pact carbon transition

850
-1

Published on

Published in: Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
850
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

pact carbon transition

  1. 1. PACT: Pathways for Carbon Transition Deliverable D6 3 scenarios to assess post-carbon transitions September 2011 EC/DG Research Project 225 503 Authors: B. Château, B. Bougnoux Dissemination level: PU
  2. 2. PACT D6: "3 scenarios to assess post-carbon transitions"Table of content1 Abstract .............................................................................................................. 42 Introduction ........................................................................................................ 0 2.1 Limits to the development of the current energy system ............................... 0 2.2 Post-carbon transition.................................................................................... 1 2.3 Defining, designing and quantifying post-carbon transition scenarios ........... 23 Outlines and main features of the 3 post-carbon transition scenarios ......... 3 3.1 The social expectations as regard welfare .................................................... 3 3.2 The social balance between environment and wealth ................................... 5 3.3 Two visions of long term EU post-carbon situations ...................................... 6 3.4 Three transition scenarios to post-carbon for the EU .................................... 8 3.5 Scenario outlines ........................................................................................... 0 3.5.1 International context ................................................................................ 0 3.5.2 EU context .............................................................................................. 1 3.5.3 Local transitions ...................................................................................... 34 Spacecraft........................................................................................................... 5 4.1 International context ...................................................................................... 5 4.1.1 Governance of global issues ................................................................... 5 4.1.2 Policies, opportunities and constraints of major World players ............... 6 4.2 The EU and member countries context ......................................................... 8 4.2.1 Economic model ..................................................................................... 8 4.2.2 The social balance between environment and wealth ........................... 11 4.2.3 Technology, energy efficiency and stake-holders strategies ................. 13 4.3 Local transitions........................................................................................... 14 4.3.1 Local players policies and actions......................................................... 15 4.3.2 changes in urban schemes ................................................................... 16 4.3.3 Daily life in post-carbon societies in the EU .......................................... 185 Smartphone ...................................................................................................... 21 5.1 International context .................................................................................... 21 5.1.1 Governance of global issues ................................................................. 21 5.1.2 Policies and constraints of major World players.................................... 22PACT D6 vf Enerdata 23-09-2011 0
  3. 3. PACT D6: "3 scenarios to assess post-carbon transitions" 5.2 The EU and member countries context ....................................................... 24 5.2.1 Economic model ................................................................................... 24 5.2.2 The social balance between environment and wealth ........................... 26 5.2.3 Technology, energy efficiency and stake-holders strategies ................. 28 5.3 Local transitions........................................................................................... 30 5.3.1 Local players policies and actions......................................................... 30 5.3.2 Changes in urban schemes .................................................................. 32 5.3.3 daily life in post-carbon societies in the EU ........................................... 346 Hard Way .......................................................................................................... 38 6.1 International context .................................................................................... 38 6.1.1 Governance of global issues ................................................................. 38 6.1.2 Policies and constraints of major World players.................................... 39 6.2 The EU and member countries context ....................................................... 41 6.2.1 Economic model ................................................................................... 41 6.2.2 The social balance between environment and wealth ........................... 43 6.2.3 Technology, energy efficiency and stake-holders strategies ................. 44 6.3 Local transitions........................................................................................... 46 6.3.1 Local players policies and actions......................................................... 47 6.3.2 Changes in urban schemes .................................................................. 48 6.3.3 Daily life in post-carbon societies in the EU .......................................... 507 Quantifying carbon transition pathways ........................................................ 52 7.1 From scenario storylines to quantitative models inputs ............................... 53 7.1.1 Identification of relevant exogenous inputs of the models ..................... 53 7.1.2 Linking the storylines to the relevant exogenous inputs of the models . 58 7.1.3 Quantifying the relevant exogenous inputs of the models ..................... 58 7.2 Socio-economy, energy and CO2 projections in PACT transition scenarios 70 7.2.1 Socio-economy, EU-27 ......................................................................... 70 7.2.2 End-use technologies and energy needs, EU-27 .................................. 76 7.2.3 Global energy outlook ........................................................................... 79 7.2.4 CO2 emissions outlook ......................................................................... 838 Conclusion ....................................................................................................... 869 Annex 1: brief description of VLEEM/TILT ....................................................... 010 Annex 2: brief description of the POLES model ......................................... 411 Annex 3: linkage between scenario statements and models inputs ....... 11PACT D6 vf Enerdata 23-09-2011 1
  4. 4. PACT D6: "3 scenarios to assess post-carbon transitions"12 Annex 4: scenario projections .................................................................... 14 12.1 EU-27 as a whole ..................................................................................... 14 12.1.1 Socio-economy .................................................................................. 14 12.1.2 End-use technologies and energy needs........................................... 16 12.2 Core cities ................................................................................................ 18 12.3 1st rings.................................................................................................... 19 12.4 Small/medium cities ................................................................................. 20 12.5 Sparse settlements................................................................................... 21PACT D6 vf Enerdata 23-09-2011 2
  5. 5. PACT D6: "3 scenarios to assess post-carbon transitions"List of figuresFigure 3-1: Visions of the post-carbon transitions .................................................................................................. 6Figure 7-1: VLEEM/TILT overview .......................................................................................................................... 53Figure 7-3: GDP assumptions, PACT scenarios ...................................................................................................... 66Figure 7-4: assumptions on oil availability, PACT scenarios .................................................................................. 66Figure 7-5: Biomass potentials in PACT scenarios ................................................................................................. 67Figure 7-6: Biomass use in PACT scenarios............................................................................................................ 67Figure 7-7: Improvements in carbon intensities, PACT scenarios .......................................................................... 68Figure 7-8: Carbon values, PACT scenarios ........................................................................................................... 69Figure 7-9: EU-27 demography, PACT scenarios ................................................................................................... 71Figure 7-10: EU-27 urbanization, PACT scenarios ................................................................................................. 72Figure 7-11 : EU-27 dwellings, PACT scenarios ..................................................................................................... 73Figure 7-13: EU-27 car use and technology, PACT scenarios ................................................................................ 77Figure 7-15: EU-27 dwelling stock by technology, PACT scenarios ....................................................................... 78Figure 7-18: Oil prices on World markets, PACT scenarios .................................................................................... 80Figure 7-19: EU primary energy, PACT scenarios .................................................................................................. 81Figure 7-21: Electricity generation mix, world, PACT scenarios ............................................................................ 82Figure 7-22: Electricity generation mix, EU-27, PACT scenarios ............................................................................ 83Figure 7-26: CO2 emissions by sector, EU-27, PACT scenarios .............................................................................. 85Figure 9-1: VLEEM overview .................................................................................................................................... 0Figure 10-1 : Overview of the POLES model ............................................................................................................ 5Figure 10-2 : Oil and gas production module .......................................................................................................... 9List of tablesTable 7-1: Quantitative assumptions for the 3 scenarios, VLEEM-TILT ................................................................. 60Table 7-2: UN-2008 population medium projections ............................................................................................ 65Table 7-3: EU-27 demography, PACT scenarios .................................................................................................... 71Table 7-4: EU-27 urbanization, PACT scenarios .................................................................................................... 72Table 7-3: EU-27 economy and welfare, PACT scenarios ...................................................................................... 73Table 7-6: EU-27 dwellings, PACT scenarios .................................................................... Erreur ! Signet non défini.Table 7-7: EU-27 mobility indicators, PACT scenarios ..................................................... Erreur ! Signet non défini.Table 7-8: EU-27 car use and technology, PACT scenarios .............................................. Erreur ! Signet non défini.Table 7-9: EU-27 car energy consumption and CO2 emissions, PACT scenarios ............. Erreur ! Signet non défini.Table 7-10: EU-27 dwelling stock by technology, PACT scenarios .................................. Erreur ! Signet non défini.Table 7-11: EU-27 useful energy of buildings, PACT scenarios ........................................ Erreur ! Signet non défini.PACT D6 vf Enerdata 23-09-2011 3
  6. 6. PACT D6: "3 scenarios to assess post-carbon transitions"1 AbstractPost-carbon transition scenarios for the European Union (EU) are based on the 3following observations:a) because of limits in oil and gas resources, and because of climate change, theWorld will not have the possibility to continue for long developing on fossil fuels as itdid in the past;b) something else (energy efficiency/thriftiness, renewables, nuclear, carbon captureand sequestration (CCS), either forced or anticipated, will take the lead well beforethe end of the century;c) because of time delays for nuclear and CCS to prove sustainability on largeamounts, renewables and efficiency/thriftiness might well be the core of the"something else".What is called "post-carbon transition" is precisely the process through which"something else" will substitute progressively and massively for fossil fuels, and startshaping new technological clusters, new economic and social organisations, newbehaviours and preferences, i.e. new energy-technology paradigm.Depending on its social and political dimensions, at local, national and internationallevels, the post-carbon transition may take very different routes, with differentconsequences as to the green house gases (GHG) emissions trajectories up to 2050.3 scenarios are therefore elaborated and quantified to capture three "extreme" routestowards post-carbon EU. Welfare expectations More GDP focussed Spacecraft Growth Business with as usual anticipation of limits Balance wealth More attention to Smartphone More attention to / environment wealth environment Hardway Limits to New growth welfare More « beyond GDP » focussedThese scenarios do not necessarily include quantitative targets for GHGs mitigationor fossil fuels market shares by 2050: PACT focuses more on post-carbon transitionsand less on the description of future post-carbon worlds, which may be achieved in amore or less distant future. But for easing the comparison among transition routes,PACT D6 vf Enerdata 23-09-2011 4
  7. 7. PACT D6: "3 scenarios to assess post-carbon transitions"and clarifying their consequences for policy making, we have assumed similar GHGsconcentration in 2050 for all scenarios, around 500 ppmv for energy CO2.Scenario 1, "Spacecraft" : a highly centralized while cooperative project, thewedding of speed and technology, working well with absolute physical limitation inresources."Spacecraft" (SC) describes a centralized transition process duly planned andmanaged by governments and big industrial and financial stakeholders, in a ratherconsensual movement among main GHGs emitting countries worldwide. In particular,they agree to commit themselves to mandatory reduction objectives of the carbonintensity of the GDP, accounting for carbon content of imported and exported goods."Spacecraft" is highly technology oriented. Centralized technologies and innovationdriven by big industries, in particular the "green" ones, are the pillars of a fast Worldeconomic development, respectful of the limits in natural resources and climate inthis transition process.The EU is expected to experience a moderate-to-high GDP growth in this scenario,thanks to a high World demand for its high value products and services, despite thefierce competition of China and Emerging Countries for current goods and services,and the technology leadership of the USA.Maximizing the GDP on the long term within a globalized World remains the priorityof national and EU policies. "Spacecraft" is a scenario where the demographicdecline stops, immigration is encouraged and the human capital increases steadily inthe EU-27. The consumption model and the behaviours remain roughly unchanged.Local transitions are mostly driven by policies and strategies decided andimplemented by Governments and big players. Local players still play an importantrole, but limited to the practical implementation of the national and EU policies andmeasures.Urban sprawl is stopped in relative terms (share of the total population concerned),but continues in absolute terms. Small/medium cities, in particular close to big cities,expand rapidly. Spatial networking among these dynamic cities and with big cities isdeveloping fast, in particular thanks to new fast rail infrastructures.Electric and plug-in hybrid cars chase out the conventional ICE cars in the stockaround 2040; together with biofuels, this contribute to decrease by a little more than85% the direct specific CO2 emissions per km of cars. Very energy efficient buildingconcepts are generalized in the construction everywhere after 2015, while newretrofitting techniques allow for drastic energy savings in existing buildings.On-shore and off-shore wind, Concentrated Solar Power (CSP), biomass and othercentralized renewables contribute to roughly 40% of electricity generated in the EU,and nuclear 35%.The total primary energy consumption of the EU-27 will grow by 20% between 2000and 2050, but the contribution of fossils will decrease in the same time by 1/3.PACT D6 vf Enerdata 23-09-2011 5
  8. 8. PACT D6: "3 scenarios to assess post-carbon transitions"The World CO2 emissions related to energy will peak up at 38Gt around 2020 andthen decrease steadily, with a 2050 level close to that of 2000. Thanks to CCS, CO2concentration in the atmosphere will stabilize around 500 ppmv in 2035. In the EU-27, the CO2 emissions related to energy will decrease by almost a factor 2 from 2000to 2050.Scenario 2, "Smartphone ": a bottom-up carbon transition process in which socialnetworking and ICTs plays a critical role."Smartphone " starts more or less as "Spacecraft", but diverge rapidly when itbecome obvious that Governments and big stakeholders will fail to implement a realand effective governance of the problems related to oil/gas resources and climatechange. Instead, EU and member states governments, which are fully aware of thenature and urgency of the climate and resources problems, rely as much as possibleon local / regional authorities, NGOs and citizens to address these issues. Althoughthere is no global commitments on GHG mitigation, most cities in Europe, US, Chinaand other main emerging countries adopt and implement drastic energy and climateplans.The EU is expected to experience a low - but smart, much better distributed - GDPgrowth in this scenario, for two reasons: a weak World demand for its high valueproducts and services, and a weak internal demand resulting from moderatedemographic perspectives and deep changes in people preferences andconsumption pattern ("beyond GDP" perspective). There is a clear social preferencefor a life more balanced between jobs, family and self-accomplishment in thisscenario."Smartphone " is oriented on small and smart technologies, which are supported by asocial movement towards more autonomy, more connectivity and more self-reliance.Consumers want to become more and more actors as well, which is enabled bynetwork operators investing in smart grids. Nevertheless, few believe that technologywill "save the world". Individual behaviours and social organization appear asimportant. ICTs, decentralized "green" technologies (photovoltaïcs for instance) andinnovation driven by new, small size, industries accompany this "grass root"phenomenon.Local transitions are the bulk of the overall transition movement, and they are mostlydriven by local and regional authorities in the one side, citizens and NGOs in theother side. Local players play a critical role, both in the design and the practicalimplementation of policies and measures mostly decided at the local and regionallevels. These local and regional policies take fully account of changes in socialbehaviours and consumption preferences to reach climate change objectives withinlocal energy and climate plans.Urban sprawl is stopped and then regresses, both in relative and absolute terms. Bigcities, both cores and 1st rings, are strongly densified, and small/medium citiesnearby expand rapidly. Isolated small/medium cities continue to loose population.PACT D6 vf Enerdata 23-09-2011 6
  9. 9. PACT D6: "3 scenarios to assess post-carbon transitions"Spatial networking among big cities and with medium cities nearby is developing fast,in particular thanks to new fast rail infrastructures.Electric and plug-in hybrid cars chase out the conventional ICE cars in the stockaround 2040; together with biofuels, they contribute to decrease by almost 75% thedirect specific CO2 emissions per km of cars. Very energy efficient building conceptsare generalized in the construction everywhere after 2015, associated with PV inzero-energy and +energy buildings in many cases. Thermal retrofitting in existingbuildings is generalized, although less efficient than in "Spacecraft".Electricity needs will increase by 50% between 2000 and 2050; wind power,photovoltaïcs, limited CSP, biomass and other decentralized renewables willcontribute to more than half the electricity generated in the EU in 2050, and nuclear25%.Total primary energy consumption of the EU-27 will decrease by almost 30%between 2000 and 2050, while the contribution of fossils will decrease in the sametime by 2/3.The World CO2 emissions related to energy will peak up at a little lower level than in"Spacecraft" (37Gt), and later (around 2030), and then decrease steadily, with a 2050level close to that of 2000. Thanks to CCS, CO2 concentration in the atmosphere willalso stabilize around 500 ppmv after 2035. In the EU-27, the CO2 emissions relatedto energy will decrease by almost a factor 3 from 2000 to 2050.Scenario 3, "Hard Way": a Business-as-usual scenario, that account fordevelopment/adjustment through violent/brutal crises."Hard Way" describes a carbon transition process which is imposed by the growingproblems and crises resulting from the un-ability of countries and societies to addressin due time the question of the limits in natural resources and environment.Globalization and international relations are driven mostly by national interestconsiderations, paving the way for increasingly conflicting relations among nations.No global governance mechanisms neither for climate change, nor for oil and gasresources.Depletion policies of main oil and gas producing countries (Gulf countries, Russia, ...)are mostly driven by domestic considerations and geo-political aspects. This meansin particular production ceilings in many countries, in particular in the Persian Gulf.This results in increasing tensions on oil and gas markets, with fast rising and highlyfluctuating prices, possible physical shortages in the case of EU, which, after a while,convince an increasing number of persons and industries to switch away from theseenergies and turn to renewables and electricity as fast as possible.In this scenario, the EU is expected to experience first an economic recession,followed by a slow recovery, for three reasons: a weak World demand for its highvalue products and services, a depressed internal demand resulting from a fearconcerning the future (savings first) and supply crisis on oil, gas and main importedminerals.PACT D6 vf Enerdata 23-09-2011 7
  10. 10. PACT D6: "3 scenarios to assess post-carbon transitions"In general terms, "Hard Way" is similar to "Spacecraft" as regard life styles andconsumption model for the two first decades. But afterwards, the long lasting badeconomic conditions and the resulting social tensions, force an increasing number ofpeople, in particular with low income, to change their way of life and consumptionpattern towards something closer to "Smartphone ".EU sticks to its on-going CO2 mitigation efforts. Environmental concerns remainstrong, but the bad economic context and the absence of clear public support makethe adoption and implementation of drastic measures against CO2 emissions ratherdifficult."Hard Way" is not so favourable for technology innovation and development of newinfrastructures that are capital intensive, basically for economic and financial reasons.Nevertheless, the increasing lack of reliability of centralized energy systems favoursthe supply and demand of decentralized solutions.Local transitions participate to a large extent to the overall carbon transitionmovement, and they are mostly driven by the changes in attitudes in a growing partof the population, because the difficult economic conditions in the one side, andbecause an increasing lack of confidence in the conventional energy system in theother side. But local and regional authorities remain mostly followers in this process,partly for policy reasons, partly because of financial constraints .Urban sprawl continues, core cities and 1rings are stabilized and remainingpopulation and households are absorbed by small/ medium towns, in particular in theperiphery of core cities. Spatial networking among big cities continues to bedeveloped, but at a low pace. Investment in new motorways and airportinfrastructures is strongly reduced.Electric and plug-in hybrid cars chase out the conventional ICE cars in the stockaround 2040, but with a lower electricity/motor fuel ratio for hybrids as compared tothe previous scenarios; altogether, with the contribution of biofuels, the specific CO2emissions per km of cars decrease by almost 70%. There are no significant changesin existing standards for buildings construction in all EU countries. Competitiveness,in a context of high prices for oil and gas, remains the main driver of the constructionof low energy and very low energy buildings beyond the actual regulations. Same forzero / +energy buildings. Thermal retrofitting in existing buildings is rather moderatefor financial reasons.Electricity needs fluctuate around 2000 level up to 2050; wind power, photovoltaic,limited CSP, biomass and other decentralized renewables will contribute to morethan half the electricity generated in the EU in 2050, and nuclear 20%.Total primary energy consumption of the EU-27 will decrease by almost 35%between 2000 and 2050, while the contribution of fossils will decrease in the sametime by 2/3.The World CO2 emissions related to energy will peak up still at a little lower levelthan in "Smartphone " (35Gt), and before (around 2025), and then decrease steadily,PACT D6 vf Enerdata 23-09-2011 8
  11. 11. PACT D6: "3 scenarios to assess post-carbon transitions"with a 2050 level close to that of 2000. Thanks to CCS, CO2 concentration in theatmosphere will also stabilize around 500 ppmv after 2035. In the EU-27, the CO2emissions related to energy will decrease by almost a factor 3 from 2000 to 2050.ConclusionThe 3 scenarios describe very different pathways to post-carbon situations in Europe,resulting in very contrasted social, economic and technology panoramas in 2050.Demography, economic growth, World tensions on resources and climate, policies,behaviours and life styles, technologies, are the main discriminating factors amongscenarios.Nevertheless, these very different routes could lead to similar reduction in CO2emissions of the EU, and similar levels of CO2 concentration in the atmosphere, by2050. But with very different prices for oil and gas, and very different values (i.e.constraint) for CO2:- "Hard Way" is the scenario in which the oil prices will reach the highest levels (closeto an average 250 US$2005/bbl in 2050, with the highest fluctuations), but the lowestcarbon value (lowest constraint, around 100 US$2005/t), and the lowest GDP/capita;- "Smartphone " is the scenario with the highest carbon value (constraint), around800 US$2005/t in 2050, with also high oil prices (around 200$2005/bbl in 2050) andhigher GDP/capita than in "Hard Way";- "Spacecraft" is the scenario in which the increase of oil prices is the slower (around140 US$2005/bbl in 2050), with a rather high carbon value (around 400 US$2005/bblin 2050) and a much higher GDP/capita as compared to the other two scenarios.These scenarios do not attempt to indicate to policy makers and stakeholders whatroute must be chosen, but to give them two clear messages:- The EU may reduce in any case by large amounts its consumption of fossils in thenext 40 years, and therefore reduce its CO2 emissions in the same proportion, butthe social, economic and policy costs would be very high if this transition is notproperly planned and implemented;- There not one single way for planning and implementing properly the transition.Indeed, social forces are currently pushing in two very different directions: some tendto reproduce the recipes that have cooked the economic growth of the OECDcountries during the last 50 years (even if this economic model seems a bit tiredthese days), while others consider this model obsolete and fight for inventing a new"beyond GDP" model. Depending on which social forces will become predominant,the transition pathways, even if duly planned and managed, will be very different.PACT D6 vf Enerdata 23-09-2011 9
  12. 12. PACT D6: "3 scenarios to assess post-carbon transitions"2 Introduction2.1 Limits to the development of the current energy systemBefore the turn of the century, oil and gas resources will prove to be too limited toallow production to meet World demand growth at current trends. Coal, whichdisplays much larger resources in the ground, can easily substitute for oil and gas forbig, highly concentrated heat production: electricity generation, energy intensiveindustries,...Substituting for oil and gas in transport is technically feasible (throughsynthetic fuels), but much more difficult and very costly. Coal has already been usedextensively in buildings in the past (and still currently in some countries), but at theexpense of great inconvenience for people, and of severe local pollutions, notacceptable any more in most countries. Altogether, getting back to coal on such alarge extent, even with modern technologies, would create very severe environmentaldamages, both local (SO2, dust,...) and global (green house gases emission), unlesscarbon capture and sequestration (CCS) is mastered in due time at a sufficient scale.Indeed, as shown by the results of the Very Long Term Energy EnvironmentModelling (VLEEM) study1 (fig below), such a movement back towards coal wouldmake CCS at a very large scale a pre-condition to avoid most likely climaticdisasters. If CCS is not timely mastered at such a large scale, the social, economicand political consequences of these climatic disasters would plunge the World in agreat turmoil, with dramatic consequences on wealth and welfare2. Figure 2-1: CO2 emissions and storage in Europe in the fossil paradigm, VLEEM 8 7 CO2 Emissions [Gt CO2] 6 5 Emissions 4 Stored 3 Total 2 1 0 2000 2020 2040 2060 2080 2100 2120The question is: could nuclear replace coal for electricity generation on a very largescale at the global level in case CCS cannot develop beyond well-known but ratherlimited geological storages? In principle, yes, as shown by the VLEEM study. Butunder very strict conditions as to the security and wastes aspects. Hence, the recentaccident at the Fukushima nuclear plant in Japan has enlighten worldwide the natureand the magnitude of the security and waste aspects, and this will probably slow1 www.VLEEM.org2 On this matter, see "Stern review"PACT D6 vf Enerdata 23-09-2011 0
  13. 13. PACT D6: "3 scenarios to assess post-carbon transitions"down for years, maybe decades -if not stop - the recent rebound of the electro-nuclear industry. It has become therefore most unlikely that nuclear might offer asolution to the replacement of coal at the magnitude and speed requested to avoidclimatic disasters.On paper, renewable energy (solar, wind, biomass,...) seems to be more thanabundant in regard to future World energy demand levels, and could well substitutefor fossil fuels in all end-uses of energy. But when getting into the details of costs,location and intermittency of the energies, the picture is much less appealing. Asshown by the VLEEM study, renewables could solve the resource shortage andclimatic problems raised by the fossil fuels, but only under very drastic conditionsincluding energy efficiency, storage (daily and seasonally) and international trade. Itis not just a matter of changing the primary energy inputs in the same processes andappliances to supply the same needs, but to change the whole energy-technologyparadigm.To summarise, it is becoming more and more obvious that:a) the World will not have the possibility to continue for long developing on fossil fuelsas it did in the past;b) the turn to "something else (energy efficiency/thriftiness, renewables, nuclear,CCS)", either forced or anticipated, will take place well before the end of the century;c) because of time delays for nuclear and CCS to prove sustainability on largeamounts, renewables and efficiency/thriftiness might well be the core of the"something else": this is one of the basic assumption of this study.2.2 Post-carbon transitionWhat is called "post-carbon transition" is precisely the process through which"something else" will substitute progressively and massively for fossil fuels, and startshaping new technological clusters, new economic and social organisations, newbehaviours and preferences, i.e. new energy-technology paradigm.Depending on its social and political dimensions, at local, national and internationallevels, the post-carbon transition may take very different routes, with differentconsequences as to the GHG emissions trajectories up to 2050.3 scenarios are elaborated and quantified to capture three "extreme" routes towardspost-carbon EU.- "Spacecraft" (SC) describes a transition process duly planned and managed bygovernments and big stakeholders in a rather consensual movement worldwide,driven by the recognition of the limits (resources and climate), and the willingness toanticipate and manage them in due time.- "Smartphone " (SP) describes a bottom-up managed transition process, wheremunicipalities, NGOs and citizen networking play a leader role in redesigning welfareand security values.PACT D6 vf Enerdata 23-09-2011 1
  14. 14. PACT D6: "3 scenarios to assess post-carbon transitions"- "Hard Way" (HW) describes a transition process poorly managed, imposed by therecurrent and more and more severe crises resulting from the competition for scarceoil resources and from growing extreme climatic events; to some extent, "Hard Way"looks like a business-as-usual scenario without a "happy ending".2.3 Defining, designing and quantifying post-carbon transition scenariosThe purpose of the scenarios is twofold:- to recognize that there is not a unique "post-carbon" EU and a unique path to it, andto draw the consequences of the uncertainties on these matters as to the futurepossible energy systems;- to account for the interactions between the various dimensions of the post-carbontransition as investigated in phase 1 of the PACT project, within consistent visions ofthe transition.As mentioned above, the definition of the scenarios is driven by the willingness tocapture the extreme routes that frame the field of possibilities in matter of post-carbon transitions. This definition has taken the form of scenario outlines which havebeen circulated, and discussed and challenged within a 2 days seminar held inPadova (September 2010).Based on these outlines, a skeleton for scenario story-lines has been elaborated withthree purposes:- provide a common structure for the story-lines of the 3 scenarios, highlighting the 3main levels for appraising policies and consequences (international, national, local),and pointing out the critical points to be addressed in the story-lines for robustness,consistency and transparency purposes;- provide a framework for comparing the main features of the post-carbon transitionsconsidered in the three scenarios;- provide a clear and understandable linkage between the qualitative statements tobe developed in the story-lines and the corresponding quantitative inputs to beplugged into the models to quantify the consequences of the scenarios as regardenergy and GHG emissions (VLEEM/TILT3 and POLES4).Once the skeleton has been adopted, the story-lines have been written, using asmuch as possible the findings of the analytical work of phase 1 (deliverables D1, D2,D3 and D4).3 Very Long Term Energy Environment Model / Transport Issues on the Long Term; short descriptionin annex 14 Propective Outlook of Long term Energy Systems; short description in annex 2PACT D6 vf Enerdata 23-09-2011 2
  15. 15. PACT D6: "3 scenarios to assess post-carbon transitions"Then, the main exogenous inputs of the models related to the qualitative features ofthe scenarios story-lines have been quantified in 4 steps:a) collection of data on historical values of these exogenous inputs, including that ofthe base year of the modelsb) assessment of the boundary values of these inputs (range of uncertainty) withinthe frame of the 3 scenarios, for 2025 and 2050, mostly based on the quantitativeinputs of phase 1c) allocation of specific values within these boundaries to each scenario according tothe scenario story-linesd) run of the models, check of the consistency and likelihood of the results, finetuning of the values allocated to the exogenous inputs.It must be noted that the scenarios do not necessarily include quantitative targets forGHGs mitigation or fossil fuels market shares by 2050: PACT focuses more on post-carbon transitions and less on the description of future post-carbon worlds, whichmay be achieved in a more or less distant future. But for easing the comparisonamong transition routes, and clarifying their consequences for policy making, wehave assumed similar GHGs concentration in 2050 for all scenarios, around 500ppmv for CO2.The comprehensive storylines of the scenarios, including the quantitative elements,are presented in chapters 4 to 6 hereafter.3 Outlines and main features of the 3 post-carbon transition scenariosThe analytical work developed in the phase 1 of the PACT project has clearlyidentified two main dimensions that will shape the post-carbon transitions in the EU:the social expectations as regard welfare, the social trade-off between environmentand wealth.3.1 The social expectations as regard welfareThe discussion about the social expectations as regard welfare could be summarizedas follows.a) The current economic model assimilates welfare to GDP/capita and thereforetends to maximize the GDP/capita, in particular through the diversification of goodsand services.PACT D6 vf Enerdata 23-09-2011 3
  16. 16. PACT D6: "3 scenarios to assess post-carbon transitions"b) When considering the value of time in addition to the price of goods and services(as currently done in transport models with global cost functions or as suggested byG Becker in the nineteen-sixties5), the perception of the mix of goods and servicesthat maximizes the global individuals utility (= welfare) may change significantly.Indeed, each consumption opportunity for goods and services has a monetary cost,but also a time cost: eating a pre-cooked frozen meal takes less time, but it is moreexpensive, than purchasing the ingredients and cooking the meal at home. The mixof goods services that maximizes the utility for a given income when accounting justfor market prices, may be rather different from the mix that maximizes the utility whenconsidering the value of time.c) Among goods and services, a distinction worth to be made between twocategories: those which do correspond to a logic of maximisation of opportunities perunit of time (the logic of hypermarkets), and those which escape this logic andcorrespond to another rationale where utility is proportional to time spent (sailing orfishing for instance).d) The current productive and economic model (so-called "economy of variety")undoubtedly focuses more on the first kind of goods and services, assuming thatmore diversity means at the same time more value as well as more utility, andtherefore more welfare.e) Many of the alternative views on welfare consider implicitly or explicitly that welfareis more complex, that the quality of the opportunities really matters, in particular forthe second category of goods and services above, and that maximizing valuethrough diversity of goods and services may well not correspond to maximization ofutility if quality -and time in particular - is accounted for in the utility.f) Practically, the GDP growth in the coming decades will be driven by the balancebetween the two above categories of goods and services in peoples preferences, i.e.by the dominant expectations as regard welfare.In practical terms, the consequences of the expectations as regard welfare on thetransition process will be addressed through several input variables of the models,among which:- structure of the time budgets- equipment of households (in particular private vehicles)- GDP- travel speed elasticity to GDP....5 Gary S. Becker (1965) “A Theory of the Allocation of Time,” Economic ]ournal 75 (299), pp. 493-517PACT D6 vf Enerdata 23-09-2011 4
  17. 17. PACT D6: "3 scenarios to assess post-carbon transitions"3.2 The social balance between environment and wealthThe discussion about the social balance between environmental quality and materialwealth could be summarized as follows.a) Obviously, sustainability as regard greenhouse gases emissions and climatechange is a major dimension of "post-carbon": therefore, the true nature of thetransition issue is that of the trade-off between maximizing wealth and mitigatingGHGs emissions to respect minimum thresholds of sustainability.b) First question then: how is socially defined the "minimum threshold ofsustainability"? There are two possible answers to this question, according to socialpriorities: - either an absolute ceiling for GHG concentration, as that advocated by the EU with the objective of keeping earth temperature increase below 2°C; - or a macro-economic optimum that pretends to balance the alleged costs of GHGs mitigation and adaptation with their macro-economic feed-backs (Nordhaus’ perspective).Depending on the answer to this question, e.i. the social priority, the level of carbonconstraint accepted by the society would be more or less severe, as the social valueof the carbon reflecting this constraint.c) Second question: how the society operates the trade-off between wealthmaximisation and respect of the carbon constraint, in particular to which extent thecarbon constraint (and the related social value of carbon) should and could beintegrated in market signals through any internalization mechanism (tax, tradingsystem,..). Again two answers, reflecting social priorities: - the carbon constraint is not negotiable, and market signals (carbon tax, ETS,...) can and must be used, but only as a complementary means to other policies and measures in order to respect the constraint at the minimum cost; - reaching the macro-economic optimum is the priority, the level of carbon constraint and the related carbon social value are consequences of this optimum; this indicates the optimal price for carbon wherever this price can be internalized in energy prices (carbon tax, ETS,..) and the necessary complementary policies and measures to be implemented wherever the carbon value cannot be internalized in energy prices.d) Practically, the nature, speed and magnitude of the transition will be dependent onhow the societies, in particular in the EU, will answer these questions. This is amatter of awareness and values of the population, of democracy in decision makingprocess, of perception of risks, of stake-holders game, etc...In practical terms, the consequences of this social trade-offs in the transition processwill be addressed through several input variables of the models, among which:PACT D6 vf Enerdata 23-09-2011 5
  18. 18. PACT D6: "3 scenarios to assess post-carbon transitions"- carbon price/value in the various sectors- climate policies and measures: energy efficiency standards, support to renewablesand nuclear, discount rates, investments in public transport,...- technology options: buildings, transport, electricity generation,...- land-use options: urbanization, renewable energy production,...- life styles and consumption preferences- transport options: soft modes, cars, public transport,.....3.3 Two visions of long term EU post-carbon situationsThe considerations above can be summarized in the following scheme, showing whatthe situation of post-carbon EU might be in the long term. Figure 3-1: Visions of the post-carbon transitions Welfare expectations More GDP focussed Spacecraft Growth Business with as usual anticipation of limits Balance wealth More attention to Smartphone More attention to / environment wealth environment Hardway Limits to New growth welfare More « beyond GDP » focussedVision 1 of post carbon EU: Growth with anticipation of limitsThis vision corresponds to the more commonly accepted one as regard post-carbonEU. To some extent it is where the "Lisbon strategy" is heading. The main features ofthis vision are:- the current economic model still dominates in the EU in the long term- the main industrial stake-holders and policy makers have become fully aware thatthe market signals do not reflect properly the physical limits (natural resources andenvironment) that the World will face in a foreseeable futurePACT D6 vf Enerdata 23-09-2011 6
  19. 19. PACT D6: "3 scenarios to assess post-carbon transitions"- international governance of climate change and hydrocarbon resources scarcity isin place, ambitious climate change objectives are reached, based on appropriateinternational mechanisms to mitigate GHG emissions- national climate change policies and measures that go far beyond usual marketmechanisms have been implemented soon enough to be fully effective in 2050- technologies and services that bring micro energy end-uses and electricitygeneration out from fossils are mostly based on centralisation and networks, and theyare fully available and competitive- economic growth is boosted by innovation and productivity within a new Kondrattief-Schumpeter Cycle based on "green" technologies.Vision 2 of post carbon EU: New welfareThis vision of the post-carbon EU is more challenging as compared to the previousone, because it involves deep changes in individual behaviours, social preferencesand economic organization as compared to today situation. It merges current ideasabout "beyond GDP" with low carbon issues.The main features of this vision are:- industrial stake-holders and policy makers have become fully aware that the marketsignals do not reflect properly the physical limits that the World will reach in aforeseeable future;- but central governments have failed to implement national climate change policiesand measures that go really far beyond usual market mechanisms, prices of fossils(including taxes) are very high in the EU;- demand by individuals and local authorities for technologies and services that bringmicro energy end-uses and electricity generation away from fossils has resulted in anew offer, mostly decentralized and competitive of such technologies and services,with "paradigm" effects (i.e. effects on behaviours and organisation);- considerable awareness about limits in resources and environmental problemsamong common people, with very tangible consequences on behaviours,consumption pattern and life styles;- strong desire of autonomy with large amounts of micro energy consumers-producers having a strong perception of limits;- the income per capita increase slowly, but people compensate the lack of growth ofconsumption opportunities by more attention to daily life quality and less stress ontime.PACT D6 vf Enerdata 23-09-2011 7
  20. 20. PACT D6: "3 scenarios to assess post-carbon transitions"3.4 Three transition scenarios to post-carbon for the EUThree transition scenarios to the 2 future post-carbon EU (the two "visions" above)are investigated:- one transition scenario leading to "growth with anticipation of limits", named"Spacecraft", more or less a successful "Lisbon strategy";- two transition scenarios leading to "new welfare", one rather positive, named"Smartphone ", where the transition is socially desired and implemented, and onerather negative, named "Hard Way", where the transition is imposed by the limits,and suffered by the people. The storylines of these 3 scenarios are displayed in the sections 4, 5 and 6 of thereport."Spacecraft""Spacecraft" (SC) describes a centralized transition process duly planned andmanaged by governments and big industrial and financial stakeholders, in a ratherconsensual movement among main GHGs emitting countries worldwide, driven bythe recognition of the limits (resources and climate), and the willingness to anticipateand manage them in due time.Centralized technologies (economies of scale) and innovation driven by bigindustries, in particular the "green" ones, are the pillars of a fast World economicdevelopment, respectful of the limits in natural resources and climate in this transitionprocess.The scenario is named "Spacecraft" for three main reasons: a highly centralizedwhile cooperative project, the wedding of speed and technology, working well withabsolute physical limitation in resources."Smartphone""Smartphone " describes a smooth bottom-up transition from BAU to new welfare. Itstarts more or less as "Spacecraft", but diverge rapidly when it become obvious thatGovernments and big stakeholders will fail to implement a real and effectivegovernance of the problems related to oil/gas resources and climate change. Instead,EU and member states governments, which are fully aware of the nature andurgency of the climate and resources problems, rely as much as possible on local /regional authorities, NGOs and citizens to address these issues.ICTs, decentralized "green" technologies (economies of series) and innovation drivenby new, small size, industries accompany this "grass root" phenomenon.PACT D6 vf Enerdata 23-09-2011 8
  21. 21. PACT D6: "3 scenarios to assess post-carbon transitions"More generally, globalization and multi-lateralism are more and more contested bycountries populations in this scenario, paving the way to increased protectionism andbilateral relations, within regional blocks.The scenario is named "Smartphone " because it describes a bottom-up carbontransition process in which social networking and ICTs plays a critical role both inraising the awareness of the common people as regard limits in resources andclimate, and in designing and imposing local, decentralized solutions to theseproblems."Hard Way""Hard Way" describes a carbon transition process which is imposed by the growingproblems and crises resulting from the un-ability of countries and societies to addressin due time the question of the limits in natural resources and environment. To someextent, Hard Way can be considered as a Business-as-usual scenario that accountfor development/adjustment through violent/brutal crises.It supposes the continuation of the current trends as regard selfishness of nations,without emergence of citizens movement against it. More generally, globalization andinternational relations continue to be driven exclusively by national interestconsiderations in this scenario, paving the way for increasingly conflicting relationsamong nations.PACT D6 vf Enerdata 23-09-2011 9
  22. 22. PACT D6: "3 scenarios to assess post-carbon transitions"3.5 Scenario outlines3.5.1 International context Spacecraft Smartphone Hard way High international cooperation, Weak international cooperation1 International context worldwide worldwide, regional blocks Isolationism and protectionism1.1 Governance of global issues Global governance Local governance No governance Binding targets on carbon intensity of Local climate plans with voluntary1.1.1 Climate change and GHG mitigation No target the GDP for main world players targets of GHG emission per capita1.1.2 Availability and Accessibility to oil Oil and gas markets highly regulated Oil/gas production ceilings and bilateral Oil/gas production ceilings and marketand gas resources worldwide agreements Globalisation efficient to boost the1.1.3 World trade Restrictions to globalisation High protectionism world economy and trade1.1.4 World finance No restriction to financial flows Some restrictions to financial flows Recurrent financial crises1.2 Major world players policies and US and China heading, main emerging China and major emerging countries China and major emerging countriesconstraints countries and EU doing well heading, US resists, EU follower resisting, US and EU in crisis Technology leadership challenged by Continued leadership on technology,1.2.1 US China and some Emerging Countries, Isolationism and low GDP growth high GDP growth medium GDP growth Exports based economic model Successful continuation of the current Rising the internal demand is a top1.2.2 China challenged by moderate world economic economic model, high GDP growth priority, moderate GDP growth growth Sucessful economic strategy based Moderate exports perspective slow Low exports perspective slow down1.2.3 Other Emerging Countries partly on internal demand, high GDP down the economic development, further the economic development, growth medium GDP growth low/medium GDP growth Success on some niche technologies,1.2.4 EU EU follower, low GDP growth Recurrent economic crises medium/high GDP growthPACT D6 vf Enerdata 23-09-2011 0
  23. 23. PACT D6: "3 scenarios to assess post-carbon transitions"3.5.2 EU context Spacecraft Smartphone Hard way Medium/high GDP growth, Low GDP growth, sustainability low/negative GDP growth, escape2 EU and member countries context competitivity first first from "hell" first Successful continuation of the current Organized switch towards "beyond Reccurent crises imposing de-facto a2.1 Economic model model, successful "Lisbon strategy" GDP" model "beyond GDP" model GDP maximization under severe2.1.1 Macro-economic objective function GDP maximization Welfare maximization constraints EU, member sates government and big EU and member sates government EU, member sates government and big2.1.2 Role and intervention of EU and stake-holders holding sucessfully the relying increasingly on local/regional stake-holders failing to hold or transmitmember countries Governments leadership actors the leadership2.1.3 Utility functions, consumption Working more to earn more and More time for oneself, welfare is not Unemployment and low salaries imposemodel, preferences, life styles,... consume more only quantity a change in life styles2.2 The social balance between Looking for a macro-economic desparate, but unsuccessfull, quest for Environmental sustainability firstenvironment and wealth optimum wealth, for more and more people2.2.1 Environment policies and ETS and taxation first Regulation and subsidies first A little bit of everything Social inequity & exclusion increasing, Social inequity & exclusion increasing,2.2.2 Equity, social exclusion, social but limited social unrest because of Social inequity & exclusion decreasing with recurrent social unrest and "systemprotection, pensions increasing wealth D" Education is at the core of the social More authoritarian policies, democracy2.2.3 Education, values, icons, democracy As usual transformation towards new values, suffers new iconsPACT D6 vf Enerdata 23-09-2011 1
  24. 24. PACT D6: "3 scenarios to assess post-carbon transitions" Spacecraft Smartphone Hard way2.3 Technology, energy efficiency and Centralized technologies and De-centralized technologies and Conflictual balance between centralizedstake-holders strategies economies of scale, big players economies of series, new comers and de-centralized technologies Increasing average speeds for New technology clusters with Switching away from gasoline and diesel2.3.1 Transport passengers and freight within the decentralized electricity generation, high as fast as possible carbon constraint speed trains New energy-efficient concepts for new Zero-energy and +energy building Zero-energy and +energy building2.3.2 Buildings buildings, standardized solutions for concepts for new construction, drastic concepts for new construction after a retrofitting of existing buildings retrofitting of existing buildings while, energy switch2.3.3 Materials Mostly decentralized: PV, biomass for Mostly decentralized: PV, biomass for Mostly centralized: off-shore wind, CSP,2.3.4 Renewables CHPs, geothermy; limited centralized CHPs, geothermy; limited centralized 2nd generation biofuels renewables renewables Heat/cool systems, local electricity2.3.5 Network energy systems (electricity, As usual, smart grids to shave the peak As usual but less and less reliable, smart demand/supply balance thanks togas, heat/cool) demand grids to shave the peak demand smart grids, gas stoppedPACT D6 vf Enerdata 23-09-2011 2
  25. 25. PACT D6: "3 scenarios to assess post-carbon transitions"3.5.3 Local transitions Spacecraft Smartphone Hard way Driven by EU and MS Poorly driven by institutional3 Local transitions governments Driven by local/regional actors actors, peoples decisions first Key role in designing and implementing3.1 Local players policies and actions As usual As usual the post-carbon transition3.1.1 Municipalities and other Mostly implement policies and measures Decide and implemente successfully As usuallocal/regional authorities decided by governments climate plans New local and regional energy players Mostly "as usual", but some new local3.1.2 Utilities and services As usual and services and regional energy players and services Strong weight in local and regional Little weight in major decisions, except Little weight in major decisions, except3.1.3 NGOs and citizens associations decisions, active in implementation of through national votes & politics through votes & politics local "solutions" Urban sprawl continues, 1st rings Urban sprawl continues, core cities & Urban sprawl reduced, core cities, 1st3.2 changes in urban schemes stabilized, densification of growing 1st rings stabilized, densification of rings and larger medium cities densified cities growing small/medium cities More high income small households, More balanced social structures in all High income small households in core3.2.1 transport and energy networks, less jobs in core cities; more jobs and urban areas; masstransit system cities, families in sparse settlements,spatial distribution of dwellings less poors in 1st ring; large & dense between core cities, 1st rings and main poors in 1st ring; mass transit systems masstransit systems around core cities surrounding small/medium cities between core cities and 1st rings Driven by density and fiscal policies; New rules for new premisses, for3.2.2 distribution of urban functions business services going out from core education, commerces and personal As usual cities services Fast city networking among core cities, Fast city networking among core cities, Fast city networking among core cities,3.2.3 city spatial networking and between core cities, 1st rings and and between core cities, 1st rings and and between core cities & 1st rings; surrounding medium/small cities main surrounding medium cities limited elsewhere Local/regional energy demand / supply3.2.4 land-use and cities energy Cities more energy balanced with solar Not an issue balancing, a resilience target for mostdemand/supply balancing harvesting and biomass citiesPACT D6 vf Enerdata 23-09-2011 3
  26. 26. PACT D6: "3 scenarios to assess post-carbon transitions" Spacecraft Smartphone Hard way3.3 daily life in post-carbon societies in Time value for oneself very high, less Unemployment and lack of money force No significant changethe EU material and more cultural/intelectual people to change Transport time budget unchanged, Transport time budget increases, speed Transport time budget unchanged,3.3.1 How people move speed increases steadily driven by high almost stabilized due to low GDP, speed stabilized, distances shortened GDP distances unchanged Social standards down because of new Social standards unchanged, gap with Social standards up with income, gap3.3.2 Indoor comfort behaviours, gap with social standards social standards increases because with social standards reduced reduced economic context Increasing labour time budget and Decreasing labour time budget and slow Decreasing labour time budget because productivity are the driving forces; tele- progress in productivity; substitution lack of jobs, and increasing labour3.3.3 How people work working and tele-meeting when transport/ICTs very active, tele-working, productivity, tele-working and tele- economically justified tele-meeting meeting popular for economic reasons Significant development because of the The core of the new energy/technology3.3.4 Micro energy consumers producers Marginal development increasing lack of reliability of paradigm conventional systems Time budget reduced, strong Time budget increased by choice, Time budget increased by force,3.3.5 Leisure development of long distance out-door reduction of % of long distance out-door reduction of % of long distance out-door leisure activities leisure activities by choice leisure activities by forcePACT D6 vf Enerdata 23-09-2011 4
  27. 27. PACT D6: "3 scenarios to assess post-carbon transitions"4 Spacecraft" Spacecraft": a highly centralized while cooperative project, the continuation of thewedding of economic growth, speed ("doing fast6") and technology, working well withabsolute physical limitation in resources.4.1 International contextA rather consensual and cooperative context worldwide, driven by the recognition ofthe limits (resources and climate), and the willingness to anticipate and manage themcollectively in due time.4.1.1 Governance of global issuesThe PACT analytical work on governance which support this section is available inthe PACT deliverable D4.2: "Risks and governance in the transitionprocess towards post-carbon societies". Climate change and GHG mitigationAfter some hesitations, the UN negotiation process overcome the main difficulties atthe occasion of the post-2012 Kyoto Protocole discussions. IPCC is not challengedanymore, and its conclusions and warnings are taken very seriously by all majorcountries around the World.Most countries of the World, including Emerging Countries, North America, Europeand Asian and Pacific OECD, agree on a common position on how to achieve amacro-economic optimum, which is: a) to commit themselves to mandatory reductionobjectives of the carbon intensity of the GDP, accounting for carbon content ofimported and exported goods; b) to use extensively flexible mechanisms to tradecarbon internationally.In counterpart for the adhesion of the poorest countries to the new Protocole, richcountries (mostly OECD) accept to pay for their adaptation to climatic change. Availability and accessibility to oil and gas resourcesDepletion policies of main oil and gas producing countries (Gulf countries, Russia, ...)are mostly driven by prices on international and regional markets. In order to secure6 The concept of "doing fast" is developed in PACT deliverable D1PACT D6 vf Enerdata 23-09-2011 5
  28. 28. PACT D6: "3 scenarios to assess post-carbon transitions"the return on exploration-production investment and avoid turbulences on the marketprices, long term contracts constitute the main trading mechanism. Oil and gasproducers and consumers reinforce their relations in order to prevent price shocks.This could be done within an international, well-balanced institution that couldemerge from a renewed IEA, or/and through upstream/downstream re-integration ofoil and gas industries. World tradeWTO is strengthened and all World countries join progressively the institution.Protectionism decreases everywhere, which favours World trade dynamics. Nobarriers are settled to compensate for international discrepancies in GHG mitigationefforts, although GHG embodied in imports/exports is accounted for in CO2 intensitytargets. On the contrary, countries are allowed to partly compensate, through importtaxes, differences in social protection costs. World financeThe role of IMF is increased, in particular for avoiding major financial crisis that couldjeopardize the World economic development, and for paying for adaptation in poorcountries. Financing investment in developing countries becomes progressivelyeasier and more secure, for an increasing number of countries, high financialresources being available and more controlled worldwide.4.1.2 Policies, opportunities and constraints of major World playersIn this scenario, major international players are assumed to continue more or lesstheir policies and adapt to constraints and opportunities in a rather "business-as-usual" perspective. USAIn such an international environment, the USA is expected to enjoy a high GDPgrowth, mostly due to the continuation of their technology leadership which booststheir high value exports.Binding targets on GHG intensity appear therefore rather easy to reach, thanks to ahigh GDP growth mostly supported by low energy/GHG intensity goods and services.The US doctrine as regard energy security is almost unchanged, although theirforeign policy turns progressively to multi-lateralism along with the overall movementof increased international cooperation.PACT D6 vf Enerdata 23-09-2011 6
  29. 29. PACT D6: "3 scenarios to assess post-carbon transitions" ChinaThe dynamism of World trade continues to boost Chinese exports of manufacturedproducts, resulting in high economic growth perspectives for China for severaldecades in this scenario.To maintain their export potentials, enterprises in China succeed in moderating theincrease of wages, thanks to the huge reserves of workers coming from rural areas;this would moderate therefore the increase of the internal demand.Targets on GHG intensity may prove rather difficult to reach, despite a high GDPgrowth, because the growth is still supported by the production of manufacturedgoods, some of them being rather energy/GHG intensive. Indeed, the accounting ofGHG embodied in imports and exports released the constraint, but, because of themoderate increase of the internal demand, manufactured goods will still constitute thebulk of this demand.China will continue to give a great importance to energy independence targets, inparticular to make sure that energy shortage wont threat its industrial developmentand its export policy.Multilateralism will be enhanced in China, while the Yuan will be progressively re-evaluated to avoid major clash with big importing countries and World financinginstitutions. Other Emerging CountriesThe other Emerging Countries are expected to continue to suffer from thecompetition of China on exports of manufactured goods, but they succeedimplementing high GDP growth strategies mostly supported by internal demands.Targets on GHG intensity are more or less difficult to reach according to countries,because of the actual content of the GDP growth in the various countries.For these countries, in the international environment of this scenario, energy securityis not so much a critical issue.All these countries work out to develop tighter relations with the USA, China andEurope. Regional economic relations (Mercosur and ASEAN) are developing slowly. The European UnionThe EU is expected to experience a moderate-to-high GDP growth in this scenario,thanks to a high World demand for its high value products and services. But thefierce competition of China and Emerging Countries for current goods and services,PACT D6 vf Enerdata 23-09-2011 7
  30. 30. PACT D6: "3 scenarios to assess post-carbon transitions"as well as the technology leadership of the USA, do not allow the EU to hope for veryhigh GDP growth rates in the coming decades in such a scenario.East/West socio-economic discrepancies within the EU are expected to decline underthe combined effect of economic growth and EU political reinforcement.Targets on GHG intensity are rather easy to reach for the EU, thanks to the speedand content of the GDP growth, and because the on-going mitigation efforts.No major changes should be expected in this scenario for the EU, as regard energysecurity issues and international partnership.4.2 The EU and member countries contextAs already said, "Spacecraft" (SC) describes a top-down transition process dulydriven by governments and big stakeholders, who at the same time decide what isgood for the common people (what welfare is) and how to provide it.4.2.1 Economic modelIn "Spacecraft", the EU as a whole and member countries are doing rather well inGDP growth. How this is achieved, what policies are implemented, to whatconsumption model it corresponds, these are the questions that we will addresshereafter to describe the economic model supporting the favourable GDP growthperspectives. A particular focus is put on three main aspects as regard modellingpurposes: human capital, role of state, values and preferences. Human capitalPolicies dedicated to immigration, birth rate and women activity, working time andretirement, education, are driven by considerations of GDP maximization within ainternational context of fierce economic competition.Combining a revitalized birth rate with a high level of women participation in thelabour market, as in France today, becomes rapidly a shared objective for the EUand all the member countries. Measures such as high allowances for 2 to 3 childrenfamilies, widespread government supported daycares, social promotion of mothers atwork, etc...may help reaching such an objective. The EU as a whole is back to 1,9children per woman between 2030 and 2050, while the percentage of women in thelabour market reaches 80% in 2050 (46% in 2000).Immigration, in particular of high skill people from Emerging Countries and otheremergent countries, is highly supported in the EU, despite residues of nationalismthat fade out along with the resuming economic growth. The growing trend inPACT D6 vf Enerdata 23-09-2011 8
  31. 31. PACT D6: "3 scenarios to assess post-carbon transitions"immigration from outside the EU speeds up to reach some 2 million people annuallyin 2050.The historical declining trend of the average annual working time in Europe isexpected to smooth down and then to reverse between 2020 and 2030: in 2050,people will work a little more (2%) than in 2000. This increase is the same for theaverage retirement age: the declining historical trend reverse between 2000 and2020 (already achieved in many countries), the average retirement age reaching 69years in 2050 against 60 in 2000.Education policies are mostly focused on the objective to get the appropriate labourforce with the appropriate education and skill levels at the right time to operate themost efficiently the economic machine. In particular, these policies aim at boostingthe participation level of the youngsters in the university: in 2050, it is expected that70% of a 25-50 years age class would be graduated from university, against 22% in2000. Role and intervention of EU and member states governments"Spacecraft" is a scenario in which innovation and clean technology development arethe back-bone of the economic growth. This implies a strong support to innovationand clean business development from EU and member states governments.More generally, this scenario is characterized by a strong leadership of Governmentsand main industrial and financial stakeholders in the transition process. Onemanifestation of this leadership is a strong movement of re-regulation of all energyrelated businesses, energy being the main source of GHGs emissions.Another manifestation, that the re-regulation would certainly ease considerably, is astrong investment policy in strategic capital intensive technologies & infrastructures,both in energy production and in main energy end-uses (strategic according to the"Spacecraft" logic). This means in particular a vigorous policy support to nuclear andcentralized renewables (off-shore wind, CSP,...), and to EU high speed trainnetworks.In the POLES model, this is captured through two main exogenous inputs which drivethe competition between these capital intensive technologies and infrastructures, andalternative solutions:- the discount rates associated with these investments, which are used to translateboth a higher security for private investment due to public guarantee, and asignificant share of public investment;- the investment costs of the capital intensive technologies and infrastructures beingpromoted, which are used to translate both a reduction in private costs due to lowertransaction costs and accelerated investment procedures, and to learning and serieseffect.PACT D6 vf Enerdata 23-09-2011 9
  32. 32. PACT D6: "3 scenarios to assess post-carbon transitions"Taxation, subsidizing and pricing are the main policy instruments used by EU andnational Governments to make sure that the huge investments in capital intensivetechnologies and infrastructures will be cost-effective, and to orient consumersdecisions towards targeted technologies and services. The key measures taken byGovernments in this scenario, which can be quantified through POLES exogenousinputs, are: CO2 taxation, feed-in tariffs for nuclear and renewables, subsidizingenergy efficiency. Life styles and consumption modelIn general terms, "Spacecraft" is a scenario in which Governments and mainstakeholders succeed in fostering a "green economic growth" with high economicperformances, that minimize behavioural and life-styles impacts on common people,except as regard environmental aspects. Practically, this means that environmentalawareness will be included in education programmes at an early stage, resulting inan increasing share of the environmental friendliness dimension in utility functions.But for the rest, only little change can be expected in these utility functions.In particular, attitudes towards wasting are not expected to change a lot, except whenthe relation to environment is immediate (tap water waste for example).Human capital is the main fuel of the economic performances in this scenario: whichmeans, as already seen, increasing education and skill in the one side, andincreasing the size and intensiveness of the labour force in the other side. Thisresults in limitations for increase of the time budget for self-accomplishment, and inparticular for leisure, but more money will be spent on leisure activities: this is likely toboost low cost air transport for outdoor leisure activities, electronic devices andservices for in-door leisure.But such constraints on time-budget for self-accomplishment can be durablyaccepted by the European population only if it emerges that the marginal benefit ofnot working an extra hour (= the value attached to leisure) becomes lower than themarginal earnings (salary) from this extra work hour. In other words, as PresidentSarkozy suggested to the French people, if common people agree to work more toearn more. Although this was not historically the case in European countries, theNorth-American experience shows that this may well happen also in Europe in thecoming decades.In the VLEEM model, time budget for self-accomplishment is directly impacted bytime-budget for paid work. Two exogenous inputs are nevertheless used to specifyhow the time-budget for self-accomplishment is used, and how it impacts the needsof energy services:- the share of activities outside the home (out-door) versus inside (in-door) in thistime-budgetPACT D6 vf Enerdata 23-09-2011 10
  33. 33. PACT D6: "3 scenarios to assess post-carbon transitions"- the share of long distance mobility in out-door activities.In general terms, "Spacecraft" is a scenario where people are doing things faster andfaster: because the marginal value of time increases substantially, and because thenumber of consumption opportunities "within 24hours a day" also increasesdramatically.4.2.2 The social balance between environment and wealthIn "Spacecraft", EU and member countries are committed to binding targets on GHGintensity of the GDP, that include GHG content of imports, but also flexibilityinstruments allowing them to purchase GHG credits from abroad on a rather largescale. The resulting level of carbon constraint is primarily internalized through carbonprices, with complementary policies and measures where such internalization is notfeasible or inefficient. Environment policies and instrumentsGHG quotas are imposed to all big emitters: electricity generation, industries,transport companies, big tertiary. Their magnitude is calibrated according to thebinding targets.The emission trading system (ETS) is expanded in scope and modalities. It isgeneralized to all emitters subject to quotas, and includes possibilities of purchasinglarge amounts of GHG credit from abroad or through flexibility mechanisms (CleanDevelopment Mechanisms -CDM- for example). The carbon price on this Europeancarbon market is therefore highly correlated to other carbon markets and bindingtargets worldwide.GHG taxation is implemented for small emitters not subject to quotas, and its level isderived from the trading system (which does not mean that the tax level must benecessarily identical to the carbon price on the ETS). There is no taxation of carbonembodied in imports, although this carbon has to be included in binding targets.In POLES model, this is captured with the exogenous inputs "carbon price", whichcan be differentiated among countries, and among sectors within each country.Regulations and norms on energy and GHG performances are generalized to newbuildings and road vehicles, but rather limited for other existing or new devices.In VLEEM, this is captured through exogenous inputs related to either specific usefulenergy consumption levels (new buildings mainly), or through new technologiesdeployment (vehicles mainly).As already said, feed-in tariffs for nuclear and renewables, and subsidies/tax creditfor energy efficiency are also part of the policy instruments in this scenario.PACT D6 vf Enerdata 23-09-2011 11

×