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DECARBONISATION & THE
CONSEQUENCES FOR THE GERMAN
AND EUROPEAN ENERGY MARKETS
BDE
W
DIETER HELM
Professor of Energy Policy, University of Oxford
Director, Aurora Energy Research
9th June 2016
AGENDA
The scale of the challenge
The emerging energy context
The policy responses
THE SCALE OF THE CHALLENGE
Source: US Department of Commerce, National Oceanic & Atmospheric Administration (NOAA), "Globally Averaged Marine Surface Annual Mean Data", Trends in Atmospheric Carbon Dioxide,
http://www.esrl.noaa.gov/gmd/ccgg/trends/global.html (accessed 5 May 2016).
I: CARBON EMISSIONS KEEP GOING UP
II: FORECAST OIL DEMAND INCREASES
THE SCALE OF THE CHALLENGE
Source: BP Energy Outlook 2035 (February 2015), http://www.bp.com/energyoutlook; Exxon Mobil, The Outlook for Energy: A View to 2040 (2015),
http://corporate.exxonmobil.com/en/energy/energy-outlook; Statoil Energy Perspectives 2015,
http://www.statoil.com/en/NewsAndMedia/News/EnergyPerspectives/Downloads/Energy%20Perspectives%202015.pdf
THE SCALE OF THE CHALLENGE
2-3 billion more people
III: AND…. POPULATION GROWTH
3% world GDP  = x 16 GDP  by 2100
India x 2 coal by 2020
IV: WHY SO LITTLE PROGRESS?
The Kyoto illusion
• European  carbon production
• European  carbon consumption
Coal 25%  30% world energy
Coal  in Germany
THE SCALE OF THE CHALLENGE
V: GERMAN COAL AND CO2 EMISSIONS
Source: http://www.bmwi.de/EN/Topics/Energy/Energy-data-and-forecasts/energy-data.html
THE SCALE OF THE CHALLENGE
THE EMERGING ENERGY CONTEXT
I: THE END OF THE COMMODITY SUPER CYCLE
Sources: BP Statistical Review of World Energy (June 2015), bp.com/statistical review; Aurora Energy Research 2016, with data from Thomson Reuters
0
20
40
60
80
100
120
140
1860 1880 1900 1920 1940 1960 1980 2000 2020
2012 US$/bbl Crude oil prices 1861-2016
Historic average
EMERGING ENERGY CONTEXT
II: NEW TECHNOLOGIES
Electric cars
Digitalisation of manufacturing and services
• Robots
• 3D printing
• AI
New decentralised networks
UK exit by 2025
Germany now  (Aurora estimate: 27 GW of coal plant need to
close by 2030 to meet targets)
THE POLICY RESPONSES
But earlier = nuclear  coal
gas  coal
I: EXIT COAL
THE POLICY RESPONSES
II: PARIS & 2030 TARGETS
The targets are
• Voluntary
• They don’t add up ≠2°C
AND
They are based upon carbon consumption not carbon production.
THE EU 2030 FRAMEWORK
The renewables target
The market design directive & state aids
The allocation of the 2030 target
The renationalisation of energy policy
Nord Stream 2 & the Eastern Europeans
III: THE POLICY RESPONSES
CONCLUSIONS
• Prices of fossil fuels – slowly falling
• Carbon constraints increasing (& temperatures increasing)
• Key role for gas in the transition – and for secure supplies
• Technological transformation changing the game
• And (almost) everything will be electric ….. electric cars, next generation
solar, small modular nuclear, smart systems, decentralised generation, lots
of AI…
AND
Lots of unpredictable surprises …. it could all be very different!
BOOKS
www.dieterhelm.co.uk
NEW WEBSITE
FOR INFORMATION
• Stranded Assets – a deceptively simple and flawed idea, Paper 15, Oct 15
• Reforming the FiTs and capacity mechanisms, Paper 14, Sep 15
• The first 100 days of Conservative energy policy, Paper 13, Aug 15
• Penalty tariffs, open ended regulation and embedding overcharging. Paper 12, Jul 15
• British energy policy- what happens next? Paper 11, Jun 15
• Energy Policy and the Coalition, Paper 10 March 15
• What should oil companies do about climate change? Paper 9, Feb 15
• Competition in the British electricity sector: a set or practical measures, Paper 8, Feb 15
Energy Futures Network
Paper 18.
After Hinkley – how to
contract for the rest of the
nuclear programme
Dieter Helm
Apr 16
Energy Futures Network
Paper 19.
24th June – the day after
the referendum
Dieter Helm
May 16
Energy Futures Network
Paper 16.
The new normal – oil
prices after the crash
Dieter Helm
Feb 16
www.dieterhelm.co.uk
Energy Futures Network
Paper 17.
The CMA Energy Market
investigation: Companies
5-0 CMA?
Dieter Helm
Mar 16

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Bdew 8.6.16 f

  • 1. DECARBONISATION & THE CONSEQUENCES FOR THE GERMAN AND EUROPEAN ENERGY MARKETS BDE W DIETER HELM Professor of Energy Policy, University of Oxford Director, Aurora Energy Research 9th June 2016
  • 2. AGENDA The scale of the challenge The emerging energy context The policy responses
  • 3. THE SCALE OF THE CHALLENGE Source: US Department of Commerce, National Oceanic & Atmospheric Administration (NOAA), "Globally Averaged Marine Surface Annual Mean Data", Trends in Atmospheric Carbon Dioxide, http://www.esrl.noaa.gov/gmd/ccgg/trends/global.html (accessed 5 May 2016). I: CARBON EMISSIONS KEEP GOING UP
  • 4. II: FORECAST OIL DEMAND INCREASES THE SCALE OF THE CHALLENGE Source: BP Energy Outlook 2035 (February 2015), http://www.bp.com/energyoutlook; Exxon Mobil, The Outlook for Energy: A View to 2040 (2015), http://corporate.exxonmobil.com/en/energy/energy-outlook; Statoil Energy Perspectives 2015, http://www.statoil.com/en/NewsAndMedia/News/EnergyPerspectives/Downloads/Energy%20Perspectives%202015.pdf
  • 5. THE SCALE OF THE CHALLENGE 2-3 billion more people III: AND…. POPULATION GROWTH 3% world GDP  = x 16 GDP  by 2100 India x 2 coal by 2020
  • 6. IV: WHY SO LITTLE PROGRESS? The Kyoto illusion • European  carbon production • European  carbon consumption Coal 25%  30% world energy Coal  in Germany THE SCALE OF THE CHALLENGE
  • 7. V: GERMAN COAL AND CO2 EMISSIONS Source: http://www.bmwi.de/EN/Topics/Energy/Energy-data-and-forecasts/energy-data.html THE SCALE OF THE CHALLENGE
  • 8. THE EMERGING ENERGY CONTEXT I: THE END OF THE COMMODITY SUPER CYCLE Sources: BP Statistical Review of World Energy (June 2015), bp.com/statistical review; Aurora Energy Research 2016, with data from Thomson Reuters 0 20 40 60 80 100 120 140 1860 1880 1900 1920 1940 1960 1980 2000 2020 2012 US$/bbl Crude oil prices 1861-2016 Historic average
  • 9. EMERGING ENERGY CONTEXT II: NEW TECHNOLOGIES Electric cars Digitalisation of manufacturing and services • Robots • 3D printing • AI New decentralised networks
  • 10. UK exit by 2025 Germany now  (Aurora estimate: 27 GW of coal plant need to close by 2030 to meet targets) THE POLICY RESPONSES But earlier = nuclear  coal gas  coal I: EXIT COAL
  • 11. THE POLICY RESPONSES II: PARIS & 2030 TARGETS The targets are • Voluntary • They don’t add up ≠2°C AND They are based upon carbon consumption not carbon production.
  • 12. THE EU 2030 FRAMEWORK The renewables target The market design directive & state aids The allocation of the 2030 target The renationalisation of energy policy Nord Stream 2 & the Eastern Europeans III: THE POLICY RESPONSES
  • 13. CONCLUSIONS • Prices of fossil fuels – slowly falling • Carbon constraints increasing (& temperatures increasing) • Key role for gas in the transition – and for secure supplies • Technological transformation changing the game • And (almost) everything will be electric ….. electric cars, next generation solar, small modular nuclear, smart systems, decentralised generation, lots of AI… AND Lots of unpredictable surprises …. it could all be very different!
  • 15. FOR INFORMATION • Stranded Assets – a deceptively simple and flawed idea, Paper 15, Oct 15 • Reforming the FiTs and capacity mechanisms, Paper 14, Sep 15 • The first 100 days of Conservative energy policy, Paper 13, Aug 15 • Penalty tariffs, open ended regulation and embedding overcharging. Paper 12, Jul 15 • British energy policy- what happens next? Paper 11, Jun 15 • Energy Policy and the Coalition, Paper 10 March 15 • What should oil companies do about climate change? Paper 9, Feb 15 • Competition in the British electricity sector: a set or practical measures, Paper 8, Feb 15 Energy Futures Network Paper 18. After Hinkley – how to contract for the rest of the nuclear programme Dieter Helm Apr 16 Energy Futures Network Paper 19. 24th June – the day after the referendum Dieter Helm May 16 Energy Futures Network Paper 16. The new normal – oil prices after the crash Dieter Helm Feb 16 www.dieterhelm.co.uk Energy Futures Network Paper 17. The CMA Energy Market investigation: Companies 5-0 CMA? Dieter Helm Mar 16