Making Europe Carbon-Neutral by 2050: the Vision of the Electricity Industry
Friday, 13th February, EU Sustainable Energy Week
Decarbonising electricity, decarbonising Europe: the way forward
Pantelis Capros - Videoclip
Pantelis Capros, Professor of Economics at the National University of Athens, explained what is needed to plot the path to the decarbonised future that will be necessary in order to prevent massive and harmful climate change. He underlined however that the path to 2030 is already to a large extent determined by the “20-20-20” targets recently agreed and set out in a number of Directives by the EU legislators. By 2020 the EU power sector will have to:
- reduce CO2 Emissions by 21% as at 2020 versus 2005 and purchase all CO2 emission allowances through auctions at a price likely to be between €30-40/tonne.
- generate 30-35% of power from renewable energies (RES) - hydro, biomass, windpower, solar and tidal - to meet the overall EU obligation for 20% RES in total energy
- increase investment in power generation and grids relative to baseline
- pass through to consumers the cost of emission allowances plus restructuring costs, driving electricity prices higher
- face lower electricity demand than at baseline because by 2020 energy efficiency will have reduced demand for energy, including electricity
Beyond 2020, towards 2030 and 2050, new options, including new build nuclear power plants and carbon capture & storage technologies, plus more advanced RES, will enable power generation to reduce greenhouse gas (GHG) emissions drastically. During this period, it will become cost-effective to partly substitute fossil fuels by electricity in such demand-side areas as plug-in hybrid cars and heat pumps, which will stimulate demand for electricity again, he predicted.
Professor Capros told the audience that a project is now underway to take the EURELECTRIC Role of Electricity (RoE) projections all the way through to 2050 and see what must be done to achieve a carbon-neutral power sector by mid-century. The RoE project sees 36% of the 2020 GHG cuts arising from improvements in energy efficiency, and 45% coming from reducing CO2 output from power generation. On the 2050 horizon, emissions of greenhouse gases will have to be cut by a minimum 60% versus current baseline, instead of 20% as set out in the EU legislation, in order to achieve climate stability, Professor Capros has calculated. However the competitiveness of the various technology solutions will “heavily depend on the carbon price established by the EU (and other) emissions trading systems. If the carbon price is too low, as at present, the power sector will not be able to decarbonise,” he warned.
Peter Zapfel - Videoclip
Peter Zapfel, assistant to the European Commission’s Deputy Director-General for the Environment, underlined the need for “mature political debate” on the way forward and welcomed the “sound analysis” provided by EURELECTRIC on the issues and welcomed “the initiative of the electricity industry to become carbon-free”.
In order to keep on track over the next 40 years we will need a “flexible regulatory framework”, to take account of science, research and development in the coming years and enable deployment of new low-carbon technologies through a “market-based and performance-based approach,” he told the workshop.
Mr Zapfel explained that the main challenge now is to ensure a “smooth transition” towards a “stable investment climate”. Today targetted R&D and support schemes for the new technologies are needed but support should be temporary. “We need to let the carbon market work, and make auctioning of allowances work”. Ultimately, a global carbon market is the goal, he underlined. The offset mechanisms set up under the Kyoto Protocol – Joint Implementation and the Clean Development Mechanism – should also be seen as a transitional tool and should not be available any longer by 2040-2050 as those countries hosting such carbon-reduction projects should themselves be in the worldwide cap and trade system by then.
Stephan Singer, Director of Global Energy Policy at environmental lobby WWF, and Ulrika Raab, Senior Climate Change Advisor at the Swedish Energy Agency, joined the speakers, for a round-table discussion moderated by EURELECTRIC Secretary-General Hans ten Berge.
Ulrika Raab - Videoclip
Ms Raab underlined the need to “set a general framework to mitigate climate change. We are trying to transform society, so we can’t pick and choose or focus on one issue or one sector. There is no one silver bullet. We need a modal shift and a holistic approach,” she argued, adding: “Decisions taken today must have a long term vision.”
Ms Raab argued the need for a joint EU effort both on emissions trading – ie the Emissions Trading System (ETS) and support for RES. She agreed with Mr Zapfel that support schemes should be limited in time but “first you have to create trust in the market”, she stressed. Relevant questions remain, especially how to set the emissions cap that will drive the reductions – and the price of carbon. The system must be designed to be stable and the policymakers should not keep meddling with it, Mr Raab told the workshop.
Stefan Singer - Videoclip
Mr Singer said that the EU commitment to boost renewable energy uptake and reduce greenhouse gas emissions is “a good first step” and applauded the attitude of the electricity sector, which has recognised that it is “the key sector” for climate change action and can also develop valuable synergies such as use of electricity in transport. Nevertheless, we need to go beyond the EU 20-20-20 targets, bring in other sectors, and must not stop at a 35% share for RES-power, he stressed.
To have a reasonable chance of staying below the crucial 2° threshold for global warming, we will have to reduce global GHG emissions by 80% by mid-century, which means that developed countries must be carbon free, argued Mr Singer. He told the workshop that the power sector should strive to become carbon-free power by 2040. This will require inter alia smarter grids for better network and load management. The creation of a European “super grid” would help to integrate much more RES, including African solar power, he argued.
One concern voiced by Mr Singer is that the EU 2020 framework “does not provide any real incentive to build carbon capture & storage (CCS)-equipped power plants,” therefore the current ETS and RES target could still have the effect of perpetuating “business-as-usual coal-fired power plant investments,” he warned. His answer is to impose GHG emissions performance standards – at a level of 350gCO2/kWh, as this would still allow combined heat & power (CHP) and combined cycle gas turbine (CCGT) plants to be built.
During discussion with the audience, the question of carbon price was raised, referring back to Prof. Capros’s remark that a sufficiently high carbon price would be needed to drive investment in low-carbon technology. Questionners expressed fears that the current ETS price, which has sunk as low as €8/tonne, would not be sufficient to support the EU policy.
Lars G Josefsson: stressed that the market will “not solve all problems but only deliver those things which are profitable.” The EURELECTRIC President argued that it was not today’s spot price of €8 per tonne for CO2 that would influence future investment but rather “what we think the price will be in the future.”
Peter Zapfelpointed out that the emissions cap would continue reducing, as default, by 1.74%/year until 2025, when there will be a review, thus providing certainty for investors until then. This makes today’s €8 an unlikely guide for future action, he told the audience.
Dr Bill Kyte: EURELECTRIC international climate change advisor, argued that as market prices can be volatile, one should not focus too closely on today’s level. “As sources become scare, it is likely to go up,” he predicted. However, Dr Kyte underlined that what we should be focussing on are the barriers to development of low-carbon technologies. For nuclear power, there are some political barriers. For RES the current main barrier is how to develop the grid. For coal-fired power plant, the question is how CCS will evolve – and we should address these issues, he told the audience.
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