The Role of Energy in Coming Society
Prof. Dr. Peter HennickePresident of the
Wuppertal Institute
International SCJ Conference on Science and Technology for SustainabilityTokyo, Mita Conference Hall
December 16, 2003
The Wuppertal InstituteMission: “Sustainability Research”- exploring interdependencies between ecology, economy and society, innovations to decouple ressource use from wealth.
Profile: Practice and solution oriented research; policy advice on regional, national and international level; issues: energy, transportation, climate protection, resource flows and sustainable production/consumption
Organisation: “Non Profit”- Organisation owned by the State and member of the Science Center of North Rhine-Westphalia
Staff: 150 members (80 full time) from all disciplines working in 80 projects/a
Budget: 3.2 mil. Euro form the state of North Rhine-Westphalia; about 4 mil.Euro from different sources (International; EU, Ministries, Private Sector)
2003-02-12 Source: Hennicke 2003
Overview
Challenges for sustainable energy in developing and industrialized countries
What is possible? - What is needed?Target oriented scenarios and policies („Back Casting)
The green pillars for sustainable energy: Efficiency + Renewables + Co-/Trigeneration
A sustainable world energy strategy: efficiency inrease by 2% p.a. plus diversifying,greening and decentralizing supply
German case study: 80 % CO2 reduction (2050) plus nuclear phase out is affordable
Energy efficiency needs highest priority to buy down the costs of renewables
Fostering eco-efficiency: a new paradigm for technological progress
Source: UBA/OECD 2002
The daily toll
P-362e
Source: Hennicke 2000
Sustainable Energy Systems: Challenges for IC and DC
Industrialized Countries (IC)
Absolut decoupling of primary energy consumption and wealth (GDP growth)Only moderate growth of energy services „New models of wealth“: Eco-efficiency, service orientation, sustainable life styles, „qualitative“ growth
Developing Countries (DC)
Relative decoupling: Lower the annual growth rates of energy consumption (energy costs), increase living standards, accelerate qualittative GDP growthMore energy services with less energy through increasing efficiency ("leap frogging)
Comparable Challenge:
Sustainable energy systems based on „three green pilars“: RUE, REN and CHP„Greening“ energy supply, decentralisation, liberalisation, democratisation!
Source: OECD 2000
OECD trends in GDP and a range of eco-efficiency „input“ indicators (Average annual percentage change, 1985-1995)
Source: Wuppertal Institute
Developing countries:Energy use outstripped GDP
P-238e
Source: Wuppertal Institute 2000
Projected Impacts of the Kyoto Protocolon Emissions of Greenhouse Gases from Annex I Parties
Note: The estimateof emissions without the Protocol is based on five projectionsfrom internationalorganisations.Emissions in 1995have declinedrelative to 1990because of changesin economic growth in countries with economies intransition.
EN-307e / 00
Source:IPCC 2001
IPCC-SRES Scenarios (World, in 2100): Every thing goes?
CO2 Emissions [GtC]
CO2/PE [tC/TJ]
PE [ZJ]
FE [ZJ]FE/GWP [MJ/$]
GWP (mex) [T$]
POP [billion]
median
max
min
B2 - MESSAGE
B1 - IMAGE
A1 - AIM
A2 - ASF
SRES-max
SRES-min
2.08529
1.74
3.3
13.1
3281.4
0.46
0.52
11.1
5.7
7.24
15.1
242
5.9
1.43
1.72
15.127.8
10.4
235
4.1
0.95
1.36
10.514.2
Source:Hennicke 2003
Scenarios as a tool for target oriented policy advice
1.Forecasting: Where do we probably go ?Uncertainties, surprises,decisions
2.Backcasting: Where do we want to go?Climate protection, risk minimisation, closing the South-North gap
3.Implementing: Where can we go?Technological and political learning curves
Source:WBGU Sondergutachten 2003
Recommendations of the German Environmental Advisory Council on Climate Protection Goals
•Global temperature increase: only 2o C should be allowed
•Rate of temperature increase: not higher than 0.2o C / 10 Years
•Increase of C02 concentration: below 450ppm
•World energy related C02-emissions: reduced by 45-60% up to 2050
•Industrialized countries should take the lead and reduce their C02-emissions by 20% (2020) up to 80% (2050)
•GHG per capita emissions: IC should reduce by 2/3 - 3/4; DC should limit the increase so that per capita emissions converge in 2050
Source: UNEP 2002
Carbon Dioxide Emissions and Temperature Change: The Urgent Need For Action!
Source: UNEP 2002
Temperature Change can only be stopped within Scenario „Sustainability first“
Source
World energy consumption until 2060: 60% renewablesshare in the Shell-Scenario „Sustainable growth“
Source
CO2 emissions of fossil energy carrier: Doubling instead of halving!
Source: Le Monde Diplomatique 2003
Per Capita Energy Consumption
Kilogram crude oil units (per capita, 1999)
Worldwide average: 1671 kg
Scandinavia5492
North America8043
Japan4069 European Union
3785
Middle East and North Africa1287
Sub-Sahara Africa671
least developedCountries 292
Source: Online database of the World Bank
December 2003
Source: Le Monde diplomatique 2003
Crude oil and natural gas resources worldwide
Natural gas resource
Crude oil resource
in percent
Countries of theformer Sowjetunion
December 2003
Source: Lovins/Hennicke 1999, ???
Primary Energy Consumption: The Wuppertal “Factor Four”-Scenario compared to WEC-Scenarios B and C1
„Factor-Three“ is enough !
Source: WEC/IIASA WI 1998
CO2-Emissions: WEC and “Factor-Four”-Scenario
Source: WEC 1998
The World Energy Council Houston Statement (1998):
„Increased efficiency in the end use of energy offers
the most immediate, largest and most cost-effective
opportunity to reduce consumption and
environmental degradation...“
2003-04-03 Quelle: RWE 1999
Comparison of Energy Intensities (Primary Energy/GNP (1996) in kg SKE per 1000 DM)
Japan 101
Europe 200
USA 306
China 1171
Former SU 1777
Russia 1817
(EU Accession Countries: about 4x higher than EU15!)
Source: Fischedick 2002
Cogeneration around the World
Source: Fischedick 2002
Energy Balance of Cogeneration
Energy savings through cogeneration Example: MPS
Energy providedMPS100
Energy providedseparate generation142
Power plantcoalηel = 40%
Boilerheating oilηth =90%
100Natural gas33
power
54heating
13 losses55 losses
Primary energy savings of over 30%
Source: Fischedick 2002
Possible opportunities for application of cogeneration
industrialPharmaceuticals & fine chemicalsPaper and board manufactureBrewing, distilling & maltingCeramicsBrickCementFood processingTextile processingMinerals processingOil RefineriesIron and SteelMotor industryHorticulture and glasshousesTimber processing
BuildingsDistrict heatingHotelsHospitals
Leisure centres & swimming poolsCollege campuses & schoolsAirportsPrisons, police stations, barracks etcSupermarkets and large storesOffice buildingsIndividual Houses
Renewable EnergySewage treatment worksPoultry and other farm sitesShort rotation coppice woodlandEnergy cropsAgro-wastes (ex: bio gas)
Energy from wasteGasified Municipal Solid Waste
Source: ADL 2001
Different trends and developments support the market chances of decentralized generation (DG)
Innovation: Strategic factor of success - decentralized generation
EN/ph-33e/00
Source: Energie Enquete 2002
Energy-Enquete Commission of the German Bundestag: Longterm Energy Scenarios for Germany
Reference Case
Behaviour the same
Continuation of energy policy
Supply safeguarded
Markets stay open
Ecotax continues until 2003
Energy taxes constant in real terms
NH 1/UWE: Conversion efficiency
Focus:Increasing efficiency of fossil fuels
Tightening energy policy
Intensifying savings
Higher energy taxes
Public authorities set an example
NH 2/RRO:REN / RUE -Offensive
Focus:IntensifyingREN/RUE
Energy services play a major role
50% share of REN in 2050
Higher energy taxes
Public authorities set an example
NH 3/FNE:Fossil-nuclear
energy mixAfter 2010 construction of nuclear power plants possible
Moderate implementation of energy savingspolicy
Source: Fischedick 2002
The C02-gap between Business as Usual and Sustainability
0,0
200,0
400,0
600,0
800,0
1000,0
1200,0
1990 2000 2010 2020 2030 2050
CO2CO2-ÄquivalenzKlimaschutzziele
Emission in Mio. t
Kyoto-Ziel
SVE 2005
Koalitionsver-einbarung 2002
Enquete/IPCC
Source: Energie Enquete 2002
Competing longrun scenarios of the German EnergyEnquete Commission (WI/Wuppertal Institute vs. IER/Stuttgart)
0
2
4
6
8
10
12
14
16
1990 1995 1998 2000 REF UWE WI UWE IER RRO WI RRO IER FNE WI FNE IER
Statistik 2050
Steinkohle Braunkohle Mineralöle Naturgase Kernenergie
Importsaldo Strom Wasserkraft Windenergie Biomasse, Muell Solar, Umgebung
Primärenergieverbrauch insgesamt [EJ]Total Final Energy Consumption (PJa)
Hard coal
Import balance,electricity
Lignite
Hydropower
Mineral oils
Wind power
Natural gases
Biomass, waste
Nuclear power
Solar, ambient heat
Source: Energie Enquete 2002
Development of the energy intensity in the scenarios of the German Enquete Commission - a Factor 3 to 5 is possible!
Reference
Conversion efficiency WI
Conversion efficiency IER
REN/RUE strategy WI
REN/RUE strategy IER
Fossil-nuclear energy mix WI
Fossil-nuclear energy mix IER
GJ / DM 95 GDP [Index 1998 = 100]
P-480e
Source: Energie Enquete 2002
0
100
200
300
400
500
600
1998 2005 2010 2020 2030 2050
Sonstiges (inkl. KWK)Erneuerbare EnergienEnergieeinsparung SonstigesEnergieeinsparung VerkehrEnergieeinsparung Strom
in Mio. t CO 2
Other (incl. CHP)Renewable energiesEnergy savings, otherEnergy savings, transportEnergy savings, electricity
Mio. t CO2
CO2-Reduction in Enquete Scenario RRO through RUE, REN and CHP in comparison to the Reference Case
Source: UBA 2002; Fischedick 2002
Economic and job impacts of a German sustainability strategy
2 - 3,5 billion Euro/a12 - 17,5 billion Euro/a
In comparison:Subsidies for hard coalEco tax income
201 billion Euro3,8 billion Euro/a
48 Euro/capita0,3 billion Euro/a
Additional cost (cumulative: 2000 to 2050)Annual additional cost in averageAdditional costs per capitaAnnual additional cost in average (variation: high energy prices)
• significant employment effects (amount of employees):
- renewable energies: 250.000 - 350.000
- building industry: 85.000 - 200.000
- coal and nuclear industry: ca. - 100.000
• incentives for technology development ( export effects)
Source: Energie Enquete 2002
Costs of Sustainable Energy Systems: Results of the German Enquete-Commission (without external costs)
“The share of system costs within a reference scenario will be 12,5% of GDP (2010) and can be reduced to 9,2% (2050)”
“Within a sustainable energy scenario (phase out of nuclear; 80% CO2-reduction) the share of system costs to GDP in 2050 will increase to 9,4-10,4%”
Within all calculated energy paths “the range of additional costs is relatively low and don’t differ much; therefore the calculation of the additional costs are relatively robust”
Recognizing the benefits from these additional costseven the highest additional costs “are socially acceptable - especially when external costs are taken into account”
Source: Energie Enquete 2002
Sustainable Energy System in Germany:Targets of the Enquete-Commission for 2020
Increase of the energy productivity: 3% p.a.
Reduction of GHG-gases: 40%
Increase of electricity production by renewable: Factor of 4
Increase of electricity productionfrom CHP: Factor of 3
Energy consumption in retrofitted buildings: 40kWh/qm/a
Average fleet consumption of new vehicles: 3,5-4 l/100km
Source: Hennicke 2003
Lessons learned from German Enquete-Scenarios
80% C02 reduction up to 2050 is technically feasible with different technological options on the supply side
But: 60-75% of C02-reductions must be realized by energy efficiency
Risk minimisation ( climate protection plus nuclear phase out) can be financed with moderate incremental costs
Greatest challenges for implementation:
decentralisation of the power sector - highly concentrated supply sidestrategic policies for energy efficiency increase in all sectorsconsensus building on sector and target group specific policy mixes
Source: Fischedick 2002
Structural Change in the Power Plant Park in the German Sustainability Scenario: “The Future is (more) decentralised”
Stromerzeugung von Bestands- und Neukraftwerken bis 2050- Szenario NACHHALTIGKEIT -
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 20500
100
200
300
400
500
Bru
tto
stro
mer
zeu
gu
ng
, [T
Wh
/a]
REG für Wasserstoff
REG-Import
REG-Inland alt + neuKWK BiomasseNeubauKWK fossil,NeubauKond.KW, fossilNeubau
Erdgas/ÖlBestandSteinkohleBestandBraunkohleBestand
Kernenergie
uba-2\zubau01.pre;25.6.02
Power Generation from existing and new power stations until 2050Sustainability Scenario
Gro
ss e
nerg
y ge
nera
tion,
[TW
h/a]
REN for hydrogen
REN import
REN domestic, old & new
CHP biomass, new
CHP fossil, new
Cond. CHP, fossil, new
REN for hydrogen
REN import
REN domestic, old & new
CHP biomass, new
Existing gas/oil
Existing hard coal
Existing lignite
Nuclear Power
Dec 2003 DLR 2003
Decentralised CHP up to 10 MWel (German scenario „sustainability“)- Objects, buildings, process heat -
000 nz eit mal nz eit mal nz eit mal
0
5.000
10.000
15.000
20.000
25.000
Inst
allie
rte
Leis
tung
, MW
el
Brennstoff-zellen
konvent.BHKW
2010
2020
2030 fuel cells conven-tional
Reference
Sustainability
Maximum
2000
Inst
alle
d ca
paci
ty (M
Wel
)
Dec 2003 DLR 2003
Additional capacity of renewable electricity(German scenario / „Sustainability“)
2005 2010 2015 2020 2025 20300
10
20
30
40
50
60
70
13
21
31
49
58
68
Inst
allie
rte
Leis
tung
, GW
el
Europ. REG-VerbundWasser,Geothermie
Fotovoltaik
Wind - OffshoreWind -OnshoreBHKW + BZ(Biomasse)
bmu/oeko/kw-50neu; 3.10.03
Europ. REGNetwork
Hydro/Geothermal
Photovoltaic
Wind-Off-shore
Wind-On-shoreBiomass/Fuelcells
Inst
alle
d ca
paci
ty (M
W)
10/01/2004 Source: http://saharawind.com/documents/trec.paper.pdf
TREC - Trans-Mediterranean Renewable Energy Cooperation
Renewable energy optimisation by long-distance powerinterconnections and synergies between Europe and North Africa/Near East (NA/NE)
Source: Wuppertal Institute 2002
Concentration of Power Generation in Germany
40%
28%
16%
8%
2%
6%
RWE
E.ON
EnBW
Vattenfall
20Regionalanbieter
900 Stadtwerke
Reg. Contractors
900 Public Svcs.
Source: Fischedick 2003
Targets for German nuclear phase out
• Based on a contract between government/producers
• 19 nuclear power plants are to be phased out
• Nuclear electricity generation (164,8 TWh/a):
• substituted by efficiency/climate friendly new capacities
• Limitation of the further nuclear electricity generation
to 2.623 TWh (from 01. 01.2000)
• Normally a nuclear power plant will be phased out after 32 years of operation
• Opportunity to change generation budgets from one plant to an other
• Prohibition for reprocessing of nuclear waste
• Use of intermediate stores while decisions on how to come to a final disposal are on the way
• The last nuclear power plant will be phased out between 2020 and 2025
Source: Fischedick 2003
Renewable Energies - Status Quo and potentials
Wasserkraf21,6%
Photovoltaik0,1%
Windenergie9,6%
Geothermie0,9%�Biomasse fl ssig
4,3%
Biogas2,3%
�Kl rgas1,7%
Solarthermie1,5%
Deponiegas3,6%
Biomasse fes54,4%
• comparable low supply share
• dynamic increase rates
• technological progress
• high technical potential
• high policy support
• but: not going by ist own
RE - heat: 3,9 %RE - electricity: 7,8 %RE - fuels: 0,8 %
Primary energy 390 PJ in 2001
Dec 2003 DLR 2003
Electricity costs: Mix of renewables compared with average of installed capacity (German Scenario „Sustainability“)
2000 2010 2020 2030 2040 20500,04
0,05
0,06
0,07
0,08
0,09
0,10
0,11St
rom
gest
ehun
gsko
sten
, [EU
R/k
Wh] Basis-Mix
NeuanlagenVar 1:
PV geringVar 2:
kein ImportBasis-Mix
jeweiliger Bestand
oeko/kost-reg.pre; 15.09.03
Mix of Var 1: Var 2: Var 3: average new capacity less PV no imports of capacity
Prod
uctio
n co
stso
f ele
ctri
city
((E
uro/
kWh)
Dec 2003 DLR 2003
,
Comparison of electricity costs of new powerplantsfossil mix: 50% coal, 50% natural gas
2000 2010 2020 2030 2040 20500,00
0,02
0,04
0,06
0,08
0,10
Stro
mge
steh
ungs
kost
en, [
EUR
/kW
h]
REG MixBasis
fossiler MixKostenbandbreite
zusätzl.15 EUR/t CO2
CO2-Rückhalt.Kostenbandbreite
oeko/kost-kw.pre; 15.09.03
mix of mix of fossil additional CO2-Sequest.renewables fuels (cost range) 15 EUR/t CO2 (cost range)
Ele
ctri
city
pro
duct
ion
cost
s (E
uro/
kWh)
Source: Fischedick 2002
The German Renewable Energy Sources Act
Came into force in April 2001Subidizes a mix of renewables to buy down costs by market expansion Obligation and fixed remunerations for electricity feed in from renewablesGives incentives for continuous cost reductionsFinanced by electricity users - no additional tax or public budgetImplementation of a nation wide compensation scheme among utilitiesDebate on “oversubsidizing” and additional costs (especially of wind power)
Development of wind energy in Germany since the beginning of the 90s (VDEW- and IWR-statistics)
0
500
1000
1500
2000
2500
3000
3500
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 20020
2000
4000
6000
8000
10000
12000
14000
jährlich inst. Leistung gesamte inst. LeistungQuelle: iwr 2002
neue installierte Leistung in MW/a gesamte installierte Leistung in MW
Source: HGF 2001
Wind energy costs depend on wind speed and size
- interest rate 6%/y; amortisation 15/y; operation, maintenance 6% - > 5%/y -
Initi
tal p
o we r
co s
ts, P
f/kW
h
off-shore-parks
coastinland
average wind speed per year (10 m high), m/s
Source: HGF 2001
Source: HGF 2001
Photovoltaic: technical potential
0,28 4)
1500,30160
5,030.000
2,117.000
0,135.000
2,426.500
C) ensured technical potential- usable area, % of the land area- electricity (15%). TWh/a- ratio to the present current consumption- installed output, GWp
1,03570,7535
1,0
50,0 1)200.000
14 (world)300.000
21
1,0235.000
16350.000
24
B) Maximum technical potential - usable area, % of the land area- electricity (10%2) TWh/a- ratio to the present power consumption of
electricity- electricity (15% 3), TW/a- ratio
0,357357
1.000
1,884.050
2.150
149235.000
1.575
A) Solar radiationB) Land area, mill km2
C) total radiation on horizontal areaD) 1000 TWh/aE) specific radiation kWh/m2, a
usage inGermany
selected areas with high radiation
world(all continents)
efficiency 10% status quo, 15% in the future
Source: HGF 2001
Wind power - high potentials worldwide
initi
al p
ower
cos
ts, P
f/kW
hexpanded szenario until 2030;middle costs of power
increment potential of power generation, TWh/a
technical potentials ofwind power in TWh
365190454783Germany
4.3302.715670315630West Europe
18.700-53 000world *)
offshoremainlandoffshoremainland
Total TWhAdditional developable potentialensured potential
* Only potential on mainlandQuelle: HGF 2001
Source: Energie Enquete 2002
Characteristical data of the cost degression of renewable technology options („learning curves“)
2000 2010 2020 2030 2040 2050
Photovol taicslearn ing factor 0,8 0,8 0,8 0,9 0,9 0,9costs, small plan t(DM/kWp)
14000 8000 4000 2800 2375 2100
econom y of sc ale 1,00 0,57 0,29 0,20 0,17 0,15costs, larg e plant(DM/ kWp)
10000 5750 2500 1900 1850 1800
econom y of sc ale 1,00 0,58 0,25 0,19 0,19 0,18
Windpow er (ons hore)learn ing factorinc idental costs:F=0,9
0,9 0,9 0,9 0,9 0,9 0,9
costs, onshore(DM/kW)
2070 1450 1400 1350 1300 1300
econom y of sc ale 1,00 0,70 0,68 0,65 0,63 0,63
Wind po wer (offs hore)learn ing factorinc idental costs:f=0,9
0,85 0,85 0,87 0,9 0,9 0,9
costs, offshore(DM/kW)
3000 1800 1650 1500 1450 1375
econom y of sc ale 1,00 0,60 0,55 0,50 0,48 0,46
So larthermal co llect ors yst emslearn ing factor 0,85 0,85 0,9 0,9 0,9 0,9costs, small plan t(DM/m2)
1600 825 725 725 700 700
econom y of sc ale 1,00 0,52 0,45 0,45 0,44 0,44costs, larg e plant(DM/m2)
900 500 425 400 390 380
econom y of sc ale 1,00 0,56 0,47 0,44 0,43 0,42
Source: Energie Enquete 2002
Estimated cost development of photovoltaics
costs, small plantEuro/kWp
costs, large plantEuro/kWp
Source: Fischedick 2002
Additional costs for electricity by doubling renewable power generation in 2010 (0.5cts/kWh)
Source: Hennicke 2000
Efficiency Potential in Germany
Technical Potential: Up to 45% of primary energy =50 billion Euro/a reduction of total energy bill
Cost-effective Potential: About 30% within the electricity sector
Employment effect: 370 jobs per 1 TWh saved500.000 jobs with implementation oftotal technical potential
Source: Klima Enquete 1995
Technical and economic potential of CO2 reductionGermany (without former GDR); based on the energy consumption in 1987
Source: Wuppertal Institute 2000
Development of useful heat consumption in new buildings in Germany
Source: Feist 1996
A typical German «Passivhouse» compared to standard Yearly energy consumption in kWh/m2
EN-204e / 96
Source: Feist 1998
One of 1000 German „Passivehouses“ with almost no heating
Source
„Passivehouse“ office building that needs almost no heating and cooling
Source: Hennicke 2000
Electricity Efficiency Potential in German Industry
37 %, further 30 % by substitution
- Substitution electricity → gasCooking
30 %- efficient compressors- Leakage removal
Compressed air
17 % or 40 % by substitution- Substitution electricity → gas- Hot-water connectors for washing- and dish-
washing appliances - Heat recovery
Hot water
35 - 50 %- efficient appliancesCooling
up to 35 %- Frequency inverters for asynchronous motors- optimized design
Motors and drives
30 - 45%
- Optimization (pumps, drives, control systems,distribution)
- Heat recovery from ventilators/fans
Ventilation and air-conditioning
up to 50 %
- Luminaires with mirror reflectors- Electronic ballasts- Tri-phosphor lamps - Compact fluorescent lamps- Daylight-dependent light control- Timers
Light
Potential for savingsTechnical measuresApplication
Source: Thomas 2003
High efficiency ‚Factor 4‘ circulation pump
Uses 5 to 20 W instead of 40 to 80 W for current technology Product is on Swiss and German marketPotential for saving: up to 1 % of all electricity in the EUMarket penetration programmes needed
Source: Thomas 2003
What is end-use energy efficiency? The ++Standard
E.g., an Energy+ fridge-freezer thatonly uses 200 kWh/year:
Two thirds less than an averageEuropean model of the same size 10years ago
Source: Hennicke/Seifried 1996
“Factor 5” less: Electricity consumption of the Freiburg solar house compared to average (7x1000MW power plants less if transferred to every German household)
EspKw-01e/96
Source: Thomas 2003
Residential electrical appliance electricity consumption under the “No Policies”, “Current Policies” and “Least Life-Cycle Cost” in OECD countries, 1990 to 2030
Source: Lovins/Hennicke 1999
The Power of system solutions: «Factor 4» within a motor-pump system
EN-281e / 99
Source: Thomas 2002
Market reforms should not be limited to the supply side of the market by stopping at end-use energy
Source: Hennicke 2003
A strategic energy efficiency initiative is needed!
Complete the liberalized markets (“level playing field”) on the demand side
Let efficiency compete with energy supply to deliver least cost energy services (“low bills” instead of only “cheap kilowatthours”; life cycle cost analysis)
Create a competition neutral incentive scheme for utilities and new actors to invest in cost effective energy efficiency technologies (“NEGAWatts”)
Combine national/ regional energy efficiency funds with e.g. DSM-schemes, procurement, rebates, standards, labelling, contracting/’TPF
Source: European Commission/12/2003
A breakthrough for efficiency policies: the new EU-directive on energy efficiency and energy services (10/12/2003)
Potential for cost effective savings: 15-35%; correspond to over 200 million tons of oil/aAverage cost of saving electricity: 2.6 Euros/kWh compared to 3.9 Euros/kWh for delivered electricityEmerging markets for energy efficiency and energy services: to be worth 5 to 10 bn Euros per yearRemoval of current obstacle (e.g. lack of information/financing; institutional and legal barriers) with low transaction costs
Compulsory energy efficiency targets:a) Member States should save each year 1% more (compared with average of
previous five years)b) Public Sector should set good examples: 1.5% more (by public procurement)c) Retail suppliers/distributors should offer efficiency programmes (e.g.DSM,
audits)
2003-02/03 Source: Hennicke/Seifried 2002
Peter Hennicke / Dieter Seifried: A toolkit for efficiencypolicies for utilities! [Japanese edition]
Source: Hennicke 1999
The rationale behind “least cost energy services” (e.g. TPF, DSM, IRP)
Source: Hennicke 2003
Energy Efficiency - a „win-win-win“ - option
Increasing energy-efficiency contributes to several societal goals:
Competitiveness of the economy
Security of supply of energy services
Decrease import interdependencies
Protection of the environment
Positive employment effects
Increased welfare (lower energy bills)
Reduced geostrategic risks („war on oil“)
Source: Hennicke 1998
Reduce market barriers and market failures!
Split markets• no functioning competition between energy efficiency and energy supply• competition for “cheap and risky” power instead for least cost energy services; Asymmetrical market power• ´David-Goliath´-constellations: no fair “level playing field”• grids as “natural monopolies” Different requirements for return on investment (’pay back gap’)• Electricity suppliers: 15 years, industry: 2 – 3 years, households: 1 year• Separation of running costs and investments in public budgetsElectricity generation asymmetry• newcomer’s full costs vs. short run marginal costs of electricity suppliers• dumping prices of great utilities against newcomersInvestor/user dilemma/split incentives• rented building sector
EN/ph-21e/00
Source: Hennicke 2000
Decrease of total costs through energy efficiency(„life-cycle cost analysis“)
EN/ph-20b-e/00
Source: Hennicke 2002
Policy instruments for saving electricity
Federal energy efficiency funds:
• Invite tenders for energy saving projects or DSM programmes (e.g. rebate programmes, free give-away, direct installation programmes, conversion of electrical heating to gas or district heating)
• Evaluation of the programmes• Financing according to the Danish or English example; e.g. by ‘Public Benefit Charge’ (additional charge on electricity network prices) or eco-taxes
Public procurement
Federal energy agency/ ESCO/ Professional training programmes(e.g. Swiss RAVEL)
EN/ph-05e/00
Source: Wuppertal Institute 1996
The Principle of Third-Party Financing (TPA)
EspKw-43/96
Source: Wuppertal Institute 2000
Energy Performance Contracting (Third Party Financing)
Source:Thomas 2002
Energy efficiency funds and obligations in European countries
Energy efficiency funds Energy efficiency obligation
Others
AustriaBelgium (0,0248 Cent/kWh) for distribution network
companies; only Flandersonly electricity
Agreement
Denmark only electricity for distribution network companies
Agreement + Price regulation
Finland Agreement France AgreementGermany AgreementGreeceIreland only electriciy AgreementItaly for distribution network
companiesPrice regulation
LuxembourgNetherlands part of the ecotax AgreementPortugal Price regulationSpainSwedenUK for supply companies Price regulation
at the moment no supportive framework for energy efficiencyat the moment no supportive framework for energy efficiency
?
Country Energy efficiency - electricity and gas
at the moment no supportive framework for energy efficiency
?
Source: Thomas 2002
Types of technical measures supported by energy efficiency programmes in different EU-Member States
Insulation / building fabric
Domestic / Non-domestic lighting
Refrigeration
Washing machines, dishwashers, dryers
Boilers, heating systems
Variable speed drives
Electric motors
Others, multiple technologies
Source: Thomas 2002
Lessons from experiences in European countries
There are highly efficient energy efficiency programmes by energy companies and other actors in the liberalised EU-energy market
A supportive framework is needed to achieve a broad implementation of energy efficiency
Mechanisms in conformity with the market and with a funding neutral to competition are established in UK, Denmark, NL and 20 states in the US
Possible result of energy efficiency programmes and services in the EU
=> 10% electricity and gas savings within 10 years possible; net economic gain: around 10 billion # per yearThe new “EU-Directive on energy efficiency and energy services” (10/12/2003) is a big step forward
Source: Thomas 2002
The German Debate: Energy Efficiency Fund (Option 1)
Independent dedicated funds
Financed from levy neutral to competition (e.g. 0,15 c#/kWh electricity; 0,05 bis 0,15 c#/kWh gas for the domestic and the small commercial sector; similar percentages for other customer groups) or from part of the ecotax-> leads to lower energy bills!
Tender for innovative energy efficiency activities+ application scheme for energy companies (e.g., 50% of the funds)
Source: Thomas 2002
The German Debate: Energy Efficiency Obligation (Option 2)
Obligation on the distribution network or supply companies (fixed in the German Energy Law)
Obligation for additional savings of at least 1% of energy consumption compared to the forecast/BAU
Ex ante-assessment, monitoring and evaluation(cf. Energy Savings Trust in the UK)
Reporting requirements and external verification of savings
Funding neutral to competition
Source: Thomas 2002
Tasks of an Energy Efficiency Fund
support general energy advice and consultationimplement energy efficiency programmes e. g.• targeted advice and energy audits• rebate programmes• free give-away of energy saving techniquessupport development/introduction of new efficient technologies into market, e. g.• co-operative procurement• manufacturer rebates, ‘Golden Carrots’• energy labelssupport the development of a market for energy services• loan guarantees to Energy Service Companies (ESCos)• creation of networks on energy efficiency• motivation and professional training programmes (e.g. Swiss RAVEL)
EN/ph-11e/00
Source: E-Parliament 2002
The Energy Page of E-Parliament Website
10/01/2004 Source: Wolters, e-parliament Policy Toolkit "Reducing standby power to 1 Watt" unpublished draft 10/2003
E-Parliament -Initiative: Limit Standby Power to 1 Watt! Policy options and best practice for 25.000 parliamentarians
“Did you know that standby mode is consuming a growing share of the electricity generated in your country – often as much as 5% already?”
Facts:
• Producing electricity for machines to do nothing is costing billions of dollars and is emitting hundreds of millions of tons of carbon dioxide
• A standard of 1 Watt would save 300TWh p. a. in OECD households up to 2030 and 300TWh/a in all sectors up to 2020
• Some governments are already taking action:a) US: by requiring a 1 Watt maximum stand by power for many
appliancesb) Australia: active process of voluntary measuresc) Denmark: combining public education with labelling
Source: Lebot/Waide 2003
Projected OECD residential electricity consumption by end use with current policies
Source: Lebot/Waide 2003
Projected OECD residential electricity savings by end use for the „Least Life Cycle Cost Efficiency“ levels (from „2050 Scenario“ compared with the „Current Policies“ scenario)
Source: Eco-profit Graz 2002
The importance of regional networking: The „Eco-Profit-Movement“ from the City of Graz (A) to 40 cities in Germany
Networks between municipalities and SMEs, based on a series of workshops
Involving environmental authorities, local academia and consultants
Enabling SMEs via education programmes
Dissemination to other SMEs,cities and countries
2003-04-03 Source: Ökoprofit Bergisches Dreieck, Auszeich. 2001/02, S. 6/7
From energy to eco-efficiency: The „Eco-Profit“-Network for SMEs around Wuppertal/ Germany (2001/2002)
Annual savings and investments of 123 measures of 24 participating companies
Breakdown of measures by environmental fields
P-494e
Source: Hennicke 2001
The way forward to an eco-efficient economy: Increase energy and material productivity!
Source: Wuppertal Institute 2000
Four levers for increasing energy and material productivity(10% of german energy consumption can be reduced by fostering material productivity!)
Source: WBCSD 2000
Source
Reduction of residual materials -The link between costs and environmental protection
10/01/2004 Source: Walter R. Stahel, 1991/ Hennicke, 2002
Strategies to increase recource productivity by selling functions, services and products in a service economy
Flow of productsFlow of recycable materials
V1 = Selling functions instead of goods(appliances, TV)
V2 = Common or shared use of goods (e.g. Washing machines, cars)
V3 = Selling services for maintenance(e.g. washing machines, cars)
M = multifunctional products (PC, Fax, Phone)
Source: Fischer/ADL/ Wuppertal Institute 2003
Materials are a central factor in the life-cycle cost of industrial products.Cutting these costs increases competitiveness and growth
0%
10%
20%
30%
40%
50%
60%
Materials &Energy
OtherCosts
Depreciation/Rent
Cos
t typ
esin
% o
f tot
alco
sts
ofm
anuf
actu
ring
indu
strie
s*
Personnel costs: 23% of totalcosts of industry.
Starting point: Agenda 2010/ wage flexibility
Material costs: 51% of total costs of industry. Materials throughput causes a further 21%.
Starting point: Impulse programme “Materials Efficiency”
Cost Factor: Materials & Energy Cost Factor: Personnel
Personnel
* Federal Statistical Office, Cost Structure of Manufacturing Industries, 1999
Factor2-3 : 1
Source: Fischer, ADL, 2003
Source:Fischer/ADL/Wuppertal Institute 2003
An accelerated reduction in life-cycle costs through more materials efficiency results in considerable economic win-win effects
Benefit to public budgetsrelief of 45* b/a
Benefit to private enterprise130* b/a more turnover
Benefit to labour market800,000* jobs
New products and businessfields, cost reduction
Strengthening SME in globalcompetitiveness
Reduced expenditure(material costs, social insurance)
Increased revenue (taxrevenue through growth andmore jobs)More turnover creates
additional jobs
Focusing on “materials” vs. “personnel” curbs pressure on labour costs
* = provisional values if 50% of the potential available today is realised and the job creation effects are not cancelled out by additional wage increases.
Source: Fischer, ADL, 2003
Source: Bleischwitz 2000
A new typ of technical progress: “Make tons redundant and not people”! (Development of productivity of energy, raw material and labour in the former FRG)
Climate and Environmental Protection: Growth Markets with Positive Effects on Employment
1999: Global environmental protection market estimated to 550 b Euro;
1998: in Germany 1. 3 million employed in environmental protection
Studies and market performance show: “Sustainability oriented companies are more successful” (German Environmental Agency)
A success story: 130,000 new jobs in Germany through REN/RUE
Estimated global growth of wind power: from 25,000 to 120,000 MW (2010)
Renew. Energy Law: Germany “largest operator, producer and exporter” of wind power
Quelle: UBA 2002
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