November 27 2006 Commission ENERGY 2030 Commission ENERGY 2030 Preliminary Report William...

November 27 2006Commission ENERGY 2030

Commission ENERGY 2030

Preliminary Report

William D’haeseleer, Chair


Establishment of Commission

CE2030 established by Royal Decree

of December 06, 2005published in MB/BS of December 19, 2005

Duration of activities 18 months;Final report due at the latest June 19, 2007


Process Followed

Delivery of preliminary report mid November 2006

Review procedure with Review Panels

Revision of report

Then final report


Process Followed

Delivery of preliminary report mid November 2007

Review procedure with Review Panels

Revision of report

Then final report


Objectives

«To provide the scientific and economic analyses necessary to evaluate Belgium’s options with regard to the energy policy up to 2030»


Objectives

«To provide the scientific and economic analyses necessary to evaluate Belgium’s options with

regard to the energy policy up to 2030»

…so as to assure an energy system that

- guarantees security of supply


LNG-TERMINAL

emission to grid

Reception LNG storage

Gas


Reliable: Security of Supply Electricity


Reliable; Security of Supply Electricity


Objectives





- is environmentally friendly


Clean Energy


1973 2003

Source NASA

Climate Change / Melting Polar Cap


Objectives






- at affordable cost for society


Affordable Energy Provision


Objectives








Objectives




simultaneouslysimultaneously






1. Permanent Panel

W. D’haeseleer (Chair)

P. Klees (Vice Chair)

J. De Ruyck

P. Tonon

J. Albrecht

JM Streydio



2. Non-Permanent Support Members

L. Dufresne J-M Chevalier

R. Belmans P. Terzian

B. Leduc W. Eichhammer

S. Proost

J-P van Ypersele



3. Advisory Member

F. Sonck

4. Ex-officio Observers

M.-P. Fauconnier (Min Econ Affairs; DG Energy)

H. Bogaert (Fed Planning Bureau)



5. Secretariate

(Min Econ Affairs; DG Energy)

M. Deprez

H. Autrique



6. Special Acknowledgement

(Fed Planning Bureau)

D. Gusbin

D. Devogelaer


Review Process

External Review Panels

- Federal-Regional Consultation Cell (CONCERE/ENOVER)- Central Council for the Economy (CCE/CRB)- National Bank (NB/BN) & Ass Belgian Banks- Regulators (CREG, VREG, CWaPE, IGBE/BIM)- Fed Council Sust Develop (FRDO/CFDD)- Academy Council for Applied Science (BACAS)- DG TREN European Commission- International Energy Agency (IEA)


Approach of the study

1. Context & Issue to be Addressed

2. Scenario Analysis

3. The Broader Belgian Picture

4. Conclusions & Recommendations




1. Scope, Setting the Stage

2. Current Situation in Belgium




1. Scope, Setting the Stage

2. Current Situation in Belgium

3. Challenges

4. Demand for Energy & Energy Services



2. Scenario Analysis

1. Definition of the Scenarios

2. Results of the Scenarios



3. The Broader Belgian Picture

1. Addl Aspects Beyond the Scenario Analysis1. Reality Check & Implementation Challenge

2. Belgian Liberalized Markets

3. Security of Supply

4. Post-Kyoto in Practice

5. Socio-Econ Consequences

6. Nuclear Phase Out & Nuclear Option

7. Energy Efficiency & Nuclear Power



4. Conclusions & Recommendations

1. Conclusions

2. Comparison Climate Study (Min. Tobback)

3. Recomendations


Practical Implementation (Part 1)

Scenarios to be performed & analyzed by Federal Planning Bureau(follow up of earlier scenario studies with Model PRIMES)

Definition of scenarios (objectives, boundary conditions, hypotheses, technical and economic input, etc) jointly established by permanent members of CE2030 & FPB

Contributions by non-permanent members in area of their specific expertise


Practical Implementation (Part 2)

Evaluation, interpretation and validation of scenario results by FPB and CE2030

Post scenario interpretative analysis by CE2030

Preliminary Report issued by permanent members

CE2030

Major Supporting Document by FPB


Important Remark

Study focuses on longer term: 2030

Global legal tendency taken into account (EU directives etc)

No detailed analysis of current legal & regulatory intricacies

But perceived shortcomings pointed out


Baseline Scenario

Same baseline as

- DG TREN

- Climate study (Min Tobback) – but till 2030


Baseline Scenario


Baseline Scenario

Same baseline as

- DG TREN

- Climate study (Min Tobback) – but till 2030

Current measures implemented

• No-post Kyoto imposed

• Nuclear phase out implemented


Baseline Scenario Fuel prices

0

10

20

30

40

50

60

70

1990 1995 2000 2005 2010 2015 2020 2025 2030

$05/

boe

Oil-baseline Gas-baseline Coal-baseline

Oil-ref PP95 Gas-ref PP95 Coal-ref PP95

Gas-HGP sc PP95


Baseline Scenario – soaring variant

Apr. 2006 E3mlab - NTUA 22

Oil-Soaring

Oil-Base

Gas-Medium

Gas-Soaring

Gas-Base

Coal-Soaring

Coal-Base

0

20

40

60

80

100

120

1990 1995 2000 2005 2010 2015 2020 2025 2030

$ o

f 2005 p

er

barr

el of oil e

quiv

ale

nt


Baseline Scenario – GDP evolution

Gross Domestic Product

0

50

100

150

200

250

300

350

400

450

500

2005 2010 2015 2020 2025 2030

Year

GD

P [

G€'

00]

GDP in [G€ '00]


Baseline Scenario -- Results

Final Energy Demand; Total & per Sector

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2000 2005 2010 2015 2020 2025 2030

Year

FE

D [

kto

e/a]

FED total

FED_industry

FED_residential

FED_tertiary

FED_transport



Final Energy Demand per Sector

0

2000

4000

6000

8000

10000

12000

14000

16000

2000 2005 2010 2015 2020 2025 2030

Year

FE

D [

kto

e/a] FED_industry

FED_residential

FED_tertiary

FED_transport



Baseline Average Annual Grow th Rate Final Energy Demand

-0,2

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

1,8

1 2 3 4

Decade

Ave

rag

e g

row

th [

%]

1: 1990-2000 2: 2000-2010 3: 2010-2020 4: 2020-2030


Baseline Scenario – FED (recall)

Final Energy Demand

20000

25000

30000

35000

40000

45000

2005 2010 2015 2020 2025 2030

Year

FE

D [

kto

e]

Final Energy Demand [ktoe]


Baseline Scenario – FED Intensity

FED/GDP

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

2005 2010 2015 2020 2025 2030

Year

FE

D/G

DP

[to

e/M

EU

R'0

0]

FED/GDP [toe/MEUR'00]


Baseline Scenario – Prim En Consumption

Primary Energy Consumption

40000

45000

50000

55000

60000

65000

2005 2010 2015 2020 2025 2030

Year

PE

C [

kto

e]

PEC [ktoe]


Baseline Scenario – Prim En Intensity

Primary Energy Intensity

0

50

100

150

200

250

2005 2010 2015 2020 2025 2030

Year

PE

C/G

DP

[to

e/M

EU

R'0

0]

PEC/GDP [toe/M€'00]


Baseline Scenario – Demand Combi Plot

Combined data

0

50

100

150

200

250

300

350

400

450

500

2000 2005 2010 2015 2020 2025 2030

Year

GDP [G€ '00]

PEC [Mtoe]

PEC/GDP [toe/M€ '00]

FED [Mtoe]

FED/GDP [toe/M€ '00]



Installed Generation Capacity

0

5000

10000

15000

20000

25000

2000 2005 2010 2015 2020 2025 2030

Year

Inst

alle

d P

ow

er [

MW

e] Total install Cap

Nuclear

Gas

CHP

Coal

Wind

Bio & Waste

Oil

Solar PV



Installed Generation Capacity

0

2000

4000

6000

8000

10000

12000

2000 2005 2010 2015 2020 2025 2030

Year

Inst

alle

d P

ow

er [

MW

e] Nuclear

Gas

CHP

Coal

Wind

Bio & Waste

Oil

Solar PV



Electric Energy Generated

0

20000

40000

60000

80000

100000

120000

2000 2005 2010 2015 2020 2025 2030

Year

Ele

ctri

city

Gen

erat

ion

[G

Wh

]

Total Generated

Nuclear

Gas

Coal

Bio & Waste

Wind



Electric Energy Generated

0

10000

20000

30000

40000

50000

60000

2000 2005 2010 2015 2020 2025 2030

Year

Ele

ctri

city

Gen

erat

ion

[G

Wh

]

Nuclear

Gas

Coal

Bio & Waste

Wind



Energy-related CO2 emissions

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

2000 2005 2010 2015 2020 2025 2030

Year

CO

2 em

issi

on

[M

ton

/a] CO2 emissions total

Electr sector

Industry

Residential

Tertiary

Transport

Energy branch



Energy-related CO2 emissions

0,0

10,0

20,0

30,0

40,0

50,0

60,0

2000 2005 2010 2015 2020 2025 2030

Year

CO

2 em

issi

on

[M

ton

/a]

Electr sector

Industry

Residential

Tertiary

Transport

Energy branch



-10

-5

0

5

10

15

20

25

30

35

2000 2010 2020 2030

Mt o

f CO

2

supply side industry and buildings transport total


Baseline Scenario Soaring Variant Results

Baseline vs Soaring Price GIC & FED Comparison

33000

38000

43000

48000

53000

58000

63000

2000 2005 2010 2015 2020 2025 2030

Year

GIC

&

F

ED

[k

toe/

a]

GIC_tot BL

FED_tot BL

GIC_tot Soar BL

FED_tot Soar BL


Baseline Scenario Soaring Variant Results

Soaring Prices

Average Annual Growth Rate Final Energy Demand

-0,5

0

0,5

1

1,5

2

1 2 3 4

Decade

Ave

rag

e g

row

th [

%]

Baseline Soaring Prices


Alternative Scenarios

Eight scenarios

• All same GDP evolution as Baseline

Demand for energy services adjusted according to price elasticity

• All same fuel-price evolution as Baseline


Alternative Scenarios

Eight scenarios

• -15% and -30% domestic reduction of energy-related CO2 in 2030 wrt 1990

• Each time with nuclear phase out on-off

• Each time with CCS and without


Alternative Scenarios -- Results

Carbon value Post-Kyoto -15%

0

100

200

300

400

500

600

1 2 3 4

Scenarios -15%

CO

2 va

lue

[E

UR

/to

n C

O2]

no nuc; w ith CCS

nuc allow ed; w ith CCS

no nuc; no CCS

nuc allow ed; no CCS



Carbon value Post-Kyoto -30%

0

500

1000

1500

2000

2500

5 6 7 8

Scenarios -30%

CO

2 va

lue

[E

UR

/to

n C

O2]

no nuc; w ith CCS

nuc allow ed; w ith CCS

no nuc; no CCS

nuc allow ed; no CCS



-15% Scenarios


-2-1,6-1,2-0,8-0,4

00,40,81,21,6

2

1 2 3 4

Decade

Ave

rag

e g

row

th [

%]

Baseline -15%; no nuc; w ith CCS -15%; w ith nuc; w ith CCS

-15%; no nuc; no CCS -15%; w ith nuc; no CCS



-30% Scenarios


-3,6-3,2-2,8-2,4

-2-1,6-1,2-0,8-0,4

00,40,81,21,6

2

1 2 3 4

Decade

Ave

rag

e g

row

th [

%]

Baseline -30%; no nuc; w ith CCS -30%; w ith nuc; w ith CCS

-30%; no nuc; no CCS -30%; w ith nuc; no CCS


Beyond the Scenarios

Growth Rate & Market Diffusion

- Wind 13% p.a. ; PV 25% p.a.

shows that wind OK up to 5850 MW

- But PV limited to 530 MW

Extension of networks

- For HV if off shore > 1000 MW ~ 200-300 M€

or 2 G€ (cables)

- For distribution grid adaptation ~ 2 G€ over 10 yr



Security of supply; see table

- Import dependency on scale ~ 1-2 yr



Major gas reserves

05

10

152025303540

455055

USA

Venez

Kazah

Nethe

rl

Norway

Russia

Turkm

en UKIra

nIra

q

Qua

tar

Saud

Arab

UAE

Alger

ia

Niger

ia

China

Indo

nesia

Mal

aysia

Country

Gas

vo

lum

e [t

rill

ion

m3 o

r 10

9 m3]

Largest reserves

European

Other


Reliable; Security of Supply GasUkraineUkraine

01.01.0601.01.06



How about non-CO2 GHG, Flexible Mechanisms?

Simple estimate: “guestimate”- EU ~ 30% reduction GHG- B ~ 25% reduct GHG (bubble EU; burden sharing)- B ~ 20% reduction CO2

- B ~ 15% domestic reduction ener-related CO2

Likely -15% to …-20%...CO2 reduction in B to be expected


Conclusions

- Reliable, clean & cheap energy provision daunting challenge !

- Belgium must fully subscribe to EU philosophy

- Baseline: nuclear replaced by coal CO2

- CCS very unlikely by 2030 (storage in B?)-15% to 30% reduction CO2 ; give substantial demand reductions & renewable energy expansion, but likely very expensive w/o nuclear

- Security of supply endangered diversity


General Recommendations

Belgium must keep a EU perspective; quick transposition of directives is called for

Need stable legislation & regulatory framework

Belgian energy responsibilities to be harmonized

Do not put all eggs in same basket; need diverse set of contributing elements

Belgium should prepare for a substantial post-Kyoto reduction (no ostrich attitude)


Concrete Recommendations

Do all that is reasonable for reducing energy demand

…start with EU directives quickly

…go perhaps beyond

Pass on energy prices to consumers



Should keep the nuclear option open:

…use Borssele scenario; reinject in DSM & renew; amount to be negotiated

… continued operation under strict safety rules

(regulators, IAEA, EURATOM, WANO…)



Renewable obligation (quota) best on supply; local production to be carefully considered via penalties

Off shore wind to be pursued

… reconsider earlier rejected sites

… develop far off-shore sites meticulously



Make commitment for one CCS pilot plant no later than 2030

Security of supply

… diversity of prim sources & technologies

… stable investment climate

… transmission & distribution networks



Liberalization of electricity & gas…stable regulatory framework…one wholesale NW-EUR region with sufficient cross border capacity; efficient & strict regulatory supervision…retail market access to be developed over time…vertical unbundling needed (grids outside, at least legally)…guarantee for B: golden share in Suez/GdF?



Research & development

…do preferentially in a EU framework

…R&D for energy efficiency

…off shore wind development

…systems integration

…one CCS plant by 2030

…nuclear-energy systems development

…energy-system model development



Sustained Strategic Watching Brief

…permanent follow up of recommendations

…supervised by independent core group

…statistics to be improved


Information

As of 16.00h Friday Nov 17, 2006,Available on web site:

http://www.ce2030.be - Executive Summary (C & R)- Preliminary report- Extra comments & reflections non-permanent

members- Supporting documents:

- Contributions members- Report FPB


Conclusion

Please do not judge based on emotion or sentiment!

Study the report carefully in all its aspects:Security of supply (LT & ST)Clean energy provision (climate & other)At reasonable prices and cost

We wish to be judged based on facts & figures;Then draw conclusions and define policy!


Additional information

Alleged

Electricity Generation Capacity

by 2015



Actually irrelevant for PRIMES simulations;

PRIMES invests whenever there is a need.



Capacity replacement DL 1&2 and TH 1

Evolution of net annual import:- 2000 4.3 TWh/a- 2001 9.1 TWh/a- 2002 7.6 TWh/a- 2003 6.4 TWh/a- 2004 7.8 TWh/a- 2005 6.2 TWh/a

currently about 7% to 8% of demand is imported



Capacity replacement DL 1&2 and TH 1

Evolution of net annual import:- 2000 4.3 TWh/a- 2001 9.1 TWh/a- 2002 7.6 TWh/a- 2003 6.4 TWh/a- 2004 7.8 TWh/a- 2005 6.2 TWh/a

currently about 7% to 8% of demand is importedFrom FRANCE = nuclear power !



Capacity replacement DL 1&2 & TH 1~ 1800 MW ‘always’ available / ~ 14.5 TWh

- Need to distinguish between electrical power and electrical energy

MW MWh

- Acceptable capacity must be controllable for peak coverage!

- Fluctuating sources are not firm capacity- CHP is heat driven; is often not firm



Capacity replacement DL 1&2 & TH 1

- BASF: N/A; already taken up by demand- INEOS: not yet active / is CHP but baseload; OK- Amercoeur: partial replacement only, and not at

8000 h/a - Sidmar: minor impact; effectively replaces

Rodenhuize 2 & 3 (en deels 4)-T power: Tess Chemie part of Blue Sky and ‘to be

seen’ because high gas prices- Stora: 60 MW effectively small




- C power: fluctuating and realization to be seen

6 x 5 MW; 18 x 5 MW; 36 x 5 MW (?)

- Nuon / Vleemo: 90 MW wind problems with permits; is not controllable capacity

- SPE/Ecopower :30 MW wind; uncontrollable

- Groenkracht: 12 MW biomass: CHP and very small

- Aspiravi: 20 MW biomass: CHP and small




- Estimate GP ~ 14.5 TWh

- Own estimate ~ 6 to 8 TWh




Furthermore:

- Assumed operation time gas-fired plants of 8000h quasi impossible because high gas prices

- Extra CO2 emissions for replacement nuclear not taken into account

- Closure of older (coal plants) by 2015 not taken into account

- And what if electricity demands keeps increasing?



Cost of Nuclear Fuel

for

Electricity Generation



Price Nuclear Fuel (SNT – G. Pauluis)

- Price nuclear fuel cycle ~ 15% of electricity cost

- Price of nuclear raw material U3O8 ~ 15% of nuclear fuel cycle cost

• 50% - 50% upstream / downstream

• ~ 1/4 to 1/3 of upstream is fuel element manufacturing

• of other 70% ; 40% is for resource (other conversion UF6 & enrichment)

raw material cost is only ~ 0.5 x 0.7 x 0.4

≈ 14 % of fuel cycle cost

► Cost nuclear raw material ~ 0.15 x 0.14 ~ 2 % electricity cost



Price Nuclear Fuel (IAEA June 01 2006)

- Price nuclear fuel ~ 15% of electricity cost

- Price of nuclear raw material U3O8 ~ 33% of nuclear fuel element cost

► Cost nuclear raw material ~ 0.15 x 0.33 ~ 5 % electricity cost

w/o taking into account waste management cost

Assume 50% - 50% upstream / downstream fuel cycle cost

► Cost nuclear raw material ~ 0.05 x 0.5 ~ 2.5 % electric cost



Price Nuclear Fuel (IEA WEO 2006, Chapt 13)

- Price nuclear fuel ~ 7 - 14% of electricity cost

- Price of nuclear raw material U3O8 ~ 25% of total nuclear fuel cycle cost (with 75% - 25% upstream / downstream cost assumption)

► Cost nuclear raw material ~ 1.75% to 3.5 %

of electric cost



Price Nuclear Fuel -Order of Magnitude Summary-

Cost of nuclear raw material U3O8

~ a few percent of electricity cost;

~ anyway less than 5% of nuclear-generated electricity cost



Current annual consumption ~ 70 kton p.a. ► 40 y …80y…160 y



Cost after Recycling

of CO2 Revenues

for Reduction of Labor Charges



Recycling of revenues to lower labor charges only applies when revenues are effectively collected:

CO2 taxes imposed and collected;

CO2 allowances auctioned



Marginal Abatement Cost (MAC) vs Marginal Damage Cost (MD)

Report Pg 66 – Fig. 3.1



Equi-marginal abatement cost

Report Pg 67 – Fig. 3.2



0

10

20

30

40

50

60

70

80

0 1 2 3 4 5 6 7

PRIMES cost

MAC as projected by PRIMES



0

10

20

30

40

50

60

70

80

0 1 2 3 4 5 6 7

PRIMES cost cost economy with labor taxes


MAC when labor taxes present in rest of economy




MAC when labor taxes present

MAC after recycling via lower labor taxes

0

10

20

30

40

50

60

70

80

0 1 2 3 4 5 6 7

cost economy after recycling PRIMES cost

cost economy with labor taxes



0

10

20

30

40

50

60

70

80

0 1 2 3 4 5 6 7


cost economy with labor taxes Reduction quotum


MAC when labor taxes present

MAC after recycling via lower labor taxes

MAC with fixed reduction target



0

10

20

30

40

50

60

70

80

0 1 2 3 4 5 6 7


cost economy with labor taxes Reduction quotum


MAC when taxes present

MAC after recycling

MAC with fixed reduction target

Cost PRIMES is NOT overestimate real costs!



Cost of Nuclear Phase Out

even if

Making Use of Emission Trading


A

DO

B

E

MAC B

MAC EU

Emission reduction

€/ton X

C

F

G

yy

X+y

X-y



A

DO

MAC B

Emission reduction

€/ton


yy

X+y

X-y E

B

X

C

F

G

MAC EU


B C

D F

G

Oyy

Ez

H

K

X-y-z

M

X+y+z

z

J

L

MAC B - new

MAC B - old

MAC EU

Emission reduction

€/ton X



MAC B - new

MAC B - old

MAC EU

Emission reduction

€/ton X

Red dominates green




Emissionreduction

OShare B - old

H

Share EU - oldO’

Share EU - new Share B - new

H’

MAC B - old€/ton B

MAC B - new

O’’

MAC EU€/ton EU



Comparison with

DLR –GP study

“Energy Revolution: a Sustainable Pathway to a Clean Energy Future for Belgium”


Comparison DLR (Greenpeace) - CE2030 for primary energy in 2030

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

DLR bpk30 bpk30n bpk30s bpk30ns

Scenarios

Mto

e p

er a

nn

um

.


Comparison DLR (Greenpeace) - CE2030 for renewable electricity in 2030

0

5000

10000

15000

20000

25000

30000

35000

40000

DLR bpk30 bpk30n bpk30s bpk30ns

Scenarios

GW

he

pe

r a

nn

um

.

import

PV

wind

biomass

total domestic

November 27 2006 Commission ENERGY 2030 Commission ENERGY 2030 Preliminary Report William...

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