POWER CHOICES EURELECTRIC Study on lowCO 2 Europe

POWER CHOICES EURELECTRIC Study on low-CO 2 Europe by 2050 Owen WILSON Environment and Sustainable Development Committee, EURELECTRIC Geneva, 13 th April 2010

Background • EURELECTRIC “Role of Electricity” Study (2007) – Changed Energy landscape • Climate Challenge; Security of supply; Competitive EU economy – Partners: University of Leuven (Demand); VGB (Supply); Technical University of Athens (Modelling); Mc. Kinsey (coordination) – Focus: How to provide low-carbon, secure energy at least cost – Outcome: 50% reduction in EU 27 GHG emissions by 2050 • European Council decisions on Climate-Energy package and 2050 objective • Economic and financial crises • Electricity industry CEOs Declaration

EURELECTRIC CEO Declaration 18 March 2009 Carbon-neutral power in Europe by 2050 1. Cost-efficient, reliable supply through an integrated market 2. Energy efficiency & electricity use as solutions to mitigate climate change

High Level Strategy to deliver CEO Declaration • Build on “Role of Electricity” Study – “Role of Electricity” took technological and policy developments as start point and projected impacts on CO 2 emissions to 2050 – New study, “Power Choices”, takes 2050 GHG objective (-75% on 1990) as start point and maps most economic pathway for delivery – Consequential impacts on SO 2, NOx emissions also assessed

“Power Choices” Study SCENARIO ASSUMPTIONS • 75% GHG cut across whole EU economy, consistent with 450 ppm global in 2050 • CO 2 price applied uniformly to all sectors BASELINE ASSUMPTIONS • No new policy developments post 2009 • ETS 1. 74% p. a. reduction continues • Power becomes major transport fuel • No CO 2 price in non-ETS sectors • All power generation options available (with CCS commercially available as of 2025) • Bottom up measures to support energy efficiency, new renewables • Major policy push in energy efficiency • No binding RES target post-2020; RES support mechanisms withdrawn by 2030 • CO 2 price is the only driver for low-carbon generation post 2030 • Rational behaviour by economic agents MODELLING • PROMETHEUS to evaluate global energy supply/demand prices • PRIMES to evaluate EU 27 energy supply/demand (as per DGTREN Dec 2009) and emissions

“Power Choices” Output Summary • Energy efficiency in buildings, houses, electricity use (appliances, lighting, heat pumps, motor drives … ) – Domestic sector savings • -16% in 2030 relative to Baseline; -39% in 2050 relative to Baseline – Electrification of road transport • 10% in 2030; 80% in 2050 • Renewables in heat and power generation – 37% in 2030; 40% in 2050 • CCS in power generation – 63 GW in 2030; 191 GW in 2050 (85% of CO 2 captured) • Nuclear energy – 132 GW in 2030 (85 GW new); 175 GW in 2050

Energy Efficiency is Key Stationary uses - 10% on Baseline by 2030 - 30% on Baseline by 2050 Transport uses - 7% on Baseline by 2030 - 29% on Baseline by 2050

Composition of electricity demand Electricity demand on Power Choices vs. Baseline

Overall energy demand -30% vs. Baseline in 2050 Mtoe Final energy consumption by sector, EU-27 1400 1200 1000 Heavy Industry 800 Other Industries Tertiary 600 Residential Transport 400 200 0 Paradigm shift to 2010 efficient 1990 1995 2000 2005 2015 2020 2025 electric 2030 2035 2040 technologies 2045 2050 More electricity = less energy

Need for all low-carbon generation options In 2050 RES: • 40% of total mix (1910 TWh) • Wind: 56% of RES Nuclear: • 28% of total mix (1330 TWh) CCS: • 28% of total mix (1320 TWh) Other fossils: • 4% of total mix (210 TWh) Net power generation in EU-27

Carbon emissions from power fall by >90% Deep emission cuts take place between 2025 -2040. But investments are needed NOW! NOW: 1423 Mt. CO 2 2050: 128 Mt. CO 2

Decomposition of emissions reduction in Power Sector

Decomposition (ex-post) of emissions reduction

Investment needed across the period Gross investment in generation capacity MW 2010 – 2050 13% 17% 4% 52% 14%

Significant investments… … but a reasonable cost for society Investment needed in power generation by 2050: € 2 trillion

What if… Nuclear phaseout is reversed in Germany and Belgium? Commercial deployment of CCS is delayed to 2035? One-third of onshore wind power is not built due to planning problems?

All technologies are really needed CO 2 emissions from power, EU-27 Mt CCS delay 1600 Power Choices Nuclear+ • More nuclear = more rapid reduction curve 1400 • 10 -year delay of CCS = delayed CO 2 emission reductions from power & whole economy! 1200 1000 800 600 400 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 • 1/3 onshore wind not built = more CCS & nuclear, off-shore wind not likely to fill gap.

Power Sector SO 2 and NOx emissions SO 2 emissions • 3. 3 Mt in 2000 • 0. 2 Mt in 2050 NOx emissions • 1. 6 Mt in 2000 • 0. 5 Mt in 2050 Major impact on urban air quality

Key outcomes EU carbon-neutral power by 2050 is realistic -75% GHG on whole economy can be reached • Energy efficiency is critical – • • • Electrification of the demand side essential All power generation options needed Significant investment but at acceptable cost to society The major CO 2 reductions in power are achieved from 2025 onwards CCS delayed &/or nuclear phase-out = slower CO 2 reduction Significant co-benefits with air pollutants

Policy recommendations CO 2 reductions • Support CO 2 market to deliver cap at least cost • All sectors to internalise cost of GHGs • Promote an international agreement on climate Cost • Significant investment cost but reduction in share of GDP • Recognise that cost of technology deployment differs substantially across the EU Technology choices • Enable the use of all low-carbon options for power generation • Encourage public support for modern energy infrastructure: onshore wind, CCS, smart grids… Demand-side • Major policy push in energy efficiency • Facilitate electrification of road transport and spatial heating & cooling

EURELECTRIC’s partner organisations in Power Choices study: National Technical University of Athens Verband der Großkraftwerks-Betreiber