Navigant Research Blog

A Disruptive Approach to 100% Decarbonisation of the Global Energy System by 2050

— May 8, 2018

Decarbonisation of the global energy system is one of the big challenges society faces today. The Paris Agreement, adopted in 2015, states that efforts should be pursued to limit the temperature increase to 1.5°C above pre-industrial levels. This is a tightening of earlier agreements that put the limit at 2°C.

What Does Such Increased Ambition Mean for the Global Energy System?

The temperature effect of CO2 emissions is not primarily determined by the level of emissions in a future year; rather, it is by the cumulative amount of emissions, or the carbon budget. To stay within the carbon budget, emissions need to be reduced—and fast. If we keep on emitting CO2 at the current pace, the carbon budget to limit the temperature increase to 1.5°C will be exceeded in one or two decades.

What Could a Fast Energy Transformation Look Like?

Population and GDP growth results in an increasing demand for energy services like space heating and cooling, transportation, and materials production. There are several critical levers to constrain emissions against the background of these developments:

  • Ongoing efforts to deliver all energy services in an efficient way
  • Electrifying energy consumption, especially for buildings and transportation
  • Fast penetration of wind and solar in the electricity sector
  • Adopting a range of other renewable energy technologies, from solar heat to electricity-based hydrogen
  • Bioenergy as a fuel source for the manufacturing industry and specific transportation needs and a role for carbon capture and storage (CCS) in specific sectors

By giving preference to options that have high social and political acceptability, Ecofys, a Navigant company, developed a decarbonisation scenario where maximum feasibility is achieved. With strong energy efficiency improvement, this decarbonisation scenario shows it is possible to bring global energy use below current levels to 435 EJ, which is a strong contrast to business as usual growth to about 800 EJ. However, while the total primary energy supply in the scenario is reducing slightly, electricity demand is expected to almost triple. We estimate that all this energy can be supplied from zero-carbon or low carbon energy sources because of the unprecedented scale up of technologies such as solar PV, wind turbines, EVs, and heat pumps.

(Source: Ecofys, a Navigant company)

Despite the global energy system’s rapid reduction of CO2 emissions in our disruptive decarbonisation scenario, cumulative CO2 emissions beyond 2014 are calculated to be 680 billion tonnes, likely exceeding the carbon budget. However, combined with options such as afforestation and agricultural carbon sequestration, it seems possible to stay within a carbon budget compatible with a maximum temperature increase of 1.5°C.

Fast Global Action Is Needed

Fast global action is needed, and the way we live, produce, consume, and dispose of products and services needs to be redesigned to reduce dependence on future negative emissions. An energy system transformation as set out in a recent report by Ecofys, a Navigant company, Energy transition within 1.5°C, is feasible but highly disruptive because it is based on technologies that are already available. Nevertheless, it will influence all players in the energy system due to strong electrification and the increased use of bioenergy. Existing businesses will need to be completely reoriented and new business lines developed to cope with the energy technology requirements of the future.

 

Developing Energy Strategies That Can Be Readily Deployed: A Socio-Political Merit Order

— May 1, 2018

This blog post was prepared with contributions from Jan Cihlar

The challenge brought by the energy transition is every bit as political and emotional as it is techno-economic. Yet today almost all energy modelling is based on least-cost optimisation from integrated assessment models for global climate change analyses of national energy strategies. A new approach must be considered, one that takes societal and political preferences into greater consideration: a socio-political merit order.

Limits to Least-Cost Modelling

As consultant to the UK Department of Energy and Climate Change, David MacKay advised against supporting solar PV as it would just add costs to the system: “The only reason that solar got on the table was because of democracy. The MPs wanted to have a solar feed-in tariff.”

Decision-making processes go far beyond the techno-economic reality of the solutions. As Andris Piebalgs, former EU Commissioner for Energy stated: “Energy efficiency involves a lot of nitty-gritty, a lot of incentives, and a lot of regulations. And there’s no ribbon to cut. It’s very important to be able to cut a red ribbon.”

These are both examples of how policymakers deviate from what energy analysis considers the best solution. And they are not alone, public attitudes towards different energy technologies can vary significantly across regions or social segments.

Least-cost optimisation has its merits; our financial resources are limited, and it is valuable to know how certain objectives can be achieved at the lowest costs. But when a rapid transition to a low carbon energy system is necessary, there is a strong case for options and technologies that are well accepted in society by the public, and by companies and nongovernmental organisations.

Enter the Socio-Political Merit Order

Least-cost optimisation for energy strategies can be expanded as a set of new procedures that will allow for a socio-political merit order. Merit is about preferences: preferences of citizens and, none less important, of policymakers and corporate decision makers. The aspects of the merit order include:

  • Financial costs and benefits
  • Environmental impacts
  • Employment and local economics
  • Inertia
  • Perceived risks and trust
  • Cognitive biases
  • Legislation and implementation hassle
  • Last, but not least, the X-factor

Aspects Determining the Socio-Political Merit Order

(Source: Ecofys, a Navigant company)

What Is Already Known about the Socio-Political Merit Order?

The socio-political merit order is dynamic and will vary over time. Yet, there are ways to look inside of this evolving black box—typically with the help of surveys or dialogue processes, and potentially in the near future, by utilising large sets of unstructured internet data.

For instance, we already know that solar and wind energy are most often the winners in public surveys, while coal and nuclear generally are the losers. Less information is available on preferences amongst policymakers. The private sector presents yet another arena; there, decisions are not purely driven by cost-benefit analysis, but also by factors such as public acceptance, non-monetary implementation barriers, and regulatory risks.

Getting to More Robust Energy Visions and Scenarios

With more clarity about individual and societal inclinations, the question will be how to represent these in energy and climate modelling. Converting non-monetary barriers and drivers into cost categories might just miss the point, as it suggests that technology choices are an optimisation problem. More detailed knowledge of social preferences is required, and we need to better understand how the preferences interact with the merit order of actual private and public decision-making. Ecofys, a Navigant company, has already developed a decarbonisation scenario for the global energy system where the initial principles of the socio-political merit order are applied to achieve maximum feasibility. Such approaches can lead to the creation of strategies that have broader citizen support and that can be implemented more rapidly.

 

Promoting Sustainable Energy Systems on European Islands

— April 3, 2018

The EU has around 2,400 inhabited islands. EU islands vary substantially in size, population, natural conditions, and economic activity, but share common energy systems characteristics such as strong dependency on imported fossil fuels, insufficient interconnections, high energy prices, and massive unexploited renewable energy sources (RES) potential. Exploiting this RES potential will not only help decarbonise EU islands but also significantly decrease the cost of energy supplies.

Islands and the Energy Transition

The EU energy policy agenda has aimed at addressing these issues since the early 1990s. On May 18, 2017, the Clean Energy for EU Islands initiative was signed by the European Commission and Energy Ministers of Croatia, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Malta, Portugal, Spain, and Sweden. The initiative intends to assist islands with the energy transition. The European Commissioner for Climate Action and Energy, Miguel Arias Cañete, revealed the Commission’s plan to decarbonise 1,000 islands by 2030.

Ecofys, a Navigant company, has provided a front-running analysis of the energy landscape of EU islands to support the European Commission’s Directorate-General for Energy in this effort. The project, Islands and Energy Islands in the EU Energy System, was realised under ASSET’s framework program Energy Systems in Support of Policy. With this project, Ecofys, a Navigant company, and partners presented the energy landscape in non-connected islands, proposed categorisation of islands, and recommended policy actions towards an effective energy transition in islands.

Action Plans and Regulatory Measures Go Hand in Hand

An island’s sustainable energy action plans could become the core of its regulatory measures towards decarbonisation and lowering the cost of energy supplies. These plans should be supported by key performance indicators, to allow the monitoring of the progress of island decarbonisation by islands’ authorities and on the EU level to be in line with the Energy Union principles. Other key regulatory measures include addressing monopolistic practices in island energy markets and considering specific support schemes to incentivise green and local/community investments.

Cooperation between island authorities and investors is necessary to further decrease investment time and cost. The Ecofys and Navigant team proposes the creation of one-stop-shops in islands for island authorities to permit green investments and to facilitate an open discussion with local communities on the benefits of such investments.

On the funding side, Ecofys, a Navigant company, proposed twofold investment support. The team believes it is necessary to pool small-scale investments into clusters to use the economies of scale, and to create micro-loans for activating small-scale investments.

Advanced Islands Should Practice Knowledge Sharing

Knowledge and experience transfer between more advanced islands (e.g., Bornholm, Gotland, Tilos, el Hierno, and others) and those still struggling with the energy transition is another important element of islands’ decarbonisation. Exchange of experience should be supported by social awareness and engagement campaigns, and open discussion within the environmental impact assessment procedures. Technical training to meet the growing demand for green jobs in islands is also needed.

The solutions proposed by Ecofys will be further discussed and integrated into the Directorate – General for Energy actions aimed at supporting islands via the Secretariat of EU energy islands, Horizon calls for proposals (H2020 call – Decarbonising energy systems of geographical Islands and H2020 call – European Islands Facility: Unlock financing for energy transitions and supporting islands to develop investment concepts), and actions aimed at limiting energy poverty.

Decarbonising islands will bring down the cost of energy for island communities. In that way, islands will meet one of the key pillars of the European Commission’s Clean Energy Package for all Europeans proposals—providing a fair deal for consumers.

 

Federal Carbon Regulation Likely Dissolves, but Some States Fill the Void

— January 13, 2017

Cyber Security MonitoringA version of this article was originally published on Energy Central.

After months of litigation, a decision by the DC Circuit Court on the future of the Clean Power Plan (CPP) is expected to be announced early this year. Congressional Republicans and incoming president Donald Trump were both critical of the CPP on the campaign trail during the 2016 election, so the outlook for the CPP is bleak. The demise of the plan seems likely, though it will not be quick, however, as states that support the rule have promised to fight to protect it. New York, California, and other states are stepping up to fill the CPP’s void and continue to work toward decarbonization.

States Stepping Up

Continued progress is expected in greenhouse gas emissions reductions in New York as the state has implemented the Clean Energy Standard (CES), Reforming the Energy Vision (REV), and other emissions-related initiatives. The CES targets the use of renewables for 50% of electricity consumption by 2030. Navigant’s 2017 outlook for New York shows significant increases in energy efficiency, wind, and solar over previous cases without the CES. Some of these additions are already happening around the state, and growth is expected to continue through at least 2030. Additional initiatives at the state level that put an emphasis on distributed energy lead us to forecast that nearly half of all the solar capacity added in the state through 2040 will be distributed solar. New York is a member of the Northeast’s Regional Greenhouse Gas Initiative (RGGI) along with states from New England and PJM. As New York increases its deployment of energy efficiency and renewables, CO2 prices on the RGGI market will be driven down and other states in the market will be affected. This would also otherwise affect energy efficiency and renewable development in other RGGI states, except that these are mostly driven by other state imperatives.

California has also been a leader in decarbonization efforts for many years, and it is not expected that leadership from California will taper off anytime soon. California’s cap-and-trade market for CO2 is linked to Quebec, with plans to link with other Canadian provinces in the near future. The state is also on track to meet its aggressive Renewable Portfolio Standard (RPS) targets of 33% by 2020 and 50% by 2030.

Higher Emissions

Even though state policies are expected to continue to push the grid toward decarbonization, without a federal regulation on carbon, overall emissions from the industry will be higher. Without the CPP in place, MISO and other areas are expected to see less coal capacity retire. However, the economics of some older coal plants and even a few nuclear plants make it unlikely they will continue to operate through 2040.

Uncertainty in the industry will likely continue, and can make planning for the future difficult, particularly in a sector where planning is so important and highly regulated. Navigant’s 2017 Integrated Energy Market Outlook and Industry Trends webinar on January 25 will analyze how fundamental policy shifts are expected to impact coal retirements, energy, capacity, and prices as well as the potential impacts regarding supply and transmission expansion for gas and power over the next 25 years.

 

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