Owen WILSON Environment and Sustainable Development Committee, EURELECTRIC

1. Owen WILSON Environment and Sustainable Development Committee, EURELECTRIC POWER CHOICES EURELECTRIC Study on low-CO2 Europe by 2050 Geneva, 13th April 2010

2. 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); McKinsey (co-ordination) • Focus: How to provide low-carbon, secure energy at least cost • Outcome: 50% reduction in EU27 GHG emissions by 2050 • European Council decisions on Climate-Energy package and 2050 objective • Economic and financial crises • Electricity industry CEOs Declaration

3. EURELECTRIC CEO Declaration18 March 2009 Carbon-neutral power in Europe by 2050 • Cost-efficient, reliable supply through an integrated market • Energy efficiency & electricity use as solutions to mitigate climate change

4. 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 CO2 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 SO2, NOx emissions also assessed

5. “Power Choices” Study • SCENARIO ASSUMPTIONS • 75% GHG cut across whole EU economy, consistent with 450 ppm global in 2050 • CO2 price applied uniformly to all sectors • Power becomes major transport fuel • All power generation options available • (with CCS commercially available as of 2025) • Major policy push in energy efficiency • No binding RES target post-2020; RES support mechanisms withdrawn by 2030 • CO2 price is the only driver for low-carbon generation post 2030 • Rational behaviour by economic agents • BASELINE ASSUMPTIONS • No new policy developments post 2009 • ETS 1.74% p.a. reduction continues • No CO2 price in non-ETS sectors • Bottom up measures to support energy efficiency, new renewables • MODELLING • PROMETHEUS to evaluate global energy supply/demand and prices • PRIMES to evaluate EU27 energy supply/demand (as per DGTREN Dec 2009) and emissions

6. “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 CO2 captured) • Nuclear energy • 132 GW in 2030 (85 GW new); 175 GW in 2050

7. 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

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

9. Overall energy demand -30% vs. Baseline in 2050 Paradigm shift to efficient electric technologies More electricity = less energy

10. Need for all low-carbon generation options Net power generation in EU-27 • 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)

11. Carbon emissions from power fall by >90% Deep emission cuts take place between 2025-2040. But investments are needed NOW! NOW: 1423 MtCO2 2050: 128 MtCO2

12. Decomposition of emissions reduction in Power Sector

13. Decomposition (ex-post) of emissions reduction

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

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

16. What if… Nuclear phase-out 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?

17. CCS delay CO2 emissions from power, EU-27 Power Choices Mt Nuclear+ 1600 1400 1200 1000 800 600 400 200 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 All technologies are really needed • More nuclear = more rapid reduction curve • 10-year delay of CCS = delayed CO2 emission reductions from power & whole economy! • 1/3 onshore wind not built = more CCS & nuclear, off-shore wind not likely to fill gap.

18. Power Sector SO2 and NOx emissions • SO2 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

19. 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 CO2 reductions in power are achieved from 2025 onwards • CCS delayed &/or nuclear phase-out = slower CO2 reduction • Significant co-benefits with air pollutants

20. CO2 reductions Technology choices • Support CO2 market to deliver cap at least cost • All sectors to internalise cost of GHGs • Promote an international agreement on climate • Enable the use of all low-carbon options for power generation • Encourage public support for modern energy infrastructure: onshore wind, CCS, smart grids… Cost Demand-side • Significant investment cost but reduction in share of GDP • Recognise that cost of technology deployment differs substantially across the EU • Major policy push in energy efficiency • Facilitate electrification of road transport and spatial heating & cooling Policy recommendations

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