EU Climate policies & Bio-energy Estonian conference on

1. EU Climate policies & Bio-energy Estonian conference on “The contribution of agriculture to energy production” Talinn, 7 Ocotber 2005 Erik Tang Climate Change & energyDG Environment

2. The state of play:The Science is robust • Most of the earth’s warming over the last 50 years (0.6° C) can be attributed to human activities • Global temperature will increase by 1.4 – 5.8°C over next 100 years Source: IPCC TAR

3. Factual signs:Impacts in Europe • Terrestrial ecosystems and biodiversity • Glaciers, snow and ice • Marine ecosystems • Agriculture • Economy • Human health EEA (2004): Impact of Europe’s changing climate

4. Climate change impacts: Agricultural yields will be affected

5. Where do we stand today now?

6. Where do we stand today now- EU10

7. Where do we stand today now- EU25

8. The 550ppm scenario: Cut global emission by 15-20% by 2050 as compared to 1990 Source: GCNRS/LEPII-EPE/RIVM/MNP/ICCS-NTUA/CES-KUL study

9. major impacts on future energy systems Source: GCNRS/LEPII-EPE/RIVM/MNP/ICCS-NTUA/CES-KUL study

10. Energy efficiency is key in reducing global GHG emissions

11. ECCP: Most important EU legislation in implementation relating to climate change

12. Develop new technologies: Reverse spending on international R&D for energy

13. EU agricultural emissions decreased 8% in 1990 -2001

14. post 2012 : objective and process • EU goal : limit global warming to 2°C • European Spring Council March 2005: “looks forward to considering medium and longer term emission reduction strategies, including targets” / Commission is invited “to prepare a report on benefits and costs taking account both of environmental and competitiveness considerations” • ISC group on post 2012 • stakeholder consultation (170 replies in total, including CEPF, future forests, CEPI) • Commission report to be issued in January 2005

15. issues post 2012 & agriculture & forestry sector • climate change impacts : EU & world-wide (costs of non action) • adaptation : EU & world-wide • LULUCF (deforestation, sinks) • mitigation strategies : bio-energy as a CO2 neutral energy source

16. agricultural & forestry sector & climate change • nitrates directive • RES-E Directive • biofuels directive • Common Agricultural Policy – set aside and energy crops scheme • Rural Development Policy (forestry) looking forward : • Biomass action Plan • Structural & Cohesion Funds 2007-2013 • Future 2020 targets for RES?

17. ETS & (biomass) renewables • one uniform price/ EU market for CO2 allowances… • affecting the competitive situation of the various primary energy sources • renewables get cost advantage as they do not need to surrender CO2 allowances • liberalisation opens market for innovative suppliers, eg. renewables

18. EU ETS: price and traded volumes 3 October 2005EUA 2005 (€/tCO2)  €22.75 Source: Point Carbon's Carbon Market Daily

19. ETS & (biomass) renewables • impact on improved competitiveness of bio-energy depends on allowance price (scarcity) • expected moderate prices in first trial period will bring limited incentives, but : • can tip the balance for near competitive applications • raises awareness of carbon constraint and search for alternatives to fossil fuels • comes on top of other dedicated instruments (eg. RES-E) … • and high oil prices

20. ETS & (biomass) renewables • short term direct impacts: • increased use of co-firing in coal power plants • increased use of biomass in pulp&paper • longer term : allowance price impacts on • investments decisions; • make or buy decision for energy users • emergence of new “low carbon energy” suppliers

21. JI/CDM link to ETS • An indirect link exists as of 2008 through international emissions trading • Linking proposal: to provide more flexibility and certainty to legal entities • In concrete terms, linking means that JI/CDM credits can be used by operators to fulfil their domestic obligation • Linking implies the recognition of JI/CDM credits as equivalent to allowances

22. JI/CDM link to ETS • avoiding double counting : no ERUs for installations covered by the Directive • Baseline takes into account environmental acquis in EU and accession countries • provisions for control of MS which projects “come in”

23. bio-energy scenario 2010 – 2020 : GHG emission reductions http://europa.eu.int/comm/energy/res/sectors/doc/bioenergy/bioenergy_role_2000_2010_2020.pdf

24. bio-energy scenario 2020 : energy

25. outlook for bio-energy • Review RES-E Directive • Biomass action Plan • Common Agricultural Policy & Rural Development Policy • Structural&Cohesion Funds 2007-2013 • Future 2020 targets for RES

26. Well-to-Wheels analysis of future automotive fuels and powertrainsin the European context WTW A joint study by EUCAR / JRC / CONCAWE Overview of Results Slide 26 09/2005

27. General Observations: Costs • A shift to renewable / low carbon sources is currently costly • However, high cost does not always result in high GHG emission reductions • At comparable costs GHG savings can vary considerably • The cost of CO2 avoidance using conventional biofuels is around • 150-300 €/ton CO2 when oil is at 25 €/bbl • 50-200 €/ton CO2 when oil is at 50 €/bbl • Syn-diesel, DME and ethanol from wood have the potential to save substantially more GHG emissions than current bio-fuel options at comparable or lower cost per tonne of CO2 avoided. • Issues such as land and biomass resources, material collection, plant size, efficiency and costs, may limit the application of these processes Slide 27 09/2005

28. Potential of biomass residues • Availability of biomass for biofuels is less than for bio-energy: • Advanced biofuels plants need to be large for reasonable economics • Crop residues are mostly highly dispersed: better suited to local heating. • STRAW is the most concentrated residue • can be taken when soil water-retention is not critical • that means in the best cereals-growing areas: 37% of EU 25 wheat • Straw/grain ratio about 0.65 in these high-yield regions • total about 600 PJ/y • FOREST RESIDUALS cost rises steeply with transport distance • above 365 PJ/y in EU 25 it becomes more expensive than pulp wood • practically all wood-industry waste is recycled inside the industry • BIOGAS availability depends on price: • much of the potential feedstock is too dispersed for economic plant size Slide 28 09/2005

29. Alternative use of primary energy resources - Biomass Potential for CO2 avoidance from 1 ha of land CO2 savings per hectare are better for advanced biomass than ethanol or biodiesel Using biomass for electricity generation offers even greater savings Reference case: 2010 ICE with Conventional fuel Wood gasification or direct use of biomass for heat and power offers greatest GHG savings Slide 29 09/2005

30. Conclusions • A shift to renewable/low fossil carbon routes may offer a significant GHG reduction potential but generally requires more energy. The specific pathway is critical • No single fuel pathway offers a short term route to high volumes of “low carbon” fuel. • Contributions from a number of technologies/routes will be needed. • A wider variety of fuels may be expected in the market • Blends with conventional fuels and niche applications should be considered if they can produce significant GHG reductions at reasonable cost • Transport applications may not maximize the GHG reduction potential of renewable energies • Optimum use of renewable energy sources such as biomass and wind requires consideration of the overall energy demand including stationary applications • More efficient use of renewables may be achieved through direct use as electricity rather than road fuels applications Slide 30 09/2005

31. Well-to-Wheels analysis of future automotive fuels and powertrainsin the European context The study report will be available on the WEB: http://ies.jrc.cec.eu.int/WTW For questions / inquiries / requests / notes to the consortium, please use the centralised mail address: infoWTW@jrc.it Slide 31 09/2005