Energy Policies and Market

Energy Market

Europe is leading the world in pan-regional cooperation in coordinating an energy revolution to clean and efficient electricity and decarbonised economies

The next decade will see the Green Industrial Revolution transform all economies around the world. As renewable energies become more competitive and less dependent on subsidies, there will be pressure to remove market-distorting subsidies for traditional energy sources, such as nuclear and fossil fuels, which will quickly push them out of the market.

With the energy transition planned over the next two to three decades, there is currently a boom in interest in renewable energy options. Investment worldwide in renewable energy is nearly half a trillion dollars. With pressure for governments to stop their heavy subsidies for fossil fuels and meet other obligations, such as the Paris Accord (2015), the scope and incentive for participation of companies, SMEs, and private individuals, has never been greater.

An important aspect of renewable energy investment is the desire of governments to create level playing fields so that renewable technologies have a chance to compete fairly against traditionally subsidised fossil and nuclear sectors. Already wind and solar can outprice fossil fuels in some cases, and a lifting of legislative restrictions will allow citizens who wish to be part of building a sustainable and viable future energy economy to make better decisions. As the economies of scale right the balance, renewable energy will be the cheapest and most viable choice for all energy needs. And well ahead of the official 2050 target.

By far, the most viable choice for private individuals is solar panels on the roof of their homes. This is entirely compatible with a transition to electrically heated buildings, and zero-emission vehicles. As batteries improve in efficiency, the old problems of vehicle ranges and recharging times are falling away. Those who buy into solar photovoltaic systems will be energy independent for their own needs, and a supplier of electricity to the grid, at guaranteed market prices.

Here on Renewable Media we will be reporting regularly on the technological advancements and legislative changes which affect the transition to a clean energy market.

World Renewable Energy

Global energy demand has risen dramatically in the past decades. By 2013 144 countries had made commitments to a transition to renewable energy through a promotion mechanism, compared to 48 in 2004.

Global renewable energy statistics

Generation capacity End 2003 /GW End 2013 /GW
Total with hydro 800 1,560
Total w/o hydro 85 560
Hydro 715 1,000
Wind 48 318
PV 2.6 139
Bioenergy 36 88
Geothermal 8.9 12

Worldwide investment in renewable energy is estimated to have been 214 billion dollars in 2013, and in excess of 400 billion dollars by 2016.

Energy consumption around the world experienced a small decline in the late 1970s, but otherwise has been increasing fairly consistently right through since the advent of the Industrial Revolution.

Primary energy

Primary energy (PE) is the form of energy which enters the human system. It is any form of energy, renewable and non-renewable found in nature. After conversion it is known as secondary or tertiary energy. For example, electricity is a secondary form of energy generated by various primary sources (coal, hydro, solar, etc.).

Total primary energy supply (TPES) = sum of production and imports minus exports and inventory changes.

    TPES of fuels and energy sources in 2012:

  • Oil: 31.4%
  • Coal/peat/shale: 29.0%
  • Natural gas: 21.3%
  • Biofuels and waste incineration: 10.0%
  • Nuclear: 4.8%
  • Hydro: 2.4%
  • Others (renewables): 1.1%

(Data source: IEA, 2014)

Fossil fuels: energy, whether electricity generation or fuel for transport or industry, has traditionally been predominantly oil, followed by coal, then gas. Coal plateaued in the 1990s, before resurging between 2005 and the present to be almost at the level of oil. Gas is rising and gaining gradually on the other two fossil fuels. In 1985, gas consumption (c. 15,000 TWh/y) was half that of oil (c. 30,000 TWh/y), and close to coal (c. 22,000 TWh/y). By 2015, gas was two-thirds of oil, 35,000 TWh/y, coal at 44,000 TWh/y, and oil at 50,000 TWh/y.

Renewables worldwide were mainly hydropower and fairly consistent at around 15 TWh/y till the 1980-90s, when an exponential growth began. Renewables are currently at c. 4,000 TWh/y.

The only energy to have shown a decline is nuclear. In the 1980s nuclear was providing just as much energy needs as renewables, but is now less than half.

In 2012 the world energy consumption was 104,426 TWh (= 8,979 mega-tonne of oil equivalent (Mtoe)).This breaks down to:

  • Oil: 40.7%
  • Coal/peat/shale: 10.1%
  • Natural gas: 15.2%
  • Biofuels and waste incineration: 12.4%
  • Electricity: 18.1%
  • Others (renewables): 3.5%

World energy statistics

Energy consumption around the world experienced a small decline in the late 1970s, but otherwise has been increasing fairly consistently right through since the advent of the Industrial Revolution.

Primary energy

Primary energy (PE) is the form of energy which enters the human system. It is any form of energy, renewable and non-renewable found in nature. After conversion it is known as secondary or tertiary energy. For example, electricity is a secondary form of energy generated by various primary sources (coal, hydro, solar, etc.).

Total primary energy supply (TPES) = sum of production and imports minus exports and inventory changes.

    TPES of fuels and energy sources in 2012:

  • Oil: 31.4%
  • Coal/peat/shale: 29.0%
  • Natural gas: 21.3%
  • Biofuels and waste incineration: 10.0%
  • Nuclear: 4.8%
  • Hydro: 2.4%
  • Others (renewables): 1.1%

(Data source: IEA, 2014)

Fossil fuels: energy, whether electricity generation or fuel for transport or industry, has traditionally been predominantly oil, followed by coal, then gas. Coal plateaued in the 1990s, before resurging between 2005 and the present to be almost at the level of oil. Gas is rising and gaining gradually on the other two fossil fuels. In 1985, gas consumption (c. 15,000 TWh/y) was half that of oil (c. 30,000 TWh/y), and close to coal (c. 22,000 TWh/y). By 2015, gas was two-thirds of oil, 35,000 TWh/y, coal at 44,000 TWh/y, and oil at 50,000 TWh/y.

Renewables worldwide were mainly hydropower and fairly consistent at around 15 TWh/y till the 1980-90s, when an exponential growth began. Renewables are currently at c. 4,000 TWh/y.

The only energy to have shown a decline is nuclear. In the 1980s nuclear was providing just as much energy needs as renewables, but is now less than half.

In 2012 the world energy consumption was 104,426 TWh (= 8,979 mega-tonne of oil equivalent (Mtoe)).This breaks down to:

  • Oil: 40.7%
  • Coal/peat/shale: 10.1%
  • Natural gas: 15.2%
  • Biofuels and waste incineration: 12.4%
  • Electricity: 18.1%
  • Others (renewables): 3.5%

World electricity statistics.

2014

Country Total generation /TWh per capita /MWh Fossil share /% Renewables share /% Nuclear share /%
China 5670 3.93 75 23 2.0
USA 4320 13.0 67 13 19
India 1290 0.80 82 15 3.0
Russia 1060 6.60 66 17 17
Japan 1040 7.83 86 14 0.0
Canada 656.1 15.5 20 63 16
Germany 621.9 7.04 57 26 16
Brazil 590.6 2.58 24 73 3.0
France 557.0 6.95 5.0 16 78
UK 336.0 5.13 61 19 19
Italy 278.1 5.00 55 43 0.0
Switzerland 70.1 7.52 1.0 58 39
Austria 61.6 8.36 18 81 0.0
Denmark 32.2 5.86 42 56 0.0
Australia 248.3 10.0 85.0 15.0 0.0

Data source: IEA Energy Atlas

Coal supplied 1520 Mtoe (46%) of the 3292 Mtoe of additional global primary energy supply from 2000 to 2012 [IEA]

Decarbonisation Plan of the EU

Decarbonisation in the sense of climate mitigation is the process of eliminating as much as possible the use of fossil fuels for electricity generation, vehicle transport, and any other application which may lead to the release of carbon dioxide, carbon monoxide, methane or other carbon-based compound into the atmosphere, especially when that gas is a known greenhouse gas.

The EU is the world’s driving force in responsible energy transition policies. It has agreed unanimously, through a series of directives, to attempt to eliminate fossil fuels from all energy applications by at least 80% by 2050. A Europe that is 100% free of carbon could also be possibility under some scenarios. However, the 80% target is considered to be sufficiently high enough to ensure a radical series of changes are brought about.

Not only will eliminating fossil fuels create better and safer living conditions for humans, and a healthier natural environment, it will also lead to a more successful and more sustainable economy, and hedge against the liabilities the scenario of business as usual leave open. The security of energy supply, given the international trends to less and less reliable neighbours, is an ever increasing threat to the stability and prosperity of Europe.

Decarbonisation

No region on Earth has shown more global leadership and commitment in the cause of combating climate change than the EU. In October 2009, the European Council of heads of state and government launched a policy designed around the parameter of limiting anthropogenic warming to 2°C. The objective is to reduce GHG emissions in the EU by 80-95% over 1990 by 2050. This amounts to approximately 1% less fossil fuel combustion per year for four decades.

20-20-20 vision

In 2009, the EU adopted the 20-20-20 commitment. This agreement has two binding elements: 20% reduction in GHG emissions compared to 1990, and 20% of final energy consumption would be from renewable sources. A non-binding target of 20% improvement in energy efficiency by 2020 over projections with business-as-usual practices.

Other and subsequent directives include: the Energy Efficiency directive (2012/27/EU), a revised Emissions Trading Directive (2009/29/EC), a new Renewable Energy Directive (2009/28/EC), a legal framework for Carbon Capture and Storage (CCS) (2009/31/EC), the new Effort Sharing Decision (which covers reductions not covered by the ETS – Emissions Trading System) (No. 406/2009/EC).

Other agreements affecting the EU include the Doha amendment to the Kyoto Protocol (adopted in 2012), under which the EU is committed internationally to reducing GHG emissions by 20% over 1990 during the 2nd commitment period to the protocol (2013-2020). Regulation (EU) No 517/2014 on fluorinated GHGs. Regulation (EU) No 333/2014 on CO2 emissions of passenger cars.

2035 Targets

The second stage in the decarbonisation programme of the EU is to ensure that carbon energy sources are not locked in during the 2020s. Power stations built now will still be operating in 2050, so the key to achieving close to zero carbon emissions by mid-century is to prevent carbon power stations being built to replace old stations as they go out of service.

The 2030 targets agreed by the EU in January 2014, are for a 40% reduction in greenhouse gases, at least 27% of all electricity generation will be from renewable sources, and efficiency improvement of 30% over 2008. Given that Germany has already met the renewables target, there is a lobby pushing for more ambitious targets than these, fearing that too much leeway was made for the retention of fossil fuels.

EU GHG reductions to 2012

The EU-15 countries, which were involved as the EU in the 1992 UNFCCC treaty, and subsequent 1996 Kyoto Protocol, were set a target of an 8% reduction in GHGs by the end of the Kyoto 1st term, 2008-2012. By 2012, the EU-15 had collectively exceeded this target and reduced GHG emissions by 15%.

Not to be outdone, the 28 nations of the current EU have achieved a 19% reduction in GHGs. Mind you, it is easier to reduce by percentage when you start from a higher level, which the eastern European countries did.

As of January 2014, the EC (European Council) has adopted a new policy framework for climate and energy policy to 2030, generally considered an interim stage to the almost complete decarbonisation ambition by 2050. This policy has the target of 40% GHG reductions and 27% renewables (of final energy consumption), as binding targets. And a non-binding 27% compromise target for energy efficiency helps to ensure the percentage targets are meaningful as an impact on climate change.

The general impression of the author (Andrew Bone) is that most experts consider the 2030 targets to be Realpolitik compromises, and will not be sufficient to achieve the decarbonisation goal.