The Pan EU NEEDS TIMES model: main results of scenario analysis

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The Pan EU NEEDS TIMES modelmain results of
scenario analysis
SIXTH FRAMEWORK PROGRAMME 6.1
Sustainable Energy Systems
Denise Van Regemorter, CES KULeuven NEEDS Final
Conference RS2a Modelling Pan European Energy
Scenarios Brussels, February 17 2008
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Scenarios with PEM TIMES

• Focus the EU energy and environmental objectives
  and policy targets
• Energy target competitiveness and energy
  security, through energy efficiency and
  enhancement of domestic resources
• Environmental targets climate and local
  pollution
• The scenarios
• Reference scenario, without specific policies
• CO2 climate policy scenario -70 in 2050
  compared to 2000
• Internalisation of external cost of local
  pollution scenario, in association with climate
  scenario and renewable target

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The Reference scenario

• Growth rate and international energy price
  assumptions, derived from POLES and GEM-E3, as in
  the EU Impact assessment
• Exogenous evolution in technology development
• No specific country policies, except the nuclear
  phase-out when decided and low CO2tax of 5/tCO2
• EU Primary energy demand increases with 0.4 per
  year, while CO2 emissions decrease till 2020
  (-0.2) but then increase again (0.5) because
  of coal use.

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Internalisation of external cost of local
pollution in TIMES

• The external cost associated with local pollution
  (damage per emission from RS1b stream) are
  computed in TIMES
• either ex-post
• either included in the optimisation process and
  then internalized
• So always included in the welfare/system cost
  (not the case for CO2)
• With internalisation, synergies between policy
  targets (climate and air quality) are fully
  exploited in the choices of reduction measures
• Caveat the direct abatement options are not yet
  extensively modelled.

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Internalisation of external cost of local
pollution in Reference

• Sharp reduction in local pollution through
  internalisation
• Only small impact on CO2 emissions

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Climate policy scenario and internalisation of
external cost

• Climate policy
• Overall EU CO2 target of 70 in 2050 compared to
  2000, with -12 in 2020
• Covers only CO2 because other gasses not yet
  completely modelled and other gasses only partly
  from energy
• No CDM or JI here because the target takes it
  already in account (therefore cost is only cost
  reduction in EU), neither burden sharing
• Cost efficiency scenario with full trading in the
  EU
• Nuclear phase-out as in reference
• With and without internalisation of external cost
  from local pollutants

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Additional pollutant reduction through
internalisation

• Mainly an impact at the beginning of the horizon
• Slightly no impact on CO2 emissions because of
  target

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Impact on Primary energy (EU30)

• Primary energy consumption decreases
• decrease in demand for energy services, esp.
  2020, after more similar (around -5)
• Shift from solids to gas and to biomass in
  industry and electricity (role of CO2 capture)
  but shift to coal derived fuel in transport (at
  least till 2030) (maybe linked to abatement
  options in model)

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Welfare Loss(EU30, difference compared to
reference)

• internalisation reduces the damage from local
  pollution (damage from CO2 not included)
• the joint policy is slightly less costly in terms
  of welfare loss (excluding reduction of damage)
  than the sum of the losses of both policies
  separately
• Climate and air quality jointly allows taking
  into account the interaction between the
  pollutants reduction options (depends on policy
  in place)

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Climate policy and renewable/biofuel target

• Scenario
• Climate policy, as in previous
• Renewable target as defined in the EU climate
  energy/climate package) with the possibility of
  trade of green certificates
• Biofuel target

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Renewable and Biofuel targets

• Results compared to CO2 only
• only significant impact before 2030
• Reduces import dependency
• greater shift towards biomass and slower
  penetration of carbon capture
• small impact on cost
• local pollution remain very close, so still need
  for internalisation

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Overview of the integrated scenarios results

• Overall cost remains limited given assumptions of
  the model (optimisation, perfect foresight, no
  adjustment cost)
• Reduction of local pollution damage needs
  appropriate policy in conjunction of climate
  policy
• Renewable target significant impact before 2030

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Conclusion

• Mix of options to reach severe energy/climate
  targets
• Decrease in demand of energy services
• efficiency improvement and shift to low carbon
  energy at start
• Renewables, carbon capture, hydrogen with higher
  target
• Climate policies brings also ancillary benefits
  by reducing damage from local pollutants (SO2,
  NOx, PM,VOC) but policy aiming directly at better
  air quality is more effective (though synergies)
• Climate policy alone is not sufficient for the
  renewable target in 2020 and a renewable policy
  contribute only slightly to the climate target,
  more for learning by doing for future
  technologies
• Importance of an integrated modelling framework
  for climate/energy policy to exploit synergies
  and trade-offs
• integrated in terms of demand and supply in the
  energy system
• geographical integration
• covering all environmental dimensions linked to
  energy
• Caveats of the modelling framework must be kept
  in mind and further development of the technology
  database is important