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Energy Policies of the Czech Republic2010 In-depth Review

Energy Policies of the Czech Republic2010 In-depth Review

Prague, 7 October 2010

Nobuo TanakaExecutive DirectorInternational Energy Agency

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• IEA conducts regular reviews – every 4-5 years

• Last Czech review was in 2005

• Based on the IEA’s Shared Goals and three pillars:Energy securityEconomic growthEnvironmental sustainability

• Peer review by experts from other IEA member countries (France, Germany, Norway, Sweden, Turkey, UK, ) along with EC, NEA and IEA

• Report based on Review Team visit in November 2009 and research in December 2009 - June 2010

Review Background

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• Improving policy framework Draft State Energy Concept Draft Climate Protection Policy

• Enhanced energy security No disruption of gas supplies to essential customers in January 2009; reversibility

• Market reform Liberalisation of gas and electricity markets Prague Energy Exchange launched in 2007

Policy Achievements

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A Sustainable Energy Future: Emissions Reductions in OECD Europe to 2050

Source: Energy Technology Perspectives, IEA 2010

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2010 2015 2020 2025 2030 2035 2040 2045 2050

Gt CO

2

CCS 24%

Renewables 21%

Nuclear 7%

Power generation efficiency and fuel switching 3%End-use fuel switching 12%

End-use fuel and electricity efficiency 33%

WEO 2009 450 ppm case ETP2010 analysis

BLUE Map emissions 1.1 Gt

Baseline emissions 4.0 Gt

Improved energy efficiency in the end-use sectors in OECD Europe accounts for 33% of the total emissions reduction in 2050.

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Decarbonisation of power generation in OECD Europe

0

1000

2000

3000

4000

5000

6000

2007 Baseline 2050 BLUE Map 2050

BLUE High Nuclear 2050

BLUE High Ren 2050

TWh

Imports

Other

Solar

Wind

Biomass+CCS

Biomass and waste

Hydro

Nuclear

Natural gas+CCS

Natural gas

Oil

Coal+CCS

Coal

A mix of nuclear, renewables and fossil-fuels with CCS will be needed to decarbonise the electricity sector.

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• Draft State Energy Concept preferential use of domestic resources

coal, uranium, renewables focus on supply side

third largest electricity exporter in the EU need for further integration with climate change objectives scenarios, greater consultation, analysis of costs and benefits

Policy Challenges

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Czech CO2 Emissions by Sector, 1973-2008

Industry emissions have fallen dramatically, but transport emissions are rising.

0

50

100

150

200

1973 1978 1983 1988 1993 1998 2003 2008

Mill

ion

to

nn

es

of

CO

2

Electricity and heat Other energy industries

Manufacturing industry and construction Transport

Residential Other *

Combating Climate Change

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Energy Intensity in the Czech Republic and Other Countries(toe per thousand USD at 2000 prices and purchasing power parities)

Energy efficiency is crucial in efforts to reduce energy consumption and addressclimate change, while also providing benefits for energy security.

Energy Efficiency and Renewables

0.00

0.10

0.20

0.30

0.40

0.50

1993 1995 1997 1999 2001 2003 2005 2007

Czech Republic

Slovak Republic

Poland

Germany

IEA Europe

Austria

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Role on the Regional Electricity Market…

Cooperation between governments and TSOs is key.

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… and Regional Gas Market

Effective policy framework is needed to attract investments in cross-border infrastructure.

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Key Recommendations (I)

The Government of the Czech Republic should:

Build on the draft State Energy Concept, Climate Protection Policy and report of the Independent Energy Expert Commission to develop coherent energy and climate strategies including a vision to 2050 consistent with the latest EU policies in these areas, and consider different scenarios to assess in particular the economic and environmental sustainability of the proposals

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Key Recommendations (II)

The Government of the Czech Republic should :

Develop an integrated strategy to improve energy efficiency, addressing both primary and final energy use, particularly in the buildings and transport sectors, and improving the co-ordination and cost-effectiveness of different energy efficiency schemes; and identify specific policy measures to achieve particular energy-saving targets, the responsible institutions, resource allocations and timelines for implementation.

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Key Recommendations (III)

The Government of the Czech Republic should:

Assess the economic and social costs and benefits of enhancing energy security through the predominant use of domestic energy resources and, if necessary, consider low-carbon energy sources, such as gas, in devising a long-term strategy to reduce emissions

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The Government of the Czech Republic should :

Key Recommendations (IV)

•Create an effective policy framework to attract investments in cross-border infrastructure in both electricity and gas sectors.

•Support co-operation among governments and transmission system operators at the regional level, in order to ensure that growth in electricity supply is compatible with the regional supply and demand balance and strengthen co-operation with neighbouring countries to develop a functioning regional electricity market.