Timothy J. Foxon 1 , Geoffrey P. Hammond 2 , Craig I. Jones 2 and Peter J. Pearson 3

1. Transition pathways for a UK low carbon electricity system: comparing emissions reductions options and policy implications Timothy J. Foxon1, Geoffrey P. Hammond2, Craig I. Jones2 and Peter J. Pearson3 1Sustainability Research Institute, University of Leeds 2Department of Mechanical Engineering, University of Bath 3Low Carbon Research Institute, Cardiff University 34th IAEE International Conference Stockholm, Sweden, 19-22 June 2011

2. Outline • A transition to a low-carbon energy system in the UK – policy drivers • ‘Transition Pathways’ project approach • Developing and analysing transition pathways based on alternative governance patterns • Results of whole systems appraisal of pathways v1.1 • Branching points analysis • Policy implications

3. UK Low Carbon Goals Climate Change Act (2008) Set 80% carbon emissions reduction target by 2050 into law Requires govt to set five-yearly carbon budgets, based on recommendations by expert Committee on Climate Change UK Low Carbon Transition Plan (2009) Plan for meeting (unilateral) 34% reduction goal for 2020 40% of electricity from low-carbon sources by 2020 - 30% electricity from renewables (mainly onshore and offshore wind) - 4 demonstration carbon capture and storage from coal plants; - facilitating build new nuclear power Energy efficiency measures for households, business and transport Coalition Government priorities (2011) Electricity Market Reform Green Deal for household energy efficiency improvements 4th Carbon Budget period: 50% reduction by 2025

4. UK possible 80% CO2 emissions reduction path Source: Climate Change Committee Report 2008

5. Department for Energy and Climate Change 2050 Roadmap Analysis (March 2010) • Initial findings • Ambitious energy demand reduction is needed • High level of electric heating and transport is needed • Electricity supply needs to be decarbonised, and may need to double • Uncertainties and trade-offs • Shape of future energy infrastructures • Precise 2050 electricity generation mix • Technological uncertainties

6. ‘Transition pathways’ project • ‘Transition pathways to a low carbon economy’ • Universities of Bath, Cardiff, East Anglia, Imperial College, Leeds, Loughborough, Strathclyde, Surrey, University College London • Funded by EPSRC and E.On UK (May 2008 – April 2012) • Key aims: • Select, develop and analyse a set of potential transition pathways for the UK energy system to a highly electric low carbon future; • Undertake integrated assessments of the technical and economic feasibility and social and environmental potential and acceptability of these pathways

7. Transition pathways approach • Developing and analysing transition pathways for a UK low carbon electricity system • Co-evolution of technologies, institutions, firms’ strategies and user practices • Quantitative and qualitative analysis of v1.1 of the pathways • Generation and infrastructure requirements • Life cycle carbon emissions and environmental impacts • Social acceptability of key technologies, e.g. smart meters • Now undertaking • Second iteration of core pathways • Identifying and analysing potential branching points

8. Market-led pathway Market Rules Past regimes Future regimes Action Space 1 Government-led pathway: Central co-ordination Civil society-led pathway: Thousand Flowers The Action Space for Transition Pathways

9. Core transition pathways • Market Rules: • Energy companies focus on large-scale technologies: nuclear power, offshore wind and capture-ready coal • Minimal interference in market arrangements • Central Co-ordination: • Greater direct government involvement in governance of energy systems, e.g. issuing tenders for tranches of low-carbon generation • Focus on centralized generation technologies • Thousand Flowers: • More local, bottom-up diversity of solutions • Local leadership in decentralized options

10. Residential electricity demand by enduse (TWh/year)

11. Electricity generation mix, ‘Market Rules’ v1.1

12. Electricity generation mix, ‘Central Co-ordination’ v1.1

13. Electricity generation mix, ‘Thousand Flowers’ v 1.1

14. CARBON FOOTPRINT ASSESSMENT: WORKING ASSUMPTIONS • CCS = 90% capture of direct emissions, 15% fuel penalty • Full LCA basis, including upstream impacts • Stable uranium ore concentrations E.On/EPSRC

15. ‘Market Rules’ carbon emissions E.On/EPSRC

16. E.On/EPSRC

17. E.On/EPSRC

18. ‘Central Co-ordination’ carbon emissions E.On/EPSRC

19. E.On/EPSRC

20. ‘Thousand Flowers’ carbon emissions E.On/EPSRC

21. E.On/EPSRC

22. Economic costs • Undiscounted cumulative investment costs for each pathway, based on Ofgem ‘Project Discovery’ methodology, in £billion • Now undertaking more sophisticated economic analysis

23. Branching points • Market Rules: CCS assessed commercially unviable by 2020 • Market actors decide to continue investing in CCS, driven by expectations of large export markets for successful CCS technology; • Market mechanisms judged incapable of delivering CCS – branch to Central Co-ordination pathway; • Widespread scepticism about achieving low carbon targets and energy security concerns lead to renewed investment in unabated generation • Central Co-ordination: Strategic Energy Agency fails • Government proceeds to re-nationalisation of key electricity assets; • ‘Bureaucratic interference and incompetence’ blamed for failure – move back to Market Rules, but with time delays and higher costs; • Lack of co-ordination leads to a ‘two-tier’ price driven electricity system • Thousand Flowers: ‘Too much to carry’ in terms of actions needed • Community groups take ownership of local electricity networks; • National government or big energy companies step in to manage problems • Patchwork of local problems, result in targets being missed

24. Branching point: Smart grid visions • Technology integrator • Integrate high levels of distributed generation, changing consumer roles, electrification of heat and transport • Policy integrator • Help to deliver security of supply, environmental and internal market (innovation and competitiveness) objectives • Competing visions • ‘Top down’ vision of smarter control of system for benefit of electricity producers • ‘Bottom up’ vision of ‘electricity internet’ responsive to electricity consumers – real-time pricing, market segmentation • Is there a social vision of ‘smart grids’?

25. Policy implications • All these pathways will be extremely difficult to achieve • Demand reductions ease pressure on levels of low-carbon generation needed • But imply behavioural change in energy use practices, as well as technical efficiency measures • Pathways require coherent long-term framework and consistent short-term policy measures • UK carbon budgets provide long-term framework, but concerns about credibility of commitments • Electricity is the easiest sector to decarbonise • But additional supply needed for electric cars and electric heating • Branching points analyse to explore critical changes and uncertainties

26. References • Foxon, T J, Hammond, G P and Pearson, P J (2010), ‘Developing transition pathways for a low carbon electricity system in the UK’, Technological Forecasting and Social Change77, pp. 1203-1213 • Nye, M, Whitmarsh, L and Foxon, T J (2010), ‘Socio-psychological perspectives on the active roles of domestic actors in transition to a lower carbon electricity economy’, Environment and Planning A42, pp. 697-714. • Hargreaves, T, Nye, M and Burgess, J (2010), ‘Making energy visible: A qualitative field study of how households interact with feedback from smart energy monitors’, Energy Policy 38, pp. 6111-6119. • Special issue of Energy Policy planned for 2011. • Further working papers and presentations available on project website: www.lowcarbonpathways.org.uk