Unpacking the Sixth Carbon Budget The transition for energy
Transcript of Unpacking the Sixth Carbon Budget The transition for energy
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14th December 2020
Unpacking the Sixth Carbon Budget –
The transition for energy
Professor Keith Bell (member of the Climate Change Committee)
Owen Bellamy, Dr David Joffe (CCC Secretariat)
Agenda
1. Our approach
Outline of methodological approach to the Sixth
Carbon Budget
2. Our recommended path
Emission pathways, costs and co-impacts, and policy
recommendations
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Chapter 1
Our approach
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Our approachThree exploratory scenarios to reach Net Zero by 2050
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Further behaviour change
High behaviour change
Widespread Engagement
HeadwindsWidespread Innovation
Further innovation
High innovation
Our approach
Our approachOne highly optimistic scenario with success on infrastructure, innovation, societal and behavioural change
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Further behaviour change
High behaviour change
Widespread Engagement
Tailwinds
HeadwindsWidespread Innovation
Further innovation
High innovation
Our approach
Our approachA balanced pathway to keep options open
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Further behaviour change
High behaviour change
Widespread Engagement
Tailwinds
HeadwindsWidespread Innovation
Balanced Sixth Carbon Budget
Pathway
Further innovation
High innovation
Our approach
Our approachConsistent with the Paris Agreement
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Further behaviour change
High behaviour change
Widespread Engagement
Tailwinds
HeadwindsWidespread innovation
Balanced Sixth Carbon Budget
Pathway
Further innovation
High innovation
Climate science and international circumstances
• Need deep reductions globally to 2030 to keep
1.5°C in play
• Paris demands ‘highest possible ambition’
• UK leadership matters as President of COP26
• Equity arguments reinforce need for strong UK
action
Our approach
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The Sixth Carbon Budget Headroom for IAS emissions
Past carbon budgets Active legislated carbon budgets
Historical emissions The Balanced Net Zero Pathway
Our recommended pathThe recommended sixth carbon budget and 2030 NDC
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2030 NDCAt least 68%
2035 Emissions Reduction
78%
Notes:
Emissions shown including emissions from international
aviation and shipping (IAS) and on an AR5 basis,
including peatlands. Adjustments for IAS emissions to
carbon budgets 1-3 based on historical IAS emissions
data; adjustments to carbon budgets 4 and 5 based
on IAS emissions under the Balanced Net Zero
Pathway.
Source:
BEIS (2020) Provisional UK greenhouse gas emissions
national statistics 2019; CCC analysis.
Recommendations
Chapter 2
Our recommended path
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Changes in energy demand
Fossil fuels (TWh)
11What changes will we see on the balanced pathway?
Fossil fuels are largely phased out
• Demand falls significantly to 2050 for oil (-85%) and
natural gas (-70%)
• Petroleum is mainly restricted to the aviation sector,
• Natural gas use is limited to combustion with CCS
for power generation and industrial processes and
phased out of use in buildings.
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Oil
Removals Surface transport Aviation Shipping
Res buildings Non-res buildings Electricity supply Agriculture
LULUCF sources LULUCF sinks M&C Fuel supply
Waste F-gases Total
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2020 2025 2030 2035 2040 2045 2050
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Source: CCC Analysis.
Hydrogen supply and demand
By 2050 the hydrogen economy is comparable in scale to existing electricity use
12What changes will we see on the balanced pathway?
Source: CCC Analysis.
Demand for electricity
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Changes from now to 2050
What changes will we see on the balanced pathway?
• Current demand for electricity is around 300 TWh
per year. Under the Balanced Pathway that
increases by 50% to 2035 and doubles out to 2050.
• The Balanced Pathway has an increase in
electricity demand from buildings, manufacturing
and construction as those sectors partially electrify.
• Significant new sources of electricity demand arise
from electrification of surface transport, and for the
production of hydrogen using zero-carbon
electricity.
Source: CCC Analysis
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TWh
Residential buildings Non-residential buildings
Manufacturing & construction Surface transport
Fuel Supply Other
Electrolysis
Electricity generation mix (Balanced Pathway)
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Changes from now to 2050
What changes will we see on the balanced pathway?
Key features of the Balanced Pathway include:
• Phasing-out of unabated gas generation by 2035
• An expansion of variable renewables, so that it
provides 80% of generation by 2050
• Increasing use of surplus generation to produce
zero-carbon hydrogen
• New sources of dispatchable low-carbon
generation (e.g. gas CCS and/or hydrogen) to
balance variable weather-dependent renewables
• An increasingly flexible system, including from
demand-side management, storage, hydrogen
production, and interconnection
Source: CCC Analysis
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Other Dispatchable low-carbon generation
Firm power Electricity for hydrogen production
Variable renewables Unabated fossil fuel generation
Emissions pathways for electricity generation
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Changes from now to 2050
What changes will we see across the scenarios?
• Emissions from electricity generation fell by 64%
over the last decade, as coal was replaced by
renewables and gas.
• To fully decarbonise electricity generation, the UK
will need to move away from unabated gas,
replacing that with additional variable renewables,
and low-carbon dispatchable generation (e.g. gas
CCS and hydrogen) in the 2020s and 2030s.
• In the 2040s the challenge is to continue deploying
low-carbon generation to meet new additional
electricity demands in a low-carbon way.
Source: CCC Analysis
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Headwinds Widespread Engagement
Widespread Innovation Tailwinds
Role of hydrogen in electricity generation
Role of hydrogen 16
A source of generation and a potential demand
Hydrogen has a dual role to play in decarbonising electricity,
as it can be both a source of low-carbon generation and a
potential new demand for electricity.
• Hydrogen could play a crucial role in delivering flexible
low-carbon generation. By adjusting their output in a short
period of time, hydrogen plants can ensure security of
supply with low-carbon generation.
• Hydrogen production. Hydrogen burned in gas plants can
be produced via electrolysis, which uses electricity as an
energy input, or methane reformation that relies on CCS.
• In the 2020s, methane reformers with CCS are more likely
to play a role in providing hydrogen. That is because the
cost of electricity would need to be as low as £10/MWh for
electrolysis to be cost-competitive with methane reformers
that could cost £40/MWh of hydrogen.
• From the 2030s, as renewables become a larger share of
the generation mix, there could be surplus generation
when demand is low but renewable output is high. This
surplus electricity could be used to produce hydrogen at
costs competitive with methane reformation with CCS,
albeit at volumes constrained by availability of these
surpluses.
• In 2050, the Balanced Pathway has 195 TWh of domestic
production of hydrogen evenly split between electrolysis
and methane reformation with CCS.
Costs
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Variable renewables are the cheapest form of generation
Costs
Source: CCC Analysis
Costs of generation technologies in 2050 (£/MWh)
Balanced Pathway
HeadwindsWidespread Engagement
Widespread Innovation
Tailwinds
Unabated gas plant (excluding carbon price) 60
Variable renewables 40 25
Firm power 85 105
Dispatchable low-carbon power 80-185
Source: CCC analysis based on BEIS (2020) Electricity Generation Costs, CCC (2018) Hydrogen Review, Wood Group (2018) Assessing the Cost
Reduction Potential and Competitiveness of Novel (Next Generation) UK Carbon Capture Technology.
Notes: Costs in 2019 prices. Costs based on a central gas price scenario. Variable renewables include wind and solar. Firm power includes
nuclear. Dispatchable low-carbon generation includes gas CCS, BECCS, and hydrogen.
Costs, impacts, and co-benefits
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The Balanced Pathway is cost-saving by 2050
Costs under the balanced pathway
• The Balanced Pathway is cost-saving by 2050, as
the lower operational costs of low-carbon
technologies more than outweighs the additional
investment required.
• Additional investment requirements peak by the
mid-2030s, and reduce thereafter as costs of low-
carbon technologies fall.
• Investment in low-carbon generation will bring a
range of co-benefits including improved air quality,
lower electricity prices, and opportunities for
industry and a just transition.
Source: CCC Analysis
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Capital expenditure Operational expenditure
Key policy recommendations
Recommendations 19
Decarbonising electricity generation by 2035
The Committee’s key recommendations:
• Deploy low-carbon generation at scale, including variable
renewables (e.g. 40 GW of installed offshore wind
capacity by 2030 and sustaining that build rate to support
deployment of up to 140 GW by 2050) and dispatchable
and flexible generation (e.g. at least 50 TWh of gas CCS
and/or hydrogen by 2035) that can balance a system
driven by renewables at low emissions.
• Develop an increasingly flexible electricity system,
including from demand-side management (with 20% of
demand being flexible in 2035), storage, hydrogen
production, and interconnection.
• Phase-out unabated gas by 2035. By 2021 commit to
phasing-out unabated gas by 2035 and publish a
comprehensive long-term strategy on how to achieve
that. By 2025 ensure new gas plants are properly CCS
and/or hydrogen-ready. By 2030 no new unabated gas
plants should be built and the Government should
regulate for a firm pathway to zero unabated gas by 2035,
subject to ensuring security of supply.
• Ensure networks are ready, by delivering plans to ensure
they can accommodate future demand levels, and
developing a strategy to coordinate interconnectors and
offshore networks for wind farms and their connections to
the onshore network.
• Develop a coherent market framework for Net Zero,
publishing a clear long-term strategy as soon as possible,
and certainly before 2025, on market design for a fully
decarbonised electricity system.
Summary of advice on electricity generation
20Summary of electricity generation
Source: CCC Analysis
Dispatchable low-carbon (%)
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Demand (TWh) ~300 610
Flexible demand (TWh) 13515
2021Publish a comprehensive
long-term strategy for
phasing-out unabated
gas.
2025Market design strategy.
New gas plants to be
properly CCS and/or
hydrogen ready.
2030Regulate for a 2035
unabated gas phase-out.
No new-build unabated
gas plants from 2030.
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100% clean electricity from 2035
Widespread electrification from 2030
Increasing potential, inc H2 production
70 80Deploy at scale Deploy at scale to meet new demands
0 15 10Develop markets for gas CCS and H2 Deploy at scale from mid-late 2020s
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Unabated gas share (%)
Renewables share (%)
Dispatch. low-carbon (%)
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Policy recommendations for hydrogen supply
21Recommendations
Strategy
• Focus hydrogen demand on areas where that cannot feasibly decarbonise without it.
• Pursue proven solutions (e.g. electrification) in the 2020s, in parallel with developing hydrogen.
• Set out vision for contributions of hydrogen production from different routes to 2035.
Demonstration / near-term deployment in supply
• Get on with low-carbon production to establish low-carbon hydrogen supply chains.
• Blue hydrogen. Deploy fossil gas CCS early to prove that it can deliver suitable emissions reductions vs. fossil gas (i.e. at least 95% CO₂ capture, 85% lifecycle GHG savings).
• Gasification. Support commercialisation of biomass gasification with an aim to establish hydrogen production from bioenergy with CCS.
• Electrolysis. An RD&D programme is required to improve cost & performance of electrolysers.
Incentives
• Ensure low-carbon hydrogen capacity is incentivised to contribute emissions reductions(including mixing with fossil gas) at least for power generation, industrial clusters & grid injection.
• Ensure incentives for hydrogen use, together with electricity pricing, don’t bias solutions towards hydrogen where electrification is competitive.
• Avoid incentivising electrolysis based on (non-curtailed) grid electricity, as likely to push up emissions – focus on curtailed generation and dedicated renewable electrolysis.
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