Energy- related EU wide projections of CO2 emissions

Dr. L. Mantzos E

3

M-Lab / ICCS-NTUA

contact: [email protected]

PRIMES model

Baseline scenario for EU15 (1) • Developed in the context of the LREM framework contract for DG-TREN – Preliminary draft available since December 2001 is under revision:

• member states comments • benchmarking of draft baseline performed by ERM and ESAP Be .

• update of energy related data for year 2000 • integration of results from detailed sector specific models

Baseline scenario for EU15 (2)

• knowledge to be gained from policy analysis including – higher economic growth – alternative energy import prices scenarios – greater penetration of renewables, nuclear cases – alternative energy efficiency and technology progress assumptions – Kyoto compliance (Burden Sharing, different emission trading regimes)

– Baseline to be finalised in summer 2002

Short description of PRIMES model (1)

• An Energy-System Model covering market-driven behaviour of energy/economic agents – Solving for the whole energy system • Modular structure • Economic decision of agents / Price-driven clearing of energy markets • Explicit technologies in both demand and supply • Environment integrated: when emission constraints apply to the whole energy system the model suggests least cost allocation of effort to agents • Dynamic model; includes vintages of equipment • Long term 2030 – Covers all EU15 member states individually – Produces long term (up to 2030) projections of: • production, imports, conversion, consumption and prices of energy • investments, technology choice and cost of policies

Short description of PRIMES model (2)

• The demand side in PRIMES: – Industry: 9 sectors according to EUROSTAT Energy Balances definitions; further decomposed to sub-sectors, for each one different energy uses defined – Households: decomposition along typical patterns of household energy/technology behaviour – Tertiary: decomposition along types of services (market services, non-market services, trade), agriculture – Transport: decomposition along passenger and freight transport • Passenger transport: private cars, motorcycles, public road transport, rail, aviation, inland navigation • Freight transport: trucks, rail, inland navigation – Fuels detail at the level of EUROSTAT Energy Balances – Alternative technologies defined at the level of energy uses

Short description of PRIMES model (3)

• Structure of the demand side model Link to Macro-Economy Activity and Income Variable Sector - 1 e.g. Iron and Steel Sector - 2 e.g. Residential Sector - 3 e.g. Passenger transports Sub-Sector - 1 e.g. Central Boiler Dwellings Sub-Sector - 2 e.g. Electric Heating Dwellings Energy Use -1 e.g. Space Heating Energy Use - 2 e.g. Water Heating TECHNOLOGY Ordinary Fuels Fuels Future Technologies

Short description of PRIMES model (4)

• Electricity and steam generation in PRIMES: – Three different types of generators considered: utilities, industrial autoproducers, other generators • Different characteristics and decisions • Economies of scale – Installed capacity categorised in 45 different plant types – Capacity expansion: 88 different plant types for new plants (technical and economic characteristics evolve over time); possibility for re-powering of existing plants – Chronological load curves; synchronisation of four loads: demand of electricity/steam, intermittent, fuel pricing – Simultaneous decision on electricity/steam production: • Strategic capacity expansion problem • Operational plant selection and utilisation problem • Cost evaluation and pricing policy

Short description of PRIMES model (5)

• Structure of power/steam generation model Utilities Prod Distr.

Trans Links to other Utilities (e.g. other countries)

industry tertiary

Distr.

Trans Prod Other generators

residential

Trans Distr.

Prod IndustrialAutopr.

Critical assumptions used in PRIMES model projections (1) • Demographic assumptions: – Population: use of EUROSTAT Base scenario – Household size: Global Urban Observatory and Statistics Unit of UN-HABITAT scenario • Weather assumptions: 2000 weather conditions maintained throughout the projection horizon • Macroeconomic and sectoral projections sources: – DG-ECFIN short term forecast (as in November 2001) – Study performed by WEFA (now DRI-WEFA) in the context of the LREM framework contract (March 2001) – Member states stability programs and long term projections – GEM-E3 model (general equilibrium model of the EU economy used to ensure consistency of sectoral and macroeconomic projections

Critical assumptions used in PRIMES model projections (2) • Fuel prices: – International fuel prices scenario: output of POLES model (world energy model); scenario constructed in the context of LREM Framework contract – Energy Taxes: assumed to remain unchanged in real terms as determined by legislation which was in place at the end of 2000 – Refinery production costs: detailed analysis for consistency reasons with PRIMES-Refinery model (IFP) performed in the context of the Framework contract • Transport activity growth: – Model output related to macroeconomic and demographic assumptions – In line with White paper for Transport figures

Critical assumptions used in PRIMES model projections (3) – Detailed analysis for consistency reasons with PRIMES Transport model (KUL) performed in the context of the Framework contract • Potential for renewable energy forms: – study performed by ECN in the context of the Framework contract (including construction of cost curves for exploitable potential) • Committed investment and decommissioning in power generation – EURPROG report and other databases (e.g. EPIC) in the horizon to 2010 – Beyond 2010 plant decommissioning occurs on the basis of technical lifetime and agreed policies on nuclear phase-out

Reporting of PRIMES model parameters

• Model report files delivered to DG-TREN in the context of the LREM Framework contract include in full detail: – Demographic assumptions – Macroeconomic and sectoral assumptions – International fuel prices assumptions – Transport activity results by mode (both for passenger and freight transport) – Energy production and net imports – Energy conversion in power plants, CHP plants, district heating plants, refineries, etc – Energy consumption by sector and fuel – CO2 emissions by sector and fuel

Summary of policies and measures included in PRIMES baseline (1) • The baseline assumes that agreed policies addressing economic actors in the Member States, as known by the end of 2000, would be continued: – Dynamic trends of technological progress – Current trends as regards sectoral restructuring of the EU economy continue – Liberalisation of electricity and gas markets assumed to develop fully by 2010 – Restructuring in power and steam generation enabled by mature gas based power generation technologies – Ongoing infrastructure projects in some member states involving the introduction of natural gas assumed to gain full maturity by 2005

Summary of policies and measures included in PRIMES baseline (2) – Continuation of current policies and those in the process of being implemented – Energy policies aiming at promoting renewable energy are assumed to continue (the EC renewables electricity Directive is not included explicitly in the baseline) – Different policies in place by member state as regards nuclear energy – The effects from the ACEA/KAMA/JAMA negotiated agreements are incorporated in the baseline • This approach allows considering the Baseline as the benchmark against which a number of alternative policies can be measured, assisting policy analysts in the evaluation of alternative measures

Comparison to previous PRIMES model projection (1) • In the context of the “Shared Analysis” project PRIMES model has been used for the construction of the Baseline scenario published in the “ European energy Outlook to 2020” (DG-ENER, 1999) – The “Shared Analysis” Baseline has been used as the starting point for the current Baseline being constructed in the context of the LREM Framework Contract • In Spring 2000 a revision of the “Shared Analysis” Baseline took place in the context of the “Sectoral Objective Targets” Study for DG-ENV – The “Sectoral Objective Targets” Baseline included the effects from the ACEA/KAMA/JAMA negotiated agreements and focused in the horizon to 2010 • Given that the draft Baseline also includes the above mentioned agreement comparison of some indicative results in the horizon to 2010 is made versus the “Sectoral Objectives Study” Baseline

Comparison to previous PRIMES model projection (2) • Main model assumptions: – In 2000-2010 EU population is expected to increase by 0.2 % pa compared to 0.3 % pa – In 2000-2010 GDP is assumed to grow by 2.4% pa in both scenarios – Crude oil price is assumed to reach 20 $00 per boe in 2010 compared to 15.5 $00 per boe • Total CO2 emissions are projected to increase by 4.8% in 1990-2010 compared to 4.1% – The corresponding increase in 2000-2010 is 3.8% in the draft Baseline compared to 2.55% in the “Sectoral Objectives Study” Baseline

Comparison to previous PRIMES model projection (3) • Gross inland consumption: – Increases by 18.2% versus 15.6% in 1990-2010; 6.7% versus 5% in 2000-2010 – Natural gas share in 2010: 29% versus 26.3% – Renewable energy forms share in 2010: 7.3% versus 5.8% – Nuclear energy share in 2010: 13.1% versus 14.9% • Main indicators of the EU energy system: – Energy intensity improves by 23.8% versus 25.2% in 1990-2010; 15.9% versus 17.2% in 2000-2010 – Carbon intensity improves by 11.3% versus 10% in 1990 2010; 2.8% versus 2.3% in 2000-2010