Future low carbon energy systems - Copenhagen Cleantech Cluster

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CO ² reduction strategies up to 202088.1 Danish CO ² reduction scenariosKenneth Karlsson and Peter Meibom, Risø DTU; AndersKofoed-Wiuff and Helge Ørsted Pedersen, EA EnergyAnalyses, DenmarkBased on a review of recent low-carbon energy system studiesfor Denmark, this section discusses the most importantoptions for significantly reducing Danish CO2 emissionswithin the next 10-50 years. We begin with an overview ofthe present Danish energy system, focusing on the availabilityof renewable energy resources. After this comes themain conclusions of six different energy system studies forDenmark, which are used as input to a discussion about CO2emission reduction, and finally a conclusion.8.1.1 The present Danish energy systemDenmark has excellent wind resources, thanks to its flat terrainand nearness to the sea. Climate and hydrology allowhigh yields of biomass from agriculture, although land itselfis a scarce resource due to the country’s small size andrelatively high population density. The long Danish coastlinecould allow wave energy to become important in the future.Photovoltaics and solar heating could also contribute in thelonger term, though their cost-effectiveness are not as attractiveas in sunnier countries to the south.Denmark’s power system is presently characterised by combinedheat and power (CHP) plants delivering heat to districtheating systems, and a high proportion of wind power. TheCHP plants are a combination of a few large plants fuelledmainly by coal and natural gas, and a large number of distributedCHP plants using natural gas, straw and municipal waste.Fuel for road transport is dominated by gasoline and diesel.Gross energy consumption in Denmark increased by only5% during the period 1970-2006. This was because of theintroduction of CHP plants and wind power on the supplyside, and energy efficiency improvements on the demandside (energy savings) [1]. CHP plants improve the systemefficiency while the influence of wind power is describedthrough statistical methods. In statistics for gross energyconsumption wind power is counted as PJ electricity producedwhile coal used in a power plant is counted for byits caloric value (energy content using lower heating value)– therefore a replacement of thermal power by wind powerwill reduce the gross energy consumption in the statistics.8.1.2 Low-carbon energy studiesConcerns over global warming and energy security haveplaced renewable energy and CO2 emissions reduction highon the Danish political agenda. This has resulted in a numberof energy system studies:A Visionary Danish Energy Policy 2025 [Ministry for Transportand Energy 2007]: was launched by the Government inJanuary 2007, focusing on the framework for a future energypolicy. The main idea is that energy technologies should bechosen through a combination of market mechanisms andpolitical regulation. The government wishes to secure a futureenergy supply that is safe and reliable, environmentallyfriendly, and supports growth and competitiveness. Goals tobe reached before 2025 include at least 30% renewable energy,gross energy consumption at the same level as in 2006,and a 15% cut in fossil fuels compared to 2006. The longterm vision is a total phase out of fossil fuels in Denmark[2].IDA Energy Plan 2030 [IDA 2006]: The Danish Society ofEngineers (IDA) proclaimed 2006 an “energy year”, duringwhich it examined future energy solutions for Denmark. Asa framework, the IDA adopted three main targets for 2030:Denmark should be self-sufficient with energy, as it is today;greenhouse gas emissions should be half their 1990 level;and exports of energy technology should quadruple, witha doubling of jobs in the energy sector. IDA used a modelof the energy system, known as EnergyPlan [3], to find themost cost-effective way to meet these targets [4].Danish Greenhouse Gas Reduction Scenario for 2020 and2050 [EA Energy Analyses and Risø DTU 2008]: was drawnup by EA Energy Analyses and Risø DTU for the DanishEnvironmental Protection Agency (DEPA) and the DanishEnergy Authority (DEA) in 2007. It contains two scenariosfor 2020 and three for 2050; they account for all the greenhousegasses emitted in Denmark, with the exception of internationalair and ship traffic. The scenarios are analysed ina spreadsheet-based energy system model called STREAM(see description of model in the report). For 2020, the maingoals were to reduce greenhouse gas emissions by 30% or40% compared to 1990 and for 2050 the reduction goals was60% to 80% [5].Cutting CO2 Emissions [Greenpeace 2008]: describes the resultsof an analysis prepared for Greenpeace in January 2008,setting out what is needed to meet reduction targets for 2008-12 and 2020. The analysis is based on the SESAM model [6],which differs from the tools used in the other studies in thatit allows investments and energy balances to be tracked yearRisø Energy Report 763
8CO ² reduction strategies up to 2020by year. The framework for the analysis was that CO2 emissionsin 2020 should be 40% below their 1990 level, and oiland natural gas consumption should decline [7].Scenarios for Danish GHG Reductions in 2020 and 2050[COWI 2008]: were prepared in 2007 by the consultancyCOWI for the Danish Environmental Protection Agency(DEPA) and the Danish Energy Authority (DEA). The focusis on energy supply technologies, transport technologies,and GHG reduction measures outside the energy sector. Theanalysis yielded marginal abatement cost (MAC) curves,which rank measures according to their abatement costs,for 2020 and 2050. The marginal abatement cost is foundby comparing each investment option to a baseline case anddividing its cost by the resulting CO2 reduction [8].The Future Danish Energy System [The Danish Board ofTechnology 2007]11: In 2004 the Danish Board of Technologyinvited the largest players in the energy sector, research- options for the development of the Danish energy system.Technology scenarios were developed to show how by 2025Denmark could halve its CO2 emissions compared to 1990,and halve its oil consumption compared to 2003. This studyled to the development of the STREAM modelling tool. Allstakeholders were involved in the process of creating thescenarios through workshops, meetings and hearings whilefindings were continuously disseminated in newsletters [9].Table 18 summarises the main assumptions and conclusionsof these studies, with emphasis on the years from 2020 to2030. All the studies except A Visionary Danish Energy Policyachieve CO2/GHG reductions in the order of 40–50%,compared to 1990, by 2020-2030. Increases in investmentand fuel costs compared to business-as-usual scenarios areeither negative or below 0.5% of GDP, meaning that theselow-carbon energy systems would cost society little. Mostof the studies assume no decrease in economic activity; theyenvisage exponential growth in GDP and private consumption,in line with the official forecasts from the Danish Ministryof Finance. IDA Energy Plan and Cutting CO2 Emissionsboth assume saturation in the demand for transport,while Cutting CO2 Emissions generally assumes significantlylower growth in energy demand than the other studies.The conclusion that large CO2 reductions can be achievedwithin the next 12-22 years, with low additional costs whilemaintaining high economic activity, is very interesting. Itcontradicts real-world experience, i.e. the fact that Denmarkwill probably not be able to fulfil its CO2 emissions reductiontargets for the first Kyoto period (2008–2012) throughdomestic reductions alone [10].The predicted costs of reducing GHG emissions rely onmany assumptions, including future fossil fuel prices; highfossil fuel prices make the scenarios based on high proportionsof renewable energy more attractive. Interestingly, theoil prices assumed in five of the studies are significantly lowerthan present oil prices.Furthermore, this type of analysis is limited in its coverageof macro-economic effects such as market disturbances, reboundeffects, labour effects and changes in tax revenues.Except for Scenarios for Danish GHG Reductions in 2020and 2050, by COWI, the studies exclude externalities such associo-economic costs related to health effects, environmentalimpacts and damage to buildings and monuments.The modelling tools used in the presented type of scenarioanalyses describe technically possible and economically feasiblesolutions’ for future energy systems. They do not includepolitical processes and related transaction costs linkedto the approving of new policy, legislation and regulation,e.g. setting energy efficiency targets and standards. Marketfailures; such as a private investor’s short term investmenthorizon sometimes leading to in-optimal solutions for thesociety – is not treated in this type of scenarios. The scenarioanalysis simply assumes that the “right” political decisionsare made in adequate time and that private investors do whatis best for the society. Therefore, the scenarios should be seenas guidelines to how our society technically can reach certainenvironmental goals at a certain socio-economic cost. Theyare not telling us how to regulate the markets and which politicaldecisions we have to take when. That is the next step inthe process and therefore the involvement of politicians andother decision makers is very important.Figure 25 compares predictions of gross energy consumptionfrom the different studies (note that the target years alsodiffer). Compared to A Visionary Danish Energy Policy, allthe other studies assume significant energy savings, resultingin lower total energy consumption and reduced use of coal,natural gas and oil. Reduced dependence on fossil fuels will tosome extent counteract the decrease in Danish oil and naturalgas production expected in the coming years. Productionis expected to fall close to zero before 2050 (Statement on theand Business Affairs, from 2003). However, fossil fuels will11 The Danish Board of Technology is an independent body established by the Danish Parliament. The Board is advising the Danish Parliament andother governmental bodies in matters pertaining to technology.64Risø Energy Report 7
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Preface1This Risø Energy Report, t
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2Summary and recommendationsFor the
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Danish and global climate andenergy
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Danish and global climate and energ
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