european parliament itre committee · 2014-12-17 · • decarbonisation policy leads to increase...
TRANSCRIPT
Dr Bolesław Jankowski
Badania Systemowe „EnergSys” Sp. z o.o. Expert of the Polish Chamber of Commerce
Bolesł[email protected]
www.energsys.com.pl
Energy Roadmap 2050 from the economic, industrial and social
perspective (case of Poland) as well as its value for the EU decision making
process
European Parliament ITRE Committee
Brussels, 18 September, 2012
Main issues
1. Impact assessment of the Energy Roadmap 2050 from a Member State perspective – case of Poland
2. Important shortcomings of the Energy Roadmap 2050 from the EU policy making perspective
1. EU climate policy documents and scope of impact assessment in the
Polish study
EU goals for GHG emission reduction A. Evolution of EU emission reduction goals
1. Kyoto Protocol (reduction goals till the year 2012)
– UE-15: 8% reduction (in relation to 1990)
– Poland: 6% reduction (in relation to 1988)
2. The EU Climate and Energy Package
– U-27 – 20% reduction till 2020
3. Roadmap 2050 - 80% reduction till 2050
B. Roadmap 2050 – proposed path of GHG emission reduction:
2020 - 25%
2030 - 40%
2040 - 60%
2050 - 80%
The scope of impact assessment in the EC proposals concerning the climate policy
Document Date of
issue
Time
horizon
Macroeconomic assessment Techno-economic
assessment
EU level MS level EU level MS Level
Climate and
Energy Package
2008 2020
YES YES YES YES
Analysis beyond
20% reduction
in 2020
2010/
2012
2020 YES
(till 2020) -
YES (limited scope)
YES
(limited scope)
Roadmap to
low carbon
economy 2050
2011 2050 YES
(only Fragmented
Action, till 2030)
- YES -
Energy
Roadmap 2050
2012 2050
- -
YES
(only Global Action
Scenarios)
-
Conclusion:
1. Only the Climate and Energy Package was accompanied by impact assessment on the EU and MS level
2. Impacts on Member States were not assessed in new EC proposals concerning 2050 targets
• The lack of impact assessment on the MS level is a serious barrier in rational discussion on the
EC proposals
• The Polish study tries to overcome this shortcoming of EC studies in case of Poland
• The study presented below was performed in 2011/2012 for the Polish Chamber of
Commerce
2. Methodology, scope of modelling calculations and main assumptions
in the Polish study
Methodology Modelling set and calculation scheme
final
energy
demand
sectoral
value
added
EFOM-PL
Final consumption
Demand
Solid fuels
Sector
Gas fuels
Sector
Liquid fuels
Sector
Public
Power Plants
Public H & P
Cogener. Plants
Industrial
Cogener. Plants
Industry and
Construction
Hausehold
Sector
Tertiary Sector
Transport
Agriculture
Electricity
Electricity
Heat
Heat & Steam
Solid, liquid and gas fuels
SolidLiquid,Gas,
Fuels
Supply
Fuels production, preparation Conversion
Public & Municipal
Heating Plants
Industrial
Heating Plants
Heat
Heat & Steam
Frame data
Scenarios
Strategy
measures
CGE-PL
PROSK-E
energy
service
demand
technologies
energy,
emissions,
system costs
world
energy
prices,
emission
limits,
strategy
measures
population,
economic,
social,
internat.
Growth, fuels
prices
EFOM-PL
Energy prices iteration loop (optional)
The modelling set was used and verified in many complex studies for the Polish Government,
The World Bank and within the UE Projects
Considered scenarios and calculation cases Climate policy options:
1. Liberal (Lib) – without CO2 limits (zero CO2 prices)
2. Continuation (Kon) – 20% emission reduction in 2020 and moderate growth of CO2 prices till 2050
3. Decarbonisation (Dek) – 80% emission reduction in 2050, CO2 prices according to Impact Assessment to the Roadmap 2050
A set of calculation cases:
Energy
Efficiency
policy including
electric
vehicles
Climate policy (restrictions on GHG emissions)
Liberal (without emission restrictions) Continuation Decarbonisation
Without RES
enforcement
Enforcement of RES production shares
Reference Baza_Ref_Lib Baza_Ref_OZE Baza_Ref_Kon Baza_Ref_Dek
Efficient Baza_Efek_Lib Baza_Efek_OZE Baza_Efek_Kon Baza_Efek_Dek
The set of calculation cases makes possible assessment of costs of the climate policy as a whole
and costs of its main elements and phases (RES development, 20% GHG reduction, 80% reduction)
Main assumptions CO2 and fuel prices
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
2010 2015 2020 2025 2030 2035 2040 2045 2050
[EU
R/ t
]
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
2010 2015 2020 2025 2030 2035 2040 2045 2050
Main assumptions (CO2 and fuel prices were taken
from the EC Impact Assessment to the Roadmap 2050
Continuation Policy Scenario Decarbonisation Policy Scenario
CO2 Prices in [EUR’2009/ t CO2]
Scope of impact assessment
The analysis covers the impact of the climate policy on:
– the whole economy development (GDP growth)
– Households sector (costs of fuels and energy, share of energy costs in households’ budgets)
– Industry sector (increase of energy costs, drop in profitability of industrial production)
– Energy system (investment outlays, generation costs, CO2 costs)
3. Main results of the Polish study
All monetary values expressed in polish zloty – purchase
power from 2005 (PLN’2005)
Exchange rate:
1 EUR = 4,05 PLN (in prices from 2005)
CO2 emissions according different scenarios
• Decarbonisation policy leads to significant CO2 emission reduction in Poland
• In power sector unit CO2 emission drops from about 860 kg/MWh in 2010 to 40 -45 kg/MWh in 2050
Increase of marginal costs of electricity generation
• Decarbonisation policy leads to near twofold increase of wholesale electricity
prices in comparison with liberal policy scenario (without CO2 limits)
• Electricity prices after 2020 will be 3 – 4 times higher then in 2005
Increase of heat production costs in large cogeneration plants
• Decarbonisation policy leads to over twofold increase of wholesale heat prices in
comparison to liberal policy scenario (without CO2 limits)
• Heat prices in decarbonisation scenario will be in 2050 3 times higher then in 2010
PLN’2005/GJ
Impact on the Polish economy growth depend on climate policy
2010 2020 2030 2040 2050
Continuation / Liberal scenario - -3.8% -8.0% -9.5% -6.8%
Decarbonisation / Continuation scenario - -1.7% -2.2% -3.0% -6.1%
Decarbonisation / Liberal scenario - -5.4% -10.0% -12.2% -12.5%
Changes in GDP due to the climate policy scenario
Main threat is
created by
Climate and
Energy Packet
with maximum
negative impact
delayed by 10-
15 years
Energy
Roadmap 2050
increases
negative impact
In longer term
Impact on household sector Share of energy costs in households’ budgets, Reference scenario
Share in relation to average income
in [%] Share in relation to median income
in [%]
Median income: represent the income level which is available for the half of the households
• The level of 10% is often considered as criteria of energy poverty
• Only Liberal scenario gives chance to reduce high energy costs for households
• Decarbonisation (Energy Roadmap 2050) scenario is particularly painful due to high CO2 taxation of all
fuels used in households (not only ETS but also Non ETS emission sources)
Impact on Industry Increase in manufacturing costs per branch of industry in 2030 relative to 2010
levels (1)
Comment:
Three ways of industrial
manufacturing costs
increase:
• Directly through CO2
emission costs
(producers of heat and
products included in EU
ETS)
• Indirectly through
increased electricity
prices (all producers)
• through taxation of CO2
emissions (types of
production not included in
EU ETS).
Impact on Industry Increase in manufacturing costs per branch of industry in 2030 relative to
2010 levels (2) Comment:
Direct CO2 costs are
high in spite of the fact, that
majority of industrial sectors
were classified as threaten by
carbon leakage (allow for free
allocation)
The reason is that the EC
adopted EU benchmark based
on technologies using gas
CO2 emissions in most of the
Polish industrial producers is
higher then benchmark due to
wide use of coal in heat
production (including
cogeneration)
The Commission refused
acceptance of fuel specific
benchmarks
Impact on Industry Value added and employment of energy branches which are threaten
to become unprofitable
Year/ Scenario
Employment Gross value added
Thousand workers % of total Industry Million PLN % of total Industry
In the year 2015
• Liberal scenario 66,0 2,7 5 291 2,3
• Continuation scenario 193,2 7,9 13 753 6,1
• Decarbonisation scenario 193,2 7,9 13 753 6,1
In the year 2030
• Liberal scenario 369,5 15,1 34 768 15,3
• Continuation scenario 793,9 32,4 69 434 30,6
• Decarbonisation scenario 793,9 32,4 69 434 30,6
About 800 thousand of labour places and near 70 billion PLN of value added are threaten in energy
intensive branches when we take into consideration cumulated effect of climate policy and other
factors increasing energy prices
Impact on energy system Investment outlays on electricity and heat production in 2011 – 2050
Decarbonisation policy leads to increase of investment outlays in energy production by: • 100 - 114 billion PLN in comparison with the current climate policy • 336 – 352 billion PLN in comparison with the liberal policy scenario (without CO2 limits).
Comment: We should keep in mind, that there are still huge investment needs to build modern infrastructure in Poland: roads, rail, water treatments, gas infrastructure (grids, storages, terminals), electricity grids, telecommunication networks, internet. It is not possible to invest intensively in all infrastructural sectors in the same time.
Impact on energy system Increase of energy production costs by implementation phases
Comment: It is worth to underline, that costs of implementing CO2 reduction are small at the beginning, but grow substantially in next decades
Impact on final users of fuels and energy CO2 costs (Costs of emission allowances purchase or carbon tax)
• Decarbonisation policy leads to increase of CO2 prices and inclusion all CO2 sources to the EU ETS (or to impose of CO2 tax)
• In spite of the fact, that CO2 emissions drop significantly, CO2 costs grow to the level of 25 billion PLN per year in 2025 and 40 – 67 billion PLN per year in 2030 - 2050
Reference demand scenario, Decarbonisation policy
Summary of impact assessment Main results (1)
1. Drop in GDP by 5% in 2020 and 10-12% in years 2030 – 2050 in comparison with Liberal scenario (without CO2 limits)
2. Increase of energy costs share in households’ budgets from 12% in 2010 to 14-15% in years 2020 - 2050 in half of the households in Poland
3. Negative or strongly reduced profitability in ten industrial sectors with about 800 thousand people employed
4. More diversified fuel and technology structure of energy system
Summary of impact assessment Main results (2)
• Increase of investment outlays in energy generation sector by 330 – 360 billion PLN in the whole period 2011-2050
• Increase of energy production costs (without CO2 costs) by 12 – 30 billion PLN per year in years 2030 – 2050
• Increase of CO2 costs by 11 billion PLN in 2020 up to 40 - 67 billion PLN per year in 2030 – 2050;
• Near threefold increase of wholesale electricity prices and more then threefold increase of heat prices in period 2010 – 2050 (electricity and heat prices near double the prices in Liberal scenario without CO2 limits)
4. Impact for Poland according to the EC documents
The EC documents confirm that costs of implementing the EU climate policy for Poland are at least threefold higher
then average in the EU …
Results of the EC analyses (2008) Impact of the climate policy and on GDP according to Impact Assessment to the
Climate and Energy Package
Source:
SEC(2008) 85,
VOL. II Annex to
the Impact
Assessment
Table 8, p. 53
More then four
times higher
negative impact
on GDP,
employment
and private
consumption in
Poland
compared to the
average UE
values
Redistribution mechanisms were proposed in Climate and Energy Package to compensate higher costs for a group of
Member States…
Results of the EC analyses (2008)
Costs of the climate policy in 2020 and effects of the redistribution mechanisms according to the Impact Assessment to the Climate and Energy Package
Source:
SEC (2008) 85 ,
Table II, p. 22-23
Direct costs of
Energy and
Climate
Package
implementation
in Poland were
to be reduced
from 1,24 % of
GDP to 0,02%
of GDP in effect
of three
redistribution
mechanisms
However these mechanisms failed in case of Poland, which was confirmed in the newest EC impact assessment concerning the MS level …
Results of the EC analyses (2012) Costs of the climate policy and effects of the redistribution mechanisms
according to the newest EC analyses SWD (2012) 5
Scenario/ Countries Additional system costs Additional system costs including
distributional impacts
€ billion % of 2020 GDP € billion % of 2020 GDP
Climate and energy Package
implementation (20% reduction in 2020)
EU 41,8 0,28% 42,1 0,28%
in which:
- Higher Income group * 37,3 0,27% 39,1 0,29%
- Lower income group** 4,5 0,35% 3,0 0,23%
- Poland 2,2 0,52% 2,2 0,52%
More stringent GHG goals in 2020 (30%
reduction in 2020)
EU 67,0 0,45% 75,0 0,50%
in which:
- Higher Income group * 59,3 0,43% 71,4 0,52%
- Lower income group** 7,7 0,60% 3.6 0,29%
- Poland 3,3 0,76% 3,2 0,69%
* AT, BE, CY, DK, FI, FR, DE, EL, IE, IT, LU, NL, ES, SE, UK
** BG, RO, LV, LT, PL, SK, EE, HU, CZ, MT, SI, PT
Sources: SWD (2012) 5, Table. 5 - 6, p. 21-23, values expressed in 2008 prices
Zero effect of
distribution
mechanisms in
case of Poland
during
implementation
of Climate and
Energy Packet
Very limited
effects in case of
30% reduction in
2020
Direct costs in
Poland about
twofold higher
then average in
higher and lower
income groups
Conclusions from the Polish perspective
1. Impacts of the climate policy for Poland (additional costs, energy prices increase) are much higher then the average for the UE
2. Redistribution mechanisms which were to compensate higher costs has failed in case of Poland. Costs are much higher then benefits.
3. Poland is currently affected by increasing energy generating costs and energy prices and other negative impacts. Main burdens however will come in next years as calculation shows
4. Climate policy creates in Poland threats for energy security and stimulate increase of gas import dependence and huge expenses for imported gas (monopolistic position of Gazprom)
5. Additional investments for RES development give positive impact mainly for other countries (including China) as they are focussed mainly on building new wind farms.
6. It is too early to say Poland can afford to implement fully the climate package. There is still a need to discuss how to repair compensation mechanisms from climate package
7. The current crisis shows, that main obligation of Poland within the UE is to preserve growth of economy and alarm when EU policies or strategies create threat for it
8. In this context Poland can not accept the Energy Roadmap 2050 as it does not take into consideration the real conditions of the Polish economy.
Main remarks to the Energy Roadmap 2050 from the EU decision making process
1. Impact assessment relate only to situation of global climate policy (global action)
2. Energy Roadmap 2050 gives no answer to the question: What will be the impact of proposed strategy if no global action is taken?
3. It is clear that costs of decarbonisation strategies will be much higher in such case (higher fuel prices in Fragmented scenario compared with Global Action scenario)
4. There are some other severe shortcomings of the document:
• lack of impact assessment for Member States
• lack of wider strategic analysis of the world development till 2050 as a framework for energy strategy
• Inconsistency of Energy Roadmap 2050 targets with targets of main Europe 2020 strategy
• very limited set of cost data presented in the Impact Assessment
5. There is high risk, that implementation of the proposed strategy without global action will increase global GHG emissions and will be harmful for the climate
6. Shortcomings of impact assessment makes the document useless from the perspective of the current policy making process in the UE
7. Energy Roadmap 2050 however, could be useful as background document in negotiations concerning new global agreement on further GHG emission reduction
Additions
Remarks and questions concerning Energy Roadmap 2050 from the EU
decision making perspective
Remarks from the EU policy making perspective (1)
1. Energy Roadmap 2050 is presented as granddaughter strategy within EUROPE 2020 main strategy, however it tries to modify the GHG reduction goals of main strategy
2. It should be rather developed as a part of Europe 2050 strategy or vision because it determines in large extent the EU development till 2050.
3. Development of justified Energy Strategy till 2050 needs a framework of long term strategic analysis not only in area of energy, e.g. analysis of future impacts of wide scale exploitation of unconventional oil and gas resources.
4. The Roadmap 2050 and Energy Roadmap 2050 adopts wrong interpretation of 80-95% reduction goal in 2050, as this goal was addressed to the whole group of developed countries, not to its part. Even significant emission reduction in EU without global agreement will result in global GHG emission increase.
5. The strategy proposed in Energy Roadmap 2050 was assessed only under scenario of global climate action. It means, that this assessment does not cover all possible future global situations, particularly – lack of global climate agreement.
6. Such limitation in scope of analysis has significant influence on presented results, as it was assumed that global action leads to reduced fuel prices.
7. It means that Energy Roadmap 2050 presents only optimistic scenario, without considering less favourable ones (it is similar to hypothetical situation, when governments are planning their budgets assuming high GDP growth in the UE and MS’ in the 2013 year).
Remarks from the EU policy making perspective (2)
1. The Energy Roadmap 2050 document uses terms „robust” or „No regret” options (measures or energy technologies) in unjustified way, while effectiveness of these options were not proven in conditions of scenario without global climate action.
2. The presented strategy is one of many possible ones. Many element of it are uncertain. The EC study does not provides arguments to support this one, as no alternative strategies were formulated and assessed.
3. Energy Roadmap 2050 propose high increase (apps 50%) of energy system costs, e.g. costs of satisfying energy demands (from 10,5% in 2005 till 14 - 15% in 2030 – 2050). This means perspective of dynamic increase of energy poverty particularly in lower income groups of households in UE.
4. In the same time, the unconventional gas and oil revolution leads to lower energy costs in USA and probably – in other countries. This could result in lower competitiveness of the EU economy and unfavourable social situation of inhabitants in the EU compared to the USA and other countries. Such situation will not be accepted by EU citizens.
5. There is a need to look for the energy strategy which could offer lower costs of energy for industry and households.
6. Energy strategy till 2050 needs a framework of long term strategic analysis not only in area of energy, as a part of a process creating a vision for Europe 2050.
Is Energy Roadmap 2050 a plan, vision or strategy?
• In this Energy Roadmap 2050 the Commission explores … It responds to a request from the European Council (COM (2011)885 p.2):
The European Council looked forward to the elaboration of a low carbon 2050 strategy providing the framework for the longer term action in the energy and other related sectors. (European Council 4 February 2011 Conclusions, p. 6)
Conclusion:
• The Commission consider Energy Roadmap 2050 as a low carbon 2050 strategy
What is the relation between Energy Roadmap 2050 and the EUROPE 2020 strategy
Conclusion:
- Energy Roadmap 2050 is a part of Europe 2020 strategy
- It is a granddaughter strategy within the Europe 2020
Comment:
- It is very strange relation, as the time horizon of Energy Roadmap
2050 goes far beyond the time horizon of Europe 2020 strategy
- The goals of Energy Roadmap 2050 does not seem to fit to goals
of Europe 2020 strategy
How strategy goals were harmonised?
Conclusions:
- Roadmap 2050 and Energy Roadmap 2050 extend emission targets far beyond the time horizon of the main strategy
- In fact they tries to modify goals of the main strategy
- It means that granddaughter strategy modifies the mother strategy!!!
Comment:
- Does it mean a new paradigm in the EU in which e.g. Polish climate policy will be modifying EU climate policy?
What about alternatives and impact assessment for Energy Roadmap 2050?
• The scenario analysis undertaken is of an illustrative nature (Energy Roadmap 2050, p. 2)
• This is not a typical impact assessment in that it does not list policy options to meet certain policy objectives and then assesses impacts of these policy options to determine a preferable one. (Impact Assessment p. 22)
• It rather examines a set of possible alternative future developments (Energy Roadmap 2050, p. 3)
Conclusions:
• No policy alternatives were formulated and assessed
• There were no normal impact assessment of policy alternatives
What is a consequence of drastically reduced scope of assessment in Energy Roadmap 2050?
Conclusion:
- In Roadmap 2050 impact of decarbonisation was analysed in two scenarios of global climate policy
- In Energy Roadmap 2050 scope of analysis was drastically reduced and only optimistic scenario of global action was
considered
- In consequence the impact assessment to the Energy Roadmap 2050 presents overoptimistic results
Decarbonisation scenarios analysed in
Roadmap 2050
Decarbonisation scenarios analysed in
Energy Roadmap 2050