The Emergence of a Global Carbon Market:
How to foster technology diffusion to realize
climate mitigation benefits?
Prof. Dr. Peter Hennicke
President of the
Wuppertal Institute
JET-SET. International Conference on Linking Schemes.
29-30 May 2006, Bruxelles
Overview
1. Where should ET lead us? Citeria and challenges for sustainable energy systems
2. “Solving the carbon and climate problem simply by scaling up what we already know to do“:
The target oriented „Wedges“ concept of Princeton (Pacala/Socolow 2004)
3. Identifying a “robust technological corridor” to sustainable energy systems: rational use of
energy (RUE), combined heat/cold and power production (CHP) and renewables (REN)
4. The key for climate mitigation policies: Integrating energy efficiency and renewables, fostering
the diffusion of climate mitigation technologies and structural change ( e.g. decentralisation)
5. The German case for risk minimisation: A feasible strategy for climate protection and
nuclear phase out
6. Learning curve effects: Give energy efficiency highest priority to buy down the costs of
renewables
7. Thinking out of the box: A better linking of ET with multi-level policy mixes of global and
target group specific instruments is needed
03.07.2006
Climate protection is necessary but not sufficient: Criteria
and goals for sustainable energy systems
•
Access to energy services for all and fair partnerships with developing countries
•
Conservation of resources and protection of environment, climate and health
•
Social acceptability now and in accordance with the needs of later generations
•
Low risks and contribution to mitigate international conflicts
•
Cost-effectiveness (including external costs)
•
Industrialized countries (IC) should take the lead: To reduce global CO2emissions by 50% up to 2050 a reduction target of 80% for IC is necessary.
03.07.2006
Sustainable Energy Systems: Common, but differentiated
challenges for IC and DC
Industrialized Countries (IC)
Absolut decoupling of primary energy and GDP growth; reduce per capita energy
consumption by 75% (e.g. Swiss model of „2000 W/cap society“)
Establish sustainable consumption patterns: Eco-efficiency, service orientation,life
style changes, „qualitative“ growth
Developing Countries (DC)
Relative decoupling: Reduce growth rates of energy consumption by more
efficient use; increase living standards, alleviate poverty, foster rural electrification
Combine advanced end use efficiency with renewables ("leap frogging)
Common challenges:
Built sustainable energy systems on „three green pilars“: RUE+CHP+REN
Foster Institutional change: decentralisation,liberalisation,democratisation
Raise resource productivity by integrating material +energy efficiency
03.07.2006
The Challenge:
Absolute decoupling of qualitiy of life from use of nature
Quality
of life
Economic Sustainable
Production
growth
Use of
nature
03.07.2006
Source: Wuppertal Institute
Sustainable
Production
and
Consumption
Relative decoupling of GDP, energy und C02 ias a first step,
but not sufficient for sustainable energy systems!
03.07.2006
Relative decoupling in the past 30 years
C02 emissions growth
: 1.5% p.a.
Primary energy growth
: 2 % p.a.
World GDP growth
: 3 % p.a.
„Improvements in efficiency and conservation probably offer the
greatest potential to provide wedges“ (Pacala/Socolow 2004)
03.07.2006
The Stabilization Triangle (Socolow et al 2004)
Billion of Tons of
Carbon Emitted
per Year
14
h
d
e
ct
t
pa
=
“
p”
m
ra
e
n
tly
rre
Historical
emissions
7
Cu
j
ro
p
Stabilization
Triangle
Flat path
Interim Goal
O
1.9 0
1955
03.07.2006
2005
2055
2105
The power of technology diffusion - the challenge for implementation policies: How can we make it happen in time?
„Humanity can solve the carbon and climate
problem in the first half of this century simply by
scaling up what we already know to do“.
(Pacala/ Socolow 2004)
03.07.2006
Wedges: Target oriented diffusion politics
Socolow et al 2004
Billion of Tons of
Carbon Emitted per
Year
14
14 GtC/y
th
d
e
ct
pa
je
ly
t
n
Historical
emissions
7
o
pr
Seven “wedges”
re
r
u
C
Flat path
O
7 GtC/y
1.9 0
1955
03.07.2006
2005
2055
2105
The Flat Path is Consistent with Stabilization below
Doubling (Socolow et al 2004)
Stabilization below doubling (450-550 ppm) is the centuryscale carbon management goal recommended by many
environmental scientists.
This century-scale goal is broadly consistent with the Interim
(50-year) goal:
7 GtC/y in 2055, as in 2005
Uncertainty of ± 3 GtC/y in land plus ocean sink.
Further emissions cuts are required after 2055.
03.07.2006
What is a “Wedge”?
(Socolow et al 2004)
A “wedge” is a strategy to reduce carbon emissions that grows
in 50 years from zero to 1.0 GtC/yr. The strategy has already
been commercialized at scale somewhere.
1 GtC/yr
Total = 25 Gigatons carbon
50 years
Cumulatively, a wedge redirects the flow of 25 GtC in its first 50
years. This is 2.5 trillion dollars at $100/tC.
A “solution” to the CO2 problem should provide at least one wedge.
03.07.2006
Wedges
(Socolow et al 2004)
EFFICIENCY
Buildings, appliances, transport, industrial processing, lighting, electric power plants, upstream extraction.
DECARBONIZED ELECTRICITY
Natural gas for coal
Power from coal or gas with carbon capture and storage
Nuclear power
Power from renewables: wind, photovoltaics, solar concentrators (troughs and dishes), hydropower, geothermal.
DECARBONIZED FUELS
Synthetic fuel from coal, natural gas, and biomass, with carbon capture and storage
Biofuels
Hydrogen
from coal and natural gas, with carbon capture and storage
from nuclear energy
from renewable energy (hydro, wind, PV, etc.)
FUEL DISPLACEMENT BY LOW-CARBON ELECTRICITY
Grid-charged batteries (“plug-in hybrids”) for transport
Heat pumps for furnaces and boilers
NATURAL SINKS
Forestry (reduced deforestation, afforestation, new plantations)
Agricultural soils
METHANE MANAGEMENT
landfill gas, cattle, rice, natural gas
03.07.2006
Italics: Not on list in Science
$ 100/tC
Carbon emission charges of $100/tC can enable commercialization of
most of the wedges (PV is an exception.) (Socolow et al 2004)
Form of Energy
Equivalent to $100/tC
Natural gas
$1.50/1000 scf
Crude oil
$12/barrel
Coal
$65/U.S. ton
Gasoline
25¢/gallon (ethanol subsidy: 50¢/gallon)
Electricity from coal
2.2¢/kWh (wind and nuclear subsidies: 1.8 ¢/kWh)
Electricity from natural gas
1.0¢/kWh
Today’s global energy system
$700 billion/year (2% of GWP)
$100/tC is approximately the October 2005 EU trading price
03.07.2006
Potential wedges (Socolow et al 2004)
Option
Economy-wide carbon-intensity
reduction (emissions/$GDP)
1.
2.
Efficient vehicles
Reduced use of vehicles
3.
Efficient buildings
4.
Efficient baseload coal plants
5.
Gas baseload power for coal baseload power
03.07.2006
Effort by 2054 for one wedge, relative to 14
GtC/year BAU
Energy effiency and conservation
Increase reduction by additional 0.15% per year
(e.g., increase U.S. goal of 1,96% reduction per year to
2,11% per year)
Increase fuel economy for 2 billion cars from 30 to 60 mpg
Decrease car travel for 2 billion 30-mpg cars from
10.000 to 5000 miles per year
Cut carbon emissions by one-fourth in buildings and
appliances projected for 2054
Producte twice today‘s coal power output at 60% instead
of 40% efficiency (compared with 32% today)
Fuel shift
Replace 1400 GW 50%-efficient coal plants with gas plants
(four times the current production of gas-based power)
Potential wedges (Socolow et al 2004)
Option
6. Wind power for coal power
Effort by 2054 for one wedge, relative to 14
GtC/year BAU
Renewable electricity and fuels
Add 2 million 1-MW-peak windmills (50 times the current
capacity) „occupying“ 30 x 106 ha, on land or offshore
7. PV power for coal power
Add 2000 GW-peak PV (700 times the current capacity)
on 2 X 106 ha
8. Biomass fuel for fossil fuel
Add 100 times the current Brazil or U.S. ethanol production, with the use of 250 X 106 ha
(one-sixth of world cropland)
Strategies available to reduce the carbon emission rate in 2054 by 1 GtC/year or to reduce
carbon emissions from 2004 to 2054 by 25 GtC
03.07.2006
Market Trends and Perspectives for Clean Energy
(Clean Edge, March 2005)
1.Projected world markets for Clean Energy (2004 to 2014)
Wind Power:8 to 48,1 (US $ Billions)
Solar PV: 7.2 to 39.2 (US $ Billions)
Fuel Cells: 0.9 to 15.1 (US $ Billions)
2. Up coming clean energy markets
Biofuels (e.g. biogas, biodiesel, ethanol, long term:BTL (driven by oil prices/ security of oil supply e.g. in
countries like Brasil, US, EU, India)
Energy Efficiency („Efficiency is back on the spotlight“; driven by private companies like General Electric
and countries like China, EU and US states like California)
Concentrated Solar Power (CSP) („after a standstill of more than a decade“; 1000MW initiative of US
DOE; many plans in the „Solar Belt“ (e.g. Spain, Northern Africa, Middle East; EU-MENA Study)
Green Buildings (e.g driven bei US Green Building Council and LEED-Standard „Leadership in Energy
and Envionmental Design“; „leap frogging“ in rapidly growing economies like in e.g. China, India) )
03.07.2006
The contribution of
energy efficiency (purple
bar; compared to Reference
Case), renewables and
C02-sequestration
(WBGU) in three recent
world scenarios of
sustainable energy
systems (Source: Wuppertal Institute)
WBGU Sustainability Scenario:
Increased Energy Productivity
WBGU: 1,6% p.a.
(historically: 1%)
Productivity
Increase:
„Factor 3“
by 2050
Remark:
2% p.a.efficiency increase
has been demonstated
by the Wuppertal-Scenario
03.07.2006
WBGU/IPCC A1T*-Path: Global Energy Mix
03.07.2006
“Tolerabel Window” and Results
of the WBGU-Sustainabilty Scenario
•Keeping Climate Change within
the „Tolerable Window“ is possible
•Reducing C02 by about 50%
globally and 80% in ICs (using
C02-sequestration)
•Phasing out nuclear up to 2050,
using C02-sequestration
•Raising living standards in all
developing countries
•Being the „Least Cost Option“
compared to IPCC-SRESScenarios
03.07.2006
„Tolerable Window“:
Temperature change
20C and <0.20C/decade
The „Top“ Energy Technologies for Climate Mitigation:
Screening International R&D Programmes and Scenarios
Efficient Coal Technologies
Supercritical power plants
Carbon capture and storage (CCS)
Natural Gas / Gas Combined Cycle
Decentralized Cogeneration
Technologies
Fuel cells
Microgasturbine
Stirling
Block-type thermal power station
Solar Appliances
Solar heating & cooling
Solar thermal power stations
Photovoltaic
Wind Energy
Geothermal Energy
03.07.2006
Biomass Options
Efficient stationary use of biomass
(cogeneration, gasification)
Bio Fuels
Energy Efficiency Technologies
Efficient household appliances
Efficient electrical propulsion
LED
Information- & communication technologies
Industrial efficiency technologies
Energy Storage Systems
Efficient Vehicles
The „Top“ Energy System Solutions for Climate Mitigation:
Screening International R&D Programmes and Scenarios
Decentralized Intelligent Energy Systems
(including net connection, system integration, storage battery,
virtual power stations
Rural Electrification
(including stand alone sytems)
Alternative Fuels, Infrastructures & Energy Carriers
(including Hydrogen)
Efficient Buildings
Residential buildings with focus on passive houses
Commercial buildings, (including air conditioning engineering,
energy management)
Sustainable cooling (including passive cooling, solar cooling)
03.07.2006
Assessment of future energy technologies in representative studies
Political Action Plan for a
Sustainable Development
+ Interntl. Technol. Assessmt Study
+ Interntl. Implementing Agreemts
Technol. Assessment Study
+ Future Studies &
Technol. Assessmt
+ Worldwide Report on
Sust. Dev.mt
Worldwide
Technol. Report
on Sust. Dev.mt
Political Initiative
on Sust. Dev.mt
+ Energy Research
Program
+ independent
Initiative by private
foundation
Political Initiative
on Sust. Dev.mt
+ Technol.
Outlook
+ EU
Research
Programme
+ Energy
Policy Study
Technology
Assessment
Representative studies due to
a) Regional variety b) Coverage of all types of approaches (R&D programs, scenarios ...)
03.07.2006
Source: Wuppertal Institute
Energy Efficiency and Co-/Trigeneration:
Stepchildren of Multi-Player Initiatives
Assessment of Studies shows:
Energy efficiency under-represented
Co-/Trigeneration under-represented
Although
Technologies are highly cost-effective
after barrriers removal
Potentials for application are huge
Both are key strategic elements of sustainable energy strategies
One reason: International initiatives and drivers are lacking!
03.07.2006
Source: Wuppertal Institute
Worldwide electrical output of decentralised low- or no-carbon
generators (except large hydro)
Source: Lovins/2006; based on MIT 2003).
03.07.2006
Worldwide electrical generating capacity: Decentralized (28 GW)
vs. nuclear (4.7 GW) in 2004 (forecast 2010: ca. 70 GW vs. 0.5 GW!)
03.07.2006
Source: Lovins 2006
Centralized power´s competitors on a consistent accounting
basis. Levelised cost of delivered electricity or end-use efficiency
(at 2,75¢/kWh delivery cost for remote sources, Source: Lovins/2006; based on MIT 2003).
03.07.2006
Facts and projections on wordwide decentralized vs. centralized (nuclear) electricity capacity and efficiency gains
In 2004 low- and no-carbon decentralizend sources of electricity (28 GW) added worldwide 5.9
as much capacity p.a. as nuclear (4.7 GW); in 2010 it could be 65-87GW to 0.48 GW
Efficiency gains plus decentralized sources add 10x as much capacity p.a. as nuclear power
Nuclear is an inherently limited climate protection option: it makes only electricity and it`s too big
for small countries, the slowest option to deploy, (without subsidies) the most costly and
financially risky technology, least accepted in society and vulnerable to terrorist attacks and
proliferation: „Since nuclear power is unnecessary and uneconomic, we needn‘t debate whether
it`s safe“ (Lovins 2006, p.18)
Comparative costs (MIT 2003; levelized 2004 US$; including 2.75c/kwh delivery costs;$100/t
carbon tax):
- nuclear: 9.77 c/kWh (decreasing to 7.15 c/kWh?)
- coal: 9.66 c/kWh (without tax: 7.15 c/kWh)
- combined cycle: 7.78 - 9.77c/kWh (depending on gas prices; without tax: 6.73-8.61 c/kWh)
- wind: 7.51 - 8.01 c/kWh (1.0 c/kWh reduction expected in 2012)
- end-use efficiency: 1c/kWh up to 5c/kWh (suboptimal business programs); average: 2- 4c/kW
Opportunity costs: Instead of spending 10c to displace 1 kWh coal-fired electricity/C02 by
nuclear we get: 1.2-1.7 kWh wind, 0.9 -1.7kWh gas fired industrial cogeneration; 10 kWh enduse efficiency
Opportunity costs and climate protection: „nuclear power saves half as much carbon per dollar
as windpower and traditional cogeneration, half to a ninth as much as innovative cogeneration,
and a tenth as much as end-use efficiency“ (Lovins, 2006, p.15)
03.07.2006
European Energy Priorities DG Energy and Transport
Piebalgs:
„Increase Energy Efficiency.
Energy efficiency is a core objective of the European Commissions
Energy Policy. It will be a key priority from 2005 onwards
It is commonly accepted that the Union could save 20% of the energy use in a costeffective manner.
Even if only a proportion of this is achieved, it means a real contribution to Europe`s
competitiveness, a boost to Europe`s security of supply,
a significant contribution to meet the Union Kyoto objectives
and in particular a real gain in employment, given that the majority of the energy
efficiency services and products come from the Union“.
03.07.2006
Results of the first European Energy-Delphi-Survey
up to 2030
„The 670 experts gave those technologies the highest priority which could reduce
the energy consumption“ („increase of energy efficiency“)...
A clear trend to a decentralized energy system and to implementing more
energy storage capacity was identified...
Nuclear energy was controversial among the experts...A number of Delphi
comments point to the apparent contradiction between the high share of funding for
nuclear research, especially fusion, and the meagre positive impacts anticipated
over the next 35 years...
The respondents generally rated the anticipated impacts of C02 sequestration as
rather low in relation to the uncertainties connected with the technology“.(IZT 2004)
03.07.2006
Target 2020. Results of an integrated EU25-Scenario:
Analysis on behalf of WWF (Wuppertal Institute, 10/2005)
Policies & measures (P&M) compared to BAU for GHG-reduction up to 2020;
CO2 emissions can be reduced by more than 30 % until 2020 (vs. 1990)
energy efficiency must be given highest priority; efficiency/renewables
integration needed
20 % share of renewable energies is feasible (2020)
active climate protection strategy yields further benefits:
less oil and gas import dependence
reduced risks of energy shortages and energy price peaks
reduction of high energy costs; positive net employment effects
less environmental burdens.
03.07.2006
A climate friendly path for EU25 is possible:
30% C02 reduction up to 2020
4.000
3.500
– 30 %
Milion tons of CO2
3.000
2.500
Transport
2.000
Tertiary
Residential
1.500
1.000
Industry
ET-Sectors:
(~ 55 % of total)
500
Energy Branch
Electricity &
Steam prod.
60 % of Reduction
~ 2.8 % per year
0
1990
03.07.2006
1995
Source: Wuppertal Institute
2000
2005
2010
2015
2020
Acceleration of Energy Efficiency in EU 25
Improvements in all Sectors are feasible
Improvement of Energy Efficiency by Sector
% per Year
0,0%
0,5%
1,0%
1,5%
3,0%
2,7%
1,3%
Residential (Energy on
Private Income)
2,6%
1,8%
Tertiary (Energy on
Value added)
2,8%
0,4%
90 - 00 Actual
00 - 20 BAU
00 - 20 P&M
03.07.2006
2,5%
1,9%
Industry (Energy on
Value added)
Transport (Energy on
GDP)
2,0%
Source: Wuppertal Institute
2,2%
Acceleration of efficiency
increase p.a. in all sectors
(vs. actual and BAU)
Residential: doubling
Industrial/commercial
+ 50 %
Transport x 5
Total: almost a doubling of
efficiency increase p.a.
Increasing energy
efficiency over 20 years by
more than a third
Primary Energy Use and Energy Security: P&M vs. BAU Scenario
800
BAU Oil
700
P&M Oil
600
BAU Natural gas
Mtoe
500
P&M Natural gas
BAU Nuclear
400
P&M Nuclear
300
BAU Solids
P&M Solids
200
BAU RES
100
P&M RES
0
1985
1990
1995
2000
2005
Year
03.07.2006
Source: Wuppertal Institute
2010
2015
2020
2025
CO2 reduction by strategy: Priority for energy efficiency
Emission reductions P&M vs. BAU
4 500 000
4 000 000
Energy Efficiency - 22 %
3 500 000
Fossil fuel switch - 2 %
t CO2
3 000 000
2 500 000
Renewables
2 000 000
1 500 000
1 000 000
500 000
BAU 0
P&M
03.07.2006
1990
1995
2000
Source: Wuppertal Institute
2005
2010
2015
2020
- 14 %
P&M-Scenario: 580 TWh electricity savings up to 2020 (14%
compared to BAU)
03.07.2006
Source: Wuppertal Institute
Energy Savings by Appliances in the Commercial Sector,
P&M vs. BAU Scenario, 2020 (EU 25)
Electricity
15 Mtoe
(22%)
03.07.2006
Source: Wuppertal Institute
Fuel/Heat
23 Mtoe
(24%)
Energy Savings by Appliances in the Residential Sector,
P&M vs. BAU Scenario, 2020 (EU 25)
Electricity
Total
48 Mtoe
(24%)
03.07.2006
Source: Wuppertal Institute
Electricity
33%
23 Mtoe
(40%)
BAU: Transport Sector Trends
Almost Doubling of Emissions
1 800
Vapour/H2O
1 600
CO2 Air
CO2 other
1 400
+ 117 %
mt CO2eq
1 200
1 000
800
+ 54 %
600
400
200
0
1990
03.07.2006
2000
2010
Source: Wuppertal Institute
2020
Aviation is responsible for almost 50 % of
increase in transport sector emissons
(including H2O)
Based on: Global Market Forecast 2003
(Airbus Industries)
BAU scenario: 195 Mt CO2 (including water
emissions 586 Mt CO2eq)
Demand growth: + 5.4 %/ year
(+119% 2005-2020)
Fuel Efficiency: + 0.58 %/ year
(+8.3% 2005-2020)
P&M scenario: 139 Mt CO2 (including water
emissions 416 Mt CO2eq)
Demand growth: + 4%/ year
(+80% 2005 – 2020)
Fuel Efficiency: +1.55%/ year
(+20.8% 2005 – 2020)
Transport Sector: Emission Reductions P&M compared to BAU
Demand measures ( e.g. emission trading, tax incentives, rising energy
prices, road pricing):
Passenger road transport:
- 17 Mt CO2
Demand
Air transport:
- 34 Mt CO2
measures:
Optimisation of logistics:
-106 Mt CO2
Trucks:
- 55 Mt CO2
Efficiency Improvements:
Passenger cars:
- 106 Mt CO2
Efficiency:
-175 Mt CO2
Aviation:
- 21 Mt CO2
Trucks:
- 48 Mt CO2
Biofuels:
Renewables:
Target 2020: 8 % share:
- 64 Mt CO2
-64 Mt CO2
03.07.2006
P&M compared to BAU for power production:
Significant structural change needed!
BAU:
+ 339.500 MW new fossil
condensing power plants
+ 71.400 MW CHP generation
P&M:
+ 65.200 MW new fossil
condensing power plants
+ 118.400 MW new CHP
(45 % biomass)
03.07.2006
Economic rationale of the P&M scenario: Multiple benefits
As compared to BAU
Reduced energy imports (depending on oil price (24 - 48$/bbl) & $ / Euro ratio
by 0.3 to 0.6% of GDP in 2020 (46 to 120*109 Euro in 2020)
Cutting of thermal power plant investment
by roughly 50% (100 – 200*109 Euro savings)
Doubling of investment in renewable energy generation
+ 50 GW offshore windturbines (roughly +50*109 Euro investments needed)
Cost-efficient investments in energy efficiency
Reduced costs for energy imports cover 1.6 to 4.1 ct per kWh of energy savings
According to LCP-studies this covers for cost-efficient saving potentials of 20 to 30%
(on a macro economic level)
The P&M strategy substitutes imports by domestic investments
Fuel import expenses and investment in fossil power plants
By domestic investment in energy efficiency, renewable energy technology and
domestic (renewable) energy production
The P&M strategy reduces economic risiks
Generates higher and more sustainable investment
Is largely cost efficient on a macro economic level (on average)
Offers higher resilience toward energy price shocks and higher price scenarios
03.07.2006
The growing energy import dependency of Europe
Source: European Commission 2004
03.07.2006
Final energy consumption in transport from 1990 to 2003 in the EEA30
(EU25 plus Norway, Iceland, Bulgaria, Romania and Turkey)
and the cost of the fuel (pretaxes, inflation-corrected, Euro of 2005)
Quelle: EEA-fact sheet in the Oil Bulletin, 2005
03.07.2006
How can Germany contribute to climate mitigation?
CO2-reduction path in a German sustainable energy system
- energy related emissions only -
1.000
800
Governmental
declaration 2002:
- 40% in 2020
Commitment
- 25% in 2005
600
Kyoto-target
2008-2012
400
CO2 emissions
200
0
1990
Recommendations
Enquete; IPCC:
- 80% in 2050
1990-2003
2000
Reference
case
2010
Scenario
Nat. conservation
2020
2030
Reduction
targets
2040
2050
oeko\co2deu.pre;3.1.04
Sources: DIW-report 10/2004; reduction path: BMU 2004
03.07.2006
Decoupling GDP-growth (1.5% p.a.) from energy: The role of
sectoral energy efficiency in a German sustainable energy system
03.07.2006
Source: Wuppertal Institute
Structural change in a sustainable German power system: Big power plants are
phased out - decentralisation of new power plants would be necessary
Stromerzeugung
Bestandsund
Neukraftwerken
bis 2050
Power Generation from von
existing
and new power
stations
until 2050
Sustainability Scenario
- Szenario NACHHALTIGKEIT -
Gross
energy generation, [TWh/a]
Bruttostromerzeugung,
[TWh/a]
REG für
REN for hydrogen
Wasserstoff
500
REG-Inland
REN
domestic, old & new
alt
+ neu
KWK Biomasse
CHP biomass, new
Neubau
KWK fossil,
CHP fossil, new
Neubau
Kond.KW, fossil
Cond. CHP, fossil, new
Neubau
400
300
Erdgas/Öl
Existing gas/oil
Bestand
REN for hydrogen
Steinkohle
Existing hard coal
Bestand
REN import
Braunkohle
Existing lignite
Bestand
REN domestic, old & new
Kernenergie
Nuclear Power
CHP biomass, new
200
100
0
2000
REG-Import
REN import
2005
2010
2015
Source: Enquete Commission 2002
2020
2025
2030
2035
2040
2045
2050
uba-2\zubau01.pre;25.6.02
The increase of renewables in a sustainable German energy system:
Low incentives by ET!
360
320
1.400
67,6
Electricity
46,7
1.200
Heat
58,0
280
34,9
1.000
240
46,5
23,8
800
200
30,3
160
REN share (%)
120
80
400
REN share (%) 14,1
200
6,1
U
0
2000
2010
2020
2030
Biomass
Wind
Onshore
Geothermal
Photovoltaic
Import REN
2050
Wind
Offshore
03.07.2006
Source: Wuppertal Institute
l
oeko\stromerz; 6.1.04
6,1
2,9
0
2000
t (fi
Hydropower
2040
f l h
Electricity generation
40
13,7
600
2010
Biomass
indiv. heatings
Collectors
distric heating
2020
2030
Biomass
distric heating
Geothermal
2040
2050
Collektors
indiv. installations
CHP with H2
distric heating
oeko/regwae-NP2; 14.1.04
Planned power plant capacities 2006 to 2012 in Germany
(Sources: BMU Statusbericht Energie-Gipfel 3/2006; VDEW 24.1.2006; LBD Research 6.4.2006)
year
natural gas
03.07.2006
natural gas
gas turbine
natural gas
hard coal
brown coal
Long term structural effects of NAP II (Germany):
23 GW (>50% coal) planned - about 70 mio t C02 fixed!
CO2-Emissions
in Mio. t/a
NAP II (Germany): Todays privileges for coal power plants
cause too many CO2 emissions in the future
Necessary reductions of CO2
to reach the +2o C goal of
EU (= 80% CO2-reduction in
Germany)
03.07.2006
Source: Literature list of Wuppertal Institute
Transportation in a sustainable German energy system: The
„efficiency revolution“ can make alternative fuels feasible!
03.07.2006
Source: Wuppertal Institute
Fuels for transportation in a long run
German Sustainability Scenario 2100
Final energy, PJ/a
3000
2.775
2.623
2500
Strom
Power
Benzin
Gasoline
Diesel
Diese
Kerosene
Kerosin
Biofuels
Biokraftstoffe
lNatural gas
Erdgas
H2
2030)
H2(ab
(from
2030)
2.274
2000
1.841
1.550
1500
1.117
970
1000
880
E d
810
780
760
2080
2090
2100
500
i
0
[P
03.07.2006
2000
2010
2020
2030
2040
2050
2060
2070
Source: DLR/IFEU/WI 2004
Strategic „Implementation Order“ of Renewables towards a Sustainable
German Energy System: First electricity (E), then heat (H), then
transportation (F)
03.07.2006
Source: Wuppertal Institute
CO2 avoidance costs for electricity generation by renewables
– a matter of strong dynamics and learning effects
970
Photovoltaic
Wind Onshore
Wind Offshore 1)
2000
2030
2050
Geothermal
plant
Solar thermal
power plant 1)
with transport
Biomass CHP
Hydropower
> 1 MW
1) initial figure
stands for 2005
Hydropower
< 1 MW
-40
-20
0
20
40
60
80
EUR/t CO2
100
120
140
oeko/co2-ver; 18.4.04
03.07.2006
Source: Wuppertal Institute
160
Electricity production costs (Euro/kWh)
Comparison of electricity costs of new powerplants
- fossil mix 50% coal, 50% natural gas 0,10
0,08
0,06
0,04
0,02
0,00
2000
REG
fossiler
Mix
zusätzl.
CO2-Rückhalt.
mix Mix
of
mix
of fossil
additional
CO2-Sequest.
Basis Kostenbandbreite
15 EUR/t
CO2 CO2
Kostenbandbreite
renewables
fuels (cost range)
15 EUR/t
(cost range)
2010
2020
2030
2040
2050
oeko/kost-kw.pre; 15.09.03
03.07.2006
Source: Wuppertal Institute
Assessment of cost effective CO2-reduction potentials in Germany: 70
technological options in the heat and electricity sector (WI 9/2005)
More than 120
mio t of CO2
(20-25%) can
be avoided
with zero net
costs
specific costs of saved energy
CO2-avoidance costs
03.07.2006
Marginal costs
of advanced
technologies
compared to
reference cases
over the life
time
Net costs of technological CO2 reduction options
in Germany until 2015
Net costs of conserved energy=additional costs of advanced technology less long-run avoided system costs
03.07.2006
Source: Wuppertal Institute
Dynamic and static electricity saving potentials (net) in Germany,
compared by sectors with the respective total consumption in 2003
electricity saving potentials as part of the 2003 consumption
[TWh/year]
250
dynamic potential to 2010
additional dynamic potential to
2015
200
difference to static total potential
remaining electricity consumption
150
100
50
0
residential
commercial & public
Sector
03.07.2006
Source: Wuppertal Institute
industrial
Dynamic and static saving potential for heating fuels and district heat
(net) in Germany, compared to the respective total consumption in 2003
fuel saving potentials as part of the 2003 consumption
[TWh/year]
700
dynamic potential to 2010
600
additional dynamic potential to
2015
difference to static total potential
500
remaining fuel consumption
400
300
200
100
0
residential
commercial & public
Sector
03.07.2006
Source: Wuppertal Institute
industrial
Dynamic and static GHG-reduction potentials from energy end-use
efficiency in Germany, to the respective total consumption in 2003
300.000.000
CO2 saving potentials as part of the 2003 emission
[t/year]
dynamic potential to 2010
additional dynamic potential to
2015
250.000.000
difference to static total potential
remaining CO2 consumption
200.000.000
150.000.000
100.000.000
50.000.000
0
residential
commercial & public
Sector
03.07.2006
Source: Wuppertal Institute
industrial
Economic and job impacts of a German sustainable energy system (80%
C02-reduction; nuclear phase out by 2025)
Additional cost (cumulative: 2000 to 2050;
compared to reference case)
201 billion Euro
3,8 billion Euro/a
Annual additional cost in average
Additional costs per capita
• significant (net) employment effects (change of jobs):
- renewable energies: + 250.000 to 350.000
- building industry: + 85.000 to 200.000
- coal and nuclear industry: - 100.000
03.07.2006
48 Euro/capita
Lessons learned
from German long term Energy Scenarios
80% C02 reduction up to 2050 is technically and economically feasible with different
technological options on the supply side
60-75% of C02-reductions must and can be realized by energy efficiency
Risk minimisation - climate protection plus nuclear phase out - can be financed with
reasonable additional costs
Key challenges for implementation:
Growing opposition against higher costs of renewables
Strategic initiative for fostering energy efficiency in all sectors needed
R&D priorities are not adapted to “Top ten” climate mitigation options
No consensus on sector and target group specific policy mixes to support
renewables, combined heat and power (CHP) and higly efficient vehicles
03.07.2006
Deficits of NAP/ETS in Germany
•Strong bargaining power of industry and utilities against tougher caps: Burden shifted to
other sectors (residential, commercial & public, transportation)
•,Adressing only the supply side and especially the owners of big power plants: 80% of
power capacity owned by 4 companies (RWE, E.ON, EnBW, Vattenfall)
•No incentive for utilities to engage in DSM („Efficiency power plants“): Potential for
electricity savings 20 - 30% compared to BAU
•No incentive for decentralisation (Renewables, CHP): Additional potential for
decentralised CHP e.g. about 20 GW
•Indirect support for nuclear (debates on life time extension; phase out cancelled?)
Linking with supporting framework for Renewables, CHP and End Use Efficiency is
needed!
03.07.2006
A Paradigm Shift is Needed: ET must be better linked to a Policy Mix to Overcome
Barriers and to Foster Decentralisation and Efficiency Technologies!
Energy tax,
subsidy reform
Emission trading, JI, CDM
Price structure,
costs oriented prices
Incentives and support (financial, organisational) :for investments, R&D, demonstration, pilots
Campaigning: Motivation, information, energy audits, training
Efficiency standards/labelling: for products and production (mandatory/ voluntary)
Foster public procurement, bundling of demands etc.
Stimulate ESCOs , Contracting/ Third Party Financing (about 600 in Germany)
Establish Energy Efficiency Funds: on the national, regional and local level (e.g.ProKlima/Hanover)
EU-directive on energy efficiency (target: 1 % additional increase of energy efficiency p.a.)
Integrated market transformation programme
Manufacturers
03.07.2006
Planers,
Installers,
Retailers
Source: Wuppertal Institute
Building, Equipment owners,
Final users
Energy- (Service)
Companies
Possible international cooperation
on strategic policies and measures
1. Establish tagets, foster dissemination and use technological leap frogging
- Raise the share of co- and trigeneration to 20% in 2020 in OECD-Countries
2. Foster Innovation and R&D on renewables, distributed power systems and energy/ material efficient techniques
3. Create markets for electricity from renewables and realize learning effects
- Raise share of renewables to 25% (2020) and 50% (2050) globally
- Use guaranteed feed-in tariffs (e.g. German Renewables Resources Act the installed German)
4. Remove barriers to end use energy efficiency by
- efficiency targets and standards (like the Japanese “Top Runner Program”)
- voluntary agreements in energy intensive industries (like in NL)
- internal emissions trading schemes (like BP or Shell)
- standards for car fleet efficiency (like in California)
- energy efficiency funds and DSM-programs (like in 20 US states and in Europe)
- building codes for low energy and passive houses (like in Germany)
- founding Energy Service Companies (e.g. more than 600 ESCOs in Germany)
5. Foster resource productivity increase (“eco-efficiency”) by integrated energy and material efficiency
projects/programmes
- e.g. 5% of German energy consumption can be conserved by efficient material managment (e.g. recycling)
6. Safeguard access to advanced energy for the poor (2.4 billion people)
- Integrate rural electrification programs for income generation into ODA/establish micro credit programs
- Build a network of decentralized international “Efficiency and Renewables Centers”
- Found a “Knowledge Diffusion Network” in cooperation with the “GEF-family” to disseminate lessons learned
03.07.2006
Possible international cooperation on
knowledge sharing and diffusion of technologies
1. Establish an „International Knowledge Sharing and Diffusion Network“ and
help developing countries to „leap frog“ to advanced technologies
Foster dissemination, replication and expansion of good practice.
Establish a co-ordinating unit (“International Effciency and Renewable Agency”) and a
network in cooperation with the “GEF family”.
Identify, systematize and publish relevant information related to lessons learned from
successes and failures of projects and for market aggregation (“good policies”)
Develop Handbooks for target groups; provide high profile and authorised data on key
technologies, costs, financing, standard specifications, typical applications etc.
2.
R&D-Initiative to build „2000 W per capita societies“:
Identify feasibility and R&D needs: technological foresight of new technologies and potentials
Integrate material and energy efficiency into energy systems analysis („lightweight economy“)
Identify patterns of „sustainable consumption and production“
03.07.2006
R&D contributes to close the „efficiency gap“: The Vision of a „2000W
per Capita Society“ (The Swiss „White Book for R&D of energy-efficient technologies“,March 2004)
Starting point of a R&D initiative of Swiss Research Institutes (e.g. PSI, ETH):
2000W/cap (=65 GJ/cap) corresponds to 1/3 of today`s European per capita
energy use; world average in the last two decades (=70 GJ/cap)
Assuming GDP/cap growth of 2/3 up to 2050, the „2000W per Capita Society“
requires a factor 4 to 5 increase of energy efficiency (including structural
change)
A fundamental change of the innovation system and five decades are needed
to exploit the opportunities of long re-investmant cycles (e.g.industrial
processes,buildings,power plants)
03.07.2006
The „2000 W per capita
society“. The Swiss example
Reference case: 2/3 of primary energy
demand is lost in energy conversion in the
world energy system
Swizzerland in 2000 and 2050: reducing
losses and energy per capita demand by two
thirds while increasing energy services by
65% is proven to be technically feasible
Source: Novatlantis, 2005
03.07.2006
Source: Literature list of Wuppertal Institute
Feasible efficiency potentials to reach a „2000 W per Capita Society“
(according to Swiss White Book 2004)
Buildings: 80 % (new types of insulation and windows; efficient low temperature heating and heat recovery;
decentralised combined heat, cold and power produc- tion, integrated PV and solar thermal systems)
Large equipments and industrial plants: 20-50% (paper machines, petro-chemical plants and industrial
kilns; process substitution/ i.g. bioplastics)
Transportation: cars: up to 70% (light weight, braking energy recuperation, new materials,
downsizing);trains: up to 60% (new propulsion, light construction); buses and light trucks: up to 60% (freight
logistics) ; air crafts: up to 45% (improved turbines and aerodynamic efficiency)
Systematic use of power electronics and telematics (30-80%)
More efficient material use: 30-90% (reduce, recycle, reuse,substitute: “The close relationsship between
material use and energy demand opens an entirely new area of energy systems analysis and...offers major
entrepreneurial opportunities for a lighter, more efficient and less polluting industrial society“)
R&D on „soft issues“ and „implementation research“ is needed as well: Social innovations and new
behaviour patterns in decisions making („use instead of own“, life cycle costs including external costs,policy
mix to overcome barriers and market failures)
03.07.2006
Perspectives of “Post-Kyoto”
climate mitigation policies: Parallel tracks
“Kyoto” continues, but modified
New targets negotiated for subsequent periods, with
additional countries added to Annex B
Structure of emissions trading system retained while CDM is
streamlined
Additional areas of agreement around technology, adaptation
and financial assistance to developing countries
In the near term, international process may move down parallel
tracks: Kyoto and non-Kyoto,
Kyoto evolves, although perhaps with limited additional
reductions in near term
“Non-Kyoto” structure may include US and key developing
countries,
03.07.2006
International markets (through CDM) also developing,
but only marginal interest in energy efficiency
January 2004 – April 2005
$680 million in contracts
Source: World Bank, 2005, State and Trends of the Carbon Market
03.07.2006
72
Concluding Comments:
ET should be integrated into target oriented
technology deployment and diffusion programms
To date, international negotiating focus has been on top down “GHG-reduction”approaches
Driven by the connotation of “burden sharing”, forgetting societal benefits
and “profit
sharing” amongst the “winners” of climate mitigation technologies
Driven by the theoretical rationale of
economic efficiency of ET, forgetting the
reluctance of private sector (“loosers”) and policy to adopt globally efficient systems
While some industries and countries are moving forward, necessary caps are rejected
by key players including US, and developing countries
Alternatives (“parallel tracks”) include mechanism and policy mix for “scaling up”
markets and encouraging innovation
Technology and sectoral approaches
Development approaches, and
Sub-global target oriented agreements and cooperation
Main goal: Fostering the dissemination and deployment of the
(e.g. End use Efficiency, Renewables, Trigeneration)
03.07.2006
“three green pillars”
Thank you for your attention!
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