Exploring Policy Scenarios for Energy Transformation in Europe: Cascade Mints Project

1. Scenario development for policy analysis: ongoing experiences in Europe and the Netherlands ETSAP 24-25 November 2004, Firenze Koen Smekens, Hilke Rösler ECN Policy Studies, The Netherlands

2. Current activities • Major EU projects • Cascade Mints • HyWays • NEEDS • EFDA • Wide variety of policy questions & issues to be covered • Involving MARKAL/TIMES analytical work and model extensions Cascade Mints

3. Cascade Mints - Introduction • Stands for : CAse Study Comparisons And Development of Energy Models for INtegrated Technology Systems • FP6 project, DG Research • Part 1: Modelling possible configurations of a hydrogen economy and using models to study its prospects • Part 2: Medium- and Long-term policy scenarios focusing on the impact of renewables, nuclear and CCS (follow up of the ACROPOLIS project) • Partners: 15 institutes in Europe, US, Canada and Japan • January 2004-December 2006 Cascade Mints

4. PART 1 PART 2 Modelling possible configurations of a hydrogen economy and using models to study its prospects Joint case studies on policy issues with operational energy models Coordinator: ECN Coordinator: NTUA Administrative Coordinator: NTUA Cascade Mints Cascade Mints

5. CM part 1 - objectives • Extensive model development • Technological scenario analysis: Aim to identify conditions under which hydrogen can transform the energy system with particular emphasis on aspects of the transition. • Hydrogen technology dynamicsExamine conditions under which favourable developments in the technical and economic characteristics of hydrogen related technologies (both on the demand and supply side) may materialise.Incorporate relationships in the models to equip them with the ability to perform R&D policy simulations in a dynamic environment • Stochastic evaluation of hydrogen economy prospectsSystematic evaluation of the risks (and opportunities) facing the evolution of the hydrogen economy: assessment as to how likely different paths towards it are. Cascade Mints

6. CM Part 2 – objectives • Investigate the role of different policies in improving security of supply, reducing GHG emissions and fostering technological innovation • What will happen without intervention? • What room is available for policy intervention? • Show consequences (energy mix, emissions, SoS, cost) • Analyse trade-offs and synergies on different policy issues • Enhance the communication between model experts and policy-makers • Build consensus among model experts Cascade Mints

7. CM Part 2 – classification of models Cascade Mints

8. CM Part 2 – background and baseline analysis • Harmonization of drivers • IPCC B2 storyline • Energy prices (oil, coal, gas) form POLES • Economic growth • European policies (present policies valid for 2003-2012, abandoned afterwards but CO2 tax of 10€/ton after 2012) • Analysis of outcome (Europe, world) • Primary energy demand • Security of supply • Emissions • Long term challenges for the energy sector • Environmental impacts • Security of supply • Acceptable costs • Global interactions • Key drivers for change • Economical growth • Availability of resources • Technological development • Infrastructure • Geopolitical situation • Policies • Preferences Cascade Mints

9. Selected baseline results

10. CM Part 2 – mix primary energy consumption Energy mix remains dominated by fossil fuels, but mix changes Cascade Mints

11. CM part 2 – percentage of world oil production from Middle East Cascade Mints

12. Oil Gas CM Part 2 – Import dependency Europe Cascade Mints

13. CM Part 2 – global CO2 emissions Cascade Mints

14. CM Part 2 – Key messages for Europe in 2030 • Energy consumption grows with some 20-25% in 2000-2030; dominated by fossil fuels • Increasing import dependency (up to 70%) • Uncertain: Power generation mix • Growers: natural gas and renewables (wind, biomass) • Decrease: oil • Large variety in the prospects for coal technologies and nuclear power • New Member States: increasing contribution from natural gas and renewables at expense of coal • Share of electricity in final demand increases; fastest growth in new Member States • Mixed message on CO2 due to increasing importance of natural gas Cascade Mints

15. CM Part 2 – Renewables case study • Focus: Europe, but world models contribute • Two approaches - Europe 2020, world 2050 • Major scenario assumptions: EU targets (12 and 20% of primary energy consumption in 2020) • World models: subsidy scheme (ct/kWh green electricity) • Use models according to strength • Several sub-questions • Technological developments • Impact on other important issues: employment, SoS, … • Interregional dependence: spill-overs, relative growth, … • Report and policy brief in January 2005 Cascade Mints

16. CM Part 2 - forthcoming case studies • Nuclear case • 2 versions: phase out in OECD and global technical break-through, both under sever climate constraints (100€/ton CO2) • CO2 capture and storage • No outline yet • Hydrogen economy • No separate case (=CM part 1), but synergy analysis • More information Cascade Mints • http://www.e3mlab.ntua.gr/cascade.html Cascade Mints

17. HyWays Building a fully validated and accepted H2-roadmap for Europe

18. Background - Objectives • The transition towards a hydrogen based society is the starting point • Simulation models show usually “no hydrogen” (short term benefits vs. long term profits) • Boundary of future hydrogen society have to be set by the Scoping Report • HyWays has to show that the transition towards a future hydrogen society is preferable • Emission impacts, employment effects, impacts on GDP • Indicate the conditions (policy measures, energy prices, CO2 contstraints, etc.) HyWays

19. Scope and level of ambition Scoping report • Ambition has to be in line with US, Japan • Consensus on forehand on essential project characteristics (Industry, Institutes, MS, EC) • Scenario parameters (energy prices, energy demand,) • Depletion of natural resources (e.g. natural gas bij 20??) • Policy framework (550 ppm level in 2050, emission trading, etc.) • Time horizon (2020, 2030, 2050) HyWays

20. Major research questions Penetration of hydrogen as an energy vector for mobile and stationary applications; • Development of penetration rate and investment (additional) costs of hydrogen relevant technologies • Pathway analysis, including identification of critical actors and key changes and plausible hydrogen production routes matched to feasible timeliness • Changes in primary and final energy demand (security of supply) • Blueprint of a possible future hydrogen based society (stationary and mobile) • Emission analysis indicating achievable reductions in greenhouse gasses and pollutant emissions HyWays

21. Major research questions (2) • Demands on infrastructure • Estimated costs, capital investments and timescales for infrastructure built-up • Identification of different (most promising) regional markets for a hydrogen economy in Europe and development of regional market strategies • Development of industry R&D strategies for the creation of hydrogen economies; identification key technologies and needs for further research (R&D) HyWays

22. Major research questions (3) • Analysis of economical (i.e. subsidies, taxation) and legal conditions (i.e. regulatory policies) under which a hydrogen economy can become competitive in order to derive a European set of recommendations • Impacts on GDP, EU balance of trade, economic structure, employment effects, private vs. public investments, security of supply and social justice • Impacts of introducing general policy instruments such as a CO2-tax, emission trading etc. HyWays

23. Characteristics • Many partners (>30): Institutes and Industry (co-funding), MS/regions • Start: 1 April 2004 • Time frame (2 x 18 months) • Phase 1: NL, Gr, Nw, It, Fr, D • Phase 2: other member states of EU-25 HyWays

24. Objectives • Valid storylines, taking into account all kinds of barriers and opportunities have to be build • Models can address energy demand, penetration rates, emission impacts etc., but not country specific infrastructure built up or niche market development • Hybrid approach (including actor analysis) is needed HyWays

25. General Framework Hybrid approach • Address impact on • micro level (technology) – E3-database and Markal • meso level (sectoral level) – ISIS I/O-model • macro level (national level) – GEM-E3 • emission impacts – based on COPERT III • Technical, social, economic, political/institutional aspects have to be taken into account • Multi-level • Micro level – cost/benefit ratio (pay back time) • Macro/meso level – cost effectiveness (€ / tonne CO2) HyWays

26. Hybrid approach LBST CEA ECN ISI ZEW ENEA IST ICSTM ECN HyWays

27. Modelling framework HyWays

28. Transition analysis Analytical framework: using elements from transition methodology Key regime changes • Technology and economics • Consumer behaviour Critical actors • Actors opposing • Actors who benefit • Neutral actors HyWays

29. Example of topological input HyWays

30. H2 chains • Member state specific hydrogen chains • max 6 pathways per MS • Stationary and mobile options • Modelling of infrastructure (lumpy investment approach) HyWays

31. Demand regionalisation • Regionalisation of end use demand in building sector (commercial, service and residential) and transport sector HyWays

32. Regionalisation – results (1) Residential space heating/cooling Middle WEU  and NL HyWays

33. Regionalisation – results (2) Space heating/cooling Commercial/service WEU  and NL HyWays

34. More information • www.HyWays.de HyWays