Effects of a White Certificate trading scheme on the ... · Electricity generation and Primary...

Effects of a White Certificate tradingscheme on the energy system of the EU-27

Ralf Kuder

Institute of Energy Economics and the Rational Use of EnergyUniversity of Stuttgart

08.09.2009, Vienna

Ralf Kuder 08.09.2009Energy efficiency 2 / 23

Overview● Introduction

● Energy efficiency

● MethodTIMES PanEU-model

Scenario definition and white certificates

● Results and key effects on the European Energy System (EU-27)Electricity generation and Primary Energy Consumption

Final energy consumption and Emissions

Costs

● Conclusion


Introduction

● Reduction of energy consumption of 20% till 2020 by improvementsof energy efficiency [EU20/20/20: emission reduction, renewable energy sources]

● Highlighting the importance of energy efficiency as part of EU energyand climate policy

EU 20/20/20 targets

● Reduction of emissions

● Security of supply (reduced import dependency of oil and gas)

● Reducing energy related costs

● Competitiveness of European industry (positive impact on labour market)

Goals of Energy efficiency improvements:








Costs

● Conclusion


Energy efficiency

● Ratio between an output (output of performance, service, goods or energy) andinput of energy Source: Directive 2006/32/EC, April 2006

Definition EU

● Industrial sub-sectoral energy intensity as proxy for energy efficiencySource: worldwide trend in energy use and efficiency, OECD/IEA 2008

Use of IEA (Focus on Industry)

● Reduction of primary energy consumption in 2020 compared to areference development (PRIMES) [target in absolute terms]

EU 20/20/20 target

● White certificate as possible measure to increase energy efficiency

Implementation




● MethodTIMES PanEU-modelScenario definition and white certificates



Costs

● Conclusion


TIMES PanEU – model description (I)

● Energy system model

● Technology oriented bottom-up model

● Perfect foresight

● Objective function: Minimization of total costs (optimisation model)

● Multiregional model with trade processes (electricity, bio fuels)

● Starting point: EU-Project NEEDS

General model characteristics


● Modelling horizon 2000 – 2050

● 12 time slices (4 seasonal, 3 day level)

● 30 region model (EU 27 + IS, NO, CH)

● Country specific differences (characterisation of new power plants,load curves, availability factors for renewable energy sources, ...)

● Detailed electricity exchange balances

● Emissions: Greenhouse gas emissions and Pollutants

● Sectors: Public and industrial electricity and heat supply, conversion,industry, residential, commercial, transport and agriculture

Specification: TIMES PanEU

TIMES PanEU – model description (II)



▪ -21% CO2 reduction till 2020 in ETS sector + 450ppm target till 2050

▪ Reduction target Final Energy Consumption [white certificates for FEC]FEC_450ppm

▪ Business as usual [Reference case]

▪ -21% CO2 reduction till 2020 in ETS sectorREF

▪ -21% CO2 reduction till 2020 in ETS sector

▪ Reduction target Final Energy Consumption [white certificates for FEC]FEC

▪ -21% CO2 reduction till 2020 in ETS sector

▪ Reduction target Primary Energy Consumption [white certificates for PEC]PEC

▪ -21% CO2 reduction till 2020 in ETS sector + 450ppm target till 2050

▪ Reduction target Primary Energy Consumption [white certificates for PEC]PEC_450ppm

DescriptionScenario

▪ EU-27 cap with European-wide trade of certificates for FEC/PECWhite Certificates

DescriptionCertificates






● Results and key effects on the European Energy System (EU-27)Electricity generation and Primary Energy ConsumptionFinal energy consumption and EmissionsCosts

● Conclusion


Net electricity generation by technology (EU-27)

● FEC: Increase ofpublic generation fromcondensing powerplants/ decrease autoproduction (industry)

● PEC: Increase publicCHP/ decrease publiccondensing plants (totaldecrease)

● 450ppm: Increase ofelectricity generation inboth scenarios

Key effects:

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Sta

tis

tic

REF

REF

FEC

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FEC

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FEC

FE

C_450p

pm

PE

C

PE

C_450p

pm

2000 2010 2020 2030 2050

Net

ele

ctr

icit

y g

en

era

tio

n [

TW

h]

public cond. public CHP autoproducer CHP autoproducer cond


Net electricity generation by energy carrier (EU-27)

● FEC: less industrialgas fired CHP’s / morepublic coal-fired

● FEC_450: Increaseduse of CCS

● PEC: main influencefrom efficiency (partlystatistical effect):Decline of nuclear andcoal, rise of gas (mainlyin CHP) and otherrenewables

Key effects:

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000S

tati

sti

c

REF

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

2000 2010 2020 2030 2050

Ne

t e

lec

tric

ity

ge

ne

rati

on

[T

Wh

]

Coal Lignite Oil

Natural gas Nuclear Hydro

Wind Solar Biomass / Waste ren.

Other Renewables Others / Waste non-ren.


Primary energy consumption (EU-27)

● white certificatetrade: Impactbeginning in 2020

● FEC_450: higher usein conversion/production (higher elec.generation + CCS)

● PEC: Restrictionfulfilled in conversion/production

● PEC_450: also effectin end use sectors

Key effects:

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

Sta

tis

tic

REF

REF

FEC

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FEC

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FEC

FE

C_450p

pm

PE

C

PE

C_450p

pm

2000 2010 2020 2030 2050

Pri

mary

en

erg

y c

on

su

mp

tio

n [

PJ]

FEC conversion/production


Primary energy consumption by energy carrier (EU-27)

● FEC: mainlyreduction of gas(industrial CHP) and oil

● PEC: Decrease ofnuclear and coal,increase of gas (publicCHP)

● 450_ppm: in bothscenarios higher use ofrenewable energysources and less oil

Key effects:

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

Sta

tis

tic

REF

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

2000 2010 2020 2030 2050

Pri

ma

ry e

ne

rgy

co

ns

um

pti

on

[P

J]

Coal Lignite Oil

Natural gas Nuclear Hydro, wind, solar

Other renewables Waste (non renewable) Electricity import


Burden sharing: Reduction of primary energyconsumption [scenarios compared to REF in 2020]

● Key driver: the maininfluence has theconversion/ productionsector, especially theelectricity generation

● Burden sharing:according to changes inelectricity generation(less nuclear/coal); alsochanges in electricitytrade

Key effects:

-25%

-20%

-15%

-10%

-5%

0%

EU27AT BE BG CY CZ DE DK EE ES FI FR GR HU IE IT LT LV MT NL PL PT RO SE SI SK UK

Red

ucti

on

of

pri

mary

en

erg

y c

on

su

mp

tio

n [

%]

PEC PEC_450ppm


Reduction final energy consumption by sector (EU-27)[scenario FEC compared to REF]

● Sector view:reduction mainly inresidential and industry(main driver: space andprocess heat supply)

● 2025: also clearreduction in commercialsector

● Transport: no clearreduction before 2040

Key effects:

0%

5%

10%

15%

20%

25%

30%

2000 2005 2010 2015 2020 2025 2030 2040 2050

Red

ucti

on

of

fin

al en

erg

y c

on

su

mp

tio

n [

%]

Industry Commercial Households

Transport Agriculture Total


Final energy consumption (EU-27)

● FEC: less renewables

●450ppm: in bothscenarios higher shareof electricity andrenewables, less oil

● PEC: just smallchanges compared toscenario REF (shift todistrict heat, lessrenewables)

Key effects:

0

10000

20000

30000

40000

50000

60000

Sta

tis

tic

REF

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

2000 2010 2020 2030 2050

To

tal

fin

al

en

erg

y c

on

su

mp

tio

n [

PJ

]

Coal Petroleum productsGas Electricity

Heat RenewablesWaste Others (Methanol, Hydrogen)


CO2-Emissions (EU-27)

● PEC: same level ofemissions like REF;higher emissions inconversion/ production

● FEC: shift ofemissions toconversion/ productionsector, reduction inindustry

● 450ppm: differentreduction strategies

Key effects:

0

500

1000

1500

2000

2500

3000

3500

4000

4500S

tati

sti

c

REF

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

REF

FE

C

FE

C_450p

pm

PE

C

PE

C_450p

pm

2000 2010 2020 2030 2050

Em

issio

ns o

f C

O2 [

Mt]

Conversion, production Industry Households, commercial, AGR Transport


Costs of white certificates and overall costs

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

2020 2030 2040 2050

Sp

ec

ific

Co

sts

[!/G

JF

EC o

r !

/GJ

PE

C]

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

De

lta

Sy

ste

m C

os

ts [

in %

to

RE

F]

● 450ppm: In bothscenarios leads450ppm target tohigher costs

● FEC: costs of FECalways above PEC dueto less flexibility (FEC:reaching target only inend use sectors; PECalmost completely inconversion/Production)

● PEC_450: dominatedby climate costs

Key effects:








Costs

● Conclusion


Conclusion (I)

● White certificates based on final energy [FEC]:shift of conversion losses to public sector (increase of electricity from

public condensing power plants, less from industrial autoproducer)

stronger effect on emissions, but to higher costs (compared to PEC)

Key findings

● White certificates based on primary energy [PEC]:main changes in production / conversion, key driver efficiency

Just small effects on emissions (independent targets)

No clear improvement of security of supply (reduction nuclear andbiomass, increased use of gas)

=> PEC (representing EU target): EU intention of energy efficiencyimprovements not fulfilled


Conclusion (II)

● White certificates based on final energy + 450ppm[FEC_450ppm]:clearly higher use of electricity (including considerable use of CCS, also

more nuclear and renewables)

high end use energy efficiency (electricity based applications)

=> more emissions in conversion/production (compared to PEC_450), less inend use sectors (different strategy to fulfil 450ppm target)

Key findings

● White certificates based on primary energy + 450ppm[PEC_450ppm]:high share of CHP’s, strong use of wind, solar and other renewables

=> Efficiency (end use + mainly conv./prod.) and renewables in end usesectors


contact:

Ralf Kuder

IER [Institute of Energy Economics and the Rational Use of Energy][email protected]


BACKUP


Reduced FEC by energy efficiency improvements(Industry EU-27)

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

Sta

tistic

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

2000 2010 2020 2030 2040 2050

Eff

ects

on

FE

C d

evelo

pm

en

t re

lati

ve t

o 2

000 [

PJ]

energy efficiency demand Intensity-/Demand-effect


Final energy consumption Industry (EU-27)

0

2000

4000

6000

8000

10000

12000

14000

16000

Sta

tistic

REF

FEC

FE

C_450ppm

PEC

PE

C_450ppm REF

FEC

FE

C_450ppm

PEC

PE

C_450ppm REF

FEC

FE

C_450ppm

PEC

PE

C_450ppm REF

FEC

FE

C_450ppm

PEC

PE

C_450ppm REF

FEC

FE

C_450ppm

PEC

PE

C_450ppm

2000 2010 2020 2030 2040 2050

Fin

al

en

erg

y c

on

su

mp

tio

n I

nd

us

try

[P

J]

Coal Petroleum products Gas

Electricity Heat Renewables

Waste Others (Methanol, Hydrogen)


Heat supply Industry from fuels by generationtechnologies (EU-27)

0

2000

4000

6000

8000

10000

12000S

tati

sti

c

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

RE

F

FE

C

FE

C_

45

0p

pm

PE

C

PE

C_

45

0p

pm

2000 2010 2020 2030 2040 2050

Fin

al

En

erg

y C

on

su

mp

tio

n [

PJ

]

Industrial CHP Kilns and Boiler District Heat


Energy efficiency indicatorsScenario 2000 2010 2020 2030 2040 2050

REF 100.0 88.3 73.3 61.2 51.6 44.2

FEC 100.0 87.9 64.5 52.4 42.9 35.6

FEC_450ppm 100.0 88.0 64.5 52.4 43.0 35.7

PEC 100.0 87.9 70.5 58.3 49.2 41.8

PEC_450ppm 100.0 87.9 69.8 57.3 47.1 37.4

Scenario 2000 2010 2020 2030 2040 2050

REF 100.0 86.3 67.6 57.3 48.4 41.8

FEC 100.0 86.1 63.3 52.4 43.9 38.1

FEC_450ppm 100.0 86.2 63.3 53.1 46.8 40.6

PEC 100.0 86.0 58.5 48.0 39.2 32.7

PEC_450ppm 100.0 86.0 58.5 48.0 39.2 32.7

Scenario Description UNIT 2020 2030

PRIMES Primary energy consumption PJ 82378 83933

EU target (in PJ) Primary energy consumption PJ 65903 67147

REF reduction primary energy to PRIMES % -10.2% -9.1%

FEC reduction primary energy to PRIMES % -15.9% -16.9%

FEC_450ppm reduction primary energy to PRIMES % -15.9% -15.8%

PEC reduction primary energy to PRIMES % -22.3% -23.9%

PEC_450ppm reduction primary energy to PRIMES % -22.3% -23.9%

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