38% and 41% lower (compared to 1990), and total GHG emissions reductions are lower by 40–42%.” The results from our exercise suggest a CO2 reduction of 47% [40–51%] for the default mitigation scenario (80%DEF), compared to 1990, i.e., a much stronger CO2 reduction than in the Energy Roadmap.

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This indicates that a reduction of GHG emissions of 40% by 2030 — as mentioned in the EU green paper (European Commission, 2013a) — could, in principle, be in line with the long-term effort to reduce emissions by 80%. The model median, however, would suggest setting a more ambitious target.

The annual CO2 reduction rates for 80%DEF are 2.2% [1.7–2.4%] between 2010 and 2030 and 4% [3.5–4.7%] between 2010 and 2050 and for the ETS sector the CO2 reduction factor is 5.4% [4.4–5.9%] between 2020 and 2050. These rates are clearly above the linear annual reduction factor of 1.74% that is currently set for the 3rd phase of the EU emissions trading scheme (2013–2020) and beyond 2020. There may be many reasons why short-term constraints make it impossible to follow the pathways of the cost-optimal 80%DEF scenarios for 2020 or 2030 — but it should be noted that any short-term delays must be compensated for in the long-term. In the extension of the 2020 target, the policies in the default reference scenario lead to a 40% GHG reduction by 2050. Global studies (e.g., Luderer et al., forthcoming) have shown that similar worldwide policies of only moderate mitigation could lead to a global “muddling through” scenario, with a global average temperature increase of approximately 3–4 C in 2100, which is considerably higher than the targeted increase of a 2 C maximum.

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Renewable energy

In terms of the second component of the EU 20-20-20 policy — renewable deployment — the target has been formulated in such a complex way that it is difficult to track based on the variables and accounting, e.g., of bioenergy, reported by the models. One commonly used proxy for renewable deployment is the share of renewable energy in the electricity mix and primary energy (Figs. 13 and 14). Interestingly, the difference in renewable deployment in the electricity sector between 40% DEF and 80%DEF is not significant based on the models’ means, although the spread within the 80%DEF scenario extends somewhat higher (Fig. 13; Sec. 2.4), especially towards 2050. On average, the deployment of RES shows a steady increase up to 2050.

However, saturation can be noted in some models after 2030 as it becomes more important to utilize bioenergy to decarbonize sectors other than electricity. To obtain an indicative number of the share of renewables in the electricity sector that would be consistent with the overall renewable target, the document “Renewable Energy: Progressing towards the 2020 target” (European Commission, 2012) states that renewable energy should constitute 37% of Europe’s electricity mix by 2020. Clearly, a 37% share is at the upper limit of what the models report for 2020. One reason might be, as stated above, that there are reasons other than GHG reduction for the deployment of renewables, and that these are not being captured by the models. In this respect, it is also important to note that the recent “Renewable energy progress report” (European Commission, 2013b) states that the 2020 renewable target might not be met and that more effort is needed to reach it, implying that the 20% renewables target might indeed be very ambitious.

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Figure 14 presents the share of renewables in total primary energy. This graph shows a considerable increase in the share of renewables over the entire 2010–2050 period. Furthermore, a clear increase between the default reference (40%DEF) and the default mitigation scenario (80%DEF) can be noted for 2050. This increase is mainly due to the increase in bioenergy after 2030.

Interestingly, the models reveal a significant change in the pattern and extent of the share of RES in relation to electricity generation and primary energy from 2020–2030 and further to 2050. Although the shares of RES are rather homogenous across models and technology scenarios in 2020, the picture changes in 2030, which demonstrates the increasing importance of RES and more divergent patterns across technology scenarios. By 2030, the share of RES is much higher in the mitigation cases where CCS is not allowed (80%noCCS and 80%GREEN) and nuclear deployment is low (80%PESS and 80%GREEN) and where additionally the assumptions on energy efficiency and renewable deployment are optimistic (80%GREEN). The share of RES in electricity generation reaches 47% (for 80%PESS) and 55% (for 80%GREEN), compared to 41% for 80%DEF. This effect is even stronger by 2050, as the share of RES reaches a median value of approximately 85% for 80%PESS and 80%GREEN, compared to 48% in the default mitigation scenario, 80%DEF.

Concerning the implication for a potential renewable target for 2030, it is important to note that over time the share of renewables continues to increase in all models demonstrating the importance of renewables (mainly bioenergy) for long-term energy transformation. In addition, based on the analysis in Secs. 2.1 and 2.2, the model results suggest that wind could become of considerable importance and be promoted based on its expected long-term potential.

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Energy efficiency

The third important point of the 20-20-20 targets relates to energy efficiency. The Directive 2012/27/EU on energy efficiency,17 adopted in October 2012, states that a cumulative end-use energy savings target must be achieved by 2020: “That target shall be at least equivalent to achieving new savings each year from 1 January 2014 to 31 December 2020 of 1.5% of the annual energy sales to final customers of all energy distributors” (European Parliament and the European Council, 2012, Art.7). Because of several amendments and exceptions, this target cannot be directly compared to the model results, but at least it is clear that an absolute reduction in final energy use is intended.

All the models reveal a considerable reduction of EI with a model median of 1.8% [1.5–2.1%] p.a. in the default reference scenario (40%DEF) and 2.1% [1.7–3.5%] p.a. in the default mitigation scenario (80%DEF; Fig. 3) between 2010 and 2050. For the 80%DEF scenario, even a reduction in absolute final energy use becomes important, as all models show a decrease in final energy use by 2050 compared to 2010. Despite the significantly increased GDP by 2050 (75–110% increase from 2010), final energy use reduces by 15 EJ in 80%DEF (roughly 30% of today’s final energy use), whereas it stays constant in 40%DEF. This implies that energy efficiency improvements must be initiated early in order to achieve final energy savings of sufficient scale to meet the 80% reduction target. Some policies related to energy efficiency have already been initiated, such as energy labeling, the Ecodesign Directive, and the implementation of smart metering. However, currently, no EU-wide policy instruments of substantial scale — compared, for example, to the EU emissions trading scheme for CO2 — have been implemented to trigger energy savings or energy efficiency. This is key for achieving the mitigation targets.

The models clearly reveal that in order to reach 80% emission reduction in the long-term, fundamental changes for decarbonizing the energy system are needed. Although the largest effort must occur after 2030, the foundations need to be laid out beforehand and considerable effort is required to facilitate such substantial changes. Sufficiently ambitious milestones for CO2 emissions, renewable deployment, and energy efficiency are needed in order to create a foundation for achieving the long-term target by 2050. The discussion surrounding a potential 2030 framework (European Commission, 2013a) is in this respect only a first, but very timely and important step.

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Conclusion

This paper describes the EMF28 multi-model assessment of the long- and medium-term transformation of the European energy system. Thirteen models have been run using the same set of mitigation and reference scenarios under comparable technology assumptions. This model comparison is the first to relate its results to those of the Energy Roadmap presented by the European Commission in 2011. The EMF28 model comparison is used as a tool to determine what the EU energy system transition should look like in order to meet the EU’s emission reduction goals and to be consistent with the international goal of staying below a 2 C rise in global average temperature. In this context, the analysis compares a reference scenario where the EU achieves 40% GHG reduction by 2050 with a mitigation scenario in which GHG emissions are reduced by 80%. The scenarios build upon the cases that support the Energy Roadmap. In other words, the results of this exercise assess the robustness of the Energy Roadmap.

First, this study shows that, despite the models’ differences, there are several pathways for achieving ambitious climate change mitigation in Europe. Nearly all the models can achieve the long-term target of reducing GHG emissions by 80%,18 with only a moderate reduction in GDP (less than 0.7% by 2030 and below 2.3% by 2040).

However, in some models, costs increase considerably after 2040, while others show costs increasing in a linear manner. This allows us to conclude that the 80% GHG reduction target is indeed challenging, especially after 2040 when a substantial amount of effort is required. It is important to mention that these results are derived from models that do not consider technical and political obstacles that could hinder the technological developments prescribed by our results.

This study also shows that it is critical to start a structural transformation of the fossil fuel-based energy system prior to 2030. It is necessary to set the right price signals in order to prevent the energy system from being locked into long-lasting investments in carbon technologies, such as coal-fired power plants. In general, policies should be designed to facilitate this transition through infrastructure development and behavioral and societal transformation.

Our findings show that the short-term target of a 20% GHG reduction by 2020 is not consistent with the cost-minimizing pathways for the long-term target of reducing GHG emissions by 80% in 2050. Therefore, to facilitate the long-term transformation, a clear indication of binding targets for the period beyond 2020 would help investors to take the right strategic decisions. In addition, by setting targets for 2030, the EU would signal their willingness to contribute to the global climate mitigation effort. Concerning potential targets for 2030, a 40% reduction of GHG emissions — as indicated in the EU green paper (European Commission, 2013a) —could be in line with the long-term effort to reduce emissions by 80% in 2050, but the model median would suggest setting an even more ambitious target.

The power sector is crucial for decarbonization, already shown by the reference scenario, as it has the ability to reduce emissions more than any other sector. However, as the mitigation target becomes more stringent, cutting emissions through the non-electricity sectors becomes increasingly important. The transportation sector is the most costly sector to decarbonize, especially without significant biofuel imports to the EU. Allowing larger biofuel imports is likely to decrease the costs of mitigation. Energy efficiency is key for transformation across all the models, in all the scenarios, and for all levels of ambition. Achievement of energy efficiency, however, requires very strong policy instruments.

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Despite the differences across the models, common features concerning the relevance of certain mitigation options leading to the achievement of the 80% GHG reduction target exist:

. Reduction of energy intensity plays a key role in the mitigation strategies;

. Biomass use shows a greater than three-fold increase from 2010–2050; nonbiomass-renewables also increase considerably; all renewable energies together make up nearly 50% of electricity generation (model mean); among nonbiomass-renewables, wind is the most important with a seven-fold increase by 2050, ultimately reaching a similar deployment level as nuclear, while solar PV represents a limited share;

. Nuclear is constant or moderately increases over time, but continues to make an important contribution in the electricity sector;

. While CCS plays also an important role in the default EMF28 scenarios, the alternative technology scenarios show that CCS is not necessarily required to meet the mitigation target;

. Intermittent renewables such as wind and solar PV contribute 27% of the future electricity mix by 2050 (model median). Therefore, new balancing power options are required, like the development of long-term and medium-term energy storage options and/or the expansion of the European electricity grid and the increase of interconnectors between Member States and demand-side measures.

We have compared the EMF28 conclusions to those of the Energy Roadmap. The advantage of the EMF28 study compared to the Energy Roadmap is that it provides a comparative assessment based on a larger number and greater variety of models run by several organizations. We relate our findings to those provided in the communication document of the European Commission, which describes “ten structural changes for energy system transformation” (European Commission, 2011e), see Table 3.

This comparison shows that EMF28 results can support the general conclusions of the Energy Roadmap. One noticeable difference is the importance of CCS: While CCS plays an important role in the Energy Roadmap, especially as includes no scenario completely without CCS, in the EMF28, CCS only plays a role in scenarios where CCS is available, and the alternative technology scenarios show that CCS is not required to meet the mitigation target.

Future areas of research identified in this study include: (i) analysis of technology options in final consumption, including structural change; (ii) a more detailed analysis of all sectors, especially the transport sector; and (iii) an analysis of the implications and requirements of including a high share of intermittent renewables in the system in a technical and economic sense. These three streams of research could support the transformation that the European energy system must undergo in order to mitigate climate change.

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