Long term scenarios and short term action the Deep ... · Institute for Sustainable Development and...

InstituteforSustainableDevelopmentandInternationalRelations(IDDRI)41rueduFour–75006Paris-France

www.iddri.org

LongtermscenariosandshorttermactiontheDeepDecarbonizationPathways

approach

MichelColombier

On the road to Paris

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Departfromtheburdensharingapproachandsizetherealchallengeinfrontof(allof)us:decarbonizationWhatdoesittaketodecarbonizeeconomiesin50yearstime?

The need for national, ambitious narratives

•  Globalscenarios,withregionalbreakdown– Nopoliticaltractionatnationallevel

•  Nationalshortterm,climateeconomyfocussed(MACcurves)approaches

– Climateasaburden/riskoflockin?

•  Nationalshortterm,«noregret»(stakeholdercompromise)policyapproaches

– Consensus,butadequacy?

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The DDPP complementary approach

1.  NoshorttermCbudget,justalongtermnormative«attractor»

2.  Nationalteams

3.  Strategytobecompatiblewithsocioeconomicobjectives

4.  Neversay«impossible»,explore!Enablingconditions?

5.  STRATEGYMATRIX:reportandquantifysectoralnarrativesofchange

6.  DASHBOARD:snapshotofkeyeconomicetenergyindicators

7.  Academicsbutalso«experts»,politicaljudgement

8.  Modelling?

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3 pillars for the transition, demand side action is key

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1.Energyefficiency/sufficiency

3.Decarbonizationof

Supply(fromprimarytofinalenergy)

2.Fuelswitchinginenduses

Developmentofdecarbonizedenergy

carriers(power,gas,water..)

Leading to country specific, alternative options

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Inde1Inde2

Chine

Corée1 Corée2 Corée3

US3US2US1

Waisman,DDPP/Iddri

16 socio economic context / expectations

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DDPPparticipants

DDPP2015report

Energy bill

Trade

Air pollution Employement and inequalities

Growth and job creation

The DDPP in 2018

1.  Expandingtonewcountries

2.  Goingdeep,betterrespondingtospecificNONENERGYsectoralchallenges

3.  Buildingambition

4.  Providingrelevanttools

»  Aguidetopublicaction(roadmap)»  Areferenceforprivatedecisionmaking

21/11/2013 IDDRI-A.Rüdinger 8

“ Future is less to be discovered than to be invented” - Gaston Berger

31/01/2017 IDDRI 9

What?

How?

Institutional debate Public debate

Steeringcommittee

Secretariatforthedebate

National Council for the debate

Regionalconferences

Liaisoncommitteeforthelocaldebates

CitizenCommittee

Territorial debates

Participative internet site

Citizen Day

Expertgroup

Contactgroupwithbusiness

The french energy debate 2012-2013

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Conflicting views

a)  Sufficiency:emergingbehavioursorde-growth?

b)  Efficiency:costefficientortooexpansive?c)  Electricitydemand(sharpincreasevs

shrinkingdemand)d)  Roleofnucleare)  Theneedforshalegas

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FR diversity of scenarios / stakeholders

TransportFuelsupply

Powerdemand

4 Visions for the Energy Transition in France Methodology:Focusonexistingenergyscenariosdistilledinto4trajectoriesDevelopmentofacommontemplatewithindicators:Ø Generalvision,modelingtoolsandmethodØ Energysupply&demandindicatorsØ DemographicandeconomicevolutionØ Socio-economicindicatorsHarmonizedimpactanalysis(GHG,economicimpacts)

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Objectives:•  clarifyconditionsoffeasibility,uncertaintiesandimpactsofdifferentpolicyoptions

andtrajectories•  Dynamicvisionsandtimehorizons:whathastobedonebywhen?

Investmentneedsandchangeinenergydependency

Recommandations du GT financement au Conseil national du débat – 23 mai 2013

TrajectoireDEC-Investissementsparsecteuretréductionfactureénergétique

0

20

40

60

80

100

120

140

160

2012(actuel) 2020 2030 2040 2050

Md€

/an

Biomasse(bois,biocarburants,etc)

Réseauxdegaz

Réseauxdechaleur

Agriculture(horsinvestissementsdanslesmodèlesagricoles)

Industrie

Transport-véhiculesparticuliers

Productionélectricité+réseaux

Tertiairerénovation

Résidentielrénovation

Réductiondéficitfactureénergétiquetrajectoirev/sréférence-scénariobas

Réductiondéficitfactureénergétiquetrajectoirev/sréférence-scénariohaut

DECTrajectoireDIV-Investissementsparsecteuretréductionfacture

énergétique

0

20

40

60

80

100

120

140

160

1 2 3 4 5Md€/an


Réseauxdegaz

Réseauxdechaleur


Industrie







DIV

TrajectoireEFF-Investissementsparsecteuretréductionfactureénergétique

0

20

40

60

80

100

120

140

160

1 2 3 4 5

Md€

/an


Réseauxdegaz

Réseauxdechaleur


Industrie







EFFTrajectoireSOB-Investissementsparsecteuretréductionfacture

énergétique

0

20

40

60

80

100

120

140

160

1 2 3 4 5

Md€/an


Réseauxdegaz

Réseauxdechaleur


Industrie







SOB

Electricity price versus cost of the power system

SourceELECsim

0 20 40 60 80 100 120

0 10000 20000 30000 40000 50000 60000 CoûtTotal(M € ) DEC CoûtMoyen( € /MWh)

0 20 40 60 80 100 120

0 10000 20000 30000 40000 50000 60000 CoûtTotal(M € ) DIV CoûtMoyen( € /MWh)

0 20 40 60 80 100 120

0 10000 20000 30000 40000 50000 60000 CoûtTotal(M € ) EFF CoûtMoyen( € /MWh)

0 20 40 60 80 100 120

0 10000 20000 30000 40000 50000 60000 CoûtTotal(M € ) SOB CoûtMoyen( € /MWh)

€/MWh cumac €/MW

Ø  Comes from : •  Different hypothesis on learning effects •  Methodology : marginal/total costs

Ø  Methodological differences correspond to alternative public policy designs Ø  Yet uncertainty on policy impact!

Heat-pumps air /air

Thermal insulation renovation

Freezer

31/01/2017 16IDDRI

Interests, uncertainties, controversies

-50100150200250300350400450

010.00020.00030.00040.00050.00060.00070.00080.00090.000

900MW(CP) 1300MW(P4) 1450MW(N4) Production(TWh)HORSEPR

Power generation from existing NPP before their 4th decadal inspection (40 years) 1)  A40%renewableobjectiveby20302)  Astableelectricitydemand(ambitiouselectrificationinindustry,buildings

andelectricvehicles,butalsoenergyefficiency/newtechnologies)3)  Needforaninvestmentstrategyinthenuclearfleettoexpandlifetime4)  Adjustment:exports?

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Nuclearinvest>40years

NEW RES

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0

40

80

120

160

2050 pathways for France Base year 1990 (Index 100)

0

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160

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19 (26)

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Total electricity generation. (Mtep)

high

median

low

Emmissions (red) are driven by the final demand and the composition of the energy mix (right columns).

Mtep

Mtep

Mtep

Mtep

Mtep

DEC : Switch to electricity, nuclear and biofuels

DIV : Diversification, efficiency

EFF : High efficiency, sufficiency and diversification

SOB : No fossil no nuke. Sufficiency, efficiency and renewables

Convergence, controversies,uncertainty 1.   Controversies

a)  Sufficiency/emergingbehavioursb)  Electricitydemand(increaseversusstable)c)  Roleofnuclear/strategy(reducedcapacity?)d)  Theneedforshalegas

2.   Progressiveconvergenceonkeypillarsofthetransitiona)  Increasingoverallefficiency(industry,buildingtransport)b)  Changingthestructureoffinalenergy(energycarriers)c)  Anincreasingroleforrenewables,noenergyCCS(butindustrialCCS)d)  Theneedforadiversifiedpolicyapproach(price,regulation,incentives,

etc)

3.   Uncertainties,unsolvedcontroversies:Theneedforadynamicapproach:periodicrevisionofmediumtermobjectives,basedonlearningprocess(monitoring/evaluation)

a)  Conflictinginterestsb)  Boundaryconditions(internationalprices,technologies…)c)  Successes/failureofpolicies

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Energy Transition Law and implementation 1.   EnergyTransitionLaw(July2015)

a)  Longtermandmediumtermobjectivesonemissions,totalenergyconsumption,respectivesharesofrenewables,fossilandnuclear

b)  Asetofsectoralframeworkandinstitution

2.   National«LowCarbon»Strategy(sept2015)a)  15yearhorizon,revisedevery5yearb)  GlobalCarbonbudget,indicativesector/gasallocationc)  Sectoralstrategies(industry,buildings,transport,agriculture)

3.   PluriannualEnergyPlan(currentlyunderpublicconsultation,tbpnov2016)a)  5+5yearhorizon,revisedevery5yearb)  QuantitativeEnergysectoral/technologyobjectivesc)  Governmentmandatoryframework,alignmentofprivatedecision

making

Economic analysis of the transition

ElementsforthedebateIfyouhavefurtherquestions:[email protected]

21/11/2013 IDDRI-A.Rüdinger 21

The 3 pillars of the energy transition (-75% of GHG by 2050)

Energyefficiency:•  Additionalinvestmentonenduseequipments•  Astrongreductionofthefinaldemandofenergy(-50%by2050)

Switchtowardsdecarbonisedenergycarriers:•  Additionalinvestmentintransportanddistributioninfrastructures

•  Increasedshareofelectricity(from24%to40-45%offinaldemand),heatanddecarbonisedgasandfuels

•  Energysecurity,“smart”demandsidemanagement,betterintegrationofvariablerenewableenergysources=>improvedeconomicefficiencyortheenergysystem

Developmentofdecarbonisedsupply:•  FromOPEXtoCAPEX,amixofadditionalinvestmentandsubstitutiontoBAU

investment•  Astrongreductionoffossilfuel

consumption(andimports):-30%by2030

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0%20%40%60%80%100%

CO2

Combustible

Maintenance

Coûtd'investissement

Providing appropriate finance solutions is key to harvest the macro economic effects

With short term, « consumption type » loans, energy savings will never pay back EE investment With long term, « real estate type » loans, up to 75% savings are economically viable

Whenthetransitionfrom«feedintarifs»toamoremarket-orientedRenewableSupportShemewasannounced,capitalcostimmediatlyincreasedby1to2pointsØ  Needtorapidelyrespondtoinvestor’sconcernwithclearperpectivesin

thenewmarketdesign,toavoidlongtermimpactonREScost.

Actual investment cost also depends on the regulatory environment

Impact on domestic energy bill

0

10

20

30

40

50

60

2010 2020 2030 2040 2050

Mtepfinal

Evolutiondemandeénergiefinalelogements

TrajectoireDECTrajectoireDIVTrajectoireEFF

0

500

1000

1500

2000

2500

3000

3500

4000

2010 2020 2030 2040 2050

€/ménage/an

Factureénergétiquedulogement(horscoûtdestravauxrénovation)

TrajectoireDEC

TrajectoireDIV

TrajectoireEFF

TrajectoireSOB

REF(+2%/an)

Macro economic impact of the transition

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TheEnergytransitionprovidesshortterm,butalsolongterm,sustainablebenefitsongrowthandemployement–butunderdifferentconditions(seenextslide)

•  +3to4%GDPontheshortterm,+1to1.5%onthelongrun•  +100000to300000netjobs

Mechanisms (and unabling conditions) matters (not figures)

1.   Shorttermmacro-economicbenefitsmostlycomefromtheinvestmentdynamic(andthecreationofdebt)

2.   Longtermpositiveimpactsongrowthandemploymentdependonthelevelofconsumption(andthereforeontherespectivelevelsofdebtserviceandenergybillreduction)andtrade(dependingonconsumptionbutalsoonlabourproductivity)

3.   Economicandregulatoyenvironmentwillplayakeyroleinthesuccessofthetransition

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Beyond aggregated results, the challenges of the transition 1.   BehindthereorganisationoftheEnergySystemsandtheadoptionofnew

technologies,areorganisationoftheeconomicstructureswithnewfunctionsandnewagents(independantproducers,systemdevelopers,serviceproviders)

Ø Needtogiveclearperspectivestotheprivatesector(thisisalsotheroleoftheNationalLowCarbonStrategy,andthePluriannualEnergyPlanningprocedures)

Ø Needtorevisitregulationsandrules,marketstructures,andtoprovideeconomicspaceandopportunitiesforinnovativeoutsiders

2.   Thetransitioncanharmtheincumbentenergyindustry,buttheyarealsowellpositionned,ifstrategic,toadapttheirbusinessmodelandplayakeyroleinthenewenergysystem

3.   Anet,positiveimpactonemployment?Yes,butjobswillbedestroyed,withsocialandregionalconsequencesintheabsenceofproperpolicyintervention.Atthesametime,thetransitionrequiresnewqualificationinallsectors(industry,building,services)

Ø Needforcapacitydevelopment,training,supportpolicies

Beyond aggregated results, the challenges of the transition 1.   AtState/EULevel,muchcanbedonetodrivethetransition(framework

legislation,sectoralregulations,fiscalreform,etc.butmostofthetransitionpotentialscanbeharvestedatlocallevelbylocalauthorities(LA),whoneedspecificincentives,toolsandsupport

Ø LAinchargeoflocalplanning(urbandevelopment,transport)andinfrastructures

Ø LAbetterpositionnedtoidentifyopportunities,mobilizedecentralizedeconomicagents

2.   Apositiveimpactonconsumers(andSMEsandservices)energybills?Yes,familiesfacingenergypoverty,andfragilefirmsmaynotbeabletosizetheinvestmentopportunitiesandmaybenegativelyimpactedbytheevolutionofenergyprices,intheabsenceoffocussedpolicies

Ø Needforspecific,tailoredaccompanimentofthemostvulnerables(rebates,compensations,supportforEEinvestment)

Ø Financesolutionsaremoreeffectivethansubsidies(andlessexpensiveforthepublicbudget!)

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Carbon prices in Deep Decarb. Pathways

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www.iddri.org

Contact:

MichelColombier

[email protected]

Long term scenarios and short term action the Deep ... · Institute for Sustainable Development and...

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