Energy in the EU

1. Presentation for Decision Making
Energy in the EU
Antonio Merola Khaldon Evans Christopher Lipp
Specialist in
Energy trends & policy
in the EU
Specialist in
Renewable energy
in the EU
Specialist in
Nuclear power
in France & Germany

2. 1. Introduction
 Kahneman & Heuristics
 European energy policy
 Electricity subsector
2. Nuclear power: the case of France & Germany
 Overview: Nuclear power in the EU
 Rise of nuclear power in France
 Germany’s nuclear power U-turn
 Influences in decision making
3. Renewable energy: Wind & Solar Power
 EU Investments in alternative energy
 A paradigm shift in Wind & Solar Power
 Factors influencing micro-level decisions
Overview
2

3. 3
Introduction
Heuristics & Energy in the EU

4. • Kahneman demonstrates how easily statistics can be misinterpreted and
explains the risk of using statistics as an attempt to assign greater meaning to
something that occurred due to chance.
• Kahneman uses heuristics to assert that System 1 thinking involves associating
new information with existing patterns, or thoughts, rather than creating new
patterns for each new experience. In addition to offering an explanation for the
statistical problem, the theory also offers an explanation for human biases
Overview
4
• Anchoring effect names our tendency to be
influenced by irrelevant numbers.
• Availability Heuristic – we intuitively think the
things we remember are more likely to happen
again and that they are more important
• Representativeness Heuristic – we intuitively
think that different events that seem similar to us
have a similar likelihood of occurrence when
often they do not
• Commitment Heuristic – we intuitively think
that if we’ve already invested in a decision, we
should continue to do so

5. European Energy policies
5
The EU Treaty of Lisbon of 2007 legally includes solidarity in matters of
energy supply and changes to the energy policy within the EU
The Energy Union Strategy is a project of the European Commission to
coordinate the transformation of European energy supply. - It was
launched in February 2015, with the aim of providing secure, sustainable,
competitive, affordable energy
Strategic Energy Technology Plan

6. In 2003, the EU energy sector generated a turnover of about €535 billion. Moreover, it was
the main activity of 16,000 enterprises, which employed slightly over a total of 1.1 million
people.
Slovakia is by far the most specialised energy producer since the energy sector represents
14.8% of the added value and 3.4% of the employment of the country’s non-financial
business economy.
Main contributors to the EU energy sector are France and Germany, respectively
contributing 16% and 23% of the total added value, and together employing more than
30% of the sector’s total workforce in Europe
European Energy policies
Sector People employed No. of companies Value added
(% of energy sector total)
Electricity 867,000 11,000 77
Gas 152,000 1,300 18
Steam and hot water 165,000 3,800 5
Table: Size of EU energy subsectors
Source: Eurostat, 2006 - 2007

7. Electricity subsector
7
• The electricity subsector is the largest of the three subsectors within
the EU energy sector.
• It is comprised of almost 11,000 companies, employs more than 867,000 people
and accounts for 77% of the energy sector’s total added value
(Eurostat 2012).

8. 8
Nuclear Power
The case of France & Germany

9. Overview: Nuclear Power in the EU
 France is the 2nd biggest producer of nuclear power in the world
after the United States (100 reactors) and before Russia (34 reactors)
 China has 26 reactors in operation but 23 are under construction
 While Germany has planned a phase out by 2022, the UK signed
deals with China for a nuclear power cooperation (October 2015)
9
44%
12%
8%
7%
5%
5%
5%
14%
Nuclear Power Plants in the EU
France
United Kingdom
Sweden
Germany
Spain
Belgium
Czech Republic
Others

10. Overview: Nuclear Power – pros and cons
10
Arguments against nuclear power
• High construction costs
• High-known risks of accidents, &
unknown risks
• Uranium just as finite as other sources
• Nuclear waste lasts 200-500 years
 Nuclear power is highly controversial and there is no unified European policy
(Euratom Treaty of 1957 has limited power, mainly regulates the market)
 The case of France & Germany shows how the two main actors of the EU follow
two entirely opposite strategies
Arguments for nuclear power
• Lower greenhouse gas emissions
• Relatively low operating costs
• Large power-generating capacity
• Progress in recycling of nuclear
waste

11. Rise of nuclear power in France
1973
Oil prices quadrupled due to first
majoroil crisis, when most of France’s
electricity came from oil burning plants
France decides to become energy
independent
“No coal, no oil, no gas, no choice”
58 active nuclear power plants
in France produce 75% of all electricity
Cultural, political & economic factors
influenced this decision
 Two thirds of the French are highly in favor of this energy source
 Nuclear power as a solution to these problem ‘feels right’ to the French
 Currently there are 2 nuclear reactors under construction in France,
the expansion does not seem to be slowing down
11
Source: Eurostat. Table: Wikipedia

12. Germany’s nuclear power U-turn
First nuclear power plant built in 1962
1970s
Demonstration near Hamburg to stop
construction of nuclear plant
Green party “Die Grünen” gets seats in
Bundestag, advocates against nuclear
power
2011
Fukushima accident  Germany
closes eight nuclear reactors
Acceleration of phase-out:
deadline 2022 instead of 2036
 Studies by German insurance companies show that the cost of a potential nuclear
accident is impossible for them to bear
 Phase-out is poised to push Germany to develop renewable energy sources
 Short term effect: strong increase in coal and oil burning since 2011
12
Source: IAEA

13. Influences in decision-making
13
Availabilty
Heuristics
Law of
Small numbers
Conjunction
fallacy
Intuitive
Prediction
Anchoring effect
Sunk cost fallacy
Despite the high risks and the problems of
radioactive waste, France continues to expand
and develop its nuclear power
France’s reaction after the accident
of Three Mile Island
Occurrence of Fukushima made
Germany accelerate its way out
of nuclear power, as if the
likeliness of such an accident
had increased by the
occurrence of the event
itself
Germany may be mistaking
plausible and probable.
The conditions that lead to
major nuclear accidents like
Fukushima and Chernobyl
are unlikely to happen in
Germany
The arguments that lead to
the beginning of the nuclear
program in France made people
feel right about it. It is now part of the
day-to-day life on French. However conditions
have changed, and it might be a mistake to
invest more in this energy source.
France has not experienced
any major nuclear accident,
which may be comforting the
French population in believing
that it is a known and
safe power source.
Arguments based on the
statistics of the number of
accidents are often raised,
though the statistical
significance can be seen as
marginal, considering the
small sample (amount of
plants and duration)

14. 14
Renewable energy
Wind & Solar Power

15. Use of renewable energy (EU28 vs. 2020 target)
EU investments in renewable energy
15
• Increase renewable energy use
20% by 2020
• Creating more jobs
• Having a carbon free economy
• Cleaner energy
 2011 – 2013 renewable energy use increased 2.1%. A 1% increase per year
 2013 renewable energy was accounted for 1.2million jobs
EU unemployment crisis
 Carbon free economy - Global warming (climate change) effects

16. Energy sources in the EU
EU investments in renewable energy
16
• Increase renewable energy use
20% by 2020
• Creating more jobs
• Having a carbon free economy
• Cleaner energy
 2011 – 2013 renewable energy use increased 2.1%. A 1% increase per year
 2013 renewable energy was accounted for 1.2million jobs
EU unemployment crisis
 Carbon free economy - Global warming (climate change) effects

17. Greenhouse gas emissions 1990 vs. 2012 in the EU
Greenhouse gas emissions
17
 Reduce greenhouse gas 20% by 2020 compared to 1990 hence a 15.8% reduction
from 2012 to 2020
 A more realistic goal would be an increase would be approximately 3%
reduction between 2012 & 2020
 Raw statistics rather than past efforts should influence decision making
• Only reduced by 4.2
points from 1990 to 2012
• Increase in emissions from
transportation 6.9 points

18. Capacity factors of various energy sources
A paradigm shift in wind & solar power
18
 Wind is the cheapest energy produced in UK & Germany
More solar and wind plants are being installed because of the capacity factor
• More wind & solar power installed
leads to…
• Coal & gas plants sitting idle
longer, leads to…
• Coal & gas power costs going up
H2 2014 H1 2015 H2 2015
Coal 86% 85% 85%
Natural
Gas
70% 70% 62%
Wind 32% 35% 37%
Solar 16% 17% 20%

19. Solar Panel Purchase vs. Price in the UK
Factors influencing micro-level decisions
19
 People buy solar panels because of the price seem more reasonable to them
and they will get a return on investment much quicker
Positive factors
• The decrease in cost of solar
panel
• Increase in home purchase of
solar panel

20. Example of Online Advertising
for Solar Panels
Factors influencing micro-level decisions
20
 People will buy only if the price is right not because they will save on the bill
 The negative effect of not using renewable energy is difficult to quantify
 Advertise more about environmental issues, people may react better and buy
Negative effects
• Advertisement telling you to
buy solar panel because you
will save money today
• People do not see the
environmental need to buy it

21. 21
We are ready to answer your questions.
Thank you for your attention

22. Sources
22
• Braun, Jan Frederik (24 February 2012). "EU Energy Policy under the Treaty of Lisbon Rules: Between a new policy and business as usual". Politics and
Institutions, EPIN Working Papers. p. 14. Retrieved 21 August 2012
• S. Andoura, L. Hancher, M. van der Woude: Towards a European energy community: a policy proposal by Jacques Delors Notre Europe – 2010
• Kahneman, D (2012). Thinking, Fast and Slow. Penguin. Part II.
• World Nuclear Association: Nuclear Power in the European Union (http://www.world-nuclear.org/info/Country-Profiles/Others/European-
Union/) October 2015
• The Guardian: The UK’s deals worth billions with China: what do they really mean? October 24th, 2015
• PBS.org, Jon Palfreman. Why the French Like Nuclear Energy. http://www.pbs.org/wgbh/pages/frontline/shows/reaction/readings/french.html
• Triplepundit.com. Nuclear energy: Pros and Cons. http://www.triplepundit.com/special/energy-options-pros-and-cons/nuclear-energy-pros-and-
cons/
• DW.com. The future of nuclear power in Europe. http://www.dw.com/en/the-future-of-nuclear-power-in-europe/a-16772616
• Europa.eu, Renewable Energy (https://ec.europa.eu/energy/en/topics/renewable-energy)
• Europa.eu, Energy Strategy (https://ec.europa.eu/energy/en/topics/energy-strategy)
• EPA, Overview of Greenhouse Gases (http://www3.epa.gov/climatechange/ghgemissions/gases/co2.html)
• Natural Resources Defense Council, Global Warming (http://www.nrdc.org/globalwarming/)
• Europa.eu, Greenhouse gas emissions by sector (http://ec.europa.eu/eurostat/statistics-
explained/index.php/File:Greenhouse_gas_emissions,_by_source_sector,_EU-28,_1990_and_2012.png)
• The Eco Experts, How much do solar panels cost (http://www.theecoexperts.co.uk/how-much-do-solar-panels-cost-uk)
• Bloomberg.com, Solar and Wind Just Passed Another Big Turning Point (http://www.bloomberg.com/news/articles/2015-10-06/solar-wind-reach-
a-big-renewables-turning-point-bnef)
• RenewableEnergyWorld.com, Fact Sheet: Renewable Energy Job Numbers (http://www.renewableenergyworld.com/articles/2015/01/fact-sheet-
renewable-energy-job-numbers.html)