Long-term, Low-emission Pathways in Brazil, Canada, EU, India and Japan

Contribution to the Talanoa Dialogue by the COMMIT project

October, 2018

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Suggested citation: COMMIT (2018) Long-term, Low-Emission Pathways in Brazil, Canada, EU, India and Japan -

Contribution to the Talanoa Dialogue by the COMMIT project

Authors:

Alexandre C. Köberle, COPPE, Universidade Federal do Rio de Janeiro, Brazil & Imperial College London, United

Kingdom

Roberto Schaeffer, COPPE, Universidade Federal do Rio de Janeiro, Brazil

Nick Macaluso, Environment and Climate Change Canada, Canada

Panagiotis Fragkos, E3 Modelling, Greece

Alessia De Vita, E3 Modelling, Greece

Swapnil Shekhar, The Energy and Resources Institute, India

Ritu Mathur, The Energy and Resources Institute, India

Shinichiro Fujimori, National Institute for Environmental Studies, Japan & Kyoto University, Japan

Diego Silva Herran, Institute for Global Environmental Strategies, Japan

Junya Takakura, National Institute for Environmental Studies, Japan

Heleen van Soest, PBL Netherlands Environmental Assessment Agency, Netherlands

About COMMIT:

The COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition

pathways, aims to improve modelling of national low-carbon emission pathways, and to improve analysis of country

contributions to the global ambition of the Paris Agreement. The consortium consists of 18 international research

teams, including 14 national modelling teams in G20 countries, who regularly support domestic policy-making, and

global integrated assessment modelling teams with extensive experience on global-scale modelling of climate

change policies. The project is financed by the European Commission’s Directorate-General for Climate Action (DG

CLIMATE).

More info on: www.pbl.nl/commit-project

See also the policy brief: Opportunities for Enhanced Action to Keep Paris Goals in Reach - Contribution to the

Talanoa Dialogue by the COMMIT and CD-LINKS projects.

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Contents Brazil: Opportunities from AFOLU and non-CO2 mitigation reduce pressure on productive sectors .............................. 4

Where are we? .................................................................................................................................................................. 4

Low Carbon scenarios for Brazil ................................................................................................................................... 5

Where do we want to go? ................................................................................................................................................ 6

How do we get there? ...................................................................................................................................................... 7

Sustainable intensification of agriculture ........................................................................................................................ 9

References ....................................................................................................................................................................... 10

Canada’s Low-carbon Pathway .......................................................................................................................................... 12

Where are we? ................................................................................................................................................................ 12

Where do we want to go? .............................................................................................................................................. 13

How do we get there? .................................................................................................................................................... 15

Oil sands in the low-carbon transition context ............................................................................................................. 17

European Union: Energy system restructuring towards a long-term low-emission pathway ....................................... 19

Where are we? ................................................................................................................................................................ 19

Where do we want to go? .............................................................................................................................................. 20

How do we get there? .................................................................................................................................................... 21

The role of hydrogen and clean gas towards deep decarbonisation ........................................................................... 23

India: Decarbonisation Pathways - Options & Implications .............................................................................................. 25

Where are we? ................................................................................................................................................................ 25

Where do we want to go? .............................................................................................................................................. 26

How do we get there? .................................................................................................................................................... 30

Decarbonisation pathway of Japan .................................................................................................................................... 33

Where are we? ................................................................................................................................................................ 33

Where do we want to go? .............................................................................................................................................. 33

How do we get there? .................................................................................................................................................... 36

The role of nuclear power in the Japanese low-carbon transition .............................................................................. 38

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Brazil: Opportunities from AFOLU and non-CO2 mitigation reduce pressure on productive sectors

Where are we? Brazil1 is a developing country with several challenges regarding poverty eradication, infrastructure development

and even, to some extent, energy access. Driven by reduced deforestation rates, greenhouse-gas (GHG) emissions in

the country in 2014 had been reduced by almost half since their peak in 2004 (MCTIC, 2016). Accounting for forest

land-use carbon sinks, net emissions in 2014 were 1.284 Gt CO2eq, already slightly below the 2025 NDC target but

still above the indicative 2030 target (MCTIC, 2016). However, emissions have been generally flat in 2009-2012, and

actually showing a slight growing trend since 2013. Emissions levels in all sectors except LULUCF have increased

between 2010 and 2014 (MCTIC, 2016), and are projected to continue doing so in the short- to medium-term. Brazil

has ratified the Paris Agreement, turning its INDC into an NDC, pledging to reduce total GHG emissions to 1.3 Gt

CO2eq by 2025, with an aspiration to reduce to 1.2 Gt CO2eq by 2030, corresponding to about 37% and 43%

reductions from the 2005 level, respectively (GofB, 2015a). Most of the proposed measures are in the Agriculture,

Forestry and Other Land Use (AFOLU) sectors, along with targets for increased use of bioenergy.

Agriculture is central to Brazil’s economy, land use and emissions. The agricultural production chain (including food

processing and retail) is responsible for about 18% of total economic output (OECD, 2015). Brazil is one of the

largest agricultural exporters with soybeans, sugar, coffee, beef and chicken making up a sizeable portion of the

country’s exports (CEPEA, 2017). Brazilian beef cattle production is one of the most competitive in the world, but

about half of the 200 million hectares of pasturelands are considered degraded, and their recuperation2 is a

cornerstone of the agricultural sector’s mitigation potential. The NDC pledges to recuperate 15 million hectares of

degraded pastures, and to implement 5 million hectares of integrated cropland-livestock-forestry systems (ICLFS) by

2030. These are projected to reduce emissions relative to current levels by some 83-104 Mt CO2eq and 18-22 Mt

CO2eq respectively, according to the country’s Low-Carbon Agriculture plan (Plano ABC) (MAPA, 2012), which should

meet its targets by 2025 (Köberle et al., 2017). The NDC also pledges to “restoring and reforesting 12 million

hectares of forests by 2030, for multiple purposes”.

Brazil’s efforts in the 2000s to protect the Amazon from deforestation were pivotal for the successful reduction of

its emissions since they peaked in 2004 (Cohn et al., 2014; Macedo et al., 2012; Nepstad et al., 2009). Maintaining

this protection and expanding it to other biomes can further reduce emissions from land use, land use change and

forestry (LULUCF), and also protect rich biodiversity hotspots especially common in the central savannahs known as

Cerrado. Protecting forests would also bring benefits to water supply and climate regulation. Brazil has relatively

strong protective measure written into its laws, but these tend to be weakly implemented and, lately, have been or

are being undermined by a weak government struggling to remain in power. In order to receive support from the

powerful agricultural lobby, environmental regulations are being offered as bargaining chips, threatening to a return

to growing deforestation rates. Brazil’s Forest Code was controversially overhauled in 2012, granting amnesty to

illegal deforestation occurring before 2008. Accounting for this amnesty, there is still a deficit of about 21 million

hectares of mandatory natural vegetation reserves in privately held land, which implies there should be a great deal

of afforestation if the Forest Code mandates are to be met (Soares-Filho, 2013). It is reasonable then to think that a

scenario of net-zero deforestation is possible in Brazil by 2030 (i.e. afforestation compensates for deforestation in

some areas of Brazil).

1 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: www.pbl.nl/commit-project 2 Pasture recuperation is defined as the recovery of the carrying capacity of a given area of degraded pastureland that has low regrowth rate and, therefore, can only support a limited herd of low productivity (Dias-Filho, 2011; Strassburg et al., 2014).

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As for the country’s energy system, it already has high penetration of renewable sources, with hydropower

accounting for about 70% of annual electricity generation, and bioenergy for about 15% of annual primary energy

consumption (EPE, 2016). Still, the Brazilian NDC pledges to further increase the “share of sustainable biofuels in the

Brazilian energy mix to approximately 18% by 2030”, although it does not specify if this target refers to primary or

final energy. Earlier this year, the Renovabio policy was implemented into law (GofB, 2018), aiming to develop a

market for carbon credits related to the biofuels production chain, and allocating emission permits to fuel

distribution companies which will gradually be reduced in number. This is supposed to incentivise the biofuels sector

and meant to reverse the effects of the recent economic crisis on the Brazilian ethanol sector, which suffered

drawbacks from lack of investments in the sugarcane production phase and from reduced demand caused by low

gasoline prices. In fact, the recession of the last 5 years has led to reduced energy consumption, with significant

drops across all sectors, including industry, transportation, buildings, agriculture and the energy sector itself. In

addition, there has been a reduction in investments in low-carbon technologies. Nonetheless, renewables (hydro,

biodiesel, bioethanol, wood and charcoal, black liquor, wind and solar) account for almost half of the domestic

primary energy supply. There have been significant increases in wind and solar electricity generation recently, and

the trend is of continuing expansion of these sources. The country is making a fragile recovery to economic growth,

and it remains to be seen how energy consumption will develop once it recovers to pre-2012 levels.

Another important aspect of Brazil’s emissions profile is the high share of non-CO2 greenhouse gases, which

currently account for about 45% of total GHG emissions (Köberle, 2018). These come mostly in the form of methane

(CH4) from enteric fermentation and from nitrous oxide (N2O) emissions caused by animal waste left on pastures

and from synthetic nitrogen fertiliser application to crop fields (GofB, 2015b). Much of the GHG emissions

reductions foreseen in the Brazilian NDC come from non-CO2 gases.

Low Carbon scenarios for Brazil As this fact sheet will demonstrate, opportunities for GHG emissions mitigation in the AFOLU sectors are large and

low cost. Model results show that prioritising AFOLU mitigation efforts alleviates pressure on the productive sectors

of the economy to reduce their emissions, which is costlier in general. The model used here is the Brazilian Land Use

and Energy Systems model (BLUES), which includes detailed representations of energy supply, industry,

transportation, buildings, agriculture and land use sectors (Köberle, 2018; Rochedo et al., 2018). BLUES is a partial

equilibrium model that meets demand for energy services and key commodities (exogenous) by minimising total

system cost to 2050. For more information see

https://www.iamcdocumentation.eu/index.php/Model_Documentation_-_BLUES. This fact sheet examines two

scenarios for Brazil’s climate mitigation efforts: one consistent with the Brazilian NDC (used here as the reference

scenario), and another consistent with a global cost-optimal 2-degree target by 2100 (the Low-Carbon scenario).

The Reference scenario follows a pathway to the NDC in 2030 and keeps emissions frozen at the NDC target

thereafter, while the Low-Carbon scenario follows current policies to 2020 and thereafter follows a trajectory of

minimum cost towards a system in 2050 that is consistent with global well-below 2-degree scenarios3. In effect, this

means the Reference scenario is one of delayed climate action relative to the Low-Carbon scenario, which begins its

3 The Brazil Low-Carbon scenario presented here is considered to be in line with the objective to limit global warming to well-below 2°C, as cumulative CO2 emissions for Brazil are 23.6 Gt in the 2010-2050 period; this half-century CO2 budget for Brazil derives from a global model run with a 1000 Gt CO2 global budget to 2100. The global model used was COPPE’s integrated assessment model COFFEE (Rochedo, 2016). This budget is well within the range projected by a number of global models for cost-optimal scenarios assuming a global carbon budget of 1000 Gt CO2 considered equivalent to likely below 2°C. The range of Brazil cumulative CO2 emissions over 2010-2050 from global models is [15-35] Gt in the 1000 Gt global carbon budget scenario, for additional information: McCollum DL, et al (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.

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transition already in 2020. As will be shown, early action implies significant advantages to Brazil, which may be a

special case in the world.

Where do we want to go? Whether the country meets its NDC emissions target will depend in large part on the developments of deforestation

rates, because the emissions resulting from a return to former deforestation rates would more than negate any

possible reductions in energy use emissions (Rochedo et al., 2018). Since 2014, there have been slight increases in

emissions from land use, which are largely dominated by deforestation emissions. Although reduced, deforestation

continues at around 5,000 km2 per year (INPE, 2017), but has shifted from large contiguous areas to a pattern of

small clearings and small-scale low-density forest loss, posing alarming new challenges to forest conservation

(Kalamandeen et al., 2018). Although Brazil is still on track to meet its NDC emissions targets by 2030 (UNEP, 2017),

the recent weakening of environmental legislation may threaten to reverse the deforestation reduction of the last

decade, increasing emissions from land-use change. A return to growing emissions from the LULUCF sector would

imply additional burdens on other sectors, deviating from cost-optimal scenarios for the country, as mitigation

measures in AFOLU are seen as the lowest-cost options available (Rochedo et al., 2018). A return to strong

governance of Brazil’s forests and natural vegetation could help realise the economic opportunities for Brazil in a

global scenario consistent with the Paris Agreement.

As mentioned before, a net-zero deforestation pathway post-2030 is possible, and this is implemented into the

BLUES model in both scenarios (Reference and Low-Carbon). With the additional measures pledged in the NDC, the

AFOLU sectors could deliver negative emissions already by 2030 (Figure 1). On the other hand, the Low-Carbon

scenario implies high bioenergy deployment, which could place extra pressure on land, delaying the negative CO2

emissions from AFOLU from 2030 to 2050. Net afforestation, that is forest area increase, is only expected to happen

in the second half of the century4. Should the required afforestation be done with natural vegetation, this could

bring additional co-benefits to biodiversity conservation and contribute to meeting the Sustainable Development

Goals (SDGs) adopted in the United Nations’ Agenda 2030 (United Nations, 2015).

The trend is that, in a business-as-usual scenario, non-CO2 gases will continue to account for about half of the

country’s total GHG emissions, mainly from methane from enteric fermentation and nitrous oxide from manure left

on fields and nitrogen fertiliser application. The NDC scenario (Reference) developed with the BLUES model

indicates that CO2 from AFOLU sources and non-CO2 gases make up a significant portion of the low-cost mitigation

potential available in the country. Pasture recuperation is a particularly attractive option since it increases pasture

productivity (yield) and also leads to lower enteric fermentation emissions through shorter time to slaughter.

Although this measure would allow for more production per hectare, rising demand both domestically and abroad

cancels the gains, and methane emissions from AFOLU show only a slight difference between the Reference and

Low-Carbon scenarios. Nitrous oxide emissions on the other hand are reduced by over 50% between these

scenarios. The net result is a decrease in total non-CO2 gases in 2050 in the Low-Carbon scenario versus the

Reference (Figure 1).

4 In a scenario consistent with global targets of 1.5oC by 2100 over pre-industrial era (not explored here), the BLUES model indicates that net afforestation could happen earlier, starting in 2040 (Köberle et al, submitted).

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Figure 1: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario (NDC), emission reductions

between the reference and low-carbon scenarios by sector (energy supply, industry, residential and commercial

buildings, transport, industrial processes, non-CO2, and AFOLU), and 2050 emissions in the low-carbon scenario

(consistent with 2°C). Non-CO2 emissions include emissions from AFOLU, energy use, waste treatment and industrial

processes.

As for energy-related emissions, coal is the lowest-cost option for power generation expansion once the

hydropower potential is saturated, and this is projected to happen around 2030 at current growth rates, especially if

the potential in the Amazon is left unused. Much of the remaining hydropower potential is in the Amazon, but

environmental concerns as well as the long distances to electricity demand centres make it risky to develop new

projects in the region. There is a clear benefit to forest and biodiversity conservation of leaving the Amazon

hydropower potential untouched, in a clear synergy with Sustainable Development Goals (SDGs) 14 and 15 (Life on

Water, Life on Land), but implying additional costs to avoid trade-offs with SDG 13 (Climate Action) from

deployment of coal-fired power plants. However, besides hydropower, Brazil has significant potential for wind and

solar electricity still to be developed, so there are several low-carbon options for meeting the expected increasing

energy demand in the country in future. In fact, without considering grid integration costs, wind power is generally

accepted to be the lowest-cost option in Brazil today, directly competing with natural gas plants on cost.

How do we get there? Brazil does not yet have an official mid-century low-emission strategy, but there are indications that public officials

are beginning to plan one. Figure 1 shows important opportunities if Brazil were to begin ratcheting up its NDC

before 2030. By implementing the low-cost measures in the AFOLU sectors earlier, Brazil’s energy emissions can

increase until mid-century while still following the least-cost pathway towards a global target of well-below 2oC. This

is an opportunity for the Brazilian productive sectors to avoid some of the more costly emissions abatement

measures, especially in industry, which sees an increase in final energy consumption.

The model-based analysis shows that the key options to further reduce GHG emissions in Brazil are:

Sustainable intensification of livestock and agriculture production

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Decarbonisation and electrification of the transportation sector (mainly with expansion of biofuels)

Deployment of Bioenergy with Carbon Capture and Sequestration (BECCS) in liquid biofuels production, in

particular of 1st and 2nd generation ethanol and of Fischer-Tropsch biodiesel and biokerosene (bio-jet fuel)

Deployment of wind and solar capacity in power generation

The AFOLU sectors are central for Brazil’s low-carbon future, and Section 4 explores this in more detail.

Leveraging the large bioenergy potential in a sustainable manner faces similar challenges as other activities in the

agricultural sector. Continuation of the past successes is a key option for Brazil to decarbonise its transport sector as

well as to seize an opportunity to increase exports of high-value added fuels such as biokerosene for aviation. In

fact, biofuels are key for the country´s low-carbon future. Improving public transportation infrastructure would be

another good option to reduce private vehicle use in urban centres, with potential co-benefits of reduced local air

pollution. On the other hand, electrification of the light-duty vehicle fleet (LDV) would leverage the low-carbon

electricity of the Brazilian grid to help reduce transportation sector emissions. Electrification would also reduce

demand for ethanol for LDVs, increasing the potential for biokerosene production through the alcohol-to-jet (ATJ)

route. Biodiesel availability is key to decarbonising freight transportation, which is currently dominated by diesel

trucks travelling on badly maintained roads, meaning efficiency is low but also investments in expensive equipment

(such as electric or hydrogen trucks) are not likely to materialise in the short and medium-term . Second generation

biodiesel would become an important option for this sector post-2030.

The success of the Brazilian biofuels programme has found a counterpart in the recent rise of wind power in the

country. Spurred by capacity auctions dedicated exclusively to wind power plants (PROINFA programme starting in

mid-2000s), the contracted prices of wind power fell considerably so that today it competes directly with natural gas

in general auctions. This has led to a rapid rise in wind power capacity, surpassing 12 GW of installed capacity as of

today, with several more GWs under construction. This has added to the low-carbon power generation of hydro and

sugarcane bagasse combined heat and power (CHP) capacity, thus keeping the low emission factor of the Brazilian

grid. Recent dedicated solar power auctions had good results and attempt to repeat the success of wind power.

However, there has also been an increase in coal power generation, which remains the lowest-cost option for

capacity expansion in scenarios with no carbon emission constraints. Increased deployment of coal capacity post-

2030 is partially responsible for the rising emissions from the energy sector in the Reference scenario in 2050. This

capacity is replaced with low-carbon sources (mostly wind, solar, and bioenergy) in the Low-Carbon scenario.

Figure 2 shows the changes to the Brazilian energy and land use systems in the Low-Carbon scenario. Both the

carbon and final energy intensities of GDP improve considerably by 2050, while the growth in share of electricity in

final energy leverages the low-carbon electricity of the Brazilian grid to deliver more energy services with less

emissions. The share of renewable energy sources in primary energy remains rather constant across scenarios at 35-

40% over 2015-2050, although there is a slight overall reduction in primary energy consumption (PEC) in the Low-

Carbon scenario compared to Reference.

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Figure 2: Illustration of energy system transformation towards decarbonisation. Numbers in the graph indicate

change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

Sustainable intensification of agriculture About two thirds of the country´s net GHG emissions come from AFOLU sectors, and almost 45% of total GHG

emissions are in the form of non-CO2 gases. Therefore, reducing emissions from agriculture and curbing

deforestation are key measures for Brazil’s low-carbon transition. Moreover, the two are inextricably linked since

most of the non-CO2 gases come from agricultural activity, especially methane emissions from enteric fermentation

in ruminants and nitrous oxide emissions from agricultural soils and animal excreta left on fields. The potential to

reduce AFOLU emissions is enormous, and the most concrete targets in the Brazilian NDC are in the AFOLU sector.

The cornerstone of the NDC is the Plano ABC, or Low Carbon Agriculture Plan, which calls for recuperation of 15

Mha of degraded pastures, introduction of 4 Mha of ICLF systems and planting of 3 Mha of forests. Although the

original 2020 target of the Plano ABC will be missed, it is expected that it should be completed by 2025, in line with

the NDC timeline.

Sustainable intensification of livestock production (especially beef) is seen as a negative-cost option, mainly through

the recuperation of degraded pastures and introduction of integrated crop-livestock-forestry (ICLF) systems that

increase yield and also improve soil organic carbon stocks (Assad et al., 2015; Strassburg et al., 2014). There are

challenges, however, to the implementation of these promising options. For livestock intensification, up-front

investment requirements, coupled with high interest rates due to increased country risks, often block landowners

from adopting intensification techniques in a classic example of market failure (Köberle et al., 2017). Targeted

policies to encourage adoption through low-interest credit lines and capacity building have been successful in

spurring uptake in recent years, and the country is on target to meet its pledge to deploy ICLF on 4 million hectares

of land (Embrapa, 2017), but there is no assessment on the target to recover 15 million hectares of degraded

pastures. The recuperation of degraded pastures is one way to increase the stocking rate of Brazilian livestock,

which currently for beef is slightly above 1 head per hectare (IBGE, 2017).

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Intensifying agriculture production increases yields, which means more production with the same amount of land.

This allows Brazil to continue growing its agricultural production but with a smaller increase in agricultural area

expansion, implying reduced deforestation. As mentioned before, the scenarios here assume net-zero deforestation

by 2030, in line with the full implementation of the Brazilian Forest Code. Further reducing, or even eliminating,

deforestation is central to Brazil meeting its NDC targets while allowing more room for emissions from other

sectors. This is vital for the concurrent achievement of economic development and climate change mitigation, as

well as the concurrent achievement of the SDGs.

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Strassburg, B. B. N., Latawiec, A. E., Barioni, L. G., Nobre, C. a., da Silva, V. P., Valentim, J. F., … Assad, E. D. (2014). When enough should be enough: Improving the use of current agricultural lands could meet production demands and spare natural habitats in Brazil. Global Environmental Change, 28, 84–97. https://doi.org/10.1016/j.gloenvcha.2014.06.001

UNEP. (2017). The Emissions Gap Report 2017. United Nations Environment Programme (UNEP). https://doi.org/ISBN 978-92-9253-062-4

United Nations. Transforming our world: the 2030 Agenda for Sustainable Development, 16301 General Assembley 70 session § (2015). https://doi.org/10.1007/s13398-014-0173-7.2

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Canada’s Low-carbon Pathway5

Where are we?

Canada has taken significant steps to address climate change. Federal, provincial and territorial policies and measures implemented in the last 20-years have contributed to a decoupling of greenhouse gas (GHG) emissions from economic growth with the carbon intensity of GDP declining by about 35 per cent in the 1990 to 2016 period. Actions taken to promote non-emitting electricity generation sources and the phase-out of coal-fired power generation have resulted in Canada having one of the cleanest electricity generating systems in the world with over three quarters of Canada’s electricity supply emitting no GHGs (mostly due to the large hydro-power capacity).

In 2016, Canada adopted a comprehensive plan on climate change, the Pan-Canadian Framework on Clean Growth and Climate Change (PCF). This is the first climate change plan in Canada’s history and includes joint and individual commitments by federal, provincial and territorial governments that have been developed with input from Indigenous Peoples, businesses, civil society, and Canadians. The PCF outlines over fifty joint and individual actions by federal, provincial and territorial governments to reduce carbon pollution, build resilience against climate impacts and generate clean growth and includes putting a price on carbon pollution. The plan sets Canada on a path towards meeting or exceeding its Paris Agreement commitment to reduce GHG emissions by 30 percent below 2005 levels by 2030. Federal, provincial and territorial governments are making strong progress in implementing the Pan-Canadian Framework. Funding has been mobilized, greenhouse gas regulations are being put in place, and new policies and programs are being established and implemented.

In November 2016, Canada submitted its Mid-Century Long-term Low-Greenhouse Gas Development Strategy

(MCS) to the United Nations Framework Convention on Climate Change (UNFCCC) making it one of the first

countries to articulate such a strategy under the Paris Agreement. The MCS examined various pathways to achieve

an illustrative 80% reduction in greenhouse gas (GHG) emissions from 2005 levels, consistent with the Paris

Agreement’s temperature goal.

Many factors influence the future trends of Canada’s GHG emissions including a unique geographic and

demographic structure (e.g., population and household formation), economic growth, energy prices (e.g., world oil

price and the price of refined petroleum products, regional natural gas prices, and electricity prices), technological

change, and policy decisions. For example, while Canada has a relatively small population, it also has one of the

largest landmasses in the world, most of it located in the northern half of the northern hemisphere. These factors

contribute to heavier energy and transportation use and thus to higher emissions than in more densely populated

countries. The relatively high contribution of its manufacturing, construction, mining, oil and gas, and forestry

sectors (i.e., about 30 percent of the economy) is unique among industrialized countries. While Canada experienced

strong economic growth, including in its crude oil and natural gas extraction sector, it continues to make progress in

decoupling economic growth from GHG emissions. The emission intensity for the entire economy (GHG per unit of

GDP) has declined by 16.4 percent since 2005. This was also documented in the OECD’s 2017 Environmental

Performance Review of Canada that noted Canada’s progress in decoupling economic growth from GHG emissions.

5 This fact sheet was prepared on behalf of the COMMIT Consortium by Nick Macaluso, Director of Model Development and Quantitative Research at Environment and Climate Change Canada. The views expressed in this paper are those of the author and do not reflect those of Environment Canada or the Government of Canada. The COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: www.pbl.nl/commit-project

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A suite of models is used to exploring how varying any of the assumptions above could have a material impact on

long-term energy and emissions trends in Canada (i.e., Global Change Assessment Model (GCAM) and EC-MSMR)

and its provinces and territories (EC-Pro). The models are briefly described below:

Global Change Assessment Model (GCAM), a global recursive-dynamic integrated assessment model with

32 world geo-political regions (including Canada as a region) with technology-rich representations of the

economy, energy sector, land use and water linked to a climate model.

EC-MSMR, an open-economy recursive-dynamic international multi-sector, multi-region computable

general equilibrium (CGE) model that captures characteristics of country-specific or regional production

and consumption patterns through detailed input-output tables and links countries/regions via endogenous

bilateral trade flows. The model has 16 countries/regions and 28 industrial sectors, and endogenously

simulates final consumption by households, the federal and provincial governments and investment.

EC-Pro, a 10 province and 3 territory multi-sector, multi-region computable general equilibrium (CGE)

model with 25 industrial sectors, final consumption by households, the federal and provincial governments

and investment.

Where do we want to go? In its 7th National Communication and 3rd Biennial Report to the United Nations Framework Convention on Climate

Change, Canada presented projections under two scenarios. A reference scenario (‘with measures’), including

actions taken by governments, consumers and businesses put in place up to September 2017, and a ‘with additional

measures’ scenario, which accounts for a broader suite of policies under the Pan-Canadian Framework.

In 2017 GHG emissions reporting, Canada saw a significant decline in its GHG projections because of

measures/policies being implemented under the PCF. In 2030, the GHG emissions in the ‘with measures’ scenario in

Canada are projected at 722 Mt CO2eq, 92 Mt below what was presented in Canada’s 2nd Biennial Report (BR2), a

decline greater than 2015 emissions from Canada’s entire building sector. This reflects the future impacts of a

number of federal and provincial policies that had been put in place since September 2016 such as:

Alberta’s Carbon levy, 2030 phase-out of coal-fired electricity, and 100 Mt CO2eq cap on oil sand emissions;

Domestic reductions from Ontario joining Québec and California in the Western Climate Initiative (WCI)

cap-and-trade regime in 2017;

Federal, provincial and territorial regulation for new commercial, institutional and residential high-rise

buildings and federal measures to increase efficiency of residential and commercial equipment and

appliances;

Federal regulations to reduce releases of methane in the upstream oil and gas sector and to phase-out the

use of hydrofluorocarbons;

Federal GHG emissions standards for heavy-duty vehicles and trailers in years 2021 to 2027;

Increasing carbon tax in British Columbia to $50/tCO2eq by 2022 onwards.

The ‘with additional measures’ projections include additional policies and measures which are planned under the

Pan-Canadian Framework. Taking into consideration all these climate change policies and measures, Canada’s

emissions are projected to be 583 MtCO2eq in 2030, a 232 MtCO2eq decline from projections included in the BR2.

These additional measures include:

Federal Carbon Pricing Backstop

Accelerated Coal-Fired Electricity Phase-Out

Clean Fuel Standard

Strategic Interconnections, Smart Grid and Renewables

Saskatchewan’s renewable target

BC’s increase in Low Carbon Fuel Standard

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Post-2025 Light Duty Vehicles Regulations

Accelerating Industrial Management

Large Scale Technology Demonstration

Building Codes for new buildings

Building Retrofits – labelling and codes

Appliance Standards

Increased use of wood in construction

Reduced diesel use in remote communities

Off-road Vehicles Regulations

Under the ‘Reference scenario’ (i.e., the 2015 GHG projection used to inform Canada’s NDC), emissions are

projected to increase from 722 MtCO2eq in 2015 to 815 MtCO2eq in 2030. Since announcing Canada’s NDC,

implemented and planned policies and measures are expected to achieve emissions levels of 583 Mt by 2030. Other

measures under consideration will help achieve Canada’s NDC target of 517 (Figure 1).

Figure 1: Evolution of GHG Emissions to Canada’s NDC target

The Government of Canada releases annual GHG emissions projections, which take into account evolving policy and

economic circumstances; for example, Ontario has recently announced its intention to repeal cap-and-trade

legislation. Canada’s 2018 emissions projections are expected to be released at the end of the year.

Canada’s Mid-Century low-carbon scenario presented here is considered to be in line with the objective to limit

global warming to well-below 2oC, as cumulative CO2 emissions are 15.8 Gt in the 2010-2050 period; this is well

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within the range projected by a number of global models6 for cost-optimal scenarios assuming a global carbon

budget of 1000 Gt CO2 considered equivalent to likely below 2oC. Under the Mid-Century low-carbon scenario,

emissions are projected to decrease from 722 MtCO2eq in 2015 to 517 MtCO2eq in 2030 (i.e., to meet Canada’s

Nationally Determined Contribution of 30% below 2005 levels) and further decreasing to 149 MtCO2eq by 2050 (i.e.,

80% below 2005 levels). Figure 2 below depicts how key sectors could help Canada achieve its mid-century goal. As

depicted below, industry (i.e., manufacturing and crude oil and natural gas production) is projected to generate

reductions in the range of 225 MtCO2eq relative to the reference case in 2050, followed by non-CO2 GHG emissions

with reductions of about 110 MtCO2eq. Energy supply (i.e., electricity generation and refining/upgrading) and

transportation are projected to generate reductions of about 95 MtCO2eq each. Overall, the modeled mid-century

scenario is expected to generate emissions reductions of some 590 MtCO2eq relative to the reference case in 2050.

Figure 2: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario, emission reductions between the

reference and low-carbon scenarios by sector (energy supply, industry, residential and commercial buildings,

transport, non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with 1000 GtCO2, i.e. 2 °C).

A cross model comparison of the cost of achieving Canada’s NDC and MCS pathway suggests that with current

technologies a market clearing carbon charge in the range of $85 to $150 per ton (in real 2011 dollars Canadian) in

2030 increasing to $300 to $1,800 per ton by 2050 is needed for Canada to achieve its MCS pathway.

How do we get there? Canada’s Mid-Century Strategy (MCS) is consistent with work underway to implement the Pan-Canadian Framework

of policies and measures to help meet Canada’s 2030 NDC emissions reduction objective. The Mid-Century Strategy

will inform longer term planning and investment and sets the course towards a low-carbon economy.

6 The range of Canada’s cumulative CO2 emissions over 2010-2050 from global models is 13-21 Gt in the 1000 Gt global carbon budget scenario, for additional information: McCollum DL, et al (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.”

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Canada’s MCS is not policy prescriptive and highlights the key role of the Pan-Canadian Framework on Clean Growth

and Climate Change in contributing to the Paris Agreement goal to hold the global average temperature to well

below 2ºC above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C. Canada’s

MCS presents a series of pathways aimed at achieving a net 80% reduction by 2050 relative to 2005. The pathways

explored include: i) electrification of service demands coupled with decarbonized electric generation (i.e., high

hydro, high nuclear and high renewables); ii) improving energy efficiency in buildings, vehicles and industry; iii)

moving to zero emission transport fuels; iv) decarbonize industrial processes; and v) introduction of advanced

technologies in energy supply and demand sectors.

For analytical purposes, the Mid-Century Scenario was based on a pathway that includes:

Electrification of final energy uses in combination with non-emitting electricity generation (including high hydro contribution) to meeting energy demands in the transportation, building and some industrial sectors

Accelerated Energy efficiency improvements and demand side management Increased use of renewable fuels is prominent across decarbonisation scenarios Deployment of innovative and clean technology in industrial sectors, including oil sands production Sequestration technologies, such as bioenergy with carbon capture, use, and storage

From a federal perspective, in January 2018, Canada launched its Greening Government strategy, aimed at reducing

GHG emissions from federal government operations by 80% by 2050, relative to 2005 levels, a target selected based

on the illustrative one in the MCS.

The implementation of Canada’s NDC and the long-term low-carbon pathway (as envisaged by Canada’s Mid-

Century Strategy) implies significant changes in investment requirements for Canada’s energy system both in

demand and supply sectors. For example, under the modeled scenario, investment expenditures associated with the

expansions of Canada’s electricity system is projected to grow from $30 billion in 2015, to $45 billion in 2030 and

further increasing to $105 billion by 2050. The direct policy related cost would represent an additional investment of

$0.35 billion in 2020, increasing to $4.8 billion in 2030 and further increasing to more than $14.5 billion by 2050.

These investments associated with implementation of Canada’s NDC and Mid-Century pathway will help to

accelerate the transformation of Canada’s energy system towards low-carbon options.

Canada’s electricity generation is low-carbon intensive, albeit with significant regional differences. The least carbon

intensive electricity generation is in Quebec, Manitoba and British Columbia, while the most carbon intensive is in

Alberta, Saskatchewan and Nova Scotia. Ontario and New Brunswick have a modest carbon-intensive system. The

current focus on North-South electricity flows presents a challenge to greater exchanges between low and high

carbon intensive electricity generating system. In 2015, the carbon intensity of Canada’s electricity generation

system was 120 gCO2/KWh. By 2030, carbon intensity is projected to decrease to 6 gCO2/KWh and further

decreasing to 3 gCO2/KWh by 2050.

Over the 2015 to 2050 period, Canada’s projected emissions suggest improvements in (Figure 3):

Carbon intensity of GDP declining by 92.4 per cent.

Final energy demand intensity declining by 55.7 per cent.

Share of electricity in final energy demand is projected to increase by 58.1 percentage points.

Renewable share in primary energy increasing by 45.5 percentage points.

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Figure 3: Energy system transformation towards decarbonisation (key transition indicators). Numbers in graph

indicate change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

Oil sands in the low-carbon transition context The oil sands industry is both an important source of GHG emissions in Canada, while being of vital importance to

the economic growth of Alberta’s, and Canada’s, economies. The deployment of innovative and more

environmentally sustainable oil sands production technologies could make an important contribution to mitigating

the growth in Canada’s GHG emissions, while promoting the competitiveness of Alberta’s oil sands industry and the

Canadian economy in general. The 100 MtCO2e emissions per year cap imposed on the oil sands industry is

projected to be reached by 2028. This means that the industry has about 10 years to act in order to continue oil

sands production growth by reducing its emissions intensity. On the other hand, high bitumen supply cost is another

important factor that makes oil sands production less competitive relative to other competing world crude oil

resources.

The technology configurations currently being explored which meet the minimum costs and emissions objective

criteria can achieve potential reductions of bitumen supply cost by 34-40 percent, and reduce fuel-derived

emissions from in situ oil sands production by more than 80 percent. There are also promising technologies for

upgrading bitumen, which could further reduce the life cycle emissions profile of refined petroleum products

produced from oil sands.

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Realizing the benefits from these innovative technologies will require further research and development work in

order to reduce the risks of these promising technologies and thereby ensuring their commercialization and massive

market deployment that will contribute to reducing GHG emissions in line with the Canada Mid-Century low-carbon

pathway.

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European Union: Energy system restructuring towards a long-term low-emission pathway

Where are we? The EU7 has been an early mover in the global climate policy landscape and has ratified the Paris Agreement with its NDC target to reduce GHG emissions by at least 40% in 2030 from 1990 levels. The EU energy and climate policy framework has led to a rapid expansion of renewable energy sources (RES) in electricity generation and to a decline of CO2 emissions by about 20% from 1990 levels. In this context, the EU NDC implementation implies an acceleration of climate policy efforts in the period after 2020 and fits in a pathway to achieve the EU’s long-term objective of at least 80% reduction in domestic GHG emissions by 2050. The EU’s primary energy mix is still dominated by fossil fuels with oil accounting for 34%, gas for 23% and coal for 17%, while the share of RES has increased from 7% in 2000 to 14% in 2017. The main sources of emissions are energy-related CO2 emissions (which account for 77% of GHG emissions) while non-CO2 emissions represent 18% and non-energy related CO2 emissions 5%. The power generation and transport sectors are the major emitting sectors accounting for 62% of EU CO2-energy emissions in 2015 mainly driven by high transport activity (which is still largely dominated by oil products) and the electrification of the EU economy.

Recently, the European Commission (EC) presented the “Clean Energy for all Europeans8”, a package of measures to keep the EU competitive in the context of clean energy transition. The proposed policies and legislation are aligned with the EU NDC commitments to the Paris Agreement and the 2030 policy objectives regarding GHG emissions reduction, renewable energy and energy efficiency. European climate policy can be broadly classified into two categories: (1) the EU Emission Trading System (ETS), the EU-wide cap-and-trade system covering power generation, energy-intensive industry and aviation, and (2) policies targeting non-ETS sectors (buildings, transport, agriculture) including Member State-specific targets for emission reduction (Effort Sharing Decision). The inclusion of all sectors in EU’s climate action sets a good practice GHG reduction policy. To reach the NDC target, both policy pillars need to be strengthened after 2020; more specifically, in March 2018 a revision of the EU ETS for the period from 2021 to 2030 was adopted encompassing three key elements: doubling the Market Stability Reserve (MSR) feeding rate in the 2019-2023 period to reduce surplus of allowances; increasing the ETS cap annual reduction rate to 2.2% from 2021 onwards; and invalidating allowances in the MSR exceeding the number of allowances auctioned in the previous year. These measures contribute to achieving the 2030 ETS emission reduction target of 43% below 20059. The Effort Sharing Decision10 on GHG emissions from sectors not covered by the EU ETS was adopted in May 2018 and would lead to an EU-wide emission reduction of 30% by 2030 relative to 2005; this will be achieved by binding emission limits for each EU Member State by 2030. The policy framework is also complemented with sector-specific measures including the adopted proposal for amending the Energy Efficiency Directive and the Energy Performance of Buildings Directive11, the regulation to integrate GHG emissions and removals from LULUCF12 into the 2030 Climate and Energy policy framework, and the EC proposal for setting CO2 performance standards in light- and heavy-duty vehicles13. In 2018, the Energy Union Governance Regulation was agreed, which sets out interim targets towards achieving the

7 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: www.pbl.nl/commit-project 8 https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/clean-energy-all-europeans 9 European Commission (2015) Impact Assessment: Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC. European Commission, Brussels, Belgium 10 https://ec.europa.eu/clima/policies/effort/proposal_en 11 Council of the European Union (2017a) Energy efficient buildings – Presidency secures provisional deal with European Parliament 12 Land Use, Land Use Change and Forestry 13 https://ec.europa.eu/transport/modes/road/news/2018-05-17-europe-on-the-move-3_en

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2030 goals of 32% renewable energy and 32.5% energy savings14. Recent analyses show that current actions and policy initiatives are not sufficient to meet the Paris Agreement long-term objectives15, so strengthening of climate ambition is needed towards acceleration of energy system transformation and clean technology uptake. On the other hand, several positive changes have already been observed in the EU, including the implementation of GHG reduction policies at the EU and national-level, the rapid reduction in RES costs, the reduced CO2 emissions and import dependence, the employment opportunities in RES activities (wind energy, bioenergy, PV installation16), and the significant progress made by several EU Member States towards clean energy transition.

This analysis is based on the PRIMES model describing in detail the European energy system and markets on a country-

by-country basis17. PRIMES simulates a multi-market equilibrium solution for energy supply and demand by explicitly

calculating prices which balance demand and supply in each sector, while the modelling of agents’ behaviour is

founded on micro-economics and considers technical and engineering constraints. Two scenarios are explored, i.e.

the Reference (including already implemented policies) and the low-carbon scenario assuming strong climate policy

action by 2050. The analysis builds on recent modelling improvements including enhanced representation of

hydrogen, synthetic fuels, storage and innovative options towards deep decarbonisation and on PRIMES model results

from the ASSET project18.

Where do we want to go? The EU is on track to achieve its 2020 emission target and is currently legislating policies to reduce GHG emissions by

at least 40% in 2030. The policies, legislative instruments and support programmes are expected to put the EU on a

trajectory compatible with its NDC, but further measures are needed after 2030 to ensure consistency with the Paris

Agreement goal of carbon neutrality in the second half of the century (achieve a balance between emissions and

removals of GHGs by human activities). This transition will require deep transformational change to achieve full

decarbonisation of the energy system, i.e. going beyond the 80% emission reduction in 2050. The EU has not yet

submitted its strategy for long-term low-carbon transition. In July 2018, the EC launched a public consultation on a

strategy for long-term GHG emissions reduction reflecting on a vision for a modern low-carbon economy for all

Europeans19. Recently, eleven EU Member States pledged to meet the Paris Agreement’s goal of achieving carbon

neutrality in the second half of the century through the Carbon Neutrality Coalition 20 . Various options for

decarbonisation and their implications for technology choices and socioeconomic factors are worth to be examined,

in an effort to ensure that climate policy creates multiple co-benefits (e.g., reducing air pollution and improving

health), but avoids generating adverse side-effects (e.g., deteriorating access to energy). The setting of firm and clear

policy directions is required to ensure that near-term choices are aligned with long-term goals, i.e. to ensure sufficient

investment in clean energy technologies, and to avoid lock-in to carbon-intensive technologies, processes and

infrastructure.

The low-carbon transition pathway requires a significant reduction in GHG emissions towards close to zero net

emissions by mid-century. The EU “low-carbon” scenario presented here is considered to be in line with the objective

to limit global warming to well-below 2 °C, as cumulative EU CO2 emissions are 93 Gt in the 2010-2050 period; this is

14 The EC anticipates that emission reductions would go beyond 40% below 1990 in 2030, if these new targets are met http://europa.eu/rapid/press-release_SPEECH-18-4236_en.htm. The current analysis does not consider these targets. 15 European Climate Foundation, Net Zero by 2050: from whether to how, zero emission pathways to the Europe we want, https://europeanclimate.org/wp-content/uploads/2018/09/NZ2050-from-whether-to-how.pdf 16 https://ec.europa.eu/energy/en/news/over-one-million-jobs-renewable-energy 17 The analysis does not include emissions from the Land Use, Land Use Change and Forestry sector. 18 ASSET project, https://ec.europa.eu/energy/en/studies/asset-study-sectorial-integration 19 https://ec.europa.eu/clima/news/public-consultation-strategy-long-term-eu-greenhouse-gas-emissions-reduction_en 20 https://www.euractiv.com/section/climate-environment/news/europes-2050-climate-strategy-takes-shape/

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well within the range projected by a number of global models21 for cost-optimal scenarios assuming a global carbon

budget of 1000 Gt CO2 considered equivalent to likely below 2 °C and it is also in line with global models’ scenarios

assuming a global carbon budget of 400 Gt CO2 over 2010-2100 (equivalent to 66% probability to limit global warming

to 1.5 °C). The EU low-carbon scenario leads to a 95% reduction in CO2 emissions from 1990 levels implying a near

complete decarbonisation of the energy system by 2050. All sectors need to contribute to the low-carbon transition

according to their technological and economic potential, with an almost complete decarbonisation of both energy

supply and demand (Figure 1). The energy supply and transport sectors are the major contributors to emission

reductions, driven by extensive expansion of wind and solar PV in power production and large-scale deployment of

electric vehicles, hydrogen and advanced biofuels in transport modes. The industry and buildings sectors have high

CO2 abatement potential, through accelerated energy efficiency, electrification and reduced carbon intensity of

energy use. Closing the gap towards the long-term decarbonisation pathway can be achieved with a renewed and

more ambitious NDC (strengthening action in the medium term)22; suitable near- and long-term climate strategies

targeting the key emitting sectors; appropriate carbon pricing mechanisms and other policy measures; and

appropriate finance to facilitate uptake of clean energy technologies.

Figure 1: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario, emission reductions between the

reference and low-carbon scenarios by sector (energy supply, industry, residential and commercial buildings, transport,

non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with 1000 GtCO2, i.e. 2 °C). Non-energy

CO2 includes emissions from industrial processes.

How do we get there? Several studies23 have identified the key role of energy efficiency, expansion of renewable energy and fuel switching

away from carbon-intensive options and towards electricity and bioenergy in end-use sectors to achieve large cuts in

GHG emissions. RES expansion is driven by significant cost reduction due to accelerated technical progress, while

transport decarbonisation requires large-scale deployment of electric cars and increased use of advanced biofuels in

non-electrifiable transport modes. The role of electricity is central in the low-carbon transition; electrification of final

21 The range of EU cumulative CO2 emissions over 2010-2050 from global models is [91-111] Gt in the 1000 Gt global carbon budget scenario and [90-102] Gt in the 400 Gt global carbon budget scenario, for additional information: McCollum DL, et al (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z. 22 http://europa.eu/rapid/press-release_SPEECH-18-4236_en.htm 23 EC Energy Roadmap 2050, Capros et al, 2014, European decarbonisation pathways under alternative technological and policy choices: A multi-model analysis, https://www.sciencedirect.com/science/article/pii/S2211467X13001053

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energy demand (both in stationary and transport uses) complemented with decarbonised power supply plays a critical

role for the cost-efficient low-carbon transition (Figure 2). Power generation is projected to undergo a profound

restructuring towards the dominance of variable renewables, with the share of solar PV and wind increasing from 12%

in 2015 to 58% in 2050. In parallel, gas-fired capacities are required for balancing and reserve to complement

expansion of intermittent RES. In the longer term, the massive RES deployment in the electricity system is supported

by development of batteries, hydro pumping and chemical energy storage (power-to-gas, hydrogen). To achieve

ambitious GHG emission reduction targets, the low-carbon scenario includes several policy measures:

Strengthening of the ETS cap in power generation and energy intensive industries Measures for accelerating energy efficiency in the buildings sector Regulatory emissions standards for Light Duty Vehicles aiming at low emissions mobility Promotion of Best Available Techniques in industry Facilitation of renewables’ deployment in energy supply and demand sectors.

The large-scale adoption of these mitigation options and policy measures would lead to GHG emissions reduction of

about 80% in 2050, leaving unabated emissions from the transport, industry and building sectors. To achieve further

GHG reductions, it is necessary to further augment the intensity of sectoral measures and achieve a higher level of

sectoral integration mainly through the deployment of hydrogen and clean synthetic fuels (next section).

Figure 2: Energy system transformation towards decarbonisation (key transition indicators). Numbers in graph indicate

change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

The transition would entail several challenges to all sectors that need to decarbonise, i.e. energy-related costs for

households and firms shift to CAPEX, away from OPEX, posing challenges to low income classes. On the other hand,

significant opportunities may also emerge as the energy transition would improve security of energy supply, air quality

and human health. The energy efficiency gains, together with the shift towards RES, would reduce the need for

imported fossil fuels and lead to a large decline in the EU energy import bill. The low-carbon transition can bring a

wide range of additional benefits for EU citizens (clean air, less traffic and city congestion, avoided climate damages),

better living environments, reduced energy import bill, and increased resilience of the EU economy. The model-based

analysis supports the feasibility, technically and economically, of the NDC targets for 2030 and the long-term low-

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carbon transition with opportunities for strengthened climate action through low-cost options, like coal phase-out,

energy efficiency measures and RES expansion in electricity production. The EU Climate policy framework can facilitate

the effective market coordination between consumers, policy makers, technology and infrastructure developers

towards the cost-efficient decarbonisation of the European economy.

The role of hydrogen and clean gas towards deep decarbonisation Transport and heat decarbonisation are key ingredients towards the low-carbon transition, but are challenging

without structural innovations. Energy efficiency improvements and electrification of final energy uses would reduce

CO2 emissions, but the deployment of hydrogen and clean synthetic fuels would be required to enable full

decarbonisation complemented with innovative technologies providing flexibility and storage services. Assuming high

learning for these options in the long-term, the low-carbon scenario (presented above) would have the following

characteristics (Figure 3):

Mix of hydrogen up to 15% in the gas distribution grids, together with bio-methane and clean methane

(produced from hydrogen and CO2 captured from the air); the share of each option reaches 15-20% in

2050;

Use of electrolysis-produced hydrogen to feed fuel-cell powertrains in large vehicles (trucks, buses,

etc.) and long distance travelling cars coupled with hydrogen refuelling infrastructure hubs;

Use of hydrogen directly in high-temperature furnaces to decarbonise industrial processes which are

difficult to electrify, including in iron and steel, the chemical industry and other sectors;

Power-to-H2 technologies would need to be developed to provide electricity storage services at a large-scale, needed

to maximise the use of renewables, and produce hydrogen and clean methane used by consumers. The

decarbonisation of transport is achieved through a combination of mitigation options; electric vehicles are massively

deployed in the passenger car stock, battery-charged vehicles combined with fuel cell powertrains are used for heavy-

duty and high mileage travelling vehicles, while advanced biofuels are mainly used in aviation and maritime sectors.

Despite the significant increase in the volume of electricity required to produce hydrogen and clean synthetic fuels,

electricity prices would not increase owing to the market integration and the interconnected energy system allowing

access to remotely located renewables, flexibility provision, and an effective sharing of balancing resources. The

hydrogen-based storage of electricity would contribute to smoothing the load curves, maximising RES capacity factors,

and to shifting RES-based electricity to time periods when renewable power production is in deficit. Hydrogen, clean

gas and bio-methane would cover almost half of total consumption of gaseous fuels by 2050, with natural gas

(equipped with CCS) mainly used in power generation and industrial applications. Energy security has long been a

major concern in the EU as most Member States rely to a large extent on imported fossil fuels. The low-carbon

pathway reduces EU’s energy import dependence significantly, from 56% in 2015 to 27% in 2050, driven by the

expansion of domestic renewable sources (including advanced biofuels) and the domestic production of gaseous fuels

from electricity and hydrogen.

24

Figure 3: Deployment of hydrogen and clean gas in EU deep decarbonisation scenario in 2050

25

India: Decarbonisation Pathways - Options & Implications Ritu Mathura, Swapnil Shekharb

aDr. Ritu Mathur is the Director of Centre for Integrated Assessment & Modelling, The Energy and Resources Institute (TERI), New

Delhi, India. bMr. Swapnil Shekhar is a Research Associate with Centre for Integrated Assessment & Modelling, TERI, New Delhi,

India. For any queries related to this brief, please reach out to Mr. Shekhar at swapnil.shekhar@teri.res.in.

Where are we? India24 is one of the fastest growing developing economies. Housing about 17.5% of the total world population, it

faces several developmental challenges such as poverty alleviation, low Human Development Index (HDI) and

standards of living, lack of access to basic necessities such as electricity and other clean and modern fuels, proper

housing, potable water etc. Furthermore, large areas of the country are exposed to natural disasters, which have been

increasing in frequency over the years. Given that much of India’s energy infrastructure is yet to be built, it is important

to plan the development meticulously to grow in a sustainable manner.

India ratified its Nationally Determined Contribution (NDC) targets for 2030 to the United Nations Framework

Convention on Climate Change (UNFCCC) with an aim to combat climate change while ensuring that the country is

able to meet development aspirations. In this context, India has pledged to reduce the GHG emission intensity of GDP

by 33-35% from 2005 levels, increase forest cover by 2.5-3 GtCO2e and increase the share of non-fossil power

generation capacity to 40% conditional on international finance by 2030, among other qualitative targets on

developing mitigation and adaptation capacities. India has not yet submitted a long-term low-emission strategy to the

UNFCCC process.

India is actively implementing policies and measures on multiple fronts to grow on a path aligned with the idea of

“economic development without destruction”. Some of these policies and measures include Perform Achieve Trade

(PAT), Unnat Jyoti by Affordable LEDs for All (UJALA), and Standards & Labelling, directed at improving energy

efficiency; ambitious renewable energy targets and clean coal technology adoption in the power sector; Bharat Stage-

VI (BS-VI), National Electric Mobility Mission (NEMM), and the National Policy on Biofuels in the transport sector25.

This analysis is based on TERI’s MARKAL model which is a dynamic least cost optimization model with a detailed

representation of the energy sector of India. The model follows a rational expectation hypothesis for intertemporal

optimization26.

24 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: www.pbl.nl/commit-project 25 PAT is a policy directed at energy improvement in industries, UJALA is aimed at deeper penetration of LEDs to replace the conventional and inefficient lighting systems, Standards & Labelling programme deals with labelling of appliances on their energy efficiency potential, India has an ambitious renewable energy target of 175GW of renewables (100GW solar, 60GW wind, 10GW from biomass and 5GW from small hydro systems), policy on clean coal technology adoption aims at shifting from subcritical plants to super critical and ultra-supercritical coal based thermal power plants in India, BS-VI is aimed at emissions reduction from the vehicles, NEMM targets to increase the penetration of electric vehicles in India and the National Policy on Biofuels is aimed at enhancing domestic capacity of biofuel production in India. 26 TERI. (2018). Climate Change Risks and Preparedness for Oil & Gas Sector in India. The Energy and Resources Institute: New Delhi. 196pp

26

Where do we want to go? Figure 1 shows the emissions trajectory of four energy scenarios for India, namely the Reference and NDC scenarios,

and the 2 °C compliant and 1.5 °C compliant scenarios27. The cumulative carbon budgets for India between 2010 and

2050 are 277GtCO2, 251GtCO2, 226GtCO2 and 189GtCO2 for the four scenarios respectively. The budgets for the 2 oC

and 1.5 oC scenarios are considerably higher than the range projected by the global Integrated Assessment Models

based on cost optimality which are respectively 88-117GtCO2 for the 2 oC scenario and 32-91GtCO2 for the 1.5 oC

scenario. This difference arises primarily due to the assumption of inter-temporal and interregional cost-optimisation

of global models (i.e. a universal carbon tax is applied across all countries and sectors). This leads to relatively larger

allocation of mitigation efforts to the developing countries where much of the infrastructure is yet to be built. Another

reason for the disparity is that TERI’s MARKAL model assumes a higher economic growth rate (based on India’s

development aspirations28) relative to the global models that assume a slightly lower growth rate for India (based on

the SSP2 ‘Middle of the Road’ scenario). For brevity, however, the scenarios presented here are still referred to as `2 oC` and `1.5 oC`.

27 These scenarios were developed as part of the CDLINKS project. The 2 °C and 1.5 °C compliant scenarios are based on the assumption that by 2030, India’s NDC targets are achieved and further actions are undertaken only beyond 2030. These two scenarios were an attempt to align India’s cumulative carbon budget between 2010 and 2050 with the cost-optimal budget range as provided by the global Integrated Assessment Models (IAM) of the consortium. The cumulative global budget used for 2 oC and 1.5 oC is 1000Gt and 400Gt respectively. It is worth noting here that the budget range for India will change if different effort sharing principle is used instead of cost optimal carbon budget allocation or if the global carbon budget changes. 28 This growth rate is in line with the target set by the Government of India in its NDC submission. The growth rate assumed here is 8.3% until 2030 and 7% thereafter.

27

Figure 1: CO2 Emissions Trajectory (GtCO2): Total, Demand and Supply Emissions (Source: TERI model-based analysis)

The total range of reductions in carbon dioxide emissions in 2050 between Reference and the 2 °C scenario is

4.3GtCO2, of which 1.0Gt come from the demand side transformations (industry, transport and buildings), whereas

3.3Gt come from the supply side low-carbon transition. (Figure 2). While the largest potential comes from the power

generation sector, the highest emissions reduction potentials in the demand sectors are in the industry and transport

sectors. It is worth noting here that the emissions of the residential & commercial sector are reflected in the power

sector because energy consumption in buildings is largely based on electricity.

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**Buildings stands for Residential and Commercial sector, which includes appliances and energy required for cooking in the former

and buildings in the latter.

Figure 2: CO2 emissions in 2015 and by 2050 in the reference scenario (NDC), emission reductions between the

reference and low-carbon scenarios by sector (energy supply, industry, residential and commercial buildings, transport,

non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with 1000 GtCO2, i.e. 2 °C, starting from

the 2030 NDC emission levels). Non-energy CO2 includes emissions from Industrial Processes.

The emission trajectory of India depends on certain development needs and aspirations, which directly impact the

energy system. These include economic growth, urbanisation, uniform access to affordable and clean energy, uniform

access to mobility services and sustainable stimulation of Indian industries.

In the quest of providing uniform access to affordable and clean energy to all, the electricity demand in the country is

expected to increase rapidly, despite significant strides in energy efficiency. Figure 3 presents some of the

decarbonisation indicators for the 2 oC scenario.

Figure 4 illustrates the capacity needed to generate electricity and the corresponding generation of electricity across

the four scenarios in 2030 and 2050. The high decarbonisation potential of the power generation sector comes from

the assumption that renewable electricity coupled with storage will be commercially viable at scale by 2030, thereby

overcoming the intermittency challenges (for wind and solar power). However, the adoption of renewables has to be

complemented with grid improvements to handle higher share of renewables in the electricity. The task becomes

more challenging because of the sheer scale of implementation that is required for India. Another important issue

here is the management of the existing fossil fleet. As is evident from panel (a) of figure 4, coal is projected to decline

by nearly 40% in the 2 °C compliant scenario relative to Reference in 2050. This implies that even the relatively new

and more efficient coal power plants will need to be pre-maturely retired in this scenario. It is also clear from figure 4

that investment in gas-based plants needs to be critically assessed because the contribution of natural gas appears to

diminish as the level of mitigation actions deepens.

29

Figure 3: Decarbonisation indicators for the 2 °C scenario (starting from NDC emission levels in 2030). Numbers in

graph indicate change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

The two sectors in the demand side that offer the largest mitigation potential are the industry and transport sectors.

In the industrial sector, the PAT-I cycle successfully realised the benefits of low hanging fruits in seven energy-intensive

industrial sub-sectors 29 . However, achieving higher levels of efficiency improvement will become increasingly

challenging and cost-intensive as well. In this regard, Micro, Small and Medium Enterprises (MSME) present a unique

case because apart from investment barriers, they also lack the advantage of scale which prohibits them from moving

to efficient processes and technologies. Thus, in the industrial sector, not only cost is likely to become a deterrent,

implementation of disruptive processes like deep electrification might also require hand-holding and efforts towards

capacity building to reap the benefits of these changes.

The transport sector is one of the fastest growing sectors in terms of energy consumption, as incomes of households

increase. While on one hand increasing income of households leads to large growth of private vehicles, on the other

hand inefficient public transportation system is failing to support the increasing demand for mobility. The Indian

transport system is locked into conventional fossil fuel-based vehicles, especially the road-based freight segment,

which has no commercially viable alternative to diesel. Electrification of vehicles can serve the purpose of tail-pipe

emission reduction (also given that the power system would be deeply decarbonised) but issues related to associated

battery recharging infrastructure and large scale manufacturing are currently prohibiting the penetration of electric

vehicles (EVs). In the interim period, Compressed Natural Gas (CNG) can bridge the transition between conventional

fossil fuels (gasoline/ diesel) and electricity, with EVs projected to be massively deployed in the 2 °C scenario after

2030. However, this can imply high risks for India locking itself into infructuous and carbon-intensive infrastructure.

29 PAT-I covered seven industries viz. Iron & Steel, Cement, Aluminum, Fertilizer, Paper & Pulp, Textile & Chlor-Alkali in industrial sector and Thermal power plants in power sector

30

Figure 4: Electricity generation capacity & Electricity Generation

How do we get there? As enumerated in the previous section, the three key strategies towards a 2 °C or 1.5 °C world are increased

penetration of renewables in the energy supply sector, end-use electrification and energy efficiency in transport,

industries and buildings.

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**These costs do not reflect the additional investment required to develop the associated infrastructure like charging stations for

EVs, grid strengthening to handle increased share of renewable electricity etc.

Figure 5: System and Investment Costs of the pathways

The total discounted energy system cost (at a discount rate of 10%) for the period 2010 to 2050 increases by 2.1%

between Reference and NDC and 2.8% between Reference and 2 °C compatible scenario30. A key point to note here

is that these strategies are dependent on development of associated infrastructure whose cost is not reflected in

Figure 5.

The investment requirements of each of the four scenarios are presented in Figure 5(b). The increase in investment

between Reference and NDC31 scenario in 2031 is 5%. However, by 2051, the investment requirements increase by

24% in the 2 °C scenario. The huge requirement in investment towards 2 °C scenario is considered a major challenge

towards realisation of the low-carbon transition pathways.

The mobilisation of funds for financial assistance is one of the conditions on which India’s NDC relies. The NDC target

no. 4 32 relies on technology transfer and Green Climate Fund (GCF) whereas target no. 7 33 seeks additional

international funds to successfully adopt and implement mitigation and adaptation strategies. While it is difficult to

assess whether the funds are going towards development of clean technologies or towards broader development

agenda, the available finance under current conditions is definitely lower than what is needed for the low-carbon

transition.

When it comes to technology transfers, the issues associated with the Intellectual Property Rights and other legal

aspects need to be resolved. Consideration needs to be made on the mode of technology transfer that should be

adopted in India. Whether India should import a manufactured product, or import the capacity to produce the

technology within the country, or be involved in R&D activities jointly with other countries needs careful assessment

30 Interestingly, the overall discounted system cost for 2010-2050 is nearly the same for the Reference scenario and the 1.5 °C compatible scenario for India. This is because the 1.5 °C scenario heavily relies on renewables, which leads to reduced fuel purchase expenditure (relative to Reference). Even though the upfront cost of clean energy technologies is higher relative to fossil fuels, the fuel cost declines dramatically, which leads to only a 0.1% increase in the total energy system cost in the 1.5 °C scenario. 31 By design of the scenarios (India’s NDC targets are achieved in all scenarios in 2030 and further actions are undertaken only beyond 2030), the investment cost in 2031 is (roughly) the same across the NDC, 2 °C and 1.5 °C scenarios. 32 “To achieve about 40% cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030 with help of transfer of technology and low cost international finance through Green Climate Fund (GCF)” 33 “To mobilise domestic and new & additional funds from developed countries to implement the above mitigation and adaptation actions in view of the resource required and the resource gap”

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to determine which is the most appropriate mode for India. However, an issue that resonates within each of these

modes is the need for capacity building. Development of new and clean energy technologies needs to be associated

with an innovative supply chain mechanism especially given that changes in India need to be adopted at massive scale.

While some strategies and business models such as mass procurement of LEDs to reduce their unit cost and PAT

scheme for energy efficiency in industrial sectors have been successful, similar innovations are needed to make clean

energy technologies affordable to the wider public.

The next step in this process is to ensure that entities are willing and able to adopt these technologies and reap the

associated benefits. The former calls for certain behavioural changes by energy consumers (for instance in case of

electric cooking) and elimination of markets for second hands products (to improve the energy efficiency of the stock

of technology) whereas the latter calls for capacity building, even handholding to equip the users with the appropriate

information to be able to use these advanced technologies.

This entire framework of new, clean and energy-efficient technologies has a direct bearing on the existing technology

and infrastructure and the bridging technologies (such as CNG). The biggest challenge that India faces right now is to

efficiently manage the existing fossil fleet; the large scale shift to renewables is likely to generate stranded assets (of

coal-based power plants), thereby increasing the social cost of renewable electricity. The transition needs to be

carefully planned to maximise the use of current assets and minimise further lock-ins.

33

Decarbonisation pathway of Japan

Where are we? In 2016, Japanese34 GHG emissions were 1,307 Gt-CO2eq, most of which came from energy use (88.3%) and industrial

processes (7.3%). CO2 emissions made up 92.2% of the total GHG emissions. The submitted Japanese NDC pledges a

26% reduction in GHG emissions by 2030 compared to 2013 levels. In addition, the government expressed its intention

to pursue efforts for 80% GHG emission reduction by 2050. The former Japanese decarbonisation plan35 heavily relied

on nuclear energy. However, after the event of Fukushima-Daiichi nuclear power plant in 2011, all nuclear power

plants were shut down. To date, only a few plants have resumed operations and no new construction plan is running.

The population of Japan (127 million in 2016) is now decreasing after peaking in 2008 and is expected to be around

102 million by 2050. The economic activity (measured in terms of Gross Domestic Product) in 2016 was 4.8 trillion

USD, the GDP per capita was 37,960 USD, and the economic growth rate in the last decade fluctuated around 1-2%

with very low and even negative values following the global financial crisis, the 2011 Great East Japan Earthquake,

and the rise of consumer taxes in 2014. Implemented decarbonisation policies are mainly based on voluntary actions

targeting energy efficiency in private sectors. The feed-in tariff for renewable energies introduced in 2012 has led to

a significant increase in the capacity of solar PV.

The AIM/Enduse [Japan] energy system model is mainly used in the analysis36. This is a partial equilibrium, dynamic

recursive model with detailed descriptions of energy technologies in the end-use sectors as well as the energy supply

sectors in Japan. It describes the characteristics of energy supply and demand across 10 sub-regions in Japan, broadly

coinciding with the areas of power supply firms.

Where do we want to go? It is noted that the government claims Japan’s NDC for 2030 is consistent with the Paris Agreement target of well-

below 2 °C, but how to realise the ambitious 2050 goal (GHG reduction by 80%) remains an open question. The NDC

emission reduction target (GHG reduction by 26% in 2030 from 2013 levels)37 is regarded feasible by the extension

and strengthening of current policies and actions. On the other hand, the 2050 goal is seen as challenging without

structural innovations both in energy demand sectors (transport, industries, buildings) and energy supply systems.

The AIM/Enduse [Japan] model is used to assess three scenarios: a scenario assuming only current policies in place

(Baseline); a scenario introducing a decarbonisation path towards 2050 that is in line with the NDC (2030) target

(NDC); and a low-carbon scenario assuming immediate decarbonisation towards an 80% emission reduction by 2050

(Immediate). The Japanese low-carbon scenario presented here is considered to be in line with the objective to limit

global warming to well-below 2 °C, as cumulative CO2 emissions are 28 Gt in the 2010-2050 period; this is well within

the range projected by a number of global models38 for cost-optimal scenarios assuming a global carbon budget of

1000 Gt CO2 considered equivalent to likely below 2 °C.

34 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: www.pbl.nl/commit-project 35 METI. The Strategic Energy Plan of Japan. In: Meeting global challenges and securing energy futures—(Revision June 2010) [Summary], Ministry of Economy, Trade and Industry, Tokyo, Japan; 2010. 36 Oshiro, K., Kainuma, M., & Masui, T. (2017). Implications of Japan's 2030 target for long term low emission pathways. Energy Policy doi:10.1016/j.enpol.2017.09.003 37 Japan’s NDC includes targets for the share of RES technologies in power generation for 2030, but here we only analyse the NDC emission reduction target. 38 The range of Japan cumulative CO2 emissions over 2010-2050 from global models is [28-43] Gt in the 1000 Gt global carbon budget scenario, for additional information: McCollum DL, et al (2018) “Energy investment needs for

34

According to the model-based analysis, keeping the same mitigation effort needed for the NDC target until mid-

century (2050) contributes to large emissions reductions compared to the Baseline scenario, but leaves a gap of

around 100 Mt CO2eq with the pathway that assumes immediate action to achieve the long-term 80% GHG emission

reduction target by 2050 (Figure 1).

Japan has not submitted a Mid Century low-carbon Strategy. Discussion on the long-term low-carbon strategy led by

the government has just begun in August 2018. ‘Simultaneous solution’ is the key notion forming the Japanese

decarbonisation strategy, e.g., low-carbon society and economic growth, energy security, sustaining local

communities, and resilience to climate disasters. They are also linked to Japanese national Sustainable Development

Goals. A sense of urgency to be left behind from the global trend of decarbonisation is becoming common particularly

among large global companies.

fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.”

35

Figure 1a: CO2 emissions from energy supply and demand in alternative pathways (Baseline, NDC, and Immediate

pathway). 1b: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario (Baseline), emission reductions

between the reference and low-carbon (Immediate pathway) scenarios by sector (energy supply, industry, residential

and commercial buildings, transport, non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with

2 °C)39.

39 Non-energy CO2 emissions correspond to those from industrial processes; land use change emissions are excluded.

36

How do we get there? A drastic energy system transformation is required to achieve Japan’s NDC and the more ambitious long-term

decarbonisation goal (immediate pathway). Extensive improvement of energy efficiency and decarbonisation of

energy sources in all demand and supply sectors are expected to play key roles in the mitigation effort (Figure 2).

Improvement in energy efficiency is achieved by both supply and demand sides. In the supply side, for example, by

means of deployment of high efficiency combined cycle and cogeneration systems. In the demand side, energy

efficient cars, appliances, and buildings with energy management systems utilising Internet of Things (IoT) and AI

technologies will reduce the final energy consumption while maintaining the standards of living of Japanese citizens.

Decarbonisation of energy sources could be achieved via the large-scale expansion of wind power, solar PV, and

geothermal power generation as well as by the development of CCS technologies (in electricity production and in

industrial applications). Nuclear energy may also contribute to decarbonisation in case it overcomes safety issues and

becomes accepted by Japanese society. Required additional energy system investments in 2030 are projected to be

9.4 billion USD and 69 billion USD under NDC and immediate low-carbon pathway, respectively. In 2050, the additional

investment requirements increase to 62 billion USD and 86 billion USD, respectively. They would partly be offset by

reduced energy import bills induced by a large-scale decline in imports of oil and natural gas.

In order to lead to decarbonisation of society, economy-wide carbon pricing and support for innovative clean energy

technologies would be important as well as enhancement and strengthening of current policies. The integration of

nuclear-energy-related issues in the long-term decarbonisation pathway should also be discussed nationwide.

Introducing variable renewable energies (solar and wind) is a challenge for the Japanese energy system. Increasing

the connectivity of power grids among regions is important as well as developing energy storage technologies (e.g.,

batteries, fuel cells, or pumped-storage hydropower). Energy security has long been a major concern because Japan

relies almost entirely on imported fuels (oil and gas). Increasing the capacity of renewable energies can contribute to

improve energy security. While the present analysis focuses on Japanese domestic energy system transformation,

Japan can also contribute to the decarbonisation of other countries by transferring energy-related technologies, which

can be a business opportunity for many Japanese innovation-based companies (like battery manufacturers).

37

Figure 2a: Energy system transformation towards decarbonisation for each pathway (low-carbon energy includes

renewables, nuclear and CCS). 2b: Decarbonisation indicators for the Immediate pathway. Numbers in graph indicate

change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

38

The role of nuclear power in the Japanese low-carbon transition The government’s basic energy plan and NDC still rely on nuclear energy, which maintains a share in the primary

energy supply of about 10-11% in 2030. However, after the events of Fukushima-Daiichi nuclear power plant in 2011,

all nuclear power plants ceased their operations temporarily (the share of nuclear energy in primary energy supply

dropped from 11.2% in 2010, to less than 1% in 2016), and the public opinion against nuclear energy has become

dominant. Therefore, it is quite uncertain whether deployment of nuclear energy in the future is possible or not.

In order to quantify the effect of limited nuclear energy availability in energy system transition towards

decarbonisation, additional analysis is conducted under a scenario assuming gradual phase-out of nuclear energy

(NDC limited nuclear, Figure 3). Under the limited nuclear scenario, achieving Japan’s NDC can be more challenging.

More intensive deployment of renewables and additional investment for energy systems are necessary. On the other

hand, it can lead to more energy-efficient society, promote new business opportunities based on local and

decentralised energy supply, and reduction in nuclear wastes.

Figure 3: Effects of nuclear energy phase-out in the NDC scenarios. (a) Electricity generation. (b) Investment on energy

supply. (c) Changes in final energy consumption.