session iv. “europe’s energy future: an overview … meetings 29 30-1...first stakeholders...

First stakeholders meeting, Brussels 29 January 2009 1

SESSION IV. “Europe’s Energy Future: An Overview of Scenarios”

SECURE first stakeholders meeting

New Approaches to Secure Europe’s Energy Supplies


Europe’s Energy Future : First Generation Scenarios

1. SECURE scenarios structuring dimensions

2. SECURE scenarios parameters

3. Description of the scenarios- REFerence (pre-SECURE)

- LTS (Liberalisation -Technology based - Smooth prices),

- LTR (Liberalisation -Technology based - Rough prices),

- LCS (Liberalisation - Cap on emissions - Smooth prices),

- ITR (Intervention (State) -Technology based - Rough prices),

- ITS (Intervention (State) -Technology based - Smooth prices).


First Generation Scenarios, structuring dimensions

EU Energy policy

EU Climate policy

International Energy Markets

Smooth Path, stable prices

( S )

Rough Ride, high prices

( R )


( S )


( R )


( S )


( R )


( S )


( R )

Scenario(1) Openfield, Technology-

push

(2) Managing risks through competition

(3) Ecological virtue through

market

(4) Competitivity at

risk

(5) Bocage, Comeback of

nations

Scenario LTS LTR LCS ITS ITR

Liberalisation, Competition ( L )

State Intervention ( I )

Technology-Based ( T )

Hard Cap on Emissions ( C )

Technology-Based ( T )

Hard Cap on Emissions ( C )


First Generation Scenarios, key parameters

Scenario LTS LTR LCS ITS ITR

Discount rate in EU

16% 16% 16% 4% 4%

Carbon valueEU

- 20% 2020 - 60% 2050

Technology performances

Optimistic Optimistic Norm Optimistic Optimistic

Oil and gas resources

Norm -20% Norm -20% Norm

2005 2010 2020 2050

EUR 5 10 15 25

RAN1 0 5 10 20

ROW 0 0 5 15

2005 2010 2020 2050

EUR 5 10 15 25

RAN1 0 5 10 20

ROW 0 0 5 15


REFerence case◆ The Reference projection provides an image of the e nergy scene to

2050, as resulting from the continuation of on-goin g trends and structural changes in the world economy.

◆ These projections are been developed with the POLES model, a Partial Equilibrium Model for the energy sector, with a dyn amic recursive simulation process.

◆ The approach combines 47 regions for the world, wit h 22 energy demand sectors and about 40 energy technologies – no w including generic “very low energy” end-use technologies.

◆ The Reference projection adopts exogenous forecasts for population and economic growth in the different world regions.

◆ The projection is also based on consistent assumpti ons on the availability of fossil resources and for the costs of future technologies (a discount rate of 8% is applied to investment dec isions).


REFerence Case: World and Europe Gross Inland Consumption

0

5

10

15

20

25

2000 2010 2020 2030 2040 2050

Gto

e

Other Renew ables

Biomass

NuclearCoal, lignite

Natural gasOil

World Primary consumption - REF EU27 Primary consumption

0

500

1 000

1 500

2 000

2 500

3 000

2000 2010 2020 2030 2040 2050

Mto

e

Other Renew ablesBiomassNuclearCoal, ligniteNatural gasOil

♦ World energy consumption doubles from 2000 to 2050, with a leveling-off of world oil and gas production after 2030

♦ In spite of significant developments in nuclear ene rgy, biomass and other renewables, the contribution of coal in absolute value is multi plied by three between 2000 and 2050

♦ As for Europe, the dynamics in GIC is much less pro nounced with an increase from 1.7 Gtoe to 2.3 Gtoe between 2000 and 2050.

♦ There again one notes the leveling-off of oil and g as consumption, the progress of renewable and the penetration of coal, although mor e modest


1. LTS: Liberalisation – Technology based – Smooth prices

◆ Due to the economic crisis, world GDP growth rate is 20 % lower than in REF between 2008 and 2015

◆ World GDP in 2015 is 6% lower (other hypotheses on economic growth may be explored in future runs)

◆ LTS scenario also accounts for low level climate policies, with abatement policies included through a carbon price.

◆ This price is higher in the industrialized regions. Europe keeps the lead in climate policies

◆ The liberalization/competition framework translates into a high discount rate (16%) that penalizes investment intensive solutions

◆ The scenario however supposes an accelerated technological progress in low-carbon technologies: CCS, nuclear, renewables and low energy end-use technologies


2. LTS – Exogenous Carbon Value and

endogenous international energy prices

0

10

20

30

40

50

60

70

80

90

100

2000 2010 2020 2030 2040 2050

OilGas (Asia)Gas (Europe)

Gas (America)Coal (Asia)Coal (Europe)Coal (America)

International Prices - REF

0

5

10

15

20

25

2000 2010 2020 2030 2040 2050

€05/

tCO

2

Europe

RAnnex1

RoW

Carbon Value

◆ In Europe, the carbon value starts at 10 €/tCO2 in 2010, increases to 15 in 2020 and 25 in 2050

◆ In the rest of the Annex B countries the carbon value starts at 5 €/tCO2 in 2010 and follows with a lag, ending at 20 €/tCO2 in 2050, while in non-Annex B countries, it ends at 15 €/tCO2 in 2050

◆ Oil, Gas and Coal establish at respectively 60, 30 and 15 €/boe in 2020 and 90, 60 and 20 €/boe in 2020


LTS compared to REF◆ Lower Gross Inland Consumption and CO2 emissions at world level

◆ Total energy consumption also lower in EU27

◆ The main difference between LTS and REF for Europe appears in the development of nuclear energy

◆ Starting at approximately 250 Mtoe in 2005, nuclear production in LTS is at 170 Gtoe in 2050, as compared to 300 Gtoe in REF

0

5

10

15

20

25

2000 2010 2020 2030 2040 2050

Gto

e

Other Renew ables

Biomass


Natural gas

Oil


0

500

1 000

1 500

2 000

2 500

3 000

2000 2010 2020 2030 2040 2050

Mto

e

Other Renew ablesBiomassNuclearCoal, ligniteNatural gasOil


LTS compared to REF

◆ As a consequence, energy CO2 emissions are higher in Europe in the LTS case, in spite of a lower GIC

EU27 CO2 emissions by sector (energy) : REF

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 2010 2020 2030 2040 2050

GtC

O2

TransformationTransportRes-Ser-AgrIndustry

EU27 CO2 emissions by sector (energy) : LTS

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 2010 2020 2030 2040 2050

GtC

O2



2. LTR: Liberalisation – Technology based – Rough prices

◆ SECURE-LTR gives special attention to the risks ass ociated to oil and gas supply

◆ The scenario first supposes Ultimate Recoverable Re sources to be 20% lower than in the Reference or smooth cases

◆ It also supposes a price shock, due to a geo-politi cal event, with a doubling of the oil and gas prices in 2015, compared to the LTS price profile

◆ This allows analyzing the impacts of price shocks a nd instability at the 2020 horizon.

0

20

40

60

80

100

120

140

2000 2010 2020 2030 2040 2050

€05/

boe





LTS –World and Europe Gross Inland Consumption◆ The consequences of the price shock are noticeable and long lasting, even if,

the price hike is followed by a counter-shock

◆ Oil price is higher than in the LTS scenario on the whole period, reflecting a higher scarcity. The consequences on the world energy balance are also noticeable, with lower GIC at world and European level

◆ It appears that oil and gas scarcity scenario is mostly prejudicial to natural gas, which development in the electricity sector, as opposed to coal and principally nuclear and renewable, is strongly limited by the price shock and subsequent high price level

0

5

10

15

20

2000 2010 2020 2030 2040 2050

Gto

e

Other Renew ables

Biomass


Natural gas

Oil

Wor ld Pr im ary cons um ption - REF EU27 Pr im ary consum ption

0

500

1 000

1 500

2 000

2 500

3 000

2000 2010 2020 2030 2040 2050

Mto

e

Other Renew ables

Biomass

Nuclear

Coal, lignite

Natural gas

Oil


3. LCS: Liberalisation – Cap on emissions – Smooth prices

◆ The main feature of this scenario is the introduction of a hard cap on emissions, corresponding to a Kyoto-type international agreement for the Second Commitment Period

◆ This Carbon Constraint scenario reflects a state of the world with already (if not overly …) ambitious climate targets, aiming at an emission profile that is compatible in the long-term with concentration levels of 450 ppmv for CO2

◆ The liberalization of the energy markets is translated here as in the former scenarios by a high discount rate. Assumptions concerning the technology performances and resources are identical


Emission scenarios according to IPCC AR4


World and EU27 CO2 emissions by sector in the LCS case

◆ This scenario tries to depict the climate policy of the EU that is now under preparation, in its milder version: -20% of the European emissions of 1990 in 2020 and -60% in 2050

◆ In a consistent set of hypotheses, it is also considered that world emission are brought down in 2050, to -25% of their 1990 level. This has to be compared with the doubling of emissions in the LTS case.

World CO2 emissions by sector (energy)

0

5

10

15

20

25

30

35

2000 2010 2020 2030 2040 2050

GtC

O2


EU27 CO2 emissions by sector (energy)

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

2000 2010 2020 2030 2040 2050

GtC

O2



LCS – Carbon Values meeting the emission cap and

endogenous international energy prices

◆ The carbon Value that is necessary to induce new trajectories in the world and European energy system is at least one order of magnitude higher than the value used in the other scenarios

◆ This corresponds to the fact that the LCS scenario reveals the need for radical changes in the energy systems

0

10

20

30

40

50

60

70

80

90

100

2000 2010 2020 2030 2040 2050

€05/

boe




0

50

100

150

200

250

300

350

400

2000 2010 2020 2030 2040 2050

€05/

tCO

2

Europe

RAnnex1

RoW

Carbon


LCS –World and Europe Gross Inland Consumption

◆ GIC and fuel-mix in Europe and in the world are significantly different, with lower GIC and coal and oil consumptions and higher renewables and nuclear. In Europe total energy consumption is almost stabilized

◆ The EU gas consumption is not significantly modified in this scenario until 2020. However, the prices of oil and gas are much lower in this scenario, as the high carbon values induce a drastic reduction in coal, oil and gas demand

0

5

10

15

20

2000 2010 2020 2030 2040 2050

Gto

e

Other Renew ables

Biomass


Natural gas

Oil


0

500

1 000

1 500

2 000

2 500

3 000

2000 2010 2020 2030 2040 2050

Mto

e

Other Renew ables

Biomass

Nuclear

Coal, lignite

Natural gas

Oil


4. ITS: Intervention – Technology based – Smooth prices

◆ This scenario is similar to the LTS scenario, except the assumption concerning the discount rate used for investment decision in Europe, which is here much lower (4%). This reflectsa lower degree of liberalization, more state intervention and a longer time horizon considered for decision in the energy sector.

◆ It has an impact for all investment intensive – and most of the time low-carbon – technologies, but particularly for nuclear energy, while renewable face technical constraints

◆ As a consequence the development of nuclear energy in Europe is profoundly altered, with a total contribution of 360 Gtoe in 2050, i.e. more than two times the contribution noticed in the LTS case


ITS –World and Europe Gross Inland Consumption

◆ As a consequence, EU27 emission are significantly reduced in that case: European emissions are stabilized in 2050 approximately at their 1990 level without any strong carbon value

◆ This scenario however doesn’t meet the EU’s current climate target

0

5

10

15

20

25

2000 2010 2020 2030 2040 2050

Gto

e

Other Renew ables

Biomass


Natural gas

Oil


0

500

1 000

1 500

2 000

2 500

3 000

2000 2010 2020 2030 2040 2050

Mto

e

Other Renew ables

Biomass

Nuclear

Coal, lignite

Natural gas

Oil

World CO2 emissions by sector (energy)

0

5

10

15

20

25

30

35

40

45

2000 2010 2020 2030 2040 2050

GtC

O2


EU27 CO2 emissions by sector (energy)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 2010 2020 2030 2040 2050

GtC

O2



5. ITR: Intervention -Technology based - Rough prices

◆ This scenario corresponds to the LTR scenario, with a similar international context of oil and gas scarcity and price instability

◆ The main change corresponds to the assumption concerning the discount rate in Europe, which is here much lower (4%).


ITR –World and Europe Gross Inland Consumption

◆ Due to higher international prices and a lower discount rate, energy demand is limited while investment intensive solutions such as renewables and nuclear are strongly stimulated

◆ As a result, this scenario is the one with the higher share of renewables and the lowest CO2 emissions, of all cases that do not consider a high carbon value

◆ In 2050 the CO2 emissions of the European energy sector are in that case at 90% of their 1990 level.

0

5

10

15

20

2000 2010 2020 2030 2040 2050

Gto

e

Other Renew ables

Biomass


Natural gas

Oil


0

500

1 000

1 500

2 000

2 500

3 000

2000 2010 2020 2030 2040 2050

Mto

e

Other Renew ables

Biomass

Nuclear

Coal, lignite

Natural gas

Oil


First Generation Scenarios

◆ This first set of POLES scenarios in the SECURE project illustrates the capability of the model to describe the consequences on the future of the

energy systems of contrasted sets of hypotheses

◆ The global results presented above display features that are significantly

different from one case to the other

◆ After development of the storylines and a validation of the hypotheses /

results by the other partners in the project …

◆ more investigation will have to be performed in order to explore the

consequences of the different scenarios in terms of European energy dependency and vulnerability

session iv. “europe’s energy future: an overview … meetings 29 30-1...first stakeholders...

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