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EUROPEAN ENERGY AND TRANSPORT TRENDS TO 2030 – UPDATE 2009 Dr. Leonidas MANTZOS E3MLab National Technical University of Athens April 2010 Reference scenario with PRIMES
EUROPEAN ENERGY AND TRANSPORT
TRENDS TO 2030 – UPDATE 2009
Dr. Leonidas MANTZOS
E3MLab National Technical University of Athens
April 2010
Reference scenario with PRIMES
PRIMES ENERGY SYSTEM MODEL
April, 2010
Main Features of PRIMES• Full coverage of the energy system, both in demand and supply
• Mixed representations:
Bottom-up (engineering, explicit technology choices) and
Top-down (microeconomic behaviors, consistent economic decisions by agent)
• Modular, with separate modules for each demand and supply sector and separate decision making
• Decentralized decisions form demand and supply of each energy commodity
• Market-oriented: market equilibrium prices drive energy balancing of demand and supply per energy commodity
• Electricity and/or Gas trade within the EU Internal Market and beyond is simulated
• Extensive set of policies represented
Taxes, subsidies, Tradable Permits or certificates
Technology supporting policies
Environmental policy instruments
April, 20103
System Coverage• Geographical coverage
Each EU-27 member-state taken individually
Also, candidate MS and neighbors, such as Norway, Switzerland, Turkey, South East Europe
• Network coverage
Electricity and gas interconnections over Eurasian area
For electricity and gas markets, the European countries can be simulated as an interlinked system
• Core of the model: market linked sub-models for demand sectors, power/steam generation, fuel supply
• Satellite models: Biomass supply, refineries, detailed transport sector model, gas supply (Eurasian), H2 supply
• Time frame : 2000 to 2030 (is currently being extended to 2050) by five-years periods
• Model results fully calibrated to EUROSTAT data for the period 1990 to 2005 (simulated). Projections start from 2010
April, 20104
Sectoral and Technology Details
• 9 industrial sectors, subdivided into 23 sub-sectors using energy in 12 generic processes (e.g. air compression, furnaces)
• 4 tertiary sectors, using energy in 6 processes (e.g. air conditioning, office equipment)
• 4 dwelling types using energy in 5 processes and 12 types of electrical durable goods (e.g. refrigerator, washing machine, television)
• 4 transport modes, 12 transport means and 10 vehicle technologies
• 14 fossil fuel types, new fuel carriers (hydrogen, biofuels) 10 renewable energy types
• Main Supply System: power and steam generation with over 150 power and steam technologies and grid interconnections
• Other sub-systems: refineries, gas supply, biomass supply, hydrogen supply, primary energy production
• 7 types of emissions from energy processes
April, 20105
Energy Carriers
Final EnergyPrimary Energy
Modular Structure of the PRIMES model
Oil Supply
Coal/Lignite Supply
Gas Supply (Eurasian area)• Gas Production
• Pipeline Transportation
• Gas Storage
• LNG system
• Gas trade
• Gas pricing
Biomass-Waste Supply• Primary resources (18 types)
• Conversion technologies (17 types)
• Final bio-energy products (7 types)
Cost-supply curves for
Renewable sources(20 types)
Industry• 9 main sectors
• 23 sub-sectors
• 90 energy using processes
Residential sectors• 5 types of dwellings
• 4 energy uses
• 10 electric appliances
Services sectors• 3 sub-sectors
• 6 energy uses
Agricultural sector• 6 energy uses
Transport• Passengers and freight
• 4 transport modes
• 12 transport means
Electricity and Steam/Heat Supply• More than 150 power generation technologies (and CCS)
• Cogeneration of Heat and Power (12 technologies)
• District Heating
• Industrial Boilers
• Interconnections among countries
Oil
Refinery• 5 generic
conversion
types
• blending
Hydrogen production and
distribution• 18 H2 production processes
• 8 H2 transportation and
distribution means
• Several H2 using equipments
Market Clearing
and Price
Formation
April, 20106
PRIMES: Links to other models
Energy
demand-supply
prices and
market equilibrium
for the EU area
PRIMES
model
World energy
oil, gas, coal
prices
POLES and
PROMETHEUS
models
Transport activity
and flows
SCENES model
(to be replaced by
TRANSTOOLS in
forthcoming
modelling exercises)
Macroeconomic/sectoral
activity GEM-E3 model
•Environmental impacts GAINS
•Transport projections
TREMOVE/COPERT
•Agriculture projections CAPRI
April, 20107
A new transport
module with much
higher detail has
been developed and
will replace the
existing transport
module of PRIMES in
forthcoming
modelling exercises
PRIMES 2009 BASELINE SCENARIO ASSUMPTIONS
April, 2010
Macroeconomic Scenario for the EU
Three periods: recession (2008-2012), recovery (2013-2022), low but stable growth period (beyond 2022)
GDP annual growth rate is 2% for 2010-2030, 1.7% 2005 -2030
Demographic projections are based on DG ECFIN’s Ageing report 2009, which takes into account dynamic immigration
Sectoral Activity Scenario
Industrial activity displays a sustained growth pace after downturn during the recession period
Energy intensive industrial activity is assumed to remain in the EU
Higher growth of non energy intensive sectors
Services are the main driver of economic growth in the EU
April, 20109
2000, 3.9%
2005, 2.0%
2009, -4.1%
2010, -0.1%
2014, 3.4% 2015, 3.3%
2020, 2.1%
2004, 2.5%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
% annual change of real GDP (EU27)
Base'2009
Base'2007
Macroeconomic Scenario for the EU
April, 201010
'95-00
'00-05
'05-10
'10-15
'15-20
'20-25
'25-30
Base'2007 2.89 1.80 2.53 2.46 2.19 1.91 1.57
Base'2009 2.89 1.80 0.58 2.29 2.13 1.82 1.65
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
%
Avg. real GDP growth pa
World Energy Prices as in
Prometheus Reference
Case
Probability of peak oil
(conventional) around 2020 is
low (20%) but gets close to 50%
after 2030. The share of non
conventional oil is 25% by 2030
Gas prices follow a trajectory
similar to oil, coal prices increase
during economic recovery period
but then stabilize;
Hence, gas to coal price ratio
increase (this ratio is important
for power investment choices)
April, 201011
50.19
72.93
90.83
30.85
51.24
65.71
12.03
21.29
25.18
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
Fossil Fuel Prices in Baseline (Constant Euro of 2008 per boe)
Oil
Gas
(NCV)
Coal
1.88
4.70
2.30
2.77
0.77
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Ratios of Fossil Fuel Prices in Baseline (Constant Euro of 2008 per boe)
gas (NCV)/ coal
gas (NCV)/ oil
Evolution of Transport activity by mode Passenger transport is characterised by a strong increase of aviation
activity with respect to other transport modes
• The share of aviation reaches 12.6% in 2030 from 6.5% in 2005
• Following a strong decline in the short term the share of rail transport stabilises beyond 2015 close to 8%
Freight transport activity grows in a uniform manner for all transport modes
April, 201012
Buses
Carsand
Motor
cycles
Rail
Aviation
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1990 2000 2010 2020 2030
Passenger transport activityin Gpkm
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%1
99
0
20
00
20
10
20
20
20
30
Road
Rail
Inland
navig.
0
500
1000
1500
2000
2500
3000
3500
4000
1990 2000 2010 2020 2030
Freight transport activityin Gpkm
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
19
90
20
00
20
10
20
20
20
30
Policy assumptions in Baseline 2009 Policies as in Spring 2009 incorporated Efficiency Directives and regulations, such as on energy services,
buildings, labelling, lighting, boilers Regulation on new cars (penalty if above average 135 gCO2/km in
2015, 115 in 2020, 95 in 2025 – in test cycle) Strong RES supporting national policies, but 20% RES non mandatory Cogeneration directive Large Combustion Plant directive, IPPC directive, national emission
ceilings CCS demonstration plants Nuclear revival in some countries, like Italy, (despite continuation of
banning by others, Germany, Belgium) ETS Directive included:
a) emission allowances up to 2030 decrease, banking allowed, b) full auctioning, after transition phase for some MS, c) extension for aviation, d) benchmarking for most industrial sectors
Internal electricity and gas market
April, 201013
PRIMES REFERENCE SCENARIO
April, 2010
Additional policy assumptions for the Reference scenario• Achievement of the targets set by the Energy and Climate
policy package adopted by the European Parliament in December 2008 • Full implementation of the Renewables Directives with limited use of
cooperation mechanisms• 20% RES in gross final energy demand• 10% RES in transport
• Full implementation of the Effort Sharing Decision• Leading, in combination to the ETS Directive, to a 20% reduction for total
GHGs emissions in 2020 from 1990 levels
• Implementation of recently adopted EU legislation • Recast of the Energy Performance of Building directive
• agreed between the European Council and the Parliament in November 2009; expected to become an EU legislation within 2010
• Eco-design implementing measures• four eco-design and labelling implementing measures came into force after
the cut-off point of the Baseline: electric motors, TVs, refrigerators and circulators
April, 201015
The Energy and Climate policy package The projection of the Reference scenario ensures that
simultaneously
ETS emissions (plus permissible use of CDM credits) meet the ETS cap cumulatively over 2008-2030
Non-ETS emissions reduction target is met for the EU as a whole (-9.4% from 2005 levels) , i.e. through a common carbon price for the non-ETS sectors in all EU Member States implying the existence of a trade mechanism similar to that of the ETS sectors
The targets set in the Renewables directive are met (assuming limited trade among Member States)
April, 201016
Drivers related to the achievement of the Energy and Climate policy package Carbon prices clearing the ETS market and shadow values of the
constraints related to the satisfaction of the non-ETS and the RES targets are calculated by the model
Carbon prices clearing the ETS market reach 16.5 €’08/t CO2 in 2020 and 18.7 €/t in 2030
The shadow value of the non-ETS constraint at the EU level is calculated at 5.3 €’08/t CO2 both in 2020 and in 2030
The average shadow value at the EU level of satisfying the Member States RES constraint reaches 49.5 €/MWh in 2020 and 34.8 €/MWh in 2030
The inclusion of the RES directive in the Reference scenario (involving a strong shift towards the use of renewable energy forms in the EU energy system) limits the scope for strong action towards emissions reduction in the ETS sectors
Carbon prices clearing the ETS market are projected to be well below those of the 2009 Baseline scenario in which only the ETS Directive is included
April, 201017
GDP, Energy and
CO2 emissions in the
Reference scenario
Noticeable effects of the economic
crisis on primary energy
requirements
In the Reference scenario, energy
efficiency progress offsets GDP
growth effects on energy demand
and so primary energy
requirements remain below 2005
levels (with a declining trend in the
long run) over the projection
period.
Carbon intensity of GDP decreases
continuously, as a result of
efficiency improvements and the
full implementation of the Energy
and Climate policy package.
April, 201018
'90-'00 '00-'10 '10-'20 '20-'30
Carbon intensity (t of CO2/toe of GIC)
-0.93 -0.44 -1.04 -0.46
Gross Inl. Cons./GDP
(toe/MEuro'05)-1.77 -0.94 -2.08 -1.86
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
% change per year
Final energy demand in EU27 Final energy demand in the EU27 stabilizes over the projection
period• Electrification and higher penetration of renewable energy forms is a key trend
in the demand side• Distributed heat also gains some additional market share• Strong decline in the use of liquid fuels and to a less extend natural gas
April, 201019
0
200
400
600
800
1000
1200
1400
2000
2005
2010
2015
2020
2025
2030
Mtoe Transport
Services -Agriculture
Residential
Rest of Industry
Energy Intensive industry
0
200
400
600
800
1000
1200
1400
2000
2005
2010
2015
2020
2025
2030
Mtoe
Electricity
RES
Gas
Steam
Liquids
Solids 6 5 4 4
43 4238 36
4 46 7
24 2421 20
5 59
9
19 20 22 25
2000 2005 2020 2030
Shares in %
Energy Efficiency
Progress in EU27
The economic crisis induces a
slowdown of energy efficiency
progress in the short term,
because of lower capital
turnover.
Beyond 2015 policies included in the Reference scenario induce significant energy intensity gains in all demand sectors
• car regulations imply significant energy efficiency gains in transportation
• similarly, policies for buildings, appliances and lighting accelerate progress in houses and buildings
• for industry, smaller effects on energy efficiency trajectory
April, 201020
'90-'00 '00-'10 '10-'20 '20-'30
Reference -2.61 -0.99 -1.43 -1.36
-3.00
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
% c
han
ge p
er
year
Industry (Energy on Value added)
'90-'00 '00-'10 '10-'20 '20-'30
Reference -0.25 -0.32 -1.59 -1.96
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
% c
han
ge p
er
year
Transport (Energy on GDP)
'90-'00 '00-'10 '10-'20 '20-'30
Reference -1.34 -0.29 -2.02 -2.10
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
% c
han
ge p
er
year
Residential (Energy on Private Income)
'90-'00 '00-'10 '10-'20 '20-'30
Reference -2.32 -0.48 -2.11 -2.10
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
% c
han
ge p
er
year
Tertiary (Energy on Value added)
Transport
Outlook for EU27
Policies included in the
Reference scenario allow for a
fast decoupling of energy
demand from transport activity.
However, the scenario takes a
rather conservative view
regarding changes in the fuel
mix:
• Hybrid vehicles make significant inroads, but grid electricity is not penetrating the market
• Biofuels develop according to the RES directive targets
April, 201021
100.0
120.0
140.0
160.0
180.0
200.0
220.0Energy and Activity in transportation
GDP
Passenger transport activity
Energy for Passenger
transportation
Freight transport activity
Energy for Freight
transportation
291
206
164
0
50
100
150
200
250
300
350
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2020 2030
CO2
g/km
Electric
Plug-in hybrids
Hybrid vehicles
ICE vehicles
CO2 intensity (right axis)
Fuel Mix Cars 2020 2030
Petroleum Fuels 90.4% 88.1%
Biofuels 8.9% 11.3%
Electricity 0.0% 0.0%
Natural Gas 0.6% 0.6%
Passenger transport Outlook Energy requirements for passenger transport exhibit a strong decoupling
from economic and transport activity growth
• Regulation for new cars, further electrification of the rail network and inclusion of aviation in the ETS are the main drivers for the more than pronounced energy efficiency improvements projected in the Reference scenario
April, 201022
Energy demand
Travel per capita
Income per capita
Energy Intensity
0
25
50
75
100
125
150
175
200
1990 2000 2010 2020 2030
Passenger TransportIndex 1990 = 100
-14.7
-8.0
-18.3
-24.5
-17.1
-26.3
-17.5
-30.4 -29.9
-33.2Passenger transport
Public road transport
Private cars Rail Aviation
Vehicles efficiency improvementchange from 2005, in %
2020 2030
Freight transport Outlook Trends are similar to those for passenger transport, though less
pronounced
April, 201023
Energy demand
Travel per unit of GDP
GDP
Energy Intensity
0
25
50
75
100
125
150
175
200
225
1990 2000 2010 2020 2030
Freight TransportIndex 1990 = 100
-4.9 -5.4
-13.6-13.4 -13.0
-36.9
Freight transport Trucks Rail
Vehicles efficiency improvementchange from 2005, in %
2020 2030
CO2 emissions in Transport In the reference scenario transport activity related CO2 emissions are projected to
peak in 2015 and decline thereafter reaching by 2030 at levels below those observed in 2005
• Technology progress, CO2 and cars Regulation and increasing contribution from RES are the main drivers for this result
April, 201024
2.900 2.912
2.837
2.707
2.644
600
700
800
900
1000
1100
1200
1990 1995 2000 2005 2010 2015 2020 2025 2030
Mt
CO
2
CO2 emissions in Transport sector
Inl. Navigation
Aviation
Rail
Road
Carbon intensity (t CO2/toe)
Power generation
in EU27
Considerable increase in RES generation, obtaining the largest market share already in 2020.
• solar power and offshore wind become increasingly important in the long run
Electricity generation from nuclear energy remains rather stable over the projection period.
The same applies for power generation from solid fuels and natural gas.
April, 201025
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Gross Power Generation by source
in TWh
RES
Oil
Gas
Solids
Nuclear
30.5 28.0 24.1 24.1
30.0 27.622.6 21.1
21.2 23.219.5 17.8
14.3 19.032.6 36.0
2005 2010 2020 2030
Shares in %
2000 2005 2010 2015 2020 2025 2030
Tidal, etc. 0 0 0 1 7 10 14
Geothermal 5 5 7 8 12 17 22
Biomass/waste 45 84 120 171 261 275 286
Solar 0 1 17 32 62 77 94
Wind offshore 0 2 14 81 177 224 287
Wind onshore 22 68 147 243 348 381 407
Hydro 353 307 323 333 341 350 358
0
200
400
600
800
1000
1200
1400
Gross Power Generation by RES
Primary Energy, EU27 In the Reference scenario, lower primary energy requirements and restructuring
away from fossil fuels limit import dependence growth
• 56.9% in 2020 and 57.4% in 2030 from 52.5% in 2005
EU27 will require 24% more gas imports by 2030 than today. Oil imports by 2030 will be 4% lower from today’s levels
April, 201026
0
500
1000
1500
2000
1990 1995 2000 2005 2010 2015 2020 2025 2030
Mto
e
Primary Energy Requirements
RES
Natural gas
Oil
Solids
Nuclear
1990 1995 2000 2005 2010 2015 2020 2025 2030
Natural gas 135 145 193 257 288 307 301 315 319
Oil 536 512 533 600 580 610 608 600 578
Solids 82 79 99 127 122 125 120 133 129
0
200
400
600
800
1000
1200
Mto
e
Net Imports
GHGs emissions,
EU27GHGs emissions reduce 20.4% from 1990 levels in 2020 and 23.9% in 2030
The reduction takes place for both energy related CO2 emissions and non-CO2 GHGs whereas process related CO2
emissions exhibit a slight increase.
April, 201027
1990 2000 2005 2010 2015 2020 2025 2030
non-CO2 GHGs emissions 1172 954 879 815 749 696 694 689
CO2 emissions (non energy related)
330 299 304 280 294 310 320 329
CO2 emissions (energy related)
4031 3811 3947 3740 3665 3397 3345 3194
Index 1990=100 100 91.5 92.7 87.4 85.1 79.6 78.8 76.1
70
75
80
85
90
95
100
0
1000
2000
3000
4000
5000
6000
GHG Emissions (Mt CO2-eq)
2005 2010 2015 2020 2025 2030
non ETS emissions 2691 2657 2592 2439 2358 2269
ETS emissions 2438 2179 2116 1964 2001 1943
Total GHGs emissions 5130 4836 4708 4404 4359 4212
0
1000
2000
3000
4000
5000
6000
GHG Emissions (Mt CO2-eq) Index, 2005=100 2020 2030
CO2 emissions (energy related) 86.1 80.9
CO2 emissions (non energy related) 101.9 107.9
non-CO2 GHGs emissions 79.2 78.5
Total GHGs emissions 85.8 82.1
ETS emissions 80.6 79.7
non ETS emissions 90.6 84.3
Conclusions
The Reference scenario reflects the effects of the economic crisis and includes all new EU policies for energy efficiency, GHGs emissions reduction, RES penetration etc.
The scenario delivers simultaneously the ETS targets, the non ETS targets and the targets set in the RES directive.
The policies included allow total energy demand to stabilise, RES to deploy considerably and the use of fossil fuels to decrease. Power generation gets into a significant decarbonisation pathway.
The energy trends under the Reference scenario imply a decreasing trajectory for GHGs emissions.
April, 201028
