EUROPEAN COMMISSION
Brussels, 28 November 2018
IN-DEPTH ANALYSIS IN SUPPORT OF THE COMMISSION
COMMUNICATION COM(2018) 773
A Clean Planet for all
A European long-term strategic vision for a prosperous, modern, competitive and
climate neutral economy
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Table of Contents
1 INTRODUCTION AND CONTEXT .............................................................................................13
1.1 Global and EU action to achieve the Paris Agreement ......................................................................14
1.2 Europe’s need to act to achieve the Paris Agreement ........................................................................17
2 EU ACTION TO DATE REDUCING GHG EMISSIONS AND TRANSFORMING
ITS ENERGY SYSTEM..................................................................................................................19
2.1 Decarbonisation and energy transformation to date...........................................................................19
2.2 EU policies on the way to the Paris objectives ..................................................................................26
2.2.1 2011 Roadmaps......................................................................................................................26
2.2.2 2030 targets and Energy Union..............................................................................................27
2.2.3 Clean Energy for All Europeans ............................................................................................29
2.2.4 Industrial policy strategy and strategic value chains..............................................................31
2.2.5 EU Mobility strategy and mobility packages.........................................................................32
2.2.6 Circular Economy Policy.......................................................................................................33
2.2.7 Common Agriculture Policy ..................................................................................................33
2.2.8 Cohesion Policy .....................................................................................................................33
2.2.9 Waste policy, F-gas regulations. ............................................................................................34
2.2.10 MFF and climate mainstreaming in financing .......................................................................34
2.2.11 Aviation and Maritime sectors...............................................................................................36
2.2.12 The need for new vision.........................................................................................................37
2.3 Policy initiatives at national level ......................................................................................................38
2.3.1 The implementation of the EU acquis....................................................................................38
2.3.2 Additional national policies ...................................................................................................40
2.4 Regional cooperation .........................................................................................................................42
2.5 Action agenda by regions, industry and civil society.........................................................................43
2.5.1 Regional actors.......................................................................................................................43
2.5.2 Sectoral actors........................................................................................................................44
2.5.3 Citizens and civil society .......................................................................................................44
3 IMPACT OF CURRENT POLICIES BEYOND 2030 .................................................................46
3.1 Policies and assumptions ...................................................................................................................46
3.2 Energy supply and demand................................................................................................................47
3.2.1 Energy supply ........................................................................................................................47
3.2.2 Energy demand ......................................................................................................................48
3.3 CO2 emissions....................................................................................................................................49
3.4 Non-CO2 emissions............................................................................................................................50
3.5 Land use and forestry.........................................................................................................................51
3.6 Total GHG emissions.........................................................................................................................52
4 SECTORAL AND ECONOMY WIDE LOW CARBON AND ENERGY
TRANSFORMATION PATHWAYS.............................................................................................53
4.1 Overview and scenario description....................................................................................................53
4.2 Energy supply ....................................................................................................................................57
4.2.1 Energy supply options............................................................................................................57
4.2.2 Energy supply results.............................................................................................................67
4.2.3 Transition enablers, opportunities and challenges .................................................................88
4.3 Buildings............................................................................................................................................90
4.3.1 Buildings options ...................................................................................................................90
4.3.2 Buildings results.....................................................................................................................98
4.3.3 Transition enablers, opportunities and challenges ...............................................................106
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4.4 Transport..........................................................................................................................................107
4.4.1 Transport options .................................................................................................................107
4.4.2 Transport results...................................................................................................................113
4.4.3 Transition enablers, opportunities and challenges ...............................................................137
4.5 Industry............................................................................................................................................139
4.5.1 Options to reduce emissions in industry ..............................................................................139
4.5.2 The Industrial Transition......................................................................................................146
4.5.3 Transition Enablers, Opportunities and Challenges .............................................................157
4.6 Non-CO2 emitting sectors................................................................................................................158
4.6.1 Increasing importance of non-CO2 GHGs ...........................................................................158
4.6.2 Reducing non-CO2 GHG emissions in Agriculture..............................................................159
4.6.3 Reducing non-CO2 GHG emissions in other sectors............................................................167
4.6.4 Transition enablers, opportunities and challenges ...............................................................172
4.7 Land resources.................................................................................................................................174
4.7.1 Land use options ..................................................................................................................174
4.7.2 Biomass demand, supply and land use projections in the scenarios ....................................181
4.7.3 Transition enablers, opportunities and challenges ...............................................................186
4.8 Towards negative emissions ............................................................................................................187
4.8.1 Why negative emissions and what are the options? .............................................................187
4.8.2 Negative emissions in the scenarios.....................................................................................191
4.8.3 Transition enablers, opportunities and challenges ...............................................................193
4.9 Economy wide greenhouse gas emission pathways.........................................................................194
4.10 Economic aspects of energy transformation and decarbonisation pathways ...................................198
4.10.1 Investment requirements ......................................................................................................200
4.10.2 Energy system costs and prices............................................................................................207
4.10.3 Social aspects related to the fuel expenses...........................................................................212
4.10.4 Impact on energy import expenditure ..................................................................................214
4.10.5 Macroeconomic impacts of the climate and energy transition.............................................217
4.10.6 Employment impacts of the climate and energy transition ..................................................226
5 CROSS-CUTTING FACTORS ....................................................................................................231
5.1 Regional employment aspects, education and skills ........................................................................231
5.1.1 Implication for regions.........................................................................................................231
5.1.2 Implication for education and skills.....................................................................................233
5.2 Role of finance.................................................................................................................................235
5.3 Industrial competitiveness ...............................................................................................................239
5.4 Role of research and innovation ......................................................................................................241
5.4.1 RDI for a decarbonised economy.........................................................................................241
5.4.2 Advancing the European R&I system..................................................................................246
5.4.3 Possible route for R&I to a EU decarbonised economy.......................................................250
5.5 Lifestyle and consumer choices.......................................................................................................252
5.6 The international dimension, implications for the EU Long Term Strategy....................................254
5.6.1 Security ................................................................................................................................254
5.6.2 Markets and Trade ...............................................................................................................260
5.6.3 Cooperation with third countries..........................................................................................267
5.7 Interactions with other Sustainable Development Goals .................................................................270
5.8 Air pollution benefits from climate action.......................................................................................273
5.9 Climate change and its impact, how to increase resilience and adaptation......................................275
5.9.1 The need to adapt in the EU.................................................................................................278
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5.9.2 Mitigation and adaptation: co-benefits and trade-offs..........................................................282
5.9.3 EU adaptation action in the global context ..........................................................................286
6 ROLE OF DIFFERENT ACTORS IN THE ACHIEVEMENT OF LOW CARBON
AND ENERGY TRANSFORMATION PATHWAYS ...............................................................287
6.1 Role of Member States ....................................................................................................................287
6.2 Role of regional and local authorities ..............................................................................................288
6.3 Role of business and civil society....................................................................................................290
7 ANNEXES ......................................................................................................................................292
7.1 Synopsis report on consultation activities........................................................................................292
7.1.1 Methodology and tools of analysis of the online public consultation ..................................292
7.1.2 Type and number of stakeholders participating in the online public consultation ...............292
7.1.3 Main results on the general stakeholder opinion on long-term reduction of
greenhouse gases and the Paris Agreement..........................................................................293
7.1.4 Summary and key messages of sector/issue specific questions ...........................................294
7.1.5 Results of the position paper analysis submitted to the consultation ...................................307
7.1.6 Results of the stakeholder consultation conference..............................................................309
7.2 Details on methodology and modelling ...........................................................................................311
7.2.1 Description of analytical models used .................................................................................311
7.2.2 Construction of scenarios.....................................................................................................313
7.2.3 Limitations in the modelling exercise. .................................................................................329
7.3 EU contribution to the Paris Agreement's temperature objectives...................................................331
7.4 Global CO2 budget...........................................................................................................................334
7.4.1 Global carbon budgets in light of the IPCC Special Report on 1.5°C..................................334
7.4.2 Emission pathways in light of the IPCC Special Report on 1.5°C.......................................335
7.5 The specificities of methane emissions and other short-lived climate pollutants ............................336
7.6 Sectoral Industry Transformation ....................................................................................................339
7.6.1 Iron & Steel..........................................................................................................................339
7.6.2 Chemicals.............................................................................................................................347
7.6.3 Non-metallic minerals..........................................................................................................354
7.6.4 Pulp & Paper........................................................................................................................361
7.6.5 Non-ferrous metals...............................................................................................................366
7.6.6 Refineries .............................................................................................................................371
7.6.7 Circular Economy: The opportunities for industry ..............................................................376
7.6.8 CCU .....................................................................................................................................381
7.6.9 Industrial Symbiosis.............................................................................................................383
7.7 GHG Pathways towards 2050 (GtCO2eq)........................................................................................386
8 LIST OF ACRONYMS .................................................................................................................388
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Table of Figures
Figure 1: Left: world emissions (GtCO2eq) and percent change in emissions intensity per unit of
GDP. Right: global average temperature change. ................................................................ 15
Figure 2: Well below 2°C and 1.5°C projections.......................................................................... 16
Figure 3: EU greenhouse gas emissions by sector 1990-2017...................................................... 19
Figure 4: Primary and final energy consumption in the EU.......................................................... 20
Figure 5: The levelised cost of electricity for projects and global weighted average values for
CSP, solar PV, onshore and offshore wind, 2010-2022 ....................................................... 21
Figure 6: Share of renewable energy in gross final energy consumption in the EU ..................... 21
Figure 7: Primary energy production in the Baseline.................................................................... 47
Figure 8: Gross electricity generation in the Baseline .................................................................. 48
Figure 9: Final Energy demand by sector ..................................................................................... 49
Figure 10: Final Energy demand by fuel/energy carrier ............................................................... 49
Figure 11: Carbon dioxide emissions by sector ............................................................................ 50
Figure 12: Baseline projections of non-CO2 emissions by sector and by gas (MtCO2eq) ............ 50
Figure 13: Evolution of the emissions and removals from land use, land use change and forestry
.............................................................................................................................................. 51
Figure 14: Total GHG emissions and split ETS/non-ETS (MtCO2eq) ......................................... 52
Figure 15: Overview of different electricity storage technologies................................................ 63
Figure 16: Integration of energy vectors....................................................................................... 66
Figure 17: Changes in primary energy consumption in 2050 (% change) .................................... 68
Figure 18: Gross inland consumption ........................................................................................... 69
Figure 19: Changes in sectoral final energy consumption (% change vs 2005)............................ 71
Figure 20: Share of energy carriers in final energy consumption ................................................. 72
Figure 21: Changes in final electricity consumption in 2050 compared to 2015.......................... 74
Figure 22: Increase in gross electricity generation compared to 2015.......................................... 74
Figure 23: Shares in power generation.......................................................................................... 75
Figure 24: Power generation capacity........................................................................................... 77
Figure 25: Newly installed power generation capacities............................................................... 78
Figure 26: Electricity storage in 2050........................................................................................... 79
Figure 27: Electricity storage and new fuel production capacities (2050).................................... 80
Figure 28: Consumption of natural gas by sector.......................................................................... 81
Figure 29: Consumption of biogas and gas from waste by sector................................................. 82
Figure 30: Consumption of e-gas by sector in 2050 ..................................................................... 83
Figure 31: Total gas consumption per gas type............................................................................. 83
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Figure 32: Consumption of hydrogen by sector in 2050............................................................... 84
Figure 33: Consumption of gaseous fuels..................................................................................... 85
Figure 34: Consumption of new fuels by sector in 2050 .............................................................. 85
Figure 35: Energy imports............................................................................................................. 86
Figure 36: Energy import dependency.......................................................................................... 87
Figure 37: Breakdown of residential building by age category (2014)......................................... 91
Figure 38: Average U-value per building element (2014) ............................................................ 92
Figure 39: Evolution of the energy consumption in buildings in 2050 (compared to 2005) ........ 99
Figure 40: Useful energy consumption for space heating in buildings....................................... 101
Figure 41: Average yearly renovation rate.................................................................................. 102
Figure 42: Share of electricity in final energy demand buildings ............................................... 103
Figure 43: Share of electricity in space heating in buildings ...................................................... 104
Figure 44: Non-electricity fuel consumption in buildings. ......................................................... 105
Figure 45: Passenger transport activity in the Baseline (average growth rates per year) and in the -
80% to net zero scenarios (% changes to the Baseline in 2050)......................................... 114
Figure 46: Inland freight transport activity in the Baseline (average growth rates per year) and in
the scenarios reaching -80% to net zero emissions by 2050 (% changes to the Baseline in
2050)................................................................................................................................... 116
Figure 47: EU international maritime activity in the Baseline and scenario variants ................. 117
Figure 48: Projections for global international shipping activity................................................ 118
Figure 49: Shares in total cars stock by drivetrain technology in the Baseline and scenarios
reaching -80% to net zero emissions by 2050 .................................................................... 119
Figure 50: Shares in total light commercial vehicle stock by drivetrain technology in the Baseline
and scenarios reaching -80% to net zero emissions by 2050.............................................. 120
Figure 51: Shares in total heavy goods vehicles stock by drivetrain technology in the Baseline
and scenarios reaching -80% to net zero emissions by 2050.............................................. 123
Figure 52: Aviation fuels mix in the Baseline and scenarios reaching -80% to net zero emissions
by 2050 in 2050.................................................................................................................. 126
Figure 53: Fleet level emission reduction potential from individual measures........................... 127
Figure 54: EU international maritime fuel mix in the Baseline and decarbonisation variants.... 129
Figure 55: Energy demand of global international shipping....................................................... 129
Figure 56: Change in energy consumption per mode in 2050 compared to 2005....................... 130
Figure 57: Fuels consumed in the transport sector in 2050......................................................... 131
Figure 58: CO2 emissions from transport in 2050 (in MtCO2).................................................... 133
Figure 59: CO2 emissions from transport in 2050 relative to 2005 (left) and to 1990 (right)..... 134
Figure 60: Air transport emissions (MtCO2) in the Baseline and scenarios reaching -80% to net
zero emissions by 2050....................................................................................................... 135
Figure 61: Emissions reductions at EU level in the maritime decarbonisation variants ............. 136
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Figure 62: Emissions reductions at global level in POLES ........................................................ 137
Figure 63: Value chain links of energy intensive industries to other sectors in the economy and
other energy intensive industries ........................................................................................ 140
Figure 64: EU 28 Industrial direct emissions by end use and sub-sector.................................... 141
Figure 65: Hotspots in term of density of industrial sites in Europe........................................... 146
Figure 66: Menu of options to decarbonise industry................................................................... 148
Figure 67: Low carbon technologies used for each material in industry..................................... 149
Figure 68: Total final energy consumption in industry by scenario compared to 2015.............. 150
Figure 69: Differences in final energy consumption in industry compared to Baseline in 2050 151
Figure 70: Carbon intensity in industry....................................................................................... 152
Figure 71: Total remaining industrial GHG emissions by scenario and energy carrier in EU28 154
Figure 72: Remaining (gross) process emissions by sector and process in 2050 before possible
CO2 capture......................................................................................................................... 155
Figure 73: Industrial electricity demand in final energy in 2050, including production of
feedstocks, clean gas and hydrogen.................................................................................... 156
Figure 74: Example of technologies and mitigation potential in the agriculture sector.............. 163
Figure 75: Historical EU meat consumption............................................................................... 164
Figure 76: Animal based calorific consumption for different diet assumptions ......................... 165
Figure 77: Potential impacts on GHG emissions due to dietary changes.................................... 166
Figure 78: Example of reduction potential in the agriculture...................................................... 167
Figure 79: Reductions in non-CO2 emissions in sectors other than agriculture.......................... 168
Figure 80: Additional non-CO2 emissions reduction potential in 2050 compared to baseline in the
EU in sectors other than agriculture ................................................................................... 172
Figure 81: Land cover overview in 2015 .................................................................................... 175
Figure 82: Gross inland consumption of biomass and waste ...................................................... 182
Figure 83: Use of bioenergy by sectors and by scenario in 2050................................................ 182
Figure 84: Break down of bioenergy feedstock in 2050 ............................................................. 183
Figure 85: Use of natural land by 2050....................................................................................... 184
Figure 86: Potential for carbon sequestration and LULUCF sink enhancement at different carbon
prices in 2050 ..................................................................................................................... 185
Figure 87: LULUCF emissions across the scenarios .................................................................. 186
Figure 88: Cost of carbon dioxide removal technologies............................................................ 188
Figure 89: CO2 capture and storage or reuse (2050)................................................................... 192
Figure 90: Two ways to reach net zero GHG emissions - reduction pathways for 1.5TECH
(above) and 1.5LIFE scenario (below) with enhanced LULUCF sink............................... 195
Figure 91: Sectoral emissions by 2050........................................................................................ 196
Figure 92: Real GDP and net GHG emissions 1.5 TECH (1990 = 100)..................................... 199
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Figure 93: Real GDP (million EUR 2013) per energy consumption (Mtoe of GIC), 2015 and
2050.................................................................................................................................... 200
Figure 94: Additional annual investment (2031-2050) and total GHG reductions (2050) relative
to Baseline .......................................................................................................................... 201
Figure 95: additional investments (including transport) compared to Baseline in % of GDP .... 203
Figure 96: Minimum (-), maximum (+) and average (x) additional annual investment per sector
(billion EUR 2013 compared to baseline) .......................................................................... 205
Figure 97: Total energy system costs, 2005-2070....................................................................... 208
Figure 98: Total energy system costs as a percentage of GDP, 2005-2070................................ 209
Figure 99: Projected average electricity prices for final users .................................................... 210
Figure 100: Composition of electricity costs in the high electrification scenario (ELEC) ......... 211
Figure 101: Energy related expenses in % of sectoral value added in industry .......................... 211
Figure 102: Energy related expenses per households in different scenarios (EUR 2013) .......... 213
Figure 103: Energy related expenses per households in different scenarios (% of income)....... 214
Figure 104: Net fossil fuel imports as % of GDP........................................................................ 215
Figure 105: Cumulative savings on net imports of fossil fuels, difference from baseline in 2031-
2050 (full bars) and 2051-2070 (patterned bars)................................................................ 216
Figure 106: investment (full bars) and private consumption (patterned bars), deviation from
baseline (%)1
....................................................................................................................... 224
Figure 107: Regional exposure to sectors that will decline (left) and transform (right) ............. 232
Figure 108: European clean energy finance landscape ............................................................... 236
Figure 109: Relevant research and innovation areas................................................................... 242
Figure 110: Gross domestic expenditure on R&D compared to GDP ........................................ 247
Figure 111: Trends in energy patenting ...................................................................................... 248
Figure 112: Proposed R&I actions for decarbonisation .............................................................. 251
Figure 113: Global material extraction by resource type, historical up to 2015 and projected to
2050.................................................................................................................................... 256
Figure 114: Materials use trends till 2060................................................................................... 257
Figure 115: Non-Ferrous Minerals production per continent...................................................... 258
Figure 116: Largest suppliers of critical raw materials to the EU............................................... 259
Figure 117: EU, GHG emissions on a PBA, CBA and TCBA basis........................................... 266
Figure 118: Reduction achieved due to EU net exports and imports, fragmented and global action
(TCBA basis)...................................................................................................................... 266
Figure 119: Indicative linkages between mitigation options and sustainable development using
SDGs................................................................................................................................... 272
Figure 120: Risk of climate change impacts across Europe........................................................ 281
Figure 121: Type of stakeholders in the public consultation ...................................................... 293
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Figure 122: Stakeholder opinion on the factors and/or trends that will affect jobs in the future
[only one answer possible] ................................................................................................. 296
Figure 123: Stakeholder opinion on whether the low-carbon transition represents an opportunity
or a challenge...................................................................................................................... 297
Figure 124: Stakeholder opinion on the means to achieving greenhouse gas emission reduction
............................................................................................................................................ 298
Figure 125: Stakeholder opinion on the impact of the low-carbon transition on EU
competitiveness .................................................................................................................. 299
Figure 126 : Stakeholder ranking of energy technologies (from 1 (not important) to 5 (important))
............................................................................................................................................ 301
Figure 127: Stakeholder ranking of land-use activities (from 1 (not important) to 5 (important))
............................................................................................................................................ 303
Figure 128: Interlinkages between models.................................................................................. 312
Figure 129: Overview of the bottom-up model FORECAST ..................................................... 313
Figure 130: Overview of the FORECAST scenarios. ................................................................. 327
Figure 131: GHG emissions intensity vs GDP per capita for major economies......................... 334
Figure 132: Temperature response to CO2 and CH4 emissions................................................... 337
Figure 133: EU28 Historical GHG Emissions for Iron & Steel Sector (in MtCO2eq)................ 340
Figure 134: Differences in final energy consumption in Iron & Steel compared to Baseline in
2050 by fuel and scenario................................................................................................... 344
Figure 135: Final energy demand in the iron & steel industry by energy carrier (excluding
production of feedstocks, clean gas and hydrogen)............................................................ 345
Figure 136: Staged transformation of a steel plant to hydrogen reduction and electric arc furnace
through use of natural gas in transition stages in SALCOS ............................................... 346
Figure 137: EU28 Historical GHG Emissions for Chemicals Sector (in MtCO2eq)................... 347
Figure 138: Differences in final energy consumption in Chemicals compared to Baseline in 2050
by fuel and scenario............................................................................................................ 351
Figure 139: Final energy demand in the chemical industry by energy carrier (excluding
production of feedstock hydrogen and clean gas) .............................................................. 353
Figure 140: Energy Content of feedstock demand for ethylene, ammonia and methanol
production by type of feedstock and scenario in 2050 ....................................................... 354
Figure 141: EU28 Historical GHG Emissions for Non-Metallic Minerals Sector (in MtCO2eq)355
Figure 142: Differences in final energy consumption in Non-Metallic Minerals compared to
Baseline in 2050 by fuel and scenario................................................................................ 359
Figure 143: Final energy demand in the non-metallic minerals industry by energy carrier........ 361
Figure 144: EU28 Historical GHG Emissions for Paper & Pulp Sector (in MtCO2eq).............. 362
Figure 145: Differences in final energy consumption in Pulp & Paper compared to Baseline in
2050 by fuel and scenario................................................................................................... 365
Figure 146: Final energy demand in pulp & paper by energy carrier ......................................... 366
Figure 147: EU28 Historical GHG Emissions for Non-Ferrous Metals Sector (in MtCO2eq) ... 367
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Figure 148: Differences in final energy consumption in Non-Ferrous compared to Baseline in
2050 by fuel and scenario................................................................................................... 370
Figure 149: Final energy demand in the non-ferrous industry by energy carrier........................ 371
Figure 150: EU28 Historical GHG Emissions for Refineries Sector (in MtCO2eq)................... 372
Figure 151: Differences in final energy consumption in Refineries compared to Baseline in 2050
by fuel and scenario............................................................................................................ 374
Figure 152: Final energy demand in the refining industry by energy carrier.............................. 375
Figure 153: A circular economy.................................................................................................. 376
Figure 154: Material flows in the economy (EU-28, 2014)........................................................ 377
Figure 155: EU Emissions reduction potential from a more circular economy .......................... 379
Figure 156: Circular economy impacts on industry .................................................................... 380
Figure 157: Overview of CO2 sources, utilisation options and end of life considerations.......... 381
Figure 158: Global CO2 emissions and the role of CCU............................................................. 382
Figure 159: CO2 Feedstock used for the production of Synthetic Fuels (in MtCO2).................. 383
Figure 160: The Kalundborg Symbiose ...................................................................................... 384
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Table of Tables
Table 1: Overview of main scenario building blocks.................................................................... 56
Table 2: Major sources of non-CO2 greenhouse gases in the EU in 2005.................................. 159
Table 3: CH4 emissions (outside agriculture), mitigation potential by 2050 in different scenarios.
............................................................................................................................................ 169
Table 4: N2O emissions (outside agriculture), mitigation potential by 2050 in different scenarios.
............................................................................................................................................ 170
Table 5: F-gas emissions (outside agriculture), mitigation potential by 2050 in different scenarios.
............................................................................................................................................ 171
Table 6: Non-CO2 GHG emissions compared to baseline in 2050 in different scenarios
(MtCO2eq). ......................................................................................................................... 173
Table 7: EU agricultural soil emissions in 2016 ......................................................................... 177
Table 8: Carbon Captured and stored underground (MtCO2) ..................................................... 193
Table 9: Sectoral emissions levels and percentage change in total emissions ............................ 198
Table 10: Average annual investment by scenario (billion EUR 2013 over the 2031-2050 period;
baseline for 2021-2030 is also shown). .............................................................................. 202
Table 11: Additional average annual investment compared to baseline (2031-2050, billion EUR
2013)................................................................................................................................... 204
Table 12: GDP impacts of 80% reduction and 1.5°C scenarios (deviation from Baseline, percent).
............................................................................................................................................ 219
Table 13: Sectoral output impacts, (deviation from Baseline, percent). ..................................... 221
Table 14: Impact on GDP, profit maximisation, market share maximisation and carbon revenue
recycling. ............................................................................................................................ 223
Table 15: Impacts on ETS sectors, (deviation in output from baseline, percent)........................ 223
Table 16: Sectoral investment impacts in the EU, (deviation from Baseline, percent)............... 225
Table 17: Impacts of a low-carbon transition on different sectors.............................................. 227
Table 18: Potential to absorb work force changes ...................................................................... 230
Table 19: Sectors shown in the heat maps .................................................................................. 231
Table 20: Labour by qualification level ...................................................................................... 233
Table 21: Air pollution control costs and benefits in the EU compared to 2015 in 2050 (EU28).
............................................................................................................................................ 275
Table 22: Selected Climate Change Impacts to Natural Systems at 1.5°C & 2°C...................... 277
Table 23: Selected Climate Change Impacts to Human Systems at 1.5°C & 2°C ...................... 278
Table 24: Co-benefits and trade-offs between adaptation and mitigation................................... 283
Table 25: General stakeholder opinion on the EU’s contribution to the Paris Agreement
objectives, per respondent type .......................................................................................... 294
Table 26: Major common characteristics of Scenario Category 1 .............................................. 319
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Table 27: Assumed impact of circular economy on energy intensive industries primary
production in the CIRC scenario ........................................................................................ 322
Table 28: Main differences in assumptions of Scenario Category 1........................................... 324
Table 29: Lifetimes, radiative efficiencies and GWPs relative to CO2 as presented in the IPCC 4th
Assessment report............................................................................................................... 338
Table 30: Low Carbon Projects under development in Iron & Steel .......................................... 342
Table 31: Total CO2 emissions reduction in Iron & Steel by 2050 compared to 2015............... 343
Table 32: Total GHG emissions reduction in Iron & Steel by 2050 compared to 2015 ............. 344
Table 33: Low Carbon Projects under development in Chemicals ............................................. 349
Table 34: Total CO2 emissions reduction in Chemicals by 2050 compared to 2015.................. 350
Table 35: GHG emissions reduction in Chemicals by 2050 compared to 2015.......................... 351
Table 36: Low Carbon Projects under development in Cement & Lime .................................... 357
Table 37: Low Carbon Projects under development in Glass and Ceramics .............................. 358
Table 38: Total CO2 emissions reduction in Non Metallic Minerals by 2050 compared to 2015
............................................................................................................................................ 358
Table 39: GHG emissions reduction in Non-Metallic Minerals by 2050 compared to 2015...... 359
Table 40: Low Carbon Projects under development in Paper & Pulp ........................................ 363
Table 41: Energy related CO2 emissions reduction in Pulp & Paper by 2050 compared to 2015
............................................................................................................................................ 364
Table 42: GHG emissions reduction in Pulp & Paper by 2050 compared to 2015..................... 365
Table 43: Low Carbon Projects under development in Non-ferrous Metals............................... 368
Table 44: Energy related CO2 emissions reduction in Non-Ferrous Metals by 2050 compared to
2015.................................................................................................................................... 369
Table 45: GHG emissions reduction in Non-Ferrous by 2050 compared to 2015...................... 370
Table 46: Low Carbon Projects under development in Refineries.............................................. 373
Table 47: Energy related CO2 emissions reduction in Refineries by 2050 compared to 2015 ... 373
Table 48: Total GHG emissions reduction in Refineries by 2050 compared to 2015................. 374
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1 INTRODUCTION AND CONTEXT
We are experiencing rising, record temperatures and extreme weather events which impose ever
growing costs and threaten the livelihood of all of us. Seventeen of the eighteen warmest years on
record have occurred in the 21st
century1
. The message from the recent Intergovernmental Panel
on Climate Change (IPCC) report on 1.5°C is clearer than ever before2
. Human activities have
caused around 1°C of global warming to date, we are already experiencing changes in weather
and climate extremes, and temperatures continue to rise3
. If not managed well, these impacts will
significantly compromise global human health and safety, development, economic growth,
biodiversity and can have an impact on migration flows and spur a downward global spiral of
social fragility and conflict. Climate change is a threat multiplier that can undermine – both
inside and outside the EU – security and prosperity, including economic, food, water and energy
systems4
. For a discussion on the impacts and concerns for Europe, see section 5.7.
At the same time, combatting climate change in a context of global “mega-trends” – changing
demography, technologies, digitalisation - presents an unprecedented opportunity to prepare the
European Union for a safe, prosperous and competitive 21st
century. The transformation away
from a fossil fuel based economy is a vital part of sustainable development, and can be combined
with a host of benefits such as improved human health and air quality, greater energy security,
more efficient resource use and even more economic and political stability in the third countries.
The transformation provides an important opportunity for our long-term competitiveness. As
innovation accelerates, and costs of low-carbon technologies continue to fall, it is important to
ensure that the EU remains an industrial leader, that citizens are empowered in the process, and,
at the same time, to ensure that no-one is left behind. These different dimensions have been
brought together in the Energy Union and Digital Single Market5
.
Recognising that climate change represents an urgent threat to societies and the planet, the Paris
Agreement sets all countries the goal of keeping global warming well below 2°C, and pursuing
efforts to limit the increase to 1.5°C. To achieve this goal, the Agreement also sets out the aim of
peaking global greenhouse gas emissions as soon as possible, and achieving a balance between
anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second
half of this century.
The Paris Agreement also invites all Parties to communicate, by 2020, to the UNFCCC, midcentury,
long-term low greenhouse gas emission development strategies. On the basis of the best
available scientific knowledge, these strategies should allow our societies to plan and prepare for
the long term, and inform policy making in the short term. This assessment supporting the long
term strategy explains not only how energy and climate policy measures have developed and
continue to evolve; it also highlights the industrial competitiveness consequences and
1
European State of the Climate 2017, Copernicus Services of the European Centre for Medium-Range
Weather Forecasts (ECMWF) - the Climate Change Service (C3S) and the Atmosphere Monitoring
Service (CAMS). https://climate.copernicus.eu/CopernicusESC
2
IPCC SR15 (2018), Special Report on Global Warming of 1.5°C
3
The years 2013-2017 were the warmest five-year period on record and 2018 is set to continue this pattern,
see WMO Statement on the State of the Climate in 2017, World Meteorological Organisation (2018); and
Global Climate Report - June 2018, National Oceanic and Atmospheric Administration (2018). Climate
change is increasing global average temperatures. The recent IPCC report (IPCC (2018) Special Report
on Global Warming of 1.5°C) concluded that human-induced global warming reached approximately 1°C
above pre-industrial levels in 2017 (see FAQ of the report’s Chapter 1), and is currently increasing at
around 0.2°C per decade.
4
See also section 5.6 regarding the impact of climate change and the need to adapt to it.
5
https://ec.europa.eu/commission/priorities/digital-single-market_en
14
implications for jobs and economic growth that come with the innovations and technology
necessary to deliver on energy and climate goals. Together with the development of the circular
economy, the transformation of the energy sector is harnessing a range of technologies and new
practices which are changing the way our energy markets and indeed the way our economy work,
creating dynamic new sectors and opportunities for jobs and growth and a more prosperous
Union.
1.1 Global and EU action to achieve the Paris Agreement
Keeping average global temperature rise well below 2C and pursuing efforts to achieve 1.5C
compared to pre-industrial levels will require global action. The Paris Agreement fully recognises
this.
In pursuit of Paris Agreement goals, over 190 countries made mitigation pledges to reduce
emissions, so called nationally determined contributions (NDCs). The NDCs’ collective
contribution to the Paris goals has been examined in a number of studies6 7
. These clearly show
that the NDCs represent a considerable step forward compared to a baseline without global
climate action. However, achieving the NDCs would leave global emissions in 2030 above a
level consistent with well below 2°C. They are broadly consistent with pathways resulting in 3°C
warming by 2100, and, according to the IPCC8
, would not limit warming to 1.5°C even if
supplemented by very challenging emissions reduction after 2030. The Joint Research Centre, in
its annual Global Energy and Climate Outlook9
, found that achieving the targets of the NDCs10
would still lead to continued global emission increases in the coming decade, with potential
global emissions peaking at 51 GtCO2eq per year as early as 2025. Assuming a continuation of
efforts at this level11
beyond 2030, would see emissions starting to decrease at a global scale but
not at all at the scale required to achieve the well below 2C objective. Projections instead see
these efforts as consistent with a temperature rise of around 3°C by the end of the century (Figure
1).
6
See for example United Nations Environment Programme (UNEP) (2017), The Emissions Gap Report
2017.
7
UNFCCC (2016), Aggregate effect of the intended nationally determined contributions: an update.
8
Unless otherwise stated, references to IPCC in this document refer to the 2018 Special Report on Global
Warming of 1.5°C
9
JRC (2017), Global Energy and Climate Outlook 2017: How climate policies improve air quality,
http://publications.jrc.ec.europa.eu/repository/bitstream/JRC107944/kjna28798enn(1).pdf
10
Both conditional and unconditional NDCs - and including achievement of the US NDC.
11
Continuing the same level of effort assumes global GHG intensity of GDP continues to decline at the
2020-2030 rate.
15
Figure 1: Left: world emissions (GtCO2eq) and percent change in emissions intensity per
unit of GDP. Right: global average temperature change.
Source: POLES-JRC model (left), used in combination with MAGICC model (right).
What is clear is that global action presently is changing the global emission pathway but not at
sufficient pace. After three years of flat emissions globally, 2017 actually saw global CO2
emissions from energy and industry rising again by +2%12 13
.
The pace of greenhouse gas (GHG) reductions will have to shift strongly at a global scale. The
EU has long supported the global objective of reducing global emissions by at least 50% by 2050
compared to 1990 to ensure global temperature stays below 2C14
. Recent science15
confirms that
such an objective, with a further decline to near net zero GHG by 2100 or just below, remains
consistent with pathways that have a likely chance (above 66% chance16
) of keeping temperature
rise below 2°C this century. This finding is also supported by analysis conducted by the
Netherlands Environmental Assessment Agency and JRC for this report (see Figure 2)17
.
Achieving net zero GHG emissions by the end of the century will require significant amounts of
negative emissions from the land use sector through for instance afforestation, reforestation and
other types of ecosystem restoration or from carbon dioxide removal technologies (CDR) to
compensate for the remaining emissions that are hardest to eliminate, for instance non-CO2
emissions related to food production.
Acting to reduce global emissions as quickly as possible will place the world on a safer path and
reduce the need for negative emissions technologies later on. A slower pace of emissions
reduction by 2050 would require steeper reductions thereafter, including deployment of negative
emissions technologies at even greater scale and faster. This may require net negative greenhouse
gas emissions towards the end of this century, with a net withdrawal of CO2 from the atmosphere
12
IEA (2018), Global Energy and CO2 Status Report 2017, p.3
http://www.iea.org/publications/freepublications/publication/GECO2017.pdf
13
Le Quéré et al. (2017) Global Carbon Budget 2017. Earth System Science Data Discussions.
https://doi.org/10.5194/essd-2017-123
14
European Council Conclusions, 29/30 October 2009
15
Based on Table 2.4 of the Special Report on 1.5°C, supplemented by EDGAR database and Global
Carbon Project to track global emissions from 2010 back to 1990.
16
While there is no official definition of ‘well below’ 2°C, studies typically refer to pathways with a >66%
chance of keeping global warming below 2°C. The average temperature change expected in such
pathways is therefore lower – typically 1.7-1.8°C in 2100.
17
Esmeijer K., den Elzen M.G.J., Gernaat D., van Vuuren D.P., Doelman J., Keramidas K., Tchung-Ming
S., Després J., Schmitz A., Forsell N., Havlik P. and Frank, S. (2018), 2 °C and 1.5 °C scenarios and
possibilities of limiting the use of BECCS and bio-energy. PBL report 3133, PBL Netherlands
Environmental Assessment Agency, The Hague
0
10
20
30
40
50
60
70
1990 2000 2010 2020 2030 2040 2050
GtCO2eq/yr
2°C
NDC
Reference
History
0
1
2
3
4
5
2020 2040 2060 2080 2100
°C
Reference
2°C
NDC
16
to compensate for past emissions and, possibly, reduce global temperatures following an
overshoot of the 2°C threshold. Moreover, delayed actions to reduce greenhouse gas emissions
increases the risk of cost escalation, lock-in in carbon-emitting infrastructure and stranded assets.
Figure 2: Well below 2°C and 1.5°C projections
Source: 2°C and 1.5°C runs from POLES-JRC and IMAGE models, and comparable runs from the
scientific literature17
.
Limiting global warming to 1.5°C requires even greater, and more urgent, action. In a 1.5°C
world, typical projections reach net zero GHG emissions by 2070, and become negative
afterwards18
(Figure 2). In such scenarios, global CO2 emissions would have to become net zero
already by 2050, as confirmed by the IPCC.
Negative CO2 emissions in energy, industry and land use have to compensate not only for
residual GHG emissions but also to correct for possible temperature overshoot by achieving net
negative GHG emissions. The IPCC Special Report on 1.5C is also clear: scenarios with no or
low overshoot of the 1.5C temperature objective, and lower amounts of net negative emissions,
tend to be closer to zero GHG emissions globally2
by 2050.
The EU long-term strategy needs to consider the possible contribution of the EU to such global
pathways. The EU already has a strong record of considering the global picture when setting its
own climate action targets. Our existing objective for 2050 is to reduce emissions by 80-95% in
18
See in particular Table 2.4 of IPCC (2018), Special Report on Global Warming of 1.5°C.
17
the context of necessary reductions, according to the IPCC, by developed countries as a group19
.
It is now time to update the evaluation of the EU’s possible contribution to global action,
following the entry into force of the Paris Agreement, the adoption of legislation to achieve the
2030 Framework (see Section 2.2) and new scientific evidence, as synthesised in IPCC Special
Report on 1.5°C.
The 2050 Low Carbon Economy Roadmap20
demonstrated that it is feasible and affordable for
the EU to reduce domestic emissions by 80% by 2050 compared to 1990, with a milestone of
reducing by 40% by 2030. Recent science confirms that the EU’s reduction of GHG emissions by
at least 80%, including emissions and absorptions of the land use, land use change and forestry
sector (LULUCF), remains in line with projections that look at global emissions reduction
achieving the well below 2°C objective efficiently (see section 7.3).
To be in line with the 1.5°C objective, significantly higher reductions are needed. Full technology
pathways with efficient global action beyond 2020 may see EU GHG reductions, including
emissions and absorptions of the land use sector, at around -91% to -96% below 1990 levels in
2050 (see section 7.3).
Such scenarios rely heavily on net negative emissions later on in the century to remove actively
CO2 emissions from the atmosphere. If the aim is to reduce the need for large net negative
emissions in the second half of the century, higher reductions earlier in the order of magnitude of
-100% by 2050 need to be considered, achieving a net zero GHG economy by 2050. This would
also be a precaution to avoid carbon lock-in.
By doing so, the EU would confirm its leadership, to inform other countries on the challenges
and opportunities ahead and catalyse the global transition in line with the 1.5C objective (see
also section 7.3 for further details).
Therefore the assessment presented in this report in support of the development of the Strategy
for long-term EU greenhouse gas emissions reduction in accordance with the Paris Agreement is
looking at a range of GHG reduction scenarios, starting at -80% going up to -100% by 2050
compared to 1990.
1.2 Europe’s need to act to achieve the Paris Agreement
All regions across the globe are facing the disruptive force of major mega-trends. Digitalisation is
rapidly changing the industrial environment, simultaneously allowing and requiring continuous
innovation. A rapidly emerging global middle class will open new markets placing at the same
time constraints on scarce resources. Resource constraints will require our economy to continue
efficiency gains to remain competitive, in a context where diverging population trends will
constitute a clear challenge for Europe. Last but not least, climate change and its associated
challenges are global phenomena that will affect all societies.
Many of these trends are independent from the energy transition: the energy system will have to
adapt to these dynamics. At the same time, the energy transition will alleviate the problems
caused by resource scarcity and climate change. Moreover, many of these trends will continue
regardless of EU policies. Europe should prepare for the changes ahead and the European Union
is the framework allowing Member States to adapt collectively.
19
European Council conclusions, 29-30 October, 2009. The objective is based on the findings of the IPCC
Fourth Assessment Report, which represented the best available science at the time of its adoption in
2007.
20
Communication from the Commission, A Roadmap for moving to a Competitive Low Carbon Economy
in 2050. COM(2011) 112 final
18
The scope of these challenges, the need to develop solutions implementable on a large scale, the
importance to weigh in the climate and energy diplomacy and beyond, the international nature of
energy fuels and technologies markets and the global repercussions of European consumptions,
all contribute to the need of developing a concerted action at EU level.
The value of such action is clear when looking at the role the EU played over the last decade. The
EU climate and energy policies contributed significantly to global action and awareness on
climate change, clearly leading the world and demonstrating how to address the challenge.
Further decarbonisation will increase energy security, while demonstrating feasible economic and
technological pathways to a prosperous and sustainable society.
The EU can act as a catalyst of concerted global responses that put multilateralism at their core.
This may be through research and innovation programmes, large-scale flagship technology
projects, or the development of new industrial strategies and market designs, or simply by its
ambition. In a world of large trade blocks competing for technological leadership, the EU needs
to act jointly. A core virtue of EU action is bringing together a common vision, resources,
financing and regulatory regimes to implement coherent policies action across a domestic market
of 500 million people. This is the scale required to deal with the vast global challenges. This was
demonstrated with the European drive to promote renewable energy technologies, which scaled
up industrial effort, in the EU and around the world, reducing costs to the benefit of the entire
world. The public consultation conducted by the European Commission in preparation for this
strategy found that there is significant support, both from individuals and from organisations, for
the EU to achieve a balance between GHG emissions and removals by 2050 (see section 7.1).
19
2 EU ACTION TO DATE REDUCING GHG EMISSIONS AND TRANSFORMING ITS
ENERGY SYSTEM
2.1 Decarbonisation and energy transformation to date
Since 1990, Emissions have reduced in all sectors, except for the transport sector (Figure 3). Over
the last 3 years changes in emissions were small, with slightly increasing emissions in 2015 and
2017 and slightly decreasing emissions in 2016.
Figure 3: EU greenhouse gas emissions by sector 1990-2017
Source: EEA21
.
Structural changes in the European economy and policies for supporting renewables and energy
efficiency resulted in a decoupling of economic growth from GHG emissions and energy
consumption. GHG emissions in the EU peaked several decades ago and continuous decoupling
of growth and jobs creation from GHG emissions and energy has been observed since 1990.
Between 1990 and 2017, provisional data indicate a total emissions decrease of 22%, while the
EU’s combined GDP grew by 58%, which implies that the greenhouse gas intensity of the
economy was halved in this period22
.
Over the past years, economic growth and energy consumption have also decoupled. The steadily
declining demand for energy in the EU is attributed primarily to energy efficiency measures in
the Member States.
21
European Environmental Agency (2017), EU GHG inventory 1990-2016, proxy GHG estimates for
2017.
22
COM(2018) 716 final
20
The long-term decoupling trend is clear: in 2016, the EU consumed 2% less primary energy than
it did in 1990, while GDP grew by 54% over the same period. EU energy consumption gradually
decreased between 2006 (its highest point) and 2014, with the primary consumption reducing by
12% over the period (-1.5% per year) and the final demand reducing by 11% (-1.4% per year).
However, since then, energy consumption has started to rise again in part due to colder winters,
continued economic growth and lower fuel prices. Statistics show that, in 2016, primary energy
consumption was 2% higher than in 2014 and final demand was 4% higher. Preliminary
estimates indicate that energy consumption has been further increasing in 2017 (+1.4% for
primary consumption and +1% for final consumption compared to 2016). It is clear that with
economic growth pushing energy consumption upwards, further efforts are needed in order to
reach the 2020 energy efficiency target (primary and final energy have to reduce by respectively
5.2% and 3% over 2018-2020). In this context, a stricter enforcement of the existing legislation is
desirable. Figure 4 shows energy consumption trends in the EU.
Figure 4: Primary and final energy consumption in the EU
Source: Eurostat.
Renewable energy
In the last decade, policies implemented by the European Union and other frontrunners in the
fight against climate change have transformed the energy industry. Support programs worldwide
have kick-started a dramatic decrease in the cost of renewable energy technologies (Figure 5). As
the IPCC notes in the Special Report on 1.5°C, the energy system transition is underway, and the
political, social, economic and technical feasibility of solar energy, wind energy and electricity
storage technologies has improved dramatically over the past few years23
.
Renewable energy technologies such as wind energy, bioenergy and solar photovoltaic are now
mainstream market players. Investment in renewable power accounted for two-thirds of global
spending in power generation in 2017. The increasing share of renewable energy investments is
partly the result of a slump in the commissioning of new fossil fuel capacity (in particular coalfired
power plants in India, China and Europe)24
23
IPCC Special Report on Global Warming of 1.5°C, Chapter 4.
24
IEA (2018), World Energy Investment 2018, https://www.iea.org/wei2018.
2017 estimate:1565
1483
2017 estimate:1119
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
Mtoe
Primary Energy Consumption Target 2020 Final Energy Consumption Target 2020
1086
21
Figure 5: The levelised cost of electricity for projects and global weighted average values
for CSP, solar PV, onshore and offshore wind, 2010-2022
Source: IRENA
25
.
Helped by the European support policies, renewable energy has been increasing continuously in
the EU, with its share doubling since 2004 when renewables covered only 8.5% of gross final
energy consumption (Figure 6). In the period 2004-2016, the share of renewable energy grew
annually by 6.0% on average. Annual growth slowed slightly to 5.2% in the short-term period
2011-2016. Compared to 2008, direct and indirect employments in renewable energy more than
doubled, increasing from 660 000 to 1.43 million jobs.
Figure 6: Share of renewable energy in gross final energy consumption in the EU
Source: Eurostat SHARES tool26
.
Electricity
25
IRENA (2017), Renewable Cost Database and Auctions Database, http://www.irena.org/-
/media/Files/IRENA/Agency/Publication/2018/Jan/IRENA_2017_Power_Costs_2018.pdf
26
https://ec.europa.eu/eurostat/web/energy/data/shares
0%
5%
10%
15%
20%
25%
30%
35%
2005 2010 2015 2020 2025 2030
2020 target: 20%
2030 target: 32%
22
The power sector has made the most important steps towards decarbonisation with the closure of
most inefficient thermal generation, the growth of renewables and the contribution of nuclear
(generating together 56% of CO2-free electricity in 2016); better interconnection; more liquid and
more flexible markets. Greenhouse gas emissions from the power sector decreased by 26% from
2005 to 2016. Developments in the power market structure allowed integrating an increasing
share of variable renewable generation. Connecting markets through appropriate infrastructure
and cross border trading rules allowed significant increases liquidity and security of supply
significantly. The EU-wide electricity market now allows the aggregation of demand and supply
of almost 500 million citizens.
Dedicated infrastructure was built to enable higher penetration of renewable electricity, for
instance through interconnection of areas with complementary renewable energy resources or by
connecting offshore wind parks to the transmission network. To date, more than 30 Projects of
Common Interest (PCIs) have been completed in the power sector and 47 are scheduled to be
built around 2020.
Heating and cooling
With 50% of EU energy demand that is used for heating in buildings and in industrial processes,
renewables have also made an important contribution in this area. Over the period from 2004
until 2016, the renewables share in the heating and cooling sector has almost doubled from
10.3% to 19.1% and provided 99.3 Mtoe. Solid biomass remains the largest contributor with 80%
growing from 1.8 Mtoe in 2004 to 78.8 Mtoe of energy in 2016. Other renewable heat solutions
has started from very low basis, but has shown rapid growth over the last decade. Heat pumps
increased more than fivefold from 1.8 Mtoe in 2004 to 9.9 Mtoe in 2016 and constitutes 9.9% of
renewable heat production. Similar spectacular increases were observed in biogas (growing from
0.7 Mtoe to 3.4 Mtoe, (3.5%) and solar thermal (2.1 Mtoe or 2.1%). Renewable waste remains an
important heat source (3.4 Mtoe, 3.8%), while direct geothermal heat embarked on a dynamic
growth in the last five years (0.8 Mtoe, 0.8% in 2016)27
.
The EU is a market leader in renewable heat technologies. It is second in installed solar thermal
capacities and number one in solar district heating. Spain, Greece, Portugal, Cyprus are market
leaders in individual solar thermal installations with mandatory solar requirements in new
buildings. Large solar installations are used in Denmark, Austria, France, Germany, Sweden, The
Netherlands and Poland. In 2017, 9 large-scale solar thermal systems were added in Europe, in
Denmark (46% of new capacities), Germany, Sweden and France2829
.
Transport
In 2017, transport emissions excluding international aviation and maritime represented close to
22% of the total emissions. Transport emissions including international aviation and maritime
transport emissions were close to 26% of total emissions Transport is therefore a sector with a
significant role in the energy and climate policy. Greenhouse gas emissions from transport
continue to rise, and in 2017 were 20% higher than in 1990 (excluding international aviation and
maritime). Abating transport emissions remains challenging and, in certain regions, the impact of
air pollution from fuel combustion on the population is also a concern.
On road, light and heavy duty vehicles are by far the main emitters of greenhouse gas (GHG)
emissions from transport. In 2016, it accounted for 95% of all GHG emissions from transport.
International aviation is not included in the figures above and account for 3% of total EU
27
EurObserver, The State of Renewable Energies in Europe, 2017
28
IEA, Solar Heat Worldwide (2018), Cost-efficient district heating development.
29
METIS Studies 9 (2018), commissioned by the European Commission.
23
greenhouse gas emissions. Emissions from international aviation have more than doubled since
1990 (as the improvements in energy and emissions efficiency of aviation have been more than
compensated by increase of traffic).
Emissions from road transport experienced a decrease between 2007 and 2013 (-10%) due to
increased road vehicle efficiency, high oil prices and slower growth in activity as a result of the
crisis. Since then they have started picking up again, driven by the recovery of transport activity
in the context of the low oil price environment and economic recovery. Over the last ten years
new technologies (electrification) have been penetrating the market, albeit still at relatively slow
rates.
The evolution of greenhouse gas emissions in transport follows the evolution of energy use in
transport. By 2016, final energy consumption in transport was at similar levels to those observed
in 2005. Improvements in energy efficiency of cars, trucks and aircraft counterbalanced the
increased transport activity over this period30
. The impact of modal shift was more limited. Other
factors like behavioural change and low capacity utilisation in road freight transport had a
negative impact, slightly increasing the energy consumption30
.
The currently dominant transport technologies are tightly linked to liquid fossil fuels. Liquid
fuels, with their high energy density, are particularly suited for mobile applications. Oil
represented 95% of the energy consumed in the transport sector in 2016: air transport and
waterborne transport consume almost entirely petroleum products, road transport depended on
petroleum products for 95% of its energy use, but rail transport only 30%.
The EU share of renewable energy in transport reached 7.1% in 2016. Biodiesel remains the most
widely used form of renewable energy in transport with 11 Mtoe in 2016, followed by bioethanol
with 2.6 Mtoe31
. However, biofuels consumption slightly declined since 2014, being below the
peak levels registered in 2012. Renewable electricity in transport still represents only 1.9 Mtoe in
2016, but its contribution has been significantly increasing recently, with the vast majority of it
consumed in rail transport (only around 2% in road transport)32
.
As a result of both EU and Member State level measures, the average specific fuel consumption
of the EU passenger cars fleet went down from around 7.4 litres/100km in 2005 to 6.9
litres/100km in 201533
. However, after several years of steady decline, the average CO2 emissions
of a new car sold in the EU rose by 0.4 gCO2/km in 2017 to 118.5 gCO2/km, according to
provisional data published by EEA34,35
. Since 2010, when monitoring started under current EU
legislation, official emissions have decreased by 22 gCO2/km (16%). Nevertheless, further
improvements need to be achieved by manufacturers to reach the 2021 target of 95 gCO2/km.
30
ODYSEE-MURE (2018), http://www.odyssee-mure.eu/publications/efficiency-by-
sector/transport/drivers-consumption.html
31
According to Art. 17 (1) of the Renewables Directive, non-certified biofuels cannot be counted towards
national and EU renewable energy targets.
32
Eurostat (2018), SHort Assessment of Renewable Energy Sources (SHARES),
https://ec.europa.eu/Eurostat/web/energy/data/shares
33
ODYSSEE-MURE (2018), Online energy indicators, http://www.indicators.odyssee-mure.eu/online-
indicators.html
34
EEA (2018), No improvements on average CO2 emissions from new cars in 2017,
https://www.eea.europa.eu/highlights/no-improvements-on-average-CO2
35
Since 1 September 2017, the 'Worldwide harmonized Light vehicles Test Procedure' (WLTP) has been
introduced so that laboratory results better represent actual vehicle emissions on the road. For 2017 EU
Member States had for the first time the possibility to report WLTP emission factors, but values were
reported for just 7300 vehicles (0.05% of new registrations). According to EEA, the low number of
WLTP values means it is not yet possible to provide a representative assessment of the new
measurement protocol.
24
EEA provisional data also show that sales of battery-electric vehicles (BEV) and plug-in hybrid
electric vehicles (PHEV) increased by 42% in 2017. However, the share of these categories in the
new fleet remains low, at around 1.5%. Registration of BEVs in 2017 (97 000 vehicles) increased
by 51% compared to 2016, while sales of new PHEVs increased by 35%. The largest number of
BEV were registered in France (26 100 vehicles), Germany (24 350 vehicles) and the UK (13
600 vehicles). The relative share of BEV and PHEV sales combined in the national car sales in
2017 was highest in Sweden (5.5%), Belgium (2.7%) and Finland (2.6%) 34
. For the first year
since monitoring started, petrol cars became the most sold vehicles in the EU ahead of diesel
cars, constituting almost 53% of sales.
Industry
The industrial sector is an important sector of economic activity, producing a large share of EU
GDP and offering employment to a large share of EU population. Moreover, the industry – and
especially Energy Intensive Industry (EII) – provides materials and goods that are critical for our
way of life: from cement and steel, being the basic materials for constructing the buildings we
live in, to plastics and aluminium, used in cars, appliances and packaging. All these materials are
produced from industrial processes requiring significant amount of energy and emitting, directly
or indirectly, a high amount of GHG emissions.
Industrial activity contributes about 16% of EU's GDP and emits (directly) about 15% of total
GHG emissions. In 2015 the energy intensive industry sectors directly emitted approximately 700
million tonnes of CO2, which represents a reduction by more than 30% compared to 1990 levels.
This was the second largest source of emissions reduction after the power sector (for production
and heat). At the same time, final energy consumption of industry was reduced by about 20%.
This was observed especially in the energy intensive industries.
The above changes are due to a combination of factors. On one hand, the EU economy has been
restructuring, shifting to an increase of the services sectors and a lower share of the energy
intensive industry. On the other hand, industry has been very active in reducing its energy
consumption and switching to lower carbon fuels. The energy efficiency investments performed
by the industry, together with the increased use of recycled and re-used materials, which require
significantly less energy and produce less emissions, were two major drivers for this trend. For
example, over the last decades, the recycling rate of paper in Europe has increased substantially
from an average of 40% in 1991 to 72.5% in 2016. Moreover certain chemical industries with
very high N2O and fluorinated gases emissions reduced their GHG emissions by 93% between
1990 and 2015.
The situation in the different industry subsectors is not homogeneous. The EU Iron & Steel and
the Chemical sectors have reduced their GHG emissions by about 60% between 1990 and 2015.
On the other hand, the reductions in GHG emissions for the non-metallic minerals (cement, lime,
glass, ceramics) were about half, around 30%. Similarly, the use of low carbon energy carriers,
and particularly renewable energy, is mostly limited to the use of biomass resources, e.g. in
sectors like the pulp and paper industry.
In addition, the European Commission is working on the European Processor Initiative (EPI)36
which gathers together 23 partners from 10 European countries, with the aim to bring to the
market a low power microprocessor. It gathers experts from the High Performance Computing
(HPC)37
research community, the major supercomputing centres, and the computing and silicon
36
https://ec.europa.eu/digital-single-market/en/news/european-processor-initiative-consortium-develop-
europes-microprocessors-future-supercomputers
37
https://ec.europa.eu/digital-single-market/en/high-performance-computing
25
industry as well as the potential scientific and industrial users. This initiative will be buoyed
through a Framework Partnership Agreement.
Land and Agriculture
The EU’s balance of emissions and removals for the land sector (CO2 flux resulting from human
management of vegetation and soils, referred to as the natural sink) has remained fairly constant
for over two decades, at a little under -300 MtCO2eq/yr, or around 10% of the EU's 2005 EU
emissions outside of the Emissions Trading System.
A number of reasons explain this stability since the 1990s. First, the area used for agricultural
production has decreased thereby enabling the slow increase in forest area and related
sequestration. Second, with the decrease in crop area and an improved technological management
of inputs, CO2 released from agricultural soils decreased. Third, European forests are relatively
young and annual forest growth (increment) has been strong – although this is projected to
decline as the forests age. Fourth, despite increasing forest harvest, on average, only up to 2/3rds
of available forest biomass annual increment is exploited, leading to a continued level of carbon
sequestration in forests but also in harvested wood products. These positive trends on the
LULUCF sink were however partly counterbalanced by steady increase in emissions from
settlements.
In contrast to the land sector, agriculture (non-CO2) emissions in the EU28 have declined by over
20% since 1990, or in absolute terms by nearly 150 MtCO2eq per year. The most important
source of the EU's agriculture non-CO2 emissions is nitrous oxide emissions from agricultural
soil management. These represent around half of the total agriculture emissions in the EU, mainly
due to the application of mineral nitrogen fertiliser. Enteric fermentation emissions of methane
gas make up one-third, mainly from cattle and sheep. Emissions of both gases from manure
management add a further 16%. Despite historical emissions reduction, maintaining agricultural
output can be compatible with a reduction of emission intensities.38
The decrease so far can be
attributed to several factors: on the one hand, productivity increases and a structural decrease in
cattle numbers, and on the other hand improvements in farm management practices in general.
However, a recent rebound of this trend shows that ensuring future reductions will be
technologically difficult and potentially costly.
The impact of increased biomass demand since 2009 on the EU LULUCF sink is so far not very
clear, reflecting the interaction of different factors regarding biomass sources. The significant
emergence of energy crops on economically marginal agricultural land has yet to materialise,
while timber demand has been lower than forecast by Member States in 2011. Forest growth
could also have benefited from the double boost of lower harvests and improved fertilisation
through atmospheric CO2. Nevertheless, this relatively benign trend could be disturbed and the
overall land sink could decrease more significantly through to 2050, partially due to aging of the
forests, leading to negative impacts on the EU's overall emissions and removals balance.
In conclusion, the interactions between land uses and the subsequent effect on emission and
removals from the land sector is complex. Rules and incentives for food, feed, fibre production
and bioenergy may variously support or undermine the historical trend of a stable overall sink in
the EU.
Waste and F-gases
Greenhouse gas emissions from waste declined from 236 MtCO2eq in 1990 peaked in 1995 at
344 MtCO2eq and in 2016 were 138 MtCO2eq. Most of the emissions are methane (an important
38
Fig 3 in LULUCF SWD(2016) 249 final
26
greenhouse gas, with a 100-year warming potential 28 times larger than CO2
39
), with 124
MtCO2eq in 201640
.
The decline is mainly the result of the EU waste legislation. The Landfill Directive41
diverts
biodegradable waste away from landfills and requires recovery and control of landfill gas. The
EU Waste Management Framework adds to this by giving priority to recycling and energy
recovery over landfilling. In addition, national policies in several member states completely ban
landfilling.
Emissions from fluorinated gases (such as HFC and SF6) increased sharply from 72 MtCO2eq in
1990 to 124 MtCO2eq in 2014 and have remained stable since (122 MtCO2eq in 2016). The
stabilisation already reflects the F-gas regulation adopted in 2004 as well as the Mobile Air
Conditioning (MAC) Directive42
that limit the use of cooling agents with high greenhouse
warming potentials.
2.2 EU policies on the way to the Paris objectives
The first explicit energy and climate policy package that addressed emissions reduction at the
same time as energy sector reform was the 20-20-20 targets launched in 2007, with the EU
Emissions Trading System (EU ETS) improvements, the Renewable Energy Directive43
, the
Energy Efficiency Directive44
as well as the 3rd
package of energy market liberalisation45
. The
implementation of the legislation that emerged proved the turning point in creating recognisable
change in the energy sector.
2.2.1 2011 Roadmaps
Building on this approach and structure, in 2011 the Commission came forward with three
strategic roadmaps based on a consistent analytical framework: the Roadmap for moving to a
competitive low carbon economy in 2050, the Energy Roadmap 2050, and the Roadmap to a
Single European Transport Area – Towards a competitive and resource efficient transport system
(commonly referred to as the Transport White Paper)46
. These Roadmaps presented fundamental
aspects of the transition to a low carbon economy in 2050, cost-efficient GHG emissions
reduction milestones for 2030, and "no-regret options" – more energy efficiency, higher shares of
renewable energy and energy infrastructure development - for the transition towards a
competitive, sustainable and secure energy system. These roadmaps cover all sectors of the
economy, with a clear emphasis on energy and transport. They jointly serve to demonstrate the
consistency, feasibility and credibility of the EU's agreed objective to reduce GHG emissions47
by 80-95% in 2050 compared to 1990, in the context of necessary reductions by developed
countries as a group to limit global warming to below 2C as stated by the European Council in
200919
.
39
IPCC AR5: Myhre et al., 2013.
40
European Environment Agency data viewer
https://www.eea.europa.eu/data-and-maps/data/data-viewers/greenhouse-gases-viewer
41
Council Directive 1999/31/EC
42
Directive 2006/40/EC
43
Directive 2009/28/EC
44
Directive 2012/27/EU
45
Directives 2009/72/EC, 2009/72/EC, Regulations (EC) 713/2009, 714/2009, 715/2009
46
COM(2011)112, COM(2011)885, COM(2011)144
47
Covering all domestic emissions (including agriculture) but not emissions from LULUCF.
27
The Roadmap for moving to a competitive low carbon economy in 2050 showed pathways for the
EU to cut its domestic greenhouse gas emissions to -80% below 1990 levels by 2050. It defined
milestones for a cost-effective pathway towards this objective: a 40% reduction below 1990
levels by 2030 (as later endorsed in the 2030 Climate and Energy Policy Framework48
, see 2.2.2)
and 60% below 1990 levels by 2040. All the main sectors responsible for Europe's emissions –
power generation, industry, transport, buildings, construction and agriculture – would need to
contribute.
The Energy Roadmap 2050 explored the contribution of the energy sector to such
decarbonisation objective (-85% of energy-related CO2 emissions relative to 1990). It set out four
main routes to a more sustainable, competitive and secure energy system in 2050: energy
efficiency, renewable energy, nuclear energy and carbon capture and storage.
The White Paper on Transport defined a mid-century vision for the transport sector that
continues to serve the needs of the economy and of the citizens while meeting future constraints:
oil scarcity, growing congestion and the need to cut CO2 (-60% by mid-century relative to 1990)
and pollutant emissions. To this aim, the White Paper put forward four broad areas of
intervention: internal market, innovation, infrastructure, international aspects. For each of these
areas, a ten-year programme (by 2020) was defined with 40 specific action points, containing a
handful of specific initiatives. The strategy set in the White Paper was to a substantial degree
based on low emission fuels, energy efficiency, better multimodality of transport and new
technologies that would lead to optimised journeys49
.
These Roadmaps have been instrumental in setting the EU on track with the UNFCCC agenda,
setting 2030 targets and exploring the long-term perspective. It was a strong driver for other
stakeholders and to develop their roadmaps.
EU legislation governing the reporting of climate related information includes an obligation for
Member States to report by 2015 their progress on the development of their low-carbon
development strategies. The reported information differs greatly across Member States in terms
of type of documents, timeframe, level of details, approach, ambition level, sectors cover and
status of legal implementation. A forthcoming report of the EEA summarises the state of reported
information, with presently 13 plans reported at Member State level.50
2.2.2 2030 targets and Energy Union
Drawing on the analysis presented in the roadmaps and following discussions and guidance from
the European Council, the Commission made proposals51
, in 2014, for a policy framework for
climate and energy in the period from 2020 to 2030, notably 2030 targets. On this basis, the
European Council agreed52
to the 2030 strategy with targets on reducing greenhouse gas
emissions by at least 40%, increasing the share of renewable energy to at least 27%, and
achieving an energy efficiency improvement of at least 27%. Legislation provisionally agreed in
July 2018 revises two targets upwards to at least 32.5% for energy efficiency and at least 32% for
48
Conclusions of the European Council of 23 and 24 October 2014.
49
To date, the Commission has issued proposals in most of the 40 action points of the programme and
more than 60% of the initiatives planned could be considered as broadly covered. The White Paper
mid-term implementation report of 2016 noted that there was still little progress achieved towards some
of the goals, in particular, decreasing the oil dependency ratio and limiting growth of congestion.
50
Overview of Low-Carbon Development Strategies in European countries Information reported by
Member States under the European Union Monitoring Mechanism Regulation,
https://acm.eionet.europa.eu/reports/#tp
51
COM (2014) 15 final. A policy framework for climate and energy policy in the period from 2020 to 2030
52
EUCO (169/14), European Council Conclusions 24 October 2014
28
renewables (see 2.2.3) and introduces for the first time, via the Governance Regulation,
instruments to ensure coherent long term energy and climate policy planning. The Commission
also published its Energy Security Strategy53
in 2014. The detailed inter-relationships and
synergies available in policies and measures addressing decarbonisation and energy policy
objectives were such that it became clearer that the nexus between energy and climate policies
could be drawn even closer together. At the same time, the Commission published its vision of
the future of a circular economy54
, bringing together the themes of environmental policy (waste,
pollution) with industrial production policy (e.g. recycling and new materials) and with research
and innovation policy.
The Energy Union launched in 2015 aimed at exploring and leveraging the synergies between the
decarbonisation objectives and other energy policy priorities, by setting broader goals covering
five mutually reinforcing dimensions: energy security, internal energy market, energy efficiency,
decarbonisation (including renewable energy development), research, development and
competitiveness. It is in this context that the most recent initiatives were developed.
An important aspect of the Energy Union is the recognition that citizens must be at the core of the
transition. The Commission is thus committed to delivering a new deal for energy consumers
helping them to save money and energy through better information; giving consumers a wider
choice of action as regards their participation in energy markets; and, maintaining the highest
level of consumer protection.
The Commission has by November 2018 tabled the majority of the legislative proposals
necessary to establish the Energy Union, and enabling actions are being implemented to
accelerate public and private investment and support a socially fair clean energy transition.
Further efforts will be required to ensure the completion of the Energy Union by the end of the
current Commission's mandate in 2019: not only further progress in adopting the remaining items
of the legislative framework but also in implementing the enabling framework and securing the
involvement of all parts of society. It should be noted that among those enabling actions, many
will have much longer time horizon than 2050: facilitating access to finance or assistance for
carbon-intensive regions as the two key ones.
The first legislative deliverable under the Energy Union to implement the 2030 targets was the
revised ETS directive55
which regulates GHG emissions from large point sources (mainly power
sector and industry) and aviation. The annual ETS cap reduction was increased with a view of
achieving 43% reductions by 2030 compared to 2005, while the Market Stability Reserve was
strengthened to address the surplus of EU allowances that has built up historically. This review
has already impacted positively the carbon price signal. A second set of legislation, the Effort
Sharing Regulation56
and Regulation on the inclusion of greenhouse gas emissions and removals
from land use, land use change and forestry in the 2030 climate and energy framework, regulates
emissions and absorptions of the sectors outside the EU ETS. It does so by setting emission
trajectories and reduction objectives per Member State, taking into account different capabilities
to reduce GHG emissions.
Also within the decarbonisation pillar of the Energy Union and in accordance with Article 40 of
the Euratom Treaty, the Commission presented in 2017 the latest nuclear illustrative programme
(PINC). The programme provides an overview of developments and investments needed in the
nuclear field in the EU for all the steps of the nuclear lifecycle. It underlines that nuclear energy
53
COM (2014) 330
54
COM (2015) 614
55
Directive (EU) 2018/410
56
Regulation (EU) 2018/842
29
remains an important component in the energy mix in Europe with a 2050 horizon, as well as
identifies some priority areas, such as ways to continuously increase safety, improve costefficiency
of nuclear power plants and enhance the cooperation among Member States in
licensing new and existing nuclear power plants.
The security of supply pillar had also early deliverables: the Regulation on Security of Gas
Supply57
that aims at preventing gas supply crises and ensuring a regionally coordinated and
common approach to security of supply measures among the Member States and the Strategy for
Liquefied Natural Gas (LNG) and gas storage 58
that outlined future EU action that will contribute
to a greater flexibility of gas supply, in particular through LNG and gas storage.
In parallel, the IGA Decision59
, adopted in April 2017 significantly increased the transparency of
intergovernmental agreements between Member States and third countries in the field of energy
that have become subject to a mandatory ex-ante assessment by the Commission regarding their
compatibility with EU law.
For the research, development and competitiveness pillar the Strategic Energy Technologies
(SET) Plan has been a key deliverable and crucial component linking EU, Member State and
industry action. Following the new strategy as published in 201560
public and private parties, at
EU and national level, have joined forces to identify targets for R&I in energy technologies in the
next 5 to 15 years. These have been turned into 14 implementation Plans that identify concrete
action where Member States, industry and the European Commission cooperate to increase the
impact of R&I investments.
The majority of legislative proposals building the Energy Union were then delivered as a part of
the Clean Energy for All Europeans package (see section 2.2.3) – notably in the field of
renewable energy, energy efficiency, internal market operation and remaining aspects of security
of supply.
2.2.3 Clean Energy for All Europeans
While an important part of the legislative framework for a 40% GHG emissions reduction target
has been established by the revised ETS Directive, the Effort Sharing Regulation and LULUCF
Regulation, the two interlinked targets of energy efficiency and renewable energy sources were
addressed in the Clean Energy for All Europeans package (CE4AE, also referred to below as “the
Clean Energy package”). On 30 November 2016, eight legislative proposals and the European
strategy on Cooperative Intelligent Transport Systems in the field of mobility were proposed as
part of this package61
. It was a major milestone in the construction of a robust Energy Union and
setting the EU on the ambitious decarbonisation trajectory that was set out with the Paris
Agreement.
By November 2018, the European Parliament and the Council have reached an agreement on four
of the eight legislative proposals from the Clean Energy package: Energy Performance in
Buildings Directive62
, Renewable Energy Directive, Energy Efficiency Directive, and Regulation
on the Governance of the Energy Union and Climate Action. Thus, progress and momentum
towards completing the Energy Union and combatting climate change are well under way.
57
Regulation (EU) 2017/1938
58
COM(2016) 49 final
59
Decision (EU) 2017/684 of the European Parliament and of the Council
60
C(2015) 6317 final
61
COM(2016)766 final
62
Amended EPBD entered into force on 9 July 2018.
30
The novel and robust Governance of the Energy Union and Climate Action Regulation will
ensure coherence and better cooperation of Member States’ long term energy and climate policy
planning and foresee reporting, review and close monitoring of progress. As a result of the
Governance Regulation, Member States are expected to establish and to submit their ten year
integrated National Energy and Climate Plans (NECPs) by the end of 2019 covering all five
dimensions of the Energy Union. These plans will define and explore synergies between Member
States’ objectives and contributions to the Energy Union goals and, in particular, national targets
for the non-ETS sector as set in the Effort Sharing Regulation, national contributions to the EU
renewable energy and energy efficiency targets with a view to their achievement by 2030. This
will put the EU in a good position to reduce greenhouse gas emissions beyond the 40% target by
2030 and on the decarbonisation trajectory. National energy and climate plans are required to be
consistent with both the EU long-term strategy and the national Long Term Strategies to be
submitted by January 2020. National Energy and Climate Plans can be updated, for the first time,
in 2024 with the requirement that national objectives, targets and contributions can be revised
upwards (reductions of net greenhouse gas emissions) or to reflect an equal or increased ambition
(energy efficiency, renewable energy sources).
The agreed 2030 EU energy efficiency and renewables targets build on the experience that
concrete energy objectives do influence the pace of new technologies development and cost
reduction through economies of scale, allowing important benefits be reaped by industries,
businesses and citizens. This was experienced over the last decade.
The binding European Union-wide target of at least 32% of renewable energy in gross final
energy consumption in 2030 is supported by ambitious measures addressing untapped potential
for renewables in heating, cooling and transport. Moreover, measures will be put in place to
facilitate the participation of citizens in the energy transition through self-consumption and
energy communities and to enhance the sustainability of bioenergy. An ambitious review of
electricity market rules underpins the European Union’s ambition to further boost penetration of
renewables in power.
For energy efficiency, a target of at least 32.5% energy efficiency to be achieved collectively by
the EU in 2030 was agreed in the new Energy Efficiency Directive. The Directive also includes
an annual energy savings obligation of 0.8% of final energy consumption to be achieved in 2021-
203063
, which will trigger private investments in end-use sectors, especially in buildings, and also
in the industry and transport sectors. Other important changes were made to strengthen the rules
for metering and billing of thermal energy - especially in multi-apartment buildings with
collective heating systems. The revised and improved Energy Performance in Buildings Directive
(EPBD) includes measures to strengthen the energy performance of new buildings, to accelerate
the rate of building renovation towards greater energy efficiency so as to tap into the huge
potential for efficiency gains in the building sector. It also encourages the use of information and
communication technology (ICT) and smart technologies to ensure buildings operate efficiently
and supports the roll-out of the infrastructure for e-mobility. The Governance Regulation also
includes a definition of "energy efficiency first" principle which should now apply across the five
63
It represents a real annual savings rate to deliver the energy savings obligation from final energy
consumption (which also includes energy uses in transport), and the rate of 0.8% is more ambitious
than 1.5% (set for the current period 2014-2020) because it is set as a minimum rate to be applied in the
calculation of the required energy savings for 2021-2030; the flexibilities may be used only in addition
to this minimum. This savings obligation (of 0.8%) would continue to be applicable also after 2030
unless the review by the Commission by 2027 would conclude otherwise. A much lower rate (0.24%) is
set for Malta and Cyprus.
31
dimensions of the Energy Union. This gives recognition to the importance of energy efficiency as
a solution in energy planning, policy and investment decisions.
Regarding security of supply, the Commission proposed the Electricity Risk Preparedness
Regulation64
. This addressed the existing shortcomings in the area such as different, often not
transparent national rules and procedures and lack of cross-border co-operation. The proposed
Risk Preparedness Regulation provided rules on (1) how to assess risks, (2) what a risk
preparedness plan should look like, (3) how to deal with crisis situation and (4) how to monitor
security of supply.
Regarding the internal market, further (to the existing acquis) regulatory improvements were
proposed to the electricity sector to ensure that Europe has the right market design in place to
undertake the multiple tasks ahead (notably integration of high amounts of variable renewables in
power). The vision behind these proposals is that connecting national markets though appropriate
infrastructure and common cross—border trading rules significantly reduces the costs of the
energy transition for consumers and enhances security of supply; connected markets require
greater coordination and coherence is needed if national markets are to be integrated. If views
and requirements for electricity trading, generation adequacy and security of supply converge,
markets can function more efficiently and treat market participants more fairly. Such coherence
and coordination is also needed to facilitate decarbonisation and energy efficiency objectives.
The Clean Energy package has a very strong consumer focus that is also a leitmotiv of the 2050
decarbonisation strategy. It thus promotes consumers as active and central players in the energy
markets of the future. It is designed to facilitate all consumers across the EU having a better
choice of supply, access to reliable energy price comparison tools and the possibility to produce
and sell their own electricity. The package also proposes further transparency rules and EU-wide
regulation principles to facilitate opportunities for citizens to become more involved in the
energy system and respond to price signals. Last, but not least, the package also contains a
number of measures aimed at protecting the most vulnerable consumers.
2.2.4 Industrial policy strategy and strategic value chains
In September 2017, the Commission adopted the Communication "Investing in a smart,
innovative and sustainable Industry – An Industrial Strategy for Europe". This outlined the main
priorities and key actions for strengthening Europe's industrial base, including: a deeper and
fairer Single Market, upgrading industry for the digital age, building on Europe's leadership in a
low-carbon and circular economy, investing in infrastructure and new technologies to drive
industrial transformation, supporting industrial innovation on the ground, promoting open and
rules-based trade and empowering regions and cities to address challenges. Implementation of the
strategy will require a joint commitment from industry as well as all relevant European, national
and regional stakeholders.
As follow-up to the Renewed EU Industrial Policy Strategy, the Commission has also established
a Strategic Forum on Important Projects of Common European Interest (IPCEI). This expert
group will identify by summer 2019 a number of key value chains for Europe, which require
well-coordinated action between public authorities and key stakeholders from several Member
States, recommend value-chain specific actions and facilitate agreements to take forward new
joint investments in those key value chains, including possible new IPCEIs.
64
Proposal for a Regulation of the European Parliament and of the Council on risk-preparedness in the
electricity sector and repealing Directive 2005/89/EC, COM/2016/0862 final - 2016/0377 (COD).
32
Raw materials have been an important part of the EU’s industrial policy since the launch of the
Raw Materials Initiative in 2008. In September 2017, the Commission presented its latest
assessment of those raw materials that are important or even critical for EU value chains, based
on economic importance and supply risk65
. several technologies that are important for energy
system decarbonisation are part of this assessment (e.g. electro-mobility, storage).
2.2.5 EU Mobility strategy and mobility packages
A further major and large sector, critical for energy consumption, emissions and indeed for the
functioning of the whole economy, is the transport sector. Here too, the EU has been preparing
major advances to improve the functioning of the transport sector and to instil it centrally in
Europe’s decarbonisation and energy sector strategies. The European Strategy for LowEmission
Mobility66
was adopted in July 2016. It aims at ensuring that Europe stays competitive
and is able to respond to the increasing mobility needs of people and goods, while meeting the
challenge of shifting towards low-emission mobility. The Strategy confirms the 2011 White
Paper67
goals: “by mid-century, greenhouse gas emissions from transport need to be at least 60%
lower than in 1990 and be firmly on the path towards zero. Emissions of air pollutants from
transport that harm our health need to be drastically reduced without delay”.
To this end, the Strategy for Low-Emission Mobility proposed a comprehensive Action Plan
building on three pillars: (1) higher efficiency of the transport system, (2) low-emission
alternative energy for transport, and (3) low- and zero emission vehicles, including both
legislative and non-legislative action.
The Commission has acted swiftly by adopting proposals on most of the actions listed in the
Action Plan of the Strategy, notably through the adoption of the Clean Energy for All Europeans
package in November 2016 (which included the European strategy on Cooperative Intelligent
Transport Systems), the first Mobility Package in May 2017, the second Mobility Package in
November 2017 and the third Mobility package in May 2018.
The first Mobility Package put forward a first set of eight legislative initiatives with a special
focus on road transport68
. These proposals aimed notably at improving the functioning of the road
haulage market, enhancing the employment and social conditions of workers, and promoting
smart road-charging in Europe. The Commission also made a proposal, by now adopted, for a
monitoring and reporting system of CO2 emissions and fuel consumption for HDV (lorries and
buses) to promote the uptake of the most fuel-efficient vehicles69
. In addition, a number of nonlegislative
accompanying documents, presented a wide range of EU policy support measures
designed to accelerate the shift to a sustainable, digital and integrated mobility system
(investment financing for infrastructure, research and innovation, collaborative platforms, etc.).
The second Mobility Package70
included legislative initiatives on road transport vehicles,
infrastructure and combined transport of goods. The initiatives, including on CO2 standards for
cars and vans, public procurement and alternative fuels infrastructure, focus on the reduction of
greenhouse gas emissions and air pollutant emissions and aim for a broad take up of lowemission
alternative fuels and low-emission vehicles on the market.
65
COM(2017) 490 final, 13.09.2017.
66
COM(2016)501 final
67
COM(2011)144
68
https://ec.europa.eu/transport/modes/road/news/2017-05-31-europe-on-the-move_en
69
Regulation (EU) 2018/956
70
https://ec.europa.eu/transport/modes/road/news/2017-11-08-driving-clean-mobility_en
33
With the third Mobility Package71
, the Commission aimed to ensure a smooth transition towards
a mobility system which is safe, clean and connected & automated. The package includes
legislative initiatives on trucks, a communication on connected and automated mobility72
, and an
initiative on battery development. Through these measures, the Commission is also shaping an
environment allowing EU companies to manufacture the best, cleanest and most competitive
transport-related products.
2.2.6 Circular Economy Policy
In December 2015, the European Commission published its EU Action Plan for the Circular
Economy73
, which aims to stimulate Europe's transition towards a circular economy, boost global
competitiveness, foster sustainable economic growth and generate new jobs. The measures
foreseen cover the whole cycle: from production and consumption to waste management and the
market for secondary raw materials and a revised legislative proposal on waste.
The role of the circular economy to ensure the transition towards a low-carbon economy is
already recognised by stakeholders and literature74
.
As part of the measures announced in the Circular Economy Action Plan, the Commission has
launched in 2018 the EU Strategy for Plastics in a Circular Economy75
, which targets plastics
production and incineration of plastics (that produces every year 400 million of tonnes of CO2).
2.2.7 Common Agriculture Policy
The current Common Agricultural Policy (CAP) provides support to climate mitigation and
adaptation, and ensures sustainable management of natural resources and climate action through
the following instruments: i) cross-compliance mechanism, representing the compulsory basic
layer of environmental requirements and obligations to be met in order to receive full direct
payments under the first Pillar ii) “greening" covering a wide geographical range of agricultural
area across the EU is expected to improve the overall environmental performance of agricultural
production and iii) rural development under the second Pillar which plays an important role in
achieving the environmental objectives of the CAP and combating climate change.
2.2.8 Cohesion Policy
Cohesion policy has traditionally been one of the key EU policies for supporting Member States,
regions and cities in their development and transition. Over the years, it has, for instance,
71
https://ec.europa.eu/transport/modes/road/news/2018-05-17-europe-on-the-move-3_en
72
As announced in this Communication, the Recommendation on the use of pioneer spectrum for 5G large
scale testing, cybersecurity and on a data governance framework that enables data sharing, in line with the
initiatives of the 2018 Data Package72
, and with data protection72
and privacy legislation72
will come in the
beginning of 2019.
73
COM (2015) 614 final
74
For example according to the International Resources Panel, by 2050, resource efficiency policies could
reduce global extractions by 28%. Combined with an ambitious climate action, such policies can reduce
greenhouse gases emissions by 63%, and increase economic growth by 1.5%.
Another study from Material Economics and Sitra, focused on sectors with high energy consumption and
high level of emissions, like steel, plastics, aluminium or cement. It estimates that the circular economy
model could reduce European emissions by 56% (300 Mt) annually until 2050. Globally, emissions savings
could reach 3.6 billion of tonnes of CO2eq per year. Even more important: the study shows that the future
demand of such materials will lead to emissions exceeding the carbon budget of these sectors, even if
implementing energy efficiency and low-carbon measures.
75
COM(2018028 final
34
invested in environmental infrastructure, especially in the less developed regions of Europe. For
the 2014-2020 period it has been aligned to the smart, sustainable, and inclusive growth priorities
of the Europe 2020 Strategy and a number of legal requirements to mainstream climate and
sustainable development were introduced (such as earmarking of funds, funding pre-conditions,
partnership principle). All this led to considerable re-focusing of the funding and non-funding
support (e.g. technical assistance, cooperation, capacity building) available. For example,
Cohesion policy will provide EUR 69 billion over 2014-2020 for investments related to all five
dimensions of the Energy Union. Close to 50% of these allocations – or about EUR 32 billion –
had already been committed to real projects on the ground by the end of 2017. Cohesion policy
also supports research and innovation in those areas where regions have competitive advantages,
based on a bottom-up identification by industry, researchers and civil society of smart
specialisation priorities. For the post-2020 period the support for energy, climate and innovation
is proposed to continue with even more focus on cross-sectoral solutions and on innovation to
support the transition of all EU regions.
2.2.9 Waste policy, F-gas regulations.
EU waste policy76
limits landfills while promoting recovery of landfill gas as well as recycling.
By 2020 most EU Member States are foreseen to reduce landfilling of biodegradable waste by
65%. An improved waste management following the waste hierarchy is expected to have a
significant mitigation potential considering biodegradable and non-biodegradable waste. The
revised waste legislation adopted in June 2018 reduces landfilling of municipal waste to 10% of
the total amount of this waste category in 203577
. This deadline may be postponed by up to 5
years78
.
In 2014, a new F-gas Regulation79
was adopted to phase-down the total amount of HFCs that can
be sold in the EU from 2015 to one fifth of today's sales by 2030. The regulation is expected to
result in the reduction of the EU's total F-gas emissions by two thirds compared to today's levels.
The Kigali Amendment, entering into force on 1 January 2019, requires further step down from
the EU’s 21% (of the baseline) in 2030 to 15% in 2036.
2.2.10 MFF and climate mainstreaming in financing
The European policy making over a decade has been focused on sustainability and climate
change. As the emphasis on decarbonisation increased, more sophisticated measures have been
put in place to design and achieve targets. Giving clear policy signals, these targets and policy
measures have been crucial to guide investors, allowing world clean energy investments to
increase over time (globally USD 360.3 billion in 201580
), new technologies to emerge and
technology costs to start decreasing in the energy sector. Although the bulk of the necessary
capital will have to be mobilised by the private sector, the remaining market failures and barriers
provide the rationale for public intervention at a European level and call for European public
finance.
76
Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste
77
Directive (EU) 2018/850 of the European Parliament and of the Council of 30 May 2018 amending
Directive 1999/31/EC on the landfill of waste
78
Directive 2018/850 of 30 May 2018
79
Regulation (EU) No 517/2014 of the European Parliament and of the Council of 16 April 2014 on
fluorinated greenhouse gases and repealing Regulation (EC) No 842/2006
80
Bloomberg New Energy Finance( 2018), Runaway 53GW Solar Boom in China Pushed Global Clean
Energy Investment Ahead in 2017, https://about.bnef.com/blog/runaway-53gw-solar-boom-in-china-
pushed-global-clean-energy-investment-ahead-in-2017/
35
The European Fund for Strategic Investments (EFSI) is an example of such interventions.
Launched in 2015 in response to the economic downturn, EFSI aimed to unlock additional
investment of at least EUR 315 billion over 3 years providing a total guarantee of EUR 16 billion
combined with EUR 5 billion contribution from the EIB for business and infrastructure projects.
Given its success, EFSI was extended and now aims to mobilise EUR 500 billion of investment
in strategic infrastructure and companies, helping to address key market gaps and structural
weaknesses to build a more competitive, sustainable and prosperous EU economy. EFSI makes a
strong contribution to investments related to the Energy Union. Regular monitoring data indicates
that the energy is one of the largest policy area of operations financed under the EFSI,
representing 20% of total EFSI support.
The InvestEU Programme is the Union's new investment instrument proposed for the next
programming period, built on the success of and lessons learnt from EFSI. The size of the
proposed InvestEU guarantee is EUR 38 billion which is expected to mobilise EUR 650 billion
investments. It is proposed that 30% of this overall budget will contribute to climate objectives.
In particular, 50% of the investments under the “Sustainable Infrastructure” window should
contribute to climate and environment objectives.
The long-term budget of the European Union has an important role to play for decarbonisation by
supporting investments in and mobilising capital towards climate mitigation and adaptation –
including for research and innovation, energy efficiency, renewable energy and network
infrastructure. In its 2014-2020 multiannual financial framework (MFF), the EU decided to
commit 20% (over EUR 206 billion) of the overall budget to climate change. This climate
mainstreaming target has been a useful in integrating climate considerations across the main EU
spending programmes. Along with other EU policies, it has supported an increase in average
annual investment in the EU energy sector. Concerning the transport sector, the EU research
programme Horizon 202081
will deploy over EUR 2 billion in the period 2018-2020, focussing on
four key energy and climate priorities, including (urban) e-mobility82
.
Reflecting the importance of tackling climate change in line with the Union's commitments to
implement the Paris Agreement and the United Nations Sustainable Development Goals (SDG),
the Commission has proposed to set a more ambitious goal for climate mainstreaming across all
EU programmes, with a target of 25% of EU expenditure, or EUR 320 billion, contributing to
climate objectives in the next MFF (2021-2027). The Commission has proposed specific
expected contribution for all relevant programmes, including in research, cohesion (see section
2.2.8), common agricultural policy, strategic infrastructure and external action. This commitment
reflects our ambition to make the EU a global leader in low carbon technology and to ensure that
we achieve our climate and energy targets. Supporting partner countries in achieving the global
climate targets represents the external projection of this ambitious internal goal. Catalysing
strategic investments, such as those in the energy and mobility sectors is targeted through specific
actions, and also identified as a policy goal in horizontal programmes (e.g. Horizon Europe83
,
Cohesion Policy, the InvestEU Programme). Budgetary support and technical assistance to areas
where large investment gaps exist (energy efficiency in buildings), which are niche areas (crossborder
renewable projects), or where the rapid technological and market development has not yet
been picked up (capacity building, policy implementation) will provide additional financial
81
The EU biggest research and innovation programme, with nearly EUR 80 billion over 2014-2020
https://ec.europa.eu/programmes/horizon2020/en/
82
COM(2017) 688 final
83
Horizon Europe is the next EU programme on research innovation that will succeed to Horizon 2020:
https://ec.europa.eu/info/designing-next-research-and-innovation-framework-programme/what-shapes-
next-framework-programme_en
36
impetus to decarbonised investments, complementing the programs that have been and will be
crucial for constructing a secure, clean and integrated European energy system. Looking beyond
its borders, the EU External Investment Plan will aim to leverage private investment to scale up
climate finance and closing current finance needs gaps in sectors that are essential for partner
countries’ transition to low-carbon development paths.
2.2.11 Aviation and Maritime sectors
2.2.11.1 International Aviation
To achieve the temperature goals of the Paris Agreement, all sectors of the economy should
contribute to achieving the necessary emission reductions, including international aviation.
In the EU several measures have been taken to address aviation emissions. Air traffic
management (ATM), research, development and innovation and sustainable alternative fuels,
have the potential to contribute to reducing aviation emissions84
. The European Union’s Single
European Sky (SES) policy aims to transform ATM in Europe, tripling capacity, halving ATM
costs with 10% less environmental impact. The Clean Sky EU Joint Technology Initiative (JTI)
aims to develop and mature breakthrough “clean technologies”.
Aviation has been included in the EU ETS since 2012, and has so far contributed to reducing an
estimated 100 million tonnes of CO2 emissions between 2012 and 2018 under the EU ETS cap.
At its inception in 2012, the inclusion of aviation in the EU ETS also included flights to and from
Europe. Presently the EU has limited the scope of the EU ETS to flights within the EEA85
to
support the development of a global measure, the Carbon Offsetting and Reduction Scheme for
International Aviation (CORSIA)86
, under development in International Civil Aviation
Organization (ICAO). CORSIA aims to stabilise CO2 emissions at 2020 levels by requiring
airlines to offset the growth of their emissions after 2020, by purchasing international credits for
emissions reduction made elsewhere or by taking actions themselves to limit emissions. Its
rulebook for offsetting is still under development.
The next review regarding aviation in the EU ETS has to consider how to amend the EU ETS
legislation to take into account the development of CORSIA. In the absence of a new
amendment, the EU ETS derogations will end from 2024.
Internationally, the International Civil Aviation Organisation (ICAO) has initiated work for the
mitigation of CO2 emissions associated with aviation activities, notably with the two goals: 2%
annual fuel efficiency improvement through to 2050; and the stabilisation of CO2 emissions at
2020 levels through a market-based offsetting mechanism. To attain these goals, a basket of
measures was agreed in ICAO. Next to CORSIA these comprise aircraft-related technology and
standards; improved operations and ATM; development and deployment of sustainable aviation
fuels87 88
. The CO2 standards for new aircraft adopted by ICAO in 2017 will be implemented in
EU law in early 2019.
84
European Environment Agency (EEA), European Aviation Safety Agency (EASA), EUROCONTROL.
(2016). European Aviation Environmental Report
85
Regulation (EU) 2017/2392 of the European Parliament and of the Council of 13 December 2017
amending Directive 2003/87/EC to continue current limitations of scope for aviation activities and to
prepare to implement a global market-based measure from 2021
86
ICAO. (2016c). Resolution A39-3: Consolidated statement of continuing ICAO policies and practices
related to environmental protection – Global Market-based Measure (MBM) scheme.
87
ICAO. (2016a). Resolution A39-1: Consolidated statement of continuing ICAO policies and practices
related to environmental protection – General provisions, noise and local air quality.
37
In addition, it should be pointed out that the international aviation industry, which had originally
proposed the "2020 carbon neutral growth" objective, also agreed on an aspirational goal to
reduce net emissions from aviation by 50% by 2050 compared to 2005 levels89
.
2.2.11.2 International Maritime Shipping
Following up on the 2011 EU White paper on transport, the Commission adopted in 2013 a
strategy on the decarbonisation of shipping, calling for a gradual approach in the EU, starting
with an EU monitoring, reporting and verification (MRV) scheme. As a result, the European
Parliament and the Council adopted in April 2015 the Regulation (EU) 2015/757 on the
monitoring, reporting and verification of carbon dioxide emissions from maritime transport. This
EU MRV scheme will start providing information on ships' efficiency to relevant markets as from
June 2019.
Meanwhile, the International Maritime Organization (IMO) started working on the reduction of
GHG emissions in 1997, but the first measure was only adopted in 2011 with agreement on a
mandatory minimum efficiency standard for new ships (Energy Efficiency Design Index, EEDI)
and the obligation for ships to carry energy efficiency management plans on board. In 2016,
following the entry into force of the Paris Agreement and the adoption of an EU Monitoring,
Reporting and Verification Regulation, it adopted an amendment to the MARPOL Convention90
and specific guidelines for a Data Collection System (IMO DCS) to report fuel consumption of
ships to flag States as from 2019. Finally, after two years of negotiation, IMO adopted in April
2018, an initial strategy on the reduction of GHG emissions from ships with the objective to
reduce emissions by 50% by 2050 compared to 2008 while pursuing efforts to achieve full
decarbonisation as soon as possible in this century.
2.2.12 The need for new vision
Drawing all of the different policy threads together through the Energy Union, the Paris
Agreement as well as the economic technological, societal changes and advances that have
occurred over the last decade require an updated analysis to elaborate a decarbonisation strategy
fully integrated within the Commission’s political priorities, notably: jobs and growth, further
integration of the internal market, a fairer and more sustainable economy and making the EU a
stronger global actor. The technological developments have been particularly prominent,
reshaping energy supply as well as affecting consumer behaviour. The growing consumer
awareness and resulting change in consumption patterns will influence how the markets will
develop in the future taking also into account the growing role of consumers and new business
models spurred through the digitalisation of the economy. The demand side sectors will be
shaped by more optimal consumers' and businesses' choices leading to the smarter use of energy,
sustained by widespread automation and digitalisation, accurate and useful consumer
information, ambitious standards and targeted policies addressing the remaining market and
regulatory barriers and behavioural biases.
On the energy supply side, contrasted technological developments over the last decade, with, in
particular, lower than expected costs for certain renewable energy sources on the one hand and
higher than expected challenges for CCS on the other hand, have changed the perspective when
looking at a future decarbonised energy system for the EU. In addition, rapid development of
88
ICAO. (2016b). Resolution A39-2: Consolidated statement of continuing ICAO policies and practices
related to environmental protection – Climate change.
89
Air Transport Action Group (ATAG)) https://www.atag.org/our-activities/climate-change.html
90
International Convention for the Prevention of Pollution from Ships
38
technologies has made some actors willing to look at future alternative low-carbon energy
carriers: hydrogen and e-fuels (synthetic fuels produced from decarbonised electricity).
Energy storage emerges as a key enabling technology for addressing the flexibility requirements
for integrating variable renewable electricity into the grid and for providing green electricity for
electrified transport, industry and buildings sectors (and thus providing further rationale and
helping the sectoral integration). Large amounts of variable RES can actually be stored in the
form of hydrogen and e-fuels, capable of providing significant flexibility to the electricity system
and decarbonising other sectors. The expectations of new technologies in delivering on the Paris
Agreement goals is well illustrated by the fact that the Agreement itself was flanked by the
launch of Mission Innovation91
, complementing the Clean Energy Ministerial (CEM92
) created
during COP15 in Copenhagen (2009), two global inter-governmental initiatives aiming at
accelerating clean energy innovation and making clean energy widely affordable.
It has to be also noted that deployment of some technologies (e.g. for electric vehicles) raise
some concerns in terms of future supply of raw materials. These issues make the implementation
of circular economy approaches even more desired – not only to reduce direct emissions93
but
also to avoid possible future obstacles of this nature in the deployment of new technologies.
Recent years have also seen significant changes on other fronts than energy technologies that also
have or will have impacts on decarbonisation pathways. Notably in the field of mobility
connected and automated driving is shifting the paradigm towards 'mobility as a service',
'accessibility' and 'connectivity', which will have potentially big impacts on safety, efficiency and
emissions. Considering behavioural change is now possible either, partly because technology
progress made certain solutions easily available to consumers (e.g. own energy production from
renewables, better control of indoor temperature or more effective travel planning mindful of the
carbon footprint). Consumer awareness has also grown that certain choices can lessen the carbon
footprint and yield side-benefits, notably on health improvement. Limiting food waste, engaging
on active mobility or healthier diets are now mainstream consumer considerations in Europe and
other options could follow this suit, including limiting fast growth in long distance travel and
shifting to more sustainable transport modes like rail, or limiting the purchase of new consumer
goods. These aspects are discussed more in detail in section 5.5. Importantly, the growing
consumer awareness and role of consumer choice will have impact on the delivery of the new
vision - with increased role of the citizens, organised civil society, local and regional authorities
in the governance.
2.3 Policy initiatives at national level
2.3.1 The implementation of the EU acquis
The swift and complete national transposition and implementation of the EU acquis by the
Member States, complemented with appropriate national actions, is a primary precondition for
the delivery of the decarbonised, more competitive and dynamic economy that Europeans seek.
The following illustrates the different areas of the EU acquis in the areas of climate and energy,
and complements this with examples of national measures.
Security of energy supply also has a significant EU acquis that builds on national measures in the
electricity, oil, gas and transport sectors. This includes the oil stocks directive, infrastructure
91
Mission Innovation (2018), http://mission-innovation.net/
92
Clean Energy Ministerial (2018), http://www.cleanenergyministerial.org/
93
Recycling is generally less energy intensive than extraction.
39
planning or generation adequacy coordination, all areas where regional cooperation and trust
would strengthen the situation of the EU and its members. This is currently being fostered
through so-called “preventive action plans” and “emergency plans” that are to be notified to the
Commission by 1 March 2019 and updated regularly, the conclusion of “solidarity arrangements”
containing technical, legal and economic details and the preparation of national risk preparedness
plans.
In the area of energy production and transmission infrastructure, Member States formulate and
coordinate among each other national infrastructure development plans to manage the adequacy
of their energy production, including their maintenance and extensions. Such plans are developed
and implemented in conjunction with TEN-E policy, including the identification and co-financing
of projects of common interest (PCI). Some 77 PCIs will have been finalised by 2020 and
received EUR 2 billion from the EU. The EU has also developed the most advanced legal
framework for nuclear energy, ensuring that those Member States who chose nuclear are
complying with the highest safety and security standards.
Regarding energy efficiency, the Energy Efficiency Directive (EED) requires that energy
efficiency policy measures are taken at national level and reported in the National Energy
Efficiency Action Plans (NEEAPs). These should target each sector of the economy (residential,
services, industry, transport and energy supply). The types of measures include regulations,
standards, funds, financial & fiscal measures (including taxation and incentives and other marketbased
instruments) and awareness raising, knowledge & advice as well as education, qualification
and training.
The residential and service sectors benefit from a wide range of national policy measures to
support energy efficiency improvements. In addition to the regulatory measures directly in
relation to the Energy Performance of Buildings Directive and specific Eco-design Regulations,
measures have been enacted to address split incentives or strengthening energy efficiency
requirements for buildings. Typical instruments used for this include grants, low-interest loans
and fiscal incentives or more innovative programmes such as energy performance contracts,
guarantee facilities, possibly combined with grants and technical assistance, on-bill recovery,
Property Assessed Clean Energy (PACE) type financing (proposing low-cost, long-term funding
to be repaid as an additional payment on a property’s regular local property tax). Information and
awareness-raising measures have also been implemented with the focus on residential and service
sectors. In addition, various Member States have mentioned in their NEEAP on-going or planned
efforts related to alleviation of energy poverty.
National measures to achieve the energy savings obligation of 1.5% each year by 2020 (from
annual energy sales to customers) will be key for the 2020 energy efficiency target. Energy
efficiency obligation schemes (putting an obligation on energy distribution operators or energy
retail companies) are a key instrument since they trigger private investments in residential or
services sectors through for example installation of more efficient heating or cooling systems and
insulation of walls or roofs. The obligation schemes will remain an important market based
policy instrument in view of achieving the new savings obligation for the period 2021- 203094
.
Regarding decarbonisation, the EU Emissions Trading System (EU ETS) and the EU Effort
Sharing Regulation (EU ESR) covering non ETS sectors form the core regulatory framework set
in place to reach the consecutive emissions reduction targets. This is complemented with
legislation ensuring that emissions and removals from Land Use, Land Use Change and Forestry
(LULUCF) are at least neutral and sectoral regulations that set CO2 emission standards for
94
For the period post 2020 annual energy savings obligation of 0.8% of final energy consumption are to be
pursued see the section 2.2.3.
40
passenger cars and vans, regulate emissions of F-gases, and increase the deployment of
renewable energy.
Regarding renewables in particular, Member States are implementing their national renewable
energy action plans (NREAP) and are nearly all on track to deliver their 2020 national binding
targets. By implementing these renewable energy plans Member States reduce emissions,
increase the indigenous energy supply, create new jobs, and drive innovation and technological
and industrial development. At the same time, renewable energy requires that more ‘intelligent’
transition infrastructure is put in place and that energy systems are integrated on a larger scale
throughout Europe, which in turn requires more coordination and synchronisation across Member
States to ensure the internal market functions properly and energy resources flow efficiently
between Member States. High shares of renewables requires additional actions in terms of
sectoral integration of energy supply and demand, with contributions from the transport sector,
heating and cooling or industrial processes. Such integration will take place through the
development of decarbonised energy vectors, including electricity but also newer vectors like for
instance hydrogen. A strong reflection of the interest of the Member States in this area is the
Hydrogen Initiative launched by the Austrian presidency and signed in Linz in September 201895
.
Regarding research & innovation, whilst in the EU private investments constitute around 80% of
R&I spending, national and EU R&I programmes complement and add steer, also fostering
efficiency and cooperation among stakeholders when embarking on the large projects for the
development and demonstration of new technologies, materials and processes needed for the
energy transition.
Better governance and policy planning: Integrated National Energy and Climate Plans will
streamline many of the previously existing planning, reporting and monitoring requirements will
promote coherent progress towards EU-level targets and policies. The National Plans will
address, in a transparent manner, national targets, objectives and contributions across all five
Energy Union dimensions from 2020 onwards. National Energy and Climate Plans will also
include policies and measures underpinning the delivery of those targets, thereby allowing for a
close political monitoring of progress towards targets and of interactions between different
policies. A solid analytical framework should explore and illustrate the impacts of proposed
targets policies and measures. The Plans will also promote a broader engagement of EU general
public and stakeholders on Member States long term energy and climate priorities and enhance
coordination between Member States in their policy planning efforts.
2.3.2 Additional national policies
Some policies are not explicitly required under the EU acquis and while well aligned with the EU
climate and energy policies, they are largely dependent on national considerations. The most
notable examples are the coal phase-out, nuclear power deployment/phase-out and carbon tax as
well as urban planning. In the transport sector, a wealth of measures has been adopted at national
level to incentivise modal shift and the uptake of alternative fuels, including electro-mobility:
purchase subsidies, registration tax benefits, ownership tax benefits, company tax benefits, VAT
benefits, local incentives and infrastructure incentives. Also forest and land policies which are
important components of decarbonisation strategies are mostly in Member State competences.
Coal phase-out
95
Non-binding, this initiative still shows a strong support to hydrogen as an enabler of the energy
transition: storage, sector coupling, injection in gas network, use by the industry or for the production
of synthetic fuels:
https://www.hydrogeneurope.eu/sites/default/files/2018-09/The%20Hydrogen%20Initiative.pdf
41
Ten EU Member States have announced coal phase-out and European utilities represented in
EURELECTRIC have recently announced their intention not to invest in new coal plants after
202096
. While decarbonisation is a very important consideration for them, there are also other
drivers. In the EU, coal consumption has fallen by 34% since 1995 and production by 53%. Thus
the EU coal import dependency has increased (to 40%) even though its share in total EU energy
mix has decreased to 15%. Russia still provides 30% of EU hard coal imports, including 100% of
imports by Estonia and Lithuania, 97% by Greece, 94% by Latvia, and smaller share for Poland.
Thus there are not only climate reasons but also security of supply reasons to reduce EU coal
consumption. The recent national announcements of coal power plants phase-out is expected to
lead to further reduction of coal demand, with repercussions for gas, renewables and nuclear, and
to contribute to the reduction of overcapacity in the power generation system. Mitigating social
repercussions, especially when related to national coal-mining activities, will be facilitated by the
"Coal Regions in Transition" platform97
, a policy instrument that will support development of the
accompanying strategies required for the transition.
Nuclear power
The EU Treaty allows each Member State to decide on its energy mix98
, including on the role of
nuclear which represented 26% of EU power production in 201699
. The countries which plan to
keep or develop nuclear energy as one of their energy sources share the view that it can
contribute to energy security, competitiveness and cleaner electricity. Both the Energy Union
Strategy100
and the European Energy Security Strategy101
stressed that Member States that decide
to use nuclear energy need to apply the highest standards of safety, security, waste management
and non-proliferation as well as diversify nuclear fuel supplies.
At the end of 2017, 126 nuclear power reactors were in operation in fourteen Member States102
103
. New build projects are envisaged in ten Member States, with four reactors already under
construction in Finland, France and Slovakia. Other projects in Finland, Hungary and the United
Kingdom, are under licensing process, while projects in other Member States (Bulgaria, the
Czech Republic, Lithuania, Poland and Romania) are at different stages of preparation. The
United Kingdom has announced its intention to close all coal-fired power plants by 2025 and to
fill the capacity gap mainly with new gas, biomass and nuclear power plants. On the other hand,
some national energy policies have fixed a ceiling for the share of nuclear in their respective
range of energy generation sources (e.g. France), others (e.g. Germany and Belgium) have
decided to gradually phase-out from nuclear while other Member States have never used nuclear
energy.
96
EURELECTRIC (2017), European Electricity Sector gears up for the Energy Transition,
https://cdn.eurelectric.org/media/2128/eurelectric_statement_on_the_energy_transition_2-2017-030-
0250-01-e-h-E321F960.pdf
97
European Commission (2017)
https://ec.europa.eu/energy/en/events/conference-coal-regions-transition-platform
98
Lisbon Treaty, Article 194, paragraph 2
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12012E194&from=EN
99
European Commission (2018), Statistical Pocketbook 2018
https://ec.europa.eu/energy/en/data-analysis/energy-statistical-pocketbook
100
COM(2015) 80
101
COM(2014) 330
102
IAEA (2018), Nuclear Power Reactors in the World, Edition 2018
https://www-pub.iaea.org/books/IAEABooks/13379/Nuclear-Power-Reactors-in-the-World
103
These Member States are Belgium, Bulgaria, the Czech Republic, Finland, France, Germany, Hungary,
the Netherlands, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.
42
The importance of long-term operations is expected to increase in the coming years, and by 2030
the majority of the fleet would be operating beyond its original design life. Long-term operations
are expected to represent the majority of nuclear investments in the short to medium term.
Regulatory approval has been already granted for operational lifetime extension of certain
nuclear power reactors in some Member States (e.g. Hungary and the Czech Republic). Decisions
on operating lifetimes depend on current and forecast electricity market conditions and
sometimes also on social and political factors. Such decisions are subject to a strict and
comprehensive safety review by the competent independent national regulator, and as a basic
requirement the highest safety standards have to be implemented104
.
Carbon taxation
Some Member States have adopted systems that levy taxes related to CO2 emissions. There is lot
of heterogeneity in term of scope and implementation of these policies across the Member States.
Most commonly, these taxes target the transport sector either by applying registration or
circulation taxes based on vehicle emissions or transport fuel taxes based on the carbon content
or the efficiency of the fuel. Several Member States have broadened the scope of fuel carbon
taxes to other sectors than transport.
2.4 Regional cooperation
In many policy fields, regional cooperation fosters synergies and complementarities across
Member States as well as with neighbouring countries. It is very important in the context of
energy and climate policies, considering, for example, the need to pull common resources for
financing research and innovation, building infrastructure, development of large projects such as
renewable energy in the North or Baltic Sea or facilitating the access to financing for capitalintensive
projects. It is thus highly relevant for the Energy Union, and will certainly help the
clean energy transition in the medium and long term. Whether the EU applies a single European
scheme (e.g. the EU ETS), adopts legislation or fosters and coordinates cooperation amongst
energy regulators, including for instance on agreeing on the necessary rules for electricity trading
and grid operation in the respective regional groups defined under the EU Network Codes and
Guidelines, the lesson is that coordination, cooperation and integration brings clear mutual
benefits in this policy field.
Against this background, the Governance of the Energy Union Regulation requires Member
States to engage in regional coordination both in the preparation and the implementation of their
National Energy and Climate Plans. Regional coordination also required in the context of
infrastructure planning and the joint development of projects of common interest.
A number of regional cooperation fora dedicated to energy issues are already set-up and will
undoubtedly play a role in the clean energy transition process. Such fora include the Baltic
Energy Market Interconnection Plan (BEMIP), the Central and South-Eastern Europe
Connectivity (CESEC), the Central-West Regional Energy Market (CWREM), the North Seas
Countries’ Offshore Grid Initiative (NSCOGI), the Pentalateral Energy Forum, Interconnections
for South-West Europe and the Euro-Mediterranean Partnership.
Further, the contribution of transnational initiatives like Macro Regional Strategies should be
fully exploited notably to build the political momentum necessary for scaling-up. There are
currently four EU Macro-Regional Strategies concerning 19 EU Member States and 8 non EU
countries which cover the following macro-regions: the Baltic Sea Region, the Danube Region,
104
COM(2017)237 final
43
the Adriatic and Ionian Region, and the Alpine Region. They have shown the importance of
strengthening cooperating among Member States for maximising synergies by acting at
transnational level, pooling resources together and should lead to efficiency gains.
Cooperation with non-EU partners is also taking place, including with the Energy Community
contracting parties105
, members of the European Free Trade Association106
and, when appropriate,
with other third countries.
2.5 Action agenda by regions, industry and civil society
One of the key achievements of the 23rd
Conference of Parties presided by Fiji Islands was the
concept of "Grand Coalition of all Stakeholders" that goes beyond the COP 20 Paris-Lima Call
for global climate action stakeholders to record their voluntary action107
. The Grand Coalition
includes states, local governments, business, faith-based organisations and citizens to join forces
in fighting climate change. A pre-released chapter of the UNEP Emissions Gap report 2018108
shows that additional emissions reduction made so far by non-state actors are still quite limited:
in the order of 0.2-0.7 GtCO2 per year by 2030 compared to full NDC implementation. The low
level of available data and lack of consistent reporting limit a more comprehensive overview.
However, global climate action, if realised to its full potential, could deliver additional emissions
reduction to current policies in the range of 15-20 GtCO2 annually in 2030, which is a
considerable contribution to closing the gap. EU stakeholders have been at the forefront of these
developments109
.
2.5.1 Regional actors
Regional governments and cities, with their impact on economic, spatial, environmental planning
and energy provision challenges, are increasingly drivers of the energy transition and becoming
resilient. The Covenant of Mayors for Climate and Energy initiative110
, where local governments
voluntarily commit to implementing climate and energy objectives, has already 7,383 EU
signatories (as of 1 October 2018), representing in total 198 million citizens of the EU. A recent
analysis of the local climate plans of 885 representative EU cities concluded that close to 66% of
them have a climate mitigation plan and 26% have adopted adaptation plans111
. The EU initiative
is mirrored on the global level by the Global Covenant of Mayors for Climate and Energy112
.
Furthermore, the Urban Agenda for the EU113
, where cities, Member States, the Commission as
well as other EU institutions and actors collaborate within the intergovernmental framework,
105
Includes (as of September 2018): Albania, Bosnia and Herzegovina, FYR of Macedonia, Georgia,
Kosovo, Moldova, Serbia and Ukraine, https://www.energy-community.org/
106
Includes: Iceland, Liechtenstein, Norway, and Switzerland, http://www.efta.int/
107
UNFCCC (2017), UN Climate Change Conference 2017 Aims for Further, Faster Ambition Together,
https://unfccc.int/news/un-climate-change-conference-2017-aims-for-further-faster-ambition-together
108
UN Environment (2018), Bridging the emissions gap – The role of non-state and subnational actors
https://wedocs.unep.org/bitstream/handle/20.500.11822/26093/NonState_Emissions_Gap.pdf?sequence
=1&isAllowed=y&stream=top
109
UNFCCC (2017), Yearbook of Global Climate Action 2017,
http://unfccc.int/tools/GCA_Yearbook/GCA_Yearbook2017.pdf
110
https://www.covenantofmayors.eu
111
D. Reckien et al., How are cities planning to respond to climate change? Assessment of local climate
plans from 885 cities in the EU-28, Journal of Cleaner Production, 26 March 2018,
https://www.sciencedirect.com/science/article/pii/S0959652618308977?via%3Dihub
112
https://www.globalcovenantofmayors.org /
113
https://ec.europa.eu/futurium/en/urban-agenda
44
reinforces the urban dimension of relevant EU policies. The Agenda is being implemented
through Partnerships aimed at achieving better regulation, better funding and better knowledge
for cities in Europe. Through the agreed joint actions, the Partnership on Climate Adaptation
aims to enhance the capacities of European cities in addressing and adapting to the impacts of
climate change, and the Partnership on Energy Transition will contribute to the development of
smarter and more integrated energy systems in European cities that are secure, resilient,
affordable, clean and sustainable. Several other Partnerships, such as Urban Mobility and Air
Quality, contribute to tackling the climate and energy challenge as well.
For regional governments, initiatives such as the Under 2 Coalition114
are important as they
actively reach out to their global members to draft 2050 pathways to set a dedicated goal of
reaching less than 2 tCO2eq/capita by 2050, equivalent to 80% below 1990 levels.
200 jurisdictions globally have already committed to this long-term goal. Against this
background, the EU Governance Regulation facilitates the involvement of regional and local
actors in the definition of national energy and climate priorities.
2.5.2 Sectoral actors
Industries in Europe and their sectoral representatives have recognised the necessity of becoming
more sustainable and substantially reducing GHG emissions by 2050. Private actors, large
companies and sector associations are increasingly reporting on how to significantly reduce EU
greenhouse gas emissions in the coming decades (see section 6.3). A record of just over US$74
billion of Green Bonds were issued in the first half of 2018.115
There are many existing case
studies of companies voluntarily implementing emission-reduction measures: for instance in
order to achieve Heineken's sustainability target along its supply chain, Austrian brewery Göss
has shifted entirely to using renewable and reusable energy sources, getting rid of its CO2
emissions 116
. Eni has created the world's first green refinery,117
in 2013 DHL came forward with
Street Scooter, its own electric delivery van118
, and Siemens aims to achieve a worldwide netzero
carbon footprint by 2030.119
Industry responses to the public consultation (see section 7.1)
show a considerable evolution of their position in the last decade. For instance, 43% of private
business supported achieving a balance between emissions in the EU by 2050 and 37% a
reduction of 80-95%. Equally, there is a wealth of scenario studies done by different industry
sectors on a variety of pathways. In contrast to the preparations for the roadmap in 2011,
stakeholders tend to start from an 80% reduction target. More dominance is given to solutions
involving electrification, hydrogen, but also circular economy and lifestyle changes.
2.5.3 Citizens and civil society
Citizens have started to act both individually and collectively much more decisively on climate
change which reflects the fact that climate change has become a concern for the overwhelming
114
https://www.under2coalition.org/
115
UN Environment (2018).
116
Heineken (2018), Carbon-neutral brewing dream a reality for Göss
https://www.theheinekencompany.com/sustainability/case-studies/carbon-neutral-brewing-dream-a-
reality-for-goss
117
ENI (2018), From oil to biomass,
https://www.eni.com/en_IT/innovation/technological-platforms/bio-refinery.page
118
DHL ( 2018), StreetScooter opens second manufacturing facility in Düren
http://www.dhl.com/en/press/releases/releases_2017/all/streetscooter_opens_second_manufacturing_fa
cility_in_dueren.html
119
Siemens (2018), Siemens is going carbon neutral
https://www.siemens.com/global/en/home/company/sustainability/decarbonization/carbonneutral.html
45
majority of them – see for example recent Eurobarometer results120
. Fighting climate change as a
part of safeguarding natural resources for future generations and as an essential element of their
quality of life has for a long time been a concern for large part of European society. This has
recently been magnified as awareness of scientific findings have grown and consumers have
become more conscious about the carbon footprint of their actions. It is now clear that consumer
choice can have an impact creating new markets as well as pressure on industry to adapt their
offers allowing for more sustainable products coming to market. Already 1.5 million households
in Germany produce their own energy for self-consumption through solar panels121
. Consumer
expectations122
and the prospect of a substantial market prompt companies from all sectors to
introduce renewable energy guarantees, carbon offset programs or low carbon products (in terms
of their production chain).
Multiple examples can also be found in the field of urban mobility – certainly also because in this
case decarbonisation has very quickly visible co-benefits such as better air quality, less noise or
in sum more "liveable" cities. This is why citizens take actions themselves and support initiatives
at the local level. For instance, the city of Milan has adopted its Sustainable Urban Mobility Plan
in April 2018 with measures such as traffic reduction and shared mobility as core elements. A
new shared “free floating” system, operated by cars, bikes and scooters, is fully integrated and
supports both individual mobility and local public transport. As a consequence, the number of
alternatives to private cars has risen: nearly 3,000 shared cars (27% fully electric) and more than
600,000 subscribers, 4,650 bikes, 12,000 free-floating shared bikes and 100 fully electric shared
scooters123
. Measures such as reduced traffic operation in city centres or even overall traffic
reduction, banning polluting vehicles from accessing the city centres, bike rental services
together with development of secure biking paths and shared mobility/"mobility as a service" are
now core elements of the strategy applied by many cities in Europe.
It is clear that the clean energy transition and the achievement of net zero GHG emissions in the
European economy can only happen with citizens’ buy-in. Consumer choice will increasingly
become complementary to technological change and often a pre-condition for technology change
to happen. Further work will be necessary to increase the transparency about products and
services’ carbon footprint and thus capitalise on current consumer awareness. Organised civil
society will play a key role in the further development of consumer awareness and providing the
motivation for lifestyle change.
120
2017 Eurobarometer survey, see https://ec.europa.eu/clima/citizens/support_en
121
Eurobserver (2018), Photovoltaic barometer 2018,
https://www.eurobserv-er.org/pdf/photovoltaic-barometer-2018-en/
122
https://ec.europa.eu/clima/citizens/support_en
123
ELTIS (2018), Shared mobility enabling MaaS in Milan’s SUMP,
http://www.eltis.org/discover/case-studies/shared-mobility-enabling-maas-milans-sump
46
3 IMPACT OF CURRENT POLICIES BEYOND 2030
3.1 Policies and assumptions
The EU and its Member States have put in place a set of policies that will already strongly impact
the EU's transformation up to 2030 and will continue to do so afterwards with the ambitious
energy and climate targets as recently agreed (see section 2.2). This section assesses what the
impact of those policies will be up to and beyond 2030.
For the purpose of this assessment, a baseline scenario (referred to below as “the Baseline”) was
developed to reflect the current EU decarbonisation trajectory based largely on agreed EU
policies, or policies that have been proposed by the Commission but are still under discussion in
the European Parliament and Council.
It largely builds on the Reference scenario 2016 (referred to below as “REF2016”)124
but also
presents an update on a number of key elements detailed in Annex 7.2.2. The Baseline keeps the
macro-economic projections, fossil fuels price developments and pre-2015 Member States
policies as implemented in REF2016. On the other hand, it incorporates an update of technology
assumptions as conducted under the ASSET project125
as well as several major recently agreed
pieces of legislation as well as recent Commission proposals. A new element is also that the
Baseline, includes projections all the way to 2070, as a way to start reflecting on potential
pathways in the second half of the century. Most importantly, the Baseline also projects the
achievement of energy and climate 2030 targets126
as agreed by June 2018 as well as a
continuation of policies impacting non-CO2 emissions.
The aim of the Baseline is to illustrate the impact that current climate and energy policies and
goals would have on long-term energy and GHG evolution. It thereby offers a basis for
comparing different long-term pathways consistent with targets limiting global warming to well
below 2°C or 1.5°C. The Baseline has been specifically built for the purpose of the development
of the long-term strategy. It does not reflect specific Member State policies adopted as of 2015,
and it was not possible to consult with Member States to verify that current or updated policies as
being developed under the national energy and climate plans are adequately represented.
124
The "EU Reference Scenario 2016 – Energy, transport and GHG emissions - Trends to 2050"
publication report describes in detail the analytical approach followed, the assumptions taken and the
detailed results,
https://ec.europa.eu/energy/sites/ener/files/documents/ref2016_report_final-web.pdf
125
Modelling scenarios for development of the energy system is highly dependent on the assumptions on
the development of technologies - both in terms of performance and costs. While these assumptions
have been traditionally developed by the modelling consultants, based on a broad and rigorous
literature review, the Commission is increasingly seeking a review of these technologies by
stakeholders to make them even more robust and representative of the current projects as well as
experts’ and stakeholders’ expectations. This is why a dedicated project was launched by the
Commission in early 2018 to ensure robustness and representativeness of the technology assumptions
in model PRIMES by reaching out to relevant experts, industry representatives and stakeholders, who
are in possession of the most recent data in the different sectors. The project run was concluded in July
2018 and its final report (including the finalised technology assumptions) is available here:
https://ec.europa.eu/energy/en/studies/review-technology-assumptions-decarbonisation-scenarios
126
The 2030 targets are: at least 40% GHG emissions reduction compared to 1990; with 43% GHG
emissions reduction in ETS sector compared to 2005 and 30% GHG emissions reduction in effortsharing
sector compared to 2005; at least 32% renewable energy share in final energy consumption and
at least 32.5% reduction in both primary and final energy consumption compared to (2030 projections
established in) 2007 Baseline – see more details on EU policies in section 2.2.
47
3.2 Energy supply and demand
3.2.1 Energy supply
The EU energy supply projections evolve both in terms of its overall level and the energy mix.
Comparing primary energy consumption (PEC) projections to its historical 2005 levels, the
Baseline achieves 26% reduction in 2030 (reflecting achievement of 2030 target), 35% reduction
in 2050 and there are no further reductions by 2070 as continuous effect of energy efficiency
policies is counterbalanced by effects of economic growth on energy consumption.
The first component of EU energy supply - energy production is projected to decrease by 28% in
2050 (compared to 2005). The fossil fuels production falls by 88% and renewable energy
production (chiefly from wind, solar, biomass and waste) more than doubles in the same time driven
by the 2030 renewable energy target and competitive renewable technologies costs. The
nuclear energy production, although slightly decreasing, would still keep an above 10% share of
the energy mix.
The second component of the EU energy supply - net fuel imports will decrease by some 33%:
from some 980 Mtoe in 2005 to 670 Mtoe in 2050-70. This decline in the Baseline happens
chiefly because of reductions in fossil fuels and, to a smaller extent, and post 2030 only,
renewable energy (biomass) imports. While energy efficiency measures mostly target natural gas
consumption, it is the competitiveness of wind and solar technology that chiefly drives their
higher penetration and thus reductions in the demand for biomass (including from imports). As a
result, the EU's fossil fuel import dependency moderately decreases (from 52% in 2005 to 50% in
2050).
Figure 7: Primary energy production in the Baseline
Source: Eurostat (2010, 2015), PRIMES.
Looking already on the transformation sector, overall electricity generation is growing strongly
throughout the projection period. Electrification of demand is led by electrification of heating and
cooling (notably with heat pumps) and a continuous increase of IT, leisure and communication
appliances in the residential and tertiary sectors. The transport sector is also projected to drive
upwards demand in electricity with the further electrification of the rail and the gradual
penetration of electric vehicles127
.
127
The advent of connected and automated mobility will also lead to increased deployment for IT and thus
greater demand of electricity but this will rather be reflected in the services sector.
0
100
200
300
400
500
600
700
800
900
2010 2015 2020 2025 2030 2035 2040 2045 2050
Mtoe
Geothermal
Solar and others
Wind
Biomass & Waste
Hydro
Nuclear
Natural gas
Oil
Solids
48
The EU power generation mix changes considerably in favour of renewables with the increase in
wind being the most spectacular. By 2050, 73% of the electricity is generated from renewable
resources, while nuclear and natural gas maintain their role in the power generation mix. By
contrast, electricity produced from oil and solids becomes marginal (see Figure 8).
Figure 8: Gross electricity generation in the Baseline
Source: Eurostat (2010, 2015), PRIMES.
3.2.2 Energy demand
The final energy consumption (FEC) in the Baseline decreases by 26% between 2005 and 2050
due to moderation of final energy demand. This moderation of demand is most significant in the
residential sector (38% reduction in 2050 compared to 2005). In industrial sector, 23% reduction
in 2050 compared to 2005 is achieved but savings plateau post 2030. In transport, 24% reduction
is achieved but, conversely to industry, there is an acceleration in savings post 2030. Finally, in
tertiary sector (combining services and agriculture) the reduction in 2050 is the smallest (10%).
The changes in energy mix, driven by less demand for fossil fuel contrasted with an increasing
use of electricity (Figure 9) also help to reduce overall levels of demand. These trends reflect the
significant role of energy efficiency with ambitious 2030 targets and the implementation of
dedicated EU legislation, notably the energy Efficiency Directive (EED), the Energy
Performance of Buildings Directive (EPBD), the Ecodesign and energy labelling legislation, CO2
emissions standards for light duty vehicles and for heavy goods vehicles and other initiatives
adopted recently that increase the efficiency of the transport system.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2010 2015 2020 2025 2030 2035 2040 2045 2050
TWh
Geothermal
Solar, tidal etc.
Wind
Biomass & waste
Hydro
Nuclear
Natural Gas
Oil
Solids
49
Figure 9: Final Energy demand by sector
Note: “Tertiary” includes the energy consumed in the agricultural sector.
Source: Eurostat (2010, 2015), PRIMES.
Figure 10: Final Energy demand by fuel/energy carrier
Note: “Other” includes biomass and waste.
Source: Eurostat (2010, 2015), PRIMES.
3.3 CO2 emissions
The CO2 emissions are projected to decrease steadily towards 2050, mainly supported by very
substantial reduction in the power sector and more generally in sectors covered by the EU
Emissions Trading System, for which the Baseline assumes a continuation of the reduction of the
ETS cap with 2.2% per year, as implied by the current legislation. By 2050 the emissions reduce
to just above 1600 MtCO2 (Figure 11), this is a 65% reduction compare to 1990 level.
Overall, the main drivers for the decarbonisation are the increasing energy efficient in all sectors,
in particular in industry, as well as the penetration of renewable energies.
Notwithstanding the transport sector becoming the largest source of CO2 from 2020 onwards,
fuel efficiency gains driven by standards and transport policies significantly reduce (by 38%)
transport emissions between 2005 and 2050.
0
200
400
600
800
1000
1200
2010 2015 2020 2025 2030 2035 2040 2045 2050
Mtoe
Transport
Tertiary
Residential
Industry
0
200
400
600
800
1000
1200
2010 2015 2020 2025 2030 2035 2040 2045 2050
Mtoe
Other
Electricity
Heat
Gas
Oil
Solids
50
Figure 11: Carbon dioxide emissions by sector
Note: “Tertiary” includes the energy consumed in the agricultural sector.
Source: PRIMES.
3.4 Non-CO2 emissions
Non-CO2 emissions are projected to reduce by 50% in 2050 compared to 1990. Since most of the
legislation related to non-CO2 emissions targets the pre-2030 period, the level of emissions
flattens after 2030 and even increase slightly beyond 2050 (Figure 12).
Figure 12: Baseline projections of non-CO2 emissions by sector and by gas (MtCO2eq)
Source: GAINS.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2010 2020 2030 2040 2050
CO2emissions(MtO2) Evolutionof CO2EmissionsbySector(MtCO2)
29% 25% 20%
13%
25% 27%
27%
28%
29% 33%
35%
41%
7% 5%
6% 5%
11% 10% 12% 13%
2020 2030 2040 2050
Share(%oftotal)
Sharesof CO2 emissionsbySector
Residential
Tertiary
Transport
Industry
Power
0
100
200
300
400
500
600
700
800
900
2010 2030 2050 2070
Non-CO2EmissionsbyGas
0
100
200
300
400
500
600
700
800
900
2010 2030 2050 2070
Non-CO2EmissionsbySector
Agriculture Energy
Industry Waste
Wastewater AC & refrigeration
Other
0
100
200
300
400
500
600
700
800
900
2010 2030 2050
Non-CO2EmissionsbySector
CH4 N20 F-gases
0
100
200
300
400
500
600
700
800
900
2010 2030 2050
Non-CO2EmissionsbyGas
51
The reduction by 2050 will be the strongest for methane in absolute terms compared to 2005 (215
MtCO2eq) and significant in percentage of 2005 levels (40%). F-gas emissions will reduce
substantially until 2030 (50%) thanks to strict rules on Air Conditioning and refrigeration (Figure
12).
From a sectoral perspective, most sectors of the economy, with notable exception of agriculture,
that are emitting non-CO2 gases today are expected to significantly reduce their emissions,
especially by 2030. With demand for natural gas decreasing as well as coal mining activities
reducing, energy related non-CO2 emissions continue to decrease.128
Full implementation of EU
waste legislation would see emissions for waste continued to reduce. Similarly, F-gas emissions
are declining mainly as result of the new F-gas regulation, even though it could be
counterbalanced after 2030 by the further increase in cooling needs. In the agriculture sector
emissions are projected to remain stable in the absence of further mitigation incentives or
changes in amount and type of agriculture goods produced.
3.5 Land use and forestry
The land use and forestry sector keeps its role of net carbon sink in the Baseline (Figure 13).
However, the sink is projected to decrease from about 300 MtCO2 in 2015 to 260 MtCO2 in 2050
due to the ageing of the forest and an increasing mobilisation of forest biomass, mainly for
material use (industrial roundwood, sawnwood, wood panels, paper, paperboard)129
.
Figure 13: Evolution of the emissions and removals from land use, land use change and
forestry
128
Going beyond this effect, specific emissions mitigation measures will also be needed to further reduce
methane leakages in a decarbonised energy system. Indeed, due to the higher global warming potential
of methane, as little as 3% leakage along the natural gas supply chain can cancel out the greenhouse gas
emission benefits of natural gas vs. coal in power generation, see also IEA (2017), World Energy
Outlook, https://www.iea.org/weo2017/
129
While it has not been investigated as a part of analytical work for this assessment, there is also a
possibility that climate change impacts (droughts, forest fires) would have some impacts on viability of
forests as carbon sinks.
-500.0
-400.0
-300.0
-200.0
-100.0
0.0
100.0
200.0
2000 2010 2020 2030 2040 2050
MtCO2
Settlements and Other land Wetland
Cropland Harvested Wood Products
Forest land Grassland
52
Source: GLOBIOM & G4M.
3.6 Total GHG emissions
Excluding the LULUCF sinks, the total GHG emissions in 2030 for the Baseline scenario is
estimated at -46% of 1990 level, reducing further by 62% in 2050. Including LULUCF sink130
,
net GHG emissions actually reduce by 48% by 2030 and by 64% by 2050 compared to 1990.
Reaching the 2030 renewables and energy efficiency target, both ETS and non-ETS targets are
overachieved in 2030 (respectively 49% and 36% GHG emissions compared to 2005, see Figure
14). The over-achievement in the ETS by 2030 would result in increased surpluses of allowances.
The Market Stability Reserve (MSR) has actually been designed to address such situations,
absorbing such surpluses above a threshold (set in the legislation at 833 million allowances).
Beyond 2030, scarcity will increase again due to the continued linear reduction factor. The
evolution of the carbon price will depend on many variables, including expectations about future
scarcity. In the Baseline, an ETS carbon price at EUR 28 per tonne of CO2 (in 2013 prices) in
2030 contributes to the achievement of the Energy Efficiency and Renewable Energy targets.
After 2030, the Baseline assumes that, in the non-ETS sectors, there are no further drivers beyond
market forces (e.g. rising future fossil fuel prices, more competitive renewable sources) and the
continued impact of currently adopted policies such as CO2 standards for vehicles or energy
performance standards for products and appliances and for new buildings as of 2021 to further
reduce energy and consequently emissions. Similarly a number of policies related to non-CO2
emissions continue to impact on post 2030 emissions such as waste and F-gas legislation.
Figure 14: Total GHG emissions and split ETS/non-ETS (MtCO2eq)
Note: non-ETS emissions do not include LULUCF emissions.
Source: PRIMES.
130
Net GHG emissions add to the GHG emissions the so called unaccounted LULUCF sink, as reported in
the EU's GHG inventory to the UNFCCC.
-500
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2010 2030 2050 2070
Total GHG Emissions
LULUCF sink CO2 emissions Non-CO2 emissions
-500
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2010 2030 2050 2070
ETS and non-ETSemissions
ETS sectors Non-ETS sectors
53
4 SECTORAL AND ECONOMY WIDE LOW CARBON AND ENERGY
TRANSFORMATION PATHWAYS
4.1 Overview and scenario description
Section 4 looks at how sectors and the economy as a whole can decarbonise. Sections 4.2-4.5,
describe how technology and other options (notably lifestyle changes and consumer choices) can
transform the energy system and reduce greenhouse gas emissions. Sections 4.6-4.8 look at
sectors outside energy, as well as natural or technological options to remove and sequester CO2
from the atmosphere. Section 4.9 discusses the aggregate impact on emission levels at the
economy wide level, while section 4.10 gives economic elements associated to the transition.
All sections discuss in detail different technologies and options and their associated challenges
and opportunities based on a comprehensive literature review. They explore alternative views on
the mitigation options. Technologies considered can be found in the mainstream research and
innovation from academia or stakeholders, but do not include very innovative options with low
technological readiness. The analysis was complemented by modelling, mainly using the
PRIMES-GAINS-GLOBIOM model suite and by developing multiple and differentiated
scenarios. Particularly for industry, a second model was used – FORECAST – to complement
PRIMES.
It should be emphasised that long run uncertainties around the success of technologies are very
large. Baseline and decarbonisation scenarios are precisely that: scenarios. Technological
progress, consumer choices and regulation can lead to different results. While the modelling
exercise has been performed to the highest quality standards, one should interpret the modelling
results with caution and bear in mind that all models, independently of their complexity, are
stylized approximations of reality. A description of models used, scenarios, assumptions and
limitations of the modelling exercise can be found in Annex 7.2.
The PRIMES-GAINS-GLOBIOM model suite includes all sectors and GHG gases, covering not
only CO2 emissions related to energy combustion, but also CO2 process emissions (emissions due
to a chemical reaction), absorptions and emissions of CO2 of the land use sectors (forestry and
agriculture mainly), non-CO2 emissions of all sectors with largest sectors being the agriculture,
energy, waste and industrial sectors (including F-gas applications).
This modelling set up is especially useful to look in detail at the interactions between energy
sectors as well as the interactions of the energy system with other relevant sectors such as
industry, waste, agriculture and land use131
. The assessment also looks at how the low carbon and
energy transformation impacts international aviation and maritime sectors, given that such
transformation impacts these two sectors just like any other energy consuming sectors. The
standard PRIMES-GAINS-GLOBIOM set-up includes international aviation and is as such
always included when referring to overall economy wide results in the section 4. International
maritime has not been fully included in the modelling set-up in this analysis. While the inland
navigation sector, covering inland waterways and national maritime, is an integral part of all
decarbonisation scenarios, the international shipping has been treated separately. In section 4.4 a
sector specific assessment is made of the international maritime sector and what it would take to
decarbonise the sector and/or the bunker fuels sold in the EU.
131
Electricity production from technologies deployed in seas and oceans is represented in the modelling,
but third generation biofuels from algae and food production from marine resources is not.
54
This dedicated modelling exercise of the Commission, based on the revised state-of-the art
technology assumptions and robust modelling tools, allows to present an economy wide but yet
sectoral- and technology-specific overview of the impacts on greenhouse gas emissions, as
discussed in section 4.9, while focusing on specific options and pathways and accounting for
interdependencies among the sectors. Modelling results are also contrasted with a thorough
literature review. The associated macro-economic analysis (section 4.10) was elaborated using
three models: the GEM-E3, E3ME and QUEST models.
In general, this model-based quantitative analysis explores eight economy wide scenarios
achieving different levels of emissions reduction. The scenarios cover the potential range of
reductions needed in the EU to contribute to the Paris Agreement's temperature objectives of
between the well below 2°C, and to pursue efforts to achieve a 1.5°C temperature change. As
explained in section 1.1, this is translated into a reduction for the EU in 2050 (compared to 1990)
of between 80% (excluding LULUCF) and 100% (i.e. achieving net zero GHG emissions).
Various sectoral options are explored as possible pathways to reduce GHG emissions:
moderation of the demand (be it via energy efficiency132
, as a consequence of circular economy
or lifestyle changes), technological options to decarbonise energy supply (mainly by fuelswitching
to alternative zero carbon/carbon neutral carriers such as electricity from RES,
hydrogen, e-fuels), as well as the use of negative emissions. These scenarios are contrasted to the
Baseline projections presented in Section 3.
The scenarios project a gradual, yet significant, change from current situation. They all
incorporate a wide, albeit varying, portfolio of mitigation options. Considering the inertia of the
energy system and the economy as a whole, the resulting projections begin to differ towards 2050
and increasingly thereafter.
Three categories of scenarios are explored.
The first category addresses the well below 2°C ambition, aiming for GHG emissions reduction
levels in 2050 of around 80% compared to 1990133
. Five different scenarios are assessed in this
category, considering differentiated portfolios of decarbonisation options. All scenarios integrate
strong improvement in energy efficiency and developments of renewable energy, as well as
improvements in transport system efficiency, which goes well beyond the assumptions of the
Baseline scenario. On top of this, three of these scenarios are driven by decarbonised energy
carriers and examine the impacts of switching from the direct use of fossil fuels to zero/carbonneutral
carbon carriers, namely electricity (ELEC), hydrogen (H2) and e-fuels (P2X), in order to
meet the prescribed level of ambition. The other two scenarios examine how stronger energy
efficiency measures (EE) or the transition to a more circular economy (CIRC) can deliver the
desired emissions reduction.
Although no restrictions are placed in any technology or fuel, each scenario is assumed to have
certain advantages in facilitating the uptake of some specific technological pathway. For instance,
the circular economy scenario (CIRC) assumes standardisation of recyclable material and
improved systems for waste collection, while the hydrogen scenario (H2) assumes timely
deployment of the necessary hydrogen infrastructure and distribution of hydrogen also via the gas
grid.
The second category consists of one scenario, which serves as a bridge between the other two
main scenario categories explored. It combines the actions and technologies of the five scenarios
132
With digitalisation being a strong enabling factor.
133
GHG reductions of 80% are reached excluding the LULUCF sector. Including the LULUCF carbon sink
in the analysis results in overall reductions increasing on average by 4 percentage points.
55
of the first category into a sixth scenario (COMBO), without reaching though the level of
deployment of each technology as in the first category. All pathways are assumed to be available
and a GHG reductions can be achieved through all of them. This results in net GHG emissions
reduction (including LULUCF) in 2050 close to 90% compared to 1990. The scenario aims at
identifying how far we can go in emissions reduction combining technological solutions and
options assessed in the scenarios achieving 80% GHG emissions reduction, with small reliance
on negative emissions technologies and without changes to consumer preferences.
All scenarios of the first and this second category continue to undertake efforts to reduce
emissions after 2050, resulting in a decreasing trend in GHG emissions towards net zero GHG
emissions.
The third category of scenarios achieves even stronger emissions reduction, reaching net zero
GHG emissions by 2050 and thus pursuing efforts to achieve a 1.5°C temperature change. In this
scenario category, remaining emissions that cannot be abated by 2050 need to be balanced out
with negative emissions, including from the LULUCF sink. One scenario (1.5TECH) aims to
further increase the contribution of all the technology options, and relies more heavily on the
deployment of biomass associated with significant amounts of carbon capture and storage
(BECCS) in order to reach net zero emissions in 2050. The second scenario (1.5LIFE) relies less
on the technology options of 1.5TECH, but assumes a drive by EU business and consumption
patterns towards a more circular economy. Similarly, the increase in climate awareness of EU
citizens translates in lifestyle changes and consumer choices more beneficial for the climate.
These include a continuation of the trend by EU consumers towards less carbon intensive diets,
the sharing economy in transport, limiting growth in air transport demand and more rational use
of energy demand for heating and cooling. Both scenarios have additional incentives to enhance
the LULUCF sink, but this incentive is much more stronger in the 1.5LIFE scenario.
A sensitivity analysis was included, presented in section 4.7.2, looking into the impacts on
biomass requirements. It builds on scenario 1.5LIFE, (i.e. with already a more circular economy,
changing consumer preferences and a high incentive to enhance the LULUCF sink), while also
putting a strong focus on technology options other than biomass based ones. This sensitivity tries
to capture how net zero GHG emissions could be achieved while limiting biomass demand
increases. This scenario is referred to as 1.5LIFE-LB. If not explicitly mentioned, all results
shown in section 4 refer to the standard 1.5LIFE scenario.
Table 1 provides a summary of the scenarios, illustrating their main characteristics. For more
detailed information related to the modelling set up, as well as the description and assumptions
related to the scenarios, see section 7.2.
56
Table 1: Overview of main scenario building blocks
Long Term Strategy Options
Electrification
(ELEC)
Hydrogen
(H2)
Power-to-X
(P2X)
Energy
Efficiency
(EE)
Circular
Economy
(CIRC)
Combination
(COMBO)
1.5°C
Technical
(1.5TECH)
1.5°C Sustainable
Lifestyles
(1.5LIFE)
Main Drivers
Electrificationin
all sectors
Hydrogen in
industry,
transport and
buildings
E-fuels in
industry,
transport and
buildings
Pursuing deep
energy efficiency
in all sectors
Increased
resource and
material
efficiency
Cost-efficient
combination of
options from 2°C
scenarios
Based on
COMBO with
more BECCS, CCS
Based on
COMBO and
CIRC with
lifestyle changes
GHG target
in 2050
-80% GHG (excluding sinks)
[“well below 2°C” ambition]
-90% GHG (incl.
sinks)
-100% GHG (incl. sinks)
[“1.5°C” ambition]
Major Common
Assumptions
Power sector
Power is nearly decarbonised by 2050. Strong penetration of RES facilitated by systemoptimization
(demand-side response, storage, interconnections, role of prosumers). Nuclear still plays a role in the power sector and CCS deployment faces limitations.
Industry
Electrification of
processes
Use of H2 in
targeted
applications
Use of e-gas in
targeted
applications
Reducing energy
demand via
Energy Efficiency
Higherrecycling
rates,material
substitution,
circularmeasures
Combination of
most Costefficient
options
from “well below
2°C” scenarios
with targeted
application
(excluding CIRC)
COMBO but
stronger
CIRC+COMBO
but stronger
Buildings
Increased
deployment of
heat pumps
Deployment of
H2 for heating
Deployment of
e-gas for heating
Increased
renovationrates
and depth
Sustainable
buildings
CIRC+COMBO
but stronger
Transport sector
Faster
electrification for
all transport
modes
H2 deployment
for HDVs and
some for LDVs
E-fuels
deployment for
all modes
Increased
modal shift
Mobility as a
service
• CIRC+COMBO
but stronger
• Alternatives to
air travel
Other Drivers
H2 in gas
distribution grid
E-gas in gas
distribution grid
Limited
enhancement
natural sink
• Dietary changes
• Enhancement
natural sink
• Higher energy efficiency post 2030
• Deployment of sustainable, advanced biofuels
• Moderate circular economy measures
• Digitilisation
• Market coordination for infrastructure deployment
• BECCS present only post-2050 in 2°C scenarios
• Significant learning by doing for low carbon technologies
• Significant improvements in the efficiency of the transport system.
57
4.2 Energy supply
4.2.1 Energy supply options
The energy system is responsible for close to 80% of total GHG emissions in the EU134
. The bulk
of these emissions are due to fossil fuels combustion, which represented 75% of the total GHG
emissions in 2015. This share increase to 77% adding fuel combustion emissions from
international bunkers.
Reducing GHG emissions from the energy system is therefore a necessary condition for the EU
to achieve the Paris commitments. As demonstrated in sections 2 and 3, transformation of the
energy system is already under way and it is bringing positive effects in terms of decoupling
economic growth from the energy consumption and GHG emissions.
Technology options for further decarbonising the energy sector are, to a large extent, available on
the market. Without the need of breakthrough technologies, further reduction of emissions from
combustion can be achieved either by replacing fossil fuels with carbon-free energy sources or by
capturing their emissions by carbon capture and storage or utilisation (CCS and CCU)
technologies135
.
4.2.1.1 Key carbon-free energy sources
The current carbon-free energy sources are renewables and nuclear (based on nuclear fission).
Renewable sources known today, either in the form of electricity, heat or fuel are: wind, solar
(solar thermal and solar photovoltaic), geothermal energy, tide, wave and other ocean energy,
hydropower, biomass, landfill gas, sewage treatment plant gas and biogases. There is a strong
consensus in research that renewables will play a key role in decarbonisation pathways and when
asked to rank the importance of energy technologies in the clean energy transition, stakeholders
in the public consultation indicated that renewable energy was the most important technology
(see section 7.1).
The largest primary source of renewable energy is solar energy136
, which can be used for both
power generation and heating137
. Solar electricity generation capacity has grown considerably
recently, from almost no installations in 2000 to almost 100 GW in 2016, being responsible for
3.4% of the EU electricity production (estimates of 3.7% in 201799
). In terms of system
integration, the EU is already leading globally with Greece and Italy being the only two large
electricity-consuming countries where solar PV reached or exceeded 7% of annual electricity
production99
. Solar photovoltaics is one of the technologies that has seen the greatest
developments since 2011, with cost reduced by around 70% at global level. Now a costcompetitive
source of electricity, it is experiencing widespread deployment in buildings,
infrastructure, consumer products, and more recently vehicles. Solar photovoltaics can be used to
produce electricity locally, and the EU is leading globally for the deployment of solar panels with
134
The energy sector represents close to 80% of total GHG emissions when including emissions from
international maritime and aviation (and more than 75% of total GHG emissions when excluding
emissions from international maritime and aviation).
135
The capture and injection of CO2 is being used in enhanced oil recovery-related activities, but has
hardly been deployed in the power sector.
136
See for instance: Moriarty, P., Honnery, D. (2012). What is the global potential for renewable energy?
Renewable and Sustainable Energy Reviews. Volume 16, Issue 1, January 2012, Pages 244-252
https://doi.org/10.1016/j.rser.2011.07.151
137
JRC (2018), Potential of solar energy in Europe
58
the highest share of solar rooftop per capita. New developments in both production and
operational processes are increasing efficiencies, product lifetime and capacity factors (e.g.
thanks to solar tracking panels). Concentrated solar power is another solar energy source in
which the EU is a global technology leader, and which has the potential to produce both heat as
well as dispatchable power138
. Europe is also the second largest market for solar heating, and it is
a global leader in the deployment of solar heating for district heating and cooling systems.
Wind power produced around 11.5% of electricity in 2017 and accounted for around 55% of
newly installed capacity139 140.
In terms of installed capacity, wind power is now the second
largest, quickly closing in on gas141
. Continuous innovation in the wind sector has led to higher
capacity factors142
(meaning also that turbines can work with lower wind speeds) and reduced
production cost. The EU is a global leader in the integration of wind power with Denmark,
Portugal and Ireland reaching in 2016 wind power penetration levels of respectively 44%, 21%
and 20%143
, followed by another ten EU Member States. Offshore wind is an almost exclusive
European development, which has rapidly developed into a competitive renewable energy source
with a record of 3.1 GW installed in 2017. However, competition from abroad is increasing and
EU manufacturers will have to reinforce their competitiveness in the coming years to keep their
leadership. The resource potential for wind energy in Europe is very high. According to
WindEurope, offshore wind could meet the EU's electricity demand144
while on-shore wind could
meet almost twice as much145
. However, the actual long-term deployment of wind, and the
possibility to access the full theoretical resource, will be highly dependent on competing land or
sea-bed uses, including with agriculture, forestry and fishing, biodiversity conservation, tourism,
transport activity or military uses. In addition, in order for offshore wind to operate in deeper
waters, such as the Iberian coast and the Mediterranean, turbines will need to be floating rather
than fixed to the ocean floor. Solid progress is being been made in this respect146
and there is a
pipeline of projects that will lead to the installation of 350 MW of floating capacity in European
waters by 2021. This will need to accelerate afterwards.
Globally, electricity produced from solar and wind energy has shown the highest growth rates of
all generation technologies over the past years. However, both solar photovoltaics and wind
power remain variable sources that can only produce when solar or wind resources are available.
Biomass accounts for more than half of all renewable generation and it has recently seen
significant growth. Moreover, the technology solutions are being developed to expand its use in
power generation, buildings and industrial heating as well as transport. Biomass-fired power
138
A global outlook for solar thermal electricity suggests that deployment levels in the EU could range
between 5 and 35 GW by 2030. SolarPaces, Greenpeace, ESTELA (2017). Solar thermal electricity.
Global outlook 2016.
139
WindEurope (2018), Wind in power 2017.
140
EUROSTAT (2018), Gross electricity production from all fuel sources (GWh).
141
In 2017, solar PV and wind accounted for 76% of all new capacity additions in Europe (with only 9% of
other renewables added).
142
See for instance the DOE Wind Technologies Market report 2017: in the USA “average 2017 capacity
factor among projects built from 2014 through 2016 was 42%, compared to an average of 31.5% (..)
from 2004 to 2011 and 23.5% (..) from 1998 to 2001”
https://emp.lbl.gov/sites/default/files/2017_wind_technologies_market_report.pdf
143
European Commission (2018). Energy statistical datasheets.
https://ec.europa.eu/energy/en/news/get-latest-energy-data-all-eu-countries
144
Between 2600 TWh and 6000 TWh under 65 EUR/MWh according to WindEurope (2017).
145
JRC (2018), Wind potentials for EU and neighbouring countries,
http://publications.jrc.ec.europa.eu/repository/bitstream/JRC109698/kjna29083enn_1.pdf
146
the Portuguese Windfloat has been operated for five years, the new Hywind farm has been installed off
Scotland and a French industrial partnership will launch the Floatgen turbine in the Atlantic.
59
plants are fully dispatchable and account for around 6% of EU electricity production in 2017147
.
Biomass is also the major renewable source for heating, accounting for 24% of all commercial
heating production in the EU in 2017147
, and biofuels accounted for 3.8% of transport fuels in
2016. There were also more than 17000 biogas installations and around 450 biomethane
installations in the EU in 2015, accounting for more than 8 GW of electricity production. In
combination with CCS, energy from biomass can also produce negative emissions (see sections
4.2.1.2 and 4.8). Accounted as carbon-neutral, the use of biomass in the energy sector is expected
to increase significantly in decarbonisation scenarios at global level148 149
. However, it also raises
questions about availability and trade-offs with air pollution impacts and conflicting land uses,
with potential impacts on food security, biodiversity and its availability as material, as it is
increasingly identified as attractive feedstock for the bio-based sector (see section 4.7.1.3).
Hydropower is the oldest form of renewable electricity production in the EU, accounting for
around 10% of current electricity production. Hydropower stations can also be used to store
electricity in times of oversupply by using the excess electricity to pump water into their
reservoirs. Due to geographical conditions, its growth potential in Europe is limited, apart from
small hydropower150 151
. Yet, new improvements in turbine efficiency and re-powering could still
contribute to additional electricity production. Its long-term reliability will depend on the
evolution of climate conditions.
Geothermal energy for both electricity and heat production is currently a marginal option in EU's
energy mix accounting for 0.2% of electricity production and 0.4% of commercial heat
production152
. There are a number of ongoing demonstration projects in the EU either to use lowtemperature
heat in advanced district heating networks or to use ultra-deep geothermal drilling
for power generation. Estimates of its future potential are currently highly uncertain (although
possibly very high153 154
) and technical challenges and costs can limit its attractiveness. Although
potentially contributing to a decarbonised energy system in the long run, this technology is not
expected to experience a large scale deployment in the coming decades.
With 71% of the globe surface and regular tides and currents, oceans constitute a possible future
energy resource, notably for the EU, which possesses the largest Exclusive Economic Zone155
.
147
EUROSTAT (2018). Gross electricity production from all fuel sources, GWh
148
IPCC (2018), Special Report on Global Warming of 1.5°C http://www.ipcc.ch/report/sr15/
The report sees the global contribution of biomass to primary energy increasing by 2050 in most 1.5°C
scenarios compared to 2010 (interquartile range for low or no overshoot scenarios is +123% to +261%).
149
From 50 EJ/year today to 75-280 EJ/year in 2050 and more beyond, depending on the scenario and the
model, in: Bauer, N., Rose, S.K., Fujimori, S. et al. Climatic Change(2018). Global energy sector
emission reductions and bioenergy use: overview of the bioenergy demand phase of the EMF-33 model
comparison. https://doi.org/10.1007/s10584-018-2226-y
150
K. Bódis, F. Monforti, S. Szabó (2014), Could Europe have more mini hydro sites? A suitability
analysis based on continentally harmonized geographical and hydrological data, Renewable and
Sustainable Energy Reviews, Volume 37.
151
Stream Map (2012), Small Hydropower Roadmap, Condensed research data for EU-27,
http://www.5toi.eu/wp-content/uploads/2016/11/HYDROPOWER-Roadmap_FINAL_Public.pdf
152
EUROSTAT (2018). Gross electricity production from all fuel sources, GWh.
153
WEC (2016), World Energy Resources 2016, https://www.worldenergy.org/wpcontent/uploads/2017/03/WEResources_Geothermal_2016.pdf.
This report sees a potential of between
10 to 100 current capacity worldwide, equivalent to a production between 750 to 7500 TWh.
154
GEOLELEC (2013), A prospective study on the geothermal potential in the EU,
http://www.geoelec.eu/wp-content/uploads/2011/09/D-2.5-GEOELEC-prospective-study.pdf. This
study identifies a potential of 4000 TWh for Europe alone, with an economic potential in 2050 of 2600
TWh.
155
https://ec.europa.eu/maritimeaffairs/sites/maritimeaffairs/files/docs/body/eu-and-international-ocean-
governance_en.pdf
60
Wave energy, tidal stream, tidal range, ocean thermal conversion or salinity gradient devices
could generate important quantities of electricity156
and some of these technologies are on the
cusp of commercial deployment. Furthermore, EU's outermost regions could use seawater air
conditioning for cooling purposes. The EU is a global technology leader in ocean energy
technologies. Gearing up these will require overcoming a number of barriers, in terms of costs
decrease but also, like for offshore wind, anticipating potential conflicting uses of sea, seabed and
coastal areas. The Roadmap produced by the EU’s Ocean Energy Forum, which gathered
industry, regulators and researchers, defined four actions to kick-start this activity from
demonstration to production: (1) EU scheme for validation of sub systems and prototypes, (2)
EUR 250 million Investment Support Fund, (3) EUR 50-70 million insurance and guarantee
fund, and (4) integrated programme of measures to de-risk planning measures.
Nuclear energy (based on nuclear fission) is a well-established large-scale zero-carbon
technology in power generation. Despite high construction costs (also linked to strict safety
regulations), public acceptance issues in some Member States (demonstrated also in the results of
the public consultation) and increasing competitiveness of other energy sources, the share of
nuclear in the power production is 26% in the EU. It is expected to play a role at global level in
mitigation scenarios. For instance IAEA (2018)157
sees a possible doubling of global nuclear
capacities by 2050, and IPCC (2018) 158
sees similar increases in capacity in 2050 in 1.5°C
scenarios compared to 2010, albeit growing less fast than other zero carbon renewable energy
sources. Being used traditionally as baseload, the economics of this option could be affected in a
context of increasing role of renewables159
. In some countries, nuclear power plants are operated
in a more flexible way for instance through load following and frequency control160 161 162
.
Nuclear can play a role in reducing the dependence on fossil fuel energy imports in Europe.
Although most nuclear fuel is imported from outside the EU, the supply is well-diversified, and
fuel can be stockpiled in reserves worth 2-3 years of consumption, minimising the impact of any
short-term disruptions. Although nuclear power could contribute in those Member States that opt
156
JRC (2016), Ocean Energy Status Report 2016,
https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/jrc-ocean-energy-
status-report-2016-edition.
Apart from the mature tidal range technology, ocean energy concepts are still in the demonstration
phase. Currently announced projects sum up to about 1 GW for the early 2020s.
157
IAEA (2018), Climate change and nuclear power,
https://www-pub.iaea.org/books/IAEABooks/13395/Climate-Change-and-Nuclear-Power-2018.
158
IPCC (2018), Special Report on Global Warming of 1.5°C http://www.ipcc.ch/report/sr15/
Interquartile range (for low or no overshoot scenarios) is +91% to +190% in 2050 compared to 2010.
159
NEA, OECD (2012), Nuclear energy and Renewables - System Effects in Low-carbon Electricity
Systems, https://www.oecd-nea.org/ndd/pubs/2012/7056-system-effects.pdf.
160
IAEA (2018), Non-baseload Operations in Nuclear Power Plants: Load Following and Frequency
Control Flexible Operations,
https://www-pub.iaea.org/books/iaeabooks/11104/Non-baseload-Operation-in-Nuclear-Power-Plants-
Load-Following-and-Frequency-Control-Modes-of-Flexible-Operation
161
In addition, flexibility in electricity generation from nuclear can be enhanced by the development of
small modular reactors (SMRs). Small Modular Reactors (SMRs) are defined as reactors with an
electrical output lower than 300 MWe. SMRs have been first considered by the nuclear industry for
commercial deployments with the aim to ensure the supply of energy to communities with little access
to other sources or to address the difficulties of financing a large nuclear power plant. Nevertheless, in
recent years, with large new nuclear projects advancing slowly, an increased presence of variable
sources in the energy mix and the progressive decentralization of the grid, opportunities in smaller scale
nuclear power reactors have become again under analysis. In SMRs design, attention is paid in
particular to the capacity of the reactor to rapidly respond to the changes in the required power output.
162
FTI Energy (2018), Pathways to 2050: role of nuclear in a low-carbon Europe,
https://www.foratom.org/2018-11-22_FTI-CLEnergy_Pathways2050.pdf
61
for it, to an efficient decarbonisation of the power system, nuclear investments currently remain a
challenge in the EU, due to the important up-front costs on the one hand and less certain
electricity market prices on the other hand163 164
.
4.2.1.2 Carbon capture and sequestration/utilisation
Another option that could play a role on the path towards decarbonisation and the one that could
maintain participation of fossil fuels in the energy mix is carbon capture and sequestration/use
(CCS and CCU)165 166
. CCS and CCU are technically feasible for most large point sources (power
and CO2- intensive industry). So far, some 37 large scale CCS projects (mostly related to oil and
gas recovery activities)167
and a number of commercial pilot CCU projects168
are on-going around
the world in varying stages of development, while several planned projects have been abandoned
due to uncertain economic performance. Uncertainties on the long-term behaviour of carbon
storage as well as public acceptance issues (demonstrated also in the results of the public
consultation) have also hindered a proper uptake of this technology in the EU, with some
Member States having effectively banned it on their territory. Finally, capture rate above 90%
appears difficult and very costly to achieve169
, meaning CCS used with fossil fuels currently does
not achieve full decarbonisation.
Until recently, CCS efforts were mainly targeted at the power sector, but lately its role in
reducing emissions also in industry has also been recognised. It has the advantage that it can be
easily integrated into existing energy systems, significantly reducing GHG emissions, which is
the reason it is often referred to as a bridging technology. Moreover, in many decarbonisation
scenarios it continues to play an important role in the long term, where a share of fossil fuels
remains in the energy mix for decades to come. This is due, to a large extent, to the role of
natural gas as a transition fuel and the use of gas and oil used in power plants balancing the
electricity sector or used as feedstock in some industrial processes. The valorisation of captured
CO2 as raw material for carbon-based products/feedstocks or even e-fuels could also contribute to
a cost-effective transition in the industrial sector.
Importantly, while these technologies currently lack of incentives for large-scale
implementation170
, CCS and CCU lie in the critical path for scenarios where negative emissions
163
MIT (2018), The Future of Nuclear Energy in a Carbon-Constrained World, an interdisciplinary study,
http://energy.mit.edu/wp-content/uploads/2018/09/The-Future-of-Nuclear-Energy-in-a-Carbon-
Constrained-World.pdf.
164
OECD NEA (2018), The Full Costs of Electricity Production,
https://www.oecd-nea.org/ndd/pubs/2018/7298-full-costs-2018.pdf.
165
Bui et al, (2018), Carbon Capture and Storage (CCS): the way forward, Energy & Environmental
Science, This article provides a detailed overview of the role of CCS in meeting climate change targets.
166
ZEP (2017), Future CCS technologies,
http://www.zeroemissionsplatform.eu/news/news/1665-zep-publishes-future-ccs-technologies-
report.html
167
Global CCS Institute (2018), Projects Database,
https://www.globalccsinstitute.com/projects/large-scale-ccs-projects
168
SCOT project (2016), Database of CO2 utilisation projects,
http://database.scotproject.org/projects.
169
Global CCS Institute (2018), CO2 capture at gas fired power plants,
https://hub.globalccsinstitute.com/publications/CO2-capture-gas-fired-power-plants/
170
See also IPCC Special Report on Global Warming of 1.5°C, section 2.4.2.3.
62
would be needed. Section 4.8 discusses further negative emissions and the possible role of
biomass associated with CCS (BECCS)171
.
Nevertheless these technologies face a number of challenges, especially related to costs, but also
markets, standards and established practices. In particular for CCU, the findings of various
studies172 173
so far confirm the complexity of the subject and the uncertainty relative to the
associated climate mitigation potential, since it encompasses a large variety of applications and
situations.
4.2.1.3 Electricity and heat
Deployment of carbon-free energy sources in power generation makes electricity a carbon-free
energy carrier. As it is a versatile carrier usable for most of the final energy uses, many scenarios
see increasing electrification of final energy demand in all sectors: industry, transport and
buildings.
The anticipated electrification and the more decentralised deployment of renewable power
generation will require reinforced and smarter electricity networks to make the best of the
renewable resources allocation over the European territory174
.
Transporting electricity produced by increasingly dispersed sources calls also for the organisation
of consumption and storage in a more decentralised way. Some long-term scenarios suggest that
about 83% of all EU households could be actively supporting the deployment of renewables,
either by producing energy themselves or by providing the flexibility services175
thus requiring
decentralised network. At the same time, important segments on both energy production (e.g.
offshore wind farms which can reach capacities comparable to conventional sources) and the
consumption side (e.g. energy intensive industries) are likely to remain centralised, which
indicates that future electricity network will have to accommodate both centralised and
decentralised elements.
Not only density of the network but also increased interconnection capacities will be needed if
electricity networks are to match growing renewable energy supply and electricity demand over
ever larger geographical distances. High Voltage Direct Current (HVDC), which generates less
transport losses, could play an increasing role in the connection of offshore wind farms and help
establishing a pan-European electricity ‘super-grid’176
.
Integration of variable wind and solar energy requires flexibility of the rest of the system. This
includes fast reacting generation sources on the supply side, storage or demand response. EU
experience has shown that market mechanisms provide liquidity and flexibility necessary on the
171
Negative emissions could be obtained by using bioenergy with CCS ("BECCS"): see Luderer et al.
(2018), Residual fossil CO2 emissions in 1.5–2 °C pathways, Nature Climate Change, Volume 8, pages
626–633 (2018), https://doi.org/10.1038/s41558-018-0198-6
172
Group of Scientific Advisers (2018), Novel Carbon Capture and Utilisation Technologies,
https://ec.europa.eu/research/sam/index.cfm?pg=ccu.
173
Ramboll (2018), Identification and analysis of promising carbon capture and utilisation technologies,
including their regulatory aspects, forthcoming,
https://ec.europa.eu/clima/events/stakeholder-event-carbon-capture-and-utilisation-technologies-
technological-status_en
174
COM(2017) 718
175
CE Delft (2016), The potential of energy citizens in the European Union,
https://www.cedelft.eu/publicatie/the_potential_of_energy_citizens_in_the_european_union/1845.
176
Friends of the Supergrid (2016), Roadmap to the Supergrid Technologies – Update Report,
https://www.friendsofthesupergrid.eu/wp-content/uploads/2013/07/Supergrid-Technological-Roadmap-
2016-FINAL1.pdf
63
power market, and that market-based instruments, such as auctioning, bring down costs for
renewables generation significantly. The ongoing digitalisation of the energy grids can help
activating decentralised flexibility resources177
.
Electricity and thermal storage solutions are developing fast both in laboratories but also on the
market. Different technological solutions compete for storing electricity over timeframes between
fractions of seconds and seasons (Figure 15).
Figure 15: Overview of different electricity storage technologies
Source: European Commission (2017), Energy storage – the role of electricity178
.
The most noticeable recent evolution is the rapid improvements of batteries, in particular of
lithium-ion type179 180
. A range of alternatives are being developed, including Power-to-Heat
stored in in aquifers181
, Power-to-Hydrogen that can be stored in dedicated reservoirs and
retransformed into electricity or used directly as a fuel, Power-to-Gas and Power-to-Liquid
technologies182
or even Power-to-Ammonia183
that can be stored and used as a fuel in power
plants or in maritime applications (see section 4.4).
Distributed Heat is another energy carrier that today accounts for 4% of final energy
consumption. It is today mostly delivered by large CHP plants, mostly for district heating and is
largely based on fossil fuels. It represents only around 10% of final energy consumption for
177
SWD(2017) 425 and 3rd
PCI list, smart grid projects.
178
SWD(2017) 61 final
179
Li-ion batteries have become a key option for electrifying transport and are also increasingly as
stationary electricity storage. They can be found both behind the meter, storing PV electricity for up to
several hours, as well as in the form of larger centralised units providing frequency control.
180
JRC (2018 upcoming), Li-ion batteries for mobile and stationary storage applications - Scenario
assessment on growth and costs.
181
Liuhua Gao et al. (2017), A review on system performance studies of aquifer thermal energy storage,
Energy Procedia, Volume 142, https://doi.org/10.1016/j.egypro.2017.12.242 .
182
SWD (2017) 61. This Commission Staff Working Document discusses the different storage options at
greater length.
183
Institute for Sustainable Process Technology (2017), Power to Ammonia, Feasibility study for the value
chains and business cases to produce CO2-free ammonia suitable for various market applications,
http://www.ispt.eu/media/ISPT-P2A-Final-Report.pdf
64
heating184
, while 90% of heating is from self-production and is not directly accounted for in
energy statistics. Whilst absolute heat production levels have been relatively stable since 2000,
the share of renewables in the heating sector has increased from 11% in 2005 to 15% in 2010 and
to 19% in 2015. Studies estimate that there is the potential to expand district heating and cooling
to supply 50% of the heat demand185
, including 25–30% using large-scale electric heat pumps186
.
4.2.1.4 New energy carriers
In addition to electricity, new carriers are being considered in energy and industrial applications
where it is difficult to replace fossil fuels, in particular because of the chemical and physical
properties sought. Hydrogen (H2) and its carbon derivatives obtained by reaction with CO2 like egas
(e-CH4) and e-liquids are considered as possible options for decarbonisation of transport,
buildings or industry. These new carriers, to be themselves considered as carbon-free, will have
to rely in particular on availability of carbon-free electricity. The results of public consultation
indicate that these new fuels are recognised by citizens as technologies that could play a role in
the clean energy transition.
Hydrogen can gradually take the role of an energy vector beyond its potential role as a chemical
storage of electricity. It could replace natural gas as an energy fuel per se (albeit often with
energy efficiency losses) for heating purposes or in transport (used with fuel cells) and as
feedstock for industrial applications (e.g. steel industry, refineries, fertilisers). Hydrogen is
already a common input to some industry processes (notably in chemicals) but currently
produced via steam reforming using fossil fuels as input (mostly natural gas) and thus leading to
CO2 emissions. In the decarbonised future, hydrogen obtained from electrolysis using
decarbonised electricity is the preferable option, including “green” hydrogen obtained from
renewables. “Blue” hydrogen obtained from steam reforming of natural gas coupled with CCS
may also play a role, provided the inherent constraints of CCS are lifted. In particular, in a power
system largely based on variable renewable sources, hydrogen could be produced at times of low
electricity demand providing additional flexibility. If needed in large quantities, hydrogen could
also be produced by nuclear electricity or even might be imported from regions with potentially
low cost renewable energy production187 188
.
Hydrogen can be blended with natural gas so as to make use of the existing gas transport
infrastructure up to 15% (or 20% in the future) by volume189
. An upgrade of this infrastructure
network would be needed to accommodate higher levels of hydrogen, even more so for pure
184
Heat is estimated to represent 50% of the EU final energy consumption.
185
Paardekooper et al. (2018), Heat Roadmap Europe 4: Quantifying the Impact of Low-Carbon Heating
and Cooling Roadmaps,
http://vbn.aau.dk/files/288075507/Heat_Roadmap_Europe_4_Quantifying_the_Impact_of_Low_Carbo
n_Heating_and_Cooling_Roadmaps..pdf
186
David et al. (2018). Heat Roadmap Europe: Large-Scale Electric Heat Pumps in District Heating
Systems, https://doi.org/10.3390/en10040578
187
BCG & Prognos (2018), Climate paths for Germany,
https://www.bcg.com/en-be/publications/2018/climate-paths-for-germany-english.aspx
https://bdi.eu/publikation/news/klimapfade-fuer-deutschland/ (full study in German)
188
Prognos (2018), Status und Perspektiven flüssiger Energieträger in der Energiewende
https://www.mwv.de/wp-content/uploads/2018/06/Prognos-
Endbericht_Fluessige_Energietraeger_Web-final.pdf
189
See the FP6 EC research project NaturalHy: https://cordis.europa.eu/project/rcn/73964_en.html
65
hydrogen where a renewed network is likely to be needed190 191
. Hydrogen can also be stored at
large scale, e.g. in salt caverns and other facilities.
Hydrogen could also be converted to synthetic hydrocarbons by reacting, using electricity, with
CO2. The emissions of such "e-fuels" will depend on the source of electricity and, to be fully
accounted as carbon neutral, the source of CO2 will have to come from biomass or Direct Air
Capture (DAC)192
or biomass.
E-fuels have the advantage that, once produced, these are exactly the same molecule as natural
gas or oil, and can be distributed via existing transmission/distribution system and used by
existing installations/applications.
Finally, another option being explored is the processing of hydrogen to ammonia, which is a
versatile product, easier to transport and to store, that could be used in industry or as energy
storage and energy carrier (e.g. possibly in transport)183 193
.
However, these technologies are not ready for large-scale deployment yet, and are still
characterised by low efficiency and high current production cost estimates194
.
4.2.1.5 Sector coupling
Sector coupling refers to linking the energy (electricity, gas and heat), transport and industrial
infrastructures with a view to increase the penetration of renewable energy sources and
decarbonise the economy. Energy storage and sectoral integration would have the potential to
make the energy transition faster and more cost-effective. Common to all analyses is the finding
that many of the energy technologies, infrastructures and sectoral systems can further optimise
their contribution to decarbonisation when coupled/integrated, allowing the best possible use of
the available resources, the avoidance of stranded assets, and the best information base for
decisions on investments. Integration impacts the energy system at several levels: physical and
communications (i.e. technologies, infrastructures), functions and services (e.g. for business, for
consumers), market (regulation, transactions). Coupling also means that action in one sector is
heavily dependent on other sector(s). For instance, decarbonisation of heating via electrification
will not happen unless power generation decarbonises.
This integration will build on the interdependency of energy transformation sectors (power,
heating, production of new fuels) with industry, mobility, buildings sector, and other energyusing
activities. Several possibilities for sector coupling have been already identified – see Figure
16.
190
See NREL report (2013) "Blending Hydrogen into Natural Gas Pipeline Networks: A Review of Key
Issues" https://www.energy.gov/sites/prod/files/2014/03/f11/blending_h2_nat_gas_pipeline.pdf
191
Another possibility for a "decentralised" distribution system of hydrogen is the use of trucks - More
precisely hydrogen tube trailers, which transports compressed hydrogen (180-250 bar) in steel tubes.
Each trailer can transport about 280-720 kg of hydrogen.
192
If the CO2 comes from a fossil source (for instance captured from a gas or coal-fired power plant), then
the burning of the e-fuel will result in CO2 emissions, even though the overall carbon footprint of the
energy chain is decreased (the same unit of CO2 would be associated to the production of electricity and
the e-fuel, for instance).
193
Science (2018), Ammonia—a renewable fuel made from sun, air, and water—could power the globe
without carbon, DOI:10.1126/science.aau7489
194
Close to 2500 EUR/t for e-methane to well above 3000 EUR/t for e-petrol, i.e. more than 5 times the
fossil fuel alternatives, see also:
https://www.transportenvironment.org/sites/te/files/publications/2017_11_Cerulogy_study_What_role_
electrofuels_final_0.pdf
66
Figure 16: Integration of energy vectors
Source: European Commission (2017) 195
.
Beyond the energy sector, the economic system will also increasingly rely on the further
integration with natural resources used, industry and agriculture. Digitalisation and a smart
regulatory framework will be key enablers allowing a system-level management. The energy
sector coupling will in particular help the integration of larger contributions of variable
renewables whose energy, after transformation, can be stored and distributed in new fuels.
Additional argument for sector coupling using e-fuels is that most of today’s energy network
infrastructures (electricity, gas, heating and cooling, liquid fuels) will still be operational in 2050.
There is clearly a rationale of making use, during the transition, of the large existing gas (and oil)
infrastructure that is able to carry and store substantial amounts of energy, including by
potentially upgrading it for the use of biogas or hydrogen. In the longer run, there may be tradeoffs
between, on the one hand, managing simultaneously multiple networks and, on the other
hand, operating only one extended power grid196
.
4.2.1.6 Role of energy efficiency
Although technological development of supply-side carbon-free options will be a key and direct
contributor to the decarbonisation of the energy system, it must act in synergy with the evolution
of energy demand.
First of all, the actual capacity for deployment of supply-side options will be influenced by the
absolute quantity of future final energy demand. On the one hand, low level of demand might
hinder technologies at lower technology readiness levels to reach the scale required to reduce
costs. On the other hand, in trying to supply a high level of demand, supply-side options might
reach their maximum economic potential, be it related to raw resources (land or new materials for
instance) or to system management (power grid stability for instance). Most likely the
decarbonised energy carriers will have high costs (notably e-fuels) and thus reducing demand for
them has direct economic benefits.
195
SWD(2017) 61 final. Energy storage - the role of electricity.
196
PÖYRY (2018), Fully decarbonising Europe’s energy system by 2050,
http://www.poyry.com/news/articles/fully-decarbonising-europes-energy-system-2050
67
Secondly, reducing final energy demand and improving overall energy system efficiency (that
will translate into reducing of primary energy demand) is often a cost-effective measure for GHG
emissions reduction, able to deliver further socio-economic and environmental goals, using
available and accepted technologies with a significant potential across different sectors of the
economy.
That is why in the context of clean energy transition, "energy efficiency first" is a central
principle applied to policymaking, planning and investment in the energy sector. It requires
considering the potential value of investing in energy efficiency in all decisions about energy
system development, not only on the supply side but also in homes, offices, industry or mobility.
The principle aims to treat energy efficiency as the “first fuel” – a source of energy in its own
right, in which governments can invest ahead of other more complex or costly energy sources,
following the "save before you build"197
logic. Applying this principle will help improving
Europe’s ability to create a less costly, jobs-rich, low-carbon energy system.
For these reasons, introducing energy efficiency improvements whenever they are more costeffective
is therefore a "non-regret" or "first" option. This question is investigated further in the
sections dedicated to developments in final energy sectors (sections 4.3, 4.4 and 4.5).
4.2.2 Energy supply results
The section 4.2.1 above presents a comprehensive overview of the energy supply options for the
clean energy transition198
. In order to showcase the respective roles and potentials of options as
well as their interplay, a quantitative analysis using energy system modelling was performed by
the Commission. The modelling results are presented below and contrasted with a literature
review.
4.2.2.1 Primary energy consumption and energy mix
Before analysing the roles of respective energy sources, it is important to note that the "energy
efficiency first” principle is present in all scenarios and drives down final energy consumption
(see section 4.2.2.2), which, in turn, will decrease primary energy consumption. In fact, already
with the policies assumed in the Baseline, primary energy consumption199
is substantially reduced
(35% in 2050 compared to 2005 - building on 26% reduction in 2030 reflecting the 2030 target).
In addition to final energy consumption, the evolution of primary energy mix will also have an
impact on overall primary energy consumption due to uptake of renewables in power generation
(wind and solar) and moving away from fossil fuels. Also (in some scenarios), the uptake of
carbon neutral e-fuels (e-gas and e-liquids) and hydrogen whose production is energy (electricity)
intensive will have an important impact on primary energy consumption.
The EE and CIRC scenarios achieve the highest reductions in primary energy consumption in
2050 (compared to 2005): 50% and 45%, respectively), driven by efficiency developments on the
final energy consumption across all sectors and circular economy impacts on energy consumption
in transport and industry respectively. On the other end, the P2X scenario (achieving only 22%)
197
European Climate Foundation (2016), Efficiency First: A New Paradigm For The European Energy
System Driving Competitiveness, Energy Security And Decarbonisation Through Increased Energy
Productivity. https://www.raponline.org/wp-content/uploads/2016/07/ecf-efficiency-first-new-
paradigm-eruopean-energy-system-june-2016.pdf.
198
Without yet being fully exhaustive as some longer-term options have not been discussed (see for
instance fusion energy discussed in section 5.4.1)
199
Gross Inland consumption excluding non-energy consumption.
68
makes an intensive use of e-fuels, which require large amounts of electricity to be produced. The
other scenarios, including those with higher GHG reductions achieve reductions in-between (32%
to 42%), i.e. close to the Baseline situation, see Figure 17. In case of 1.5°C scenarios this is the
effect of combining deep savings in the final energy consumption with increased electricity needs
for production of e-fuels and hydrogen.
These results indicate well the trade-off between efficiency loss and versatility of decarbonised efuels
that could potentially replace seamlessly the fossil fuels as well as the likely dilemma of
creating the right scale of e-fuels/hydrogen consumption: too small uptake would hamper
technology learning, while large deployment would entail substantial additional needs on the
supply side.
Figure 17: Changes in primary energy consumption in 2050 (% change)
Source: Eurostat (2005), PRIMES.
The projected energy mix (Gross Inland Consumption, see Figure 18:) clearly shows the
deployment of a new energy system based primarily on renewables, moving away from fossil
fuels. Those fossil fuels that remain in the system are, to a large extent, assigned to non-energy
uses, i.e. used as raw material in the industry (e.g. to produce plastics).
It is noteworthy that by 2050 solids virtually disappear from the energy system, including in the
Baseline.
The share of fossil oil (excluding non-energy use) also declines very strongly already in scenarios
achieving 80% GHG reduction: from 30% in 2015 to 25% in 2030 to, in 2050, between 12%
(EE) and 8% (P2X). The amount of fossil oil in the EE scenario is slightly lower than in other
scenarios achieving 80% GHG reduction, but the percentage is higher because total final energy
consumption in the EE is lower than other scenarios due to the higher energy efficiency. The
sharpest decreases happen in the 1.5°C scenarios due to a combination of use of several zero
carbon or carbon neutral fuels/energy carriers, notably in transport (see section 4.4.2). This is
because the scenarios include the most ambitious CO2 efficiency for light duty vehicles200
and, in
the case of 1.5LIFE, the additional effect of lifestyle changes shifting mobility to low energy
options. Around half of the remaining fossil oil in the decarbonisation scenarios achieving 80%
GHG reduction is actually used as a raw material in industry, and in the scenarios with highest
GHG reductions, most of remaining fossil oil is used as raw material. In several scenarios (P2X,
200
Zero CO2 emissions from the new fleet is assumed for 2040 already
-60%
-40%
-20%
0%
20%
40%
Baseline EE CIRC ELEC H2 P2X COMBO 1.5TECH 1.5LIFE
2030 2050
vs 2005 vs 2030 vs Baseline
69
COMBO, 1.5TECH and 1.5LIFE), fossil oil used as energy is partially substituted by e-liquids
and they account for 2-4% of gross inland consumption201
(see 4.2.2.4).
Figure 18: Gross inland consumption
Source: Eurostat (2015), PRIMES.
The share of natural gas (excluding non-energy uses) decreases slowly from 21% in 2015 to 20%
in 2030, and then by 2050 more sharply in the decarbonisation to between 7%-9% in the 80%
GHG reduction scenarios, and 3%-4% in the stronger reduction cases. Importantly, natural gas is,
in several scenarios (P2X, COMBO, 1.5TECH and 1.5LIFE), partially substituted by e-gas,
which then represents 4%-6% of the gross inland consumption in 2050.
Overall, the decreasing roles of fossil oil and natural gas in the energy mix will contribute to
improving the security of energy supply of the EU (see also sections 4.2.2.4 and 4.2.2.5).
Studies from third parties draw a very mixed picture on the future role of natural gas in Europe.
The range goes from natural gas meeting 19% of primary energy demand in the Equinor Renewal
scenario202
, to 15% in the Shell Sky scenario203
, 10% in the IEA ETP B2DS204
scenario and 1% in
the Öko Vision Scenario for the European Union205
. The meta study by Trinomics (2018)206
on
201
By convention, e-gas and e-liquids are accounted for in the gross inland consumption, thus, when they
develop, decreasing the relative weight of primary energy from “conventional” energy sources (for
instance, in particular, in the P2X case).
202
Equinor (2018), Energy Perspectives, Long-term macro and market outlook,
https://www.equinor.com/en/news/07jun2018-energy-perspectives.html
203
Shell (2018), Sky scenario, Meeting the goals of the Paris Agreement - an overview,
https://www.shell.com/energy-and-innovation/the-energy-future/scenarios/shell-scenario-sky.html
204
IEA (2017), Energy Technology Perspectives 2017, https://www.iea.org/etp.
205
Öko-Institut (2018), The Vision Scenario for the European Union 2017 Update for the EU-27,
http://extranet.greens-efa-service.eu/public/media/file/1/5491
206
Trinomics (2018), The role of Trans-European gas infrastructure in the light of the 2050 decarbonisation
targets. http://trinomics.eu/wp-content/uploads/2018/11/Final-gas-infrastructure.pdf
The study identifies three “storylines”: electrification of transport and heating, decarbonisation of gas
through biomethane and synthetic methane, decarbonisation of gas through "green" hydrogen.
0,8
1,0
1,2
1,4
1,6
Gtoe
Gross inland consumption
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2050
renewables
e-gas
e-liquids
nuclear
natural gas
fossil liquids
solids
non-energy use (other)
non-energy use (oil)
70
the role of gas infrastructure in the light of energy decarbonisation target identifies various
storylines of replacing natural gas by decarbonised gas in the EU energy mix.
The share of nuclear energy in gross inland consumption (14% in 2015), which is relatively
stable over time in the Baseline, slightly increases in the decarbonisation scenarios to 14%-17%
in 2050, corresponding to energy supply close or only slightly below 2015 level (213 Mtoe in
2015 vs. 144 Mtoe in EE to 213 Mtoe in 1.5TECH in 2050).
In contrast the share of renewables increases in a spectacular manner, from 13% in 2015 to 25%
in 2030, and then to 36% already in the Baseline in 2050. Renewables represent more than half
the gross inland consumption in all decarbonisation scenarios in 2050, ranging from 51% (EE) to
62% (in both of 1.5°C scenarios).
4.2.2.2 Energy demand as a driver for energy supply requirements
Already in the Baseline the final energy consumption is substantially reduced and the 2030 target
on energy efficiency (32.5% reduction compared to 2007 Baseline) already translates into a 20%
reduction compared to 2005 (also achieved in all decarbonisation scenarios). The reductions
compared to 2005 go up to 26% in 2050. At that time horizon, the reduction of final energy
demand in the decarbonisation scenarios ranges from 30% (P2X) to 44% (EE) among scenarios
achieving 80% GHG reductions and up to 47% (1.5LIFE) among scenarios with higher GHG
reductions. The least reductions are achieved in scenarios with alternative zero-carbon/carbon
neutral energy carriers (ELEC, H2 and P2X) enabling reaching decarbonisation objectives with
lower reduction of the demand. The EE and CIRC scenarios achieve stronger reductions of final
energy demand, mostly in residential and industrial sectors - respectively. Among scenarios that
achieve higher GHG reductions only 1.5LIFE has higher reductions than EE (47%) as it builds on
all technology solutions but also couples them with consumer choice that further reduces energy
demand. Other studies show final energy demand reduction by 2050 ranging from as little as 19%
(Shell Sky scenario203
) to levels similar to the findings of this analysis: 43% (IEA ETP B2DS204
scenario) or even 56% (Öko-Institut207
).
Such significant reductions of the final demand confirm the large potential for energy demand
moderation and opportunities for the development of dedicated industries and services. Attention
will have to be paid, though, to implement such reductions early and gradually to avoid
bottlenecks (for instance on access to capital or labour force, in particular regarding renovation of
buildings, see section 5.1.2) that would prevent full deployment by 2050.
207
Öko-Institut (2018), The Vision Scenario for the European Union, 2017 Update for the EU, Project
sponsored by Greens/EFA Group in the European Parliament,
https://www.greens-efa.eu/en/article/document/the-vision-scenario-for-the-european-union-7659/
71
Figure 19: Changes in sectoral final energy consumption (% change vs 2005)
Note: “Services” includes here the agriculture sector.
Source: Eurostat (2005), PRIMES.
Comparing sectors, residential has the sharpest energy consumption reductions (in 2050
compared to 2005) in most scenarios. Transport then follows, due to the substitution of highly
inefficient ICE vehicles by electric vehicles and systemic energy efficiency gains. Industry and
services tend to have comparatively lower energy reductions as both sectors grow according to
assumptions on macroeconomic growth.
Final energy demand by sector is analysed in more detail in each of the sectoral sections:
buildings (comprising residential and tertiary sector – see section 4.3.1.6), transport (section
4.4.2) and industry (section 4.5).
The overall fuel mix in final demand also changes significantly and the specific drivers are
described for each of the sectors. Looking at overall picture the following trends can be noticed.
First of all, solids, already marginal in 2030 disappear by 2050 and that already in the Baseline.
Fossil liquids and natural gas remain in the system but their quantities are substantially reduced.
In these scenarios where e-fuels develop (P2X, COMBO, 1.5TECH and 1.5LIFE), fossil liquids
and natural gas are partially substituted by e-fuels: e-liquids represent 3%-7% of the final demand
in 2050 whereas e-gas that represents 7%-10% of the final demand in 2050.
-60%
-50%
-40%
-30%
-20%
-10%
0%
Baseline EE CIRC ELEC H2 P2X COMBO 1.5TECH 1.5LIFE
2030 2050
comparedto2005(%)
Services
Industry
Transport
Residential
Total
72
Figure 20: Share of energy carriers in final energy consumption
Source: Eurostat (2000, 2015), PRIMES.
Electricity becomes the dominant energy carrier and its shares grows strongly in all scenarios,
from 22% in 2015 to 29% in 2030 and then in 2050 ranging from 41% (P2X) to 53% (ELEC)
with the scenarios achieving highest GHG reductions situated within this range. The ELEC
scenario by its construction drives the highest shares of electricity whereas in P2X scenario
electricity competes with e-fuels. These rates are consistent with other studies, like Eurelectric
(2018)208
that shows electrification rate of the final demand in 2050 ranging from 38% (80%
emissions reduction) to 60% (95% emissions reduction).
Biomass and waste also increases its share in all decarbonisation scenarios, partially driven by
increased advanced biofuels penetration but also use of biogas. Biomass and waste thus represent
between 14% (H2) and 19% (CIRC) of final demand in 2050 with the scenarios achieving
highest GHG reductions situated within this range. H2 scenario has the lowest shares due to
penetration of hydrogen in gas distribution as well as in high temperature applications in industry
and in freight transport (both otherwise dependent on biomass).In CIRC, the high share is partly
driven by low overall final energy consumption and partly because of higher availability of
biomass due to reduction in industrial production (as a raw material) as well as improved
management and collection of organic waste and biomass cascading, leading to the use of
biomass as a feedstock for the production of biogas in local bio-refineries. Other types of
renewables that produce direct renewable heat, notably solar thermal, geothermal and ambient
energy209
have only very limited penetration in all decarbonisation scenarios210
.
Distributed Heat supply in final energy consumption keeps the share it holds in 2015 (4%) over
the period up to 2050 and it mainly reflects district heating for buildings and distributed industrial
208
Eurelectric (2018), Decarbonisation pathways for the European economy,
https://cdn.eurelectric.org/media/3172/decarbonisation-pathways-electrificatino-part-study-results-h-
AD171CCC.pdf.
209
Formerly hydrothermal and aerothermal.
210
The development of geothermal and solar thermal energy, individually or in district heating and cooling
has not been in depth explored in the decarbonisation scenarios.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2050
electricity
other RES
biomass
heat distributed
hydrogen
e-gas
natural gas
e-liquids
fossil liquids
solids
600
800
1000
1200
Mtoe
Final energy demand
73
heat (mostly delivered from co-generation) using as energy sources biomass, geothermal heat and
electricity since the fossil fuels disappear post 2030. It is noteworthy that the share of heating
supplied through district heating and combined heat and power in the industrial sector increases
by some 50% in most decarbonisation scenarios, although the absolute supply levels only grow
moderately. In the buildings sector, distributed heat supply decreases with increased energy
efficiency and electrification (compared to 2030).
Applying the Renewable Energy Directive formula211
, the renewables share in (gross) final
energy consumption would grow from the target of 32% in 2030 to between 67% and 84% in
2050 in scenarios achieving 80% GHG reductions and up to 100% in 2050 in the both 1.5°C
scenarios. E-fuels and hydrogen, when produced with renewable electricity, are also counted as
renewables.
4.2.2.3 Power sector
In line with earlier analyses of the Commission, electricity demand increases significantly by
2050 in all decarbonisation scenarios. Among scenarios achieving 80% GHG reduction, the
ELEC scenario displays the highest growth, with final demand of electricity being 75% above
2015 level and the EE scenario the lowest (36% increase) as increased energy efficiency
counterbalances the effects of electrification (see Figure 19). The scenarios with higher GHG
reductions lie within this range, except for 1.5LIFE which shows only 30% increase due to
combined penetration of e-fuels and effects of consumer choice.
Increased electrification takes place in most sectors compared to levels achieved in 2030. In
2050, transport sees the most spectacular development of electricity use, which multiplies in the
ELEC and 1.5TECH scenarios up to 10 fold compared to 2015 and 4 fold compared to 2030 (see
also section 4.4). Residential and industry also go through increased electrification, respectively
increasing electricity use in 2050 (compared to 2030) by up to 31% in residential and up to 50%
in industry (in ELEC). The further penetration of electricity in the tertiary sector is more limited
– up to 24% (in ELEC), even showing a slight decrease in the EE and 1.5°C scenarios, where
electrification is counterbalanced by energy efficiency improvement in this sector.
There is a consensus across studies that electricity consumption will further grow in Europe. The
growth over the period 2030 - 2050 ranges between 12% in the IEA ETP B2DS204
and 66% in the
Shell Sky scenario203
.
211
Directive 2009/28/EC
74
Figure 21: Changes in final electricity consumption in 2050 compared to 2015
Note: left graph: % change compared to 2015 for total, residential, services and industry; right graph:
ratio between 2050 and 2015 for transport.
Source: Eurostat (2015), PRIMES.
In addition to increased final demand of electricity, the development of e-fuels also create a new
need for electricity supply. As a consequence of both changes in the final energy demand and (in
some scenarios) the production of e-fuels, the gross electricity generation in 2050 compared to
2030 increases strongly, ranging from 18% (EE) through 57% (ELEC) and to 109% (P2X, which
reflects large e-fuels production) among scenarios that deliver -80% GHG reduction. Scenarios
with higher GHG reductions also experience uptake of e-fuels, and thus higher electricity
production needs, notably 1.5TECH that sees the highest deployment of e-fuels, hydrogen and
electricity combined that lead to 116% growth in gross electricity generation. The changes are
even more remarkable if compared to 2015 as shown in Figure 22.
Figure 22: Increase in gross electricity generation compared to 2015
Source: Eurostat (2015), PRIMES.
In all scenarios, the additional electricity demand is satisfied by production using resources from
the EU territory, mostly local wind and solar, but also nuclear, usually considered as a secure
source of supply212 213
. In some scenarios, biomass (mostly grown in the EU – see section 4.7.2)
212
Although Uranium is imported, fuel can be stockpiled for 2-3 years in advance, minimising the impact
of any short-term disruptions.
213
The modelling does not fully take into account the implications for the import of raw materials. This
issues is discussed in more detail in section 5.6.1.2 of this document.
-20%
0%
20%
40%
60%
80%
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
%changecomparedto2015
Services Industry Residential Total
0
2
4
6
8
10
12
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2015=1
Transport
0%
50%
100%
150%
200%
Baseline EE CIRC ELEC H2 P2X COMBO 1.5TECH 1.5LIFE
2030 2050 2070
75
also plays a role. But it is important to note that the modelling work cannot capture all possible
issues related to availability of land, public acceptance or competitiveness of EU-located
production versus imports of electricity, hydrogen and e-fuels that would be likely to develop as
scale of the electricity production increases.
The changes in electricity generation mix illustrate the strong shift towards carbon-neutral energy
sources (Figure 23), in a context of overall increase in electricity production as described above.
Fossil fuels, which represented 43% of the electricity production in 2015, become marginal
contributors the decarbonised power system. In fact, by 2050, natural gas is the only fossil fuel
left in the mix, with a share (of the production) falling from 16% in 2015 to 12% in 2030214
and
then in 2050 to between 5% (P2X) and 1% (EE, CIRC) and the scenarios achieving highest GHG
reductions that lie within this range. It can be noted that the use of biogas215
in the power system
develops, and, with a consumption between 22 and 45 Mtoe in 2050 in the decarbonisation
scenarios, comes closely on par with natural gas is several of the decarbonisation scenarios (see
section 4.2.2.4).
Figure 23: Shares in power generation
Notes: 1. The shares of renewables, nuclear and fossil fuels sum to 100%. Wind & solar is a component of
renewables. 2: The “Decarb. 2050” points are the averages across all decarbonisation scenarios per
category. These scenarios provide very similar power mix in 2050, with renewables ranging from to 81%
to 85% (wind & solar alone from to 65% to 72%), nuclear from 12% to 15% and fossil fuels from 2% to
6%.
Source: Eurostat (2000, 2015), PRIMES.
Conversely to fossil fuels, renewables become increasingly competitive, and their deployment is
facilitated by the possibility of storage in hydro-pumping, stationary and mobile (in EVs)
batteries and, indirectly, in hydrogen and e-fuels as well as via demand side response. Storage is
increasingly the principal way of integrating the renewables in the power system as thermal
generation declines over time. The amount of electricity yearly stored that in 2050 increases in
the scenarios some 10 times compared to 2015, while at the same time demand for electricity,
214
In the medium term (up to 2030) the amount of gas used in power generation depends on the interplay
of electricity demand, deployment of renewables and other policies, such as the coal phase out
announced by several Member States. In the context of the Long Term Strategy, these policies are not
modelled as exogenous assumptions but they are endogenously driven by ETS carbon prices, which
lead to a significant reduction of power generation from solids by 2030 and 2035. The impact on gas
demand of the announced phase out of coal plants could be different than projected by the model in
2025 and 2030, but this is expected to have little impact on decarbonisation in 2050.
215
Biogas is accounted for as biomass (renewable) in the energy balance.
0%
20%
40%
60%
80%
100%
2000 2015 2030 Baseline 2050 Decarb. 2050
Renewables (all)
Wind & solar
Nuclear
Fossil fuels
76
including for production of e-fuels (where applicable), increases between one third and nearly 1.5
times and while electricity from renewables increases between roughly 3 and 6 times over the
same period. The considerably increased storage systems, including the power-to-X units, operate
following a pattern that help increasing the renewables, as they charge electricity when these are
abundant and discharge when they are lacking.
The share of renewables in gross electricity generation is very similar across scenarios getting to
81%-85% in 2050 (compared to 57% in 2030 and 30% in 201532
) and remaining at this level
afterwards. This finding falls within the range of studies assessed, which gives, for the EU, value
from slightly above 75% in 2050 (IEA ETP B2DS204
and Shell Sky scenario203
) to an almost fully
renewables power system (IRENA's global energy transformation216
, Greenpeace Energy
Revolution217
and the Öko-Institut Energy Vision207
). It is also consistent with the values found in
the IPCC Special Report on 1.5°C, which gives renewable share in electricity globally ranging
from 69% to 87% in 2050 at global level218
.
Among renewables, wind is clearly the dominant technology, representing in 2050 51-56% of the
power production in all decarbonisation scenarios. This is a spectacular growth from 26% in
2030 and 9% in 2015. These scenarios follow WindEurope’s “high” scenario up to 2050 where
the offshore proportion of electricity generated moves from 12% in 2017 to 36% already by 2030
which would mean about 20% of installed capacity offshore. Other decarbonisation studies see
wind shares below 30% (Shell Sky scenario203
) or above 60% (Öko-Institut Vision EU28207
). The
share of solar219
grows up to 15-16% in 2050 in the decarbonisation scenarios, from 11% in 2030
and 3% in 2015. Views on the possible contribution of solar in the EU electricity generation in
2050 cover a broad range between 10% (IEA B2DS204
) up to 33% (Shell Sky203 220
). Both wind
and solar drive the development of renewables, and reach together some 70% of the power
production in all decarbonisation scenarios, compared to 37% in 2030.
Additionally, some studies have looked at the role that households, collectives, small and
medium-size enterprises (SMEs) and public entities may play in the production of renewable
electricity. One of these studies suggests that up to 1500 TWh (equivalent to 32% of electricity
production in the baseline scenario) of solar PV and wind power could be produced by these
stakeholder groups by 2050221
.
The share of biomass and waste remains quite stable across scenarios and over the period (7-8%
in scenarios achieving 80% GHG reductions and up to 10% in 1.5TECH scenario that develops
significantly BECCS. These figures are in line with other studies, which see the share of biomass
power generation between 8% (Shell Sky203
) and 12% (Greenpeace Energy Revolution217
).
The nuclear share in 2050 remains rather fairly similar across all scenarios (12-15%, compared to
18% in the 2030 projection and 26% in 2015). Other studies see the role of nuclear anywhere
between the current share and no contribution. The Nuclear Illustrative Programme (PINC)222
sees the nuclear share slightly higher than this analysis, between 17-21% of the total generation
216
IRENA (2018), Global energy Transition – A Roadmap to 2050,
http://www.irena.org/publications/2018/Apr/Global-Energy-Transition-A-Roadmap-to-2050
217
Greenpeace, GWEC and Solar Power Europe (2015), energy [r]evolution – a sustainable world energy
outlook, https://elib.dlr.de/98314/1/Energy-Revolution-2015-Full.pdf.
218
Interquartile range for no or low overshoot 1.5°C scenarios.
219
Combined in this reporting with tidal and other types of renewables
220
Breyer et al. (2018), Solar photovoltaics demand for the global energy transition in the power sector,
https://doi.org/10.1002/pip.2950 . This publication analyses in detail selected EU countries and sees PV
shares ranging from 26% to 35%.
221
CE Delft (2016). The potential of energy citizens in the European Union.
222
COM(2017) 237
77
in 2050, in a business-as-usual scenario. A study by FTI Energy on behalf of FORATOM162
, the
European nuclear trade association, sees three scenarios with installed capacities in 2050 ranging
between 36 and 150 GW. The Shell Sky203
and IEA ETP B2DS204
scenario project the nuclear
generation roughly stable in absolute terms and representing 11% of the total electricity
production in the Shell Sky203
scenario (due to a high growth of the electricity production),
against 25% in the IEA B2DS204
scenario. Studies by Greenpeace217
and Öko-Institut207
exclude
the option to reinvest in nuclear energy and phase out the technology by 2050.
Finally, it has to be noted that hydrogen is only marginally used in power generation (some15
Mtoe in the H2 scenario), and that e-gas or e-liquids are virtually not used in this sector.
Hydrogen provides important services as a chemical storage (see Figure 26).
The overall net installed electricity capacities reach in 2050 between some 1700 GW (EE) to
some 2700 GW (P2X) and even some 2800 GW (1.5TECH), hence almost doubling of 2015
level (985 GW) or increasing even more. It also represents a substantial increase compared to
2030: from 30% (EE) to 110% (P2X) and to 120% (1.5TECH). Such a massive growth will
certainly represent an investment challenge but also an opportunity for the rejuvenation of the
power generation infrastructure and for development of economic activity and supply chains in
Europe.
In addition to higher electricity needs, be it for final energy demand or for e-fuels production, the
growth in capacity is explained by the growth in renewable energy, and most notably wind and
solar, which display lower capacity factors than traditional generators.
Figure 24: Power generation capacity
Source: Eurostat (2000, 2015), PRIMES.
The deployment of renewables is even more visible looking at power production net installed
capacities (Figure 24). The highest increase of renewables capacity takes place in scenarios
deploying hydrogen and e-fuels.
Wind capacity increases in 2050 from some 140 GW in 2015 and some 350 GW in 2030 to
between some 700 GW (EE) and some 1200 GW (P2X) in scenarios achieving 80% GHG
reduction and 1.5TECH scenario goes slightly higher to over 1200 GW, meaning a further
doubling to tripling compared to 2030, which corresponds to annual installation of some 30 GW
(EE) to over 50 GW (1.5TECH) between 2030 and 2050 (see Figure 25), hence exceeding in
most scenarios the average pace observed over 2000-2015 for the entire power capacity (31
GW/year). Onshore wind would represent close to two thirds of total wind capacity in 2050 (92%
in 2015): from 460 GW (EE) to 760 GW (1.5TECH).
0
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3000
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2030
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EE
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ELEC
H2
P2X
COMBO
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1.5LIFE
2050
GW
BECCS
Fossil fuel (CCS)
Fossil fuels
Nuclear
Other renewables
Solar
Wind offshore
Wind onshore
78
The solar capacity that starts from smaller base today shows also a spectacular growth, from 95
GW in 2015 and some 320 GW in 2030 to between some 500 GW (EE) and 970 GW (P2X) in
2050 for scenarios achieving 80% GHG reduction and up to some 1000 GW in the 1.5TECH
scenario, hence respectively showing increases between some 50% and 200% and up to 220%
compared to 2030. This corresponds to annual installations of almost 20 GW (EE) to over 40 GW
(1.5TECH) between 2030 and 2050. Wind and solar alone represent 53% of total net capacity
installed by 2030, and between 71% (EE, CIRCC) to 80% (P2X, COMBO and 1.5°C scenarios)
by 2050.
Other renewables (mostly hydro and biomass) go through more modest development. Biomass
capacity from 60 GW in 2030 either stabilises (in EE) or grows very moderately - up to 83 GW
(P2X).
The weight of fossil fuel-fired capacity in the total power mix decreases over time. Gas-fired
capacities (that can use both natural gas or biogas) decrease compared to 2015 (220 GW),
ranging in 2050 from 141 GW (P2X) to 226 GW (ELEC) in scenarios achieving 80% GHG
reductions, and decreasing up to 100 GW in the 1.5LIFE scenario, of which some 30% is
associated with CCS. Coal-fired capacities progressively get out of the power mix, with about 20
GW only left in all scenarios except for 1.5TECH scenario, where 38 GW capacity is still
present. The solid fuel plants that operate in 2050 are burning biomass and/or are applying CCS,
whereas the not converted coal plants are in majority used for reserve purposes. Oil-fired
capacities virtually disappear already in 2030, with less than 5 GW still installed in all scenarios,
which are used either in specific applications in industry (e.g. burning industrial by-products) or
serving reserve purposes. The average running hours of fossil fuel-fired capacities decline
significantly in all decarbonisation scenarios.
Nuclear installed capacity in 2050 is only slightly lower than current level (99-121 GW versus
122 GW in 2015), and, in all cases, higher than both the 2030 projection (97 GW) and the
Baseline in 2050 (87 GW).
Figure 25: Newly installed power generation capacities
Note: newly installed capacities using fossil fuels in 2031-2050 are almost exclusively gas-fired.
Source: PLATTS (2000-2015), PRIMES.
In 2050, the role of CCS for power generation is very limited in all scenarios as competitive wind
and solar, as well as biogas, hydrogen, batteries and biomass are available in sufficient quantities
to balance electricity system. In 2050, CCS plays a noticeable role only in 1.5TECH, where it
reaches 5% of the total net electricity generation (mostly because of biomass power generation to
generate negative emissions), with 66 GW of total capacity equipped with CCS installed. In other
0
20
40
60
80
100
120
2000-'15
2016-'30
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2031-'50
GW/year
BECCS
Fossil fuel (CCS)
Fossil fuels
Nuclear
Other renewables
Solar
Wind offshore
Wind onshore
79
scenarios, the share of CCS in net electricity generation is around 0.1-0.5% and capacities range
between 1 to 5 GW. The situation changes by 2070 as bigger role of this technology to fully
decarbonise the power sector and of BECCS to generate negative emissions is then expected. The
balance of carbon capture and storage or utilisation for e-fuel production is discussed in greater
detail in section 4.8.
As a result of the changes described above, the power sector223
has only very small residual
emission left in 2050 between some 10 MtCO2 (EE) and 110 MtCO2 (P2X) and even negative
emissions (some 140 MtCO2) in 1.5TECH. The larger amounts of CO2 emissions in the power
sector in the P2X (and closely after H2) scenarios are due to the high amounts of electricity
needed for e-fuels production and the difficulties to balance such a large system without
emissions generated by gas plants with CCS (which emit a small fraction of the CO2 produced).
In 2070, all decarbonisation scenarios except for 1.5LIFE generate negative emissions in
electricity sector in order to contribute to continuing emission reductions . Other studies show
emissions in the power sector ranging from close to zero (Shell Sky scenario203
) to negative
emissions (IEA ETP B2DS204
). This illustrates that, while CCS technology for mitigation of
emissions might not be currently attractive, it is critical for achieving net-zero emissions, as
required to reach the 1.5C goal of the Paris Agreement.
As already mentioned above, while electricity supply grows, electricity storage plays an
increasingly prominent role in all decarbonisation scenarios (Figure 26).
Figure 26: Electricity storage in 2050
Source: PRIMES.
The use of conventional/"direct" storage, in the form of pumped hydro or stationary batteries,
increases in all scenarios, from about 30 TWh today, some 70 TWh in 2030 to between some 170
TWh (H2) and 270 TWh (ELEC) in 2050 among scenarios achieving 80% GHG reductions while
scenarios achieving higher GHG reductions have use of some 160-200 TWh. For all scenarios
approximately less than 30% of this storage comes from pumped hydro and roughly 70%from
stationary batteries. The highest conventional/"direct" storage takes place in the scenarios where
e-fuels do not deploy (ELEC, EE and CIRC) in final demand sectors.
The e-fuels sold to the final demand sectors have the possibility to be stored in conventional
facilities, which allows producing them at times of high availability of renewables and, in this
way, reducing the needs of storage for the system. This is an "indirect" storage of electricity,
which is not easily measurable and is not included in the total storage.
223
For calculation of GHG emission combined with district heating.
0
50
100
150
200
250
300
350
400
450
500
2030 Baseline EE CIRC ELEC H2 P2X COMBO 1.5TECH 1.5LIFE
TWh
e-gas
Hydrogen
Batteries
Pumped hydro
80
However, it is possible to measure the explicit storage of electricity using hydrogen and e-fuels,
which is also included in the scenario projections. This storage (so-called chemical storage of
electricity) produces hydrogen and e-fuels at times of abundant energy (typically from wind and
solar) and uses them at times of scarce energy (from wind and solar). In the context of explicit
chemical storage, the power system, and not final demand consumers, use hydrogen and e-fuels.
The chemical storage in 2050 ranges between some 65 TWh (ELEC) and 220 TWh (P2X) and
scenarios achieving higher GHG reduction lie in this range. The total (stationary) storage
explicitly used in the power system (i.e. hydro-pumping, stationary batteries and chemical
storage, including the indirect storage effects of producing e-fuels for the final consumers) ranges
from some 250 TWh (1.5LIFE) to 450 TWh (P2X). In addition, the large deployment of batteries
vehicles (– see section 4.4) will also play a role as a storage capacity for electricity.
Figure 27 shows the development of capacities of storage and of e-fuels production. In terms of
conventional/"direct" electricity storage, pumped hydro storage grows only slowly from 51 GW
in 2030 (that is close to the 2015 level) up to 70 GW (ELEC). Stationary batteries would play a
larger role in the future, growing from 29 GW in 2030 (from negligible amounts today) to
between 54 GW (1.5LIFE) and 178 GW (ELEC), in general having higher deployment in those
scenarios without significant development of e-fuels (EE, CIRC and ELEC). In the three
scenarios that achieve the highest GHG reductions the needs for this type of storage are the
lowest as they develop strongly both hydrogen and e-fuels – see below.
The production of new energy carriers would induce a very large deployment of electrolysers to
produce the hydrogen for direct use as well as hydrogen as feedstock for the e-fuels. The capacity
ranges from 57 GW (EE, CIRC) to 454 GW (P2X) in the scenarios achieving 80% GHG
reductions, and up to 511 GW (1.5TECH) in the scenarios achieving higher GHG reductions.
This deployment is accompanied, in scenarios where e-fuels deploy in final demand, by
development of capacities of power-to-gas (71-142 GW) and power-to-liquids (28-79 GW)
which, in both cases, are the highest in the P2X scenario while being more moderate in the three
scenarios that achieve the highest GHG reductions.
Figure 27: Electricity storage and new fuel production capacities (2050)
Source: Eurostat (2015), PRIMES.
4.2.2.4 Gas sector and new energy carriers
Decarbonisation analyses show a large uncertainty on the role of gas in the long term. This
uncertainty is definitely a challenge for planning the energy transition and in particular, for
planning the future of the gas infrastructure.
0
100
200
300
400
500
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
GW
Pumped hydro Batteries Hydrogen PtG PtL
81
In the long term, unabated emissions from natural gas become increasingly incompatible with the
climate targets. Depending on the sector, natural gas can be replaced by carbon-neutral forms of
gas (biogas, e-gas) or possibly by hydrogen, which can substitute some traditional uses of gas
(e.g. in buildings heating) but which cannot be used in all industrial applications.
First of all, the consumption of natural gas (excluding non-energy use) is expected to be severely
reduced by 2050 in all scenarios (Figure 28), from 345 Mtoe in 2015 to 273 Mtoe in 2030 and
then in 2050, in scenarios achieving 80% GHG reductions, to between 87 Mtoe (EE, CIRC) and
109 Mtoe (P2X) and to less than 54 Mtoe in the scenarios achieving higher GHG reductions. In
most cases, the power sector is key in the remaining natural gas consumption (associated with
CCS in the stronger reductions cases), except in the EE and CIRC scenarios. Interestingly,
looking at overall Gross Inland Consumption, in the decarbonisation scenarios a significant
remaining part of natural gas consumption relates in fact to non-energy needs (organic
chemistry).
Figure 28: Consumption of natural gas by sector
Note: "Residential and services" also includes agriculture.
Source: Eurostat (2015), PRIMES.
The EU natural gas production, which stands at 108 Mtoe in 2015, is expected to decline to some
30 Mtoe by 2050 in scenarios achieving 80% GHG reductions and even below 15 Mtoe in 1.5°C
scenarios224
, still fulfilling a large part of the remaining needs. As a consequence of declining
demand for fossil gas, net imports of natural gas are expected to decrease, from 247 Mtoe in 2015
to some 220 Mtoe in 2030, and then further down by 2050 (see section 4.2.2.5). The 80% GHG
reductions scenarios require noticeably higher quantities of net natural gas imports by 2050 (from
98 Mtoe to 120 Mtoe) than scenarios achieving higher GHG reductions, which limit the natural
gas net import to as low as 47 Mtoe (1.5LIFE). The reduction of natural gas imports has
significant impacts on the security of supply and reduction of fossil fuels imports bill, which is
further described in section 4.10.4.
In addition to natural gas production, biogas225
is increasingly used in decarbonisation scenarios
(Figure 29) as it is fully interchangeable with natural gas and its combustion is considered
carbon-neutral226
. The whole consumption227
of biogas228
would increase from 16 Mtoe in 2015
224
Assuming that in context of declining demand for natural gas, prices of import would be more
competitive and thus the level of production projected in the Baseline will not be maintained.
225
In this quantitative analysis “biogas” actually includes both biogas and biomethane.
226
Just as biomass and waste, where it is classified in energy balances.
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2015
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EE
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2050
Mtoe
Other energy
Transport
Residential & services
Industry
Power
Non-energy
82
to some 30 Mtoe in 2030 and then range between 45 Mtoe (EE) and 79 Mtoe (P2X) in 2050, and
is mainly used in the power and industry sectors. These projections are in line with other studies
that also see a potential for increased contribution of such type of gas in the EU energy system.
For instance, the Green Gas Grids Project229
estimated that a production of 48–50 bcm of biogas,
i.e. close to 45 Mtoe230
, (including raw biogas, upgraded biogas and syngas) could be achieved by
2030, out of the technical potential of 151 bcm (close to 135 Mtoe), hence more than tripling the
current production level. The Gas for Climate study231
expects biogas to reach up to 98 bcm/year
in 2050 (close to 88 Mtoe), hence about 20-25% of current levels of natural gas consumption.
Figure 29: Consumption of biogas and gas from waste by sector
Note: "Residential & services" also includes agriculture.
Source: Eurostat (2015), PRIMES.
Among scenarios explored in this analysis achieving 80% GHG reduction, e-gas develops only in
the P2X case (91 Mtoe in 2050 and 130 Mtoe in 2070) and in the strongest emissions reduction
scenarios albeit there more moderately (around 40-50 Mtoe). In these scenarios, the e-gas is
chiefly used in the buildings (to substitute the high natural gas demand showing in the Baseline),
closely followed by energy needs in the industry where it enables seamlessly to conduct
processes that today can only be performed with natural gas. Transport makes a smaller use of egas,
although it represents about 21% of the energy use in heavy goods vehicles and around 4%
of the fuel mix in inland navigation; its use in passenger cars is limited (see section 4.4.2).
227
Biogas is assumed to be produced entirely in the EU.
228
Also including minor quantities of gas from waste.
229
GreenGasGrids project (2014), http://www.greengasgrids.eu/index.html.
230
Using a conversion factor from bcm to Mtoe of 0.9.
231
ECOFYS (2018). Gas for Climate - How gas can help to achieve the Paris Agreement target in an
affordable way. https://www.gasforclimate2050.eu/files/files/Ecofys_Gas_for_Climate_Feb2018.pdf
0
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30
40
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1.5LIFE
2050
Mtoe
Transport
Residential &services
Industry
Power & heat
83
Figure 30: Consumption of e-gas by sector in 2050
Note 1: e-gas does not develop in the other scenarios (Baseline, EE, CIRC, ELEC, H2).
Note 2: "Residential & services" also includes agriculture.
Source: PRIMES.
Summing up the developments for natural gas, e-gas and biogas, in the Baseline scenario, total
gas consumption (covering all gas types) stands at some 320 Mtoe in 2030 and declines only
slightly thereafter (compared to some 370 Mtoe in 2015 and some 450 Mtoe at its peak, in 2005).
In the decarbonisation cases, the total consumption in 2050 (Figure 31) varies from some 300
Mtoe (P2X, which projects the highest quantities of e-gas) to some 150 Mtoe (EE, which reduces
overall energy demand with energy efficiency measures). The scenarios that achieve higher
emissions reduction scenarios lie in this range, as they see a more moderate substitution of
natural gas by e-gas, complemented by a substantial role of biogas but also high levels of energy
efficiency as well as circular economy and consumer choice curbing the overall energy demand
for 1.5LIFE. The projections indicate that the development of both e-gas and biogas could play a
key role in making the best use of the existing EU natural gas infrastructure in a decarbonised
energy system.
Figure 31: Total gas consumption per gas type
Source: Eurostat (2015), PRIMES.
In addition, and as a complement to methane molecules, hydrogen is also expected to play a role
in the future energy system. Although no major technological breakthrough took place over the
last decade, the costs lowered and new pilot projects were launched, while the industry
increasingly sees bigger role for hydrogen in its decarbonisation visions and pathways. This is
why different deployments of hydrogen were explored in the decarbonisation scenarios.
0
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Mtoe
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Power
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biogas and waste gas
natural gas
84
In the Baseline, hydrogen use develops only as a niche application for road transport (amounting
to a few Mtoe). It increases (to some 15 Mtoe) further in the EE, CIRC and ELEC scenarios as an
electricity storage option to absorb higher volumes of variable renewables (see Figure 26) and in
transport. However, large scale deployment takes place (up to some 150 Mtoe in 2050 and 210
Mtoe in 2070 in H2 scenario and up to 80 Mtoe in 2050 in 1.5TECH) as soon as consuming
technologies are available (i.e. fuel cell vehicles) and competitive (in final energy demand), and
when the full portfolio of options needs to be deployed, i.e. in the 1.5°C scenarios.
Figure 32: Consumption of hydrogen by sector in 2050
Note: "Residential & services" also includes agriculture.
Source: PRIMES.
The use of hydrogen develops in industry (see section 4.5.2), transport (mostly for heavy duty
vehicles, which do not have the option of electrification unless covering only short distances - see
section 4.4.2) and, to a lower extent, in buildings (with heating equipment consuming hydrogen
blended with gas).
Hydrogen is also assumed to be produced in the EU. Clearly, building the necessary production
assets – be it for hydrogen or e-gas production and upgrading the gas infrastructure (in case large
quantities of hydrogen are to be distributed) in the light of currently high costs and nascent
demand would be a challenge from the industrial policy perspective. Studies indicate that some
areas within the EU could be well suited to production of hydrogen/e-gas be it because of
abundant production of renewables (e.g. offshore in the North Sea or, in general, close to grids
giving access to diversified and big amounts of renewables) or proximity to nuclear power
stations or close to industrial buyers.
When combining all gaseous fuels (natural gas, biogas, e-gas and hydrogen), Figure 33 shows
two very different patterns: on the one hand, in those scenarios where the hydrogen, and the egas,
does not develop because of a lack of consumption market, gaseous fuels are roughly halved
compared to today. Conversely, in a context where large-scale end-uses of hydrogen and/or a
corresponding chain of new fuels would take place, the total consumption of gaseous fuels would
actually be close to current levels (in scenarios H2, P2X). In the 1.5°C scenarios and COMBO,
where energy efficiency and new consumption habits limit further energy needs, the consumption
of gaseous fuels would lie in-between at around 200-250 Mtoe.
Comparing total demand for gaseous fuels, these results are roughly in line with the study by
Trinomics206
on the role of European gas infrastructure in the light of 2050 decarbonisation,
0
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160
Baseline EE CIRC ELEC H2 P2X COMBO 1.5TECH 1.5LIFE
Mtoe
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Industry
Power sector (storage)
85
which expects the demand for these fuels232
to decrease compared to today in the case of strong
electrification (“storyline 1”), but to stabilise (even slightly increasing) in the case of high
developments of carbon-free gases (“storyline 2”) or hydrogen (“storyline 3”).
Figure 33: Consumption of gaseous fuels
Note: “carbon-free” gases refer to e-gas, biogas and waste-gas.
Source: Eurostat (2015), PRIMES.
The future decarbonised energy system could also make use of e-liquids, i.e. more complex
synthetic hydrocarbons also derived from hydrogen in the same way as e-gas, using CO2 from
carbon-neutral sources. Such fuels could develop in the transport sector, which appears
particularly difficult to decarbonise. Their deployment reaches up to 54 Mtoe in 2050 (and
stabilises afterwards) in the P2X scenario (whereas they are absent from all other scenarios that
achieve a 80% emissions reduction). The e-liquids are also present, at smaller scale, in the
scenarios that achieve higher GHG reductions (some 20-40 Mtoe).
Figure 34: Consumption of new fuels by sector in 2050
Note: Baseline, EE, CIRC, ELEC and H2 scenarios do not produce e-gas or e-liquids.
Source: PRIMES.
232
A noticeable difference is that the Trinomics (2018) study anticipates the disappearance of natural gas,
entirely substituted by other gaseous fuels, unlike the modelling analysis of this document.
0
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hydrogen e-gas e-liquids
Mtoe
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Industry
Power sector
86
4.2.2.5 Energy imports
Security of supply is a political priority and one of the five dimensions of the Energy Union
Strategy. Although the import of fuels is not necessarily an security problem, the magnitude and
the nature of, in particular, oil and gas imports (sometimes coming from a limited number of
suppliers or via limited number of routes) raise specific energy security and, sometimes, even
wider geopolitical issues. Energy efficiency or other ways of limiting energy demand (circular
economy and lifestyle change) as well as switching to domestically produced low-carbon energy
vectors can contribute to reducing energy imports233
.
Net fossil fuels imports, in volumes are expected to decrease already by 2030 to close to 730
Mtoe, versus some 900 Mtoe in 2015. The trend is pursued in the Baseline case, which would see
a decrease to about 650 Mtoe in 2050, 28% lower than the current level. The decarbonisation
scenarios lead to further decrease, with volume of fossil fuels imports ranging from some 370
Mtoe (CIRC) to 410 Mtoe (P2X) in the scenarios reaching -80% emissions reduction (hence a
reduction of fossil fuels imports of 54% to 58% compared to 2015). The fossil fuels imports
volumes would be close to 350 Mtoe in the COMBO case and about 250 Mtoe in the 1.5°C
scenarios, i.e. more than 70% decrease of fossil fuels imports compared to 2015. It is clear that
ambitious energy efficiency measures and strong decarbonisation go in hand with deeper
reductions of imports.
Figure 35: Energy imports
Source: Eurostat (2015), PRIMES.
Looking at fuels separately:
 Coal consumption virtually disappears from the EU energy system already in the
Baseline and in 2050 and thus there is no longer need for imports.
 Imports of oil reduce only very slowly in the Baseline. In the decarbonisation scenarios,
however, compared to 2015, they decrease in 2050 between close to 50% (in all
scenarios reaching -80% emissions reduction) and nearly 65% in the 1.5°C scenarios.
These scenarios combine the use of all alternative zero carbon or carbon neutral fuels
and, in case of 1.5LIFE the benefit from lifestyle changes that induce changes in
mobility patterns (also as part of circular economy measures).
233
Reducing the overall scale of imports also diminishes the magnitude of potential disruptions of the
economy because of supply severance or price shocks.
0
100
200
300
400
500
600
700
800
900
1000
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2050
Mtoe
Biomass
Coal
Natural gas
Oil
87
 While imports of natural gas are only slightly reduced in the Baseline, they significantly
reduce in all decarbonisation scenarios. Indeed, compared to 2015, in 2050 they are
between 51% (P2X) and 60% (EE) lower for scenarios achieving 80% GHG reductions.
The least reductions happen in the P2X (and closely after ELEC) scenarios because of
higher gas consumption for balancing purposes in the power sector. The strongest
reduction scenarios (COMBO, 1.5TECH and 1.5LIFE) lead to the highest gas import
decreases - up to 81% reduction compared to today's levels is projected in 1.5LIFE
thanks to impact of all technologies combined and consumer choice.
 Imports of (sustainable) solid biomass are kept limited in all scenarios at 4% to 6% of
the solid biomass used for bioenergy by 2050. This assessment did not look into the
effects and impacts on greenhouse gases beyond the EU if impact of biomass would be
increased to meet EU demand.
A detailed analysis on the monetary values of future EU energy imports in different
decarbonisation pathways can be found in section 4.10.4.
As a result, the dependency of the total EU energy consumption234
on energy imports (mostly
fossil fuels), which only reduces from 55% in 2015 to 52% in 2030, falls afterwards to between
27% and 38% in the 80% GHG reduction scenarios (highest in EE, which radically lowers the
demand), 27% in the intermediate level of reductions (COMBO) and further in the net zero
emissions scenarios where only 20% of the energy needs are imported.
Figure 36: Energy import dependency
Note: the rate is calculated by dividing the net imports per fuel by the sum of the gross inland consumption
and of the energy use in international bunkers for that fuel. The Total data series corresponds to the ratio
of imports to gross inland consumption.
Source: Eurostat (2015), PRIMES.
The decarbonisation scenarios explored in this document assume that decarbonised energy
carriers (electricity, hydrogen, e-gas, e-liquids) would all be produced within the EU. However,
as it is the case today for oil, natural gas and biofuels, hydrogen and e-fuels could actually be
globally traded commodities and imported from regions with comparatively cheaper, abundant
renewables.
If these fuels were to develop as large contributors to future EU energy needs in a decarbonised
economy, imports option could help reduce the cost of the transition as well as possible pressure
234
Including international bunkers.
0%
20%
40%
60%
80%
100%
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2050
%energyconsumption
Oil
Natural gas
Coal
Total
88
on domestic resources (land, sea) linked to large-scale deployment of renewables. Abundant,
globally traded zero-carbon/carbon neutral fuels could thus be an economic opportunity but they
do create a risk of new types of dependency, possibly affecting EU's energy security.
Finally, it must be mentioned that other dimensions of energy security have not been explored in
detail in this analysis. Other factors need to be considered, including the role of fuel stocks or
interconnectors235
, as well as anticipating new threats to energy supply (e.g. cyberterrorism on
critical energy infrastructures, unpredictable weather patterns) and new forms of dependencies,
for instance on raw material imports stemming from new technologies development (see section
5.6.1.2) or on foreign investors investing in EU critical assets or technology to use them to the
detriment of the EU's security (see section 5.6.1.3).
4.2.3 Transition enablers, opportunities and challenges
The options and results described in the sections above clearly show that decarbonisation of
energy supply is possible with existing technologies but of course these technologies have to
further evolve in terms of their performance and costs so as to scale up their deployment,
underlining the importance of a dedicated industrial policy. The supply of the raw materials
needed for these developments (for e.g. batteries, the electricity grid, digitalization or wind
power) will need to be secured (see section 5.6.1.2), making also sure that the climate impact
over the life cycle of products does not lead to climate impacts elsewhere.236
The technology development (both in terms of new, carbon neutral fuels and energy efficiency) is
clearly the main enabler for the transition while the costs and constraints associated to large scale
technology deployment are the key challenge. Becoming a key actor on fast expanding global
markets for low carbon technologies and services is also one of the most promising opportunities
for the European industry. Developing such a production capacity will also avoid replacing the
current dependency on fossil fuel imports by a dependency on new technologies. Europe is
leading in many low carbon technologies today but this is not the case for some, like solar PV
production and batteries. Regaining leadership and seizing the first-mover advantage in new
technologies notably hydrogen, e-fuels, advanced bio-fuels production on a very competitive
global market would require supporting domestic excellence in research, creating the necessary
conditions for innovation to materialise and reinforcing cooperative programmes for the
development of technology (see section 5.4). While many decarbonisation technologies are
expected to become competitive on their own, some small-scale and emerging ones might still
require financing support.
This analysis shows that the most important single driver for a decarbonised energy system is the
growing role of electricity, both in final energy demand and in the supply of alternative fuels,
which will be mostly met by renewables, and in particular by wind and solar electricity. A key
challenge, which lies partly in the domain of technology and partly in regulatory field, is
therefore the paradigm shift from electricity production following demand to a largely
meteorologically driven production. The future energy system will have to rely on much higher
balancing capacities, including:
235
The internal market infrastructure will in the future likely also concern hydrogen, CO2 and e-fuels in
addition to electricity, as it will be cost-efficient to share the resources and productions of the new fuels in
the EU given that the Member-States are differently endowed with RES.
236
See the EU Raw Materials Initiative: https://ec.europa.eu/growth/sectors/raw-materials/policy-
strategy_en
89
 better interconnections on all grid levels, extending pan-European, national electricity
grids and connection to extra EU areas with high renewable potential that would improve
the match between supply and demand and unlock the potential of large offshore wind
farms (e.g. in the North Sea) or solar energy (e.g. in the south of Europe);
 more storage, helping to match demand and supply over multiple time frames;
 deeper demand response;
 as well as flexible generation units.
Electricity production, transportation and storage will require proper financing and possible
adaptation of tariff schemes, notably as the utilisation rate of some infrastructure might decrease,
while still playing a critical role to guarantee security of supply. Once technologies have reached
sufficient maturity, initial support schemes can be phased out EU wide in a coordinated way, so
that investment decisions are made based on market signals.
The future of nuclear energy, will also depend on both the technological developments and the
regulatory field. Nuclear will face the challenge of decommissioning of the units at the end of
their economic life-time and developing a permanent solution for nuclear waste disposal as well
as construction of new plants in line with the highest safety standards.
Importantly, while there are opportunities for centralised storage (including new solutions of
storage in e-fuels), there will likely be also the opportunities for flexible consumers (individual
ones if representing large demand or those collectively offering their capacities through
aggregators) and producers of electricity who can be integrated through increasingly digitalised
networks, allowing peer-to-peer trading of electricity. Options for storing and converting both
electricity and heat are multiple but will all require a more integrated approach to the relevant
infrastructure. A fiscal level playing field across the EU would facilitate the deployment of such
solutions.
Storage of electricity in sectors other that power itself, for instance in the transport sector, is an
example of sector coupling, which is currently considered as very promising option. It is crucial
that sectors do not work in isolation and those consuming the energy can rely on the supply side
to deliver decarbonised fuels (bio-fuels, electricity, hydrogen, e-fuels).
The significant increase in power generation capacity and the need to develop further
infrastructure for energy carriers to go from supply regions to consumption areas also means that
spatial planning could be an important challenge. Engaging with citizens and local authorities,
addressing in synergy other local environmental challenges, will be essential to deploy in due
time the necessary infrastructure.
The regulatory framework to facilitate this major change in energy market structure and
operation is under construction already but of course more work will be needed and some
challenges might only emerge with the scaling-up of the new energy system. The EU will need to
build on the current regimes of cooperation across Transmission System Operators and
Distribution System Operators to facilitate necessary investment and market opening in the most
cost effective manner. The European manufacturers and service providers would then need to set
standards for the ongoing convergence between the energy and the IT industries – setting such
standards first in the EU could be then an opportunity for the global leadership.
Finally, the role of gas requires further consideration since scenarios considered in this analysis
see large differentiation in its use at 2050 horizon. Natural gas currently plays an important role
in balancing the electricity system and has many applications in final energy consumption. The
full decarbonisation of the energy system will challenge this role as it can only have place if
coupled with CCS, a technology itself facing challenges. In the future, decarbonised gaseous
90
fuels (biogas, but also hydrogen and e-gas) could provide clean energy to industry, buildings and
transport without loss of utility and providing longer use of existing natural gas infrastructure.
Today the economics of such energy carriers is uncertain, with costly investments and a need for
predictable levels of demand as well as regulatory certainty. Conversely, the fact that they fit
very well with Europe’s existing infrastructure and could be developed by Europe’s existing
(chemical) industry creates an opportunity to gain technological leadership.
4.3 Buildings
4.3.1 Buildings options
Buildings, comprising the residential (60% to 85% of floor area across Member States) and
services sectors, currently represent the highest share of final energy consumption in the EU.
Energy consumption in buildings serves multiple purposes: heating & cooling, operation of
appliances, water heating and cooking. Emissions in this sector have been declining only very
slowly as the majority of the energy needs are still covered by fossil fuels (mostly natural gas).
Options to reach long-term reduction of energy use and associated CO2 emissions are explored
below.
4.3.1.1 Energy performance of the building shell
The role of thermal insulation has, for a long time237
, been considered as crucial in the future
evolution of energy consumption in buildings and fulfilling the GHG emissions reduction
objective.
First of all, new buildings can be designed and constructed with high-performance thermal
insulation. However, buildings built today will only represent 10-25%238
of the buildings stock in
2050 and thus the overall energy performance of the stock will be largely determined by the
capacity to renovate and (significantly) improve the energy performance of the existing
buildings. While the efficiency of new buildings has steadily improved over time, most of
Europe's existing building stock has yet to improve insulation performance, which will have to go
through energy performance-targeted renovation.
Currently, about 35% of the EU's buildings are over 50 years old and almost 75% were built
before energy performance standards existed. It has been estimated239
that up to 97% (i.e. all
buildings built before 2010) needs partial or deep renovation to comply with the long-term
strategy ambition. This will imply a more than doubling of the renovation rate of the building
stock by 2050, from the today observed 1%-1.5% yearly rate to at least 3%. Taking advantage of
technological progress (e.g. ICT and smart-building technologies) policies should aim at
237
In the EU, 2010 has been in this respect a turning point as (i) the EPBD was adopted and (ii) the global
financial crisis put the housing sector, and in particular the renovation of the existing stock, in the
political focus because of its growth-enhancing role, see: Housing Europe position paper:
http://www.housingeurope.eu/resource-1096/decarbonisation-of-the-building-stock-a-two-front-battle.
Also, already the 2011 Roadmap gave a key role to the energy performance improvements in the
building stock.
238
BPIE (2017), State of the building stock,
http://bpie.eu/wp-content/uploads/2017/12/State-of-the-building-stock-briefing_Dic6.pdf
239
ECOFYS, Politecnico di Milano / eERG, University of Wuppertal, Towards nearly zero-energy
buildings, Definition of common principles under the EPBD (2012),
https://ec.europa.eu/energy/sites/ener/files/documents/nzeb_full_report.pdf
91
increasing the depth of renovation. Measures should be targeted towards the worst performing
segments of national building stocks, including demolition and replacement by new buildings.
The average age of existing buildings and the share of new buildings are in fact good indicators
of the overall efficiency of the building stock. Figure 37 gives the distribution of age classes in
the EU building stock per Member State, showing that most of the stock was built before 1990.
Figure 37: Breakdown of residential building by age category (2014)
Source: Building Stock Observatory240
.
Of all the energy consumed in buildings, most is used for space heating, hot water production and
cooling. In Europe's residential building stock, 71% of all energy is used for space heating alone.
Heat demand in buildings depends in fact on the insulating properties of the building shell. The
performance of the building shell and of its different elements can be expressed in U-value241
,
shown in Figure 38.
240
https://ec.europa.eu/energy/en/eu-buildings-factsheets
241
The U-value (a short name for the heat transfer coefficient) is a way to measure heat loss through a
building shell element. It is measured in W/m²°C expressing the heat transfer of the building envelope
in watts per square meter (per degree of temperature difference between the inside and outside). A low
U-value indicates low heat losses and a high level of insulation.
92
Figure 38: Average U-value per building element (2014)
Note: average over the building stock.
Source: Building Stock Observatory242
.
Insulation materials could highly impact the overall energy performance of buildings. Although
the thermal properties and performance of the traditional building insulation materials have
significantly improved over the years, new innovative emerging insulation solutions with similar
or higher performances are expected to be adopted by the market in the future. The European
thermal insulation market is expected to grow on average at a rate of 2.8% per year until 2019
with higher rates in central and eastern European countries243
. Today, the largest potential for
insulation materials in building applications is dominated by materials such as mineral (stone and
glass) wool and organic fossil fuel-derived plastic foams such as polystyrene and polyurethane.
Regarding windows, it is estimated that 85% of glazed areas in Europe’s buildings are
outdated244
, either single glazing or early uncoated double glazing.
The important challenge is that renovations have a very diverse as well as scattered nature and
encounter multiple market failures. These barriers include diversity and fragmentation within the
building value chain, split incentives between landlords and tenants, insufficient knowledge
about the advantages of renovation, inefficient and complex renovation processes, a lack of deep
renovation packages, insufficient and costly financing options, unclear energy or environmental
requirements in renovation grants or procurement processes, low progress in performance
guarantees.
242
https://ec.europa.eu/energy/en/eu-buildings-factsheets
243
JRC (2018), Competitive landscape of the EU’s insulation materials industry for energy-efficient
buildings,
https://ec.europa.eu/jrc/en/publication/competitive-landscape-eu-s-insulation-materials-industry-
energy-efficient-buildings
244
TNO (2011), Built Environment and Geosciences – Glazing type distribution in the EU building stock –
TNO report TNO-60-DTM-2011-00338.
93
4.3.1.2 Efficient equipment
The uptake of efficient energy consuming equipment in buildings (for heating/cooling, for water
heating and cooking and all domestic and tertiary sector appliances) has for a long time been
identified as a powerful driver in reducing energy demand, and this trend is confirmed by more
recent analysis245
.
The first eco-design regulations that act precisely on the performance levels of equipment date
back to the early 1990s and have been regularly revised to introduce more ambitious performance
standards while new categories of products are being constantly added. The eco-design
regulations are facilitated by other policies, in particular energy labelling, that ensure accurate
and useful consumer information and address the remaining market barriers and behavioural
biases. Together with energy labelling, Ecodesign regulations now cover over 25 product groups
and are estimated to deliver annual energy savings of over 600 TWh in 2030. This represents
30% more savings on top of those already to be achieved by 2020 (1918 TWh), which are
equivalent to the annual primary energy consumption of Italy.
Considerable unit-consumption improvements have been achieved recently in lighting, and for
large appliances like refrigerators, freezers, washing machines, both thanks to evolving
technologies and regulations246
, but an untapped potential still exists247 248 249
and some end-uses
are expanding.
While at global level appliances and space cooling energy consumption are still the two fastestgrowing
end-uses in buildings250
, in the EU the trend is partly different since energy consumption
of large appliances and lighting251
is declining and the relative importance of smaller
appliances252
and devices is increasing in aggregate as the number of electricity-using products
increases and their functionality expands253
. On the other hand, electricity demand for air
245
IEA (2018), Energy Efficiency 2018, Analysis and outlooks to 2040
246
For example, when the first energy label for dryers in was introduced in 1995, the highest performance
level, the “A” tier, was set at a level that products then sold on the market could not achieve. This
aspirational tier, along with financial incentives, motivated manufacturers to introduce new heat pump
drying technology into the European market, so that sixteen years later heat pump dryers accounted for
40% of the market share (IEA; 2016), Achievements of appliance energy efficiency standards and
labelling programs. A Global Assessment.
247
IEA (2016), Achievements of appliance energy efficiency standards and labelling programs. A Global
Assessment
248
Climate Tracker (2018), A Policy Spotlight On Energy Efficiency In Appliances & Lights Could See
Big Climate Gains
249
For instance, in the "decarbonised building scenarios" in CLIMACT (2018) the average energy
efficiency of appliances improves by 2.0% a year up to 2020, then by 2.9% a year up to 2030. The
yearly improvement is then considered to only 0.1% from 2030 to 2050. See Climact (2018), Net Zero
By 2050: From Whether to How, https://europeanclimate.org/wp-content/uploads/2018/09/NZ2050-
from-whether-to-how.pdf
250
IEA (2018), Energy Efficiency 2018, Analysis and outlooks to 2040
251
Looking more in details at lighting, technology for light sources keeps evolving, thereby improving
energy efficiency. In 2008, prior to the entry into force of the current Ecodesign and energy labelling
Regulations, there were 9.2 billion light sources operating in EU28, consuming 330 TWh/a of electricity.
LED technology, which is for almost all applications the most energy efficient lighting technology that
exists, has had a rapid uptake on the EU market: from 0% of sold lamps in 2008 to 22% in 2015. In
addition, the average energy efficiency of LEDs quadrupled251
between 2009 and 2015, and prices dropped
significantly: compared to 2010, in 2017 a typical LED lamp for household use was 75% cheaper and a
typical LED lamp for offices was 60% cheaper.
252
E.g. computers, televisions and displays, coffee makers, phones and tablets home security systems, etc.
253
Thomas S. (2018), Drivers of recent energy consumption trends across sectors in EU28 - Energy
Consumption Trends Workshop Report.
94
conditioning is increasing also in the EU because of hotter weather than usual and due to a wider
diffusion of cooling appliances.
The efficiency of heating and cooling installations254
deserves specific attention given that space
heating represents both the largest share in energy consumption in buildings and the highest
potential for efficiency gains as well as for the transition towards more sustainable and
decarbonised solutions255
.
.The energy consumed by heaters could be progressively significantly reduced, thanks to
replacement of the most inefficient segments with more efficient alternatives, which range from
condensing boilers to heat pumps in combination with better controls and smarter packages of
heaters (e.g. combinations of several heating systems). By 2030, with current policies in place, it
is estimated that their annual energy consumption could be reduced by 48% in comparison to
2015 with a share of electrical appliances (i.e. mainly heat pumps) which is expected to have
increased to 28%256
.
4.3.1.3 Fuel switch in heating and cooling
Reduction of the energy consumption through increased insulation and more efficient equipment
is already well under way in the EU and so is the use of renewable energy for heat generation,
while low carbon energy vectors for heating & cooling (electricity, but also new vectors like
hydrogen or e-gas) are a relatively newer option.
Today, the most common technologies using renewable sources to deliver heating and cooling
services in buildings are solar thermal, geothermal, biomass boilers and ambient energy. Public
consultation results clearly indicate that citizens are familiar with such options and willing to
switch to them257
. Geothermal energy is available everywhere in Europe and the extent of
geothermal deployment is limited only by the demand for heat. According to some assessments,
around 45% of all heat demand can be covered from geothermal by 2050258
, and around 25% of
the European population is located in regions that are suitable for geothermal district heating and
cooling259
. Solar thermal is a widely used low-cost technology for domestic hot water in Southern
Europe, and solar-heated buildings and solar district heating systems have been successfully
demonstrated in Central Europe (both in detached houses and multi-family buildings). According
to some assessments, geothermal energy and solar thermal could supply 133 Mtoe in 2050
254
Heating and cooling appliances are covered by a number of Regulations under the Ecodesign and
Energy Labelling Framework. These Regulations aim to improve the environmental impact of these
appliances, by setting minimum energy efficiency requirements and where relevant requirements on
sound and emissions (e.g. CO2, NOx, OGC, PM) requirements. The heating products covered by
Ecodesign and Energy labelling measures represent approximately 70% of the building load in the EU,
the products that are not covered are district heating and very large appliances.
255
The primary energy efficiency of heating appliances ranges from approximately 30% for open fire
places to 300% for the most efficient heat pumps. The average primary energy efficiency of the
installed heating products was 60% in 2010 and increased to 66% in 2015. Central space heaters are the
most common heating equipment, and amounted to 120 million installed units in the EU in 2015, i.e. 50
million more than in 1990. The average primary energy efficiency of these boilers was 67% and they
consumed 1850 TWh/a of primary energy to meet a heating load of 1240 TWh/a. The energy input
consisted of fossil fuels (84%) and electricity (16%)
256
European Commission (2017), Ecodesign Impact Accounting, Overview Report 2017.
257
Comparing the responses regarding improving thermal integrity of buildings and the use of renewable
energy sources, fewer respondents indicate that they have already done the latter but the number of
those willing to undertake any of them as a priority is almost equal.
258
European Technology Platform on Renewable Heating, Common Vision for the Renewable Heating and
Cooling Sector in Europe, 2011
259
GEODH, Developing geothermal district heating, page 21, http://geodh.eu/
95
leading to an energy saving of 217 Mtoe260
. High Coefficient of Performance (CoP) heat pumps
are key to utilise geothermal and ambient energy (aerothermal and hydrothermal) and have
already significant market shares in several countries in Europe261
. These technologies can be
used in individual units of small capacity or in district heating and cooling in larger capacities262
186
. Provided they become increasingly efficient and decarbonised, district heating and cooling
networks have significant potential to facilitate the integration of various renewable heat and cold
sources, including surplus renewable power generation by offering storage and balancing services
to the electricity grid.
The deployment rate of renewable heat (also in the industrial sector) currently stands at 19% in
the EU but varies among Member States and in terms of technologies deployed. For example,
biomass provides more than 50% of heating and cooling demand in the building stock and urban
infrastructure in Croatia and Bulgaria, and more than 40% in Portugal and Latvia. Heat pumps
provide 27% of heating in the Swedish building stock, and more than 10% in Finland and Italy.
In Cyprus, 29% of heating demand in building sector is provided by solar thermal263
.
The specific options for the fuel switch from fossil fuels to zero-carbon/carbon-neutral energy
vectors must be looked into detail as the optimal heating and cooling supply option is determined
by specific local circumstances in function of the availability of local renewable resources, the
presence or feasibility of energy infrastructures, buildings' technical systems and their links with
the broader energy system. Renewables can be used alone or in hybrid systems combining
several types of fuels in individual buildings or in decentralised district systems based uniquely
on renewables. Electrification of heating in buildings through heat pumps is an important
component of the decarbonisation of heating and cooling, provided the electricity supply is
decarbonised.
Likewise, district heating and cooling networks have a demonstrated potential to help deliver a
wide range of renewable energy sources, including surplus renewable electricity, into buildings,
particularly in cities. The switch to district heating would require dedicated infrastructure and
sectoral integration and the district heating sector would need to become increasingly efficient
and decarbonised. District heating and cooling systems currently supply about 10% of EU's
heating and cooling demand but there is a potential to expand them to supply 50% of the heat
demand185
, with 25–30% of the heat potentially supplied using large-scale electric heat pumps186
264 265
. Innovations in low-temperature, more efficient district heating and cooling infrastructure
could even further expand the potential use of low-carbon options266
.
Changes would also be required if buildings use hydrogen and e-gas, whose supply challenges
and opportunities are described in section 4.2.
260
European Technology Platform on Renewable Heating, Common Vision for the Renewable Heating and
Cooling Sector in Europe, 2011
261
European Heat Pump Market and Statistics Report, 2017, EGEC Geothermal Market Report, 2017
262
IEA (2018) Renewable heat policies,
https://www.iea.org/publications/insights/insightpublications/Renewable_Heat_Policies.pdf
263
Eurobser'ER (2017), Solar thermal and CSP barometer,
https://www.eurobserv-er.org/category/all-solar-thermal-and-concentrated-solar-power-barometers/
264
JRC (2016), Efficient District Heating and Cooling systems in the EU, Case studies analysis, replicable
key success factors and potential policy implication,
http://publications.jrc.ec.europa.eu/repository/handle/JRC104437
265
The town of Gram in Southern Jutland Denmark is an example of expanding solar district heating. It
provides the town’s 2 500 inhabitants with a heat production capacity of 20 GWh/year and 62% of the
heat needs (with the help of seasonal storage), the rest being supplied from heat pumps, electric boilers,
CHP and gas back-up boilers, see 264
.
266
Lund (2018). Comparison of Low-temperature District Heating Concepts in a Long-Term Energy
System Perspective, https://doi.org/10.5278/ijsepm.2017.12.2
96
As investigated in detail in the study "Sectoral integration"267
, hydrogen-based heating
technologies have not until now been in focus in the European debate on the decarbonisation of
the heating sector. However, multiple technologies exist that have been applied in international –
mostly Asian – markets: fuel cell micro-CHP, direct flame combustion boiler, catalytic boilers
and gas-powered heat pumps. In Europe, the fuel cell programme has led to first demonstration
projects with the goal to install 50 000 systems with a subsequent commercial roll-out. The
relatively high investment costs are still a challenge for this technology today, and the fact that
they currently run on natural gas limits their contribution to decarbonisation. In the future,
hydrogen-fuelled heating could play a bigger role, especially in off-grid areas, where there are a
limited number of flexibility sources that can ensure the balance in the heating system.
E-gas, once produced, is exactly the same molecule as natural gas, and can be distributed via
existing distribution system and used by existing installations. Therefore, from the final consumer
perspective the only difference with natural gas will be most likely the cost (on the one hand
natural gas supply cost and possible related CO2 emissions pricing, vs. e-gas production cost).
All these options will need to be available and developed especially that heating and cooling is
expected to remain the largest source of final energy demand in Europe. Decarbonising its supply
is of vital importance to the EU’s wider climate and energy objectives in the coming decades.
4.3.1.4 Smart buildings
Digitalisation is shaping Europe’s energy system transformation in enabling the shift towards a
highly distributed, networked, and dynamic grid, which leads to the creation of technology-rich
platforms such as integrated distributed energy resources and smart and connected buildings.
Smart buildings are capable to effectively adapt operation to the needs of the occupants, while
ensuring optimal energy performances and being able to interact with energy grids268
. ICT
integrated to technical building systems, in particular building automation and control systems,
will be complementary to the other measures that impact buildings’ energy efficiency and
quality, e.g. building insulation. Smart technologies in buildings can contribute to optimising the
technical building systems’ operation (in particular, but not only, heating and air-conditioning
systems), to facilitate the use of renewable energy sources, and to improve demand-side
management while guaranteeing comfort and environmental quality. Multiple studies and
demonstration projects have confirmed the high potential of building smartness for energy
efficiency and effective maintenance and operation of technical building systems269 270 271
and the
267
ASSET project (2018), Sectorial integration long-term perspective in the EU energy system,
https://ec.europa.eu/energy/en/studies/asset-study-sectorial-integration
268
Directive (EU) 2018/844 of the European Parliament and of the Council of 30 May 2018 amending
Directive 2010/31/EU on the energy performance of buildings and Directive 2012/27/EU on energy
efficiency.
269
The European Standard EN 15232 distinguishes between four efficiency classes from A to D and
defines the energy saving potential resulting from building automation and control. Such systems could
achieve savings in thermal use of up to 30% in non-residential buildings and 20% in residential
buildings, and in electricity use up to 13% and 8% respectively.
270
Results of the iSERV project (2011-2014) suggest saving potential “of over 33% […] in some
buildings, with average savings over 9% looking possible. Savings in non-electrical energy use will be
on top of this reduction”.
http://www.iservcmb.info/sites/default/files/results/overview/iSERV-factsheet_FINAL.pdf, consulted
August 2018.
271
The study Smart Readiness for Buildings suggests that between 4.3 and 5.2 Mtoe energy savings could
be achieved thanks to further promotion of smart technologies in buildings in 2030.
https://smartreadinessindicator.eu/milestones-and-documents (consulted August 2018).
97
results of public consultation prove that consumers have an interest in such technologies. Recent
assessments showed in particular that smart technologies could lead to significant reductions of
the energy consumption for space heating and space cooling272
.
Smart buildings can also interact dynamically with the energy system, supplying energy
flexibility to the grid by dynamically managing demand and optimizing the use of local on-site
energy production (e.g. electricity from PV panels) and relying, when available, on on-site
storage capacities (both stationary and embedded in appliances and vehicles). Buildings thus
become an active, manageable part of the energy system in transition, contributing to enhanced
flexibility.
Smart buildings also lead to additional benefits for building users and consumers:
 by enabling feedback from buildings and systems, they allow building users to make
better decisions on indoor parameters management and appliances and systems use,
contributing to achieving an optimal balance between users’ needs fulfilment and energy
consumption minimisation;
 energy consumption is decreased and energy bills are lowered by optimizing the
management of energy273 274 275
. Impacts on energy bills are particularly marked with
time-based and dynamic pricing schemes, by leveraging the increased flexibility of smart
buildings276
;
 comfort and well-being can be enhanced thanks to accurate indoor environment
monitoring and facilitated user interactions, such as for instance supporting independent
living of elderly people277 278
;
272
Up to 30% for heating: see (SWD (2016) 414 final).
273
D. Lee, C.-C. Cheng (2016), Energy savings by energy management systems: A review, Renewable and
Sustainable Energy Reviews 56, p 760-777. This recent review analysed the outcomes of more than 300
cases of Energy Management Systems concluded that Building Energy Management Systems led to
average yearly savings of more than 16%, and Energy Management Systems for equipment to average
savings of 39% for lighting and 14% for HVAC.
274
A. J. Morán et al (2016), Review and analysis of results from EU pilot projects, Energy and Buildings
127 128-137). This recent study based on the assessment of 105 pilot buildings from 18 European
projects highlighted the role of ICT solutions in achieving energy savings of more than 20%
(Information and Communication technologies (ICTs) for energy efficiency in buildings).
275
American Council for an Energy-Efficient Economy (2017), Smart Buildings: Using Smart Technology
to Save Energy in Existing Buildings, http://aceee.org/research-report/a1701. The American Council of
Energy gives average energy savings of 23% in office buildings after the installation of smart building
technologies (lighting control, Remote HVAC - Heating Ventilation and Air Conditioning – control
system).
276
Energy flexibility is key to benefit from such pricing schemes. In particular, the combination of
renewable energy sources and electricity storage can dramatically decrease the consumption of
electricity delivered from the grid. A recent study showed that, for a two-storey residential building, the
combination of PV panels with an electric vehicle could decrease the amount of electricity required
from the grid of 68% on average and resulted in a reduction of up to 62% of the electricity bill.
(M. Alirezaei, M. Noori, O. Tatari (2016), Getting to net zero energy building: Investigating the role of
vehicle to home technology, Energy and Buildings 130 465-476)
277
Y. A. Horr et al (2016), Occupant productivity and office indoor environment quality: A review of the
literature, Building and Environment 105 369-389.
Indoor environmental quality (IEQ) has a great impact on the well-being of building users'. It has for
instance a significant influence on productivity in tertiary buildings. This case study also suggested
productivity gains from smart energy and comfort management strategies of up to $1000 per year per
person, while reaching energy saving objectives.
278
R. Al-Shaqi, M. Mourshed, Y. Rezgui (2016), Progress in ambient assisted systems for independent
living by the elderly, Springer Plus 2016 5:624.).
According to this study, smart homes can also support independent living of elderly people.
98
 maintenance is also made easier, more reliable and more cost-effective thanks to
analytics algorithms that process monitoring data from the building automation and
control and technical building systems279
.
Finally, smart buildings can also be beneficial for the decarbonisation of the transport sector, as
they facilitate the management of recharging infrastructure in car parks280
, in particular where
smart charging capabilities are available, which in turn contributes to the uptake of electric
(battery or plug-in hybrid) vehicles.
4.3.1.5 Nearly zero-energy buildings
Drawing on all technological solutions, from 2021 onwards, all new buildings in the EU will
have to be nearly zero-energy buildings (NZEBs), that is to say buildings that have very high
energy performance and which (limited) energy consumption is mostly covered by energy from
renewable sources281 282
. To achieve this level of performance, NZEBs will have to combine the
best of energy-efficiency and smartness, relying on energy-efficient envelope components, highperformance
technical building systems, and smart technologies and ICT.
4.3.1.6 Societal and consumer choices
In addition to technology solutions for buildings decarbonisation that are described above, the
domain of the consumer choice (facilitated by recent technology progress, notably digitalisation)
also offers promising contribution with options such as better control of indoor temperature or
partial heating of the house. Other types of behavioural change relate to "circular economy"
family of measures such as sharing office space or reducing the number of appliances (because,
again, of sharing). Finally, different urban planning while it would have the biggest impact on
mobility (reducing the trajectories in daily commuting) could have also an impact on reduction of
energy consumption per dwelling.
4.3.2 Buildings results
The evolution of energy demand in buildings (both residential and tertiary) displays significant
differentiation across scenarios, depending on whether the emphasis of the pathway is on the
decarbonisation of the supply or on further reduction of the energy demand.
279
A study by Schneider Electric based on a report from the Federal Energy Management Program (US)
highlights that current practices tend to favour reactive maintenance approaches, while predictive
maintenance approaches are the most efficient and can save up to 20% per year on maintenance and
energy costs: (Schneider Electric White Paper, Predictive Maintenance Strategy for Building
Operations: A Better Approach,
https://www.fmmagazine.com.au/wp-content/uploads/2015/03/Predictive_Maintenance-SE_asset.pdf.
280
The revised Energy Performance of Buildings Directive 268
includes requirements on the installation of
electric vehicle recharging points in buildings’ car parks.
281
This requirement is laid down in the Energy Performance of Buildings Directive 268
and will apply in
the European Union, see https://ec.europa.eu/energy/en/topics/energy-efficiency/buildings/nearly-zero-
energy-buildings
282
ECOFYS, Politecnico di Milano / eERG, University of Wuppertal, Towards nearly zero-energy
buildings, Definition of common principles under the EPBD (2012),
https://ec.europa.eu/energy/sites/ener/files/documents/nzeb_full_report.pdf
99
4.3.2.1 Moderation of energy demand
Buildings, combining the residential and services sectors, make currently the largest final energy
consumption in the EU, representing about 40% of the total in 2015. The uptake of buildings
insulation, targeting in particular energy use for space heating, the most important single energy
use in buildings, is expected to lead to a decline of this energy demand.
On the one hand, the socio-economic activity drivers of these sectors are expected to push energy
demand up over time. The number of dwellings as well as their average size are projected to
gradually increase283
, while the services sector is expected to contribute to future economic
growth, increasing its share in EU GDP to 71% in 2050 (vs. 68% in 2015).
Despite these trends that push energy consumption upwards, the final energy consumption in
buildings is actually projected to reduce, due to the action of policies that will already result in
noticeable results by 2030, with final energy demand reducing by 28% and 12% compared to
2005 in residential and services, respectively. Looking at the Baseline scenario, by 2050 the
reductions would be 38% in residential sector and 8% in services (compared to 2005) as
economic growth in the services sector would be a strong countervailing force.
Figure 39: Evolution of the energy consumption in buildings in 2050 (compared to 2005)
Note: “Heating and cooling” includes space heating, water heating, cooking and air cooling.
Source: Eurostat (total sectoral energy consumption in 2005), PRIMES.
In the residential sector, the 80% GHG reduction scenarios would lead to energy consumption in
2050 reduced by between 41% (P2X, H2) to 56% (EE) below 2005 level. Stronger reductions are
achieved in EE which has, by construction the strongest action in terms of renovations and
equipment performance, lower in H2 and P2X where decarbonised energy vectors allow keeping
relatively higher levels of energy demand. The scenarios achieving higher GHG reductions
reduce most, achieve up to 57% reductions in 1.5LIFE, which benefits from technological
deployment complemented by consumer choice.
Importantly, the different end-uses show very different patterns. In all decarbonisation scenarios,
except EE and in the two 1.5°C scenarios, electrical appliances increase their consumption over
time due to the multiplications of consuming goods in households, which are only moderated in
283
It should be, however, also considered that the trend for 1-2 person households will strengthen in EU
too thus moderating the increase in surface of dwellings. See OECD (2012), The Future of Families to
2030 and GFK 2014 IFA Press Conference Home Appliances 25-04-2014.
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
Residential Services
comparedto2005(%)
Appliances & lighting Heating & cooling Total energy
100
EE and 1.5°C scenarios by ambitious energy efficiency measures (that would, in practice, require
even more stringent eco-design or similar measures) in this respect. It has to be noted that little
differentiation across scenarios is assumed in terms of useful energy demand of appliances since,
as a principle, the same level of services are sought across all scenarios (e.g. laundry, cooking,
ICT applications)284
. While in the Baseline, by 2050 the residential appliances would be
increasing their final energy demand by 46% compared to 2005 (20% compared to 2030), EE
scenario keeps the increase to half that (or 1% increase only compared to 2030) and the 1.5°C
scenarios keep the increase to 30-32% compared to 2005 (+6-8% compared to 2030). Other
scenarios see an increase of around 40% (15% compared to 2030), lower than in Baseline but still
significant. Moderation of final energy demand of appliances also happens in services sector.
Energy consumption by appliances in the services sector would increase in the Baseline by 96%
in 2050 compared to 2005 (54% compared to 2030), whereas the EE scenario would achieve 22%
reduction compared to 2005 (5% reduction compared to 2030) and the 1.5°C scenarios would
keep the increase to 34% (5% compared to 2030). Other scenarios show increases in the range of
60-80% compared to 2005 (25-40% compared to 2030).
Conversely, the useful energy demand285
for space heating286
(see Figure 40) reduces in all
decarbonisation scenarios and in both residential and services sectors, mainly as a result of
increased insulation of buildings and in 1.5LIFE, also due to a behaviour focusing on rational use
of energy.
Combined with better performing equipment, this leads to significant reductions of energy use for
heating and cooling in the residential sector reductions compared to 2005, ranging between 53%
(H2, P2X) to 67% in EE and even 69% in 1.5LIFE. It can be noticed that scenarios that develop
significant quantities of decarbonised energy carriers have lower reductions in the heating &
cooling needs.
Results in the services sector follow the same logic. Reductions of actual energy demand for
heating and cooling in services (Figure 39) are lower than in the residential sector, because of
growing economic activity of the sector, but still range from -41% to -57% compared to 2005 (-
22% to -43% compared to 2030).
284
The relationship between the macroeconomic and demographic drives with useful energy demand is the
same across the scenarios. However, the degree of energy efficiency effort, which varies by scenario
influences the useful energy that final demand has to meet. The influence is small for residential
appliances but stronger for appliances and electrical equipment in the services sectors, where there
exists potential of optimizing useful energy from appliances via control systems. Nonetheless the
impacts of scenario differentiations on useful energy remain small.
285
The "useful energy for space heating" is the actual end use of energy, estimated as the final energy for
space heating net of the efficiency losses of the different heaters, and thus removing the effects of the
changing fuel mix.
286
The analysis is done at constant climate over time. The possible effects of a warming climate on energy
needs for heating and cooling is not represented – see for instance on this topic: JRC (2014), Climate
Impacts in Europe, The JRC PESETA II Project (doi:10.2791/7409); and JRC (2018), Climate Impacts
in Europe, Final report of the JRC PESETA III project (doi:10.2760/93257).
https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/climate-impacts-
europe
101
Figure 40: Useful energy consumption for space heating in buildings
Source: PRIMES.
These projections clearly show that energy efficiency remains the key enabler for decarbonisation
of buildings across all scenarios. These figures are higher than the reductions seen in other
studies: the Öko-Institut Vison EU205
scenario, the IEA Energy Technology Perspectives204
(B2DS scenario) and the Shell Sky203
studies report buildings' final energy consumption savings
of 37%, 21% and 13% respectively between 2030 and 2050.
The improvement in terms of energy use for heating and cooling is due, to a large extent, to the
improvement of the thermal integrity of the building shell, which comes along with the upgrade
of heating appliances to more efficient and performing ones, both through the penetration of very
efficient new buildings (as required by the EU legislation) but mainly through renovation of old
buildings – the second trend having bigger effect due to very small rate of new constructions that
has been observed historically and has not been accelerated in the scenarios in this analysis.
In fact, the Baseline and all decarbonisation scenarios apply existing measures under the EPBD
Directive, which require new buildings to be nearly-zero in terms of energy consumption as of
2021. As important as they are, the contribution of such buildings constructed from 2021 to 2050
are projected to represent only 23% of the stock of residential dwellings in 2050, and 28% of
surface in services. Consequently, sizable effects on the total stock will mainly happen through a
renovation programmes that apply to the largest quantity of buildings and that lead to serious
improvement of their energy performance. In reality there are multiple barriers to wide-spread
buildings renovations notably access to finance, split incentives and likely bottlenecks if the
construction sector has to step up its activity very significantly and this in a short time (as most
ambitious scenarios with this respect would require). The model captures such non-market
barriers to renovation, but the scenarios assume that policies, before and after 2030, also aim at
removing the barriers. As a consequence, the projections include in the scenarios higher
renovation rates and higher depth of energy-related renovation than observed historically.
0
20
40
60
80
100
120
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
kWh/m2
Services
Residential
102
The projected renovation rates (Figure 41) differ across scenarios. By construction287
, the EE
scenario displays the highest rates among the 80% GHG reductions scenarios: 1.8% in the
residential sector and 1.6% in the tertiary sector in the period 2031-50, against close to 1.5% and
1.4%, respectively, in the other cases with 80% reductions of GHG emissions. The higher GHG
reductions scenarios are in-between this range with 1.7-1.8% in the residential sector in and 1.5-
1.6% in the services sector.
Figure 41: Average yearly renovation rate
Source: PRIMES.
As explained above, the performance of the scenarios differs also in terms of energy-related
depth of renovations pursued – whose projections are differentiated among scenarios. Again, the
EE and the scenarios that achieve the highest GHG emissions reduction pursue mostly medium to
deep renovations (including intervention on walls, windows, roof and basement), compared to the
other scenarios where light to medium renovations (i.e. intervention on windows and roof) have a
higher share. The different depth of renovations results in differing energy savings achieved from
refurbishment. These savings (average annual values for 2031-50) vary in the residential sector
from 55% (ELEC) to 62% (EE) and the scenarios that achieve the highest GHG reductions lie
close to EE scenario performance. In the services sector, these savings vary from 51% (ELEC) to
58% (EE) and the scenarios that achieve the highest GHG reductions also lie close to EE scenario
performance.
Higher renovation rates and deeper renovation translates into higher investment needs for
buildings in the EE scenario than for others – see Table 10 of section 4.10.1.
Beyond renovation rates and improvements in the energy performance of heating and cooling
equipment and appliances, the buildings automation, control and smart systems (BACS) (or
"smart buildings") also contribute to the demand reduction. The savings achieved from BACS288
in the scenarios analysed drive reduction of useful energy demand, notably in the services sector
as described above. The projections are, however, more conservative regarding the similar effects
in the residential sector, in contrast to several studies and demonstration projects that indicate
larger potential for energy consumption reductions. In light of these studies, a “smart building”
could thus partially reduce the need for possibly costly stringent renovation. It is also an
opportunity to further involve and empower the consumers – especially if "smart building" is
287
Both renovation rates and depth of renovation (described in section below) are outcome of modelling
and are driven by energy efficiency (shadow) values. The values are standard modelling technique that
enables to reflect the intensity of (yet to be defined) future energy efficiency policies.
288
Assumptions in the scenarios are based, among others, on the1st technical study on the Smart Readiness
Indicator that analyses the impacts of BACS on building energy efficiency along the classes defined by
standard EN-15232.
1,0%
1,2%
1,4%
1,6%
1,8%
2,0%
2016-'30
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2031- '50
Renovationrate
Residential
Services
103
coupled with management of own production (from renewables) and possibly storage (for
example in an electric vehicle).
Finally, consumer choice can also have a significant impact on the energy needs in buildings and
contribute further into the reduction of energy demand from buildings in the 1.5LIFE scenario.
Other studies indicate much higher impact that could be achieved but also then requiring change
that would have higher impact on lifestyle and thus perhaps lower acceptability such as sharing
office space and different organisation of service buildings, lowering of indoor temperature,
sharing of common spaces in blocks of flats, upper limits to the size of dwellings and different
city planning289
.
The increasing built-in intelligence of appliances and buildings will help automate and optimise
energy consumption decisions and actions (for instance switching off lights or adjusting room
temperature set points according to time and presence patterns), thereby increasing the overall
energy efficiency in buildings. However, despite this improved technological assistance, it is also
clear that raising "energy awareness / literacy" of consumers will continue to be vital to ensure
the full efficiency potential is actually exploited.
4.3.2.2 Changes in the fuel mix in heating and cooling
Concerning the fuel mix, the trend that emerges the strongest (already in the Baseline scenario) is
that buildings will experience a rapid growth of electrification. The share of electricity in services
buildings will increase from 50% today to between 83% (ELEC) and around 80% in all other
decarbonisation cases by 2050. The growth in residential buildings is also spectacular, with a
share more than doubling between 25% today and 2050 where it ranges from 53% (P2X) to 68%
(ELEC) and 63% in 1.5°C scenarios.
Figure 42: Share of electricity in final energy demand buildings
Source: Eurostat (2015), PRIMES.
It is clear that the electrification of space heating (by, in particular, greater role played by heat
pumps using different technologies) is an important driver of this dynamics, especially in
residential buildings. Also increasing penetration of appliances (only to some extent moderated
by energy efficiency measures) described in previous chapters drives up electricity demand.
289
See, among others, the study of European Climate Foundation “Net Zero By 2050: From Whether To
How”
0%
20%
40%
60%
80%
100%
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2050
Services
Residential
104
In order to separate these two trends, one can look at penetration of electricity in space heating
only (cooling being already today mainly powered by electricity). In the residential sector
electricity share in heating grows from 14% in 2030 to 22-44% by 2050. The trend is stronger in
services buildings, as electricity share for space heating grows from 29% in 2030 to reach 44%-
60% in 2050, strongly dependent on the technological pathway. In both sectors, the highest levels
are reached in the ELEC scenario (where the number of dwellings equipped with electrical
heating systems, notably heat pumps, is multiplied tenfold compared to 2015 and would represent
some 2/3 of all the dwellings) and in the scenarios with highest GHG reductions. Electrification
of heating is the lowest (but still strongly growing from levels known today) in scenarios where
alternative energy carriers develop (H2, P2X).
Figure 43: Share of electricity in space heating in buildings
Source: PRIMES.
The range on electrification of buildings found in other studies is fairly wide, with for instance
the Shell Sky scenario (74%) being close to this analysis findings, while the IEA ETP B2DS204
scenario is more pessimistic with electricity reaching 35% of residential final energy demand.
Eurelectric (2018)290
shows rates from 45% (80% emissions reduction case) to 63% (95%
emissions reduction case).
With the higher penetration of electricity, and an overall reducing demand, the consumption of
other fuels decline accordingly (Figure 44). These fuels are used only for heating purposes: space
heating, water heating or cooking.
290
Eurelectric (2018), Decarbonisation pathways for the European economy,
https://cdn.eurelectric.org/media/3172/decarbonisation-pathways-electrificatino-part-study-results-h-
AD171CCC.pdf.
0%
10%
20%
30%
40%
50%
60%
70%
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2050
Services
Residential
105
Figure 44: Non-electricity fuel consumption in buildings.
Source: PRIMES.
Gaseous fuels (natural gas, biogas, e-gas and hydrogen) represent the bulk of remaining
consumption in final energy consumption albeit falling from the 31% share achieved in 2030 to
between 12% (ELEC) to 23% (H2 and P2X). The shares projected by 1.5°C scenarios lie in this
range. Natural gas, maintains some consumption in scenarios achieving 80% GHG reductions:
between 8% (P2X) to 15% (EE) of total energy consumption in buildings but is marginal (3%
share) in 1.5°C scenarios. Natural gas is, to a large extent, substituted by e-gas in all scenarios
where this option deploys (P2X, COMBO, 1.5TECH and 1.5LIFE), and to a lesser extent by
biogas and hydrogen, depending on the scenario. Other studies find natural gas contribution to
energy demand in buildings ranging from 10% (IRENA's global energy transformation216
) to
21% (IEA ETP B2DS204
). Those that see the energy system fully based on renewable energies in
2050 make no more use of natural gas.
Distributed heat roughly maintains its share from 2030 with 5-6%of total energy demand in
buildings across all decarbonisation scenarios. Solid biomass, used in modern stoves (to limit
related air pollution) and biogas play a role too. Total of biomass has rather stable shares
compared to 2030 (9%) and across decarbonisation scenarios, between 8% and 12% of the total
energy demand in buildings. Other studies see a much higher share for biomass in buildings
between 10% (Shell Sky203
scenario) and 25% (Öko-Institut Vision EU205
). Finally, solar thermal
and geothermal heat represents marginal shares of the energy consumption. Coal and oil both
disappear from the energy consumption in buildings.
The share of renewables in heating and cooling increases considerably in all scenarios. The “RES
H&C” share, as defined by Renewable Energy Directive (and that covers also industrial heat –
see section 4.5.2), increases from 19% in 2015291
to 32% in 2030 to between 55% (ELEC) and
68% (P2X) in scenarios achieving 80% GHG reductions. Noticeably higher shares are even
reached in both 1.5°C scenarios, with 79% for 1.5TECH and 78% for 1.5LIFE. As comparison,
in IRENA's global energy transformation216
, the share of renewables in heating and cooling
grows to 65% in the industry sector and 75% in the buildings sector. As explained in the section
4.2.2.1, the e-gas and e-hydrogen that are produced with renewable electricity also count as
renewable energies.
291
Eurostat (2018), SHort Assessment of Renewable Energy Sources (SHARES),
https://ec.europa.eu/Eurostat/web/energy/data/shares
0
50
100
150
200
250
300
2015
2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
2050
Mtoe
other RES
district heating
solid biomass
hydrogen
e-gas
biogas
natural gas
oil & coal
106
As a result of such significant moderation of energy demand and fuel switch towards carbon-free
carriers, the GHG emissions in buildings decrease substantially. In the Residential sector, GHG
emissions are in 2050 reduced between 87% (CIRC) and 91% (P2X) (compared to 2005) and
nearly completely in 1.5°C scenarios. In the services sector, GHG emissions are in 2050 reduced
between 88% (EE) and 93% (P2X) (compared to 2005) and nearly completely in the 1.5°C
scenarios. The unabated emissions come from the remaining natural gas blended in gas
distribution. To sum up, the existing technology options enable buildings to fit in the -80% GHG
reduction objective by 2050 and, especially if complemented by moderate lifestyle changes, to go
beyond and contribute to the net-zero objective in 2050.
4.3.3 Transition enablers, opportunities and challenges
Energy efficiency improvements in the building sector have a robust base to start with: the EPBD
and the EED provide the right regulatory basis and incentives to ensure the construction of nearzero
emissions buildings across sectors and to spur ambitious renovations even beyond 2030
since there is no sunset clause on energy efficiency obligations). In addition, EU energy labelling
and eco-design rules have steered both consumers and industry to pay more attention to the
energy consumption of appliances and buildings, in their consumption choices, but also in
business’ industrial design and strategic product development.
While the fundamental approach has been put in place, there remains still a number of challenges
for future development considering also that demographic and welfare changes (pushing
consumers to seek increasing comfort levels) will have an impact on energy demand.
First of all, the pace of renovations has to increase significantly, which can be a challenge for the
construction sector and the production of materials that it uses. In the results of the public
consultation, it is clear that energy related renovations are desired by majority of respondents.
Technological challenges, however, exist in terms of delivering even more efficient materials at
prices affordable for all consumers. In addition, the current pay-back times in terms of
renovations can still be discouraging for lower-income owners or landlords, which is likely to
prove even more difficult with an ageing population and in general the renovations are more
difficult to envisage for the tenants as also shown in the results of public consultation. Finally,
these very highly-performing materials and affordable for construction and insulation will be
needed at a very large scale, if the increased renovation rates are to be met and the energy savings
delivered.
As regulatory requirements on buildings become more and more stringent on a number of aspects
(not only energy consumption but also on urban, social, cultural, safety, resource efficiency,
noise, etc. aspects), this will have a combined impact on the investment levels, operational and
maintenance costs. In addition, the level of maturity of local markets in terms of services supply
and access for new entrants will influence the investment and operational costs for the property
owners and building occupants.
Within buildings, appliances will continue to need to improve their efficiency, to continue to do
more with less energy and cutting edge IT solutions would need to be integrated to reap all the
benefits – again at the cost affordable for all consumers.
A critical development entailing both challenges and opportunities will be how buildings,
appliances and the energy system “talk” to each other for example through Internet of Things
292
applications and reflected by the smart readiness/communications aspect of energy systems in
292
https://ec.europa.eu/digital-single-market/en/internet-of-things
107
buildings. The ultimate goal of smart buildings being synchronisation of consumption with both
consumer and local energy system needs, including in particular mobility needs and the
development of electro-mobility (see section 4.4), which will require adequate charging
infrastructure and a proper integration of energy flows at buildings levels.
Here again, the EU has already started to address the issue – requirements for smart meters in
households or smart readiness indicators for buildings introduce technology into the households
and also raises awareness of consumers as to the new role they are able to play in managing their
energy demand. While opportunities for energy savings (and also storage) and potential of
technology to develop as a part of digitalisation wave are significant, the uptake of such solutions
will very much depend on the ease of their use. Therefore, smart technologies, for instance
minimally managed on smart phones, will need to evolve in line with users' acceptance.
Besides technology development, it will remain a key challenge to convince the consumers to
embark on these possibilities and become more active participants in the energy markets. Today
smart building technology is perceived as promising but costly and depending on infrastructure
and network improvements, or even simply burdensome and paying off only in the long run. The
public consultation shows the lowest support to smart meter option among all options that allow
reducing energy consumption and related CO2 emissions in buildings.
4.4 Transport
4.4.1 Transport options
Transport represents around a third of the final energy consumption in the EU. The currently
dominant transport technologies rely on liquid fossil fuels. This is projected to only gradually
change under current trends and policies by 2050. Greenhouse gas (GHG) emissions from the
sector, including emissions from maritime and aviation bunker fuels, have been on the rise,
except during the period 2007-2013, when emissions decreased due to a combination of factors
(i.e. improvements in energy efficiency, the impact of the economic crisis and a subsequent
period of high oil prices).
The 2011 White Paper on Transport and the 2016 EU low-emissions mobility strategy have
already shown293 294
that an integrated system approach is required to put the transport sector on a
sustainable path. Central elements of such approach include action on overall vehicle efficiency,
promoting low- and zero emission vehicles and infrastructure, and the long-term switch to
alternative and net-zero carbon fuels for transport, against the backdrop of a fundamental increase
of the efficiency of the transport system - by making the most of digital technologies, smart
pricing and further encouraging multi-modal integration and shifts towards more sustainable
transport modes. This section focuses on the central elements of the integrated system approach
and presents the options available across different transport modes.
4.4.1.1 Low- and zero emission vehicles, vehicle efficiency and infrastructure
A strategic approach to low emissions mobility needs to fully exploit the potential for improving
vehicle efficiency, in both conventional and alternative fuels vehicles. Engine efficiency
improvements, aerodynamic improvements and drag reduction, engine hybridisation of various
forms, as well as plug-in hybridisation and range extension, will continue to play a role.
293
COM (2011) 144, White Paper Roadmap to a Single European Transport Area – Towards a competitive
and resource efficient transport system.
294
SWD(2016) 244, A European Strategy for Low-Emission Mobility.
108
Important gains can still be made through a radical rethink of vehicle and vessel design, including
light-weighting of vehicles, or the use of sails as an auxiliary power source in shipping.
Significant gains are also possible in aircraft efficiency.
The uptake of low- and zero-emission vehicles will need to accelerate over the coming years and
decades. Battery electric vehicles are themselves a strong enabler of efficiency of energy use for
vehicle propulsion, as well as offering novel vehicle design possibilities. Falling battery prices
are expected to facilitate the uptake of these vehicles, although as discussed in section 5.6.1.2, the
necessary supply of raw materials needs to be secured. Advances on battery and fuel cell
developments need to be complemented by strong action to accelerate the roll out of appropriate
recharging and refuelling infrastructure in the Union, on the Trans-European Transport Network
(TEN-T) and beyond, to ensure full coverage of all transport networks. Electricity can also be
delivered via catenary lines and pantograph systems, such as in rail, tram, and metro systems or
possibly through road electrification295
. Accelerated emissions reductions in the whole electricity
system, including the production of hydrogen, will further amplify the benefits of low- and zeroemission
vehicles (see section 4.2).
4.4.1.2 The use of alternative and net-zero carbon fuels
There is no single fuel solution for the future of low-emission mobility - all main alternative fuel
options are likely to be required, but to a different extent in each of the transport modes. In
addition, the interplay between vehicles powertrains and fuels is expected to become more
diverse in the long term. Electricity and hydrogen will be used in dedicated powertrains.
Furthermore, for those transport modes where the deployment of zero emission vehicles is
unfeasible due to energy density requirements or technology costs, carbon neutral fuels (i.e.
advanced biofuels and biomethane, as well as e-fuels) can be deployed for use in conventional
vehicle engines. For instance, if, in a transitional phase, were gas to be used as a fuel for
shipping, it could be gradually decarbonised.
In the case of advanced biofuels and biomethane, CO2 emissions are offset through the initial
growth of biomass in case of sustainable biomass. However, as discussed in section 4.7, land
constraints imply that they should be deployed only in those transport modes or means where
they are necessary.
E-fuels (e-liquids and e-gas) represent a promising alternative but their lifecycle CO2 emissions
will depend on the source of the CO2 used to produce them; in case of biomass or direct air
capture of CO2 this can result in carbon-neutral fuels (see also section 4.2.1.4). With e-fuels
requiring significant amounts of electricity for their production and the uncertainty regarding the
pace of their cost reduction, the transport modes where they would be deployed need to be
carefully considered.
An important advantage of both e-fuels and advanced biofuels is their direct use in conventional
vehicle engines, relying on the existing refuelling infrastructure.
4.4.1.3 Improving the efficiency of the transport system
In addition to vehicles and fuels, substantial emission reductions are possible through optimising
the transport of people and goods across modes. Connected, cooperative and increasingly
automated mobility solutions offer unprecedented opportunities in this context to complement
295
Siemens (2017), eHighway – Innovative electric road freight transport.
https://www.siemens.com/content/dam/webassetpool/mam/tag-siemens-
com/smdb/mobility/road/electromobility/ehighway/documents/ehighway-2017.pdf
109
good public transport services. Seamless, user-centric door-to-door multi-modal solutions are
already possible, supported by Intelligent Transport Systems and multimodal travel information
services. The deployment of Cooperative Intelligent Transport Systems offers significant
potential296
. More generally, digitalisation is already reshaping the transport sector, leading to
strongly improved logistics across transport modes297
. Data sharing, enhanced traffic
management and increased cooperation between relevant authorities, as well as with private
actors, could enable the provision of services that can contribute to low emissions mobility. How
far these innovations would make a difference depends on how services are provided, and how
they impact on user behaviour.
On freight, alternatives to road (rail, waterborne transport) could be pursued more effectively, to
realise the potential of multimodal transport and modal shift298
. Rail freight would need to
become more competitive compared to road transport, by eliminating operational and technical
barriers between national networks, and by fostering innovation and efficiency. In addition, a
stronger international coordination of rail freight operations would have an important impact in
terms of cost reduction, thanks to minimisation of delays, an increased priority of freight trains
and an overall reduction of time related costs. Support for intermodal connections, digitalisation
and automation of shipping has the potential to increase the competitiveness of waterborne
transport. Extending charging to all vehicles categories and transport network could be
instrumental for improving the efficiency of the transport system.
A completed core and comprehensive Trans-European Transport Network, notably the Core
Network by 2030 and the Comprehensive Network by 2050, would allow for the optimal use of
transport modes, with rail and waterborne transport being attractive means for medium distance
passenger trips between cities in the EU, as well as for international freight traffic. As the
transformation of the various transport modes will take time, the use of the least polluting modes
needs to be optimised. Rapid capacity increase in rail is needed, and could be supported by the
effective deployment of European Railway Traffic Management System (ERTMS). It would
allow growth in commuting, long-distance travel and the development of effective freight
corridors. Alternatives to flights for short-to-medium distances (typically with high-speed railway
connections) are alternatives where available to reduce emissions because air transport is harder
to decarbonise. Finally, multimodal last-mile logistics can contribute to lower CO2 emissions
though zero-emission transport modes such as electric vehicles, cargo bikes, electric barges etc.,
as well as promoting joint delivery of goods using urban consolidation centres.
4.4.1.4 Societal and Consumer choices
Consumer choices influence much of transport development. In the end, it is the consumer who
decides. But consumer choices are strongly influenced by government policies and business
offerings.
In terms of future policy design by governments, internalising the externalities of transport
through road charging would increase social welfare. Enhanced implementation of the
user/polluter pays principle and public incentives, including subsidies, would make sustainable
296
A first milestone was reached with the adoption of the EU Strategy on Cooperative Intelligent Transport
Systems (COM(2016)766 final).
297
Proposal for a Regulation on electronic freight transport information (COM/2018/279 final) and
Proposal for a Regulation establishing a European Maritime Single Window environment and repealing
Directive 2010/65/EU (COM/2018/278 final)
298
Proposal for a Directive amending Directive 92/106/EEC on the establishment of common rules for
certain types of combined transport of goods between Member States (COM(2017) 0648 final);
Shift2Rail Initiative.
110
infrastructure and greening of assets financially viable and promote modal shift. To level the
playing field between different transport modes, external costs would need to be internalised in
all of them. In addition, dynamic pricing could reduce congestion in both road and rail transport
with positive effects on CO2 emissions.
An accelerated implementation of the EU policy framework299
and its further development for
Cooperative Intelligent Transport Systems (C-ITS) technologies will mark the first step towards
connected, cooperative and automated mobility in the EU, where data represent sort of “new
mode of transport”. Public authorities need to ensure integrated, long-term sustainable and
socially just urban300
and spatial mobility planning301
, improving the convenience and availability
of active modes (walking and cycling) and public transport302
. Public procurement of clean fleet
solution could help build market momentum for low- and zero-emission transport solutions. In
addition, eliminating operational and technical barriers between national rail networks and
fostering the competitiveness of waterborne transport would increase the potential for modal
shift.
For business digitalisation will increasingly offer solutions to replace physical transport needs by
more advanced, secure and easy-to-use tools for videoconferencing and telepresence. While faceto-face
contact cannot be replaced in all cases, there are large opportunities for saving time and
money, as well as reducing the corporate carbon footprint. This is particularly important in the
case of business air travel. In addition, large-scale fleet operators will shape much of the
transition to zero-emission mobility, both in view of accelerating uptake of zero-emission
vehicles, but also of innovative vehicle-to-grid and grid-to-vehicle solutions.
From the consumer perspective, the development of mobility as a service needs to be based on a
truly multi-modal approach, involving collective/public transport, shared vehicles and bikes. It
would need to make use of zero-emission vehicles, with higher occupancy rates for the average
vehicle (currently low at 1.5 passengers per car). Under such conditions, it would result in higher
energy efficiency and lower emissions. At the same time, it could reduce the amount of time cars
are not used, resulting in a lower vehicle fleet and thus improving materials efficiency throughout
the whole supply chain of the road transport system.
Vehicle automation is quickly proceeding. What is needed however is to ensure that the direction
is right, leading to emissions reduction in transport, and limiting rebound effects. For example,
there is a risk that vehicle automation would increase the demand for mobility or willingness to
spend time in traffic, with adverse environmental effects as a consequence. Other trends like
online shopping could reduce transport demand but could also increase it, and teleworking can
reduce traffic, but also encourage fewer but longer commutes. Hence automation and
connectivity need to go hand in hand in order to achieve overall system efficiency improvements.
Consumers can also make conscious choices to take the environmental impact of transport into
account. In an urban context, choices for active modes such as walking and cycling could be
encouraged, alongside shared, collective and public transport. For long distance travel, high
299
COM (2016) 0766 Final
300
International Resources Panel (2018) The Weight of Cities: Resource requirements of future
urbanization http://www.resourcepanel.org/reports/weight-cities
301
The concept of sustainable urban mobility planning, promoted by the Commission, is the tool to render
transport operations of municipalities more effective. The Commission’s European Mobility Week
complements this with the awareness-raising and dissemination that supports consumer choices towards
public transport, walking, cycling etc.
302
Larger pedestrian zones, better and safer cycling lanes and more and better access to public transport
options.
111
speed rail (where available) and coaches could replace aviation for short/medium distances303
(<1000 km). Improved integration of airports and the extensive rail network would further enable
passengers to undertake part of, or all of, their journey via high speed rail in particular304305
.
However, this would require appropriate incentives, as flights are often economically more
attractive and/or faster than their alternatives. In addition, if consumers are conscious of
environmental impacts, long distance touristic visits could be made longer but less frequent,
without reducing the value of such travel.
4.4.1.5 Sectoral analysis of available technologies
There is no single solution for the future of low-emission mobility. There are different modes
with different needs. All technologies have their place in the years to come. All main alternative
energies for transport must be pursued, with a focus on the specific needs of each transport mode.
Road transport is the mode where electrification is most suitable, particularly in the segments of
passenger cars and vans but also for buses, powered 2-wheelers and e-bikes, and possibly urban
delivery. Battery-electric vehicles represent a promising option, with fast developments being
foreseen especially for cars. However, large-scale roll out of recharging infrastructure is a
prerequisite. Some recent studies306
project a breakthrough307
in the competitiveness of batteryelectric
passenger cars, although more conservative estimates exist as well. It is however widely
acknowledged that bridging solutions such as hybrids and plug-in hybrids would still be needed
in the medium term, as well as improvements in vehicle design. Important co-benefits are visible
for battery-electric vehicles, beyond socio-economic benefits of decreased pollution cost. Such
vehicles will help the EU in managing the ongoing energy transition, by offering a tool to address
the growing need of managing intermittent renewable energies in the grid. A system based on
new, highly efficient batteries of the electric vehicles, connected onto a smart grid, fully digitised,
can be used to store electricity produced from renewables when it is cheap and available, and
reversely feed the power back to the grid when it is scarce and expensive. Important new
business models and consumer rewards are available in such a perspective. Considering the wider
environmental impacts of battery-powered vehicles, battery production and resource use play a
role, with re-use and recycling of key raw materials likely to become increasingly important308
.
According to the EEA309
, life-cycle climate change impacts of battery-electric vehicles vary
depending on the impacts of electricity production, with greater benefits if the electricity
production is zero emission.
Hydrogen and fuel cells can play an important role in the achievement of a low-carbon road
transport system, in particular in long-distance transport, e.g. for long-haul heavy goods vehicles
and coaches, provided that the necessary hydrogen refuelling station infrastructure is deployed.
303
High-speed rail is considered competitive with aviation only for relatively short to medium distances
(e.g. < 1 000 km) (European Commission, 2011)
304
European Environment Agency (EEA). (31 January 2018). 'Aviation and shipping — impacts on
Europe's environment' TERM 2017: Transport and Environment Reporting Mechanism (TERM) report.
EEA Report No.22/2017. https://www.eea.europa.eu/publications/term-report
305
COM (2011) 144 final
306
Bloomberg New Energy Finance (2018), Electric Vehicle Outlook
307
BEUC, ElementEnergy (2016): Low Carbon Cars in the 2020's: consumer impacts and EU policy
implications https://www.beuc.eu/publications/beuc-x-2016-121_low_carbon_cars_in_the_2020s-
report.pdf
308
European Parliament (2018): Research for TRAN committee: Battery-powered electric vehicles: market
developments and life-cycle emissions
http://www.europarl.europa.eu/RegData/etudes/STUD/2018/617457/IPOL_STU(2018)617457_EN.pdf
309
EEA (2018) EEA Report no13/2018 Electric vehicles from life cycle and circular economy perspectives
112
Hydrogen produced from carbon-neutral energy, by using electrolysis or natural gas with CCS,
offers well to wheel pathways, which are zero or close-to zero-emission.
Advanced biofuels, biomethane and e-fuels have the advantage of not requiring dedicated engine
technologies and refuelling infrastructure; but as discussed in section 4.4.1.2 care needs to be
taken on where to deploy them.
For long haul heavy goods vehicles and coaches that travel longer distances than buses, various
fuels and powertrains can be considered: electric motors, hydrogen fuel cells, the use of biofuels
and biomethane310
in conventional internal combustion engines (ICE)311
, as well as the use of egas
in gas-fuelled vehicles, and the use of drop-in e-liquids, which do not require any powertrain
adaptation. Intermediate technologies such as hybrids are available as well. For heavy goods
vehicles and coaches, in the short- and medium term, full battery electrification appears to be
more challenging due to the power and range requirements. However, projects have been already
put in place for full electric heavy goods vehicles, and some studies are bullish312
on their
potential, including a roadmap by Scania313
. Development of charging infrastructure would be,
however, more challenging than for cars, as electric heavy goods vehicles and coaches would
require super-fast charging, or an effort to construct catenary lines and pantograph infrastructure.
Hydrogen could be delivered in a decentralised fashion in the future, but future fuel cell costs are
still uncertain. Advanced biofuels and biomethane are technologically feasible, but will require
the necessary land. E-fuels would not require powertrain adaptation and could use the existing
refuelling infrastructure, but costs and energy considerations and the origin of CO2 may represent
limitations. As a result, it is not yet possible to foresee a dominant technology for long haul
heavy goods vehicles and coaches. The application, distance range or local context might lead to
a variety of technologies and fuels being deployed.
Rail is an important mode for low-emission mobility, as already explained in section 4.4.1.3.
Alternatives to road need to be pursued more effectively to unveil the full potential of multimodal
transport and modal shift. Low-carbon electricity is a sustainable energy carrier for rail in all
scenarios. Further electrification of rail would require investments in the rolling stock but also in
the rail infrastructure network. The European Union railway Agency (ERA) has developed a
database that shows where electrification of the network is needed.314
As a complementary
option, biofuels could be used, while hydrogen is also an option.
Maritime and inland waterways transport is heavily dependent on oil derivatives (more
prominently for deep sea shipping than for short maritime routes and inland waterways). In
addition, international shipping displays high activity growth. Short sea shipping and inland
waterways is an area where the power to weight ratio may make electrification feasible, with
310
The Commission has already indicated that biofuels, bioliquids and biomass fuels produced from food
and feed crops should gradually be limited beyond 2020. As now agreed in the recast of the
Renewables Energy Directive, such biofuels use will be capped (in view of achievement of renewables
2030 target) and should be gradually phased out and replaced by advanced biofuels, including notably
cellulosic ethanol and diesel and algal fuels, as well as renewable electricity based fuels.
311
If advanced fungible bio-fuels are used no adaptation in the engine is required. First generation bio-fuels
can only be blended to certain level in liquid fossil fuels.
312
Earl et al. (2018), Analysis of long haul battery electric trucks in EU - Marketplace and technology,
economic, environmental, and policy perspectives,
https://www.transportenvironment.org/sites/te/files/publications/20180725_T%26E_Battery_Electric_T
rucks_EU_FINAL.pdf
313
SCANIA (2018), Achieving fossil-free commercial transport by 2050,
https://www.scania.com/group/en/wp-content/uploads/sites/2/2018/05/white-paper-the-pathways-
study-achieving-fossil-free-commercial-transport-by-2050.pdf
314
The database is called RINF (Rail Infrastructure Register) https://rinf.era.europa.eu/RINF/Search
113
demonstration projects such as the CEF funded Port-Liner project in the Netherlands and the
Horizon2020 funded E-ferry in Denmark. While solar power, wind, or other renewables can be
used on board large vessels to diminish the use of high energy density fuels, these energy sources
do not have the right energy density to power such vessels as their main source of propulsion.
Substantial decarbonisation of this sector will therefore necessitate other energy sources such as
hydrogen and ammonia315
, advanced biofuels and biomethane and e-liquids, the use of which still
requires research. Hybridisation can be used as a bridge solution. Shipping can also exploit
efficiency improvements: not only engine optimisation but also hull design and vessel size can
bring significant improvements.
Stylised variants for EU international shipping
While the inland navigation sector, covering inland waterways and national maritime, is an integral part of
all scenarios included in the analysis, the EU international shipping
316
has been treated separately. Three
stylised variants were developed for the EU international shipping with the PRIMES model, using the H2
and 1.5LIFE scenarios set up. These variants include: (i) a reduction by 50% in the EU greenhouse gas
emissions by 2050 compared to 2008, based on the H2 scenario (called H2Mar50 scenario hereafter), (ii) a
reduction by 70% in the EU GHG emissions by 2050 compared to 2008, based on the H2 scenario (called
H2Mar70 scenario), and (iii) 1.5LIFEMar, where the maritime sector forms part of an economy wide net
zero greenhouse gas emissions target by 2050, based on the 1.5LIFE scenario, and it reduces emissions by
about 88% by 2050 compared to 2008.
In addition, a stylised modelling exercise has been performed for international shipping at global level by
JRC with the POLES-JRC model. The POLES-JRC 2C scenario illustrates a reduction by 50% in the
global (i.e. not EU only) international shipping greenhouse gas emissions by 2050 compared to 2008.
Finally, for aviation, decarbonisation will be the biggest challenge, due to the projected growth
in activity, and the fewer options available; this requires a multi-pronged approach.
E-liquids, as well as advanced biofuel, are technically more straightforward options to
implement, in the sense that they are compatible with the existing infrastructure and fleet – but
only once available on the market at acceptable cost. Electric hybridisation and design
improvements of aircrafts will contribute to further fuel efficiency improvements. Full electric
aircrafts are being developed, and the first small non-commercial planes are operating, but the
potential for large full electric aircraft is yet untested and remains in an exploratory phase.
4.4.2 Transport results
4.4.2.1 Transport activity projections
Passenger transport activity is projected to increase by 16% during 2015-2030 and 35% by
2050 in the Baseline scenario. Passenger cars and vans would still contribute 69% of passenger
traffic by 2030 and about two thirds by 2050, despite growing at a slower pace (12% for 2015-
2030 and 26% during 2015-2050) relative to other modes. In the scenarios, the lower traffic
growth is due to the slowdown of the increase in car ownership which is close to saturation levels
in many EU15 Member States, wide-spread and differentiated distance-based road pricing in line
with the proposed revision of the Eurovignette Directive, and shifts towards rail. Rail transport
activity would grow significantly faster than for road, driven in particular by the opening of the
market for domestic passenger rail transport services, and the effective implementation of the
315
According to OECD/ITF 2018, ammonia could represent up to 70% of fuel in global shipping transport
by 2035 in a 80% decarbonisation scenario: https://www.itf-oecd.org/decarbonising-maritime-transport
316
Covering maritime transport between a port of a Member State to a port outside that Member State, or
conversely.
114
TEN-T guidelines, supported by the CEF funding, leading to the completion of the TEN-T core
network by 2030 and of the comprehensive network by 2050. Passenger rail activity goes up by
36% between 2015 and 2030 (72% for 2015-2050), increasing its modal share by almost 1.5
percentage points by 2030 and an additional percentage point by 2050.
Intra-EU air transport would grow significantly in the Baseline scenario (by 41% by 2030 and
94% by 2050) and increase its share in overall transport demand (by 2 percentage points by 2030
and by additional 2 percentage points by 2050). Overall, aviation activity including international
extra-EU flights is projected to go up by 43% by 2030 and 101% by 2050, saturating European
skies and airports. Nevertheless, there are uncertainties: the Impact Assessment accompanying
the review of the EU ETS in view of the implementation of a single global market-based measure
to international aviation emissions317
used higher growth projections (from the AERO model), as
well as PRIMES projections, to estimate ranges of demand for EU ETS allowances due to
aviation.
The evolution of passenger transport activity by 2050 in the Baseline scenario (average growth
rates per year) and in the scenarios reaching -80% to net zero emissions by 2050 (percentage
changes relative to the Baseline in 2050) is provided in Figure 45.
Figure 45: Passenger transport activity in the Baseline (average growth rates per year) and
in the -80% to net zero scenarios (% changes to the Baseline in 2050)318
Source: PRIMES.
In all scenarios reaching -80% to net zero emissions by 2050, passenger transport activity is
expected to continue growing relative to 2015 (about 29-34% increase by 2050). However, active
policies in place for stimulating change in the transport system and increasing its efficiency
would put a brake on the expansion of activity in the scenarios reaching -80% to net zero
emissions by 2050, compared to the Baseline. Among the scenarios reaching -80% by 2050, the
reduction in activity is the largest for the EE scenario (above 3% in 2050 relative to the Baseline),
while for the scenarios reaching net zero in 2050, the 1.5LIFE scenario projects the highest
decrease (almost 5% in 2050 compared to the Baseline). Significant modal shift towards rail
takes place in all scenarios driven by the gradual internalisation of external costs (“smart”
317
SWD (2017) 31 final
318
For aviation, intra-EU activity is reported, to maintain the comparability with reported statistics for the
historical period.
115
pricing) going significantly beyond the Baseline, support for multimodal travel information,
policies supporting the Single European Rail area (market and interoperability), digitalisation and
automation of rail, support for multimodality and intermodal connections. The increase in
passenger rail transport activity is the highest in the EE scenario (11% in 2050 relative to the
Baseline) and 1.5LIFE scenario (close to 9% in 2050 compared to the Baseline). High-speed rail
gains further share in these scenarios and is projected to undertake 235 billion more passenger
kilometres in 2050 relative to 2015 in these two scenarios. In addition, measures promoting urban
policies that curb pollutant emissions and increase the efficiency of transport operations drive
significant shifts from private transport towards collective transport modes (i.e. buses, but also
tram and metro where available) in all scenarios; in the EE and 1.5LIFE scenarios the activity of
buses and coaches increases by up to 10-11% in 2050 relative to the Baseline.
The CIRC and 1.5LIFE scenarios additionally show the benefits of integrating the sharing
economy and connected cooperative and automated mobility, and making full use of
digitalisation, automation and mobility as a service (including shared/collective mobility).
Overall, the wealth of measures improving the transport system efficiency, including the
promotion of the Collaborative Intelligent Transport Systems (C-ITS), results in a 2-7% decrease
in passenger cars and vans transport activity in 2050 in the scenarios reaching -80% to net zero
emissions by 2050, compared to the Baseline (about 4% decrease in CIRC scenario and 6% in
1.5LIFE scenario).
Finally, the 1.5LIFE scenario assumes significant lower growth in intra-EU and extra-EU air
transport activity (59% increase for intra-EU and 70% for extra-EU for 2015-2050) relative to the
Baseline (94% growth for intra-EU and 104% for extra-EU for 2015-2050). A part of intra-EU
air trips for leisure and personal reasons would be shifted to rail (high-speed rail, where
available) and coaches and a reduction in the distance travelled for extra-EU trips would also take
place. The number of the business trips would be reduced thanks to the adoption of video/tele
conferencing facilities. No explicit policy instrument that would steer change in peoples’
behaviour has been specified: it could be interpreted as due to rising environmental awareness, or
take place in combination with strong policies.
Freight traffic for inland modes would grow faster than for passenger at 29% by 2030 and 53%
for 2015-2050 in the Baseline scenario. The share of road transport in inland freight is expected
to slightly decrease at 69% by 2030 and 68% by 2050. The activity of heavy goods vehicles
expressed in tonnes kilometres is projected to grow by 26% between 2015 and 2030 (46% for
2015-2050) in the Baseline scenario, while light goods vehicles activity would go up by 25%
during 2015-2030 (52% for 2015-2050). Rail freight activity grows by 45% by 2030 and 88%
during 2015-2050, faster than passenger rail activity, resulting in a 2 percentage points increase
in modal share by 2030 and 2 additional percentage points by 2050. Transport activity of freight
inland navigation319
also benefits from the completion of the TEN-T core and comprehensive
network, the promotion of inland waterway transport and the recovery in the economic activity
and would grow by 28% by 2030 and by 46% during 2015-2050. The significant growth in
freight inland navigation and rail freight activity is also supported by road pricing, the revision of
the Combined Transport Directive and the implementation of electronic documentation for
freight transport.
The evolution of inland freight transport activity by 2050 in the Baseline scenario (average
growth rates per year) and in the scenarios reaching -80% to net zero emissions by 2050
(percentage changes relative to the Baseline in 2050) is provided in Figure 46.
319
Inland navigation covers inland waterways and national maritime.
116
Figure 46: Inland freight transport activity in the Baseline (average growth rates per year)
and in the scenarios reaching -80% to net zero emissions by 2050 (% changes to the
Baseline in 2050)320
Source: PRIMES.
In the scenarios reaching -80% to net zero emissions by 2050, impacts on total freight transport
activity are also limited, and most significant for the EE and CIRC scenarios (around 2.5%
decrease relative to the Baseline in 2050); impacts for all other scenarios, including those
scenarios achieving more than 80% GHG reductions, are lower. Overall, freight transport activity
is expected to continue growing relative to 2015 (about 49-53% increase by 2050) in all scenarios
reaching -80% to net zero emissions by 2050, although at lower rates than in the Baseline.
However, very significant modal shift towards rail and inland navigation (i.e. inland waterways
and national maritime) takes place, beyond the Baseline, due to improvements in transport
system efficiency, driven by the gradual internalisation of external costs (“smart” pricing),
policies supporting the Single European Rail area (market and interoperability), rail freight
corridors (RFC), digitalisation and automation of rail, support for multimodality and intermodal
connections, as well as autonomous shipping and increased competitiveness of inland waterways.
Rail freight activity is projected to increase by 3-15% in the scenarios reaching -80% by 2050
relative to the Baseline in 2050, 8% in the COMBO scenario and 4-9% in the scenarios reaching
net zero by 2050. The highest increases compared to the Baseline are achieved in the EE scenario
(15%) and 1.5LIFE scenario (9%); overall rail freight activity would increase by around 116%
and 105% for 2015-2050, respectively, in these scenarios, driven by strong policy incentives.
Inland waterways and national maritime would also see a significant increase in activity relative
to the Baseline (2 to 13% for the scenarios reducing by -80% by 2050, 6% for the COMBO and 2
to 7% for the scenarios reaching net zero by 2050). Similarly to rail freight, the activity would go
up very significantly in the EE scenario (13%) and 1.5LIFE scenario (7%) relative to the
Baseline.
Road freight activity is projected to decrease by 1-11% in the scenarios reducing by -80% by
2050, 3% in the COMBO scenario and 5-6% in the scenarios reaching net zero by 2050 relative
to the Baseline in 2050. Besides policies improving the efficiency of the transport system in all
scenarios, including the promotion of the Collaborative Intelligent Transport Systems (C-ITS),
improved logistics and shifts from long-distance freight to near-sourcing also play a significant
320
Projections for international maritime are presented separately to preserve comparability with statistics
for the historical period.
117
role in the CIRC and 1.5LIFE scenarios. Road freight activity would go down by about 6%
relative to the Baseline in CIRC and 1.5LIFE scenarios in 2050, despite activity still growing by
37% relative to 2015.
International maritime transport activity at EU level is projected to continue growing strongly
in the Baseline scenario, according to the PRIMES model, increasing by 21% during 2015-2030
and by 51% for 2015-2050, due to, for instance, rising demand for primary resources and
container shipping. As explained in section 4.4.1.5, the modelling of EU international maritime
has not been integrated into the main analysis of all emissions reduction scenarios. However, all
three stylised variants developed for EU international maritime show lower growth in transport
activity relative to the Baseline, expressed in tonne kilometres (43% for 2015-2050 in the
H2Mar50 and H2Mar70 scenarios, and 37% for 1.5LIFEMar). This is due to lower imports and
thus transport demand for fossil fuels in the scenarios reaching -80% to net zero emissions by
2050.
Figure 47: EU international maritime activity in the Baseline and scenario variants
Source: PRIMES.
Additional analysis for international maritime at global level has been performed by JRC with the
POLES-JRC model. Global international shipping is projected to grow by 51% during 2015-2030
and 113% for 2015-2050 in the reference scenario, driven by trade in coal, gas, oil, chemicals,
containers, grains and other industrial products. The POLES-JRC 2C scenario, which is a global
mitigation scenario including all sectors of the economy, shows much lower growth in global
shipping activity by 2050 (68% for 2015-2050) relative to the reference scenario, due to the
lower trade and transport demand for fossil fuels.
118
Figure 48: Projections for global international shipping activity
Source: POLES-JRC.
4.4.2.2 Technology development projections by transport mode
Road vehicle drivetrain technologies
In the Baseline scenario, alternative (to internal combustion engine) drivetrains are increasingly
used in road transport, driven by more stringent CO2 standards for new cars and vans post-2020,
CO2 standards for new heavy goods vehicles post-2020, and the revision of the Clean Vehicles
Directive. No further tightening of CO2 standards is assumed in the Baseline post-2030; their
levels remain consistent with the Commission’s proposal for 2030. The increasing share of
alternative drivetrains in the long run is mainly driven by the turnover of the vehicle stock,
technological progress, and the deployment of the recharging infrastructure for electric vehicles
and refuelling infrastructure for fuel cells.
Conventional diesel passenger cars would see their share declining from 42% of the total stock
in 2015 to around 20% by 2050 in the Baseline, while the share of conventional gasoline cars
would go down from 54% in 2015 to around 18% by 2050. The share of internal combustion
gaseous vehicles (i.e. LPG and CNG) remains relatively stable by 2050, at around 4%.
Conventional diesel and gasoline drivetrains (including hybrid systems that complement internal
combustion engines) are gradually replaced by electrically chargeable systems (i.e. battery
electric, plug-in hybrid and fuel cell vehicles), which are becoming more appealing to consumers
thanks to lower costs. In the long run, battery electric vehicles become increasingly important,
reaching 35% of the stock by 2050 while plug-in hybrids would represent around 19% of the
vehicle stock. The uptake of hydrogen would be facilitated by the increased availability of
refuelling infrastructure, but its use would remain limited in lack of additional policy incentives
in the Baseline. Fuel cells would represent about 4% of the cars stock by 2050.
All scenarios reaching -80% to net zero emissions by 2050 show much higher uptake of
alternative drivetrains in the car stock by 2050 relative to the Baseline. Looking at the scenarios
reducing by -80% by 2050, the share of battery electric, plug-in hybrid and fuel cell drivetrains in
the car stock ranges between 65 and 89% in 2050. The P2X scenario shows the lowest share of
these technologies (65% in 2050) since e-liquids enable passenger cars to reduce emissions
without changing the drivetrain, and ELEC the highest share (89% in 2050). In the other
scenarios reducing by -80% by 2050, the remaining internal combustion engine (ICE) cars use
fuels with significantly reduced carbon intensity, thanks to the blending of advanced biofuels in
119
fossil fuels. In the P2X scenario, the additional blend of e-liquids implies lower carbon intensity
for the ICE cars. The EE, ELEC and CIRC scenarios show relatively similar shares for battery
electric (57-58%), plug-in hybrid (24-25%) and fuel cell vehicles (4-7%) by 2050. While EE, H2
and ELEC share more ambitious CO2 standards, from 23 to 16 gCO2/km in WLTP test cycle for
new cars in 2050 respectively, CIRC benefits from integrating the sharing economy and
connected, cooperative and automated mobility, and making full use of digitalisation, automation
and mobility as a service that benefits the penetration of electrically chargeable systems despite
less ambitious CO2 standards. In the H2 scenario, the faster learning assumptions for fuel cells
and the large scale availability of hydrogen refuelling stations lead to higher uptake of fuel cell
drivetrains (16% of car stock in 2050) to the detriment of plug-in hybrids (17% in 2050); the
impact on the uptake of battery electric vehicles (51% in 2050) is more limited relative to the EE,
ELEC and CIRC scenarios. In COMBO the share of battery electric, plug-in hybrid and fuel cell
drivetrains in the car stock is similar to the EE, CIRC and CIRC scenarios, at around 87% in
2050 (56% for battery electric, 24% for plug-in hybrids and 7% for fuel cells); the share of
internal combustion gaseous vehicles (i.e. LPG and CNG) would go down below 2% of the car
stock.
In the scenarios reaching net zero by 2050, the share of battery electric and fuel cell drivetrains
would reach 96% in 2050 (around 80% for battery electric and 16% for fuel cells), with CO2
emissions for new cars being 0 gCO2/km from 2040 onwards, and the large scale availability of
recharging stations and hydrogen refuelling stations. This outcome is also linked to the fact that
in the scenarios reaching net zero by 2050 e-fuels and biofuels are used with priority in other
parts of the energy system, including in transport sectors such as road freight, aviation and
maritime, that have fewer options available to decarbonise. This implies that the passenger car
fleet needs to be rapidly replaced by zero emission vehicles in the decades up to 2050. Plug-in
hybrids would go down below 2% of the cars stock and internal combustion gaseous vehicles
(i.e. LPG and CNG) below 1% of the cars stock in 2050.
Figure 49: Shares in total cars stock by drivetrain technology in the Baseline and scenarios
reaching -80% to net zero emissions by 2050
Source: PRIMES.
The light commercial vehicles fleet is currently dominated by conventional diesel powertrains
(around 90% of the stock). In the Baseline scenario, battery electric, plug-in hybrid and fuel cell
vehicles are projected to gain significant share by 2050 (46% of the stock), driven by the
120
Commission’s proposal on CO2 standards for new light commercial vehicles for 2030 and the
availability of recharging stations and hydrogen refuelling stations. Conventional powertrains,
including hybrids, would still provide around 54% of the stock in 2050.
In the scenarios reducing by -80% by 2050, electrically chargeable systems (including fuel cells)
would represent 58-80% of the light commercial vehicles stock in 2050. CIRC, EE and ELEC
show relatively similar shares, at 70-75% of the stock in 2050 (41-44% for battery electric, 22-
25% for plug-in hybrids and 6-7% for fuel cells). In the H2 scenario, fuel cells make up to 45%
of the stock in 2050 while battery electric and plug-in hybrids would represent around 19% and
16% of the stock, respectively. The P2X scenario projects lower shares for electrically chargeable
systems (58% of the stock in 2050), enabled by the uptake of e-liquids. All scenarios reducing by
-80% by 2050 have significant blending of biofuels, and e-liquids in the P2X scenario, that
reduces the carbon intensity of fuels used in the remaining ICE light commercial vehicles.
COMBO shows similar shares in the vehicle stock in 2050 as the ELEC scenario (44% for
battery electric, 25% for plug-in hybrids and 6% for fuel cells).
In the 1.5TECH and 1.5 LIFE scenarios, battery electric and fuel cell vehicles would provide
around 92% of the stock by 2050, with CO2 emissions from light commercial vehicles being 0
gCO2/km from 2040 onwards and the large scale availability of recharging stations and hydrogen
refuelling stations. As explained above, this outcome is also linked to the fact that, in the
scenarios reaching net zero by 2050, e-fuels and biofuels are used with priority in other parts of
the energy system, including in transport sectors such as road freight, aviation and maritime, that
have fewer options available to decarbonise. This implies that the light commercial vehicles fleet
needs to be rapidly replaced by zero emission vehicles in the decades up to 2050. Plug-in hybrids
show shares below 3% of the stock.
Figure 50: Shares in total light commercial vehicle stock by drivetrain technology in the
Baseline and scenarios reaching -80% to net zero emissions by 2050
Source: PRIMES.
Powered 2-wheelers would also benefit of electrification, around 82% of the fleet being electric
in the scenarios reducing by -80% by 2050 and COMBO scenario by 2050. The only exception is
the P2X scenario, which projects lower electrification of the stock (41% in 2050), enabled by the
use of e-liquids as drop in fuels. In the 1.5TECH and 1.5 LIFE scenarios, electric powered 2wheelers
would represent up to 94% of the stock in 2050.
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Technology uncertainties exist and future development could well result in different outcomes
than those represented in the above scenarios. But for cars and light commercial vehicles, the
current "conventional wisdom" regards electrification (with a more limited share of fuel cell
vehicles) as a viable long term option to decarbonise these segments. This is consistent with the
above PRIMES scenarios results that show very high shares of electrically chargeable
powertrains for light duty vehicles (i.e. cars and light commercial vehicles) by 2050.
Other studies also show a significant take up of electric vehicles. The "New Policies Scenario" of
the 2018 IEA Global EV Outlook321
, based on existing and planned policies, projects a share of
battery electric and plug-in hybrids in new sales in Europe of 23% for all vehicles (except twoand
three-wheelers) by 2030. The more aspirational EV@30 Scenario of the IEA shows a share
of 35% in new sales for light duty vehicles, buses and trucks by 2030. By comparison, the sales
share in China is projected to be higher than in Europe in the IEA scenarios, reaching 26% and
40% in the “New Policies Scenario” and EV@30 Scenario, respectively. In addition, the IEA
foresees a large increase in the stock of electric two- and three-wheelers in the “New Policies
Scenario”, from 300 million in 2017 to 455 million in 2030, largely in China, India and the
ASEAN countries.
The Bloomberg New Energy Finance Electric Vehicle Outlook 2018322
forecasts that given
current trends, more than half a billion electric vehicles (including plug-in hybrids) on the road
by 2040, representing a third of the global car fleet. By 2030, 28% of global new car sales, would
be electrically chargeable, while by 2040, 55% of new car sales would be electric. China is
expected to lead the transition, with Europe following. Their analysis shows that the bus fleet is
likely to electrify faster than cars.
The OPEC World Oil Outlook323
Reference Case takes a more conservative view, with electric
vehicles (including plug-in hybrids) in OECD Europe by 2040 reaching 33% of new sales. OPEC
also provides a sensitivity analysis in which 3 out of 5 cars sold in Europe by 2040 would be
electric.
The BP Energy Outlook 2018324
Evolving Transition Scenario (which assumes that government
policy, technology and social preferences continue to evolve at the speed seen in the past) expects
15% of the global car fleet to be electric by 2040, but 30% of all vehicle kilometres to be
powered by electricity, due to the increase in shared mobility. Amore radical "ICE ban" scenario
is also analysed.
By contrast, a recent study by Ricardo for Concawe325
presents scenarios showing an alternative
to the “conventional wisdom” on long-term electrification. Apart from scenarios showing high
penetration of battery electric vehicles, the study presents a scenario in which plug-in hybrids
shares are higher, and a scenario in which low-carbon fuels (biofuels and e-fuels) are the
dominant greenhouse gas reduction technology. Both scenarios result in a significant (~85%)
321
IEA (2018) IEA Global EV Outlook - towards cross-modal electrification.
https://www.iea.org/gevo2018/
This reports analyses technology, consumer behaviour, infrastructure needs and policies, for
electrification across all road transport, including two- or three-wheelers, buses and HDVs.
322
Bloomberg NEF (2018), Electric Vehicle Outlook (EVO), https://about.bnef.com/electric-vehicle-
outlook/
323
OPEC (2017) World Oil Outlook
324
BP (2018), World Energy Outlook,
https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-
sector/transport.html
325
Ricardo for Concawe (2018) Impact analysis of mass EV adoption and low carbon intensity fuels
scenarios; https://www.concawe.eu/publication/impact-analysis-of-mass-ev-adoption-and-low-carbon-
intensity-fuels-scenarios/
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reduction of greenhouse gas emissions from light duty vehicles by 2050. In the high plug-in
hybrids scenario, these powertrains would represent around 91% of the passenger car vehicle
fleet in 2050. In the low-carbon fuels scenario, plug-in hybrids represent around 47% of the fleet.
In terms of fuel mix, the low-carbon fuels scenario projects around 54% of biofuel use in 2050,
23% electricity use and 14% e-fuel use. However, the low-carbon fuels scenario relies on the
assumption of continued strong improvements in ICE technology as well as, importantly,
sufficient availability of land resources globally. On the other hand, the high plug-in hybrids
scenario relies on the assumption of increased global production of Lithium or other materials for
batteries.
While the pace of technology development is uncertain, there is widespread expectation that the
penetration of alternative drivetrains will increase, notably that of battery electric cars.
Furthermore, a successful transition to low-emissions mobility depends not only on continued
improvement in technology costs but also on regulatory action, financial incentives and large
scale deployment of recharging and hydrogen refuelling infrastructure.
As described in 4.4.1.5, for heavy goods vehicles (HGVs) the scenarios reflect the uncertain and
diverse technology expectations: they show a variety of HGV technologies being used in
different circumstances, depending on technology preferences, the distance travelled, the load,
and the infrastructure choices that are available – see chapter on fuel mix projections below.
The heavy goods vehicles stock is currently almost entirely dominated by conventional diesel
powertrains. In the Baseline scenario their share is projected to decrease significantly (to around
51% by 2050, excluding hybrids), driven by the CO2 standards for new heavy goods vehicles.
Gas-fuelled vehicles are projected to represent around 18% of the HGV stock in 2050 and
hybrids around 29%. Overall, electric and fuel cell vehicles would only provide around 2% of the
stock by 2050 in the Baseline scenario. It should be noted that the Baseline scenario keeps the
CO2 standards for new heavy goods vehicles unchanged post-2030, consistent with the
Commission’s proposal for 2030. Further evolution is thus driven by the turnover of the fleet,
technological progress and the assumed availability of refuelling infrastructure for LNG.
Looking at the scenarios reducing by -80% by 2050, hybrids would represent 22-33% of the
HGV stock in 2050. Electric drivetrains (fully electric and HGVs with pantograph326
) would
provide 17-20% of the stock in the EE and ELEC scenarios, but only 3 and 6% in the P2X and
CIRC scenarios, respectively. Fuel cells are projected at 15% of the vehicle fleet by 2050 in the
H2 scenario, driven by the faster learning assumptions for fuel cells and the large scale
availability of hydrogen refuelling stations. Gas-fuelled vehicles would represent 14% of the
stock in H2 scenario and 35% in P2X scenario by 2050. At the same time, conventional diesel
drivetrains, excluding hybrids, are projected to still provide 37-58% of stock by 2050 in the
scenarios reducing by -80% by 2050. However, the carbon intensity of fuels would be reduced
due to the blending of advanced biofuels in diesel, and in addition by e-liquids in the P2X
scenario. Similarly, the blending of biomethane and e-gas reduces the carbon emissions of gasfuelled
heavy goods vehicles.327
Thus, low carbon fuels reduce the greenhouse gas emissions of
trucks, even when used in conventional drivetrains. As an example, the use of liquid biofuels in
trucks by 2050 ranges from 21% in H2 scenario to 26-27% in ELEC and EE scenarios, and up to
34% in CIRC. In P2X, liquid biofuels only make up 8% of the energy demand, as e-liquids
326
The investment costs for the catenary lines and pantograph infrastructure are not considered in these
scenarios. These investment costs can amount up to 2 million EUR for equipping 1 km of road (e.g. in
Schleswig-Holstein).
327
The scenarios assume that by 2050 liquefaction and gasification at small scale will be applied at a
competitive cost, thus allowing refuelling hubs to develop in a widespread manner as well as
liquefaction stations where blending of biogas and e-gas in gas distribution takes place.
123
provide around 21% of the fuel mix and gaseous fuels another 44% (of which 21% is e-gas, 9%
biomethane and 14% natural gas). E-liquids and e-gas are nearly absent in the other scenarios
reducing by -80% by 2050 while gaseous fuels, including biomethane, would provide around 7%
of the fuel mix in the H2 scenario.
The COMBO scenario shows moderate uptake of electric drivetrains and fuel cells (around 10%
of the stock) by 2050, while hybrids would represent around 19% and gas-fuelled vehicles 32%
of the stock. As in the scenarios reducing by -80% by 2050, the fuel mix plays an important role
in driving the greenhouse gas emissions reduction. For example, e-liquids are projected at around
11% of the energy demand of trucks, hydrogen at 14%, liquid biofuels at 16% and gaseous fuels
at around 33% of the fuel mix (of which more than 15% is e-gas, 8% biomethane and 9% natural
gas). In the 1.5TECH and 1.5 LIFE scenarios, as illustrated in Figure 51, the uptake of
powertrains by 2050 is broadly similar to the COMBO scenario. However, the uptake of low
carbon fuels in the mix, in particular of e-fuels and biofuels, is higher. Both COMBO and the
scenarios reaching net zero by 2050 would require significant deployment of refuelling
infrastructure for hydrogen and gaseous fuels.
Figure 51: Shares in total heavy goods vehicles stock by drivetrain technology in the
Baseline and scenarios reaching -80% to net zero emissions by 2050
Source: PRIMES.
Generally, for HGVs, the PRIMES scenarios show that ICE and hybrid powertrains using fuel
blends with very low carbon intensity, either liquid or gaseous, would represent the dominant
technology. However, hydrogen would also play a significant role for long distance road haul and
electricity in particular for urban deliveries. Given the high uncertainties, care should be taken
when interpreting these results.
The IEA has analysed Scenarios for the Future of Trucks328
. In the Reference Case, penetration of
alternative drivetrains remains limited. The Modern Truck Scenario implements a large number
of systemic efficiency improvements, as well as vehicle technology improvements. By 2050,
drivetrains remain varied, with electrification becoming important for light trucks, especially for
urban delivery, and a variety of technologies, from conventional diesel, hybrids, LPG/CNG and
328
IEA (2017), The Future of Trucks
https://www.iea.org/publications/freepublications/publication/TheFutureofTrucksImplicationsforEnerg
yandtheEnvironment.pdf
124
some electrification being used for medium and long-haul heavy duty trucks. While the report
states that the price of fuel cells can be brought down to become competitive, the uncertainty is
still large. As in the PRIMES scenarios underpinning this strategy, no obvious technology winner
appears for trucks.
However, as noted in 4.4.1.5, a recent report by Scania329
shows battery electrification as the
most cost-effective option, providing an alternative viewpoint.
For buses and coaches, the Baseline scenario projects significant uptake of hybrids (36%) and
gas-fuelled vehicles (21%) as a share of the stock by 2050. Electric drivetrains (battery and
trolleys) would represent around 5% of the fleet in 2050. However, in the scenarios reaching -
80% to net zero emissions by 2050, the picture is mixed due to their different uses and
technologies available. While buses are mostly used in the urban environment where
electrification is a viable option, coaches travel longer distances and face similar limitations to
those faced by heavy goods vehicles. For buses330
, the EE, ELEC and CIRC scenarios show
almost full electrification of the vehicle fleet by 2050. In the H2 scenario fuel cells are dominant
in the stock (84%) while electric vehicles (battery and trolleys) represent around 16% in 2050.
However, in the P2X scenario, conventional diesel drivetrains still represent around 26% of the
stock and gas-fuelled vehicles around 24% in 2050, while electric buses reach 41% of the stock
by 2050. In the P2X scenario, low carbon fuels like e-gas, e-liquids, liquid and gaseous biofuels
play a significant role in the greenhouse gas emissions reduction. COMBO and the scenarios
reaching net zero by 2050 show shares of electric buses in the range of 79-88%, while fuel cells
would represent between 3% and 14% and gas-fuelled vehicles between 6 and 8%. In addition, egas,
e-liquids, liquid and gaseous biofuels play a significant role in reducing the carbon intensity
of fuel used in ICE powertrains. For coaches, the outcome is relatively similar to that for heavy
goods vehicles, although fuel cells gain significant market shares in the 1.5TECH and 1.5 LIFE
scenarios.
Rail
For rail, all scenarios show electrification as the main option. In the Baseline scenario, around
87% of the rolling stock used for passenger rail is projected to be electric by 2050, and 77% for
freight rail. This requires significant efforts, supported by the assumed completion of the core
TEN-T network by 2030 and of the comprehensive TEN-T network by 2050. In the scenarios
reducing by -80% by 2050 electric rolling stock would represent around 93-95% for passenger
rail in 2050 and 85-88% for freight rail; rail infrastructure would need to be largely electrified by
2050 to support such significant changes331
. In COMBO and the scenarios reaching net zero by
2050 the shares of electric rolling stock are similar to those in the EE scenario (95% for
passenger rail and 88-89% for freight rail).
Inland navigation
In PRIMES inland navigation covers inland waterways and national maritime332
. In the Baseline
scenario, a large share of the vessels fleet (87%) is projected to be powered by liquid fuels by
2050. LNG vessels would represent around 13% of the fleet by 2050, driven by CEF funding and
329
Scania (2018) Achieving fossil-free commercial transport by 2050;
https://www.scania.com/group/en/wp-content/uploads/sites/2/2018/05/white-paper-the-pathways-
study-achieving-fossil-free-commercial-transport-by-2050.pdf
330
The IEA Global EV Outlook points out that urban electric buses can already operate cost-competitively
in regions with high diesel taxation.
331
The investment costs for the electrification of the rail network are not covered in the modelling, but only
those related to the rolling stock.
332
This is due to the fact that a split of energy statistics between the two is not currently available.
125
the assumed availability of LNG refuelling infrastructure, plus the Sulphur Directive that is
relevant for national maritime.
In all scenarios reaching -80% to net zero emissions by 2050, energy efficiency improvements
would provide a significant contribution in decreasing greenhouse gas emissions. Energy
intensity would go down by 11-13% in the scenarios reducing by -80% by 2050, 12% in
COMBO and 13% in the scenarios reaching net zero by 2050 during 2015-2050, driven by
technical and operational measures (e.g. engine optimisation, hull design, speed optimisation,
capacity utilisation, voyage optimisation, etc.). Electrification would represent a niche market by
2050 (up to 3% of the vessels fleet in the EE and ELEC scenarios, 1% in COMBO and 3% in the
scenarios reaching net zero by 2050) while fuel cell vessels are projected at around 2% of the
fleet in the H2 scenario. Propulsion systems powered by liquid fuels would maintain a dominant
role by 2050 (84-87% of the fleet in the scenarios reducing by -80% by 2050, 86% in COMBO
and 81-84% in the scenarios reaching net zero by 2050), followed by those powered by gaseous
fuels (13% in the scenarios reducing by -80% by 2050 and COMBO, and 13-16% in the
scenarios reaching net zero by 2050). However, the carbon intensity of liquid fuels would
decrease significantly relative to the Baseline due to the uptake of liquid biofuels (16-34% of the
fuel mix in the scenarios reducing by -80% by 2050, 29% in COMBO and 34-44% in the
scenarios reaching net zero by 2050) and e-liquids (37% of the energy demand in P2X scenario,
19% in COMBO and 29-48% in the scenarios reaching net zero by 2050). In addition, gaseous
fuels would provide around 5-9% of the fuel mix in the scenarios reducing by -80% by 2050 and
7-9% in scenarios achieving higher GHG reduction, of which e-gas would represent around 4%
of the fuel mix in the P2X scenario, 3% in COMBO and 4-5% in the scenarios reaching net zero
by 2050.
International aviation
Concerning EU geographical scope, as already discussed in section 4.4.2.1, in the Baseline
scenario air transport activity including international extra-EU flights is projected to increase
significantly (43% during 2015-2030 and 101% for 2015-2050). Energy efficiency is already a
strong driver in the Baseline scenario. Energy efficiency covers a combination of measures
related to aircraft technology and design, air traffic management and operations, improved
occupancy rates, etc. Energy intensity of air transport in this broad sense, measured as tons of oil
equivalent per million of passenger-kilometres, is projected to decrease significantly in the
Baseline Scenario, by 25% during 2015-2030 and 39% for 2015-2050. In the scenarios reaching -
80% to net zero emissions by 2050, energy efficiency improvements are projected to around 42%
by 2050 relative to 2015.
Currently, air transport relies entirely on petroleum products. In the Baseline scenario, liquid
biofuels (i.e. bio-kerosene) are projected to provide around 3% of the energy demand in air
transport by 2050. In the scenarios reaching -80% to net zero emissions by 2050, liquid biofuels
and e-liquids represent the main alternatives for reducing the carbon intensity of air transport
fuels, with the required energy density to provide for longer distance flights, while electricity
remains a niche market by 2050. In most scenarios reducing by -80% by 2050, bio-kerosene
would provide 21-25% of the fuel mix in 2050 (21% in the ELEC, EE and H2 scenarios and 25%
in CIRC). The P2X scenario sees a significant penetration of e-liquids, reaching 14% of aviation
fuel consumption in 2050, while the share of liquid biofuels is projected to be more limited (9%).
Despite the significant uptake of liquid biofuels and e-liquids in the scenarios achieving 80%
emissions reductions, around three quarters of aviation fuels would still remain fossil fuel based
by 2050.
In the COMBO scenario, bio-kerosene would provide around 20% of the energy demand in 2050
and e-liquids around 5%, while in the scenarios reaching net zero by 2050 much faster
126
penetration of both bio-kerosene and e-liquids takes place by 2050, reaching 55-57% of the fuel
mix (23-45% for bio-kerosene and 10-34% for e-liquids). In the 1.5LIFE scenario the significant
uptake of liquid biofuels and e-liquids is coupled with a reduction in energy demand relative to
2015 (5% decrease by 2050), driven by the lower growth in transport activity and energy
efficiency improvements.
Figure 52: Aviation fuels mix in the Baseline and scenarios reaching -80% to net zero
emissions by 2050 in 2050
Source: PRIMES.
Electric aircraft only materialise in very small numbers in EE, ELEC and scenarios reaching net
zero in 2050. However, there are some developments on full electrification of aviation ongoing,
while Airbus, Rolls-Royce and Siemens are developing333
a hybrid-electric demonstration
aircraft. Hybridisation can significantly increase aircraft efficiency, for example by modifying the
aircraft design to enhance the overall weight, thus reducing fuel consumption.
International shipping
Various studies have described technology options for the decarbonisation of the maritime sector.
A literature review by Bouman et al.334
assesses the potential of different options, described in six
main groups: hull design, power and propulsion, economies of scale, speed, weather routing and
scheduling, fuels and alternative energy sources. These categories are similar to the generic
categories described in section 4.4.1. The authors conclude that emissions can be reduced
between 33 and 77% relative to the baseline in 2050 based on current technologies, through a
combination of policy measures335
. In terms of emissions per freight unit transported, they
conclude that it is possible to reduce emissions by a factor of 4-6. The figure below summarises
the fleet level emission reduction potential relative to the baseline according to Bouman
(2017)334
.
333
Airbus (2017), https://www.airbus.com/newsroom/press-releases/en/2017/11/airbus--rolls-royce--and-
siemens-team-up-for-electric-future-par.html
334
Bouman et.al.(2017), State-of-the-art technologies, measures, and potential for reducing greenhouse gas
emissions from shipping – a review, Transportation Research Part D 52, 408-421
335
Even higher reductions are viewed as possible if nuclear power is included as an option.
127
Figure 53: Fleet level emission reduction potential from individual measures
Source: Bouman (2017)334
The OECD report on Decarbonising Maritime Transport336
described various ambitious pathways
to zero-carbon shipping. The categories of technical, fuel and efficiency measures are highly
similar to those described above. The OECD also points out that a global effort to meet the goals
of the Paris Agreement would lead to a reduction of demand for the maritime transport of fossil
fuels. The scenarios described by the OECD lead to zero-carbon shipping in 2035, through the
rapid penetration of alternative fuels, primarily hydrogen and ammonia supplemented by
biofuels, operational measures, technical measures and ship size increase. These options are
varied in intensity to generate different scenarios.
336
International Transport Forum, OECD (2018), Decarbonising Maritime Transport - Pathways to zero
carbon shipping by 2035,
https://www.itf-oecd.org/sites/default/files/docs/decarbonising-maritime-transport-2035.pdf
128
A study337
by UMAS, UCL and Lloyds for the Danish Shipowners Association describes
scenarios of various ambition levels, ranging from those achieving zero emissions by around
2035, to the least ambitious keeping shipping emissions roughly constant at the current level. In
each decarbonisation pathway, there are different relative contributions from technical, operation,
fuel shift, and offset purchases. Ambitious reductions are achieved through hydrogen and
biofuels, in combination with low operational speeds when using fossil fuels. The report notes
that hydrogen could be replaced by other zero carbon vehicle technologies, such as
electrification. The different scenarios modelled show differing penetration of biofuels,
hydrogen, LNG and fossil fuels, depending on ambition and assumptions made.
In the PRIMES Baseline scenario, important improvements of energy efficiency are foreseen,
also triggered by the implementation of the Energy Efficiency Design Index adopted at global
level by International Maritime Organisation. Energy intensity of EU international shipping,
measured as tons of oil equivalent per million tonnes-kilometres, is projected to decrease
significantly, by 10% during 2015-2030 and 16% for 2015-2050. The share of marine diesel oil
would increase over time, while natural gas would provide around 11% of energy demand by
2050 driven by the Sulphur Directive and the assumed availability of refuelling infrastructure for
LNG.
As already explained in section 4.4.1.5, three stylised variants have been run with the PRIMES
model for EU international maritime, based on the H2 and 1.5LIFE scenarios. The variants
drawing on the H2 scenario are assumed to achieve 50% and 70% reductions in the greenhouse
gas emissions relative to 2008 (H2Mar50 and H2Mar70, respectively). In the 1.5LIFEMar
scenario, international maritime is assumed to be part of an economy wide net zero greenhouse
gas emissions target and reduces its emissions by about 88% by 2050 compared to 2008.
Energy efficiency is projected to provide significant contribution to the achievement of emissions
reductions in all three decarbonisation variants by 2050 (25% by 2050 relative to 2015 in the
H2Mar50, 28% in the H2Mar70 and 33% in 1.5LIFEMar) through e.g. technologies for
propulsion, propeller, hull coating and through speed reduction.
In terms of fuels, all three variants would imply significant uptake of liquid biofuels in the fuel
mix by 2050 (37% of the energy demand in H2Mar50 and 54% in H2Mar70 and 1.5LIFEMar).
This implies 21-30 Mtoe liquid biofuels demand by 2050. H2Mar50 and H2Mar70 scenarios
project higher uptake of hydrogen by 2050 (13-14% of the fuel mix)338
while the 1.5LIFEMar
scenario relies more on e-gas and e-liquids (10% and 17% of energy demand, respectively).
Natural gas would still represent 11 to 14% of the energy demand by 2050 in all three variants
(11% in 1.5LIFEMar and 14% in H2Mar70). The share of marine diesel oil and heavy fuel oil is
projected to reduce significantly by 2050, especially in the 1.5LIFEMar scenario. As a result, the
CO2 intensity (expressed in tons of CO2 per tonne-kilometre) is projected to go down by around
66% by 2050 relative to 2005 in H2Mar50, 79% in H2Mar70 and 91% in 1.5LIFEMar.
337
UMAS, UCL, Lloyds Register (2016), CO2 emissions from International shipping – possible reduction
targets and their associated pathways,
https://www.danishshipping.dk/en/press/news/download/News_Model_News_File/71/CO2-study-full-
report.pdf
338
E-fuels are not available in the H2 scenario and thus in the H2Mar50 and H2Mar70 variants.
129
Figure 54: EU international maritime fuel mix in the Baseline and decarbonisation variants
Source: PRIMES.
The analysis of the international maritime at global level, performed by JRC with the POLESJRC
model, shows energy intensity improvements of around 14% between 2015 and 2050
(measured in ktoe/Gtonne-miles) in the reference scenario. However, the POLES-JRC 2C
scenario shows higher improvements in energy intensity over time (39% for 2015-2050), which
allows less reliance on liquid biofuels in terms of volume than what would have been required
otherwise. By 2050, liquid biofuels would still represent around 32% of the energy demand at
global level (101 Mtoe). Hydrogen is projected to provide around 23% of the fuel mix by 2050
and gas another 14%. The POLES-JRC model does not consider e-gas and e-liquids for
international shipping.
Figure 55: Energy demand of global international shipping
Source: POLES-JRC.
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4.4.2.3 Energy demand and fuel mix projections
The Baseline scenario shows transport energy demand339
decreasing by 24% by 2050 compared
to 2005, mainly due to the impact of the proposed CO2 standards for new cars, light commercial
vehicles and heavy goods vehicles on overall vehicle fleet efficiency, but also due to
improvements in the efficiency of the transport system. Oil products remain dominant, providing
75% of the final energy demand in 2050, down from over 90% currently. Electricity would
provide around 11% of the energy consumption by 2050, driven by the uptake of electric vehicles
and further progress in the electrification of rail. Liquid biofuels would maintain a relatively
stable share over time (around 6% of the fuel mix) in the Baseline, while gaseous fuels including
biomethane would provide around 6% of energy demand by 2050. Hydrogen is projected to
represent around 2% of the transport energy demand by 2050 in the Baseline scenario, in lack of
additional policy incentives.
In the scenarios reducing by -80% by 2050, total energy demand in transport goes down between
31% (in the P2X scenario) to 43% (in the EE and CIRC scenarios) in 2050 compared to 2005,
driven by more CO2 efficient new cars, vans, heavy goods vehicles and buses post-2030 but also
by measures increasing the efficiency of the transport system and shifts towards more energy
efficient transport modes (e.g. rail). In more ambitious scenarios, higher reductions in energy
demand are achieved by 2050 relative to 2005 (38% in COMBO, 45% in 1.5TECH and 50% in
1.5LIFE). Across all scenarios, larger energy savings are projected for passenger relative to
freight transport. Significant savings would take place in road transport while air transport shows
lower growth in energy demand relative to the Baseline. Energy demand in rail is projected to
increase relative to 2005, while the energy savings in inland navigation are limited; this is due to
the significant modal shift taking place from road to rail and inland navigation in all scenarios,
having countervailing effects to the higher energy efficiency of these transport modes.
Figure 56: Change in energy consumption per mode in 2050 compared to 2005
Source: ESTAT, PRIMES.
The strongest driver for fuel consumption reduction in transport is projected to be the
electrification of the road transport sector. In the scenarios reducing by -80% by 2050, the share
339
Energy demand discussed in this section includes all transport modes except international maritime.
This is consistent with the logic of the energy balances, which report international bunkers separately.
131
of electricity in energy demand would be between 15% (in P2X and H2 scenarios) and 26% (in
EE and ELEC scenarios) by 2050, compared to 11% in the Baseline. The share of electricity is
only incrementally higher in more ambitious scenarios reaching net zero by 2050, although these
see electrification in passenger car transport penetrating faster. This is because in the scenarios
reaching net zero by 2050, by construction also e-gas and e-liquids play a more significant role in
the transport energy mix, in particular in road freight and aviation.
Figure 57: Fuels consumed in the transport sector in 2050
Source: PRIMES.
Liquid biofuels consumption is projected to increase in all scenarios, mainly driven by their use
in the air transport, road freight and inland navigation sectors. While in the Baseline liquid
biofuels would represent around 6% of the fuel mix in 2050, the scenarios reducing by -80% by
2050project shares between 10% (in P2X scenario) and 23% (in CIRC scenario) and the more
ambitious scenarios 14-24% by 2050. Together with biomethane, the shares of liquid and gaseous
biofuels would be around 13-24% in the scenarios reducing by -80% by 2050s, 18% in COMBO
and 17-26% in the scenarios reaching net zero by 2050 in 2050.
The total amount of liquid biofuels used in transport is not very different across the scenarios,
although the allocation between transport modes is very different. In more ambitious scenarios,
the transport modes that have fewer options to decarbonise use liquid biofuels with priority and
thus the other modes opt for different solutions, less based on biofuels.
E-fuels (e-liquids and e-gas) are projected to represent about 28% of the energy demand in 2050
in the P2X scenario (around 71 Mtoe), which is the only scenario reducing by -80% by 2050, that
shows a significant uptake of e-fuels. In COMBO e-fuels would provide around 14% of the
energy demand, while in the scenarios reaching net zero by 2050 between 15 and 26% of the fuel
mix (27 to 53 Mtoe). E-gas would be mostly used in road freight and, to more limited extent, in
inland navigation, while e-liquids are projected to be used in air transport, road freight and inland
navigation. As previously explained, the advantage of e-liquids is high energy density but also
their direct use in conventional vehicle engines, relying on the existing refuelling infrastructure.
Similarly to liquid biofuels, the allocation of e-fuels between transport modes is different in the
P2X scenario and more ambitious scenarios. In the more ambitious scenarios, e-fuels are
predominantly used in transport modes that have fewer options to decarbonise like air transport,
road freight and inland navigation.
132
Hydrogen is projected to have the highest share in transport energy demand in the H2 scenario
(21% in 2050) but it is part of the transport fuel mix in all scenarios, including the Baseline
(around 2%). In the scenarios reducing by -80% by 2050, except for the H2 scenario, hydrogen
would provide around 4-5% of the energy demand in 2050 while more ambitious scenarios
project larger shares (9% in COMBO and 15-16% in the scenarios reaching net zero by 2050).
E-fuels and hydrogen require significant amounts of electricity for their production. For e-fuels
electricity is also needed for the capturing of CO2. Thus, reserving the consumption of e-fuels and
hydrogen for the transport modes that need them most would help limiting the power sector
resources, which increase with their production and deployment.
Gas can play an important role, particularly in road freight transport and shipping as long as
gradually the gas supply is decarbonised.340
By 2050 the role of natural gas would be limited in
all scenarios reaching -80% to net zero emissions by 2050 (0.5-4% of the energy demand).
As already explained, not all transport modes are able to switch to electricity. As liquid and
gaseous biofuels, as well as hydrogen and e-fuels do not deliver the same type of efficiency
improvements as electrification (i.e. electric engines are much more efficient than ICE ones),
their relative share in total fuel consumption increases significantly by 2050. Overall, liquid and
gaseous biofuels, hydrogen and e-fuels would represent about 23-44% of the energy demand in
the scenarios reducing by -80% by 2050, 41% in COMBO and 56-59% in the scenarios reaching
net zero by 2050 by 2050. Also accounting for electricity, their shares would increase to 48-59%
of the energy demand in 2050 in the scenarios reducing by -80% by 2050, 61% in COMBO and
82-85% in the scenarios reaching net zero by 2050. Nevertheless, by 2050 projections still show
some fossil fuel use in the transport sector, notably in aviation but also to more limited extent in
road freight and inland navigation, underlining the challenges to decarbonise these sectors.
4.4.2.4 Greenhouse gas emissions from transport
In the Baseline scenario, CO2 emissions from transport, including domestic and international
aviation but excluding international maritime, are projected to reduce by 19% by 2030 relative to
2005 and by 38% for 2005-2050341
. However, relative to 1990 levels, emissions would still be
4% higher by 2030 and only 21% lower by 2050, owing to the fast rise in the transport emissions
during the 1990s.
CO2 emissions from passenger cars would be 65% lower by 2050 compared to 2005. For heavy
goods vehicles, lower emissions reductions are projected by 2050 (10% compared to 2005).
Already by 2030-2035, emissions from heavy goods vehicles and air transport together are
projected to overtake those of passenger cars.
The main drivers for the emissions reductions in the Baseline are the CO2 standards for new cars,
vans and heavy goods vehicles, consistent with the Commission’s proposal for 2030, supported
by the deployment of recharging infrastructure for electric vehicles and refuelling stations for
hydrogen, and by technological progress. Other policies recently proposed by the Commission
would also contribute to the emissions reductions (e.g. the revision of the Eurovignette Directive,
Clean Vehicles Directive, Combined Transport Directive and the assumed implementation of
electronic documentation for freight transport), in particular in the freight transport sector.
340
In the modelling, liquefied natural gas is assumed to be the main way of using gaseous fuels in transport
enabled by the assumption of low cost miniature liquefaction and gasification stations, allowing
blending of biogas and e-gas.
341
This section only covers the tank to wheel emissions from transport. The CO2 impact of battery
production for electric vehicles is also not taken into account.
133
Figure 58: CO2 emissions from transport in 2050 (in MtCO2)342
Source: PRIMES.
In the scenarios reducing by -80% by 2050, emissions from transport excluding international
shipping would go down by 70-71% by 2050 compared to 2005 (61-63% relative to 1990).
Thanks to more CO2 efficient new cars post-2030 and the roll out of recharging and refuelling
infrastructure, which both support electro-mobility, emissions from passenger cars are projected
to decline substantially by 2050 relative to 2005 (by 87% in the P2X scenario and 90% in all
other scenarios reducing by -80% by 2050). For heavy goods vehicles, emissions reductions
would range between 52% (in the ELEC scenario) and 69% (in the P2X scenario). By 2040,
passenger cars would only represent around 24-25% of emissions in most of scenarios reducing
by -80% by 2050 (except for the P2X scenario), having been overtaken in importance by heavy
goods vehicles (28-29% of emissions) and aviation (31-32% of emissions).
In the COMBO scenario emissions from transport are projected to be 76% lower in 2050 relative
to 2005 (69% lower relative to 1990), while in the scenarios reaching net zero by 2050 deeper
emissions reductions are achieved (91-92% relative to 2005, equivalent to 89-90% relative to
1990). In the scenarios reaching net zero by 2050, almost the entire passenger car stock would be
zero-emitting by 2050. In addition, the rapid penetration of low- and zero-emission vehicles, of
alternative and net-zero carbon fuels, and the significant improvements in the transport system
efficiency, as described in the previous sections, results in a rapid decrease of emissions from
heavy goods vehicles and aviation. In the 1.5LIFE scenario, this is complemented by significant
changes in consumer preferences.
342
Including aviation but excluding international maritime.
134
Figure 59: CO2 emissions from transport in 2050 relative to 2005 (left) and to 1990 (right)343
Source: PRIMES.
Greenhouse gas emissions from air transport
In the Baseline scenario, CO2 emissions from air transport are projected to grow by 26% by 2050
relative to 2005. However, relative to 1990 levels, emissions would be 130% higher, due to the
fast rise in the air transport emissions during the 1990s.
In the scenarios achieving 80% GHG reduction, air transport emissions would drop by 5-8%
during 2005-2050 but they would still be 68-73% higher relative to their 1990 levels. In the
COMBO scenario, somewhat higher emissions decreases are projected, at around 11% for 2005-
2050. By contrast, both scenarios reaching net zero by 2050 show large reductions in emissions
post-2035; this is mainly due to the rapid penetration of low carbon fuels (e-liquids and advanced
biofuels) and lower growth in air transport activity in 1.5LIFE scenario relative to the Baseline.
Thus, air transport emissions would go down by 52-55% by 2050 relative to 2005 (13-19%
reduction for 1990-2050). The results are shown in Figure 60.
343
Including aviation but excluding international maritime
135
Figure 60: Air transport emissions (MtCO2) in the Baseline and scenarios reaching -80% to
net zero emissions by 2050
Source: PRIMES.
A study commissioned for the European Parliament's ENVI Committee344
shows that to stay
below 2°C, the target for EU aviation for 2030 should not exceed 39% of its 2005 emission levels
(50% below the baseline in that study) and should be 41% lower compared to 2005 emission
levels in 2050. However, the study also allows for offsetting. The PRIMES results do not show
such significant reductions within the sector in the scenarios reducing by -80% by 2050, but go
beyond them in the scenarios reaching net zero by 2050.
In addition to the above, it should be noted that aviation is also a source of non-CO2 emissions.
Flights emit NOx, SO2, sulphate aerosols and water vapour, which have an effect when emitted at
high altitude. The deleterious effects are known, albeit the exact impact and interrelationships
(radiative forcing) are still debated. Research to better determine these should continue to be
pursued and encouraged. So far the non-CO2 effects of aviation on climate change remain
virtually fully unaddressed. Exploring measures such as avoiding cloud contrail formation as well
as research into aircraft avoiding sensitive climate areas, may be avenues to be explored. While
currently, policies directed at aviation only address CO2 emissions345,346,347
, the International Civil
Aviation Organization will present for endorsement, in 2019, a Global Standard for Non Volatile
Particulate Matters, and will progress in further assessing the impacts of some of contaminants, in
order to evaluate the risk to human health and to further the goal of reducing emissions.
Greenhouse gas emissions from international maritime
344
European Parliament DG for Internal Policies (editor) - Study for the ENVI Committee. (2015).
Emission Reduction Targets for International Aviation and Shipping.
345European Parliament DG for Internal Policies (editor) - Study for the ENVI Committee. (2015).
Emission Reduction Targets for International Aviation and Shipping.
346
Grewe, V. (23 January 2018). Climate Impact of Aviation CO2 and non-CO2 effects and examples for
mitigation options.
https://www.transportenvironment.org/sites/te/files/Climate%20impact%20of%20aviation%20CO2%20an
d%20non-CO2%20effects_Volker%20Grewe.pdf
347
CE Delft. (May 2017). Towards Addressing Aviation's non-CO2 Climate Impacts.
136
In the Baseline scenario, emissions from EU international maritime are projected to increase by
34% during 2005-2050 (equivalent to 19% increase over 2008-2050). This is mainly driven by
the sustained growth in transport activity over the period and despite important improvements in
the energy efficiency, also triggered by the implementation of the Energy Efficiency Design
Index.
As already explained in section 4.4.1.5, the stylised variants that have been run with the PRIMES
model for EU international maritime are based on the H2 and 1.5LIFE scenarios. The variants
drawing on the H2 scenario are designed to achieve 50% and 70% reductions in the greenhouse
gas emissions relative to 2008 (H2Mar50 and H2Mar70, respectively) while in the 1.5LIFEMar
variant, international maritime is assumed to be part of an economy wide net zero greenhouse gas
emissions target and reduces its emissions by about 88% by 2050 compared to 2008. When
compared to 2005, the emissions reductions by 2050, are equivalent to 46% in H2Mar50, 68% in
H2Mar70 and 87% in 1.5LIFEMar. The emissions reductions are driven by significant energy
efficiency improvements and the uptake of advanced biofuels, e-liquids, e-gas and hydrogen in
the fuel mix. The evolution of emissions from EU international maritime in the stylised PRIMES
variants are provided in Figure 61.
Figure 61: Emissions reductions at EU level in the maritime decarbonisation variants
Source: PRIMES
The stylised modelling exercise performed for international shipping at global level by JRC with
the POLES-JRC model shows a doubling of emissions by 2050 relative to 2005 in the POLESJRC
reference scenario (83% increase between 2008 and 2050). As already explained, the
POLES-JRC 2C scenario illustrates a reduction by 50% in the global international shipping
greenhouse gas emissions by 2050 compared to 2008 (relative to 2005, this is equivalent to 44%
decrease in emissions at global level). The emissions reductions in POLES-JRC are driven by
significant improvements in energy efficiency and the uptake of advanced biofuels and hydrogen.
137
Figure 62: Emissions reductions at global level in POLES
Source: POLES-JRC.
The two modelling exercises above offer stylised views on the evolution of emissions from
international shipping at EU and global level. They offer a broad range of alternatives and degree
of ambition in terms of energy efficiency improvements and the uptake of advanced biofuels,
hydrogen, e-liquids and e-gas in the fuel mix. An even broader range of scenarios, both in terms
of ambition and mitigation options, is found in the other studies348 349
referred to above. The
implementation of the initial IMO strategy on reductions of greenhouse gas emissions from ships
and its subsequent review will further determine the evolution of emissions from international
shipping at global level. While further work is needed to refine the approach for integrating the
EU international shipping modelling results into the EU scenarios reaching -80% to net zero
emissions by 2050, the importance of the maritime sector for greenhouse gas emissions and
energy demand cannot be ignored.
4.4.3 Transition enablers, opportunities and challenges
In the transport sector, sustained activity growth is expected in all modes. Attaining deep
emissions reductions will thus require a broad range of measures, including significant
improvements in transport system efficiency, building on strong modal shift, multi-modality and
making full use of benefits of connected, cooperative and automated mobility350
while at the
same time triggering high deployment of low- and zero-emissions vehicles, vessels, rolling stock
and aircraft and/or alternative and zero-emissions fuels.
348
International Transport Forum, OECD (2018), Decarbonising Maritime Transport - Pathways to zero
carbon shipping by 2035,
https://www.itf-oecd.org/sites/default/files/docs/decarbonising-maritime-transport-2035.pdf
349
UMAS, UCL, Lloyds Register (2016), CO2 emissions from International shipping – possible reduction
targets and their associated pathways,
https://www.danishshipping.dk/en/press/news/download/News_Model_News_File/71/CO2-study-full-
report.pdf
350
Improvements in transport system efficiency also cover, among others, reinforced mobility planning.
This can be also supported by measures for shifting consumer choice to low- and zero-emission modes.
138
Increased and targeted efforts to support R&D&I and a proper support system for deployment is
indispensable to enable the transition. For example, it is clear that the development of advanced
biofuels and e-fuels still needs to take large strides, as these are required in view of needed
emission reductions from aviation. Therefore, in particular for transport sectors with currently
limited decarbonisation options such as aviation, substantial research and innovation financing
programmes will be necessary to allow for real scale demonstration of new technologies and
business models.
Road transport will need to deliver substantial emission reductions. There is growing
international momentum for battery-electric passenger cars and light commercial vehicles
deployment. Other regions are strongly pushing this market. Europe needs to maintain its
competitiveness, making it necessary to adopt an integrated approach for vehicles, infrastructures
and services, putting consumer needs first. There is also progress on heavy-duty vehicles,
particularly for the deployment of low- and zero-emission buses in urban areas.
For heavy duty road transport, the transition might require continued development of a mix of
technologies, including battery electrification, particularly for short haul, but also advanced
biofuels, hydrogen fuel cells, e-liquids and e-gas, catenary lines and pantograph systems etc. If
technically and economically possible, a transition in this sector more reliant on electrification or
fuel cells, rather than biofuels and e-fuels, would have benefits in terms of reduced stress on land
or energy resources. On the other hand, an important advantage of both e-fuels and advanced
biofuels is their direct use in conventional vehicle engines, relying on the existing refuelling
infrastructure.
In international maritime and aviation, energy efficiency will be one of the possible elements to
limit the demand for low carbon fuels. However, the uptake of advanced biofuels, e-fuels and
hydrogen (for maritime) will be important to enable their decarbonisation. The relatively long
replacement time of the vessel/aircraft fleet in these sectors imply high risk if regulatory action is
delayed. Especially in the aviation sector, the technological challenges are large.
Similarly, there is a need to accelerate modal shift: towards rail (as a largely electrified sector for
long distance transport) and waterborne transport, and towards public transport or active modes
(cycling and walking) in cities. However, rail freight needs to become more competitive
compared to road transport by eliminating operational and technical barriers between national
networks and by fostering innovation and efficiency across the board; the competitiveness of
inland navigation should also be improved. In addition, a completed core and comprehensive
Trans-European Transport Network is needed by 2050 to support the transformation.
New societal developments and changes in consumer choices have a large potential for
improving mobility and contributing to decarbonisation. Integrating the sharing economy and
connected, cooperative and automated mobility in the existing transport institutional and
technical set-up, and making full use of digitalisation, automation, mobility as a service and the
potential of active modes, should therefore be an important part of the agenda.
The revision of the rules on road pricing is an opportunity for the EU to address a significant part
of issues concerning systemic efficiency. In all modes, there is a need for fair taxation policies
and the phase-out of fossil fuel subsidies, where present.
In view of technological trends, stronger integration of transport with the energy system, with the
support of ICT, is essential. Enabling smart charging for vehicle users, turning vehicles into
multi-purpose assets, that generate cost savings for consumers and help the management of the
energy transition, should be advanced quickly. Energy storage – both stationary and mobile - is
an important enabler of future low- and zero-emission transport, as it can provide a flexible
mechanism to support recharging of vehicles in cases where links with the energy grid are
139
constrained, as well as support balancing services. At the same time, the introduction at scale of
vehicle-to-grid solutions based on large scale fleets (for example in more densely populated
areas) could further support the energy transition and enable new consumer services.
However, questions of market design and governance issues related to consumer rights,
transparency of information, sectoral integration (energy and transport), access to data and
cybersecurity are already key policy questions today. Technological lock-in needs to be avoided
and infrastructures and systems need to be open and easily accessible to all consumers. Ensuring
sustainability of the full (global) value chain is a policy challenge, particularly for battery
development, where the EU needs to take a lead for the second generation battery development.
It will require greater coordination and cooperation among public and private market actors.
Urban areas will be the centres of mobility innovation – increasing scarcity of space could
become a real driver of innovation in mobility services. On the other hand, the convenience of
automation poses the risk that activity will increase faster. But if well channelled, technological
and societal developments could result in very large co-benefits for pollution, noise, congestion
and accidents, thereby improving the quality of life, especially in cities. Transport will be most
likely one of the first sectors affected by digitalisation and automation, with the large-scale
arrival of self-driving vehicles – including self-driving lorries – being possible in the next decade.
Full deployment of C-ITS can improve the overall efficiency of the transport system. The
Commission has published a Communication on Connected and Automated Mobility351
, setting
out a strategy for the EU.
New areas of business development and mobility services will open up. Europe's strong industrial
base, supported by R&D&I should give it the strength to compete globally, although there is also
a risk of a disruptive shift in competitiveness. Furthermore, societal challenges need to be tackled
head-on. For example, employment in some professions might decrease (e.g. drivers) and the
development of new technologies and services will require new skills. SMEs might not be
sufficiently equipped to face these changes. Therefore, opportunities for re-training of people
with obsolete profiles should be open up.
In all transport modes, market barriers and market failures such as split incentives, information
gaps, lack of certainty about the future, lack of internalisation of externalities, or lack of
information for consumers hinder the uptake of green technologies. But the importance of the
automotive, maritime and aerospace industries in the European economy requires a readiness to
be prepared for the challenges of the future.
4.5 Industry
4.5.1 Options to reduce emissions in industry
Industry is expected to continue the trend of emissions reduction and energy savings exhibited in
the past few decades. However, to further and deeply reduce its emissions, especially in line with
Europe’s ambition for 2050, major changes need to be made in the way industry consumes
energy and produces its products. There is a plethora of deep decarbonisation352
options for
industry, but no single silver bullet for all subsectors. The industrial sector is composed by many
351
COM (2018) 283 Final
352
The term decarbonisation is defined as reducing the amount of gaseous carbon compounds released in
air as a result of economic activity and not the complete disappearance of carbon in the industrial
production process, which for example is vital for the chemical industry. This is why the chemical
industry prefers to use the more precise term fossilisation.
140
diverse subsectors, each with its own particularities arising from a variety of reasons: different
energy and material needs resulting in different types, mixture, volumes and concentration of
industrial effluents containing greenhouse gases.
Figure 63: Value chain links of energy intensive industries to other sectors in the economy
and other energy intensive industries
Source: VUB-IES
353
.
The flow of materials to and from the energy intensive industries forms an integrated network
with each other and every other sector of the economy. The products from energy intensive
industries are indispensable to low carbon solutions like energy-efficient buildings, decarbonised
353
VUB-IES (2018), Industrial Value Chain. A bridge towards a carbon neutral Europe,
https://www.ies.be/files/Industrial_Value_Chain_25sept_0.pdf
141
transport system, renewable energy and battery storage. Figure 63 depicts this interconnectedness
of the value chains between energy intensive industries (EII) and other sectors.
Figure 64 shows a bottom up estimate of GHG emission in industry in 2015.354
The pie chart
excludes refineries and indirect emissions (e.g., from generating the electricity used in industry).
A significant part of industrial emissions (21%) consists of process related emissions (i.e.
emissions from chemical reactions other than combustion), while two thirds of industrial GHG
emissions are from high-temperature process heat, either in the form of steam or hot water (20%),
or from the direct firing of various types of furnaces (50%). The remaining share (9%) is due to
space heating.
Figure 64: EU 28 Industrial direct emissions by end use and sub-sector
Source: FORECAST.
The complexity and multitude of solutions to reduce industrial emissions is well illustrated in the
85 pathways and technologies identified in the main sectors under the ETS, during the 2017
expert consultation for the Innovation Fund.355
A detailed description of decarbonisation options
of the EU industry can also be found in one of the reports supporting the Commission analysis,356
354
SET-Nav project (2018), Low-carbon transition of EU industry by 2050, http://www.set-
nav.eu/sites/default/files/common_files/deliverables/wp5/Issue%20Paper%20on%20low-
carbon%20transition%20of%20EU%20industry%20by%202050.pdf
355
Climate Strategy & Partners (2017), Summary report: Finance for Innovation: towards the ETS
Innovation Fund, https://ec.europa.eu/clima/sites/clima/files/events/docs/0115/20170612_report_en.pdf
356
ICF & Fraunhofer ISI (2018), Industrial Innovation: Pathways to deep decarbonisation of Industry. Part
1: Technology Analysis, forthcoming
760 Mt
CO2-equ
50%
21%
20%
9%
142
as well as in a report353
commissioned by the Energy Intensive Industries for contributing to the
European Commission's strategy for long-term GHG emissions reduction.
The latter report was commissioned following the request to Europe's EII by DG GROW in the
3rd
meeting of the Commission High Level Expert Group on EII to develop a consolidated 2050
sector strategy, which would contribute to the EU’s low emission strategy for 2050. It
complements the individual 2050 roadmaps produced by most industries, by helping understand
how their plans fit together and what are the prerequisites for the deep decarbonisation of these
sectors in terms of access to clean energy (particularly electricity), raw materials, infrastructure,
investments, as well as policy framework conditions.
In the following, the identified solutions are grouped in a number of broader categories.
Energy efficiency, electrification and fuel switching
A large part of the GHG reductions achieved up to date are a result of energy efficiency
improvements.357
Further energy use and process optimisations, for instance through the
reduction of heat losses, recovery of process released heat and re-use of energy containing
gaseous effluents are achievable, including by linking it to district heating systems, but seem
insufficient to achieve the long term GHG reduction goals on their own. Moreover achieving
these energy savings would require in many cases the replacement of major parts of existing
production processes, which may not be preferable compared to changing to a radically new
production process, such as the ones presented below.
Electrification of industrial heat (that relies on decarbonised electricity) is a promising emissions
abatement option. There is significant potential to electrify low temperature industrial heat with
heat pumps (up to approximately 100° C) or with electric boilers (below 300° C). Low
temperature heat and steam production is common in several industrial sectors such as pulp and
paper and the chemical sector. IEA estimates358
that heat pumps can realistically provide 6% of
the world industrial heat demand in 2040 in a cost effective way. For some applications,
electromagnetic processing technologies such as electric arc furnaces, infrared heating and
induction heating, present distinct advantages (e.g. controllability, precision, versatility, and
efficiency). However, the potential for such applications is limited. EPRI359
estimated that, in
Europe, the economic potential of electromagnetic processing technologies other than heat pumps
is approximately 15 Mtoe360
. Further electrification is technically possible, e.g. for the production
of higher temperatures, but tends to increase considerably energy consumption and cost. Further
research is required to reduce costs and increase the scalability of such solutions.
Currently, energy efficiency and electrification of industrial heat and steam production seem as
the most technologically mature options for further reducing energy-related industrial emissions.
357
This is currently supported by a series of EU regulations that set minimum energy performance
requirements for energy-related products, under the framework of the Ecodesign directive. Regulations
concerning electric motors, industrial fans and water pumps were adopted in 2009, 2011 and 2012
respectively. A regulation on air compressors is under preparation. Other regulations that target
lighting, ventilation, heating or cooling may also positively impact energy efficiency in industry, but to
a smaller extent.
358
IEA (2018), World Energy Outlook 2018 (upcoming),
https://www.iea.org/newsroom/news/2018/june/weo-2018.html
359
EPRI (2018), Electromagnetic Processing of Materials (EPM) – Europe Industrial Electrification
Potential Assessment,
http://www.leonardo-energy.org/resources/1407/electromagnetic-processing-of-materials-epm-europe-
industria-5ad7aba86b87f.
360
The analysis includes Norway Switzerland and Iceland and other European countries outside the
European Union. Final Energy Consumption in the EU in 2015 was approximately 275 Mtoe.
143
Other fuel switching options do exist, but at various levels of technological readiness; these
would mainly be switching from fossil fuels to mostly biomass, but also to hydrogen and e-fuels.
Electrification of processes also has a high potential, but not horizontally across all sectors.
Today it is deployed in the non-ferrous metals and chemicals industries, while some further
potential exists in the chemical sector (electrochemical processes) and in the iron & steel sector
(electrolysis steel, electric arc). In the cases processes can be electrified the reduction potential is
very high, assuming carbon free electricity. Further research is required to increase the
technology readiness of these solutions.
Innovative low carbon processes
Process related emissions are the inherent result of the chemical transformation of materials, the
most notables one being cement production and the oxidisation of coke to produce pig iron.
Alternative process technologies that use different chemical reactions for the production of the
basic (or substitute) material could avoid the emission of such process related CO2 emissions.
Such break-through innovations361
therefore constitute a completely new production system that
would replace production processes that have been used and optimised since many decades.
An alternative way to reduce process emissions is by substituting currently used materials, based
on fossil fuels, by ones with less carbon content (mainly hydrogen) or with biomass. The
chemical and the refining sectors are a prime example where either biomass feedstock or
hydrogen-based362
chemical production can significantly reduce process emissions. Biomethanol
and bioethanol represent the most efficient ways to use bio-feedstock in these industries363
, while
biomass is a key raw material for the paper and pulp industry. Considerations though must be
given to the finite supply potential of sustainable biomass and its importance as a low carbon
solution also for other hard to decarbonise sectors, like transport. Similarly, hydrogen can be used
to produce low carbon methanol, ammonia and other chemicals, but often requires a CO2
molecule in its reaction process. Depending on the source of this CO2, the production process
would become less carbon intensive or even carbon neutral. The hydrogen solution though also
suffers from limitations, as research is needed to decrease its production costs and further
develop the associated processes, while at the same time necessary enabling infrastructure needs
to be constructed. Biomass and hydrogen have also an application in the iron & steel industry.
Carbon capture and sequestration and or use (CCS and CCU)
The options of CCS and CCU are already described above in section 4.2.1.2, but in industry it
can be also used to capture process-related emissions. CCS is regarded as a cost-effective option
for the future to reduce emissions from industrial processes. The suitability of CCS technology
differs across industrial processes, due to the different physical properties.
CCU could allow CO2 utilisation into one or several product cycles, avoiding the use and
emissions related to an equal carbon amount of fossil based resources provided that the energy
361
As an example, in the iron & steel sector the hydrogen based direct reduction process (projects Hybrit,
Salcos and H2Steel) aims using hydrogen to completely bypass the use of coal for the production of
primary steel. For the cement sector, new binders – replacing clinker – can substantially reduce
emissions, while at the same time allow for lower demand of heat.
362
Hydrogen as a reactant with CO2 being re-used to produce chemicals.
363
Dechema (2017), Low carbon energy and feedstock for the European Chemical Industry,
https://dechema.de/dechema_media/Downloads/Positionspapiere/Technology_study_Low_carbon_ener
gy_and_feedstock_for_the_European_chemical_industry.pdf
144
used in capturing and converting the CO2 is zero carbon. Its potential applications can be quite
wide, ranging from materials (chemicals and minerals) to e-fuels (in this context also called CCU
fuels), but technological feasibility, public acceptance and cost-effectiveness have to be further
assessed (see section 4.2.1.4). The CO2 mitigation potential of CCU needs to be assessed along
the complete lifecycle of the products.
CCU based materials, in contrast to CCU fuels, have the advantage that they can be recycled at
the end of life so the carbon can be again captured and re-used. Materials under advanced
development are various types of plastics and building material substitutes. Their lifespan
depends on the end use of the CCU product. Examples would be the application in the
automotive sector (e.g. polyurethane car seat cushions) or in the construction sector (e.g. concrete
building blocks). Other CCU materials are still at basic research stage, such as carbon fibres, but
have the potential to displace carbon-intensive materials such as steel, aluminium and cement and
reduce emissions from their production.364
In addition, the overall lifespan of these materials can
be elongated via material recycling (see discussions on circular economy).365
Resource efficiency/Circular Economy
Resource efficiency in industry means reduced raw material needs, minimisation of waste and
by-products, increased recycling and material substitution. As such, it is a key part of the Circular
Economy concept. Industrial and manufacturing processes can be redesigned so that material loss
in the production and between the different lifecycles phases of each product or material are
minimised. Improved waste management allows materials to go back into the economic cycle,
thus, reducing the input of primary raw materials and the need to treat waste. The quantities of
virgin material used as feedstock can reduce, part of it replaced by increased recycled and re-used
material366
, which requires (with high quality waste streams) much less energy and carbon
intensive processes for its processing. A part of virgin materials will come from the cascading
use367
of material and reduced material loss during the processing phase.
According to the International Resources Panel,368
by 2050, resource efficiency policies could
reduce global extractions by 28%. Combined with an ambitious climate action, such policies can
reduce greenhouse gases emissions around 63%, and increase economic growth by 1.5%. A
recent study from Material Economics,369
focused on energy-intensive sectors like steel, plastics,
aluminium or cement, estimates that the circular economy model could reduce European
emissions by 56% (300 MtCO2) annually until 2050. Globally, emissions savings could reach 3.6
billion of tonnes of CO2 by year. Moreover, the production and incineration of plastics produce
364
Innovation for Cool Earth Forum – ICEF (2017), Carbon Dioxide Utilization Roadmap 2.0,
https://e-reports-ext.llnl.gov/pdf/892916.pdf
365
Ramboll (2018), Identification and analysis of promising carbon capture and utilisation technologies,
including their regulatory aspects, forthcoming,
https://ec.europa.eu/clima/events/stakeholder-event-carbon-capture-and-utilisation-technologies-
technological-status_en
366
The increase in the recycling rates of many materials will require removing several bottlenecks, see for
example EU’s Plastic Strategy, COM (2018), 28 final.
367
Ellen McArthur Foundation (2013), Towards the Circular Economy,
https://www.ellenmacarthurfoundation.org/assets/downloads/publications/Ellen-MacArthur-
Foundation-Towards-the-Circular-Economy-vol.1.pdf
An example provided in this report is how cascading use of material will lead to a diversified reuse
across the value chain, for example cotton clothing first reused as second hand apparel, then as fibre-fill
in upholstery in the furniture industry and later in cotton wool insulation for construction.
368
UNEP (2017), Resource Efficiency: Potential and Economic Implications,
http://www.resourcepanel.org/reports/resource-efficiency
369
Material Economics AB (2018), The Circular Economy, http://materialeconomics.com/latest-
updates/the-circular-economy
145
globally every year 400 MtCO2. If it were possible to recycle all plastic waste, the equivalent to
3.5 billion of oil barrels per year would be saved. Recycling a million of tonnes of plastics is
equivalent to the emissions of one million cars.370
Many of the changes required to achieve the kind of resource efficiency gains in the context of a
circular economy will require changes to product design or business model of the involved
industries. Industries may also be able to develop genuinely new products, with similar
functionality for end users but lower emissions associated.
Industrial symbiosis
The partnership of industries across sectors, sharing their infrastructures and their material inputs
and outputs (including waste) in the context of industrial symbiosis, is another way to optimise
resource use and thereby reduce emissions. CCU can be an example of such symbiosis. Such
structures are greatly enabled by the mega-trend of digitalisation, which is already increasingly
penetrating industry. Taking advantage of the strong interlinkages of the different industrial
sectors, intensified exchanges of material, energy and services, can enhance environmental
sustainability and achieve economic benefits for all partners at the same time.371
The above options may be applicable to all industrial subsectors, to only a few or even to selected
industrial sites in Europe, which fulfil possible requirements of infrastructure and access to
specific resources. Industrial symbiosis is more meaningful for industrial sites that are closely
located to each other, in order to facilitate the exchanges of materials and resources. An effort to
identify the best potential sites in Europe was performed as part of the SPIRE EPOS project.372
All European industrial sites in the EPOS Sectors of cement, steel, refining and chemicals were
mapped to systematically assess the geographic dimension of industrial symbiosis, identifying
five hotspots (Figure 65).
370
COM(2018) 28 final
371
Trinomics (2018), Cooperation fostering industrial symbiosis: market potential, good practice and
policy actions,
https://publications.europa.eu/en/publication-detail/-/publication/174996c9-3947-11e8-b5fe-
01aa75ed71a1/language-en
372
https://www.spire2030.eu/epos
146
Figure 65: Hotspots in term of density of industrial sites in Europe
Source: EPOS SPIRE Project.
Material substitution
Finally, it must be kept in mind that the type of materials used in the economy will also affect the
capacity of the industry as a whole to decarbonise. It is likely that the consumption patterns will
move progressively towards materials that deliver equivalent services while being less energy
and carbon-intensive (or even sequestrating carbon, like biomass), be it in their processing and in
their use (for instance lighter products, requiring less energy to be transported). Beyond
innovative technical solutions in specific industrial sectors, material substitution373
is thus likely
to contribute also to the low-carbon society.
Such options are particularly relevant for the cement sector. New binders are developed to reach
reduced CO2 emissions, replacing limestone. There are even binders aiming to cure with CO2
instead of water, thus absorbing CO2.
356
Such solutions of low carbon cements, ranging from
-30% to -90% of carbon intensity, are targeting specific market segments and occasionally have
niche applications, but combined they can replace a significant portion of the reference cement
(Portland Cement).
4.5.2 The Industrial Transition
This section collects visions, present analyses and explains the challenges on how industry can
reduce its emissions. These are compared with the results of modelling performed for the
Commission, using two different models, PRIMES and FORECAST.374
As discussed in previous
373
Climate Analytics (2016), Manufacturing a low-carbon society: how can we reduce emissions from
cement and steel?
https://newclimate.org/wp-content/uploads/2017/10/memo_decarb_industry_final1.pdf
374
A detailed description of the models and the methodology followed can be found in section 7.2.
147
sections, PRIMES follows an energy system approach, capturing the interactions of industry with
the parallel developments in the other sectors, notably the energy sector. FORECAST follows a
sector specific bottom-up approach, examining in more detail the industry sector, but isolated
from the other sectors. For this reason, a complementary approach was followed concerning the
options examined, with PRIMES analysing more horizontal options while FORECAST focusing
on more extreme technology pathways.
There is an increasing amount of evidence indicating that continuation of current efforts and
policies in industry can achieve additional GHG emissions reduction by 2050, ranging between
55 to 65% compared to 1990.375
Nevertheless, such reductions, stemming mainly from current
trends (such as energy efficiency measures or structural change), foreseeable technological
developments, mega-trends such as digitalisation and automation, as well as existing measures
and policies, cannot deliver the desired levels of ambition.376 377
As it will not be possible to reduce industrial emissions by 80% to 95% with current commercial
technologies alone, innovative decarbonisation technologies should be developed and tested at a
large scale to demonstrate their reliability and affordability. Intense global competition and the
need for significant investments add to the challenge of decarbonising the industrial sector.
Although currently there does not exist a widely accepted pathway for achieving deep reductions
in industrial sector emissions, similar to the other sectors of the economy (power, transport,
buildings), solutions do seem to exist. This is because European companies have been
increasingly active in researching ways to decarbonise their activities378
and finding breakthrough
low-CO2 innovations379
. Given the long lead-time to develop new technologies and the
investment cycles of industry (20-30 years), it is likely that the deep emissions reduction
technologies that will be deployed by 2050 are already known today. Several recent projects and
examples are demonstrating how deep decarbonisation of processing industries can happen.380
Achieving the reductions required for a -80% level of ambition is translated to GHG emissions
reduction between 75 to 85% compared to 1990 for industry. This is found by many studies as
being feasible, even by using to a large extent existing technologies, but which need to be further
developed in order to be scaled and penetrate the market. Energy efficiency, increased use of
sustainable biomass and electrification (with electricity increasingly produced by carbon-free
sources), are technologically ready options to achieve this target.216 381 382
375
BCG & Prognos, (2018), Climate paths for Germany,
https://www.bcg.com/en-be/publications/2018/climate-paths-for-germany-english.aspx
https://bdi.eu/publikation/news/klimapfade-fuer-deutschland/ (full study in German)
376
ICF (2015), Study on Energy Efficiency and Energy Savings Potential in Industry and on Possible
Mechanisms,
https://ec.europa.eu/energy/sites/ener/files/documents/151201%20DG%20ENER%20Industrial%20EE
%20study%20-%20final%20report_clean_stc.pdf
377
McKinsey & Company(2018), Decarbonization of industrial sectors: the next frontier,
https://www.mckinsey.com/~/media/mckinsey/business%20functions/sustainability%20and%20resourc
e%20productivity/our%20insights/how%20industry%20can%20move%20toward%20a%20low%20car
bon%20future/decarbonization-of-industrial-sectors-the-next-frontier.a.
378
A number of industries have already voluntarily committed to further reducing their emissions, while
identifying sustainable and economically viable low carbon business cases. For example, see e.g. the
European Round Table of Industrialists (ERT), https://www.ert.eu/
379
VUB-IES (2018), Breaking Through. Industrial Low-CO2 Technologies in the Horizon,
https://www.ies.be/node/4695
380
A more detailed presentation of these projects can be found in section 7.6.
381
Deep Decarbonisation Pathways Project (2015), Pathways to Deep Decarbonisation,
http://deepdecarbonization.org
148
Other pathways often considered but not yet widely deployed, relate to hydrogen (both as a
feedstock and an energy carrier), clean gas, CCS and CCU and circular economy measures
(Figure 66).376 383
Such pathways are considered feasible – and even preferable for specific
industrial applications. The use of hydrogen in steel making is an example of such pathways. On
the other hand, alternative technology pathways require higher investments in infrastructure (not
necessarily just in industry), possible changes in existing industrial value chains and
technological breakthroughs.
Figure 66: Menu of options to decarbonise industry
Source: McKinsey & Company.
Further increasing the level of ambition to be consistent with net zero GHG emissions, GHG
emissions reductions in industry need to approach 90-95%, making necessary the availability of
all pathways and technologies mentioned above.384 385
But this will likely be not sufficient, in
particular to tackle the GHG emissions from the harder to decarbonise subsectors (e.g. sectors
with a high share of process emissions). Most importantly, it is widely accepted that for the
higher levels of ambition. CCS and CCU will be necessary to compensate the emissions for the
harder to abate sectors, especially in cement and chemicals.386 387
382
Öko-Institut (2018), The Vision Scenario for the European Union, 2017 Update for the EU, Project
sponsored by Greens/EFA Group in the European Parliament,
https://www.greens-efa.eu/en/article/document/the-vision-scenario-for-the-european-union-7659/
383
Shell (2018), Sky scenario, Meeting the goals of the Paris Agreement - an overview,
https://www.shell.com/energy-and-innovation/the-energy-future/scenarios/shell-scenario-sky.html
384
ECOFYS (2018), Energy Transition within 1.5°C,
https://www.ecofys.com/files/files/ecofys-a-navigant-company-2018-energy-transition-within-1.5c.pdf
385
Climact (2018), Net Zero By 2050: From Whether to How,
https://europeanclimate.org/wp-content/uploads/2018/09/NZ2050-from-whether-to-how.pdf
386
CCS can also play an important role during the transition, as it would reduce the emissions of fossil
fuels. Although the ambition may be to switch from fossil fuels to low carbon energy carriers, changing
the energy source of industrial processes cannot take place overnight. It will require first (or at best in
parallel) a decarbonisation of these energy carriers and then the investment and deployment of such
149
Figure 67: Low carbon technologies used for each material in industry
Source: ECOFYS.
Sector or even process specific solutions need to be applied to the more carbon intensive sectors
and processes (Figure 67). Moreover the emissions reduction of the industry sector rely on the
successful decarbonisation of the power and gas sectors.376
Fuel-switching to electricity, both for
industrial heat and processes, is meaningful only when electricity is produced from low carbon
sources, implying the need of large investments in wind and solar power plants. Gas consumption
may be reducing, but it is expected to retain an important share in the fuel mix of industry given
the limited potential for electrification of high temperature processes. Therefore lowering the
carbon intensity of gas used in industrial processes is critical. This can be achieved by changing
the composition of gas in distribution grid and shifting from mostly natural gas to a blend of
natural gas, hydrogen, biogas and e-gas.231
Such changes would require further technology
developments, as well as significant investments in energy infrastructure.
The above observations from a wide range of studies and reports are consistent with the
conclusions from own modelling runs, using PRIMES and FORECAST, despite the differences
in the methodologies used. It is important to underline at this point that the scenarios ran for the
two models are not directly comparable, as two different approaches were followed in order to
get complementing results. PRIMES scenarios achieving 80% GHG reduction are more balanced,
sharing many common assumptions and developments, but promoting more a specific pathway in
each case for the additional effort needed compared to the Baseline to meet the respective
ambition. FORECAST scenarios are more "extreme", fully exploiting one technology pathway at
a time, in order achieve about 80% reductions in industry in 2050, with the exception of one
scenario combining in a cost-efficient way all solutions to achieve the same target. The COMBO
scenario of PRIMES also combines the pathways, achieving though higher reductions than 80%.
Both the 1.5°C scenarios of PRIMES and the one of FORECAST achieve 95% GHG emissions
reduction or above. Detailed descriptions of all scenarios can be found in Annex7.2.2.
Total final energy consumption of industry388
in PRIMES is projected to decrease between 2015
and 2050 across all scenarios, despite the projected increase in industrial output overall (Figure
68). The highest reductions (between 22-31%) are observed in the scenarios with increased
energy efficiency and / or circular economy. The latter happens because the circular economy
scenarios assume reduced output in certain subsectors and increased secondary production of
materials (which is less energy intensive than primary). The lowest reductions in final energy
infrastructure. Given the inertia associated with these transformations and the large scale of investments
required in industry, such changes cannot be expected to be observed much earlier than 2040-45.
387
Energy Transitions Commission (2017), Better Energy, Greater Prosperity,
http://www.energy-transitions.org/better-energy-greater-prosperity
388
In the context of PRIMES, the industry sector includes all subsectors except refineries, in line with
Eurostat energy balances definitions. Information specifically about refineries can be found in section
7.6.6.
150
consumption are observed in the high electrification scenario (at 11%). This is because the focus
of this scenario is the electrification of industrial heat and certain processes, which is less
efficient than thermal processes in high-temperature applications; at the same time electrification
reduces the potential of energy savings through heat recovery. Electricity is more efficient than
thermal processes in low enthalpy heat uses, but the amount of energy demand in these uses is a
fraction of total energy demand of high-temperature uses (see Figure 64).
Energy consumption is actually the same in the ELEC scenario as in the Baseline. The largest
part of energy efficiency improvements for the scenarios without circular measures take place
between 2020 and 2030 (around 10% compared to 2015 for all scenarios). This is mainly due to
increased waste heat recovery applications, which are cost-efficient and lead to a quick
improvement in energy consumption. However, the rate of energy efficiency improvements
decreases after 2030, as available options shrink, with a jump in 2050 as more expensive
decarbonisation options become economic.
Figure 68: Total final energy consumption in industry by scenario compared to 2015
Source: PRIMES.
There are significant changes across scenarios in the fuel mix used in industry both for heating
and for chemical processes other than combustion. In the PRIMES Baseline, natural gas is the
only fossil fuel remaining in the industry final energy fuel mix with a significant share of around
24.5% (61 Mtoe). Solids and other fossil fuels account for an additional 9% (23 Mtoe). About
half of the final energy demand comes from electricity and heat. Total final energy demand is
253.5 Mtoe.
In the scenarios achieving 80% GHG reduction, the share of fossil fuels is approximately halved.
As can be seen in Figure 69, depending on the scenario, the reduced amount of fossil fuels is
replaced by electricity (in ELEC), hydrogen (in H2), clean gas and biomass (in P2X) or reduction
of demand and some electricity or biomass (in EE and CIRC). Biomass and steam broadly retain
their increased levels in the Baseline, between 45-50 Mtoe in the scenarios achieving 80% GHG
reductions and 35 Mtoe for the net zero GHG emissions ones, compared to 26 Mtoe in 2015, with
-11% -11%
-12%
-13%
-25%
-22%
-19%
-22%
-31%
-40%
-30%
-20%
-10%
0%
Baseline ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
Differencecomparedto2015(in%)
151
some differences appearing depending on the pathway followed (less steam in EE and more
biomass in P2X and CIRC)389
.
Figure 69: Differences in final energy consumption in industry compared to Baseline in
2050
Source: PRIMES.
Similar to what is found in other studies, for levels of emissions reduction consistent with net
zero GHG emissions, PRIMES projects a significant stepping up of the effort. Addressing this
challenge does not seem to require radical solutions, completely changing current way of
manufacturing and doing business (though changes will be required to a certain degree).
However, higher levels of ambitions will require deployment of all the options described above,
including the ones that need to be further developed, and at different scales. In the net zero GHG
emissions scenarios, electrification is not the critical energy carrier for further reducing emissions
in industry below 80%. Similar to studies referenced above, PRIMES identifies clean gas-based
solutions (using hydrogen and e-gas) as preferable for meeting the higher ambition. These
solutions are combined with significant investments in CCS to capture process emissions, energy
efficiency and circular economy.
Concerning emissions captured and stored from industrial processes, around 60 MtCO2 are
captured in most of the scenarios achieving 80% GHG reductions (excluding CIRC) and
389
In addition to the standard scenarios, a low biomass variant of the 1.5LIFE scenario has been introduced
(1.5LIFE-LB) to better analyse the role of biomass in the EU economy and its impact on land resources
and natural carbon sinks. Its results are discussed in Section 4.7.2. In the case of industry, biomass
consumption in 2050 drops to 11 Mtoe, replaced mainly by hydrogen, but also electricity. This shows
that despite the results of the standard scenarios projecting high levels of biomass consumption, there
are economic alternatives to biomass; the choice of fuel will depend on the availability and relative
prices of these energy carriers.
-100
-60
-20
20
60
100
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE
DifferencecomparedtoBaselinein2050(inMtoe)
Egas Hydrogen Electricity
Biomass Reduced Demand Natural Gas (incl. coal gas)
Steam Solids Fossil Based Liquids
Other (solar, geothernal)
152
COMBO (see Table 8). In these scenarios, CCS installations appear in 2045 capturing 30 MtCO2,
while post-2050 the amount of CO2 captured increase to 135 Mt. In CIRC, due to reduced
industrial output of carbon intensive industries, only 44 MtCO2 are captured in 2050, following
similar increasing trends with the other scenarios. For the 1.5°C scenarios, the higher carbon
prices allow the appearance of CCS from 2040, with 54 / 58 MtCO2 captured (for 1.5LIFE /
1.5TECH respectively), increasing to 71 /80 MtCO2 in 2050 and further to 112 / 128 MtCO2
post-2050. In these two scenarios, storage of CO2 in materials (plastics) also makes a presence,
with 47 / 80 MtCO2 stored in materials in 2050.
The projections find the industry reducing total GHG emissions (including process emissions)
from 72% in ELEC up to 77% in the CIRC scenarios between 2015 to 2050, compared to only
44% in the Baseline. The rate of reductions though differs over the period 2030-2050 across
scenarios, depending when the driver for emissions reduction is either introduced in large scale or
exhausts most of its potential. Therefore ELEC, EE and CIRC reduce quickly emissions up to
2040, but then this trend slows down considerably for ELEC and EE (CIRC retains it). On the
other hand H2 and P2X increase the pace of emissions reduction post 2040. COMBO achieves
79% reductions, while the 1.5°C scenarios around 95-98% GHG emissions reduction, all
following a rather stable reducing trend over the 2030-2050 period.
While energy intensity is similar in the Baseline and in scenarios achieving 80% GHG reduction,
carbon intensity is significantly lower in all decarbonisation scenarios. Figure 70 presents carbon
intensity in industry for the different scenarios.
Figure 70: Carbon intensity in industry
Source: PRIMES.
Complementary to PRIMES, FORECAST was used to assess in a more detailed level more
extreme pathways.390
Four pathways were examined which focus in the deployment of single
technology options: CCS, clean gas (CleanGas), bio-economy and circular economy (BioCycle)
and electrification (Electric). These four pathways were then combined into two balanced
pathways, one aiming to meet the 2°C ambition (Mix80) and one the 1.5°C ambition (Mix95).
390
ICF & Fraunhofer ISI (2018), Industrial Innovation: Pathways to deep decarbonisation of Industry. Part
2: Scenario analysis and pathways to deep decarbonisation, forthcoming
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Carbonintensity(tCO2/toe)
Baseline
ELEC
H2
P2X
EE
CIRC
COMBO
1.5TECH
1.5LIFE
153
All scenarios have as a starting point today's best available energy efficiency techniques, as well
as a certain level of recycling, material efficiency and substitution. Their key results, presented
below, are coherent with PRIMES, providing also some additional insights on the extent these
pathways can be used to meet the different levels of ambition391
.
In 2050, GHG emissions in industry392
for the CCS scenario are 79% below 2015 (87% compared
to 1990), with 294 MtCO2 captured per year, mainly from the cement and lime production, the
chemical and the iron and steel industry, reducing significantly process related emissions. Driven
by energy efficiency, demand falls by 16% in 2050 compared to 2015.
The Clean gas scenario results indicate a 72% decrease of GHG emissions by 2050 compared to
2015 (82% compared to 1990), with the remaining emissions largely coming from processes that
need to be dealt via other means.
In the BioCycle scenario biomass consumption both for energy uses and as a feedstock
quadruples between 2015 - 2050, which would make it the dominant energy carrier. At the same
time, circular economy practices reduce demand for carbon intensive products and shift part of
the primary production to secondary, due to increased availability of recycled materials. The
combination of circular and energy efficiency measures lead to a decrease of final energy demand
by 27% in 2050 compared to 2015. The above lead to 68% GHG reductions in 2050 compared to
2015 (80% compared to 1990), with additional mitigation potential remaining in reducing the
remaining fossil fuel consumption in industry.
In the Electric scenario, electricity consumption increases from 1,040 TWh in 2015 to 1,718
TWh in 2050, with industry using to a significant extent high temperature heat pumps where
applicable, as well as electric steam boilers. The demand for hydrogen (feedstock and energy use)
produced via electrolysis adds another 693 TWh, resulting in a total demand of 2412 TWh in
2050. Results show a shift towards electricity accelerating post-2030, when many of the
technologies become available at industrial scale, with emissions dropping by 66% in 2050
compared to 2015 (79% compared to 1990). The remaining emissions are mainly process related,
as well as from some natural gas still consumed in 2050.
The combination of the above solutions in Mix80 result to 71% GHG emissions reduction in
2050 compared to 2015 (82% compared to 1990), driven mainly by electrification which
becomes the major energy carrier with demand doubling between 2015 and 2050 (to 2,162 TWh),
including 632 TWh for hydrogen production. The combination of increased recycling, energy and
material efficiency improvements reduce final energy demand by 25%, while H2 takes an
important role as a feedstock. Similar to the electrification scenario, remaining emissions are
related to the gas used and the process related emissions.
Finally, Mix95, building on Mix80, achieves GHG emissions reduction of 92% compared to
2015 (or equivalently 95% compared to 1990). Electricity consumption reaches 2946 TWh, of
which 1539 TWh are directly used and 1407 TWh are needed for the production of hydrogen and
synthetic methane via electrolysis.
Figure 71 below gives an overview of the remaining industrial emissions in 2050 based on the
scenarios of the FORECAST model. The GHG emissions, mainly coming from process related
emissions and fossil fuels, are observed to decline steadily during the projection horizon in all
391
All policy scenarios run with FORECAST can be considered 2°C scenarios except for one, which is
closer to the 1.5°C ambition (scenario Mix95).
392
Please note that contrary to PRIMES, the definition of industry in FORECAST includes refineries,
Therefore care should be given when interpreting and comparing the results of the two models,
especially when also considering the differences in the assumptions and scenario definitions.
154
scenarios, with all emission sources contributing to these reduction. However, the relative
importance of process related emissions is increasing towards 2050, while other emission sources
like coal, other fossils or natural gas are decreasing. In all decarbonisation scenarios, small
amounts of fossil fuels are still used in 2050. Reasons are long capital lifetime, inertia in the
technology stock replacement and remaining niches.
Figure 71: Total remaining industrial GHG emissions by scenario and energy carrier in
EU28
Source: FORECAST.
Even in the most ambitious scenario Mix95, with emissions reduction of 95% compared to 1990,
the process emissions continue to resist (Figure 72). The remaining mitigation potentials to be
exploited are limited. From the 62 MtCO2 of remaining process emissions, about half come from
smaller sources of emissions, which become important while approaching the goal of GHG
neutrality. These include primary aluminium (3.1 Mt), primary zinc (4 Mt), ceramics (7 Mt),
bricks (3.4 Mt) and other. CCS will most likely not be an option for all these distributed sources
and thus some limited emissions are projected to remain.
The menu of options for dealing with the remaining emissions mainly includes the replacement
of left over fossil fuels in all subsectors, diffusion of low-carbon production technologies towards
100% market share in steel, cement and chemicals, use of biomass in combination with CCS and
enhancement the circular economy and material efficiency measures, particularly in the
construction and plastics industries.
-400
-200
0
200
400
600
800
2015 CCS CleanGas BioCycle Electric Mix80 Mix95
TotalindustrialGHGemissionsinEU28
(inMtCO2-eq)
Process emissions Coal Fuel oil
Natural gas Other fossil Waste non-RES
Captured emissions Total net
155
Figure 72: Remaining (gross) process emissions by sector and process in 2050 before
possible CO2 capture
Source: FORECAST.
A highly debated topic in the various industrial roadmaps and studies is the level of electricity
demand required to the decarbonisation of industry and whether the power sector can actually
provide such quantities of electricity in an economic and reliable way. The Institute of European
Studies (IES) aggregated the low- CO2 pathways and technology studies by industries and other
sources to get an estimate of the potential future electricity demand from 2,980 to 4,430 TWh for
EIIs alone, including e-fuels production in refineries (for consumption also in other sectors).353
Eurelectric in a recent study estimated different levels of ambition, finding that in a 95%
emissions reduction scenario, industrial demand would approach 3,000 TWh,393
turning industry
to the largest final electricity consumer in the EU.
Results from modelling done for this assessment are in line with the Eurelectric study and the
estimates of IES. FORECAST, looking into more extreme scenarios for industry (including
refineries), and considering also hydrogen used as feedstock for chemicals, but without producing
hydrogen or e-fuels for other sectors, sees electricity demand increase to maximum levels close
to 3000 TWh (see Figure 73 below).
The scenario with the highest electricity demand in industry in PRIMES is 1.5TECH. Electricity
demand for industrial sectors (including refineries), as well as for the production of hydrogen and
e-fuels consumed by all sectors, reach 4808 TWh, of which 1344 TWh is final electricity demand
in industry, not related to hydrogen or e-fuel production.
393
Eurelectric (2018), Decarbonisation pathways, https://cdn.eurelectric.org/media/3172/decarbonisation-
pathways-electrificatino-part-study-results-h-AD171CCC.pdf.
-
20
40
60
80
100
120
140
3aCCS
3bCleanGas
3cBioCycle
3dElectric
4aMix80
4bMix95
3aCCS
3bCleanGas
3cBioCycle
3dElectric
4aMix80
4bMix95
3aCCS
3bCleanGas
3cBioCycle
3dElectric
4aMix80
4bMix95
3aCCS
3bCleanGas
3cBioCycle
3dElectric
4aMix80
4bMix95
Chemical industry Iron and steel Non-ferrous metals Non-metallic mineral products
Process-relatedemissions[MtCO2-equ] Zinc, primary
Tiles, plates, refractories
Technical, other ceramics
Soda ash
Sinter
Poly ethylene
Other glass
Nitric acid
Low-carbon cement - 50%
Lime burning
Less-carbon cement - 30%
Houseware, sanitary ware
Flat glass
Fiber glass
Electric arc furnace
Container glass
Carbon black
Calcium carbide
Bricks
Blast furnace and converter
Ammonia
Aluminum, primary
156
Figure 73: Industrial electricity demand in final energy in 2050, including production of
feedstocks, clean gas and hydrogen
Source: FORECAST.
Concluding, both literature review and the quantitative analysis performed using two different
models indicate that technology deployment can be envisaged for the industrial sector to
successfully contribute to the Paris agreement objective. It will require combining best available
techniques in energy efficiency and fuel-switching with additional options like innovative lowcarbon
production technologies, circular economy and material efficiency, process integration394
,
low carbon energy carriers and / or CCS and CCU. It also requires the full decarbonisation of the
power sector, as well as the substitution of any remaining natural gas by zero carbon gases to the
largest degree possible.
An approach focusing on one technological pathway, similar to the more extreme scenarios
examined using the FORECAST model, would lead to economies of scale, thus reducing the
costs of the respective pathway. On the other hand, such an approach has significant risks of
lock-ins and exhausting the potentials of the chosen pathway, not being possible to further reduce
emissions post-2050.
Combining several of the additional mitigation options, as in the PRIMES COMBO and the
FORECAST Mix80 scenarios, reduces the risk of lock-ins and is still on track for deeper
decarbonisation beyond 2050. The difficulty that lies in this option is how much to diversify, so
the investments made over the selected pathways are still able to achieve economies of sufficient
scale.
Nevertheless, the highest ambition level can only be achieved if all mitigation options are
exploited, including CCS and CCU for selected process emissions, clean gas in the gas grid,
circular economy and material efficiency measures. In this case the solutions become more subsector
specific and less horizontal for the whole industry, across sub-sectors. This has interesting
implications per industrial sector, further analysed in Section 7.6 for the main individual energy
intensive ones.
394
By integrating intermediate production steps combined with recycling or better internal use of generated
process gases.
0
500
1,000
1,500
2,000
2,500
3,000
3,500Energydemand[TWh]
Electricity final energy
Electricity for hydrogen
Electricity for clean gas
Electricity for hydrogen
feedstock
157
4.5.3 Transition Enablers, Opportunities and Challenges
Europe has a strong industrial base and is a global leader in many industries, especially in high
value-added product and services. It is imperative that EU’s low-carbon economy transition does
not hamper but further strengthen industry.
EU industry has the opportunity to become the leader in this transition, changing to more
sustainable and resource-efficient business models, products and services that could then become
the paradigm for other countries and regions. At the same, this would provide a competitive
advantage, creating important cost savings and spurring innovation. Europe would then be able to
export not only sustainable products, but also sustainable technology and business models to
exploit the huge potential of the global market for low-emission solutions.
On the other hand, a number of challenges exist.353
Existing literature makes clear that the
required reductions of emissions in industry are closely linked with the need to further develop
promising low carbon technologies, currently at an early stage of research, as the deployed Best
Available Techniques (BAT) can deliver limited emissions reduction. Such innovations should
ideally become commercialised by 2030, to allow for timely scaling and deployment across the
EU by 2050.379
Thus, more research and innovation is needed, i.e. inert anodes for the aluminium
industry or direct reduced iron for the iron & steel industry. The Innovation Fund under the EUETS,
working in synergy with EUInvest Fund and Horizon Europe, is intended to become
important enabling tools in this direction, supporting industrial innovation from research to
commercialisation and thus speeding up the penetration of the new technologies.395
Similarly, decarbonisation policies cannot be implemented and innovative solutions cannot be
deployed without an extensive network of adequate infrastructure. As a minimum, there should
be sufficient infrastructure about to fully support the major trends framing the energy landscape
of tomorrow: electrification (including storage), use of alternative zero-carbon fuels and
alternative industrial feedstocks, decentralisation/distribution, digitalisation, extreme efficiency
through new materials, technologies and services, and the related new market design.
In this context, the important role of demand side actions should be carefully considered, not only
in the context of unlocking the potentials for material efficiency and circularity, but also for
designing markets that generate demand for innovative low-carbon basic material products. This
will allow companies to make large-scale investments in production plants, particularly in firstof-a-kind
and subsequent plants.
The speed of penetration of technologies and building of infrastructure is critical. Modular
technologies such as photovoltaics and wind power have been very successful in large-scale
penetration of the electricity markets. The penetration of industrial decarbonisation technologies
will not be that straightforward, as apart from international competition concerns that slow the
development of innovative environmental technologies, many industrial plants are large, tailormade,
often part of complex industrial systems and thus difficult to change while the innovative
technologies themselves often are rarely suited for retrofitting. They also depend on the
availability of the infrastructure as described above or reliable supply of alternative fuels and
feedstocks, which is not in the hands of individual enterprises. Therefore, a “chicken and egg”
situation is likely to arise. Concerted action would be needed at regional level for creating these
new business networks along the technological development. Such action will also need to
395
More broadly, in line with the Paris Agreement and the commitment to the United Nations Sustainable
Development Goals, the Commission proposed to set a more ambitious goal for climate mainstreaming
across all EU programmes, with a target of 25% of EU expenditure contributing to climate objectives.
https://ec.europa.eu/commission/sites/beta-political/files/communication-modern-budget-
may_2018_en.pdf
158
account for the significant regional differences in Europe in term of the existing industries, the
product portfolio and the shares of the various subsectors. To facilitate concerted action
roadmaps should be developed for industrial decarbonisation on local and regional levels.377
The considerable investments required to support the industrial transition poses another risk if not
planned carefully. Furthermore, stranded assets can be created when a major discontinuity in the
economic environment in which they operate takes place. The transition to a low-carbon
economy can be exactly such a major discontinuity. For existing infrastructure and assets, effort
must be made to identify innovative solutions for using them - or part of them - in the long-term
low-carbon economy. The challenge for industrial sites to retrofit and convert many of their
existing installations is that it will require significant and costly changes to the design of the plant
or a process (e.g. its furnace to accommodate switching to alternative fuels). Conversely, it can
also be seen as an opportunity that is rising from the timely replacement of ageing infrastructure
and assets with modern, highly efficient and carefully designed ones, which are compatible with
the decarbonisation targets will be an increasingly attractive one.
The above observations point to a need for a policy framework that can facilitate these
investments, support innovation and incentivise all the necessary changes, without jeopardising
the global competitiveness of the European industries (see Section 5.3). Considering the
longevity and capital intensiveness of industry’s investments and thus the inertia in replacing
industrial plants, the timing of such policy actions as well as concerted industrial action becomes
more important when ambition increases. Industrial investments made in the next 10 years will
most likely be in place in 2050, thus it is important to ensure that proper incentives are given for
low carbon investments starting as early as today.
4.6 Non-CO2 emitting sectors
4.6.1 Increasing importance of non-CO2 GHGs
Approximately 18% of the GHGs emitted in the European Union in 2015 were non-CO2 gases.
Historically, non-CO2 gases have reduced faster than CO2, linked for instance to the Member
States that joined the EU after substantial reforms in the agricultural sector, and the inclusion of
industrial installations with relatively easy to reduce N2O emissions in the ETS as well as the
development of EU waste policies. While further reduction is projected to continue in the future
up to 2030 in Baseline, at least stagnation is expected after that (see section 3.4). Non-CO2
emissions, notably in agriculture, will be more difficult to reduce towards zero emissions than
CO2.
In Baseline, the share of non-CO2 gases could increase to over 25% by 2050, and up to 31%-34%
in scenarios achieving 80% GHG reduction by 2050. Scenarios with net zero GHG reached in
2050 see non-CO2 emissions as the only residual GHG emissions fully offset by net negative CO2
emissions. Non-CO2 GHGs are projected therefore to become the main source of emissions on
the pathway towards net zero emissions and need to be addressed specifically.
Table 2 summarizes the contribution of the different non-CO2 GHGs per sector and major source
of emission in 2015. Methane (CH4) and Nitrous Oxide (N2O) are the two main gases,
responsible for respectively 55% and 32% of the non-CO2 emissions396
of the European Union in
2015. The remaining 13% emissions are comprised of various fluorinated gases belonging to
396
Based on a GWP 100 metric, IPCC (2007), Fourth Assessment Report,
https://www.ipcc.ch/publications_and_data/publications_ipcc_fourth_assessment_report_synthesis_rep
ort.htm
159
hydrofluorocarbon (HFC) group, sulphur hexafluoride (SF6), nitrogen trifluoride (NF3) and the
group of perfluorocarbons (PFC).These gases have various properties and characteristics, leading
to different times of residence in the atmosphere and potentials in term of climate warming.
Annex 7.5 elaborates on these aspects and addresses in particular the specificity of methane and
other short-lived climate pollutants (SLCP).
Table 2: Major sources of non-CO2 greenhouse gases in the EU in 2005
Source: GAINS.
4.6.2 Reducing non-CO2 GHG emissions in Agriculture
4.6.2.1 Options to reduce emissions in Agriculture
Non-CO2 emissions for agriculture have declined since 1990. But with currently available and
foreseen technology and management practices, agriculture emissions cannot be fully eliminated,
due to the biological processes involved and growing demand for food, feed, fibres and public
goods.
Given the more restricted mitigation potential of agriculture and the multiple demands including
food security, this sector is expected to make up most of the remaining sources of EU GHG
emissions after 2050 in case of deep decarbonisation. Yet, there is a need in reducing
agriculture's GHG emissions as much as possible to avoid having to recourse heavily on
offsetting through negative emissions technologies or sink in the LULUCF sector. Mitigation
action has also to avoid that agriculture production will be moved to countries with lower climate
ambition, leading to carbon leakage.
The GHG emission profile of the agriculture sector reported under UNFCCC (which excludes
energy consumption related emissions) is very specific, with only 2% of emissions derived from
carbon dioxide (from liming of acid soils and urea applications), whereas 55% of emissions being
methane (CH4, from enteric fermentation and manure management) and 43% nitrous oxide (N2O,
Sector Major sources CH4 N2O HFCs PFCs SF6 NF3
Contribution to
current EU28
non-CO2 emissions
Energy Energy use (power, industry, residential) x x 3.9%
Transport x x 1.3%
Coal mining x 2.9%
Oil and gas production x 1.5%
Natural gas transmission & distrib. x 2.5%
Industry Nitric & adipic acid, caprolactam prod. x 1.4%
Primary aluminium production x 0.1%
Semiconductor industry x x 0.1%
Agriculture Livestock: enteric fermentation x 21.7%
Livestock: manure handling x x 8.7%
Agricultural soils x 22.3%
Rice cultivation x 0.3%
Agricultural waste burning x 0.3%
Waste Solid waste x x 14.0%
Wastewater x x 4.2%
Other AC & refrigeration x 11.3%
High and mid voltage switches x 0.3%
Aerosols x 0.9%
Foams x 0.7%
Other F-gas uses x x 1.4%
Other N2O uses x 0.9%
160
from fertilizer application on soils and manure management). Agricultural activities may also
emit (or sequester) CO2 from soil and biomass, but these emissions are reported separately in the
land use, land use change and forestry (LULUCF) sector397
of the UNFCCC inventories.
The EU's emissions from agricultural activities amount to 430 MtCO2eq in 2016, about 10% of
EU GHG total emissions. These emissions have reduced by over 20% since 1990, mainly through
the reduction in livestock numbers and overall efficiency improvements in EU agriculture such as
the more efficient use of inorganic fertilizers.
Broadly speaking, two strategies can be envisaged to contribute to reducing agricultural non-CO2
GHG emissions from a supply side perspective:
a) Increase productivity. To meet growing and changing food demand without encouraging
land conversion to agriculture will require productivity increases – the amount produced
per animal or unit of land – on current agricultural land to be increased sustainably. By
using less land, fewer animals and fewer fossil-based inputs (such as fertilizer and fuel)
to produce the same crop, dairy and meat production, the GHG efficiency of the
agricultural system is improved and overall emissions reduced;
b) Adopt innovative technology and practices that aim to reduce GHG emissions. Non- CO2
emissions can be reduced through the application of a number of technical options and
selection of management practices that favour climate outcomes. The main source of
emissions that could be targeted this way are enteric fermentation, management of
agricultural soils and manure management. All together, these sources comprise more
than the 95% of the total non- CO2 GHG emission in agriculture;
Actions aiming at sequestering carbon in agricultural soils and forest biomass and thus increase
the EU LULUCF sink or store carbon in goods limit soil erosion and increases sustainability.
These actions are complementary to non- CO2 measures and discussed in section 4.7. Adaptation
actions that ensure that ecosystems continue to act as sinks are also of importance. See also
section 5.7 that discusses among others also interactions between mitigation and adaptation
actions. The approaches can provide substantial synergies that create virtuous drivers; for
example, sequestering soil carbon improves soil fertility, increases productivity, and is also
associated with innovative management practice that reduces soil erosion and increases
sustainability. However, if an ecosystem currently acts as a sink, its possible lack of adaptation to
the future climate combined with other drivers may decrease its mitigation potential and turn it
into a carbon source. Adaptation benefits are likely to emerge from many such actions and
mitigation practices, too.
As such, “win–win” or "no-regret" strategies should be prioritised to the greatest extent possible.
Mitigation measures that also improve food security, profitability and resilience, would be more
favourable than those that have no economic or agronomic benefit, or that could hinder the
application of long-term adaptation actions. For example, even a modest increase in the soil
carbon pool can provide a significant contribution to improving soil fertility, water retention and
agricultural productivity, which in turn fosters the availability of land for other societal needs.
Consumer preferences also impact agriculture production and associated emissions. Shifts in
demand in terms of types of food consumed may lead to shifts in types of agricultural production
in the EU. This would have impacts on methane and nitrous oxide emissions from animal
397
The land use, land use change and forestry (LULUCF) sector covers the emissions of biogenic and
removals of atmospheric carbon through land use activities related to forest, cropland, grassland and
wetland management, or resulting from land use change between these managed lands.
161
farming. Similarly, a reduction in the generation of food waste in households and commercial
establishments would reduce GHG emissions.
4.6.2.2 Mitigation Actions
Mitigating emissions related to production in the agriculture sector is recognised as challenging,
but a number of options exist already today and are well known. In aggregate they all show
significant total reduction potential. However, large differences remain between studies in the
potential for GHG emissions reduction of individual measures. This is illustrated in a study
published by RICARDO-AEA398
in 2016 that presents a meta-review of the main mitigation
measures applicable in EU with the range of GHG emissions reduction potential reported by
various stakeholders at Member State levels. The following are the main mitigation options
currently available:
Action to reduce emissions in the livestock sector
Enteric fermentation
Methane emissions from livestock derive from enteric fermentation during the digestive process
in the stomachs of ruminants. Different selective breeding programmes (i.e. the selection of
animals with beneficial traits) with multiple objectives and selection have been shown to
effectively reduce enteric methane emissions per unit of production from livestock. Two distinct
strategies exist. The first approach aims to enhance the herd's overall health and fertility, while
maintaining or increasing productivity, reducing the number of animals needed in the stock. The
second strategy focuses on reducing methane emissions per animal, either by selecting to enhance
the feed efficiency of the animals, or by selecting animals with low emitting rumen.
Other options exist or are under development for improving feed management, thereby enhancing
the GHG efficiency of animal diets, for instance by enriching feed with lipids or adding limited
amounts of nitrates, both of which may reduce methane emissions from digestion. Due to already
high intake of nitrate in EU livestock, mitigation potentials from additional nitrate in animal diets
are likely limited. Feed management improvements also includes options such as pre-processing
of the feed to facilitate digestion, or precision feeding with close monitoring of the composition
and timing of feeding.
Anaerobic Digestion
Manure, if left untreated, will emit methane and nitrous oxide emissions as well as a number of
other air pollutants or GHG precursors such as ammonia. Instead, if the organic content of
livestock manure decomposes in the absence of oxygen in an anaerobic digester, it will
decompose into a gas mixture richer in methane. This so-called biogas can be captured. Where
produced on farm this can be used to generate electricity or heat or sold to local industry.
However, the way in which the biogas is produced – in particular the inputs to the digestion
process in the form of type of manure and eventual additional biogenic material such as crop
residues or food waste – can have significant impacts on the efficiency and cost of the process. A
by-product is “digestate”, a nutrient-rich substance that is usually used as fertiliser.
Other options exist to reduce manure emissions but do not produce usable energy: Storage
management, air filtering and circulation, composting, nitrification-denitrification treatment,
398
RICARDO-AEA (2016), Effective performance of tools for climate action policy – meta-review of
Common Agricultural Policy (CAP) mainstreaming (Ricardo-AEA/R/ED60006/Mitigation potential,
08/01/2016), report for European Commission – DG Climate Action.
162
acidification, solid separators and artificial wetlands all have shown potential to reduce
greenhouse gas emissions from manure.
Action to reduce nitrous oxide emissions from agriculture soil
Natural microbial processes in the soil convert ammonia into nitrate and further to molecular
nitrogen. While nitrogen is key to plant growth, both processes release nitrous oxide as a side
product. Consequently, fertilizer and manure application to soils are the most important sources
of nitrous oxide emissions in agriculture. Moreover, mineral fertilizer production is also GHG
intensive. Optimizing fertilizer application rates, avoiding excess application and reducing
fertilizer losses, therefore reduces GHG emissions both directly and indirectly as well as other
pollutants. It is also potentially beneficial from an economic perspective for the farmer.
Precision farming applied to nutrient management refers to a technology that optimises the
application of nutrients to plants, adapting fertiliser application precisely to the extent they need
it. It makes use of a number of technologies such as Variable Rate Technology (VRT), Remote
Sensing, Global Positioning Systems, and Geographical Information Systems (GIS), linked to
farm machinery that applies inputs more precisely. Nutrient management plans are essential tools
to provide baseline information on nutrient use by cropping systems.
Nitrification inhibitors refer to chemical additives that reduce the release of nitrous oxide when
mineral fertilizer or manure is applied. They slow down the conversion of ammonia into nitrate
and give crops a better opportunity to absorb nitrogen, which increases the nitrogen-use
efficiency of the fertiliser and reduces nitrous oxide emissions due to mineral fertilisers and
manure application.
Organic soils, with their larger amount of available carbon provides “feed” for micro-organisms,
including those responsible for the release of nitrous oxide. Fertiliser application on organic soils
therefore leads to higher nitrous oxide emissions than corresponding applications on mineral
soils. Moreover, the decomposition of the organic matter releases nitrogen which leads to N2O
emissions also independently of fertilizer input through the 'cultivation' itself. Since the overall
area of organic soils under cultivation is relatively small in the EU, fallowing organic soils is a
simple mitigation option to reduce nitrous oxide emissions related to fertiliser application, with
the additional benefit that it would reduce CO2 emissions related to tillage from these soils.
Furthermore, specific management practices can be implemented under different specific
conditions in order to minimize carbon mineralization.
Other mitigation options relate to stricter enforcement of the existing ban on open burning of
field residuals as well as improved management practices for rice cultivations, both reducing
methane emissions and associated air pollutants.
Figure 74 gives an overview of the main reduction options as represented in the GAINS model
with marginal reduction costs up to EUR 200 per ton of CO2 equivalent, representing in total
around 130 MtCO2eq mitigation potential in 2050.
According to GAINS modelling, mitigation options with highest potential by 2050 are precision
farming (low cost options such as variable rate technology), breeding for productive, healthy and
fertile livestock, as well as nitrification inhibitors399
. The estimated additional technical reduction
399
Note that in the GAINS model, the order of technology uptake when several different technologies can
be used to address emissions in a given sector, follows from the order of the estimated marginal cost of
each technology. Hence, the potential from technology with the lowest marginal cost is always fully
exhausted before assuming uptake of the technology with the second-lowest marginal cost. This
approach leads to a fair representation of the mitigation potential and marginal cost at the sector and
163
potential coming from farm scale anaerobic digesters are relatively small in GAINS, this is partly
because there is already a significant take-up of anaerobic digestion in the baseline projections.
Figure 74: Example of technologies and mitigation potential in the agriculture sector
Source: GAINS.
An ongoing study by JRC, EcAMPA III, making use of the CAPRI model estimated similar total
non-CO2 reduction potentials in the mid-term up to 2030 than the GAINS model. The most
significant reduction options in the EcAMPA study are also measures addressing enteric
fermentation, manure management and soil emissions.400
Of note is that many of these measures, such as simultaneously breeding for enhanced
productivity and healthier and more fertile animals, or precision farming, increase efficiency of
the agriculture sector. Increased efficiency may make the EU agriculture sector more
competitive, and thus may lead to rebound effects expanding EU agricultural production. The end
effect is however uncertain as there could also be net cost impacts of these measures, which if
borne by consumers through increases in consumer prices may increase competition with
imported goods, thereby decreasing EU agricultural production. Depending on the origin of these
imports, the overall carbon efficiency in terms of impacts on global greenhouse gas emissions
would need to be evaluated in detail.
4.6.2.3 Consumer preferences on food diet
European society has historically had a strong preference for red meat consumption. Statistics
from FAO nevertheless indicate that a plateau has been reached at the beginning of the 90s with a
country level, however, can overstate the potential from the technology with the lowest marginal cost at
the technology level.
400
Pérez Domínguez et al. (forthcoming): An economic assessment of GHG mitigation policy options for
EU agriculture (EcAMPA 3). JRC Technical Report.
0 5 10 15 20 25 30
Rice cultivation
ban waste burning
Histosols left fallow
Pigs
dairy cows and cattle
Sheep
non-dairy cattle
dairy cows
farmarea < 30 ha
farmarea 30 to 150 ha
farmarea > 150 ha
Other
Anaerobic
Digestion
Breeding&Feed
management
Reducing
fertilizers&
Nitrification
Inhibitors
< 100 €/t CO2eq < 200 €/t CO2eq
164
stabilization of the total meat consumption per capita in the EU28 since and a decrease in overall
animal products. Moreover, beef consumption in the EU declined by 31% which was offset by a
+37% increase in poultry consumption.
Figure 75: Historical EU meat consumption
Source: FAOstat database.
In the Baseline used for this assessment, the assumptions on the animal based calorific
consumption are the same as in the EU Reference Scenario 2016401
(which in turn is based on the
EU Agricultural outlook402
until 2030 and FAO projections403
for the longer term). A sensitivity
analysis has been carried out in order to understand the possible implications of differing trends
in consumer preferences by the EU population on greenhouse gas emissions in the next decades.
Five further scenarios were analysed with variation in the consumption of various meat, milk and
egg products that see a reduction of animal based calorific consumption in the EU. Diet 5 is
consistent with reaching in 2070 levels of meat consumption seen as in-line with recommended
diets in a number of studies (AgCLIM50 project of the JRC404
, Bajzelj et al. (2014)405
and
Bryngelsson et al. (2016)406
). These five scenarios also include a reduction by half in the
generation of food waste in all EU Member States. This respects the objective of the Sustainable
401
European Commission (2016), EU Reference Scenario 2016 - Energy, transport and GHG emissions Trends
to 2050
https://ec.europa.eu/energy/sites/ener/files/documents/ref2016_report_final-web.pdf
402
EU Agricultural outlook for the agricultural markets and income 2017-30 (2017)
https://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook_en
403
Alexandratos, N. & Bruinsma, J. World Agriculture Towards 2030/2050 The 2012 Revision. 160 (FAO,
Rome, 2012).
404
AgCLIM50 (2017) Challenges of Global Agriculture in a Climate Change Context by 2050.
http://publications.jrc.ec.europa.eu/repository/bitstream/JRC106835/jrc106835_agclim50_jrc_science_f
or_policy_report.pdf
405
Bajželj, B. et al. (2014), Importance of food-demand management for climate mitigation. Nature
Climate Change, 4, pp.924–929
406
Bryngelsson et al. (2016), How can the EU climate targets be met? A combined analysis of
technological and demand-side changes in food and agriculture, Food Policy, Volume 59, February
2016, Pages 152-164
0
20
40
60
80
100
1960 1970 1980 1990 2000 2010
kg/capita/year
Total Meat Pigmeat Poultry Meat Bovine Meat
165
Development Goals adopted by the United Nations Assembly in 2015 where a target was agreed
to halve per capita food waste generation at the retail and consumer levels until 2030407
.
Figure 76: Animal based calorific consumption for different diet assumptions
Source: FAO.
The results show that moderate changes in food consumption patterns will still include in each of
the diets the consumption of all types of food products, even though in smaller quantities for
some of them. These possible shifts could reduce significantly emissions from agriculture
production. The effect in 2050 ranges from 34 MtCO2eq with Diet 1 to 110 MtCO2eq with Diet 5
and represents approximately 8% to 25% of 2015 emissions from agriculture408
. In 2050 the
transition would only be partially implemented, at full implementation in 2070 emissions could
reduce by 13% in Diet 1 to 44% in Diet 5.
407
Transforming our world: the 2030 Agenda for Sustainable Development (2015).
http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/1&Lang=E
408
Assuming that the decrease in EU animal products consumption is entirely passed on EU production
levels and no increase in exports of animal products to the rest of the world takes place.
0
200
400
600
800
1,000
1,200
1990 2010 2030 2050
kcal/capita/day
Animal products (excl. fish)
FAOSTAT Diet 1
Diet 2 Diet 3
Diet 4 Diet 5
0
200
400
600
800
1,000
1,200
Faostat2013
Baseline
Diet1
Diet2
Diet3
Diet4
Diet5
kcal/capita/day
Eggs
Poultry meat
Pig meat
Milk
Sheep & goat
meat
Bovine meat
2050
166
Figure 77: Potential impacts on GHG emissions due to dietary changes
Source: GLOBIOM and GAINS.
The analysis conducted in this report does not model specifically a shift towards an increase in
the consumption of food products from seas, oceans and freshwater resources to substitute GHGintensive
food production processes and the potential associated benefits in terms geographic and
environmental footprint. There is probably little scope for increasing the volume of seafood from
capture fisheries but a possible way to increase the proportion of seafood in the human diet would
be to shift toward more sustainable aquaculture. Though an increasing proportion of feed for
aquaculture comes from crops, studies have shown that the land requirements to produce a given
amount of protein are less than other sources.409
Overall potential of GHG emissions reduction in agriculture sector
The respective effects of technical mitigation measures, consumer preferences and their
combination on levels of future emissions reduction are depicted in Figure 78.
In Baseline, with current policies in place, projected population stable and no changes in EU
diets, the EU’s agriculture emissions are projected to slightly decline until 2030 and then stabilize
just over 400 MtCO2eq in 2050. This represents just below 10% of total 1990 EU GHG
emissions and consequently a significant amount of negative emissions would be needed to reach
net zero GHG emissions in the EU if agriculture emissions would remain at that Baseline level.
Applying existing technical mitigation measures to the Baseline would reduce emissions by
around one third to below 300 MtCO2eq. Approximately 60% of this reduction would be
achieved via reduction in nitrous oxide emissions and 40% via reduction in methane emissions.
Modelling dietary change alone (Diet 4), continuing the recent observed shift in animal product
consumption, shows that demand-side action could reduce emissions compared to Baseline from
EU agriculture to approximately 340 MtCO2eq when export of animal products are free to
increase. The emissions reduces further to 310 MtCO2eq when the EU dietary change is fully
passed on EU production levels (by constraining animal products exports).
Combining both technical supply-side mitigation measures and a demand-side shift in diets,
could bring down non-CO2 GHG emissions from 430 MtCO2eq in 2015 to 230 MtCO2eq in 2050
409
D. Nijdam et al (2012) The price of protein: Review of land use and carbon footprints from life cycle
assessments of animal food products and their substitutes, Food Policy 37 (2012) 760–770
-120
-100
-80
-60
-40
-20
0
2 0 2 0 2 0 2 5 2 0 3 0 2 0 3 5 2 0 4 0 2 0 4 5 2 0 5 0
ChangeinGHGemissions(inMt
CO2eq)
Diet 1 Diet 2 Diet 3 Diet 4 Diet 5
167
(211 MtCO2eq with dietary changes fully passed on EU production) or the equivalent of just
below 5% of 1990 EU GHG emissions. Achieving this level of emissions would clearly reduce
pressure on the need for negative emissions to reach net zero GHG emissions.
Figure 78: Example of reduction potential in the agriculture
Source: GAINS.
Regarding the modelling done by the PRIMES-GAINS-GLOBIOM model set up, all the
scenarios achieving 80% GHG reduction or net zero GHG assume the uptake of technical
mitigation measures but only the 1.5LIFE scenario assumes, in addition, a change in consumer
preferences towards Diet 4.
Assumptions in yields improvement are the same in Baseline than in mitigation scenarios from a
technological perspective but partial reallocation of the production to the most suitable land has a
limited positive effect on average yields.410
In order to avoid that substantial indirect land use
effects affect the results of the analysis, the modelling assumptions include constraints to keep
the imports of agricultural commodities at Baseline level or lower and the exports at Baseline
level or higher. This prevents the risk of significant displacement of food and feed production
outside Europe and allows assessing the impact of producing energy crops domestically in the
context of global efforts to reduce GHG emissions.
4.6.3 Reducing non-CO2 GHG emissions in other sectors
The main sources of non-CO2 emissions from sectors other than agriculture are fugitive
emissions from the energy sector (e.g. coal mining, oil and gas production, gas distribution, fossil
410
The model assumes that possible farmland abandonment happens firstly on less productive land,
implying an increase in average yield. The fact that energy crops tend to have better yield on marginal
land than food and feed crops contributes also to the increase in average productivity.
Methane Nitrous Oxide
0
100
200
300
400
500
2010 2015 2020 2030 2040 2050
Reductionpotential(inMtCO2eq)
Baseline
0
100
200
300
400
500
2010 2015 2020 2030 2040 2050
Reductionpotential(inMtCO2eq)
Technical Mitigation
2010 2015 2020 2030 2040 2050
Consumer preference changes as in DIET4
2010 2015 2020 2030 2040 2050
Consumer preference changes + Technical Mitigation
168
fuel power plants), emissions related to waste (solid waste, wastewaters) and F-gases from air
conditioning, refrigeration and industry.
These emissions are projected to reduce by almost 60% in the baseline from approximately 490
MtCO2eq in 2005 to 205 MtCO2eq in 2050 (section 3.4). The implementation of strong GHG
reductions in the energy system through transitions away from fossil fuels result in strong
reductions of methane emissions from the energy system. This together with technological
developments could deliver additional reductions of almost 150 MtCO2eq. This means that
approximately 60 MtCO2eq of non-CO2 GHG would still be emitted by 2050 in sectors other than
agriculture, mainly methane and nitrous oxide emissions.
Figure 79: Reductions in non-CO2 emissions in sectors other than agriculture
Source: GAINS.
Largest methane reductions outside of the agriculture sector can be found in the waste sector.
Existing legislation would already see a halving of methane emissions by 2050 compared to
2005. But additional technical potential exists that could further reduce these emissions by more
than 50%.
Emissions in the energy sector are largely linked to emissions from fuel combustion, fugitive
emissions of the transmission and distribution system and emissions from fossil fuel extraction
activities. These emissions can be largely eliminated in a low carbon scenario with a combination
of decreased fuel consumption and increased application of technological mitigation options. The
single largest reduction in 80% GHG reduction and net zero GHG scenarios in the energy sector
is achieved with the halting of most coal mining activities, but this already occurs in Baseline
under existing policies. Similarly the halting of most oil extraction in the EU by 2050 results in
significant reductions of CH4 emissions. Additional significant reduction can also be achieved in
the gas network, in part through the reduction in consumption, but also thanks to strong progress
in monitoring, detection and maintenance preventing leaks.
169
Table 3: CH4 emissions (outside agriculture), mitigation potential by 2050 in different
scenarios.
CH4 (MtCO2eq)
2005
Baseline
2050
Remaining emissions
with technical
mitigation < 250 €/t
CO2eq
Sector Activity COMBO 1.5LIFE
Waste Total 192 68 25 22
Municipal solid waste 87 29 14 11
Industrial solid waste 33 18 7 7
Historical landfill of waste 51 0 0 0
Industrial wastewater 10 11 1 1
Domestic wastewater 12 10 3 3
Energy Total 92 30 21 7
Gas distribution 18 11 8 2
Gas transmission 6 5 3 0
Transport 4 3 3 0
Biomass combustion 6 2 2 2
Other combustion 3 2 2 2
Production of crude oil 15 3 0 0
Production of natural gas 3 3 1 1
Coal mining 36 1 1 0
Oil refinery 1 0 0 0
Total CH4 (non-agriculture) 284 97 46 29
Source: GAINS.
The energy sector produces small amounts of N2O emissions with fossil fuel combustion, when
nitrogen in the fuel and in the air get oxidised. These reduce with reductions of fossil fuel
consumption, though combustion of biofuels or e-fuels will also produce some by-products such
as N2O. In waste current policies would not stop N2O emissions, and these would potentially
increase, though technical solutions exist to reduce these emissions. Industrial sectors already
have cut almost all emissions since the inclusion of most of the installations under the EU ETS,
and some very limited remaining mitigation potential exists.
170
Table 4: N2O emissions (outside agriculture), mitigation potential by 2050 in different
scenarios.
N2O (MtCO2eq)
2005
Baseline
2050
Remaining emissions
with technical
mitigation < 250 €/t
CO2eq
Sector Activity COMBO 1.5LIFE
Energy Total 32 16 12 11
Energy use 21 9 9 9
Transport 11 7 3 2
Waste Total 17 23 7 7
Solid waste composting 2 7 0 0
Domestic wastewater 15 16 7 7
Industry Total 54 6 4 4
Adipic acid production 12 1 1 1
Caprolactam production 2 3 0 0
Nitric acid production 40 2 2 2
Other Direct N2O use 7 8 3 3
Total N2O (non-agriculture) 110 53 26 24
Source: GAINS.
While current F-gas legislation have already significantly reduced emissions (certainly compared
to a no-policy baseline), still some 60 million ton CO2eq. emissions remain in Baseline by 2050.
Technical options exist to eliminate almost all, with an overall reduction of 95% in 2050
compared to 2005. Improvement in refrigeration and air conditioning technologies has by far the
greatest potential to reduce F-gases emissions.
171
Table 5: F-gas emissions (outside agriculture), mitigation potential by 2050 in different
scenarios.
F-gases (MtCO2eq)
2005
Baseline
2050
Remaining emissions with
technical mitigation < 250
€/t CO2eq
Sector Activity COMBO 1.5LIFE
AC &
refrigeration Total 66 41 0.3 0.3
Refrigeration 40 34 0.1 0.1
Air conditioning (stationary
& mobile) 26 7 0.2 0.2
Industry Total 11 6 5.1 5.1
HCFC22 production 2 0 0.0 0.0
Primary aluminium
production 3 1 0.7 0.6
High & mid voltage
switches 3 3 3.2 3.3
Magnesium production &
casting 1 0 0.0 0.0
Semiconductor industry 2 1 0.1 0.1
Other industry sources 1 1 1.0 1.0
Other Total 23 12 0.1 0.1
Aerosols 7 3 0.0 0.0
Foams 7 3 0.0 0.0
Ground-source heat pumps 0 0 0.1 0.1
Fire extinguishers 2 1 0.0 0.0
Solvents 0 0 0.0 0.0
Soundproof windows 2 0 0.0 0.0
Other SF6 5 5 0.0 0.0
Total F-gases 100 59 5.4 5.5
Source: GAINS.
Combining all mitigation options in sectors other than agriculture across all non-CO2 gases, the
waste sector at large shows the largest potential on top of existing policies to reduce emissions
compared to Baseline by 2050. F-gas emissions reduction in refrigeration and air conditioning
follow. In the scenario assessment, all scenarios use the maximum mitigation potential for nonCO2
GHG gasses.
172
Figure 80: Additional non-CO2 emissions reduction potential in 2050 compared to baseline
in the EU in sectors other than agriculture
Note: Only reduction potentials above 2 MtCO2eq are included in the chart; results from COMBO
scenario
Source: GAINS.
4.6.4 Transition enablers, opportunities and challenges
Combining all options and actions described in the sections above indicate that strong reduction
potential for non-CO2 emissions exist in 2050 compared to present emission levels and can reach
2/3rd
of 2005 levels (Table 6).
0 5 10 15 20 25 30 35 40
Municipal solid waste
Industrial solid waste
Industrial wastewater
Domestic wastewater
Solid waste composting
Gas distribution
Gas transmission
Transport
Production of crude oil
Production of natural gas
Energy use
Caprolactam production
Semiconductor industry
Refrigeration
Air conditioning (stationary & mobile)
Direct N2O use
Aerosols
Foams
Fire extinguishers
Other SF6
WasteEnergyindustry
AC&
refrigerationOther MtCO2eq
CH4
N20
F-Gases
173
All scenarios achieve a similar maximum technical reduction potential with emissions levels of
around 340 MtCO2eq in 2050. Only the 1.5LIFE scenario manages to reduce emissions further,
notably with the impact of consumer food preference changes on emissions in the agriculture
sector, further reducing emissions to 290 MtCO2eq in 2050.
Table 6: Non-CO2 GHG emissions compared to baseline in 2050 in different scenarios
(MtCO2eq).
2050 2005 Baseline CIRC COMBO 1.5TECH 1.5LIFE
Outside Agriculture 494 209 62 64 62 59
CH4 284 97 33 33 32 29
N20 110 53 25 26 24 24
F-gases 100 59 4 5 5 5
Agriculture 440 404 277 277 277 230
CH4 237 207 165 165 165 139
N20 203 197 111 111 111 91
TOTAL 934 613 339 341 339 290
CH4 521 305 198 198 198 169
N20 313 250 136 137 136 115
F-gases 100 59 4 5 5 5
Source: GAINS.
Achieving this reduction potential will be important if the aim is to reach zero GHG emissions
given that any remaining emissions would need to be offset by CO2 removals from other
activities. Therefore, the challenge is to tackle a very diverse set of sources of non-CO2
emissions.
Technological alternatives are expected by 2050 for most, if not all, F-gas applications. It is
important to give clear signals to industry to provide them sufficient certainty to invest in
technology development to allow for a complete phase out on time.
The Governance of the Energy Union and Climate Action Regulation requests the Commission to
consider policy options for rapidly address methane emissions and to put forward a Union
strategic plan for methane.411
In that context this assessment clearly indicates that for the
development of any strategy towards reducing methane emissions, as requested, a limited amount
of sectors are of key importance, notably agriculture, waste and energy.
Reduction in the waste sector under current policies are expected to be significant, though
additional potential exist and needs to be achieved towards 2050. Therefore it is very important in
the short term to ensure effective implementation of existing policies and thus attentiveness is
required that Member States fully translate and implement the waste acquis. This will not only
reduce CH4 emissions, it will also contribute to a more circular economy, improved recycling
systems will make our industrial production processes more resource efficient.
411
COM/2016/0759 final/2 - 2016/0375 (COD). Article 16.
174
The largest driver for methane emissions reduction in the energy sector are reductions in fossil
fuel consumption itself and associated reductions in emissions from fossil fuel extraction and
distribution in the EU. The faster this transition e, the faster the emissions will decrease.
Nevertheless, the gas transmission and distribution system will continue to play a role in a low
carbon economy, though rather based on clean gases such a biogas and e-gas. Thus increased
monitoring, detection and prevention, all fulfil an important function.
Finally the agriculture sector is by far the largest source of methane emissions. The introduction
of wide-spread use of anaerobic digestion would not only reduce methane emissions, it would
also provide for renewable energy. The role of feed management and feed additives has to be
explored to see how methane emissions from the ruminant herd can be reduced. The former may
also improve farm efficiency. Breeding systems focussed on both improving productivity and
animal fertility and health in the ruminant herd can significantly increase the overall efficiency of
the dairy and beef sectors, while reducing associated CH4 emissions. Given the time-lag of this
action, a more concerted EU wide effort well before 2050 seems preferable.
The same agriculture, waste and energy sectors are also responsible for nitrous oxide emissions.
For both waste and the energy sector, most measures to reduce CH4 will also reduce N2O. For the
agriculture, the focus for N2O reductions foremost needs to come from more appropriate fertiliser
application and reduced associated N2O emissions. Excessive fertilisation is not only problematic
for the environment; it can also have a negative impact on farmer's income. In this context the use
of better information systems, such as the nutrient management plans or variable rate application
should improve awareness of farmers and willingness to reduce fertiliser application without
hurting farmers' income. Together with the introduction of further digitalisation and smart
farming techniques, this could further improve farm efficiency as well as decrease N2O
emissions. Subsequent options that can be explored relate to the application of novel technologies
that can reduce subsequent N2O emissions after fertiliser application, which would not only
reduce N2O emissions but also contribute to reducing nitrate pollution.
4.7 Land resources
4.7.1 Land use options
Land is a precious and finite resource providing goods and services essential to the well-being of
our society and our economy. Land use – and the split between settlements, agriculture land,
forests and natural habitats – is a major factor influencing the distribution and functioning of
ecosystems and thus the delivery of ecosystem services, including those related to climate
change412
. There is a competition for the use of land, the main drivers being the production of
food and feed, the development of forests and its provision of various services, the supply of
bioenergy and other renewable energies and the increasing demand for housing and
infrastructures.
According to Eurostat statistics, 38% of the EU land is covered by forest and 22% is cropland,
21% grassland and 7% shrubland (Figure 81). Due to differences in the definitions of land
categories, the UNFCCC inventories report a larger share for cropland (28% or 127 Mha in
2016), with part of land classified as grassland in EUROSTAT database (in particular temporary
grassland) is inventoried as cropland in the UNFCCC database.
412
EEA (2015), The European environment — state and outlook 2015: an integrated assessment of the
European Environment, https://www.eea.europa.eu/soer-2015/about
175
Figure 81: Land cover overview in 2015
Source: Eurostat.
From a CO2 emissions perspective, the land use, land use change and forestry (LULUCF) sector
covers the emissions and removal of carbon dioxide through land use activities related to forest,
cropland, grassland, settlements, wetland and other land management, or resulting from land use
change between these managed lands.
The LULUCF sector in the EU today is a net carbon sink, i.e. it removes (or sequesters) annually
more carbon than it emits as GHG. According to the information reported by Member States to
the UNFCCC413
, the 2016 net balance amounted to 314 MtCO2 sequestered in the LULUCF
sector as a whole, with 424 MtCO2 net removals from forest land only offsetting the net
emissions of other land cover types, in particular cropland and settlements and smaller net
emissions from grassland and wetlands. Carbon tends to be lost when converting grasslands,
forest or other native ecosystems to croplands, or by draining, cultivating or liming highly
organic soils. Soil organic carbon tends to increase when restoring grasslands, forests or native
vegetation on former croplands, or by restoring organic soils of wetlands to their native
condition.
The use of natural resources can substantially affect climate, in positive or negative terms.
Climate change interacts with other drivers and further exacerbates biodiversity loss and
ecosystem degradation (also through droughts and forest fires), thus weakening the ecosystems'
ability to capture and sequester carbon. Climate change can considerably alter natural
availability, structure and function to deliver private goods and eco-system services of natural
resources, including their mitigation and adaptation capacity. A sustainable enhancing of the
413
EEA data viewer, not including N20 indirect emissions
436
Mha
176
natural resources capacity to deliver, and especially of land as being at the crossroad, will be
critical in a decarbonised context.
4.7.1.1 Preserving carbon from agricultural soils
In addition to the emissions of methane and nitrous oxide, EU agricultural soils release a
substantial amounts of CO2 emissions, 60 MtCO2 in 2016 from cropland and grassland. Slowing
down the soil degradation and enhancing the carbon sequestration of EU soils is a win-win
strategy for climate and food security that reduces CO2 emissions and, in the same time, increases
the fertility and productivity of EU agricultural land. The international initiative "4 per 1000"414
,
launched by France on 1 December 2015 at the COP 21, goes in this direction by encouraging the
implementation of some practical actions on soil carbon sequestration and the type of practices to
achieve this (e.g. agroecology, agroforestry, conservation agriculture, landscape management,
etc.).
The depletion of the soil organic carbon pool is caused by oxidation or mineralization, leaching
and erosion. Under the temperate European climate, most soil losses take place during a period of
20 to 50 years after conversion from natural land to arable land and a quarter to half of the soil
organic carbon under natural conditions is lost at the new equilibrium.415
Organic soils
An effective way to reduce soil carbon losses and associated CO2 emissions is to limit the use of
organic soil and peatlands for agriculture production and prevent the expansion of new
agricultural land on these soils. Peatlands are wetlands with a thick layer of organic soil and even
if they cover only three percent of the global land area, they store 30 percent of the world’s soil
carbon416
. In 2012 the Organic soils and peatlands climate change mitigation initiative417
was
launched by FAO, the MICCA Programme and Wetlands International. The initiative is
committed to reducing GHG emissions from peatlands and safeguarding other vital ecosystem
services that peatlands provide.
In Europe, in the 2018 UNFCCC inventories for the year 2016, the agriculture land with organic
soils is emitting on average 16 to 17 tons of CO2 per hectare (less than 1 ton of CO2 in average
for mineral soils). Only 1.5% of the cropland is covered with organic soils but that represents
55% of the total soil emissions for cropland (Table 7). For grassland, the 3% area covered by
organic soils is emitting as much carbon as the 97% grassland area of mineral soils is
sequestrating carbon, making overall grassland near neutral in term of CO2 emissions.
Protecting organic soils of intensive use would be beneficial from the perspective of climate
action in the agriculture sector. It could be achieved by limiting or using appropriate agriculture
activities on organic soils and by restoring peatlands and wetlands through the elevation of
groundwater level, in order to reduce the oxidation of the organic material.
414
https://www.4p1000.org/
415
FAO (2010) – SOLAW Thematic Report 4B Soil carbon sequestration,
http://www.fao.org/fileadmin/templates/solaw/files/thematic_reports/TR_04b_web.pdf
416
FAO (2018), Mitigation of Climate Change in Agriculture (MICCA) Programme,
http://www.fao.org/in-action/micca/knowledge/peatlands-and-organic-soils/en/
417
FAO (2012), Launch of the global ‘Organic Soils and Peatlands Climate Change Mitigation Initiative,
http://www.fao.org/3/a-az616e.pdf
177
Table 7: EU agricultural soil emissions in 2016
Cropland Grassland
Mineral Soils Organic Soils Mineral Soils Organic Soils
Area (Mha) 125 2 85 3
Total Soil Emission (MtCO2) 27 33 -41 41
Implied Emission Factor
(tCO2/ha)
0,2 17 -0,5 16
Source: 2018 UNFCCC inventories.
Mineral soils
Several studies estimated soil organic carbon (SOC) emissions from mineral soils of arable land
and the carbon sequestration potentials at regional and global level using either biophysical SOC
models418,419,420,421
or static SOC sequestration rates422,423,424
. Most studies conclude that European
SOC mitigation potential could contribute to reaching emissions saving. The PICCMAT
project425
estimated the carbon mitigation potential for several carbon sequestration options.
Strategies to enhance carbon sequestration in agriculture aim to increase the soil carbon pool,
improving soil biological activity, as such also increasing net primary productivity (NPP),
decreasing nutrient and organic carbon losses from erosion and leaching, and increasing the
humification efficiency415
. Sustainable management practices commonly recommended are426
 Reduced till or no-till cultivation practices that minimize soil disturbances, avoid the
complete inversion of the soil horizon (i.e. ploughing) and thereby reducing the oxidation
of soil carbon. Co-benefits are reduced risk of soil erosion by wind or water, and less
energy required for cultivation.
 Crop residues left on the soil surface after harvest. This enables greater carbon retention
in soils than removing crop residues.
 Cover crops are used to reduce the period of time that soil is left bare in order to reduce
the risk of soil erosion. Catch crops are grown to reduce the duration of bare soil between
418
Zaehle, S., A. Bondeau, T. R. Carter et al. (2007). "Projected changes in terrestrial carbon storage in
Europe under climate and land-use change, 1990-2100." Ecosystems 10(3): 380-401.
419
Yu, Y., Y. Huang and W. Zhang (2013). "Projected changes in soil organic carbon stocks of China's
croplands under different agricultural managements, 2011–2050." Agriculture, Ecosystems &
Environment 178(0): 109-120.
420
Lugato, E., P. Panagos, F. Bampa et al. (2014). "A new baseline of organic carbon stock in European
agricultural soils using a modelling approach." Global Change Biology 20(1): 313-326.
421
Stefan Frank, Erwin Schmid, Petr Havlíka et al. (2015). The dynamic soil organic carbon mitigation
potential of European cropland. Global Environmental Change Volume 35, November 2015, Pages
269-278
422
De Cara, S. and P.-A. Jayet (2006). Mitigation of greenhouse gas emissions in EU agriculture: An
assessment of the costs of reducing agricultural emissions and enhancing carbon sinks in agricultural
soils. INSEA Final report SSP1-CT-2003-503614-Final, INRA and International Institute of Applied
Systems Analysis (IIASA), Laxenburg, Austria.
423
Schulp, C. J. E., G.-J. Nabuurs and P. H. Verburg (2008). "Future carbon sequestration in Europe—
Effects of land use change." Agriculture, Ecosystems & Environment 127(3–4): 251-264.
424
Thomson, A. M., R. César Izaurralde, S. J. Smith and L. E. Clarke (2008). "Integrated estimates of
global terrestrial carbon sequestration." Global Environmental Change 18(1): 192-203.
425
PICCMAT (2008). Deliverable D7: European quantification results. schulop, Alterra: 42.
426
Ricardo-AEA (2016) Effective performance of tools for climate action policy - meta-review of
Common Agricultural Policy (CAP) mainstreaming
178
harvest and the following spring in order to take up mobile nutrients, such as nitrate, and
hence reduce pollution of watercourses.
 Better use of complex farming systems including mixed crop-livestock and agroforestry
techniques (inclusion of trees in cropland/grassland) that efficiently use nutrient
resources, enhance biodiversity and mimic the natural ecosystems perennial grasses,
permanent crops and deep rotting crops.415
However, despite the variety of studies large uncertainties in the magnitude of SOC emissions
and mitigation potential prevail427,428
. Some studies questioned the feasibility to achieve high
emissions saving through carbon sequestration429
. Uncertainties can be attributed to gaps in our
understanding of future land use change, quantification of the response of carbon sequestration to
land use change423
future level of adoption of mitigation measures, potential feedback on N2O
and CH4 emissions, and persistence of mitigation430
. In addition, there is an ongoing debate about
the effectiveness of conservation tillage for SOC sequestration and consequently climate change
mitigation since studies mainly relied on shallow sampling depth when comparing sequestration
rates of conservation and conventional tillage systems. Some recent studies conclude that, even
though conservation tillage may increase surface SOC concentrations, it does not store more SOC
for the whole soil profile but solely redistributes carbon in the soil431
. Carbon stored in soils also
depends on the climate and weather, which can cause emissions of carbon or reduction of the
carbon sequestration potential. This raises the question on the permanence of carbon in soils,
together with the issue of soil saturation.
4.7.1.2 Forest carbon sink
The current carbon sink on EU forest land results from an imbalance in a dynamic forest
ecosystem. Growth each year in forest biomass (gross annual increment) is larger than the
quantity of biomass taken out of forests through natural mortality and disturbances, and human
activities (harvests). This imbalance results in an increase in net carbon stocks of EU forests,
which in turn represents the net absorptions of CO2 from the atmosphere in living biomass. The
information reported in the UNFCCC inventories shows limited changes in the characteristics of
the EU forest over the last 25 years. The carbon sink of the total forest is stable since 1990,
slightly larger than -400 MtCO2, with a small increase in the biomass produced but also a small
increase of the annual losses in forest biomass (harvest and natural mortality).
Typically a forest system that has no human intervention (i.e. management) will move over the
long term towards a balanced state, with a likely decrease in increment and an increase in
mortality, and an upper limit to the carbon stock present in above ground biomass and a limited
carbon sink. Optimising the European carbon sink would therefore need action to maintain or
427
Emanuele Lugato, Adrian Leip & Arwyn Jones (2018). Mitigation potential of soil carbon management
overestimated by neglecting N2O emissions. Nature Climate Change volume 8, pages 219–223
428
Paul Gosling, Christopher van der Gast & Gary D. Bending (2017). Converting highly productive arable
cropland in Europe to grassland: –a poor candidate for carbon sequestration. Nature, Scientific Reports
volume 7, Article number: 10493
429
Powlson, D. S., A. P. Whitmore and K. W. T. Goulding (2011). "Soil carbon sequestration to mitigate
climate change: a critical re-examination to identify the true and the false." European Journal of Soil
Science 62(1): 42-55.
430
Smith, P. (2012). "Soils and climate change." Current Opinion in Environmental Sustainability 4(5):
539-544.
431
Baker, J. M., T. E. Ochsner, R. T. Venterea and T. J. Griffis (2007). "Tillage and soil carbon
sequestration—What do we really know?" Agriculture, Ecosystems & Environment 118(1–4): 1-5.
179
intensify the forest system imbalance, through increasing the forest area through reforestation or
afforestation of non-forest land, the carbon density per hectare of forest with other tree species, or
through stimulating faster increment by optimising harvests and smarter management practices –
or a combination of all three.
Afforestation, reforestation and reduced deforestation are obvious options to increase the
coverage of EU forests potential together with possible co-benefits of many other ecosystem
services such as biodiversity and reduced risks of soil erosion, floods, air and water pollution.
Land is nevertheless a finite resource and extending forest coverage can, if carried out over large
scales, intensify the competition for land with other sectors of the economy. Afforestation for
instance may displace agricultural production of food, feed, fibre or energy, and subsequently
increase GHG emissions in other GHG sectors. On the other hand, it may be the most productive
and viable use of some land in the EU.
Limiting or reducing the amount of wood extracted annually from forests may increase the forest
carbon stock and – at least in the short to medium term – the sink. Unfortunately, it comes with
the drawback of limiting the supply of biomass for energy and wood product substitution that
may otherwise lower emissions in other sectors. Other forest management practices can influence
overall carbon stock density. Depending on the forest type and location, intervention may
improve the nutrient supply and light available to or health of standing trees, thereby stimulating
growth and increasing the overall carbon stock. The progressive introduction for instance of tree
species with a faster growing rate – i.e. increment – has the potential to increase the carbon
density of a forest while preserving biomass flows towards the rest of the economy. Such
practices need to be carried out respecting the risk of potential negative impacts on biodiversity
and other ecosystems services as well as possible increased demand for water resources.
Finally, the use of the harvested wood also matters. In essence, the more it is used for durable
goods replacing those produced with fossil materials, such as construction, the more effective it is
in reducing the release to the atmosphere of biogenic (and fossil) carbon. This concept is captured
in the LULUCF accounts as Harvested Wood Products. Although in principle this use is only a
temporary storage, with the CO2 still being released eventually to the atmosphere, cascading use
can also reduce emissions in other sectors. An example is reduction of production of other
building materials like bricks and steel, or subsequent “waste” timber being incinerated for
energy production, thus reducing emissions from fossil fuels as well.
When looking at how to preserve or enhance the forest sink, it is therefore of key importance to
properly assess the interlinkages between the dynamic of the forest sink, the use of biomass in
other sectors of EU economy and any associated environmental impact, including indirectly on
carbon stocks due to displacement of other land based activities.
4.7.1.3 Land to produce substitutes to fossil carbon
Material substitutes
Timber products, paper, bio-chemicals, fertilizer, textiles, elastomers, bio-based plastics, all are
products from biomass origins that are present in our daily life. Some have the potential to
replace a significant share of fossil fuel-based materials, while simultaneously storing carbon,
sometimes for decades or centuries.
The use of wood in construction of houses represents about 10% of the EU construction market
but varies significantly across Europe with a market share up to 80% in Nordic countries and
180
very low penetration in Southern Europe432
. Moreover, the use of wood in buildings of three
storeys or more is likely to be lower than 1%. In some of the major economies outside the
European Union, such as the United States or Japan, wood-frames represent about 40% of new
constructions433
. The ClimWood433
study concluded that material use of harvest wood product
leads to lower GHG emissions over the whole life cycle than the use of functionally equivalent
alternatives by 1.5 to 3.5 t CO2 saved per ton of wood product used.
The chemical industry is also interested in the use of biomass as alternative to fossil feedstock
(see section industry). A large palette of oleo-chemical products produced from biomass are
already credible alternatives to fossil feedstock based products, e.g. fertilizers, detergents,
glycerine, cosmetics, pesticides, coating and colours, lubricants or plastics. Nevertheless, the
global bioplastic production today (bio-based and biodegradable plastics together) represents less
than 1% of the 300 Mt of plastics globally produced every year. However, this is a fast growing
industry and bio-plastics are used for an increasing number of applications such as packaging
(which account for 40% of bioplastics today), catering products, consumer electronics,
automotive parts, agriculture, toys, or textiles. Some studies claim that they could replace in the
long term almost all fossil fuel based plastics434
.
Growing demand for bio-based plastics will further increase the demand for feedstock, i.e.
carbohydrate-rich crops such as corn or sugar cane today and potentially lignocellulosic crops in
the future. While the environmental impact of this growing demand should be carefully and
systematically looked at from a lifecycle assessment perspective, the land impact itself is
expected to be rather limited. It has been estimated that replacing the global production of fossil
plastic with bioplastic would require about 5% of the total amount of biomass globally produced
and harvested each year435
.
Energy substitutes
In 2014, bioenergy represented 60% of the final renewable energy consumed in the EU12
and
about 10% of the gross final energy consumed. Bioenergy is used mostly for heat, followed by
electricity generation, and transport. It provided in 2014 88% of renewable energy in heating, and
19% of renewable electricity. Most of the bioenergy is used in solid form; biogas and liquid
biofuels represent smaller shares436
.
Currently, the main sources of solid biomass used in electricity, heating and cooling are EU
produced forestry-based feedstocks such as fuelwood, industrial residues (e.g. residues from
sawmills or from the paper industry), and forest harvesting residues (such as branches or tree
tops). Biofuels are mostly produced from agricultural food crops. In 2015, an amount equivalent
to 61% of domestic oilseed production, 13% of sugar beet production and 3.7% of cereal
production were used for the production of biofuels. While biogas is produced mainly from
annual energy crops (e.g. maize), there is a large potential in producing biogas from agricultural
432
Hurmekoski (2016), Long-term outlook for wood construction in Europe. Dissertationes Forestales 211.
57 p. http://dx.doi.org/10.14214/df.211
433
Climwood2030 (2016) Climate benefits of material substitution by forest biomass and harvested wood
products: Perspective 2030. Thünen Report 42. https://www.thuenen.de/media/publikationen/thuenen-
report/Thuenen_Report_42.pdf?
434
European Bioplastics (2017), Bioplastics - facts and figures
http://docs.european-bioplastics.org/2016/publications/EUBP_Facts_and_Figures_2017.pdf
435
Martien van den Oever, Karin Molenveld, Maarten van der Zee, Harriëtte Bos (2017) - Bio-based and
biodegradable plastics – Facts and Figures. Focus on food packaging in the Netherlands
http://library.wur.nl/WebQuery/wurpubs/519929
436
SWD(2016) 418- Sustainability of Bioenergy - Commission Staff Working Document accompanying
the document Proposal for a Directive of the European Parliament and of the Council on the promotion
of the use of energy from renewable sources (recast)
181
waste, residues, by-products (e.g. manure), sewage sludge, separated household waste, as well as
industrial household waste.
In the future, a more important role for fast growing energy crops, i.e. lignocellulosic grass (e.g.
switchgrass, miscanthus) and short rotation coppices (e.g. poplar, willow), is expected if not
hampered by upfront investment costs or land availability. When cultivated in a sustainable
manner, these crops could become the main input to gasification and pyrolysis processes for the
production of biogas and biofuels. These fuels would allow for instance the deep decarbonisation
of air transport, road freight and maritime sectors where only few alternatives exist and would
also be used to replace fossil fuel methane in the gas grid, for applications where no alternatives
exist.
4.7.2 Biomass demand, supply and land use projections in the scenarios
All the scenarios analysed in the PRIMES-GAINS-GLOBIOM set-up (see section 4.1 and annex
7.2.2 for scenario description) rely on a substantial use of biomass for energy. The 2050 gross
inland consumption of biomass and waste of these scenarios is ranging from 190 Mtoe in the EE
scenario to just over 250 Mtoe in 1.5TECH scenario (in 2016 the energy sector consumed 140
Mtoe of biomass437
). The demand for biomass is similar for all scenarios until 2030 but diverges
afterwards with more demand in the net zero GHG scenarios than in the scenarios achieving 80%
GHG reduction until a peak in 2045 (dash line in Figure 82). Post 2045 the biomass demand is
decreasing in net zero GHG scenarios, partly due to the deployment of other energy carriers
(including the introduction of e-fuels). The scenarios achieving 80% GHG reduction continue to
increase their biomass consumption after 2045.
In addition to the standard scenarios, a low biomass variant of the 1.5LIFE scenario has been
introduced (1.5LIFE-LB) to better analyse the implications of achieving net zero GHG emissions
with less increases in biomass use. Most of the characteristics of the 1.5LIFE scenario apply to
this variant (circular economy, changing consumer preference and a high incentive to enhance the
natural land use sink). However, compared to the standard 1.5LIFE, the 1.5LIFE-LB variant
combines this with much more use of technology options available in 1.5TECH scenario that
require less biomass. This results in considerably less use of biomass, with particular implication
on its use in industry, residential and transport sectors.
437
Eurostat Energy Balances 2018 edition
182
Figure 82: Gross inland consumption of biomass and waste
Source: PRIMES.
Power generation and residential heating are consuming today most of the biomass demand.
Towards 2050 the use of biomass in the residential sector is expected to significantly decrease in
all scenarios whereas the power and industrial sectors would absorb most of the additional
demand in bioenergy. About 40% of the total biomass would be used to produce electricity in a
demand-side scenarios (EE, CIRC) and up to 75% in the 1.5LIFE-LB. The 1.5LIFE-LB scenario
stands out by its low requirement in biomass for industry through the high penetration of
hydrogen and electricity for industrial heating as well as a very strong reduction of biomass used
for residential heating and less use in transport. The decarbonisation of road and air transport
requires advanced biofuels that could be produced at scale after 2030, nevertheless it would not
represent more than 20% of the total use of biomass in any of the scenarios (Figure 83).
Figure 83: Use of bioenergy by sectors and by scenario in 2050
0
50
100
150
200
250
300
2015 2020 2025 2030 2035 2040 2045 2050
Mtoe
Baseline ELEC H2 P2X
EE CIRC COMBO 1.5TECH
1.5LIFE 1.5LIFE-LB
0
50
100
150
200
250
300
2015 Baseline ELEC H2 P2X EE CIRC COMBO 15TECH 15LIFE 15LIFE-LB
mtoe
Power Industry Road Transport Air Transport
Service & Agriculture Residential Other
183
Source: PRIMES.
All the scenarios assume that most of the biomass used in the 2050 EU economy is produced
domestically (only 4 to 6% of the solid biomass is imported by 2050, no assessment has been
made on the overall climate impacts if biomass were to be imported instead). The domestic
production of feedstock to fulfil the EU demand for bioenergy is ranging from 214 Mtoe in the
1.5LIFE-LB scenario to more than 320 Mtoe in 1.5TECH scenarios (Figure 84).
Figure 84: Break down of bioenergy feedstock in 2050
Source: PRIMES, GLOBIOM.
A significant share of the feedstock used to produce this bioenergy is coming from the waste
sector with an improvement in the industrial and municipal waste collection that could supply
about 100 Mtoe of feedstock to the energy sector. The use of harvested stemwood stays at 2015
level in all scenarios while the sustainable extraction of forest residues increases, in total the
forest sector provides 60 to 65 Mtoe of wood for energy. Biogas or biofuels produced from food
crops will be very marginal in EU by 2050 but more agriculture residues are used for the
production of biogas or solid biomass. The optimisation of the sustainable exploitation of all
these classical sources of biomass could supply just over 200 Mtoe of feedstock for bioenergy
production to the EU economy.
Fast growing energy crops will provide for the rest of needs in biomass. Scenarios vary
substantially in their demand for these new energy crops. The 1.5LIFE-LB scenario requires 38
Mtoe of bioenergy whereas the demand in CIRC and 1.5TECH reach 108 Mtoe. Most of the
demand is supplied via lignocellulosic grass such as switchgrass and miscanthus while short
rotation coppices, poplar and willow, provide only 20 to 25% of the demand in energy crops.
This substantial demand on bioenergy to help to decarbonise the EU economy can have
significant impacts on land use and land use changes (Figure 85) with all scenarios having an
increased amount of land dedicated to the production of energy crops. The scenarios with highest
energy crop requirements (scenarios 1.5TECH and CIRC) see about 29 Mha of land being used
0
50
100
150
200
250
300
350
2015 Baseline ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE 1.5LIFE-LB
mtoe
Waste Paper and pulp residues Forest stemwood Forest residues
Food crops Agriculture residues Short rotation coppice Lignocellulosic grass
184
for new energy crops. Overall this would represent a diversification of agriculture land producing
energy crops, on top of the area currently used for first generation biofuels, equivalent to 10% of
current productive agricultural land. The scenario with lowest energy crop requirements (scenario
1.5LIFE-LB) see about 9 Mha of land being used for new energy crops. Most of the changes
happen through a large switch towards lignocellulosic grass (mainly switchgrass), notably from
unused grassland and through the availability of cropland currently used for the production of
first generation biofuel.438
New demand for woody biomass could further diversify today’s
farming business on around 10% of EU agriculture land. Some afforestation also occurs, in
particular on abandoned agricultural land. In 1.5LIFE scenarios that assume consumption
patterns with lower climate impacts, including changes in food consumption preferences as
discussed in 4.6.2.3 (Diet 4), the shift and reduction in meat consumption frees additional land
(production of meat has one of the largest land requirement per calorie) and allows for increased
afforestation.
Figure 85: Use of natural land by 2050
Source: GLOBIOM.
In terms of LULUCF emissions, the substantial use of woody energy crops instead of stem forest
feedstock wood limits the negative impact on the forest sink and therefore helps to maintain the
overall LULUCF sink in all scenarios. Moreover, the models shows that the LULUCF sink could
be enhanced further through economic incentives targeting various mitigation options such as the
438
Effects such as foregone carbon sequestration from biofuels grown on productive and non-productive
agriculture land and shrub land are captured by the models. The models also replace the protein byproducts
lost when replacing 1st
generation biofuel with energy crops by another source of protein to
ensure the feeding of animals and the land use effect of this replacement is also captured. Finally, the
imports of agricultural products are limited to Baseline level to assess the impact of mitigation
scenarios without displacement of agricultural production outside EU. The impacts on overall GHG
emissions, direct and indirect, if changes in imports would occur is not assessed.
0
50
100
150
200
250
300
350
400
Baseline
2020
Baseline
2050
ELEC H2 P2X EE CIRC COMBO 15TECH 15LIFE 15LIFE
LB
Mha
Productive agriculture land 1st generation biofuel
Energy crops Non-productive grassland and shrub
Forest
185
reduction of deforestation, increase of afforestation, better forest management and better
agriculture practices storing soil carbon.
Figure 86 shows the potential for enhancing the LULUCF sink at different carbon prices. A
carbon price of 150 euro in 2050 could increase the forest sink by almost 120 MtCO2 and the
total LULUCF sink by more than 160 MtCO2 compared to a situation without carbon price
applied to the LULUCF sector. At a carbon price of 70 euro the total LULUCF sink could
already be above 130 MtCO2. These amounts are in relative terms large compared to emissions
by 2050 but small compared to emissions in 1990, this is less than 3% of emissions, underlining
the priority to reduce emissions first.
The largest potential is in the optimization of forest management practices (changes of stand
rotation length, ratio of thinning versus final fellings, harvest intensity or harvest locations) and
could increase the forest sink by 56 MtCO2. Improvement in agriculture practices aiming at
sequestering more carbon into the soil would enhance the LULUCF sink by an additional 47
MtCO2. Incentivised additional afforestation could remove annually 36 MtCO2 from the
atmosphere, requiring the conversion of roughly 5 Mha of land into new forests by 2050.
Figure 86: Potential for carbon sequestration and LULUCF sink enhancement at different
carbon prices in 2050
Source: GLOBIOM/G4M.
Only the net zero GHG scenarios include a specific incentive to enhance the LULUCF sink,
strongest for 1.5LIFE (80€/tCO2) and 1.5LIFE-LB (70€/tCO2) and relatively limited for
1.5TECH (30€/tCO2).
The strong penetration of energy crops in 1.5TECH coupled with the implementation of
agricultural practices aiming at improving the soil carbon sequestration makes possible for EU
cropland to turn, in this scenario, from net carbon source to net carbon sink by 2050, with a
LULUCF sink in EU increasing to close to 400 MtCO2.
In the 1.5LIFE scenarios, more land becomes available for afforestation, and this combined with
the incentive to enhance the sink allows it to increase to 500 MtCO2. This allow to reduce the
0
50
100
150
0 50 100 150
Carbonprice(EUR/tCO2)
MtCO2/yr
Total agricultural land
Total LULUCF
Forest management
Avoided deforestation
Afforestation
186
reliance on BECCS and other carbon dioxide removal technologies to achieve net zero GHG
(Figure 87).
Scenarios without incentives to enhance the LULUCF sink present variations but show that even
if some scenario see a decline in the LULUCF sink compared to current level (circa 300 MtCO2),
all scenarios could maintain by 2050 a net LULUCF sink above 230 MtCO2.
Figure 87: LULUCF emissions across the scenarios
Source: GLOBIOM.
4.7.3 Transition enablers, opportunities and challenges
Most of the scenario analysed see an important increase in the use of biomass by 2050 with a
doubling of the current demand in biomass feedstock for energy in some scenarios (see section
4.7.2). This energy should be firstly supplied by the efficient use of feedstock such as industrial
and municipal waste or agriculture and forest residues that have less environmental impacts and
affect less other economic activities.
The full mobilisation of waste streams would not be sufficient to satisfy the EU demand in
bioenergy. The two main options to supply the additional biomass required that are assessed are
the increased mobilization of wood from forest and the development of fast growing
lignocellulosic crops. Both options have different impacts on land use, carbon sink or
biodiversity that need to be considered. This assessment did not look into the consequences of
increasing biomass imports.
As discussed in section 4.7.1.2, a sustainable intensification of forest biomass mobilization is
constrained by the net annual increment of the forest and could potentially conflict with the
production of wood material for other sectors and with other eco-services provided by the forest
such as climate regulation (through carbon sequestration), pollution control, soil protection,
-600
-500
-400
-300
-200
-100
0
100
200
Baseline ELEC H2 P2X EE CIRC COMBO 1.5TECH 15LIFE 15LIFE LB
MtCO2
Forest management Afforestation Deforestation
Cropland Grassland Other
Harvested Wood Products Net LULUCF
187
nutriment cycle, biodiversity protection, water regulation or recreation.439
However active
sustainable management of forests is key to ensure that forests continue to sequester carbon, and
provide biomass, and enhancement are possible.
Expansion of the forest area through afforestation and reforestation would limit the trade-off
between the different uses of forests and develop their synergies in EU. However, it could then
affect the availability of land for other sectors, in particular the agriculture sector. Finally,
afforestation is a slow process and its benefits for providing biomass and CO2 removal could take
several decades to materialize.
Fast growing energy crops includes lignocellulosic grass and short rotation coppices
characterized by faster growing rates and therefore higher productivity potential than forest
biomass production. These energy crops can maintain, to some extent, economically viable yields
on marginal lands and better preserve the soil content in organic carbon compared to arable land.
Energy crops are cultivated on agriculture land and can compete with the production of other
agriculture commodities. Taking into account the volumes needed, energy crops could strongly
contribute to farm income. But in order to not result in the displacement of food and feed
production outside EU (with potentially indirect effects) further efficiency improvements and
more efficient use of land are required according to the type of product grown. Such changes will
have elements of intensification of agriculture production and care will need to be taken with
consequences in terms of biodiversity or other environmental sustainability. But if well managed,
this transition could help to reverse the trend in farmland abandonment and offer to farmers new
economic perspectives.
4.8 Towards negative emissions
4.8.1 Why negative emissions and what are the options?
In order to achieve the objectives of the 80% GHG reduction scenario, and even more so for the
net zero GHG scenarios, the absolute priority is to reduce emissions. But emissions can never be
reduced to zero. For instance, certain agriculture based non-CO2 emissions cannot be eliminated.
Reaching the global objectives of the Paris Agreement without measures aiming at removing CO2
from the atmosphere is extremely challenging. It could even become quickly impossible if no
immediate and very ambitious global action is undertaken.
Therefore removing the CO2 from the atmosphere has to be considered as an option for a long
term GHG reduction strategy. Assessing what its associated challenges are can also inform to
what extent the focus has to be on achieving emissions reduction as soon as possible, which
lowers the reliance on negative emissions subsequently.
Removing CO2 from the atmosphere can be achieved by enhancing the natural carbon sink, by
using engineering technologies or through a combination of both. Increasing the natural sink
through ecosystems restoration, afforestation, reforestation, improved forest management and
enhancing soil carbon sequestration has already been addressed in section 4.7.1.2.
Other carbon dioxide removal (CDR) options include the use of biomass for energy coupled with
carbon capture and underground storage technologies (BECCS), direct air CO2 capture and
subsequent underground storage (DACCS), biochar, enhanced weathering, ocean alkalinisation
439
http://forest.jrc.ec.europa.eu/activities/forest-ecosystem-services/
188
and ocean fertilisation. We do not consider in this section the removal of other GHG than CO2
even if some technologies exist440
Providing cost estimates of various options for removing carbon from the atmosphere is
challenging. Costs from the literature vary significantly, reflecting the heterogeneity in the
methodologies used for their estimates. These large ranges of possible costs and uncertainties are
unavoidable since most of the options for carbon removals are only at an exploratory stage and
none of them are sufficiently mature for large deployment (except afforestation, reforestation and
ecosystem restoration). The cost estimates reported in a recent and comprehensive review441
of
the current knowledge regarding CDR technologies is summarised in Figure 88. According to
this review, most of the CDR options could remove CO2 from atmosphere at a cost below 200
euro/tCO2, in the long term and assuming a removal of the uncertainties surrounding the
development and implementation of the technologies involved. The authors of the study do not
consider any real potential for ocean fertilisation.
Figure 88: Cost of carbon dioxide removal technologies
Note: The full range of costs reported in the literature, the blue colour reflect the part of the ranges the
authors of the study consider as the most likely.
Source: Adapted from Fuss et al., 2018441
.
4.8.1.1 BECCS and DACCS
Biomass for Energy with Carbon Capture and Storage
The concept of BECCS lies in the utilisation of biomass as feedstock to generate bioenergy in
association with carbon capture and storage technologies (CCS). Together with massive
afforestation, BECCS is often seen in the integrated assessment models as one of the main two
options for removing permanently from the atmosphere the carbon in exceedance of an emissions
budget compatible with the Paris Agreement.
440
Ming T, de_Richter R, Shen S and Caillol S (2016), Fighting global warming by greenhouse gas
removal: destroying atmospheric nitrous oxide thanks to synergies between two breakthrough
technologies Environ. Sci. Pollut. Res. 23 6119–38
441
Sabine Fuss et al (2018), Environ. Res. Lett. 13 063002, https://doi.org/10.1088/1748-9326/aabf9f
189
The role of BECCS in the long term will depend on the ability to supply large amounts of
biomass in a sustainable way, and on the development of CCS technologies.
Large deployment of bioenergy raises the question of the quantity of land required for the
production of the biomass feedstocks and the competition with other possible use of the land,
including the necessity to cover demand for food, feed and fibre while preserving ecosystem
services and biodiversity. This issue has been addressed in the section 4.7 dedicated to land
resources.
Carbon capture and geological storage (CCS) is a technique for capturing carbon dioxide emitted
from large point sources such as power plants and industrial installations, compressing it,
transporting it and injecting it in suitable storage sites underground. The CO2 emitted from the
combustion of the biomass can be stored in geological formations including oil and gas
reservoirs, unmineable coal seams, and deep saline reservoirs that have the largest storage
potential.
Not all bioenergy applications can be linked to CCS. Capital cost of CO2 capture may prohibit the
capture of CO2 on small bioenergy installations. On the other hand, the CO2 concentration in the
flue gases of some bioenergy installations such as those for production of bioethanol and biogas
is very high and thus appropriate for CO2 capture.
There are a few large CCS projects under development currently in Europe442
. The Port of
Rotterdam PORTHOS project has the ambition to store 2Mt/CO₂ per year from 2020 on going
up to 5MtCO2 per year by 2030, which would be about 15% of the Rotterdam’s industrial sector
emissions. Norway is putting in place a relatively large industrial CCS project: capture from the
Oslo waste incinerator and a cement plant, shipping of the CO2 and storing deep under the
Norwegian North Sea. There is a small number of other CCS projects and clusters in preparation
mostly in the countries around the North Sea but all of them are in rather early stages.
Direct air CO2 capture and storage (DACCS)
Directly filtering CO2 from ambient air, without relying on photosynthesis, and subsequent
underground storage is an alternative to BECCS that has receive increasing attention in recent
years, including from the energy and climate modelling community. DACCS comprises several
distinct technologies to remove CO2 from the atmosphere making use of different materials.
Contrary to the flue gases of power plants and industrial installations, the concentration of CO2 in
the atmosphere is very low (0,04%). It is therefore key to use agents capable of binding
efficiently with the few CO2 molecules of the ambient air. Most attempts have focused on
hydroxide sorbents, such as calcium hydroxide but today other processes and materials are under
investigation, mostly involving amines. Engineering problems involve enlarging the contact
surface to increase CO2 withdrawal and dealing with moisture.
The main advantage of DACCS over BECCS is in terms of land impact since it does not require
biomass and can be deployed on non-productive land in combination with renewable energy
technologies such a solar, in the proximity of storage sites. Capturing 100 MtCO2 annually with
direct air capture requires between 4 kha and 15 kha, versus 3 to 6 Mha for BECCS and 14 to 33
Mha with afforestation443
.
However, while BECCS delivers energy together with carbon removals, capturing CO2 directly
from the ambient air requires on the contrary a significant amount of energy. Estimates refer to
442
COM(2016) 743
443
This estimation assume estimates from Smith at al 2016 for BECCS and Smith at al 2016 and
information available on Climworks website for DACCS (http://www.climeworks.com/our-products/)
and the implied emission factor from UNFCCC for afforestation (cf section 4.7.1.2)
190
0.5 MJ per kgCO2
444
. Depending of the type of energy used, preferably renewable, the production
of this energy could also have a land impact. The release of CO2 from the sorbent and the
regeneration of the sorbent is particularly energy intensive.
Research and development on Direct Air Capture technologies is rather dynamic nowadays,
progress can reasonably be expected in a mid-term future. Two direct air capture pilot plants are
running in Canada and a third in Switzerland, providing CO2 for re-use application (greenhouses,
carbonated beverages, but also targeting sectors such as Enhanced Oil recovery or synthetic fuel
production) with capacities of 300 to 900 tCO2 per year.
A Direct Air Carbon Capture and Storage pilot plant has been launched in Iceland in 2017 with
the objective to extract 50 tCO2 and combine it with a specific CCS technology where the CO2 is
stored underground in basaltic rocks where it is mineralised relatively rapidly into stable
carbonate minerals445
. In the long run, DACCS has a real potential for technological development
and could become the predominant technological option to remove CO2 from the atmosphere in
an energy system dominated by cheap renewable energy and batteries.
4.8.1.2 Other Options not considered further in this assessment
Biochar, Ocean fertilisation, Enhanced Weathering and ocean alkalinisation all still have
uncertainties regarding the effectiveness and scalability of their CO2 absorption and storage
potential. Further research and large-scale field testing is needed to increase the understanding of
the overall effects on CO2 storage, the associated costs and other environmental impacts
Biochar
Biochar is produced from biomass by pyrolysis, i.e. thermal degradation of biomass in absence of
oxygen. Added to soil, it can increase the amount of carbon stored with the potential co-benefit of
increasing the fertility of the soil and therefore crop yields. Different processes take place when
biochar is added to the soil and some uncertainties remain in the understanding of the overall
effects on carbon sequestration and environment. The residence time of biochar into soils is
likely to be variable and not well known. Presence of biochar in soils may influence the
breakdown of other soil organic carbon which could counteract sequestration of carbon. The
interactions between biochar and soils are mostly analysed in laboratories but it is not clear how
applicable they are under field conditions446
. In addition, producing the biomass feedstock for
biochar requires land and water. Contrary to bioenergy, biochar does not supply by itself energy
for the rest of the economy, with the pyrolysis that produces biochar being itself energy
consuming. However, the gasification of biomass for the production of clean fuels can also
produce biochar as by-product.
Enhanced Weathering and ocean alkalinisation
Weathering is the process of rock decomposition via chemical and physical processes. Rainwater
is slightly acidic due to the absorption of CO2 from the atmosphere that occurs in the clouds.
When the drops reach the ground they chemically react with rocks and soils and the CO2 content
of the rainwater is transformed into bicarbonate and part of it eventually ends up in carbonate
minerals in soils or on the ocean seafloor. The efficiency of this natural process depends very
444
American Physical Society(2011), Direct Air Capture of CO2 with Chemicals A Technology
Assessment for the APS Panel on Public Affairs June 1, 2011
445
https://www.or.is/english/carbfix/carbfix-project
446
RICARDO-AEA (2016), Effective performance of tools for climate action policy – meta-review of
Common Agricultural Policy (CAP) mainstreaming (Ricardo-AEA/R/ED60006/Mitigation potential,
08/01/2016), report for European Commission – DG Climate Action.
191
much on temperature and climate, characteristics of the rocks, water solution, interaction with the
environment and reactive surface area. Enhanced weathering aims at controlling one or several of
these drivers in order to speed up the transfer of the CO2 from the atmosphere to carbonate
minerals through this process.
One of the most mentioned approaches is to pulverise the rocks in small grains to maximise the
reactive surface area. The powder made out of this pulverisation is eventually spread over
agricultural land where microorganisms help to further accelerate the mineralisation process with,
as co-benefit, an increase in the soil fertility. The powder can also be spread directly on the
surface of the oceans, contributing to a further alkalinisation of the oceans (reducing
acidification) and therefore increasing their potential to directly absorb CO2 from the atmosphere.
The main barrier with this option is the slowness of the mineralisation process and the energetic
and economical costs associated to the mining and pulverisation of the enormous quantity of
rocks needed to counterbalance this slowness and remove the CO2 from the atmosphere at a
significant rate.
Ocean fertilisation
Increasing the production of phytoplankton in the oceans is another possibility to remove carbon
from the atmosphere. Oceans are limited in nutrients and in particular in micronutrients such as
iron. About one third of the oceans could see their phytoplankton production significantly
enhanced by injecting relatively small quantities of iron447
. This can trigger a bloom of algae, of
which part ultimately sink towards the ocean floor with part of the carbon sequestered in ocean
floor sediments.
Part of the carbon stays in the water column on shorter time scales, limiting the quantity of
carbon permanently stored. The acidity of oceans also increases after dissolution of the CO2 due
to the high recycling rate of organic carbon. Ocean fertilisation is expected to alter local to
regional food cycles stimulating phytoplankton production, which is the food cycle’s basis. The
unknown magnitude of impacts on ecosystems implies strong risks for biodiversity and the
sustainability of ecosystems.
4.8.2 Negative emissions in the scenarios
The only technological options envisaged to capture CO2 in the scenarios analysed are the
capture of carbon from the combustion of biomass or fossil fuel and direct air capture. The
carbon captured is then either directly stored underground or reused for the production of
synthetic fuels and synthetic material (mainly plastics). Figure 89 shows that 1.5TECH, P2X but
also COMBO, 1.5LIFE and its low biomass variant 1.5LIFE-LB are scenarios that require a
substantial amount of CO2 captured by 2050. All these scenarios favour the reuse of the CO2
rather than long-term geological storage with the exception of 1.5TECH. Only non-fossil fuel
carbon from biomass or direct air capture is reused to produce e-fuels or synthetic plastics,
insuring a truly carbon neutral process and not a simple delay of fossil fuel CO2 emissions
Direct air and biomass CO2 capture are very limited in scenarios achieving 80% GHG reduction
other than P2X and COMBO. The deployment of fossil fuel CCS capacity is also rather limited
in these scenarios.
447
Sabine Fuss et al (2018), Environ. Res. Lett. 13 063002, https://doi.org/10.1088/1748-9326/aabf9f
192
Figure 89: CO2 capture and storage or reuse (2050)
Source: PRIMES.
In all scenarios achieving 80% GHG reduction, as well as in the 1.5LIFE scenarios, most of the
CO2 stored underground is from fossil fuel origin and mainly captured in the industry sector
(Table 8). Only the 1.5TECH scenario differs with biogenic carbon supplying the largest share of
CO2 stored in geological storage sites. The 1.5TECH scenario requires a substantial amount of
technological carbon removal to generate negative emissions (BECCS) to offset the residual
emissions (in particular non-CO2 emissions from agriculture) and reach GHG neutrality by 2050.
This is contrary to the 1.5LIFE and 1.5LIFE-LB scenarios that reduce further non-CO2 emissions
and relies on a larger LULUCF sink. The 1.5LIFE-LB scenario has a relatively high reliance on
synthetic fuels as an alternative to advanced biofuels (due to lower level of biomass availability).
The CCS capacity in industry sector range from 44 MtCO2 in P2X to 71-81 MtCO2 in the net zero
GHG scenarios.
-750
-500
-250
0
250
500
750
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE 1.5LIFE-LB
MtCO2
Fossil Fuel Biomass Direct Air
Underground Storage Synthetic Fuels Synthetic material
CO2 captured
CO2 stored or used
193
Table 8: Carbon Captured and stored underground (MtCO2)
CCS Baseline ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE 1.5LIFE-LB
Power 5 6 7 16 4 7 7 218 9 20
Industry 0 59 57 61 60 44 60 81 71 71
Total 5 65 63 77 65 52 67 298 80 92
from Biomass* 0 5 6 6 4 5 6 178 6 14
*Note: CCS with biomass is predominantly used in the power sector in the PRIMES scenarios
Source: PRIMES.
4.8.3 Transition enablers, opportunities and challenges
The priority is clearly at reducing GHG emissions, with negative emissions needed to offset the
remaining emissions that are most difficult to abate in transport, in industry and certainly the nonCO2
residual emissions from the agriculture sector. Maintaining or even increasing the LULUCF
sink is essential but might not be sufficient and will in itself depend on other developments, for
instance related to changing dietary consumer preferences. In this respect, the carbon dioxide
removal technologies are also part of the solution and should not be disregarded. As the IPCC
1.5°C Special Report indicated they will certainly have an important role to play at global level.
Developing and testing them as such in the EU would also therefore serve a global role.
The most relevant source of negative emissions for the respondents of the open public
consultation (see section 7.1) is intensive afforestation, a view shared by individuals as well as
many professionals, and the potential of direct air capture raises scepticism. The replies also
indicate a preference for carbon capture and long-term utilization rather than carbon capture and
underground storage. BECCS was an important point of discussion among the responses of the
open public consultation, with significant concerns expressed over the actual emissions savings
achievable, the energy inputs needed and the diversion of resources from other technologies.
On the other hand industrial and other professional organisations often concluded that
development of CCS and CCU is a needed option to reduce GHG emissions in industrial and
energy sectors, requiring more investment in research and development and underlining that an
enabling policy framework is needed.
Although all components of CCS are known and deployed at commercial scale, barriers to the
uptake of integrated systems exist. The cost of the capture and storage remains important, the
capture component being particularly costly for processes emitting flue gas with a low
concentration of CO2. The second barrier is the social acceptance for onshore storage in Europe,
with the integrity of CCS, and the perceived risk of CO2 leakage, being a concern448
. Therefore,
CCS projects under development at the moment plan to store CO2 offshore, where the public
acceptance issue is unlikely to arise, such as below seabed storage. Correct application of the
provisions in the CCS Directive449
is meant to ensure that the CO2 captured and stored remains
isolated from the atmosphere in the long term. Studies estimate that appropriately selected and
448
ECN, Global CCS Institute. What happened in Barendrecht? Case study on the planned onshore carbon
dioxide storage in Barendrecht, the Netherlands,
http://www.globalccsinstitute.com/sites/www.globalccsinstitute.com/files/publications/8172/barendrech
t-ccs-project-case-study.pdf
449
Directive 2009/31/EC
194
managed geological reservoirs are very likely to retain over 99% of the sequestered CO2 for
longer than 100 years and likely to retain 99% of it for longer than 1000 years450
.
The capture of CO2 and its storage can take place on different sites and possibly different
countries. A typical example would be a power station with capture of the CO2 emitted but then
transfer this CO2 to another Member State with offshore storage capacities. In this context, it
would be important to ensure the deployment at scale of the necessary infrastructure to transport
CO2 but also the set-up of a consistent framework to account correctly for emission removals.
4.9 Economy wide greenhouse gas emission pathways
All pathways towards decarbonisation show that major progress will be required early on, and in
all sectors. Under the baseline, total net GHG emissions (including the LULUCF sink) are
reduced by around 64% in 2050 (relative to 1990). No sector would achieve full decarbonisation
and most progress would be achieved in power generation and district heating because of the
falling cost of renewable electricity sources. Also industry sectors included in the ETS see
significant reductions, though no full decarbonisation by 2050.
Instead, in the net zero GHG pathways all energy and CO2 related emissions strongly decrease
towards full decarbonisation. Non-CO2 emissions will be the most difficult ones to reduce and
become a critical factor in the achievement of zero GHG emissions and the corresponding need
to materialise negative emissions. Even with consumer choices evolving towards more climate
friendly options, non-CO2 emissions would remain by far the most important source of GHG
emissions.
As a result, the size of the carbon sink and the deployment of carbon dioxide removal
technologies will be a determining factor in achieving GHG neutrality and net negative emissions
(see Figure 90).
450
IPCC (2005) Carbon Dioxide Capture and Storage (SRCCS) https://www.ipcc.ch/report/srccs/
195
Figure 90: Two ways to reach net zero GHG emissions - reduction pathways for 1.5TECH
(above) and 1.5LIFE scenario (below) with enhanced LULUCF sink451
Source: PRIMES, GAINS, GLOBIOM.
Under the various decarbonisation pathways, the fastest sector to decarbonise is the power sector.
This is the first sector to reach zero emissions in all scenarios and even net negative emissions in
the most ambitious scenarios with the use of bioenergy associated to CCS. The residential and
tertiary sectors are also decarbonising faster than average thanks to the advances in energy
efficiency and increased renovation rates. Instead, in industry (including process CO2 emissions)
and transport, reductions are somewhat lower. This is most notable for transport, with emissions
remaining above 1995 levels until 2025 and only reducing by 2050 to around -60% of 1990
451
See Annex 7.7 for GHG emissions reduction pathways of other scenarios
-1
0
1
2
3
4
5
6
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
GtCO2eq
1.5TECH
Non-CO2 other Non-CO2 Agriculture
Residential Tertiary
Transport Industry
Power Carbon Removal Technologies
LULUCF Net emissions
-1
0
1
2
3
4
5
6
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
GtCO2eq
1.5LIFE
196
emissions for scenarios achieving economy wide 80% GHG reductions. Nevertheless, under deep
decarbonisation pathways achieving net zero GHG by 2050, also these sectors will have to
achieve sharp emissions of more than 80%.
Sectors encompassed in the EU ETS have so far seen greater reduction compared to historic
emission levels. This is set to continue in the long term under all pathways with the ETS reducing
emissions more than non-ETS sectors. Regarding non-CO2 emissions, these are lowest in the
two1.5LIFE scenarios because of assumed food consumer preferences changes.
The pathways envisaged vary significantly in terms of the deployment of carbon capture, storage
and use technologies (see also section 4.8.2). Capture of CO2 for use or for storage though is
large under any net zero GHG scenarios and in particular under 1.5TECH (600 MtCO2 captured).
Carbon capture, storage and use technologies are likely to pick up slowly before 2040 and
accelerate only subsequently, given the current technology readiness levels of such options. For
the scenarios achieving 80% GHG reduction, the P2X scenario requires highest capture rates,
well above 400 MtCO2 by 2050, given the substantial use of e-gas. Underground storage (CCS)
is envisaged under all pathways, with the deployment in scenario achieving 80% GHG reduction
seeing levels at around 50-70 MtCO2. These levels are much lower than projected for the 2050
Low Carbon Economy and Energy Roadmaps452
, notably because increased penetration of
renewable energy and additional mitigation options in industry.
Overall, GHG emissions are projected to fall by around 62% compared to 1990 under the
baseline in 2050 when LULUCF is excluded. The EE, H2, P2X, EE and CIRC scenarios all
achieve between 80% and 83% GHG reductions (Figure 91). Including LULUCF, these scenarios
perform a bit better with reductions between 85% and 88% or on average an extra 4% reduction
compared to the reduction without LULUCF.
Figure 91: Sectoral emissions by 2050
452
COM (2011) 112
-800
-600
-400
-200
0
200
400
600
800
1000
1200
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE 1.5LIFE-LB
MtCO2eq
LULUCF Carbon Removal Technologies Power
Industry Transport Tertiary
Residential Non-CO2 Agriculture Non-CO2 other
197
Source: PRIMES-GAINS-GLOBIOM.
The scenarios in-line with the net zero GHG objective reduce emissions by 91% to 94%. Thus
optimising the natural sink and deploying carbon dioxide removal options are necessary to reach
net zero emissions and possibly generate net negative emissions thereafter.
The different pathways indicate some variability in the evolution of the natural sink, which is
estimated to vary between 230 MtCO2 and 480 MtCO2 in 2050. Important in this context will be
how different increasing levels of biomass are produced, with pathways using energy crops
having least impact on the size of the natural sink, though at the cost of substantial land use
changes.
Pathway such as the 1.5LIFE or 1.5LIFE-LB, which include changes in consumer choice and
circular economy, the combination of reduced energy consumption and increased availability of
land allows for a potential larger role for afforestation and land restoration, reducing significantly
the need for the deployment of biomass with CCS to achieve net zero GHG emissions (see Figure
91 and Table 9).
In the scenarios achieving net zero GHG by 2050, the emitted CO2 budget for the period 2020-
2050 is just below 0 GtCO2. This represents the peak of the cumulative CO2 emissions since after
this period they decrease due to negative emissions post 2050. They reduce as low as 28 MtCO2
in the 1.5TECH scenario and only 23 MtCO2 in 1.5LIFE-LB (with continuing reduction after
2050 and assuming a stabilization of the annual CO2 removals to 2070 level for the period 2070-
2100). Depending on assumptions of negative emissions post 2070 this budget could actually
further vary.
198
Table 9: Sectoral emissions levels and percentage change in total emissions
Baseline ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE 1.5LIFE-LB
2030 (MtCO2eq)
Total GHG excl. LULUCF 3108 3101 3096 3105 3115 3105 3109 3091 3067 3060
Reduction vs 1990 -46% -46% -46% -46% -46% -46% -46% -46% -47% -47%
Total GHG incl. LULUCF 2856 2849 2834 2842 2865 2862 2846 2780 2716 2710
Reduction vs 1990 -48% -48% -48% -48% -48% -48% -48% -49% -51% -51%
2050 (MtCO2eq)
Total GHG excl. LULUCF 2214 1054 1050 1051 1004 976 868 343 489 494
Reduction vs 1990 -62% -82% -82% -82% -83% -83% -85% -94% -92% -91%
Total GHG incl. LULUCF 1978 816 806 788 763 684 620 26 25 23
Reduction vs 1990 -64% -85% -85% -86% -86% -88% -89% -100% -100% -100%
ETS GHGs emissions 772 348 362 385 301 275 297 -50 123 137
Reduction vs 2005 -69% -86% -86% -85% -88% -89% -88% -102% -95% -95%
Non-ETS GHG emissions 1442 706 687 665 702 700 571 393 366 358
Reduction vs 2005 -49% -75% -76% -77% -75% -75% -80% -86% -87% -87%
CO2 emissions 1604 717 712 713 666 638 531 5 203 208
Residential 130 49 56 45 60 66 19 12 11 13
Transport 667 328 317 309 325 317 257 86 95 90
Tertiary 78 40 34 30 44 43 23 19 19 19
Industry 484 231 205 217 225 192 176 29 53 39
Power 246 69 99 113 13 20 56 -141 24 47
Non CO2 610 337 337 337 337 337 337 337 286 286
Agriculture 404 277 277 277 277 277 277 277 230 230
Waste 90 32 32 32 32 32 32 32 29 29
Carbon captured 5 65 63 449 65 52 239 606 281 385
From Biomass 0 5 6 114 4 5 95 276 84 122
From Direct Air Capture 0 0 0 264 0 0 83 210 123 186
Carbon used 5 65 63 449 65 52 239 606 281 385
Geological Storage 5 65 63 77 65 52 67 298 80 92
Synthetic fuels 0 0 0 372 0 0 172 227 154 226
Synthetic Materials 0 0 0 0 0 0 0 80 47 67
LULUCF -236 -238 -244 -263 -241 -292 -248 -317 -464 -472
Sink without carbon price -236 -238 -244 -263 -241 -292 -248 -247 -329 -340
Enhancement with carbon price 0 0 0 0 0 0 0 -70 -135 -132
Cumulative CO2 emissions (GtCO2)
2018 - 2050 71 60 60 61 59 58 58 49 48 48
2018 - 2070 98 61 61 62 61 58 57 41 39 39
2018 - 2100 136 57 56 57 57 53 49 28 24 23
Note: The cumulative emissions 2018-2100 listed as total cumulative CO2 budgets assume the stabilisation
of net emissions at the 2070 level from 2070 onwards.
Source: PRIMES, GLOBIOM, GAINS.
4.10 Economic aspects of energy transformation and decarbonisation
pathways
The decarbonisation of the EU economy is expected to generate significant transformations
across the board. Other factors will nevertheless also influence expected macro-economic
developments to a significant extent, including for example further technological progress (e.g.
innovation in automation, IT and artificial intelligence) and the rise of a global middle class.
Such trends are expected to underpin constant though moderate increases in total factor
productivity growth, which would drive continued real GDP growth, both in absolute terms and
on a per capital basis. The baseline macro-economic growth projections underpinning the
modelling for this strategy indicate that real GDP could be about 2.5 times as large by 2050 than
in 1990. Macro-economic modelling indicates that the impact of decarbonisation and the energy
199
transition on this headline GDP figure would be moderate (section 4.10.5). Evidence from the
period 1990 to date demonstrates that the decoupling of GDP and greenhouse gas emissions has
already started. Modelling results indicate that this trend can be accelerated and reinforced to the
point of achieve a full decoupling, i.e. net zero GHG emissions and continued economic growth
(Figure 92).
Figure 92: Real GDP and net GHG emissions 1.5 TECH (1990 = 100)
Sources: PRIMES, ESTAT, JRC-GEM-E3 and E3ME.
The decoupling of economic growth and GHG emissions would be associated with an increase in
output per energy consumed, as energy efficiency would increase across all scenarios. The degree
to which the “productivity” of energy consumption would increase varies across scenarios, with
the highest gains expected in the energy efficiency and 1.5 LIFE scenarios. By 2050, output per
unit of gross inland consumption could increase by about a factor of two to three depending on
the scenarios (Figure 93).
0
50
100
150
200
250
300
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
1990=100
GDP GEM-E3 1.5°C global action GDP E3ME 1.5°C global action
Net GHG, 1.5°C TECH Baseline GDP
200
Figure 93: Real GDP (million EUR 2013) per energy consumption (Mtoe of GIC), 2015 and
2050
Source: PRIMES.
4.10.1 Investment requirements
The investments required for achieving the 2030 climate and energy targets have been estimated
in the context of previous policy initiatives using the PRIMES model and a comparable
methodology453
.
The pathways envisaged in this strategy (including the Baseline) all reach the 2030 climate and
energy targets along the same trajectory and are therefore very close in terms of costs and
investment up to 2030. Beyond 2030, however, investment and costs diverge significantly across
pathways, reflecting both the level of ambition for decarbonisation and the estimated economic
implication of the options pursued. A higher level of ambition would lead to significantly higher
investment. At the same time, some decarbonisation pathways are more capital intensive than
others and the 80% emissions reduction target by 2050 can be achieved with significantly
different additional investment, depending on the pathway.
This analysis shows that, on average, net zero GHG pathways would require 6.7% more
investment compared to 80% reduction scenarios (see Table 10). Excluding transport, in which
most of the investment represents the replacement of the vehicles as a whole, the increase would
amount to 17%. At global level, the IPCC 1.5°C Special Report estimates that a similar increase
in ambition would require a 12% (ranging between 3% and 23%) increase in global investment
compared to 2°C pathways454
.
453
The impact assessment accompanying the revision of the Energy Efficiency Directive estimated that an
additional EUR 177 billion in annual investment would be needed to reach the 2030 climate and energy
targets. However, this figure does not take into account the increased ambition of the 2030 targets as
finally adopted following negotiating with the European Parliament and the Council nor the recent cost
reduction of renewable energy technologies. The net results of these two opposing trends is a reduction
of approximately 15% of the estimated investments required to reach the 2030 targets.
454
See Section C2.6 of the IPCC Special Report Summary for Policymakers
0
5
10
15
20
25
2015 BL ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
GDP(millionEUR2013)/Grossinland
consumption(Mtoe)
201
Figure 94: Additional annual investment (2031-2050) and total GHG reductions (2050)
relative to Baseline
Source: PRIMES.
In terms of overall investment levels, the 80% reduction scenarios would require an average
annual investment of EUR 1.33 trillion in 2031-2050, compared to EUR 1.19 trillion for the
baseline and EUR 1.42 trillion for the more ambitious pathway (Table 10). Excluding transport
vehicles, average annual investment under the 80% reduction scenarios would amount to
EUR 468 billion (2.4% of GDP) in 2031-2050 compared to EUR 377 billion (1.9% of GDP) for
the baseline and EUR 547 billion (2.8% of GDP) on average for the net zero GHG pathways.
This compares to today (period 2016-2020), when around 2% of GDP is to be invested in the
energy system and related infrastructure (excluding transport). This is in line with the IPCC
1.5°C Special Report that estimates that 1.5°C pathways involve investment in the energy system
of around USD 2.4 trillion per year between 2016 and 2035 (equivalent to around 2.5% of the
world GDP). The Special Report also projects substantial investment needs even under a baseline
scenario (around USD 2 trillion).
-2000
-1900
-1800
-1700
-1600
-1500
-1400
-1300
-1200
-1100
-1000
50.0 100.0 150.0 200.0 250.0 300.0AdditinalGHGreductionrelativetobaseline
(Mega-tonnesCO2)
Additional annual investmentrelativeto baseline(EUR billion 2013)
1,5 LIFE
1,5 TECH
COMBO
CIRC
EE
ELEC
P2X
H2
202
Table 10: Average annual investment by scenario (billion EUR 2013 over the 2031-2050
period; baseline for 2021-2030 is also shown).
Baseline
2021-2030
Baseline
EE
CIRC
ELEC
H2
P2X
COMBO
1.5TECH
1.5LIFE
Supply 115 113 133 154 190 184 233 210 246 201
Power grid 59.2 71.3 80.7 91.0 110.3 91.1 95.3 99.4 102.8 90.3
Power
plants
53.9 40.2 50.5 60.3 76.8 86.6 107.9 93.6 120.3 93.9
Boilers 1.7 1.3 1.1 1.8 1.9 1.0 0.6 0.7 0.8 0.6
New
carriers
0.1 0.3 0.9 0.9 1.0 5.5 28.9 16.2 21.9 16.5
Demand
exc. trans.
281 264 335 285 285 270 271 312 330 318
Industry 18.1 11.1 35.6 13.2 13.6 13.2 13.8 26.3 28.1 22.3
Residential 198.9 199.4 235.1 211.6 214.4 198.9 198.1 218.3 225.9 227.7
Tertiary 64.3 53.7 63.8 60.3 57.0 58.0 59.5 67.1 76.0 67.8
Transport 685 813 857 837 881 907 843 881 904 847
TOTAL 1081 1190 1325 1276 1356 1361 1347 1402 1480 1366
(TOTAL
exc. trans.)
(396) (377) (468) (439) (475) (454) (504) (522) (576) (519)
Source: PRIMES.
Much of these investments455
are needed to replace assets at the end of their economic lifetime
and additional investment requirements are not constant over time. The additional investment
need compared to Baseline is highest between 2040 and 2050 for most scenario. Investment
would be on average around 0.7 percentage point of GDP above baseline in the 80% reduction
scenarios achieving 80% GHG reduction and on average up by 1.2 percentage points in the net
zero GHG scenarios, with a peak of 2 percentage points in some years (see Figure 95). Moreover,
total investment as a share of GDP is around 1 percentage point of GDP higher in 2030 than the
2020 level. The difference relative to 2020 levels gradually declines subsequently before turning
negative between 2050 and 2055. Such increases in investment are large from a macro-economic
perspective, as gross fixed capital formation is currently close to 20% of GDP in the EU. An
increase in total investment of 1-2 percentage points of GDP, for example, would represent a
considerable shift from consumption to capital investments (see section 4.10.5. for a discussion
of macro-economic impacts).
455
See section 7.2.3 for a discussion of investment expenditures reported in PRIMES.
203
Figure 95: additional investments (including transport) compared to Baseline in % of GDP
Source: PRIMES.
On average across scenarios, an additional level of annual investment of EUR 143 billion
(equivalent to a 12% increase in total investment) compared to Baseline is needed to reach an
80% emissions reduction in 2050, which is lower than the incremental investment needed to
achieve the 2030 targets. This nevertheless hides significant differences across pathways, with
values ranging from a minimum of EUR 86 billion (for the circular economy pathway) to EUR
171 billion (for the H2 pathway) (Table 11). Additional annual investment under the higher
ambition pathways range from EUR 176 billion (1.5LIFE scenario) to EUR 290 billion (1.5
TECH).
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
%GDP
ELEC H2 P2X EE
CIRC COMBO 1.5 TECH 1.5 LIFE
204
Table 11: Additional average annual investment compared to baseline (2031-2050, billion
EUR 2013).
EE CIRC ELEC H2 P2X COMBO 1.5 TECH 1.5 LIFE
Supply 20.1 41.0 76.9 71.0 119.5 96.8 132.7 88.2
Power grid 9.3 19.7 39.0 19.7 24.0 28.1 31.4 18.9
Power
plants
10.3 20.1 36.6 46.5 67.7 53.4 80.2 53.7
Boilers -0.2 0.5 0.6 -0.4 -0.8 -0.7 -0.5 -0.7
New fuels 0.6 0.6 0.7 5.2 28.6 16.0 21.6 16.2
Demand
exc. trans.
70.4 20.9 20.8 5.9 7.2 47.5 65.9 53.6
Industry 24.5 2.1 2.5 2.1 2.7 15.2 17.0 11.2
Residential 35.8 12.2 15.0 -0.5 -1.3 18.9 26.6 28.3
Tertiary 10.1 6.6 3.3 4.3 5.8 13.4 22.3 14.1
Transport 44.2 23.9 67.9 94.0 29.8 68.1 90.9 33.9
TOTAL 134.7 85.8 165.6 170.9 156.5 212.4 289.5 175.7
(TOTAL
exc. trans.)
(90.5) (61.8) (97.7) (76.9) (126.7) (144.3) (198.6) (141.8)
Source: PRIMES.
While the modelling highlights the large scale of the additional investment needs, it also shows
the significantly different implications of the various pathways, both in terms of total additional
investment and in terms of the composition of the additional investment (Figure 96). This
highlights the partial substitutability that exists between, for example, investments in energy
efficiency and additional supply-side investments in power generation, or between electrifying
road transport and increasing the use of synthetic fuels. The modelling also shows the potential of
the circular economy and lifestyle changes to reduce additional investments overall. These
pathways indeed require a total level of annual investment around 5% and 8% lower,
respectively, than that of the other pathways with a similar level of ambition. However, energy
models are not in a position to capture fully the related investment needs and costs of the circular
economy or lifestyle changes (see section 7.2). Yet, whenever easy to implement, this type of
measures can be considered as no-regret options to limit investment needs.
205
Figure 96: Minimum (-), maximum (+) and average (x) additional annual investment per
sector (billion EUR 2013 compared to baseline)
Source: PRIMES.
Supply side investments represent approximately 14% of total annual investment levels (average
for all scenarios) in 2031-2050. All pathways show that major additional investments will be
required in power generation and in the grid alike. On average, annual investment in supply is
58% higher under the scenarios achieving 80% GHG reduction than under baseline, with a
minimum of 18% for the energy efficiency pathway and a maximum of 106% for the Power-to-X
pathway. This implies large increases in investment not only in power generation, but also in the
transmission and distribution network. Because of the reduced energy demand, the high energyefficiency
and the circular economy scenarios have the lowest supply-side investment among the
scenarios reaching -80% emissions reduction in 2050.
In monetary terms, investments in power plants increase in the period up to 2040-2045 and fall
subsequently. The anticipation of the emissions cuts in 2050 and beyond, the need of replacing
the obsolete fleet, the increase of electricity demand due to transport, heating and the production
of new fuels, where applicable, explain why the restructuring of the power generation fleet takes
place well before 2050.
In addition, investment needs in power generation and the grid rise markedly with the increased
ambition level of the 1.5°C pathways. At EUR 224 billion per year in 2031-2050, supply side
investments in the 1.5°C scenarios are 98% higher than under the Baseline and 18% to 68%
higher than in 80% reduction pathways, with the exception of the Power-to-X scenario. The latter
requires a similar level of investment in power supply, reflecting the high costs of producing
hydrocarbons from CO2 and the electricity needs of these technologies.
Because of the reduced energy demand, the high energy-efficiency and the circular economy
scenarios require the lowest additional supply-side investment among the scenarios reaching an
80% emissions reduction in 2050. However, for the high energy-efficiency scenario this is
compensated by higher investments on the demand-side.
-20.0
0.0
20.0
40.0
60.0
80.0
100.0
Power grid Power plants
and boilers
New fuels Industry Residential Tertiary Transport
EURbillion2013
206
Demand side investment, excluding transport, represent approximately 22% of total annual
investment levels (average for all scenarios) in 2031-2050. Within this, the residential sector
represents by far the largest component (71.9%) followed by the tertiary sector (21.2%) and
industry (6.9%).
As for the supply side, there are also significant differences between technology pathways.
Among the scenarios with similar ambition, the high energy-efficiency scenarios requires by far
the highest increment in investment in the residential, tertiary and industrial sectors, with an
increase of 27% relative to Baseline. This compares with an increase of 2-3% for the hydrogen
and power-to-X scenarios and 8% for the electrification pathway. This is counterbalanced,
however, by lower investment on the supply side compared to other pathways. This underscores
the extent to which investment in energy efficiency and clean energy production/consumption
can be substitutes, though at varying costs.
Additional investment needs again increase with the level of ambition, but not as markedly as for
the supply side. At an average of EUR 324 billion per year in 2031-2050, demand side
investment in the 1.5°C scenarios is 23% higher than under the Baseline and 14% to 20% higher
than in the 80% reduction pathways, with the exception of the high energy-efficiency scenario
which is 3% higher than the 1.5°C scenarios on this account.
It is notable also that additional investment needs are expected to be very large in industry in
some pathways, not in terms of total amounts compared to other sectors, but as increases relative
to Baseline. The high-electrification, hydrogen, power-to-X and circular economy pathways
enable a limited increase relative to Baseline of 19% to 24%. However, the energy efficiency and
the 1.5°C scenarios would imply doubling or more than tripling (energy efficiency scenario)
Baseline investment levels in this sector. The reason for this increase is that the model PRIMES
assumes rapidly increasing costs as energy efficiency options in industry saturate in the longterm.
Despite using somewhat different assumptions, the investment requirements estimated for
industry by the FORECAST model (see section 4.5.2) are comparable to those estimated by
PRIMES. Depending on the scenario, the FORECAST model estimates that decarbonising the
European industry will require additional investment of EUR 4 to 9 billion per year between
2015 and 2050.
In transport the additional investment needs456
relative to the Baseline range between EUR 24
billion and EUR 94 billion annually during 2031-2050 (39% to 94% of total additional demandside
investments). Among the scenarios achieving 80% GHG reduction, the highest level of
investment is projected in the hydrogen scenario, due to the higher costs of fuel cell vehicles. In
the power-to-X scenario, investment needs are low as e-fuels can work with conventional power
trains and the uptake of plug-in hybrid and battery electric vehicles is more limited than in other
scenarios. As explained above, investment needs increase with the level of ambition in the
Combined and 1.5 TECH scenarios. However, the 1.5 LIFE scenario shows low additional
investment needs driven by shared mobility and the assumed increase in the occupancy rates.
This results in a decrease of the total passenger cars fleet relative to the Baseline, and lower
investment in air transport457
. In the CIRC scenario, similar considerations apply regarding the
passenger cars fleet.
456
This includes investments in transport equipment for mobility purposes (e.g. rolling stock) and energy
efficiency. They exclude investments in road infrastructure and recharging infrastructure.
457
The strong shift from air transport to rail in this scenario implies lower investments in aircraft.
However, for rail only the investments in the rolling stock are reflected; the investments required for
additional infrastructure are not covered.
207
The additional investment for decarbonisation will be reflected in total system costs, and
accounted for as equivalent annuity payments for capital. However, decarbonisation will also
affect system costs as a result of the substitution of fossil fuels with renewable energy sources.
Total system costs reflect the total impact of the scenarios on energy costs as borne by end-
consumers.
4.10.2 Energy system costs and prices
Total energy system costs458
increase over the entire modelling horizon and progressively diverge
across scenarios to differ significantly by 2050 (Figure 97). The level of cost is strongly
correlated with the level of ambition, though not perfectly. Total system costs are lowest under
the Baseline and highest under the 1.5 TECH scenario. The power-to-X and H2 pathways
generate total system costs that approach higher ambition scenario, although they achieve a lower
level of reduction in emissions. As indicated above, the high energy-efficiency generates the
largest additional investment need among all the 80% scenarios, but the impact on total system
costs is mitigated by the lower energy consumption that results from efficiency gains.
458
Energy system costs for the entire energy system include capital costs (for energy installations such as
power plants and energy infrastructure, energy using equipment, appliances and vehicles), energy
purchase costs (fuels + electricity + steam) and direct efficiency investment costs, the latter being also
expenditures of capital nature. Capital costs are expressed in annuity payments, calculated on the basis
of sector-specific discount rates. For transport, only the additional capital costs for energy purposes
(additional capital costs for improving energy efficiency or for using alternative fuels) are covered.
Direct efficiency investment costs include additional costs for house insulation, double/triple glazing,
control systems, energy management and for efficiency enhancing changes in production processes not
accounted for under energy capital and fuel/electricity purchase costs. They do not include any
disutility costs associated with changed behaviour, nor the cost related to auctioning of allowances
which lead to corresponding revenues which can be used. Energy system costs are calculated ex post
after the model is solved. The calculated cost is influenced by the discount rate used; capital
expenditures and energy efficiency investment costs have been discounted with a financial discount rate
of 10%.
208
Figure 97: Total energy system costs, 2005-2070
Source: PRIMES.
As a percentage of GDP, energy system costs are expected to increase from 12.5% in 2020 to
12.6% in 2030. These costs are lower than previously estimated459
due to cost reduction for key
technologies (e.g., renewable energy and electric batteries). In addition, after 2030, GDP growth
offsets the increase in system costs and the rising trend in the ratio to GDP is reversed (Figure
98).
The energy purchases part of total system costs (i.e. the bulk of non-capital costs) falls below
Baseline for most scenarios and most sectors, with the exception of industry. Due to fuel
switching to electricity and other carbon-free fuels, energy purchases in industry are higher than
under the Baseline in all scenarios except the high energy-efficiency and the circular economy
pathways. As a consequence of their additional investment, households and the tertiary sector
face lower energy purchases for virtually the entire 2030-2050 period than under the Baseline.
Savings on energy purchases are significant in all scenarios except the Power-to-X pathway. In
this case, the lower level of additional investment is counter-acted by higher fuel costs.
459
Impact Assessment of the 2050 Energy Strategy: https://ec.europa.eu/energy/en/topics/energy-strategy-
and-energy-union/2050-energy-strategy
1200
1400
1600
1800
2000
2200
2400
2600
2800
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
EURbillion2013
BL ELEC H2 P2X EE
CIRC COMBO 1.5 TECH 1.5 LIFE
209
Figure 98: Total energy system costs as a percentage of GDP, 2005-2070
Source: PRIMES.
The modelling used considers that the average electricity prices ensure a full recovery of the
power system costs. Fuel costs and annualised capital costs are divided by the total electricity
generation deriving an estimate of the average electricity generation price. Transmission and
distribution costs are allocated according to user characteristics (e.g. connection voltage) and
consumption profiles (e.g. mainly off-peak or on-peak consumption). This results in different
average prices for different final users. Figure 99 shows the weighted average of final end-users
electricity prices as projected by PRIMES for both the Baseline and decarbonisation scenarios.
Electricity prices increase until 2030, reflecting the costs of decarbonising the power system.
After 2030, the electricity price stabilises at a level similar to the Baseline for the Electrification
(ELEC) Energy Efficiency (EE) and Circular Economy scenarios. However, average electricity
costs after 2030 are higher for the H2 and Power-to-X scenario and also increase with increasing
climate ambitions (COMBO, 1.5 TECH and 1.5 LIFE scenarios). In the scenarios in which the
power system produces hydrogen and e-fuels sold to final consumers, the storage of these fuels in
fuel distribution facilities help the power system to further maximise the use of renewables and
manage the system. These indirect contributions of final consumption e-fuels to the power system
costs are not included in electricity costs, as the e-fuel producers do not receive payment for the
indirect services provided to the power system.
7
8
9
10
11
12
13
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
%GDP
BL ELEC H2 P2X EE
CIRC COMBO 1.5 TECH 1.5 LIFE
210
Figure 99: Projected average electricity prices for final users
Source: PRIMES.
The modelling applies a stylised carbon price in the ETS sectors, which increases significantly
under all scenarios, with carbon prices at 250 EUR/tCO2 in 2050 under the 80% reduction
scenarios and 350 EUR/tCO2 under the scenarios that achieve net zero GHG emissions by 2050
(see also 7.2.2.2 on the modelling methodology of the carbon price signal). Such carbon prices of
course apply only to a residual volume of remaining emissions. For the power sector (including
CHP installations) auctioning is assumed, and thus any costs related to the carbon price are
incorporated in the electricity price. For the 1.5 TECH scenario, emissions from the power sector
(and ETS sectors as a whole) are actually negative by 2050.
Generation costs depend mainly on the cost of carbon-free technologies. As a result, generation
costs are very similar in all scenarios and projected to decrease from 2020 onwards. However,
transmission and distribution costs are projected to increase and offset the decrease of generation
cost. As an example, Figure 100 shows the composition of electricity costs in the high
electrification scenario (ELEC).
0
50
100
150
200
250
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
EUR2013/WMh
BL ELEC H2 P2X EE
CIRC COMBO 1.5 TECH 1.5 LIFE
211
Figure 100: Composition of electricity costs in the high electrification scenario (ELEC)
Source: PRIMES.
For industry, energy related costs are projected to increase throughout the modelling horizon. In
most of the 80% reduction scenarios, the rate of increase is slightly higher between 2020 and
2030 than from 2030 onwards. The cost is noticeable higher in the 1.5 TECH scenario though.
Figure 101 shows the energy related expenses per unit of value added. It reaches in 2050 from
12% to 14%, to the exception of 17% for 1.5 TECH, compared to about 12%-14% in 2010-2015.
Figure 101: Energy related expenses in % of sectoral value added in industry
Source: PRIMES.
While the scale of the investment challenge in transport is significant in all scenarios it leads to
lower operational costs (energy expenditures). Average annual energy purchases in transport
during 2031-2050 are reduced between EUR 52 to 78 billion relative to the Baseline. Only the
P2X scenario shows higher energy expenditures relative to the Baseline (EUR 4 billion) due to
the higher costs of e-fuels. The other 80% reductions scenarios, show very similar energy cost
savings.
0%
20%
40%
60%
80%
100%
2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
Annual capital, fixed and O&M costs Fuel costs Other generation costs Grid costs Other costs
10%
12%
14%
16%
18%
2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
%Valueadded
Baseline EE CIRC ELEC H2
P2X COMBO 1.5TECH 1.5LIFE
212
Overall, total average annual costs in transport460
during 2031-2050 are EUR 15 to 60 billion
higher relative to the Baseline. The highest costs are shown in the H2 and P2X scenarios, driven
by the costs of powertrains and e-fuels, respectively. At the opposite end, the lowest costs relative
to the Baseline are projected in the CIRC scenario and 1.5 LIFE scenario; however, the disutility
associated to lower transport activity and the possible loss of comfort are not monetised.
4.10.3 Social aspects related to the fuel expenses
The energy transition will impact consumers in contrasting ways in the medium and long term.
Up to 2030, energy-related expenses (including fuel costs and energy equipment expenditure) per
household are expected to increase significantly in absolute terms under the baseline and all
scenarios (Figure 102). In 2030, on average, every household is expected to spend for energy
services EUR 570 per year more than in 2015 (at EUR 2013 prices). This corresponds to a 21%
increase and comes on the back of a 67% increase over the 2000 – 2015 period. Rising real GDP
and household income means that energy-related expenses in 2030 amount to the same share of
household income (7.3%) as in 2015. Much of the impact on households was absorbed between
2000 and 2015, when energy-related expenses as a share of income rose from 4.7% to 7.3%.
After 2030, the results vary significantly across scenarios, with the energy efficiency scenario
yielding a pay off in terms of lower fuel expenditure. In contrast, the high-ambition 1.5 TECH
scenario and the scenarios relying on costly power-to-X and hydrogen yield higher energy-related
expenses for households.
There are several reasons for these trends. The decarbonisation effort is already strong in the first
part of the transition. Moreover, a large share of the emissions reduction will be achieved with
technologies that are projected to become cheaper in the coming decade. Deploying such
technologies will be cheaper after 2030 than it is now. Finally, energy efficiency gains are
expected to continue in the long term, thereby reducing energy consumption and expenditures
over several decades.
460
These costs mainly cover the additional capital costs for energy purposes (additional capital costs for
improving energy efficiency or for using alternative fuels) and the energy expenditures.
213
Figure 102: Energy related expenses per households in different scenarios (EUR 2013)
Source: PRIMES.
The rising trend in energy-related expenses as a share of income is expected to peak at about
7.5% around 2025-2030 before declining thereafter under all scenarios as the benefits of the
energy transition materialise in full (Figure 103). By 2050, households would spend 5.6% of
income on energy-related expenses, i.e. nearly 2 percentage points lower than in 2015 and lower
than the share in 2005.
These figures should be understood in the context of significant variability across Member States
and across income classes. For example, recent analysis shows that the poorest ten percent of the
European population currently spends on average 10.4% of its income to satisfy its energy needs
(i.e. higher than the average 7.3% quoted above). Currently, the poorest households in Sweden
spend only 3% of their total expenditure on energy, whereas in Slovakia this share is higher than
23%.
Increases in energy-related expenses in the recent past highlight that the European Union needs to
step up its effort to mitigate the social costs of the transition. Households with financial means
and available options will be in the position to offset higher energy costs investing in energy
efficiency and renewable energy. Other households might not have this opportunity and this
category includes low-income households that are more exposed to energy poverty. Guaranteeing
continued and inclusive economic growth and rising living standard is the most important
measure to offset the sustained high-levels of energy-related expenses a share of income through
the 2030 horizon. In this context, it will be particularly important to protect vulnerable consumers
with the effort should focused on the next decade.
2000
2200
2400
2600
2800
3000
3200
3400
3600
3800
4000
2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
EUR2013
BL ELEC H2 P2X EE
CIRC COMBO 1.5 TECH 1.5 LIFE
214
Figure 103: Energy related expenses per households in different scenarios (% of income)
Source: PRIMES.
4.10.4 Impact on energy import expenditure
In 2016, the EU produced 45% of the energy it consumed and imported 55%461
, almost entirely
as fossil fuels. Oil imports represent the bulk of these imports (60% of the total and more than
90% of oil consumed in the EU), followed by natural gas (30% the total and more than 70% of
gas consumed in the EU) and coal. Because of higher volume and higher unit price, oil represents
the most expensive energy import cost462
for the EU, which since 2005 has oscillated between 1%
and 2.5% of GDP463
(1.7% on average over 2005-2015). The cost for the EU of fossil fuel
imports (thus also including gas and coal) has been close to 2.5% of GDP on average over 2005-
2015.
In decarbonisation scenarios, energy imports in the EU remain close to current levels until 2030,
mostly because of the expected reduction of domestic oil and gas production, which could be
halved by 2030 compared to 2010. However, import dependency fall strongly afterwards from
more than 50% in 2030 to 27-38% by 2050 in the scenarios reaching 80% reductions and to 20%
in the net zero emissions scenarios – see more detail in section 4.2.2.5.
The value of net fossil fuel imports decreases in all decarbonisation scenarios464
. In the period
2021-30 the value of fossil fuels import bill is projected to reach EUR 421 billion per annum on
average and it would continue to grow without strong decarbonisation throughout because of
rising fossil fuel prices (volume of imports decreases as described in section 4.1.2). As a share of
461
Eurostat (2018): https://ec.europa.eu/energy/en/data-analysis/energy-statistical-pocketbook
462
EC, EU Crude Oil Imports and supply cost (retrieved 02/08/2018)
463
WB, GDP (retrieved 02/08/2018)
464
Fossil fuel prices are assumed to be the same in all scenarios.
0
1
2
3
4
5
6
7
8
2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
%income
BL ELEC H2 P2X EE
CIRC COMBO 1.5 TECH 1.5 LIFE
215
GDP, net fossil fuel imports are expected to decrease after 2025, and even to go below current
levels after 2030 in all decarbonisation cases (Figure 109).
Figure 104: Net fossil fuel imports as % of GDP
Source: PRIMES.
Net fossil fuel imports in the Baseline amount to 2.2% of GDP per annum over 2031-2050, and
1.7% over 2051-2070. In the decarbonisation scenarios, average yearly imports are reduced to
between EUR 286 billion/year and EUR 362 billion/year over the period 2031-50, i.e. 1.4% to
1.8% of GDP. In 2050, energy imports represent 1.2% to 1.3% of GDP in the 80% reduction
cases, and 0.8% in the net zero emissions scenarios. Over 2051-2070, annual net fossil fuel
imports are expected to be further reduced to between EUR 164 billion/year and EUR 245
billion/year.
Based on these figures, it is estimated that in the period 2031-50 the decarbonisation scenarios
would bring cumulative savings (over 20 year) in the fossil fuels import bill ranging from EUR
1.4 trillion to EUR 3 trillion.
0
0.5
1
1.5
2
2.5
3
3.5
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
%GDP
BL ELEC H2 P2X EE
CIRC COMBO 1.5 TECH 1.5 LIFE
216
Figure 105: Cumulative savings on net imports of fossil fuels, difference from baseline in
2031-2050 (full bars) and 2051-2070 (patterned bars)
Source: PRIMES.
In addition, the import prices of oil, gas and coal are actually likely to decrease in a global
decarbonisation context whereby all regions would move away progressively from fossil fuels465
.
As a consequence, it is expected that the cost for the economy of fossil fuel imports would be
even lower if this impact of global action would have been taken into account.
By 2030 natural gas imports will still remain an important energy source. However, with natural
gas imports expected to reduce by 60-92% by mid-century in a decarbonisation context, the longterm
use of existing import capacities is an open question. Answering this question requires an
accurate estimate of gas demand in the short and medium term, its interaction with Member
States policies (such us the coal phase outs announced by several Member States) and its timing
compared with the projected rise of electricity demand. The long-term analysis performed in the
context of the Long Term Strategy is not best suited to address this issue. Imports of carbon-free
fuels, like biomass (in a solid or liquid form), hydrogen or e-fuels could benefit from existing
energy import facilities.
At global level, shifting away from fossil fuels will trigger considerable shifts in the energy trade
patterns. For exporting regions diversification of their economy, including probably developing
other energy sources, would help producers adapt.
The challenges to security of supply will evolve over time and existing security challenges are
likely to lose importance and new challenges are likely to emerge. Although the energy transition
will improve the energy trade balance of the EU, it might increase import dependency on other
raw materials used in low-carbon technologies. Current production of resources such as lithium,
cobalt or graphite are located in few countries or regions in the world, which may require a reassessment
of the EU diplomacy priorities to secure access to scarce and valuable raw
materials466
.
465
See WEO 2017, figure 1.5 (IEA, 2017), or GECO 2017, figure 28 (JRC, 2017, doi:10.2760/474356)
466
Andrews-Speed, P. et al. (2014). Conflict and cooperation over access to energy: Implications for a lowcarbon
future. https://doi.org/10.1016/j.futures.2013.12.007
0
1000
2000
3000
4000
5000
6000
7000
ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
EURbillion2013
217
4.10.5 Macroeconomic impacts of the climate and energy transition
The EU’s deep decarbonisation and the energy transition will affect all sectors of our economies,
as well as our trade relations with the rest of the world. Deep decarbonisation will not only
determine what we produce and how we produce it, but also what we consume and how we
consume it. At the core of the transition, the structure of our energy system will evolve in
fundamental ways, thereby reducing our dependency on energy imports. Deep decarbonisation
will not be the only transformative trend that will affect the EU and global economy over the
coming decades. For example, the transformation will take place in a context of an ageing EU
population and evolving globalisation as well as some effects of climate change (much more
moderate though if decarbonisation objectives are achieved).
Macro-economic modelling enables an assessment of the impact of decarbonisation on broad
economic aggregates as well as the composition of output, employment, international trade and
sectoral competitiveness. It faces limitations, however, when it comes to providing deeper
insights on the precise nature of the transformation of individual sectors (see section 7.2).
In addition, modelling over very long-term horizons (e.g. 2050 and beyond) should not be seen as
forecasts in the sense of short-term economic forecast, which seek to make relatively firm
predictions of detailed economic indicators. Instead, long-term modelling is constructed to assess
the impact of key factors and assumptions relative to a “baseline” of likely long-term
developments. It therefore abstracts from short- or medium-term economic factors that may
affect the trajectory of our economies in significant ways, e.g. financial crises, disruptive
technological innovation, etc.
All modelling results used in this section operate on this principle and seek to isolate the impact
of decarbonisation by focusing on deviations from the Baseline. Projections of long-term GDP
growth under the Baseline rely on the growth accounting methodology used in the European
Commission’s Ageing Report467
. The Baseline is constructed based on the report’s assumptions
regarding population and labour force projections, as well as expectations about the growth of
total factor productivity. It uses the report’s central assumptions and the modelling in this context
does not seek to mirror the sensitivity analyses conducted for the Ageing Report468
as scenarios
focus on the impact of decarbonisation.
The Joint Research Centre’s GEM-E3 (computable general equilibrium) model was used to
assess a range macro-economic issues stemming from the analysis of the energy transition. The
macro-economic baseline was constructed using the results of the PRIMES energy system model
for the baseline energy scenario469
. For the rest of the world, the macro-economic baseline
assumes implementation of the Intended Nationally Determined Contributions (INDCs) as
reported to the UNFCCC and as modelled by POLES-JRC. Two levels of ambition for the EU
were modelled: (1) a reduction in GHG emissions of 81% by 2050 relative to 1990, consistent
with the EU’s contribution to a 2°C objective, using the results from the PRIMES ELEC scenario
(the 80% reduction scenarios); and (2) a reduction in GHG emissions of around 94% consistent
with emissions reduction achieved in the 1.5TECH scenario (1.5°C scenarios). Including the
467
European Commission (DG ECFIN), “The 2018 Ageing Report. Underlying Assumptions & Projection
Methodologies”, European Economy Institutional Paper 065; and European Commission (DG ECFIN),
“The 2018 Ageing Report Economic & Budgetary Projections for the 28 EU Member States (2016-
2070)”, European Economy Institutional Paper 079.
468
The Ageing Report conducts sensitivity analyses based on different assumptions regarding life
expectancy, fertility, migration, total factor productivity growth or retirement age. None of these
sensitivities are assessed here as they are not directly related to the decarbonisation pathways.
469
The macro-economic baseline therefore integrates the measures as adopted under the 2030 climate and
energy framework, e.g. on the EU ETS, the Effort Sharing Regulation or energy efficiency.
218
LULUCF sink, the 1.5°C scenarios achieve GHG neutrality by 2050, but JRC-GEM-E3 does not
model LULUCF absorptions and emissions.
Further, two possible configurations for the EU and the rest of the world were modelled in each
case: (1) fragmented action scenarios where the EU achieves the 81% reduction in 2050 relative
to 1990 levels or net GHG neutrality while the rest of the world adheres only to nationally
determined contributions as submitted to the UNFCCC, (in-line with projections by the POLESJRC
model); and (2) global action scenarios where the EU achieves the 81% reduction or net
GHG neutrality by 2050 while the rest of the world achieves reductions of 46% or 72%,
respectively, in-line with projections by the POLES-JRC model.
In addition, several variants to the scenarios were modelled to assess the impact of varying
assumptions on the labour market, carbon pricing in the ETS and non-ETS sectors, the behaviour
of firms in ETS sectors and the use of carbon-based revenues.
The E3ME (Cambridge Econometrics) macro-econometric model was used in parallel to provide
as comprehensive a picture as possible. The model was similarly made consistent with the
PRIMES Baseline. As for the JRC-GEM-E3, fragmented and global action scenarios were
modelled for two given levels of efforts for the EU: an 81% reduction in GHG by 2050 (ELEC
scenario) and net GHG neutrality by 2050 (1.5°C TECH scenario). Finally, the QUEST model
from the Directorate General Economic and Financial Affairs was also used to simulate results
for the Baseline, an 80% reduction scenario and a 1.5°C scenario (net GHG neutrality by 2050),
with a sensitivity analysis on the use of revenues from the auctioning of ETS allowances.
Modelling results vary to a limited extent only, regardless of scenario, and convey a consistent
message: the impact of decarbonisation on GDP will be limited470
. While JRC-GEM-E3 indicates
that decarbonisation will typically entail a small negative effect on GDP by 2050, E3ME and
QUEST suggest that the impact of decarbonisation efforts on GDP could actually be moderately
positive, including in the context of achieving net GHG neutrality. The distinct assumptions
regarding market imperfections and whether the economy operates at full capacity are at the heart
of these differences. E3ME assumes that the economy has some unused resources to begin with,
which means that additional investment in decarbonisation operates as a demand stimulus and
spurs additional growth. Additional investments need to be financed through borrowing,
however, and the cost of repaying loans generates a negative stimulus at a later stage. QUEST
also assumes that decarbonisation efforts generate a positive expenditure shock (additional
investment). Instead, JRC-GEM-E3 assumes that the economy is at an equilibrium, without any
unused resources. It therefore projects small negative impacts due to changes in the allocation of
production factors between sectors, with resulting impacts on productivity. It must be noted,
however, that the differences in results between the three approaches are small.
The negative impact implies at worst that real GDP would be 1.30% lower in 2050 than under the
baseline (JRC-GEM-E3, 1.5°C global action scenario). At best, the positive impact could imply
that real GDP would be 2.19% higher than baseline in 2050 (E3ME, 1.5°C global action
scenario). The QUEST modelling results lie between these two (Table 12). Considering the GDP
impact over the entire period, JRC-GEM-E3 indicates that the deviation from baseline gradually
increases through to 2050 where it is highest. In turn, the impact on GDP under the E3ME model
gradually increases over time as the stimulus operates in full by around 2045, after which the
repayment of loans moderates the positive impact on GDP. Under the 1.5°C global action
scenario, the positive impact peaks at 3.0% in 2045 before falling to 2.2% in 2050.
470
These estimates exclude the co-benefits of the energy transition (e.g. the benefits of reduced air
pollution, see also 5.7), the costs of adapting to climate change and avoided climate impacts.
219
Table 12: GDP impacts of 80% reduction and 1.5°C scenarios (deviation from Baseline,
percent).
GDP vs.
Baseline, 2050
Fragmented action Global action
Temperature
target
2°C 1.5°C 2°C 1.5°C
EU action1
-80%
Net GHG
neutrality
-80%
Net GHG
neutrality
Global1
action NDC NDC -46% -72%
JRC-GEM-E32
-0.13% -0.63% -0.28% -1.30%
E3ME 1.26% 1.48% 1.57% 2.19%
QUEST 0.31% 0.68% -- --
1
GHG emissions or policy implemented.
2
Deviation from Baseline in % of GDP for the model variant that assumes maximisation of
profit in ETS sectors, flexible wages in the long run and lump-sum transfer of carbon revenue to
households.
Sources: JRC-GEM-E3 and E3ME.
As expected, the 1.5°C scenarios yield the biggest difference between modelling approaches, but
all modelling results (including the 80% reduction scenarios) fall within this narrow 3.5
percentage points range. The three approaches therefore indicate that net GHG neutrality can be
achieved with only limited impacts on GDP, either positive or negative. Results from the JRCGEM-E3
model also indicate that unilateral action by the EU to achieve net GHG neutrality by
2050 would entail only limited costs in terms of GDP. In turn, the OECD estimated that
mitigation policies could have a positive impact of 2.2% by 2050 for advanced fuel-importing
G20 countries under a coordinated 2°C scenario, if accompanied by structural reforms and green
innovation471
.
These GDP impacts must also be put in the context of economies that are set to continue growing
under all circumstances, mainly because of increases in total factor productivity (technological
progress and innovation). They should therefore be understood as decarbonisation leading the EU
economy to grow at worst by 66.0% between 2015 and 2050 instead of 68.1% under the Baseline
(JRC-GEM-E3, 1.5°C global action scenario), or growing at best by 73.7% instead of 70.7%
(E3ME, 1.5°C global action scenario) and growing by 69.3% instead of 68.4% (QUEST, 1.5°C
scenario). If 1990 is used as a point of comparison, net GHG neutrality could be achieved by
2050 while growing the economy by 152% to 163%. This would translate into increases in GDP
per capita of 126% to 136%.
While GDP impacts differ relatively little between modelling approaches, the implications of
fragmented vs. global action are more contrasted472
. Under JRC-GEM-E3, fragmented action
generates somewhat less negative impacts on GDP than global action. A unilateral effort to
471
OECD (2017), “Investing in Climate, Investing in Growth”, OECD Publishing.
472
Without taking into account the economic cost of climate change affecting economy or, in case of
global action, avoiding large part of such costs.
220
reduce emissions by 80% or achieve net GHG neutrality by 2050 means that producers of
internationally traded goods face higher costs and potentially negative impacts on
competitiveness. However, global action also means that world GDP, and hence export markets,
are negatively affected by the cost of decarbonisation473
. Overall, the market size effect
predominates the competitiveness effect, which means that leading the way on decarbonisation
actually entails some gains for the EU in terms of GDP rather than costs. Further, the
competitiveness effect is mitigated by the effort already present in the baseline for the EU. The
difference between fragmented and global action is nevertheless small and does not exceed
0.2 percentage point of GDP under the 80% reduction scenarios and 0.8 percentage points under
the 1.5°C scenarios.
Individual sectors are nevertheless affected in ways that differ from the impact on GDP. In
particular, the impact on key internationally traded goods sectors (ferrous metals, non-ferrous
metals, chemicals, paper products and non-metallic minerals) is more favourable (bigger positive
or smaller negative) under the global action scenario than under fragmented action (Table 13).
For these sectors, the competitiveness effect appears to be more important than the market size
effects and the contrast is larger for the more energy-intensive and trade-oriented sectors. This
entails that under a global action scenario, EU industry could benefit from first-mover
advantages, even though they would likely decrease over time474
. Overall, it is important to note
that the impacts on output remain relatively small under both the fragmented and global action
scenarios.
473
As for the EU, JRC-GEM-E3 assumes that the economies of other countries or blocks operate at full
capacity and that decarbonisation entails a moderate cost in terms of GDP.
474
European Commission (2017), “A technical case study on R&D and technology spillovers of clean
energy technologies”,
https://ec.europa.eu/energy/sites/ener/files/documents/case_study_3_technical_analysis_spillovers.pdf
221
Table 13: Sectoral output impacts, (deviation from Baseline, percent)475
.
2050 Fragmented action Global action
80%
reduction
1.5°C
80%
reduction
1.5°C
Fossil-fuels
industries1 -32.6 -54.5 -33.0 -40.6
Electricity
supply2 10.1 23.8 9.2 29.7
Ferrous metals -4.4 -10.1 2.3 5.5
Non-ferrous
metals
-1.0 -1.2 0.6 6.1
Chemical
Products
-1.9 -2.7 -1.8 -1.1
Paper products 0.2 1.1 1.3 6.8
Non-metallic
minerals
-1.3 -3.5 0.3 1.7
Electric Goods 0.6 -2.7 0.1 -3.4
Transport
equipment
-2.3 0.0 -2.9 -3.9
Construction 1.4 3.3 1.0 2.5
Transport -2.5 -5.6 -2.5 -8.7
Market Services -0.4 -0.7 -1.1 -2.9
1
Coal and crude oil, oil and gas industries.
2
Power generation, transmission and distribution as well as electricity sales and trade.
Source: JRC-GEM-E3.
E3ME offers a contrasting perspective on the effect of fragmented vs. global action. Since
decarbonisation investments act as an economic stimulus in economies with spare capacity,
global action generates higher output in the rest of the world than fragmented action. Increased
market size therefore cumulates with the positive impacts of global action on the competitiveness
of EU industries so that global action generates a higher stimulus than fragmented action. Under
the 80% reduction scenario, the positive impact on GDP by 2050 amounts to 1.26% under
fragmented action and 1.57% under global action.
While aggregate output is unlikely to be affected significantly by decarbonisation, this is not so
for the sectoral composition of output, i.e. what we produce. The output of sectors related to
475
Variant of the model with profit maximisation in ETS sectors, perfect labour markets and lump-sum
transfers of carbon revenue to households.
222
fossil fuels is expected to contract sharply relative to baseline by 2050, with the baseline itself
already factoring-in significant declines in output (Table 13). In turn, output in industrial sectors
is expected to remain slightly above or below baseline, depending on the scenario (fragmented or
global action). This reflects both continued demand for industrial products and the preserved
competitive position of EU industries globally. The modelling indicates that transport will be
negatively affected, as the sector starts from a high initial reliance on fossil fuels and in certain
cases has more limited decarbonisation options.
In addition to assessing the impact of fragmented vs. global action, a sensitivity analysis was run
under the JRC-GEM-E3 scenarios in order to assess the impact of firms in ETS sectors fully
reflecting the opportunity costs of free allowances in their behaviour (profit maximisation) vs. not
reflecting such opportunity costs (maximisation of volumes or market shares). This sensitivity
analysis was run as industrial firms, particularly those exposed to international competition, often
claim that they are not able to include the opportunity cost of free allowances in their price
setting. The impact of labour market imperfections and the recycling of carbon revenue to reduce
labour market taxation was also considered as part of this analysis (see also below).
Market share maximisation generates a minimally smaller loss in GDP than profit maximisation
under the model set-up with perfect labour markets and lump-sum transfers of carbon revenue476
to households as higher output in ETS sectors is offset by somewhat lower output in non-ETS
sectors due to higher carbon prices (Table 14). If labour market imperfections are also factored
in, recycling carbon revenues to lower labour taxation generates a small positive effect on GDP
as carbon revenues enable a tax shift that reduces distortions linked to labour market taxation.
The larger the carbon revenues (as occurs under market share maximisation vs. profit
maximisation), the more positive the effect. Overall, the recycling of carbon revenues to reduce
labour taxation improves economic output and reduces production costs in industry, which has a
positive impact on the competitiveness (and output) of industrial sectors. Recycling of carbon
revenues to reduce labour taxation is therefore and additional policy measure that can be used to
facilitate the transition of the industrial sector.
476
Under this assumption, all carbon revenues are redistributed to households in the form of a lump sum.
Under the recycling assumption, carbon revenues are instead used to lower taxes on labour. In both
cases, the impact on the government is assumed to be neutral, which means that the scale of the labour
taxation shift (and hence is distortionary impact) is commensurate to the level of carbon revenues
raised. Carbon revenue in the JRC-GEM-E3 model arise both from ETS and non-ETS sectors.
223
Table 14: Impact on GDP, profit maximisation, market share maximisation and carbon
revenue recycling.
GDP vs. Baseline, 2050
JRC-GEM-E3
Fragmented action Global action
80%
reduction
1.5°C
80%
reduction
1.5°C
Profit maximisation
Perfect labour market
Lump-sum transfers
-0.13% -0.63% -0.28% -1.30%
Market share maximisation
Perfect labour market
Lump-sum transfers
-0.10% -0.59% -0.25% -1.26%
Market share maximisation
Imperfect labour market
Revenue recycling
0.05% -0.29% -0.18% -1.09%
Source: JRC-GEM-E3.
The intensity of the positive impact on the output of ETS sectors of shifting from profit
maximisation to market share maximisation varies depending on exposure to international trade
and carbon intensity. Sectors that are both carbon intensive and highly exposed to international
trade (ferrous metals, non-metallic minerals) register a larger positive effect on output when
shifting to market share maximisation than sectors that are less carbon intensive and more
focused on domestic markets (chemicals, paper products, non-ferrous metals). The positive effect
on output is also larger when carbon revenues are used to lower labour taxation (Table 15).
Table 15: Impacts on ETS sectors, (deviation in output from baseline, percent).
Deviation in output vs. baseline
maximisation, 2050
JRC-GEM-E3
Fragmented action
80% reduction
Ferrous metals
Non-metallic
minerals
Chemicals
Profit maximisation
Perfect labour market
Lump-sum transfers
-4.4 -1.3 -1.9
Market share maximisation
Perfect labour market
Lump-sum transfers
2.4 0.8 -1.2
Market share maximisation
Imperfect labour market
Revenue recycling
2.9 1.1 -0.8
Source: JRC-GEM-E3.
The impact of decarbonisation on private consumption could be somewhat more significant,
though still not very large. Differences between modelling approaches are also more noticeable.
The negative impact under JRC-GEM-E3 is at most 1.0% under the 80% reduction scenarios and
3.4% under the 1.5°C scenarios. However, this mostly reflects a sharp drop in the consumption of
non-durables linked to durables, i.e. mainly a drop in energy consumption for heating and cooling
224
as well as for transport, falling by more than 30% relative to Baseline in 2050 under the 80%
reduction scenarios and by close to 50% under the 1.5°C scenarios. In contrast, consumption of
durables could rise by up to 12% by 2050 under the 80% reduction scenarios and by more than
20% under the 1.5°C scenarios. In turn, the consumption of non-durables other than energy
would increase by up to 1.8%. Given that the model assumes that the economy operates at full
capacity, any increase in investment in one sector must be met by a decrease in investment in
other sectors, or a decrease in private consumption through a reallocation of resources (full
crowding out). It does indeed appear that decarbonisation entails a shift from consumption to
investment throughout the transition period (Figure 106). This shift is generally more significant
under the 1.5°C scenarios than under the 80% reduction scenarios.
Figure 106: investment (full bars) and private consumption (patterned bars), deviation
from baseline (%)1
1
Model variant that assumes maximisation of profit in ETS sectors, flexible wages in the long run and
lump-sum transfer of carbon revenue to households.
Source: JRC-GEM-E3.
Significant investments will be required to decarbonise the energy system and industry and to
foster research and innovation. To some extent, this will mean other types of investment than
under the Baseline rather than additional investments. At the aggregate level, it nevertheless
remains that additional resources will need to be mobilised for investment, as reflected in the
modelling. The assumed crowding out effect dampens the impact of the decarbonisation
scenarios on aggregate investment, even though a small shift in aggregate resources from
consumption to investment takes place under almost all scenario variants. This shift is persistent
during 2020-2050 in most cases, with investment between 0.5% and 1.2% above Baseline
throughout the period for most scenario variants, which reflects the sustained nature of the
investment needs.
The most significant impacts, however, concern the types of investment that take place, with
impacts of a similar nature regardless of the scenarios envisaged. As expected, investment in
fossil fuels are expected to drop below Baseline throughout the period, reflecting the need to
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
2020 2030 2040 2050
%
I - fragmented 2C I - global 2C I - fragmented 1.5C I - global 1.5C
C- fragmented 2C C - global 2C C - fragmented 1.5C C - global 1.5C
225
accelerate the phasing out of such fuels from the energy system early on (Table 16). Industrial
sectors instead are projected to require additional investment to decarbonise for a sustained
period of time, while higher reliance on electricity will necessitate a significant shift of resources
to supply and power technologies.
Table 16: Sectoral investment impacts in the EU, (deviation from Baseline, percent)477
.
2050 Fragmented action Global action
80%
reduction
1.5°C
80%
reduction
1.5°C
Fossil-fuels industries -40.6 -58.2 -40.4 -40.9
Electricity supply 8.5 21.9 7.4 26.3
Ferrous metals -3.7 -9.4 3.3 6.7
Non-ferrous metals -0.4 -1.1 1.0 5.2
Chemical Products -1.1 -2.3 -0.9 -0.1
Paper products 0.8 1.2 1.8 6.5
Non-metallic minerals -0.7 -2.4 0.9 2.7
Electric Goods 1.6 3.1 0.9 -3.9
Transport equipment -1.3 0.8 -2.1 -3.4
Construction 2.0 3.6 1.7 3.0
Transport -0.8 -3.1 -0.9 -6.1
Market Services 0.0 -0.4 -0.7 -2.7
Source: JRC-GEM-E3.
In contrast, the assumption that the economy typically operates below capacity enables an
increase in investment for decarbonisation in E3ME without full crowding of other investments
or consumption. Under this model, private consumption could increase by up to about 1.5% in
2050 relative to Baseline (global action, 80% reduction scenario).
Overall, macro-economic modelling indicates that: (1) the impact of decarbonisation on broad
economic aggregates like GDP, consumption or total employment (see section 4.10.6 on
employment impacts) is likely to be relatively limited under all scenarios, including those
achieving net GHG neutrality; and (2) modelling approaches that differ significantly structurally
as well as in their underlying views on the working of the economy and the scale of market
imperfections concur on conclusion.
As far as capital is concerned, decarbonisation will indeed require not only additional investment,
but also different kinds of investments than under the Baseline. The transition will therefore
generate risks of capital misallocations in view of long-term objectives. One of the goals of the
long-term strategy is to provide a clear sense of direction upon which investors can reliably base
477
Variant of the model with profit maximisation in ETS sectors, perfect labour markets and lump-sum
transfers of carbon revenue to households.
226
their investment decisions. Finally, the architecture of the financial system will have to be fit for
purpose in order to be in a position to fund the right kind of investments (see also section 5.1).
4.10.6 Employment impacts of the climate and energy transition
The macro economic modelling can also be used to assess the employment impacts. Under the
JRC-GEM-E3 model, when assuming that wages are fully flexible and that the labour market
always clears, aggregate employment is not affected. However, sectoral composition is
significantly impacted (see discussion below).
The variant of the model that assumes labour market imperfections and involuntary
unemployment does show an impact on aggregate employment. Under such a setting (with
market share maximisation in ETS sectors) for the 80% reduction scenario, using carbon
revenues to reduce labour taxation generates a positive impact on aggregate employment of the
low carbon transition, both under the fragmented and global actions scenarios. Employment in
2050 could increase by 0.3% compared to Baseline. This would mean an additional 492 000
(global action) or 616 000 (fragmented action) jobs in 2050 relative to Baseline. Under the same
variant of the 1.5°C scenarios, employment in 2050 could increase by around 0.6%. This
highlights the potential benefits that a shift in taxation away from labour may have, as this
modelling variant also implies that GDP could be 0.05% higher than under Baseline by 2050 and
0.13% higher on average during each year of the 2020-2050 period (fragmented action 80%
reduction scenario). QUEST estimates that an 80% reduction scenario would have a small
positive impact (+0.3%) on total employment by 2050.
In turn, E3ME estimates a positive impact on employment of about 0.6% by 2050, equivalent to
1 316 000 additional jobs, under the 80% reduction scenarios (fragmented and global action) and
up to 0.9% (2 100 000 additional jobs) under the 1.5°C scenario (global action). Similarly, the
OECD’s Investing in Climate, Investing in Growth report estimates a positive impact on
employment of about 0.2% by 2050 for G20 countries, based on the assumption that additional
investment and structural reforms to labour and product markets would take place. Overall, this
indicates that the aggregate impact on employment is likely to hinge upon factors that relate more
to the structure of the labour market than to decarbonisation per se.
However, the composition of employment across sectors and within sub-sectors is likely to be
affected in significant ways. The low carbon transition will see significant increases in turnover
for sectors involved in renewable energy and energy efficiency, with associated job increases.
Previous research concluded that the shift from fossil fuel based energy towards renewable
energy deployment increases employment in the EU478
. The reason for the positive impact of
renewable energy deployment is a higher labour intensity in this sector compared to for instance
power generation from fossil fuels479
. However, the mining and extraction and power generation
sectors account at the EU level for only a small share of total employment and the impact of a
low-carbon transition on total employment is less substantial. Research also showed that the
expansion of the workforce in the green energy sector outweighs the compression in the declining
fossil fuel sectors480
. Furthermore, the EU is likely to observe employment gains from a switch to
478
Fraunhofer ISI (2014) Employment and growth effects of sustainable energies in the EU:
https://ec.europa.eu/energy/sites/ener/files/documents/EmployRES-II%20final%20report_0.pdf
479
Wei (2010) Putting Renewables and Energy Efficiency To Work:
https://doi.org/10.1016/j.enpol.2009.10.044
480
UNIDO (2015) Global green growth:
http://www.greengrowthknowledge.org/sites/default/files/downloads/resource/Clean_energy_industrial
_investment_vol1_GGGI_UNIDO.pdf
227
renewable energy since the region is currently a net fossil fuel importer481
. Positive employment
effects were found for energy efficiency measures482 483
. A particular characteristic is that energy
efficiency investment is comparatively favourable for local job creation, often associated with
activities in the building sector484
. For the deployment of renewables, the impact on employment
is positive particularly in the sectors related to installation, management, and maintenance).
The 80% reduction and 1.5°C scenarios by the JRC-GEM-E3 and E3ME as presented in section
4.10.5 were used to assess sectoral employment effects, in addition to aggregate employment
impacts485
. The results indicate that the low-carbon transition does not significantly impact most
sectors. Table 17 shows that the sector that might experience largest relative change in
employment (mining & extraction) accounts for small shares of total employment. The transition
triggers more investments and activities in construction, and agriculture (bioenergy), and power
generation leading to higher employment. Instead, the mining and extraction sectors are expected
to contract, as the demand will shift away from fossil fuels. This is in line with a recent study by
IRENA486
, according to which the energy transition would lead to a loss of 7.4 million jobs in
fossil fuels and other extraction sectors on a global level by 2050, but a simultaneous gain of 19.0
million jobs in renewable energy, energy efficiency, and grid enhancement.
Results are more mixed in the manufacturing industries. These sectors, particularly the energyintensive
sectors, will face significant changes in their production processes in the future due to
the transition towards a low-carbon economy (see section 4.5). If successful, this should not be
negative for employment. Particularly the circular economy is often associated with job increases
in the value chain supplying the energy-intensive industries. The situation in the manufacturing
sector is also ambiguous. For instance, the European automotive manufacturing sector has to
switch from internal combustion engines to electric drive trains. This development is expected to
accelerate if there will be a reduction in battery prices.
Table 17: Impacts of a low-carbon transition on different sectors.
Sector
Qualitative assessment of impacts of a lowcarbon
transition
Share
of total
jobs in
2015
Range of
change in
jobs by 2050
compared to
baseline
Construction  Direct benefits from investments related to the
low-carbon and climate-resilient transition
(e.g. renewable energy technologies, energy

481
Fragos (2017) Job creation related to Renewables:
http://www.asset-ec.eu/downloads/ASSET_1_RES_Job_Creation.pdf
482
Cambridge Econometrics (2015) Assessing the Employment and Social Impact of Energy Efficiency:
https://ec.europa.eu/energy/sites/ener/files/documents/CE_EE_Jobs_main%2018Nov2015.pdf
483
EC (2016a) The macro-level and sectoral impacts of Energy Efficiency policies:
https://ec.europa.eu/energy/sites/ener/files/documents/the_macro-
level_and_sectoral_impacts_of_energy_efficiency_policies.pdf
484
RAP (2016) Costs and benefits of EE: http://www.raponline.org/wp-content/uploads/2016/11/rap-
rosenow-bayer-costs-benefits-energy-efficiency-obligation-schemes-2016.pdf
485
This represents the range of employment impacts of all the scenarios by JRC GEM-E3 and E3ME. For
agriculture employment represented by the JRC GEM-E3 model only results from fragmented action
scenarios are included.
486
IRENA (2018), Global energy Transition – A Roadmap to 2050,
http://www.irena.org/publications/2018/Apr/Global-Energy-Transition-A-Roadmap-to-2050
228
Sector
Qualitative assessment of impacts of a lowcarbon
transition
Share
of total
jobs in
2015
Range of
change in
jobs by 2050
compared to
baseline
efficiency, and adaptation measures)
 Job-impact strongly dependent on investments
in the sector
 Workers need to up-skill to handle innovative
building materials
6.7% +0.3% to
+2.8%
Services  The business services and distribution & retail
sectors are indirectly influenced as they
depend on corporate and household demand
 Digitalisation will grow in importance in the
long-term due to the low-carbon transition
 The transport sector is expected to undergo a
substantial transformation that might lead to a
change in skills requirements
 In the non-business services sector, the skills
profile of procurement-related jobs might
change due to a shift towards green
procurement
71.7%

-2.0% to
+0.9%
Agriculture  Bioenergy production has a positive effect
 In the long-term, decarbonisation policies help
to protect jobs that depend on eco-system
services 4.5%

-0.7% to
+7.9%
Mining &
extraction
 Automation and global competition have led
to a continuous contraction of the workforce in
the mining sector
 A low carbon transition will continue the shift
away from fossil fuels with significant impact
on employment in the mining and extraction
of fossil fuels
0.5%

-62.6% to
-2.9%
Power
generation
 Energy efficiency measures lead to a reduced
demand in energy in the mid-term but
electrification will increase the demand again
 The higher labour intensity of renewable
energy technologies has a positive impact on
employment
0.7%

+3.6% to
+22.3%
Manufacturing
(energy-
intensive
industries)
 Risk of carbon leakage depends on measures
that allow EU industries to remain competitive
and if there is a unified global decarbonisation
ambition
 Existing production processes face structural
changes due to decarbonisation needs,
opportunities related to the circular economy
 An increase in investments in renewable
technologies or energy efficiency measures
would lead to an increase in demand in
upstream sectors to the construction sector,
2.0%

-2.6% to
+1.8%
229
Sector
Qualitative assessment of impacts of a lowcarbon
transition
Share
of total
jobs in
2015
Range of
change in
jobs by 2050
compared to
baseline
such as the manufacture of iron, steel or
cement
Other
manufacturing
 Direct benefits from higher investments
triggered by climate policy (increase in
demand for clean energy products produced by
some sub-sectors)
 Indirect benefits in upstream sectors to other
growing sectors, for example construction
 Automotive manufacturing will face structural
changes due to electrification
13.3%

-1.4% to
+1.1%
Source: E3ME, JRC-GEM-E3 scenarios as included in section 4.10.5.
In the public consultation, social partners stressed the importance of considering the impact of a
low-carbon transition on jobs in the different economic sectors. To evaluate the sectoral
magnitude of the employment impact, it is of interest to compare this to general employment
developments. Table 18 shows the current number of employees in these sectors, the
development of employment up to 2030 and the number of employees that are at least 50 years
old and will most likely retire by 2030. For each sector, the decarbonisation scenario with the
least favourable employment development from Table 17 was selected.
Most of the change already occurs in baseline due to structural change. For example, efficiency
improvements cause continued employment reductions in the agriculture sector. Only in some
sectors, limited impacts are due to decarbonisation (both positive and negative impacts compared
to baseline, see table above). The table shows that even in the least favourable scenario, any
decline in jobs can be absorbed by retirements in all sectors but one. Only the mining and
extraction sector is expected to contract in a way that the decrease in jobs cannot fully be
compensated by retirements.
230
Table 18: Potential to absorb work force changes
Million
2015 total
employment
2015-2030 change
(accumulated effect
from baseline
development and
decarbonisation)
Number of people
expected to retire
between 2015 and
2030
(proxy used is labour
in the 50+ years age
bracket in 2015)
Construction 14.8 0.4 -4.3
Services 158.5 5.0 -48.2
Agriculture 9.9 -1.3 -4.3
Mining & extraction 1.0 -0.5 -0.3
Power generation 1.6 -0.3 -0.5
Manufacturing: Energyintensive
industries
4.4 -0.5 -1.4
Other manufacturing 29.4 -1.2 -8.4
Source 2015 data: Eurostat LFS.
As far as the labour market is concerned, the transition will generate significant implications both
on labour demand at the sectoral and sub-sectoral level and in terms of skills in demand, with
potential impacts on income distribution as well. This is likely to have repercussions at the
national level as well as the level of sub-regions, depending on their current specialisation in
production. For example, rural areas experience an outflow of young people. To keep the rural
areas vibrant, there is the need develop the essential services (mobility, infrastructure, etc.). Such
implications will need to be managed carefully in the context of a just transition and to ensure
that no segments of the population are left behind in the process.
231
5 CROSS-CUTTING FACTORS
5.1 Regional employment aspects, education and skills
The transition to a low carbon economy is a transition towards new growth sectors and jobs and
overall benign for aggregate employment (Section 4.10.6). The differentiated impacts across
sectors imply that the transition could be particularly challenging for the job market in a number
of limited regions with high activity rates in sectors that are affected most negatively.
Historically, the EU job market has benefitted from climate policies. A review of several studies
on the effect of the EU’s 20-20-20 targets on jobs concluded that the implementation of these
targets leads to an increase in jobs, some estimates putting it as high as 1.0% and 1.5%.487
Also,
the International Labour Organisation estimated that by 2030 the low-carbon transition could
increase EU jobs by 2 million jobs compared to a business as usual case.488
5.1.1 Implication for regions
The transition towards green jobs is seen as a positive evolution for the job market. Green jobs
are often quality jobs contributing often also to local (non-outsourceable) employment in rural or
disadvantaged areas and thus to social reinsertion and territorial cohesion. The EU's green
economy has proven itself to be resilient, and has maintained jobs in recent years, including in
the recession years. The European environmental goods and services sectors employed 4.1m
people in 2015, which is an increase of 47% compared to 2000.489
However, it is clear that a low-carbon transition can entail significant economic and societal
challenges for regions. Particularly challenged are regions whose economies largely depend on
sectors that either are expected to decline or will have to transform in the future. An assessment
was made on which regions might be in this situation in the EU. Table 19 shows which sectors
and sub-sectors were included in the two different categories in this assessment and the
respective NACE codes.
Table 19: Sectors shown in the heat maps
Sectors expected to decline Sectors expected to transform
 Mining of coal and lignite (B05)
 Extraction of crude petroleum and natural gas
(B06)
 Mining support service activities (B09)
 Manufacture of chemicals and chemical
products (C20)
 Manufacture of other non-metallic mineral
products (C23)
 Manufacture of basic metals (C24)
 Manufacture of motor vehicles, trailers and
semi-trailers (C29)
To visualise the regional impact of a low-carbon transition, the maps below (Figure 107) show
the relative share of employment in sectors that are expected to decline and in sectors that will
have to transform.
487
Cambridge Econometrics (2011), Green jobs,
http://ec.europa.eu/social/BlobServlet?docId=7436&langId=en
488
ILO (2018), World Employment and Social Outlook,
https://www.ilo.org/weso-greening/documents/WESO_Greening_EN_web2.pdf
489
Eurostat (2018), Employment in the environmental goods and services sector,
http://ec.europa.eu/eurostat/statistics-explained/index.php/Environmental_goods_and_services_sector
232
Three EU regions (NUTS-2 level) have employment shares of more than 1% in sectors that are
expected to decline. The region with the highest share (11.3%) is North Eastern Scotland in the
United Kingdom because of high employment in extraction and support service activities,
focussed on oil and gas. Similarly but with a focus on coal and lignite, Silesia in Poland and SudVest
Oltenia in Romania have a share of 5.3% and 1.8% of overall employment in mining
activities and support services.
When considering the industries that will have to transform, it becomes apparent that many more
regions will be affected. Out of the EU’s 28 Member States, 24 have regions where more than
1% of the work force is employed in such a sector, with higher shares in Member States with
lower GDP per capita levels. The regions with the highest exposure are Strední Cechy in the
Czeck Republic (10.4%), Közép-Dunántúl in Hungary (9.7%), and Vest in Romania (9.3%).
Figure 107: Regional exposure to sectors that will decline (left) and transform (right)
Source: Eurostat SBS490
.
A conclusion of the above analysis is that only a few regions highly depend on sectors that will
decline. Many more regions depend on sectors that will have to undergo low-carbon
transformations. This can be more challenging in low-income regions, which often suffer from
low levels of technology, weak business organisation, a work force with more limited skills, and
an outflow of talented people. Many middle-income regions are experiencing slow growth, have
lost manufacturing jobs and also face demographic challenges as the population ages. In contrast,
more dynamic regions, and also cities and urban areas, are facing increasing congestion,
population pressures and challenges for more efficient energy and resource use.
490
SBS data at the second NACE level was used to show affected sectors at sufficient detail (e.g. fossil fuel
mining and extraction and not for instance mining and quarrying of other minerals). If for some
countries or regions some of the employment is reported only at the first NACE level in EUROSTAT
and not split into subsectors, actual employment in the represented subsectors might be higher than
shown in the maps.
Share of employment
fossil fuel extraction and mining
Share of employment
energyintensive industries and
automotive manufacturing
<0.1%
0.1-0.5%
0.5-1.0%
1.0-2.0%
>2.0%
<0.1%
0.1-1.0%
1.0-2.5%
2.5-5.0%
>5.0%
233
Many regions are likely to benefit from the transition to a green economy. This is for instance the
case of regions which are or could be involved in the production of renewable energy. The
potential for producing renewable energy depends on their geo-physical characteristics. For
instance, coastal regions generally have a high potential for producing wind energy, especially
those along the shores of the North and Baltic Seas and some Mediterranean islands. The
potential for solar energy production is obviously higher where there are large amounts of
sunshine, while the production of hydroelectricity also requires suitable geo-physical features.
Realising whatever potential exists, however, depends on the policies implemented.
5.1.2 Implication for education and skills
While overall gains more than offset losses between and within sectors, resources released by a
declining sector are not perfect substitutes for those required by an expanding sector. The
demographic shift will also increase the number of job openings in all sub-sectors, putting further
pressure on skills supply. Already today, depending on the sub-sector, 17-32% of companies are
experiencing skills gaps, and in technical occupations 9-30% are experiencing skills shortages.491
A low-carbon transition is expected to increase the capacity constraint in the labour market, also
because skills needed during a transition might be in short supply.
This issue was analysed in a study recently commissioned by the European Commission492
using
the E3ME model and GEM-E3-FIT, a version of the GEM-E3 model. The study analyses the
differences between a decarbonisation scenario compatible with a 2°C trajectory and a business
as usual scenario based on the Reference 2016 scenario developed by the European Commission,
and looked at the impact of level of qualifications needed.
Table 20 shows results from the E3ME model of the implications of a low-carbon transition on
the level of qualifications493
of workers. Large shifts already occur in reference from low- and
medium- to high-level qualifications and reflect the trends observed over the past two decades.
The decarbonisation scenario increases employment by around 1.4 million compared to reference
by 2050 with all levels of qualification having more jobs than in the Reference scenario. Largest
increases compared to reference are in the medium and high skill categories.
Table 20: Labour by qualification level
491
Knowledge Centre for Renewable Energy Jobs (2016), Skills Gaps Analysis, http://www.knowres-
jobs.eu/en/Jobs-and-skills/Education-and-training/Skill-gaps-analysis-and-Training-needs/
492
Cambridge Econometrics, E3 Modelling (2018), A technical analysis on decarbonisation scenarios constraints,
economic implications and policies, Tender ENER/A4/2015-436,
https://ec.europa.eu/energy/sites/ener/files/documents/technical_analysis_decarbonisation_scenarios.pd
f
493
Low: up to and including lower secondary education; Medium: upper secondary and post-secondary
non-tertiary education; High: tertiary education.
234
Source: E3ME.
The analysis confirms that Europe will be faced by a skills challenge494
as its economy undergoes
structural changes. Table 20 shows that decarbonisation will add to this challenge but only very
moderately. The impact of the low-carbon transition will mainly take the form of new ‘green’
skills within existing occupations. Occupational groups for which this transition will considerably
change the task profiles are construction workers, electro-engineering workers, drivers and
vehicle operators, farmworkers and gardeners, machine and plant operators, other manufacturing
workers, handicraft & printing workers, production and specialised services managers,
researchers and engineers as well as science and engineering technicians.495
The two latter
occupation groups are already now the most wanted in the European renewable energy industry
(geothermal, small hydropower, biomass, photovoltaics, offshore wind farms, solar thermal
electricity496
).
The challenge of changing job profiles through ‘greening’ and of shifts to new clean and energysaving
production processes will be to align education and training to meet the emerging skills
needs (professional and transversal) of both emerging, and existing, occupations and industries.
For example, the renovation of the existing building stock will not be possible without the right
workforce, in particular if the EU wants to double the renovation rate. This is the same situation
for the mobility value chain. Moving from combustion engines to electric power trains with
batteries will require new skills and new types of jobs.
In many industries and countries, the most in-demand occupations or specialties did not exist ten
or even five years ago, and the pace of change is set to accelerate. New occupations are also
emerging, for example related to the manufacture of renewable equipment (e.g. wind power
design engineer), project development (e.g. wind resource assessment specialist), and production
and operation (e.g. wind service mechatronics technician, biomass production managers).
'Key competences' will be needed by all in order to cope with the upcoming technological
changes in general, and this trend is amplified by the transition to a low carbon economy. These
key competencies are also referred to as “21st century skills” and cover basic and digital skills as
494
CEDEFOP (2010), Skills for green jobs: http://www.cedefop.europa.eu/files/3057_en.pdf
495
CEDEFOP, (2018), Skills Panorama, Skills opportunities and challenges in occupations:
https://skillspanorama.cedefop.europa.eu
496
The last four sub-sectors being good examples of ‘green’ activities being embedded in traditional
sectors: agriculture, chemical & electronic industries, shipyards, plumbing & roofing respectively
235
well a mix of cognitive and socio-emotional skills such as problem solving, creativity,
communication and collaboration. Furthermore, they include STEM subjects (science,
technology, engineering and mathematics) which, in view of the high demand for a qualified
workforce in technology- and research-intensive sectors (see above), should be a priority area for
education.497
Therefore, education, training and lifelong learning have an important role in addressing the
changing demands in skills and ensure that the workforce is equipped with up-to-date skills.
Workers will need both, upskilling and reskilling. Countries’ policies for reaching carbon
reduction targets are the main drivers for the development of ‘green’ skills across economic
sectors. Social partners supported this finding during the public consultation and stressed the
importance of re-skilling to make the low-carbon transition a just transition. However, it should
be stressed that the significant changes expected in employment profiles in Europe are the results
of trends (e.g. digitalization and demographic shifts) that are already largely occurring
independent from the energy transition.
5.2 Role of finance
The financial sector will play a critical role in enabling the decarbonisation transition and in
funding the appropriate types of investments at the scale required. Fulfilling this role will require
a transformation of the sector itself. The sector will have to support the long-term societal needs
for innovation and infrastructure, while at the same time it will have to enable the rapid
development of the technologies necessary for a low-carbon and resource-efficient economy. The
necessary reorientation of capital should also help strengthening financial stability by explicitly
integrating long-term physical risks and intangible value creation factors (including
environmental, social and governance factors) in asset pricing. If done in a consistent manner
across the real economy and the financial sector, losses for companies and financial institutions
arising from stranded assets can be avoided. This will protect both financial institutions and
beneficiaries, in particular where long-term returns are important, such as in the case of pensions.
In order to avoid the possible high funding costs and other financial constraints that could hamper
the transition significantly and increase its cost498
, it is necessary to put in place the conditions to
promote affordable funding through financial innovation together with government intervention.
For example, the IEA estimated that better debt financing499
terms have helped lower generation
costs for new offshore wind in Europe by nearly 15% in the past five years500
.
The main sources and instruments available for financing some of the clean energy projects today
in Europe are summarised in Figure 108 (non-exhaustive of all possible sectors to be financed).
497
Council Recommendation of 22 May 2018 on key competences for lifelong learning (2018/C 189/01)
498
A recent study commissioned by the European Commission finds that a higher discount rate (13%)
increases significantly the cost of investments in capital-intensive goods such as wind energy and solar
PV compared to a scenario with slightly lower discount rate (10%). The levelised cost of electricity
from wind and PV in 2050 could increase by more than 15%. Tender ENER NER/A4/2015 - 436
https://ec.europa.eu/energy/sites/ener/files/documents/technical_analysis_decarbonisation_scenarios.pd
f
499
Although variable case by case depending on the scale of project, the technology used and the financing
structure, debt-to-equity ratios range between 60-80% in clean energy technologies. (see IRENA (2018)
Global landscape of renewable energy finance 2018; RolandBerger (2011) The structuring and
financing of energy infrastructure projects […]; and EIB EPEC PPP guide).
500
IEA (2018), World Energy Investment 2018, https://www.iea.org/wei2018/
236
Figure 108: European clean energy finance landscape
Source: Trinomics (2017)501
.
Private finance will have to account for the bulk of investment needs – there is already a high
share of private investments in some of the sub-sectors, such as energy efficiency and renewable
electricity generation502
.
Regulatory measures and financial support at Member State and Union level will continue to be
necessary to stimulate energy and transport investments and would have to be scaled up in an
efficient way to direct capital to the low carbon transition. Efficient resource allocation requires
that, whenever possible, investments should be driven by market signals reducing the role of state
intervention. However, according to the IEA 95% of global investment is currently made in areas
where revenues are fully regulated or affected by mechanisms to manage the risk associated with
variable prices on competitive markets500
. As recognised also by the IPCC 1.5C Special Report,
public sources of financial support (see for instance the EFSI program) are well-equipped to
support investments with high added value but facing high risk.
501
Trinomics (2017), Assessing the European clean energy finance landscape, with implications for
improved macro-energy modelling,
https://ec.europa.eu/energy/sites/ener/files/documents/macro_eu_clean_energy_finance_final.pdf
502
Cambridge Econometrics, E3 Modelling (2018), A technical analysis on decarbonisation scenarios constraints,
economic implications and policies,
https://ec.europa.eu/energy/sites/ener/files/documents/technical_analysis_decarbonisation_scenarios.pd
f
237
In recent years, financial instruments and budgetary guarantees have been developed at the EU
level to support objectives across different EU policy areas. Financial instruments may take the
form of equity or quasi-equity investments, loans or guarantees, or other risk-sharing instruments,
and may be combined with other forms of support, including grants503 504
. Budgetary guarantees
are legal commitments of the EU to support a programme of actions by taking on the budget of
the Union a financial obligation that can be called upon, should a specified event materialise
during the implementation of the programme505
.
Leveraging private investments, financial instruments and budgetary guarantees may allow for a
more efficient allocation of EU budgetary resources compared to grants.
The type of financing and public intervention depends on the risk profile and potential for
revenues of targeted investments506
. While public-funded grants should target the initiatives that
do not assure sufficient financial return (such as the early stages of research and development),
revenue-generating market-based instruments such as preferential loans and loan guarantees
should cover the more financially viable projects. In cases of non-financially viable projects,
grants or blending of grants with other sources of financing could prove useful, as long as they
yield long-run added value for the EU.
Despite a significant increase in absolute terms in recent years, investment in low-carbon
technologies still accounts for a very small share of institutional investors’ assets. Institutional
investors are one of the largest sources of private capital investments, with the insurance sector
alone managing assets accounting for nearly EUR 10 trillion507
. Although it is difficult to
quantify the precise share, a recent analysis501
found that the share of green investment in the
portfolios of pension funds and insurance companies is around 1-2%. Institutional investors are
often prudent, with a more risk-averse profile, opting for investment in large volumes of mature
technologies already on the market associated with lower operational risk. They appear
increasingly reluctant to invest in carbon-intensive electricity generation (coal-fired power
plants), and rather favouring large-scale projects in mature green technologies, such as solar PV
and onshore wind. Their investment objectives are well-aligned with the needs of sustainable
investments. As pointed out by the High-Level Expert Group on Sustainable Finance501
, the longterm
liabilities of pension funds make them ideal providers of sustainable finance, and the
business model of the insurance sector is particularly well-suited to supporting sustainability508
.
The transport sector, which represents about 30% of additional annual investment needs, also
offers considerable potential for financial instruments such as green bonds. According to a study
by the Climate Bonds Initiative509
, over 40% of investment grade bonds come from the transport
sector.
503
Regulation 2018/1046 of the European Parliament and of the Council on the financial rules applicable to
the general budget of the Union, Art. 2(29)
504
European Commission, “Note on Budgetary Guarantees, Financial Instruments and Grants: Optimizing
the mix to maximise the impact of EU budget in financing EU policies.
505
Ibid, Art. 2(9).
506
European Commission, Note on Budgetary Guarantees, Financial Instruments and Grants: Optimizing
the mix to maximise the impact of EU budget in financing EU policies.
507
High-Level Expert Group on Sustainable Finance (2018), Financing a Sustainable European Economy,
https://ec.europa.eu/info/sites/info/files/180131-sustainable-finance-final-report_en.pdf
508
As an example of the behaviour of institutional investors, the European Central Bank has already taken
concrete steps to pursue a sustainable investment policy for their pension fund portfolio. Furthermore,
the ECB has started an internal investigation on how to incorporate environmental, social and corporate
governance standards in the management of their own funds portfolio.
509
Bonds and Climate Change: The State of the Market 2018, CBI, 2018
https://www.climatebonds.net/track/click/7877/14299
238
In the long-term it will be necessary to systematically re-orient private capital towards more
sustainable investments. Three conditions need to be present within financial markets in order for
private investment to support the transition. Firstly, investors need to consistently be given the
option of investing into zero or low carbon assets. Secondly, climate and environmental risks
should be mainstreamed in economic and financial decision-making and the valuation of assets.
Once markets and credit risk agencies will price climate risks properly, borrowing conditions will
adjust to favour sustainable investments. Thirdly, companies and financial institutions need to
think long-term and be transparent about their operations.
To this end, the Commission unveiled in March 2018 a ten-point Action Plan for financing
sustainable growth510
with the aim to mobilise private capital to fund sustainable projects and
activities, by changing incentives and culture all along the investment-chain. Inspired by the
work of the High-Level Expert Group on sustainable finance, this Action Plan is a big step
forward, both for the fight against climate change and other forms of environmental degradation
and for Europe's financial sector. Its three main objectives are:
 to redirect capital flows towards green and sustainable investments;
 to embed sustainability into risk management;
 to increase transparency and long-term thinking in financial and economic activity.
To achieve these objectives, the Action Plan lists a series of actions that should be implemented
by 2019. An important building block is establishing an EU classification system for sustainable
activities, often referred to as "taxonomy". The aim is to have a system that will provide clarity
on which economic activities can be considered "sustainable". It has been proposed to develop
the taxonomy along a gradual approach, classifying first economic activities that contribute to
climate change mitigation and adaptation, and later to other environmental objectives. The
classification with its coherent language will help investors allocate their capital towards
activities identified as truly sustainable.
In addition, policy needs to mainstream sustainability considerations into the financial sector:
 Combining the taxonomy with relevant standard and certification measures for the retail
market.
 Consistently treating opportunities and risks related to climate change and other sustainability
issues along with other factors impacting the profitability of an investment. In particular,
when mainstreaming the use of tools which can appropriately gage the potential scenarios
that will materialise if the transition does not happen.
 Providing sufficient transparency within the market both by corporate actors and financial
institutions with regards to their operations and their exposure to climate risks.
 Ensuring that both professional and private investors are aware of the risks and opportunities
posed by climate change and related environmental challenges to their investments, in
particular where this affects their long-term performance.
 Benchmarking the cost effectiveness of the EU financial governance compared to the ones of
its main trading partners such as China or the USA.
Work has already started on these long-term priorities. In May 2018, the Commission presented a
package of measures to implement several key actions announced in its Action Plan. This
package includes three legislative proposals aimed at:
510
COM(2018) 97
239
 Establishing a unified EU classification system of sustainable economic activities
(“taxonomy”);
 Improving disclosure requirements on how institutional investors integrate environmental,
social and governance (ESG) factors in their investment process and – if they claim to be
sustainable - how they achieve these objectives;
 Creating a new category of benchmarks which will help investors compare the carbon
footprint of their investments.
In discussing the impact of the energy transition on investments, a clear distinction should be
made between risks inherent to investment in a market economy, which should be borne by the
economic operators, and risks that arise from regulatory uncertainty or regulatory changes. Public
policy needs to minimise the risk that arise from the latter, including through transparency and
policy stability. This should be based on long-term planning that defines clear and transparent
objectives, firmly set and accepted by society as a whole, clearly indicating also the rate of
change.
Providing clarity to investors is indeed one of the goals of the Long-Term Decarbonisation
Strategy and the best way to avoid stranded assets. The European energy policy has strived to
provide coherent and timely signals to the market, notably with the recent adoption of review of
the ETS, the Clean Energy for All Europeans legislative package, with the Mobility Packages
adopted in 2017 and 2018 (see section 2.2.3) and with the establishment of the National Energy
and Climate Plans which should include investment needs foreseen by Member States for
fulfilling their energy and climate goals. Public-use infrastructures with very long economic
lifetime will require careful and strategic planning, since they might face cost recovery issue. A
relevant example is the gas network that is likely to face lower utilisation rates by 2050 (see
section 4.2.2). A strategic approach to infrastructures will also have to be considered in the
context of Member States’ budget and debt constraints.
5.3 Industrial competitiveness
The EU’s industrial transition will require more than only an enabling framework for affordable
finance. Reaching a net zero emissions economy will affect the full industrial value chains of
goods production, the ICT sector and other service providers, from raw materials through energy
intensive industries and downstream sectors to recycling and waste, large and small industrial
players alike.
The Paris Agreement can be a powerful driver for EU industrial competitiveness in mid-century
perspective. The main challenge will be to manage the transition of European industry while
ensuring its competitiveness so as to secure jobs, growth and investment in Europe and
positioning it to exploit the huge potential global market for low-emission technologies and
services. Studies suggest that the global market volume of key climate technologies will grow to
EUR 1-2 trillion per year by 2030511
.
Based on the results of the open public consultation carried out by the European Commission in
preparation for this report, a majority of stakeholders considers that the low-carbon transition will
contribute to modernise and reinforce the European competitiveness (see section 7.1). Several
stakeholders identified sustainable production as an essential need for industry.
511
BCG & Prognos, (2018), Climate paths for Germany,
https://www.bcg.com/en-be/publications/2018/climate-paths-for-germany-english.aspx
https://bdi.eu/publikation/news/klimapfade-fuer-deutschland/ (full study in German)
240
As discussed in Section 4.5 and underlined by the Commission in its Industrial Policy Strategy512
the industrial transition will require EU industry to profoundly alter business models and supply
chains. It will require an integrated and systemic approach covering:
- sustainable supply of raw materials
- optimised material flows in cross-sectoral value chains supporting circular economy and
industrial symbiosis.
- energy and resource efficiency
- breakthrough decarbonisation technologies, innovative materials, digital and space
technologies, servitisation513
and social innovation
- large-scale demonstration projects.
- demand-side measures to stimulate the creation and the fast development of markets for
low and zero-carbon products/solutions
In some cases breakthrough technologies will have to be developed or their technology readiness
levels increased in order to ensure market uptake. Strong support through research and innovation
will be needed to prove new solutions based on emerging technologies, scale up technologies to
large-scale demonstration projects, industry wide roll-out and reduce cost gaps compared to
existing industrial processes. A dedicated approach will be needed in Horizon Europe on GHG
neutral industry to provide the broad vision and framework for action to do this, with the
involvement of industry and other stakeholders (see also section 5.4 for discussion on the future
role research and innovation).
Many new technologies should be ready for large-scale deployment by the end of the next
decade. Well before then there also has to be a business case for investment. How to make lowcarbon
investments attractive in Europe for industries that operate internationally rather than in
regions that enjoy higher growth and lower regulatory costs has to be addressed. The introduction
of breakthrough technologies in the energy-intensive industries is a case in point. They have
mature assets, typically with a 30-40 year life that will need to be replaced at high capital cost
and/or with operating costs likely to be higher than those for today’s products.
The analysis in Section 4 indicates that the availability of affordable low-carbon electricity, at
sufficient scale, will be an important factor for industry and other sectors of the economy.
Switching industrial production from fossil fuels to electricity and feedstocks such as green
hydrogen or carbon will require a major development of the energy system and of the
accompanying infrastructure. Without the energy transformation, the industrial transformation
required will not be possible.
While several trade, business or professional associations in their replies on the public
consultation indicated the prominent role of the EU ETS as a key tool to drive decarbonisation,
they often also underlined the need for an complementary policy framework to achieve the
industrial transformation (see section 7.1).
In this transformation industry may face competitiveness challenges. The transition will generate
first deployment and cost challenges and may involve earlier depreciation of higher emission
assets. The necessary shift away from fossil fuels for industrial heating and processes will make
many industries become electricity intensive to a certain extent. In the absence of a true global
level playing field, these industries also face a carbon leakage risk, with different industries being
more exposed than other (see also section 4.10.5, Table 13).
The competitiveness of low carbon industry will require a framework that facilitates
differentiation and encourages markets to recognise low carbon value. The fact that high climate
ambition implies higher priced industrial goods, more clean energy infrastructure and the need
for sustainable raw materials from international and EU sources has not yet penetrated public
512
COM(2017) 479 final
513
The servitisation of products describes the strategy of creating value by adding services to products or
even replacing a product with a service.
241
opinion. Public acceptance in these areas will be key to ensure the competitiveness of EU
industry as it transforms.
Industrial policy can deliver part of the enabling framework supporting industry’s transition to
competitive GHG neutrality - for example through the Single Market; a well-functioning internal
market for primary and secondary raw materials; substitution of critical raw materials; strategic
use of public procurement, standard-setting and product-labelling; SME policy and promotion of
key enabling technologies. Other framework conditions need to be in place to turn low carbon
transition challenge into an industrial competitive advantage and growth opportunity. These
include a supportive trade policy, the investment environment, competition, taxation, research
and innovation, regional policy, energy infrastructure and access to raw materials.
From a trade policy perspective, a truly fair and level playing field with open access to global
markets and protection against unfair trade practices should guarantee the competitiveness of
those companies that are able to successfully lead the transition and export low carbon
technologies and services.
From a competition policy perspective, openness to cross-sectoral projects, partnerships between
energy providers and industry will all be necessary to attract investment and protect against
carbon leakage.
From an industrial policy perspective, the timing of the transition will be crucial. As European
industrial installation age, old factories should be replaced with new, low-emissions plants. New
products should be brought to the market as demand for emissions-free alternatives increases.
Answering these policy questions requires a detailed industrial roadmap.
5.4 Role of research and innovation
As demonstrated in Section 4, the low carbon transition appears as a technological rupture vis a
vis the (still largely) fossil fuel-based energy and economic system in place. As such, it is a
source of challenges and opportunities for a multitude of social and economic actors within the
EU and beyond. At a time of rapid change, and risks of lock-in and stranded technologies,
research and innovation (R&I) will play a crucial role to accompany the transformation and
maximise the "opportunities" for our society, be it through individual technology development,
system deployment or even social innovation. R&I also has to address a longer time perspective.
Long investment cycles, in particular for industrial installations and infrastructure, require a focus
well beyond 2050 to turn science into products and ensuring market uptake.
R&I will define the speed at which the decarbonisation can take place, at which costs and with
which co-benefits. However, how it can materialise and how it would benefit the EU's private
sector in building leadership in the upcoming global clean technologies markets, are also
fundamental questions for the strategy to yield the positive economic and social impacts that will
underpin the necessary political support it requires.
This section first reviews the identified needs in terms of R&I to achieve decarbonisation, and
then the instruments and policies to be put in place to transform these needs into an opportunity
for the EU's economy.
5.4.1 RDI for a decarbonised economy
The key to success is to develop a wide portfolio of cost-effective and efficient carbon-free
alternatives for each GHG-emitting activity, often in combination with enhanced sector coupling,
digitalisation and system integration. At the same time, the rate at which the European R&I
system succeeds in developing and commercialising such innovative solutions will steer the EU’s
future competitiveness of its existing and newly emerging industries. Relevant research areas
242
include issues around climate science and the climate-earth system, technological challenges to
create an environment that supports the required substitutions, socio-economic issues and
lifestyle change (Figure 109).
Figure 109: Relevant research and innovation areas
Given the uncertainty related to the outcomes and results of research and innovation, it is not yet
clear from today’s perspective to which extend the five technological pathways explored in
Section 4 will be part of the solution. Therefore, it is important to focus on a portfolio of
solutions that could be enablers for decarbonisation and to develop competing solutions to avoid
a potential technological lock-in514
.
The IPCC Special Report on 1.5°C also highlights the potentially large (though uncertain) role
contribution that General Purpose Technologies could play to both mitigation and adaptation.
These technologies include the Internet of Things, biotechnology, nanotechnology, artificial
intelligence, robots and information & communications technology. The Special Report explores
their potential applications to climate action in energy, industry, transport, buildings, agriculture
and disaster risk reduction515
. Such innovations have the potential to contribute enormously to
deep decarbonisation, but may have to be accompanied by behavioural changes, in particular to
combat the rebound effect
5.4.1.1 Climate science
An effective implementation of the Paris Agreement has to be based on science, which requires a
continuous development of our knowledge on the climate-earth system and potential mitigation
and adaptations options. Relevant topics are the determination of whether the EU is on track to
meet its climate targets (including earth systems feedbacks and the remaining global emission
budget) as well as the functioning and future evolution of the earth-climate system (including
improving climate projections).
Improved climate science will help to establish climate services for businesses, public authorities
and citizens, facilitating to develop mitigation strategies and adaptation pathways and policies for
vulnerable ecosystems, for critical economic sectors and infrastructure in the EU.
514
The portfolio approach is also responds to concerns expressed by the participants of the public
consultation (see section Annex 7.1) who see the opportunity to support research and development by
investments but also a challenge in terms of picking ‘picking winners’.
515
See IPCC Special Report on Global Warming of 1.5°C, Table 4.9
Zero-carbon
power
Hydrogen,
synthetic
fuels, and
fuel cells
Circular,
zero-carbon
industry
Bio-
economy,
agriculture,
and forestry
Electrifi-
cation
Integration of required technologies, infrastructure, and digitalisation
Socio-economic and behavioural research and innovation
Climate science
243
5.4.1.2 Technological innovation challenges
A portfolio of enabling technologies is necessary to facilitate the necessary substitutions for a
low-carbon transition. While this section does not provide an exhaustive list of technologies, a
number of key technological pathways have emerged based on modelling results. To include a
diverse portfolio of technologies, the discussion below focusses on these promising options. As
different technological means can be used to decarbonise certain sectors or processes, it is from
today’s perspective not yet clear to which extend they will be used in the future. Technologies are
currently at very different levels of market readiness and often lagging behind the status required
by decarbonisation pathways as can be shown by classification schemes.516 517 518 519
It is however
important to assess and mitigate their risks before large-scale deployment.
Zero-carbon power
Renewable energy technologies are a key enabler for the decarbonisation of the power sector.
There are several technological options ranging from mature technologies (e.g. onshore wind,
solar photovoltaics, and established bioenergy) to proven technologies that still have optimisation
potential (e.g. offshore wind) to less mature technologies (e.g. ocean power). Efforts are needed
to further optimise the more mature technologies and to widen the portfolio of options, such as in
the field of ocean energy (wave/tidal), alternative photovoltaic concepts (thin-film, concentrated
PV), or concentrated solar power.
The transition towards a more decentralised and variable power system implies that it will need
to be much more intelligent (through digitalisation) and flexible. R&I will have to focus on
increasing the intelligence of the system via digitalisation and developing the smartness of its
components, increase the flexibility of the system by means of more renewable dispatchable
generation capacity (e.g. dispatchable renewables, hydrogen-based power), energy storage (e.g.
storage capacities or power-to-gas solutions such as green hydrogen), demand-side management
programmes, and by a faster reacting grid.
Moreover, completely new power generation technologies may emerge from current research
efforts. For instance, a number of countries have engaged in scientific programmes developing
nuclear fusion energy, a process that would not produce greenhouse gases or long-lasting
radioactive waste and uses fuels available in abundance. One of the major global initiatives is the
International Thermonuclear Experimental Reactor (ITER)520
, which includes all major
economies (EU, USA, China, Japan Russia, South Korea) and is the European Union’s main
contribution to fusion research.
Electrification
Electrification offers great opportunities to contribute to the decarbonisation of demand side
sectors such as transport, heating and industry, which largely still use fossil fuels. In a world that
516
IEA (2018), Tracking Clean Energy Progress, https://www.iea.org/tcep/. This traffic light indicator is
based on technology penetration, market creation and technology development. The IEA Energy
Technology Perspectives 2017204
, applies the traffic light system and sees only 3 of 26 technologies on
track.
517
VUB-IES (2018), Industrial Value Chain. A bridge towards a carbon neutral Europe,
https://www.ies.be/files/Industrial_Value_Chain_25sept_0.pdf. This report addresses the readiness of
more than 80 different industrial decarbonisation technologies according to their Technology Readiness
Level.
518
IRENA (2017), Accelerating the Energy Transition through Innovation,
http://www.irena.org/publications/2017/Jun/Accelerating-the-Energy-Transition-through-Innovation
519
WIPO (2018), GLOBAL INNOVATION INDEX 2018,
http://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2018.pdf
520
https://www.iter.org
244
is increasingly electrified, batteries will become one of the key technological components of a
low-carbon economy. A fast growing global value chain is emerging. The current generation of
Li-ion batteries is already well developed but still has significant potential for optimisation, and
new emerging technologies are appearing on the horizon (solid-state, Li-air etc.…). Furthermore,
Redox flow batteries are a promising technology option for stationary applications. Despite their
strategic importance, the EU is lagging behind in the manufacturing of Li-ion batteries.521
To
build up a strong battery production value chain in the EU, research and innovation should focus
on the entire value chain: active materials, cells, modules, battery management systems and reuse
and recycling. It should spur the emergence of new promising technological solutions,
improve performance and cost, and investigate different possible applications in energy and in
transport sectors.
Several of the trends affecting infrastructure/systems, notable the accelerated electrification of all
sectors, can only optimise their contribution to the decarbonisation when integrated. This sectorcoupling
requires additional research, innovation and demonstration on energy systems
themselves. The interconnection and integration of energy supply and demand sectors, and their
joint adaptation to the energy production patterns, are the basis for the best possible use of the
available resources, the avoidance of stranded assets, and the best information base for decisions
on investments. Digitisation will be a main enabler of managing a decentralised energy system.
Hydrogen, synthetic fuels, and fuel cells
Hydrogen, in combination with demand side technologies such as fuel cells, may provide an
alternative for applications in transport, heating and industry where electrification (and batteries
in particular) cannot or struggle to reach the required level of cost and performance. While large
quantities of hydrogen are produced today using natural gas, hydrogen can also be produced from
zero-carbon power sources, such as renewable or nuclear power through electrolysis or through
methane steam reforming in combination with carbon capture and storage. Furthermore,
hydrogen can be produced during periods of excess renewable power supply and reconverted to
dispatchable zero-carbon power during periods of undersupply. This could ensure low carbon
security of electricity supply without the need to use fossil fuels.
A much larger research and innovation effort will be needed along the hydrogen supply chain to
improve performance and reduce cost (e.g. for electrolysers, methane steam reforming in
combination with carbon capture and storage, storage technologies, and stationary and mobile
fuel cell applications). This effort should be combined with support to facilitate early deployment
of technologies and related infrastructure.
Circular zero-carbon industry
Energy- and material-intensive industries can reduce their environmental footprint by decreasing
the required amount of energy and raw materials. Therefore, efficiency and a more circular
economy are first obvious win-win measures. This development would require a conversion of
most material fluxes into closed loops. A circular economy would increase the availability of raw
materials for these sectors that will manufacture key technologies for decarbonisation, such as
cobalt and li-ion for batteries or rare earths for wind turbines. Furthermore, a circular economy is
a possible path for some industrial sectors to decarbonise by re-using waste from other sectors as
raw material input, in a so-called industrial symbiosis.
521
JRC (2017), EU Competitiveness in Advanced Li-ion Batteries for E-Mobility and Stationary Storage
Applications – Opportunities and Actions,
http://publications.jrc.ec.europa.eu/repository/bitstream/JRC108043/kjna28837enn.pdf
245
Some of the current production processes have high process-related greenhouse gas emissions
(for example blast furnace/basic oxygen furnace-based steel production). Carbon capture and
storage is a possibility to reduce process-related emissions without fully substituting existing
processes and R&I should focus on the efficiency and cost-optimisation of capture technologies.
Furthermore, R&I should develop alternative processes for the energy-intensive industries, for
example the direct reduction of iron with hydrogen as an alternative steel production process, or
investigate new processes in the cement and chemicals industries. Another option is to reduce the
use of carbon-intensive products. For example, the usage of carbon-intensive cement could be
reduced through substitution by hybrid construction materials such as wood-concrete. Research
and innovation should look into the development of such products and the extent to which they
can reduce greenhouse gas emissions in industry.
The bioeconomy, agriculture, and forestry
The bioeconomy comprises the use of renewable biological resources from land and sea (e.g.
crops, forests, fish, animals, and microorganisms) to produce food, materials and energy. The
bioeconomy can be a catalyst for decarbonisation in many different ways. Research and
innovation should focus on sustainable forestry and agricultural practices, in particular those that
increase production while reducing non-CO2 emissions and with the objective of enriching and
conserving carbon in soils that can play a role as a potential source of negative emissions.
Furthermore, there remains significant potential for alternatives for industrial production of
fertilisers, bio-waste management, ruminant livestock management, and a reduction in burning of
agricultural residues.
Consumption-based measures can also contribute to a reduction of greenhouse gas emissions.
Changes in consumer behaviour can lead to a reduction in food-related land use and food waste.
However, social acceptance for such changes might be difficult to achieve because of existing
habits and cultural aspects. Therefore, research should address behavioural changes such as
changes in food habits and diets.
Most, but not all, of the potential bio-solutions require land use. The analysis in preceding
sections has demonstrated that the production of advanced biofuels and bio-energy (potentially
coupled with CCS and CCU to produce negative emissions), biomaterials (to replace more
carbon intensive products) and the carbon sink (the amount of carbon stored on land and in soils)
will all have to contribute towards net zero greenhouse gas emissions. This raises important
system-wide research issues regarding how to use the available land in the best way, how to
increase the carbon uptake by the land (carbon productivity), and how to use the available
biomass522
in the most resource efficient way without damaging biodiversity and environmental
quality.
Socio-economic and behavioural research and innovation
The transition to the low-carbon society also requires socio-economic research into many areas:
The large-scale deployment of current and future low-carbon technologies and practices will
require the development and implementation of new business models that make them
economically and socially attractive, and on the role of possible enablers such as trade,
consumers' habits, digitalisation, big data523
, block-chain524
or artificial intelligence525
.
Knowledge is needed on what price-signals and other measures maximise the demand-response
522
Also taking into account future impacts of climate change on availability of biomass.
523
https://ec.europa.eu/digital-single-market/en/big-data
524
https://ec.europa.eu/digital-single-market/en/blockchain-technologies
525
https://ec.europa.eu/digital-single-market/en/news/communication-artificial-intelligence-europe
246
potential of consumers, on understanding barriers to implementing economically beneficial lowcarbon
measures.
Next to technological solutions, consumer choice and human behaviour, including the impact of
technology on human behaviour, are important determinants for future GHG emissions.
Advancing social sciences can therefore give new insights and solutions that make an essential
contribution in areas such as food diet, mobility services and the consumption of energy. "Social
innovation" will be essential, in particular how to engage citizens in the decarbonisation
challenge as convinced actors in this transition, and to promote living-lab experiments on ways to
boost the zero-carbon economy through lifestyle changes, for instance through the sharing
economy.
5.4.2 Advancing the European R&I system
5.4.2.1 Role of RDI
Research, innovation and education can be understood as a ‘knowledge triangle’, connecting
universities, research institutions and business526
. Learning, discovering and innovating all go
together, as parts of a system that can create wealth, jobs, growth and social progress527
. Public
budgets largely finance education and fundamental research while the private sector is driving
applied research and is responsible for product and process level innovation.
5.4.2.2 Where the EU is today
The EU shows both strengths and weaknesses in this race to new low-carbon technologies
markets.
First of all, Europe is still a very active actor of the global research landscape, accounting for
30% of all scientific publications and one fifth of global research expenditure528
. European
enterprises are responsible for an important share of technological innovation and are responsible
for almost two thirds of the EU’s R&D investments529
. More than half regularly innovate in terms
of product, process, organisational and marketing530 531
(varying across Member States from 13%
to 67%). More than half of the innovative companies reported to have made improvements with
respect to the environment531
.
The public investment is split between Member States (roughly three quarters) and the EU.
However, the EU is progressively falling behind, spending comparatively less on research than
other regions. The ratio of expenditures to GDP, also known as R&D intensity, remains at 2%
526
European Commission (2017), LAB-FAB-APP – investing in the European future we want,
http://ec.europa.eu/research/evaluations/pdf/archive/other_reports_studies_and_documents/hlg_2017_r
eport.pdf
527
The expectation, that R&I creates jobs and secures wealth was shared by a number of respondents to the
public consultation (see section 7.1).
528
European Commission (2016), Open innovation, Open Science, Open to the World – a vision for
Europe,
https://ec.europa.eu/digital-single-market/en/news/open-innovation-open-science-open-world-vision-
europe
529
European commission (2018), Smarter, greener, more inclusive? — Indicators to support the Europe
2020 strategy - 2018 edition,
http://ec.europa.eu/eurostat/web/products-statistical-books/-/KS-02-18-728
530
As set in COMMISSION REGULATION (EC) No 1450/2004
531
Eurostat (2017), Eurostat Innovation statistics,
http://ec.europa.eu/eurostat/statistics-explained/index.php/Innovation_statistics
247
(see Figure 110), hence below the targeted 3% envisaged in the Europe 2020 Strategy532
and well
below levels in Japan (3.3% in 2015) and the USA (2.8% in 2015). China is also progressing and,
with almost 2.1% in 2015, is now spending more on R&D per share of GDP than the EU. This is
due to lower private investment in research and innovation in Europe.
Figure 110: Gross domestic expenditure on R&D compared to GDP
Source: Eurostat533
.
In 2015, the EU spent 0.02% of GDP on energy-related research534
, about a tenth of total R&D.
Patenting in clean energy technologies has been increasing over the last decade, with European
companies targeting "high value" inventions with international protection, which displays a
growing confidence of their competitiveness in the global energy technology market. However,
in sheer number of patents, Europe is being outnumbered by Japan, China and, more recently, by
South Korea.
532
European Commission (2018), Europe 2020 strategy,
https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/eu-
economic-governance-monitoring-prevention-correction/european-semester/framework/europe-2020-
strategy_en
533
Eurostat (2018), Statistics explained, R&D expenditure,
http://ec.europa.eu/eurostat/statistics-
explained/index.php/R_%26_D_expenditure#Main_statistical_findings
534
European commission (2018), Indicators for monitoring progress towards Energy Union objectives,
https://ec.europa.eu/energy/en/atico_countrysheets/scoreboard?dimension=Research%2C+innovation+a
nd+competitiveness
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
2000 2002 2004 2006 2008 2010 2012 2014 2016
%GDP
Japan USA China (except Hong Kong) EU
248
Figure 111: Trends in energy patenting
Source: JRC535
based on EPO (Patstat)
These general trends also reflect the situation of EU companies, which are very active in the
global clean energy market (sized at USD 1.4 trillion in 2016536
). Indeed, in 2017 Europe was
hosting 41 of the top 100 global energy companies, and the EU 6 of the 25 largest renewables
companies537
. European renewable energy businesses employed almost 1.5 million people (out of
10 million globally538
). They are accelerating R&I investments with an increasing number of
patents filed (+50% between 2010 and 2016539
), clearly contributing to the global shift towards
renewables developments (global patents in the field have doubled over 2010-2016). However,
international competition is increasing, with Asian and North American companies getting an
increasing weight in the market533 540
.
Over the years, the EU has put in place a number of instruments to deliver on research and
innovation for the EU economy as a whole, and on clean energy and climate mitigation activities
in particular:
 The EU R&D programmes Horizon 2020541
(by 2020) and Horizon Europe542
(2021-2027),
which should benefit from a budget increase to EUR 100 billion, of which 35% is intended to
be allocated to tackling climate change. The Strategic Energy Technologies (SET) Plan543 544
535
JRC (2017), Monitoring R&I in Low-Carbon Energy Technologies,
http://publications.jrc.ec.europa.eu/repository/handle/JRC105642
536
Advanced Energy Economy (2017), 2017 Market Report,
https://info.aee.net/aen-2017-market-report
537
Thomson Reuters (2017), Top 100 Global Energy Leaders.
https://www.thomsonreuters.com/en/products-services/energy/top-100.html
538
IRENA (2018). Renewables and Jobs – Annual Review 2018,
https://irena.org/-
/media/Files/IRENA/Agency/Publication/2018/May/IRENA_RE_Jobs_Annual_Review_2018.pdf
539
IRENA (2018), Database on patents evolution,
http://resourceirena.irena.org/gateway/dashboard/
540
Stash Investments, Top 10 Largest Clean Energy Companies by Revenue,
https://learn.stashinvest.com/largest-clean-energy-companies-revenue
541
https://ec.europa.eu/programmes/horizon2020/en/
542
European commission (2018), Horizon Europe - the next research and innovation framework
programme,
https://ec.europa.eu/info/designing-next-research-and-innovation-framework-programme/what-shapes-
next-framework-programme_en
543
COM (2015) 6317
249
linking EU, Member State and industry action which has put in place 10 platforms promoting
market uptake by technologies, or the European Energy Research Alliance545
that brings
together 175 research organisation across the EU.
 The SET Plan is complemented by the Knowledge Innovation Community scheme (KIC),
which aims at spurring public-private partnerships on different societal challenges, including
on energy546
.
 Energy related innovation is among the most frequently identified priorities in the current
120 Smart Specialisation Strategies that chart out the investment of over EUR 41 billion from
European Regional Development Fund (ERDF) programmes. The current Smart
Specialisation Platforms547
(on agriculture, energy, industrial modernisation, all relevant
topics for the decarbonisation) help coordinating the efforts and use of regional funds to
strengthen the regional innovation capacities. As of 2021, a new interregional innovation
investment scheme under the Interreg part of the ERDF will further strengthen the
cooperation of regions around shared smart specialisation priorities.
 The Innovation Fund under the Emissions Trading System355
.
 R&I is a key dimension of the National Energy and Climate Plans (NECPs548 549
). The
inclusion of specific and measurable R&I objectives in the NECPs will help integrating
national strategies and priorities at EU level in a 2030-2050 perspective.
 The EU is participating in international fora on innovation related to decarbonisation, in
particular as a member of the Clean Energy Ministerial550
and of the Mission Innovation551
,
the global initiatives launched in the context of COP15 and COP21, to accelerate clean
energy innovation. Members of the Mission Innovation552
have committed to double
governments’ clean energy research and development investments, and to cooperate on
different Innovation Challenges553
. Furthermore, the EU supports the IPCC which makes a
major contribution to the advancement of climate science.
5.4.2.3 Future R&I for EU decarbonisation and industrial growth
As innovation is happening within business environments or at the interface between enterprise
and research, it will be crucial to create innovation ecosystems. Economic incentives for
embracing innovation are required on the firm level. New entrants, often small and medium
enterprises, need to be able to compete and develop: for instance, financial instruments for SMEs
could be systematically adapted to the challenges of a low carbon economy. It will also require
markets free of discrimination, access to capital and a favourable regulatory environment528
.
It is crucial that European enterprises are incentivised to innovate, since they would improve their
global market positons and open up export opportunities only by being frontrunners of the
upcoming transition. An innovation policy that is “open to the world” would help extending
544
https://ec.europa.eu/energy/en/topics/technology-and-innovation/strategic-energy-technology-plan
545
https://www.eera-set.eu/
546
http://www.innoenergy.com
547
http://s3platform.jrc.ec.europa.eu
548
COM(2016) 759 final/2
549
https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/governance-energy-union
550
http://www.cleanenergyministerial.org/about-clean-energy-ministerial
551
http://mission-innovation.net/
552
As of September 2018: the EU, 9 EU Member States and 14 non-EU large countries
553
The European Commission is co-leading on 3 of them: "Affordable heating and cooling of buildings",
"Converting Sunlight" and "Hydrogen"
250
innovation ecosystems beyond their current geographic limitations528
, thus allowing to test new
concepts and products on global markets, international collaboration and the development of
common standards. In addition, showing leadership also implies to work with others, and the
global dimension of the low carbon transition has indeed already led to a number of international
initiatives through which Europe can leverage investments in R&I. Climate finance and the
implementation of national commitments are stimuli for global technology cooperation and to
create market opportunities for European businesses.
As the world outside of Europe increases its scientific output, the EU will need to ensure access
to this knowledge, in particular in the global research field of energy and climate528
. In addition,
the development of global supply and value chains around new zero-carbon technologies provide
a better sharing of the risks that exist in running alone. International cooperation should also help
less developed countries to jump over the technological divide and to base their future growth on
sustainable solutions. It will be a critical component of future development policies, with
multiple and reciprocal spill over effects on growth, stability and security.
Therefore, the future EU R&I strategy for supporting its greenhouse gas emissions reduction
efforts should be inspired by the following guiding principles:
 To keep Europe's fundamental research's excellence and be active on global research
cooperation;
 To develop an innovation agenda motivated by a race to the top, catching up in strategic
technologies and avoiding running behind if the distance is excessive;
 To explore and develop portfolios of technologies considering users’ needs and avoiding
technological lock-in;
 To link R&I strategies with European industrial capacity and strengths;
 To give priority to zero-carbon and GHG-neutral solutions;
 To address system-level innovation and sector-coupling;
 To review regulations in order to make them more innovation friendly, allowing faster
market take-up of innovative solutions, while providing disincentives for continued use of
carbon intensive technologies.
5.4.3 Possible route for R&I to a EU decarbonised economy
Successful uptake of novel decarbonisation solutions will require a specific support throughout
the innovation chain. This involves the coordinated efforts of the different EU funds to achieve
greater impact and efficiency throughout the basic research, demonstration, first-of-a-kind and
market upscaling phases up to the creation of market-pull instruments in order to bridge the
'valley of death' which is particularly pronounced in the energy and the manufacturing sectors554
.
In addition to the current strategic framework for R&I in place555
, the EU medium-term budget
aims at incentivising and catalysing the participation from the private sector. Hence,
complementarity and synergies are sought between energy, transport and digital through the
various funding R&I programmes, in particular through Horizon Europe, the Innovation Fund,
the Connecting Europe Facility and the European Regional Development Fund.
554
Due to the long lifetime of assets, the size of the investments, the need for infrastructure or the variety
of actors.
555
SET Plan for energy, STRIA for transport.
251
In terms of presenting areas for further work, the High-Level Panel of the European
Decarbonisation Pathways Initiative proposed priority actions towards a low carbon economy
(see Figure 112).
Figure 112: Proposed R&I actions for decarbonisation
Source: High level Panel of the European Decarbonisation Pathways Initiative556
.
556
High-Level Panel of the European Decarbonisation Pathways Initiative (2018), Interim
Recommendations,
http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetailDoc&id=36435&no=
1
2020 2030 2040
2050: Seamless weather-to-climate
forecasting system
Support of implementation of higher ambition NDCs
Deployment of seamless weather-to-climate forecasting systems
Support of Paris Agreement implementation (global stocktake, IPCC reports)
2050: Full system integration of renewablesA decarbonised power system
Kick-off system transition, also through low-carbon gases and fluids, early opportunities
Mission on smart storage and transmission, and energy system integration
Breakthroughs in renewables (technologies and systems)
2050: Full decarbonisation of steel and
chemical industries
A digitised, circular and carbon-neutral industry
Low-hanging fruit in energy efficiency: make the Abatement Curve work
Mission on renewable and sustainable plastics
Deployment of zero-carbon processes for steel and chemical industries
(including CCS)
2050: Zero-emission buildings (including
their construction and use)
The construction sector
Mission on zero-carbon and sustainable construction materials (zero-C cement,
wood, composites)
2050: Availability of zero emission
alternatives for freight, shipping and air
travel
Low-carbon mobility
System transition to electromobility
(including social innovation)
Developing hydrogen options for heavy duty vehicles
Low to zero carbon options for shipping and air travel
2050: Zero-emission, sustainable citiesCities and societal issues
Mission on climate-neutral, "circular" and liveable cities (with
a social innovation component)
Deployment of fully developed prosumer schemes (e.g. use of
electric cars for energy storage)
2050: Europe becomes a natural carbon sinkAgriculture, forestry and land-use
Mission on European soils as carbon sinks
Network of regional bioeconomy projects
Development of options for negative emissions from land use
2020 2030 2040
Sectors/area
s
Missions Continuous R&I actions
Proposed priority research and innovation actions for supporting the decarbonisation process in different sectors/areas
along the time frame 2017-2040, in order to get the 2050 goals indicated in the boxes. Red arrows represent missionoriented
actions; all arrows have to be intended as roadmaps that produce various outputs throughout their time frame
until their end-date, when the activity should be completed and deployed in society.
Climate science, services and observation issues
252
As also identified by the High-Level Panel of the European Decarbonisation Pathways Initiative,
tools and instruments on delivering on low carbon technological solutions full-scale deployment
will include and build on:
 New policy instruments to achieve a better pan-European R&I coordination of efforts, in
particular through a broader efficacy and effectiveness of the financial instruments to support
moving high-TRL557
solutions to the market.
 Public-Private Partnerships of a relevant size, and Mission-oriented R&I actions should be
used to focus resources on critical topics.
 Levelling the playing field - removing fossil fuel subsidies and internalising the climate
change externalities of GHG-emitting technologies is necessary in order to allow zero-carbon
technologies to compete.
 EU competitiveness - better monitoring of EU competitiveness along the new value chains, in
particular for the most strategic parts in terms of dependency and added value.
 Conflicting policy objectives - innovative approaches to deal with conflicting policy
objectives and support the decision making process to optimise the trade-offs along the life
cycle and the value chains.
 Voluntary Instruments / labelling – more focus could be given to creating right framework
conditions.
 Economic Incentives – new instruments should be established to introduce economic
incentives for enhanced life-cycle performance, durability, upgradeability and ease of repair
and recyclability. Fiscal policies should focus more on taxing capital and consumption than
labour. More reliance on polluter pays principles.
 Corporate Social Responsibility - essential to ensure that carbon-neutral technologies are
developed in an ethical way.
 Stronger focus on Circular Materials rather than waste e.g. 'Circular Materials Framework
Directive' consolidating and simplifying waste legislation.
 Support and empower cities to innovate by enhancing capacity-building and experimentation,
and in doing so, develop transferable and scalable solutions to climate and energy change
challenge, and spatial development approaches to facilitate circular economy and
bioeconomy business models and resource efficient life-styles.
 Large-scale demonstrators - competition policies may be adapted in order to allow subsidised
large-scale demonstration of systemic solutions at reasonable scale.
 Modelling - Innovative approaches to better integrate the multi-sectoral and global dimension
in current quantitative assessments while adequately addressing also behavioural aspects.
5.5 Lifestyle and consumer choices
Reducing greenhouse gas emissions by adopting more climate conscious lifestyles, and consumer
choice for products/services with lower carbon footprint help to diversify decarbonisation
pathways. More technology solutions would be required in situations where consumer
557
TRL: technology readiness level
253
lifestyle/choice would not evolve in a manner that would see a lower carbon footprint. In the
context of achieving a zero greenhouse gas economy this would mean also larger use of not yet
mature technologies such as biomass and CCS (which might face several additional difficulties
such as competition for land use and loss of biodiversity), or direct air capture and CCS (which
has not yet been demonstrated at a large scale and which also encounters some public acceptance
problems).
Demand-side solutions related to consumer choices are powerful tools to reduce the carbon
footprint of our economy558
with a clear potential for co-benefits to citizens themselves and
society as a whole - as already clearly demonstrated for example in case of urban mobility.
Awareness raising should continue to be a vital element of guiding consumers towards the right
habits and attitudes of energy use by educating consumers from an early age through daily
practices and choices.
Multiple examples can be found in section 4 where consumer choices impact the emission
profile. There is a visible trend towards greater use of walking, cycling and public transport as
well as sharing vehicles (rather than vehicle ownership) among younger people, particularly in
urban areas. Over the last decades shifts in diets already took place. On the other hand, demand
for long distance travelling, notably aviation, has strongly increased and, with increasing welfare,
will likely continue to increase.
To achieve the transformation, it is important to move consumer needs and rights into the centre
of policy discussions, as happened with the Energy Union process. The question is how to reduce
barriers that can hamper the market uptake of the low-carbon solutions that can have multiple
other benefits, be it in transport, the building or food sector, and how to spur social innovation
that can alter lifestyles towards reducing our carbon footprint.
Often there is a lack of information559
. "Soft" measures like information campaigns and labelling
programs560
can play a significant role across a wider set of products and services, so as to allow
the consumer to be able to identify and rank options according to a product’s efficiency and
expected economic benefits (as well as their own preferences). There are many schemes that have
already a very good track record in this respect (e.g. eco-labelling)
Labelling can include consumption performance, but also the nature of the good or service
provided.
Moving a step further, standards and norms are "hard" measures that allow removing inefficient
technologies from the market that often would be to the detriment of consumer welfare in the
longer term.
In the future, policy making will have to look at how to engage citizens with appropriate
economic and fiscal instruments, creating a positive environment that not only better informs
about the different options and benefits, but also addresses externalities, encourages purchasing
decisions towards lower carbon content products, as well as designing standards and norms that
will benefit the society as a whole.
558
As concluded in the 2018 Special Report on Global Warming of 1.5°C. For example Section D4.2 of the
Summary for Policymakers
559
Consumers' preference for the present (the "discount rate") tend indeed to be fairly high, placing great
value on immediate cost savings while having a low degree of confidence in expected paybacks that
would be generated by lower consumption over the lifetime of the equipment.
560
Regulation (EU) 2017/1369 setting a framework for energy labelling:
https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=uriserv:OJ.L_.2017.198.01.0001.01.ENG&toc=OJ:L:2017:198:TOC
254
By the middle of the century, consumers should be better informed and benefitting from the
economic stimulus when making buying decisions directly contributing to reducing the carbon
footprint of the economy, while improving welfare for all.
5.6 The international dimension, implications for the EU Long Term
Strategy
This section will reflect on how the EU long term strategy interacts with a number of
international dimensions, notably:
 Addressing the global economic and security consequences of the transition.
 How trade can support global competitiveness of the EU economy and secure access to
the critical raw materials.
 Supporting the development of an international regulatory framework towards lower
emissions, and supporting others in reaching their goals.
5.6.1 Security
5.6.1.1 Geopolitical stability and energy security of supply
The causes of insecurity and conflicts are complex and climate change is now an indisputable
part of that picture. Its destabilising impacts – including disruptions in food security, reduced
access to resources, water and energy, the spread of epidemic diseases and social and economic
instability – make it the ultimate threat multiplier. Assessing and anticipating climate risks in the
most fragile situations, which risk being caught in a spiral of conflict and climate disaster, should
be a priority.
The EU Global Strategy561
calls for a more comprehensive approach to the EU's foreign and
security relations, building stronger links notably between trade, energy, climate, development
and security policies. It underlines that financing instruments are "an important element of the
toolbox the EU has at its disposal for external action" and that they "should be mobilised in line
with agreed political priorities".
Political dialogues and sectoral cooperation are required to address this, with a holistic
assessment of each partner country’s situation. In particular long-term strategies and climate risks
could become standing components of bilateral and regional dialogues, agreements and
frameworks. International processes, like the Sendai framework, the SDGs and the World
Humanitarian Summit have highlighted the importance of reinforcing synergies with all relevant
sectors, therefore reducing the risks of spill-over effects. Finally, peace and stability can be
promoted through local and transboundary environmental resource management schemes as well
as through support to partner countries in addressing climate-related resource scarcity. Failing to
act is not an alternative, because climate change itself will raise numerous similar challenges,
affecting resource availability, economic development, political stability and eventually
migratory flows, which will become significantly larger than the changes expected due to
mitigation of climate change.
A particular challenge of the low carbon transition is that the economic shift necessarily
accompanying the changes will reshape the international framework itself. The changes to global
energy markets, for example, will impact on the strategic leverage some states exert over others,
561
https://europa.eu/globalstrategy/en/global-strategy-promote-citizens-interests
255
alter international financial flows and require economic diversification in countries traditionally
exporting large quantities of fossil fuels562
.
In this context, there may be geopolitical shifts while new dependencies are established. Such
shifts will test the established global order particularly within the broad neighbourhood of the
EU. Policy actions to address this would be to focus political dialogue and sectoral cooperation
on economic diversification, societal, city level and state resilience in vulnerable countries to as
to ensure successful transition.
Beyond bilateral and bi-regional schemes, at a moment when multilateralism is under threat, it is
also important that EU long term global engagement aims to maintain the issue of climate change
high on the agenda of international discussions, including further encouraging the United Nations
in general, the United Nations Security Council in particular, to better factor in the climate and
security nexus, and to look at options to institutionally strengthen climate risk assessment and
management within the UN system.
5.6.1.2 Raw material supply
Non-energy raw materials such as minerals and metals have a relatively smaller contribution to
GDP, jobs or trade than other economic sectors, but are the key enablers of all EU value chains
and for some key mitigation technologies. Materials are the main cost factor in the manufacturing
sector (44%, compared to 18% for labour, 3% for taxes and 2% for energy).563
Also in the case of
energy-intensive industries, materials are the highest or the second highest cost category, with
energy costs typically comprising 20-40% (higher in the case of aluminium). For this reason,
access to raw material is important for the competitiveness of manufacturing industries.
A risk to the transformation of Europe’s industry to net zero emissions is that Europe replaces its
dependency on fossil fuels with one on non-energy raw materials, many of which it sources from
outside Europe, and for which global competition will become more intense. However, the risks
of import dependency do not depend only on the share of imports, but also on the raw material
characteristics (e.g. storable or non-storable), uses (e.g. a component of durable equipment or a
variable cost) and market (e.g. substitution possibility in supply or demand), as well as the extent
to which the raw material can be recycled.
There is a limited amount of studies assessing the dependency of the global effort to reach net
zero emissions on the availability of non-energy raw materials, such as metals and minerals. An
important reason for this is the high uncertainty related to the future demand of raw materials,
due to technological development, material substitution and recycling. As an example of raw
materials needed by low carbon technologies, a 3 megawatt wind turbine contains 335 tonnes of
steel, 4.7 tonnes of copper, 1200 tonnes of concrete, 3 tonnes of aluminium, 2 tonnes of rare earth
elements as well as zinc and molybdenum564
. Another assessment estimated the raw material
requirement of a 3.45 megawatt wind turbine at 567 tonnes of steel, 5 tonnes of copper, 1369
tonnes of concrete, 13 tonnes of aluminium and aluminium alloys, 31 tonnes of polymers, 25.5
ton of ceramics and 3.5 tonnes of electronics while not detailing the amount of rare earths565
.
562
OECD (2017). Investing in climate, investing in growth.
http://www.oecd.org/env/investing-in-climate-investing-in-growth-9789264273528-en.htm
563
VDI Centre for Resource Efficiency, https://www.resource-germany.com/
564
http://www.cop23-rawmaterials.com/assets/presentation-1---kirsten-hund_world-bank.pdf
565
https://www.vestas.com/~/media/vestas/about/sustainability/pdfs/v1263%2045mw_mk3a_iso_lca_final_
31072017.pdf
256
The World Bank projected that demand for metals and minerals increases rapidly with climate
ambition566
. The most significant example of this being electric storage batteries, where the rise
in demand for relevant metals, aluminium, cobalt, iron, lead, lithium, manganese and nickel
grows by more than 1000 per cent under a 2°C scenario compared to a business as usual scenario
(Figure 113).
Figure 113: Global material extraction by resource type, historical up to 2015 and projected
to 2050
Source: UN Environment, World Bank.
The OECD estimates that, despite improvements in materials intensity and resource efficiency
and the growth in the share of services in the economy, global material use could more than
double from 79 Gt in 2011 to 167 Gt in 2060 (Figure 114).567
Non-metallic minerals, such as
sand, gravel and limestone, represent more than half of total materials use.
566
World Bank (2017), The Growing Role of Minerals and Metals for a Low Carbon Future,
http://documents.worldbank.org/curated/en/207371500386458722/The-Growing-Role-of-Minerals-and-
Metals-for-a-Low-Carbon-Future
567
OECD (2018), Global Material Resources Outlook to 2060 – Economic drivers and environmental
consequences, http://www.oecd.org/environment/global-material-resources-outlook-to-2060-
9789264307452-en.htm
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257
Figure 114: Materials use trends till 2060
Source: OECD
567
.
OECD concludes that the growth in materials use, coupled with the environmental consequences
of material extraction, processing and waste, is likely to increase the pressure on the resource
bases of the planet’s economies and jeopardize gains in well-being.
Without addressing the resource implications of low-carbon technologies, there is a risk that
shifting the burden of curbing emissions to other parts of the economic chain may simply cause
new environmental and social problems, such as heavy metal pollution, habitat destruction, or
resource depletion. The International Resource Panel recently assessed these trade-offs568 569
.
Access to raw materials needed to make low carbon technologies and products will determine EU
industry’s competitiveness and ability to deliver them at a scale that matches climate ambitions.
Rapid uptake of climate-friendly technologies will increase competition for resources and the EU
may face strong increase in competition in global raw materials markets from fast growing
economies. Today, production and consumption are shifting towards emerging and developing
countries, which on average have higher materials intensity than Europe. Asia has emerged over
the last two decades as a major producer and user of raw materials (Figure 115). This increase is
mainly due to China’s rapid industrialisation and urbanisation, which requires an enormous
amount of raw materials such as steel, non-ferrous metals and concrete.
568
UNEP/IRP (2016), Green Energy Choices: The benefits, risks, and trade-offs of low-carbon
technologies for electricity production,
http://www.un-expo.org/wp-
content/uploads/2017/06/Green_energy_choices_The_benefits_risks_and_trade-offs_of_low-
carbon_technologies_for_electricity_production-2016UNEP_GEC_web.pdf.pdf
569
UNEP/IRP (2017), Green Technology Choices: The Environmental and Resource Implications of LowCarbon
Technologies, http://www.resourcepanel.org/file/604/download?token=oZQeI-pe
258
Figure 115: Non-Ferrous Minerals production per continent
Source: EU Raw Materials Scoreboard.
In order to safeguard the EU’s industrial competitiveness along numerous value chains and to
support deployment of low carbon technologies the EU needs to have a sufficient, affordable and
sustainable access to raw materials, especially critical raw materials.
The EU economy requires a wide variety of raw materials. The EU has low import dependency
for construction materials, several industrial minerals and industrial roundwood, but is heavily
import-dependent on many metal ores and natural rubber. Non-metallic minerals represent nearly
half of the EU’s mass materials. Metal ores only represent a minor proportion of the EU’s
material consumption in terms of mass, but this understates their high economic and strategic
importance570
.
Securing a supply of raw materials will play an increasing role in managing risk in all EU
industrial value chains. The EU already monitors the situation through its 3-yearly assessments of
critical raw materials. This delivers a risk assessment for EU industry based on economic
importance and supply risks criteria and informs policy and business risk mitigation actions. The
Commission published the last list of critical raw materials in 2017571
.
The main global producers and suppliers of critical and some non-critical raw materials to the EU
are highly concentrated in a few third countries. Many of critical raw materials are located in
countries with poor governance and environmental standards (Figure 116).
570
Raw Materials Scoreboard 2018, https://publications.europa.eu/en/publication-detail/-
/publication/117c8d9b-e3d3-11e8-b690-01aa75ed71a1
571
COM(2017) 490 final, 13.09.2017.
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259
Figure 116: Largest suppliers of critical raw materials to the EU
Source: Study on the review of the list of critical raw materials 2017572
Sustainable and responsible mining and sourcing of raw materials approaches are needed to
decouple climate objectives from negative environmental impacts associated with necessary
technology materials. This is fundamental in the context of the sustainable development goals.
Circularity of metals and recycling of raw materials from low carbon technologies is an integral
part of the low carbon transition. The EU is at the forefront of the circular economy and
increasing the use of secondary raw materials. For example, recycling rates of some metals such
as iron, aluminium, zinc, chromium or platinum already reach over 50%. For other, especially
those needed in renewable energy or high tech applications such as rare earths, gallium, indium
secondary production represents only a marginal contribution. Significant amounts of resources
leave Europe in the form of wastes and scrap, which are potentially recyclable into secondary raw
materials.
However, given the scale of fast growing material demand, primary raw materials will continue
to provide a large part of the demand. Also, due to long time spans until these reach their end-oflife
stage, recycling opportunities will fully materialise with a lag of several years or, in the case
of buildings, several decades.
5.6.1.3 Security of critical energy infrastructure and security of investments
The energy transition raises new security challenges that will have to be properly managed.
Traditional energy technologies are historically composed of control systems tailored to operate
the physical networks. These operational technologies become more and more connected to
digital technologies and components. This advancing digitalisation makes the energy system
smarter, allows the penetration of renewables in the system and enables consumers to actively
participate in the energy market achieving higher energy services gains. But digitisation also
572
https://publications.europa.eu/en/publication-detail/-/publication/6f1e28a7-98fb-11e7-b92d-
01aa75ed71a1/language-en
260
creates an increased exposure to cyber-attacks jeopardizing the data privacy of consumers or the
security of supply.
The European Union has already initiated a strategy to promote cyber resilience. After the
adoption of the Directive on security of network and information system (“NIS Directive”) the
Commission proposed in 2017 a cybersecurity package to extend the mandate of the European
Union Agency for Network and Information Security (ENISA) and a new European framework
to certify the security of IT devices and systems.
However, the energy system has specific characteristics such as real time requirements to react in
milliseconds, which prevent the application of standard cybersecurity measures. It combines new
technologies with legacy technologies that have a very long life cycle and that were designed
well before digitalisation. Furthermore, energy security incidents could lead to cascading effects
particularly strong in a European context due to the market coupling of electricity and gas and the
numerous physical interconnections in electricity, gas and oil. These cascading effects could be
across Member States borders but also across critical infrastructures in a number of Member
States and could have devastating effects.
Moreover the current framework at European level does not provide appropriate instruments to
effectively respond to new cross-border challenges to physically protect critical energy
infrastructure. A more coherent level of physical protection across the Union could significantly
improve the security and the level of resilience of the energy system. The aim should be to match
the level of physical protection with the level of cybersecurity, which are both of crucial
importance for the resilience of the energy system.
Achieving a better preparedness and a higher level of resilience of the energy system for the case
that a hybrid threat or cyber-attack occurs will therefore require new policies and initiatives to
address adequately the issue of physical and cybersecurity of critical energy infrastructure. In
particular, the Commission will help energy operators to better cope to the specific cybersecurity
challenges of their sector by adopting next year guidance on cybersecurity in the energy sector. It
will be followed by a Network Code on cybersecurity in electricity as requested in the context of
the Clean Energy for All European package by the European Parliament and the Council.
In exceptional cases, foreign direct investments (FDI) are problematic when they pose a threat to
security or public order. This point has been made in the 2014 Energy Security Strategy and
recently by the European Parliament and certain Member States. In such circumstances, FDI may
need to be assessed and/or conditioned or prohibited. This is the case where foreign investors –
especially but not only when they are state-owned or controlled, including through financing or
other means of direction – may seek to acquire control of or influence in European undertakings
whose activities have repercussions on critical technologies or infrastructure, such as critical
energy infrastructures. Such acquisitions may allow these assets to be used by non-EU parties to
the detriment not only of the EU's technological edge but also its security including security of
energy supply. The Commission made a proposal for establishing a framework for screening of
foreign direct investments into the European Union573
.
5.6.2 Markets and Trade
5.6.2.1 Global leader on clean energy and low carbon policy
Strengthened commitments to climate change mitigation following the conclusion of the Paris
agreement, together with increasing concerns over energy security and air pollution, have
573
COM(2017) 487 final
261
accelerated the transformation of the energy system across the globe. The EU must stay in the
lead in this process, while at the same time ensuring we make full use of the business
opportunities resulting from it. Europe's industrial base has benefited from the EU's edge as an
early mover, but the competition from other economies is increasing, and the prospects for
European companies to enter and expand export markets for e.g. renewable technology is often
hampered by restrictions and distortions with reduced market access as a result. The Union's
trade policy has an important role to play, so as to enable jobs and growth through the energy
transition also in third countries while at the same time facilitating their climate mitigation
efforts.
The market opportunities are clear, with a global clean energy market, currently estimated at
about EUR 1.3 trillion574
. For instance, global investment in generating electricity from
renewable energy sources is now more than double the level of investment in fossil fuel
generation. Looking beyond electricity to the entire energy sector, low carbon sources account
for almost 50% of total energy investments. This means that, even if fossil fuels are still essential,
their use is rapidly declining in relative terms.
The challenges for EU producers in tapping this market are, however, equally clear. Although the
EU has been a leading player in the deployment of renewable energy and the development and
manufacture of renewable electricity equipment and in renewable electricity production, we have
been overtaken in recent years by other large economies, most notably by emerging economies
such as China. In terms of market size, we may soon slip to fourth place worldwide; by 2022, for
example, India's investment in renewable electricity is expected to exceed the EU's575
, a
milestone already surpassed by the US and China.
The renewable energy market is expected to grow even faster outside the EU than in the EU. For
example, while the EU market for renewable electricity would increase by about 450 GW by
2030 and 1500 GW by 2050 (on average across scenarios explored in this analysis – see section
4.2.2.3), global growth should be one order of magnitude higher, up to 10 TW of installed
renewables capacities by 2040576
577. In fact, the large majority of the electricity production
capacity installed in global energy scenarios compatible with the Paris agreement should actually
be renewables: close to 80% by 2040 according to WEO 2018576
and more than 80% by 2050
according to GECO 2018578
. More than half of these new capacities should be installed in Asia,
according to both reports, followed by North America, the EU, and other regions. In addition, the
future global market for batteries is also expected to grow fast and be very substantial, increasing
from 4 GW576
currently to between 220 GW and 540 GW in 2040, depending on cost trajectory
(WEO 2018)576
, and up to 1000 GW in 2050 (GECO 2018578
, also considering batteries in
electric vehicles).
These developments should be anticipated to benefit European industry as business opportunities.
In terms of the types of renewable electricity in which EU companies have a competitive
advantage, the EU's once strong position in solar power has been significantly eroded in recent
years by China. This is important as solar is the main growth technology worldwide. The EU,
however, is still a leader in the second biggest growth area – wind power – with a global
574
Advanced Energy Economy Report 2017. https://info.aee.net/aen-2017-market-report, which gives an
estimate of USD 1.4 trillion in 2016, converted with an exchange rate of 0.9 USD per EURO.
575
IEA (2017), Renewables 2017, Analysis and forecasts to 2022. OECD/IEA, 2017
576
IEA (2018), World Energy Outlook 2018, Sustainable Development scenario,
https://www.iea.org/weo2018/
577
To put this in perspective, total installed electricity capacity in the EU was just under 1000 GW in 2015.
578
Keramidas, K., Tchung-Ming, S., Diaz-Vazquez, A. R., Weitzel, M., Vandyck, T., Després, J., Schmitz,
A., Rey Los Santos, L., Wojtowicz, K., Schade, B., Saveyn, B., Soria-Ramirez, A., Global Energy and
Climate Outlook 2018: Sectoral mitigation options toward a low-emissions economy - Global context
to the EU strategy for long-term greenhouse gas emissions reduction, EUR 29462 EN, Publications
Office of the European Union, Luxembourg, 2018
262
investment share of 39% and huge growth in wind energy capacity in the EU and worldwide. Allin-all,
despite its strong initial advantage and the fact that the EU still hosts 6 out of the 25 largest
renewables energy companies in the world579
, the EU's renewable energy sector faces increased
competition from third countries.
EU producers have also to deal with policy-driven barriers to markets, which affect not only EU
foreign investment in clean technologies but also trade of raw materials that are essential to
develop new technologies, such as copper and lithium (see also section 5.6.1.2). Such barriers
include:
 Export restrictions on raw materials used in equipment for generating and supplying
renewable electricity;
 Barriers to market access for EU equipment;
 Barriers to market access to electricity grids for producers;
 Closed electricity procurement markets.
The Commission has proposed Energy and Raw Materials Chapters (including renewable energy)
in all of its free trade agreements (FTAs) to complement tariff elimination, services liberalisation
as well as climate action and trade facilitation provisions in Trade and Sustainable Development
Chapters to ensure the openness of the EU's energy market is matched by our trading partners.
The ideal solution would be to tackle these barriers at multilateral level. However, since there are
so far no specific provisions tailored to these products following the failure of discussions in the
World Trade Organisation (WTO) on energy in the context of the Doha round, the EU is engaged
in plurilateral and bilateral initiatives, including pushing for negotiations on an Environmental
Goods Agreement (EGA) or including provisions that facilitate the global uptake of climatefriendly
technologies in bilateral trade agreements.
5.6.2.2 Trade policy and bilateral trade agreements
EU trade policy contributes in a number of ways to global decarbonisation efforts and support the
goals of the Paris Agreement. In particular, bilateral trade agreements have numerous provisions
that facilitate the global uptake of climate-friendly technologies. They remove barriers to trade
and investment in climate-friendly technologies through early tariff elimination, ambitious
liberalisation of environmental services and by addressing non-tariff barriers. For example, green
technology annexes in the EU trade agreements with Singapore and Vietnam address non-tariff
barriers in green renewable energy such as local content requirements.
Bilateral trade agreements also enable countries to put in place environment-friendly public
procurement by promoting environmental considerations, including climate, in the procurement
procedure. Public authorities are major consumers and by using their purchasing power to choose
climate-friendly goods, or services they can make an important contribution to climate change
policies.
Finally, bilateral trade agreements reaffirm the EU’s commitment to the multilateral climate
regime under the UNFCCC and Paris Agreement in the Trade and Sustainable Development
Chapters with a view to:
 effectively implement the Multilateral Environmental Agreements including the
UNFCCC, the Paris Agreement and Kigali Amendment to Montreal Protocol reducing
the use of potent greenhouse gases harmful to climate. The EU’s post-Paris agreements
such as with Japan, Mercosur or Mexico aim to include specific provisions relating to
the Paris Agreement;
579
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 maintain a level playing field, by not lowering environmental standards for the purpose
of attracting trade or investment;
 facilitate trade and investment such as in renewable energy and energy efficient goods
and services e.g. promotion of standards;
 cooperate on trade-related aspects of climate action, including on related domestic
climate policies, customs, regulatory frameworks;
 involve civil society (including environmental NGOs and business, for example in cleantech
sector) in the cooperation, monitoring and implementation of these trade agreement
though Trade and Sustainable Development (TSD) platforms (Domestic Advisory
Groups).
Trade policy could potentially also support the reduction of the carbon footprint of all products
consumed in the EU, including imported ones (see also discussion in section 5.6.2.3). The
possibility of matching domestic policies to limit CO2 emissions with a "border tax adjustment"
has been debated for over a decade. Trade policy does not prevent the EU from taking effective
measures (including taxes) to fight climate change, but the design of these measures needs to fit
the characteristics of climate instruments that are already in place in the EU and with the EU’s
international obligations (including under the World Trade Organisation).
One basic WTO rule is that imported products cannot be treated worse than domestic products
(national treatment). A "border adjustment tax" applied on imported products cannot thus be
higher than the carbon tax payed by similar products in the EU, just as VAT rates and excise
duties apply equally to domestic and imported products.
A theoretical carbon tax on domestically-consumed products, based on their carbon footprint,
could be imposed at the border also on imported products. However, this type of tax would
necessitate an entire new system of accounting and certification of the carbon content of inputs
and production processes, which would need to be applied to any producer anywhere in the world
selling its products in the EU. The tax would also have to be adjusted depending on the sources
of energy used by each producer at the time of production and the effectiveness of the climate
policies of the country of production. This would be clearly unmanageable at this stage.
A border tax adjustment would also not be compatible with the current legislative framework of
the EU Emission Trading System (ETS). While a future review of the system could consider
whether it is appropriate to prevent carbon leakage through carbon border adjustments fully
compatible with the rules of the World Trade Organisation, such a measure would require
phasing-out the current system of free allocation, which prevents the risk of carbon leakage in the
EU ETS. It is also recalled that ETS is not a tax (as confirmed by the European Court of Justice),
and in any event it is not a tax on products but is imposed on producers. This means that a carbon
tax applied to imported products would not be matched by any equivalent internal tax,
discriminating against imported products and putting the EU in breach of its basic obligations. It
is also very unlikely that this breach could be justified by the general exceptions of the WTO
(protection of health, conservation of natural resources).
Besides these legal and practical difficulties, there are also policy and political considerations
relevant in this regard. In particular, it could be seen as running counter to the spirit of the Paris
Agreement, which is founded on the principle of nationally determined contributions.
5.6.2.3 International trade and carbon emissions
Through international trade, the EU and other leading economies can promote higher standards
across global markets and contribute to crowding out unsustainable production and consumption
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patterns (examples: palm oil, timber). Moreover, expenditure at scale on innovative clean
technologies in Europe and other advanced economies helps bring down costs and allows other
countries to access these technologies at affordable prices within reasonable timeframes
(examples: wind, solar, EVs). International competition helps drive down the cost of clean
technologies and fosters the global low-emission transition, provided market players are
protected from unfair trade practices under the multilateral rules-based framework.
At a global scale, and looking at the long term, Europe will progressively see its share of global
population reduce. Similarly, its proportional weight in the global economy will reduce, as
emerging market economies are expected to continue growing at faster rates. In 2015, the EU
was the largest economy in the world, accounting for 22.7% of world output, while the U.S.
represented 20.6% and China 13.3%. By 2050, the shares of the EU, the U.S. and China are
expected to amount to 15.1%, 15.2% and 19.8% respectively (based on the macro-economic
modelling used in section 4.10.5).
The world has seen an intensification of trade relations, and this has implication for the low
carbon transition.
The most obvious and immediate effect of the low carbon transition on trade for the EU would be
the significant reduction in imports of fossil fuels. The 80% reduction pathways could reduce net
imports of fossil fuels by around EUR 85 billion per annum during 2031-2050 relative to the
baseline, while the 1.5°C pathways could generate net annual savings of about EUR 145 billion
per annum over the same period. In turn, even oil rich countries can thrive under global action,
provided effective economic diversification policies are pursued.580
While decarbonisation will require significant investments in the EU energy-intensive industry,
leading to some reductions in EU production in the fragmented action scenario, global
decarbonisation would probably see a reversal and lead to positive effects on the EU’s trade
balance for most of the 2020-2050 period if the worldwide playing field is sufficiently levelled
and fair for the three pillars of sustainable development (economic, social and environmental).
International trade and globalisation can separate the place of production of emissions from the
place of consumption of the goods, besides generating emissions due to transport of traded goods
themselves. Global trade has for instance strongly contributed to increased emissions from
bunker fuels.
GHG emissions are conventionally allocated to the territory where they occur, thereby ensuring
clarity and consistency of international accounts. This is also typically the case for the NDCs as
submitted to the UNFCCC. Inventories do not report the emissions related to the consumption of
imported goods (which are accounted for in the country of production), but they do report the
emissions related to the production of exported goods, which are therefore not consumed
domestically. This method of accounting is typically referred to as Production-based accounting
(PBA).
PBA has been subject to criticism because it does not adequately represent the GHG emissions
impact of changing consumption patterns due to trade and globalisation. It could also potentially
open the door to “pseudo-decarbonisation” at the level of individual countries via the outsourcing
of carbon-intensive products to third countries that might actually be less carbon efficient than
the “outsourcer” country. Overall, such practices could therefore lead to higher GHG emissions
at the global level. Some authors have therefore proposed to estimate emissions on consumptionbased
accounting (CBA) basis. Under this approach, the domestic emissions associated with
580
OECD (2017). Investing in climate, investing in growth.
http://www.oecd.org/env/investing-in-climate-investing-in-growth-9789264273528-en.htm
265
exports are excluded from a country's inventory, but the emissions related to the production of
imported goods are reported in the country where the goods are consumed, not where they are
produced. Such CBA exercises rely on estimates using multi-region input-output tables and trade
flows and have inherent challenges related to data availability581
.
In this context the decarbonisation effort of the EU (traditionally measured on a PBA basis) has
been criticised as being significantly less positive if expressed on a CBA basis. However, CBA is
itself open to criticism as it fails to give credit to countries with export sectors that are more
carbon-efficient than the world average and therefore contribute to decarbonisation worldwide
via their own exports. Put differently, if such countries had not exported and more carbonintensive
countries had produced these goods themselves, global emission would have been
higher.
Technologically-adjusted consumption-based accounting (TCBA) seeks to adjust for such
differences in carbon efficiency in export sectors, by crediting carbon efficient export countries.
By doing so it provides for a more accurate reflection of how international trade impacts global
emissions than a pure CBA approach. Studies applying this TCBA methodology find for instance
more reductions achieved in the EU than compared to a pure CBA approach582
.
This type of exercise was redone for the European Commission, looking at different impacts of
the PBA, CBA and TCBA accounting methods on national emissions. The E3ME macroeconometric
model was used for this purpose, which enabled to assess past trends as well as
projections under a fragmented action scenario and a global action scenario583
. GHG emissions
considered include energy and process CO2 emissions due to data constraints for non-CO2
emissions and those related to land use. In addition, the Joint Research Centre’s Global Energy
and Climate Outlook 2018 used the JRC-GEM-E3 model to assess emissions embodied in
international trade by using the same methodology578
. The findings corroborate those described
here based on the E3ME model.
The results for the EU indicate that emissions were cut more significantly on a PBA basis (-
20.3%) than a CBA basis (-19.5%) between 1996 and 2016. The difference between the two
accounting methods is smaller than what other studies have estimated, however. In addition, the
TCBA approach resulted in significantly higher reduction for the EU than under either the PBA
or CBA methods (-25.3%), which indicates that by 2016 the EU had already contributed
significantly to the reduction in emissions of other countries because of the increased trade flow
and the improved carbon efficiency of its exports. The absolute level of EU emissions on a
TCBA basis are also lower than on a PBA basis because of the carbon efficiency of its exports.
581
Peters G., Minx J., Weber C., Edenhofer O. (2010), Growth in emission transfers via international trade
from 1990 to 2008, Proceedings of the National Academy of Sciences of the United States of America,
2010.
582
Kander A., Jiborn M., Moran D., Wiedmann T (2015), National greenhouse-gas accounting for effective
climate policy on international trade, Nature Climate Change, Letters, March 2015. CBA looks at
emission per country by calculating the actual carbon content of consumption domestically produced +
the actual carbon constant of imported consumption. Under TCBA, the carbon content of exports (i.e.
the carbon emissions that are subtracted from the production-based inventory to derive a consumptionbased
measure) is based not on the actual carbon content of the exports, but based on the carbon content
that such exports would entail if they were produced with a carbon efficiency equivalent to the world
average for traded product. The carbon content of imports (i.e. the carbon emissions that are added to
the production-based inventory to derive a consumption-based measure) is the same for the CBA and
TCBA methodology and is based on actual carbon content.
583
Cambridge Econometrics, Analysis of Consumption-Based Emissions, forthcoming.
266
Figure 117: EU, GHG emissions on a PBA, CBA and TCBA basis
Source: E3ME.
The EU has thus contributed to the decarbonisation of third-countries via the rising efficiency of
its economy and exports. Presently EU exports reduce global emissions by a bit more than
200 MtCO2, compared to a situation where EU exports would be produced locally in the
importing countries. Modelling results indicate that if the EU were to reduce its GHG emissions
by 80% by 2050 and the rest of the world were to reduce emissions in line with their NDCs, the
global reduction in CO2 emissions due to EU exports would further increase to Mt 284 CO2 by
2050. This would be the natural consequence of the EU increasing its relative carbon efficiency
compared to third countries. Under a global action scenario, this contribution would be more
limited because of the increasing carbon efficiency of other parties’ own production, but still be
significant at 117 MtCO2 by 2050 (Figure 118).
Figure 118: Reduction achieved due to EU net exports and imports, fragmented and global
action (TCBA basis)
Source: E3ME.
3000
3200
3400
3600
3800
4000
4200
4400
4600
4800
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
MtCO2
PBA CBA TCBA
-300
-250
-200
-150
-100
-50
0
50
100
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
INDC80 scenario 2C scenario
267
These estimates using the E3ME model are overall more positive than other exercises and they
can certainly be further improved, for instance by including agriculture trade and the associated
impacts on emissions, including from land use. However, they also confirm that CBA has
shortfalls and that it does not recognise the positive impact the decarbonisation of EU exports on
global emissions. CBA studies sometimes are used to conclude that the EU only achieved GHG
reduction due to de-industrialisation. This seems incorrect. The EU has not stopped producing
industrial goods and its exports may even be contributing positively to global decarbonisation as
this analysis shows.
Furthermore, if other countries had achieved emission intensity improvements similar to the EU
in globally traded good sectors, EU emissions reductions under CBA would have decreased
further. This is of course ultimately the goal of the Paris Agreement, with all countries
contributing strongly to the global effort to achieve the temperature objectives. The agreement
itself fully recognises this, with a strong transparency framework and a cyclical approach that
seeks strengthened commitments over time in order to increase action beyond current
contributions. It does so by creating a space for a narrative on action not only as an international
obligation under the Paris Agreement, but also as a positive agenda towards sustainable
development.
On the other hand, the role of trade and other internationally relevant policies is also of
importance. The ongoing economic transition will necessitate access to a new set of resources,
opening new trade routes, and potentially closing others. Global value chains will shift requiring
an update of applicable rules and regulations. EU trade policy needs to consider this and the EU
may contribute to this change itself by setting new standards and re-wiring trade with new freetrade
agreements. At the same time the EU needs to be ready to react if global trade or
investment rules are being challenged by other players with negative consequences on its
competitiveness.
5.6.3 Cooperation with third countries
EU external cooperation is designed to help partner countries develop technical capacity and
knowledge for meeting their international climate commitments (including their Nationally
Determined Contributions), be equipped for formulating and implementing climate-related
policies and projects, and effectively address context-specific, climate-related challenges in their
territories. In particular, rising emissions by newly middle-income, emerging economies
reinforce the need for cooperation at an early stage to help development process follow a lower
carbon intensive path.
The cooperation between the EU and partner countries on climate change issues follows various
approaches depending on the national circumstances of the partner country and the legacy of
bilateral relations. This includes bilateral and multilateral diplomatic relations, upstream policy
dialogues and collaboration, and the use of development policy instruments such as budget
support, project-based approaches and blending mechanisms.
Of course, the official dialogue and cooperation between the EU and its Member States and the
authorities of the partner countries represent just the tip of the iceberg, whereas climate relations
actually arise mainly from exchanges through transnational research programmes, business
forums, city networks, and other people-to-people contacts.
The EU’s external cooperation instruments are largely focused on investment and their
programmes are multiannual in nature, thus providing a stable and predictable framework over
the medium to longer term. This framework is designed to increasingly integrate climate policies,
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strategies and actions of the partner countries. EU development assistance is mainly delivered
through the three largest policy-driven instruments: the Instrument for Pre-accession Assistance
(IPA), the European Neighbourhood Instrument (ENI), and the Development Cooperation
Instrument (DCI). The European Development Fund, financed by EU Member States separately
from the EU budget, and the European Development Bank complete the package of EU
instruments for external assistance.
5.6.3.1 Cooperation with major economies
Members of the G20 account for some 80% of global emissions. As a key proponent of
international climate action, the EU must help sustain the positive international momentum,
cooperation and alliances, beyond political changeovers in individual countries. This priority was
identified in HR/VP Mogherini's Global Strategy and has been the central objective for the
successful EU climate diplomacy in recent years. Industry and investors in Europe and globally
benefit from clear signals and evidence of progress.
Bilateral relations with major economies are usually structured around an official channel for
bilateral climate policy dialogue, such as the EU-US Energy Council, the EU-China Bilateral
Coordination Mechanism, the EU-South Africa Working Group on Environment and Climate
Change and other high-level climate and environment dialogues established under Strategic
Partnership Agreements with inter alia Japan. For countries with which the EU has or is
negotiating free trade agreements, climate policy dialogues are also pursued within the Trade and
Sustainable Development sub-committees, complemented by institutional advisory and
monitoring mechanisms. In addition to or in the absence of such existing frameworks, bilateral
summits and other official visits create opportunities to exchange on climate policy issues.
Official dialogues are complemented with cooperation activities funded by the Partnership
Instrument to advance the Union’s strategic interests and to tackle global challenges with partner
countries, for example the Emissions Trading System projects in China and South Korea, the
Low carbon business projects in Brazil and Mexico, the India-EU Clean Energy and Climate
Partnership, and the EU-Gulf Cooperation Council Energy Technology Network.
Another example is a EUR 25-million programme recently set up by the European Commission
and the German Federal Government to support EU’s strategic partnerships for the
implementation of the Paris Agreement. By fostering exchanges and collaboration among
national and subnational administrations, business communities, the academia and civil society
stakeholders from Europe and other major economies, this programme encourages and assists
non-European major economies in making their best efforts towards the goals of the Paris
Agreement. In a special emphasis, the programme supports analytical work and stakeholder
involvement in the development of mid-century strategies.
5.6.3.2 Cooperation projects with low and middle-income countries and partnership with
Africa
The strategy and the new integrated Energy and Climate Plans are likely to serve as a role model
to other ambitious countries. It will also raise interest for assistance in similarly decoupling
economic growth from greenhouse gas emissions in these countries. One way of doing this is
through the EU's intensive cooperation on clean energy and low-carbon projects as well as
through technical and financial support for developing countries.
The successful low-carbon and climate-resilient transformation of the economy in developing
countries requires the mobilisation of private capital and capital market resources from a variety
of long-term oriented investors and, more broadly, aligning financial flows with the climate
269
goals. In 2017, the EU and its Member States provided EUR 20.4 billion of climate finance to
developing countries. Africa is the biggest recipient (33%, two thirds of which fund activities in
South of Sahara countries), followed by Asia (22%), America (16%), non-EU Europe (6%) and
Oceania (1%).584
In July 2018, the European Investment Bank announced that it had already
surpassed its 35% external climate finance target, pledged before COP21 as it provided EUR 2.6
billion in 2017 for climate action investments in developing countries, representing over 40% of
its lending in these regions.585
In addition to the financial instruments it manages directly, EU
external actions are focusing more and more on investment and private sector involvement and
aim to provide a stable and predictable climate-related investment framework.
They do so by combining grants with loans and equities from public and private sources,
including bilateral and multilateral development banks. Private investment, alongside and
attracted by public investment, is crucial to scaling-up climate finance and closing current finance
gaps. In this context, the External Investment Plan, launched in 2016, will mobilise over EUR 44
billion in both the public and private investment.586
It includes a dedicated fund for Sustainable
Development (EFSD). As of July 2018, the EFSD mobilised EUR 800 million in guarantees and
EUR 1.6 billion in blending, which will translate into over EUR 22 billion public and private
investments in Africa and the EU neighbourhood. With these and other projects globally the EU
is trying to pass on knowledge and build capacity, including the development of economic
modelling tools, to develop policies, both in the context of the NDCs as well as for long-term
strategies.
Furthermore, EU blending facilities operate in various regions (Latin America, Caribbean,
Africa, Asia-Pacific). They will also help de-risking investment through innovative financing
mechanisms. Leveraging activities will specifically address adaptation – an area that has been
traditionally underfunded.
Taking one region as example, Sub-Saharan Africa is a strong priority for EU Official
Development Assistance (ODA) and, together with the Western Balkans and the Neighbourhood,
attracts the bulk of EU-level climate finance. Flagship infrastructure projects, especially in
renewables, tend to focus on countries with particularly enabling environments such as Kenya,
Ethiopia and Ghana. In other countries, smaller scale projects targeting both adaptation and
mitigation are regularly employed, e.g. under the Global Climate Change Alliance Plus
(GCCA+). EFSD climate-relevant projects587
for Africa are in the planning or very early
implementation phase and are expected to bring tangible climate results in the next years.
The EIB has been scaling up renewable energy investments, often co-funded by the EU blending
facilities in Africa (e.g. Africa Investment Facility) or through the Global Energy Efficiency and
Renewable Energy Fund (GEEREF) co-financed by private investors. Building on the reciprocal
commitments that form the basis for EU-Africa partnership relations, the EU and Africa have
announced a new Alliance for Sustainable Investment and Jobs between Europe and Africa.588
584
Activities concerning multiple regions account for 12%, while 11% could not be identified due to
unavailable data from multilateral funds and institutions.
585
For a breakdown of the EU’s climate finance 2014-2020, see its Strategies and Approaches Submission
to the UNFCCC (2018), http://www4.unfccc.int/sites/SubmissionPortal/Documents/201810041701---
AT-10-04-EU%20Submission%20on%20Strategies%20and%20Approaches.pdf .
586
https://ec.europa.eu/europeaid/eu-external-investment-plan-factsheet_en
588
https://www.africa-eu-partnership.org/en/stay-informed/news/european-commission-unveils-new-africa-
europe-alliance-sustainable-investment-and
270
Mainstreaming climate policy goals as elaborated in NDCs into national development strategies
is an important undertaking for developing country partners, as it helps mobilise domestic budget
resources and facilitates the alignment of international development assistance programmes on
these climate goals through high-level development policy dialogues with key donors.
Conversely, donor countries and organisations can and should improve the mainstreaming of
climate considerations and NDCs into their development cooperation instruments. To that effect,
the EU updated its guidelines in 2016 on the integration of environment and climate change
issues into EU international cooperation and development589
. Belgian, Dutch, French, German,
Spanish and Swedish development cooperation organisations are following similar approaches.
The NDC Partnership established at COP22 also plays a critical role in promoting and
coordinating international support for the implementation of NDCs in developing countries and
enhancing aid effectiveness in this context.
5.6.3.3 Cooperation projects with fossil fuel exporting countries
The European Commission is supporting the efforts of Gulf countries, which comprise some of
the world’s largest producers of oil and gas, to shift away from sole dependency on fossil fuels,
through the initiatives with the Gulf Cooperation Council (GCC), the EU-Gulf Cooperation
Council Clean Energy Technology network and the EU-GCC Dialogue on Economic
Diversification. The emphasis is on sustainable energy transition with the implementation of
clean energy plans or the adoption of targets – mainly based on economic diversification
strategies, energy efficiency and renewables. For GCC countries to succeed in this process, they
will need to put in place an appropriate policy environment to encourage and facilitate private
sector development and investment in non-hydrocarbon-dependent sectors. For the past decade,
GCC countries have engaged more decisively on a path of transformation towards knowledgebased
economies and societies. These efforts were also emphasised in 2015, when all GCC
countries presented a commitment to the Paris Agreement.
5.7 Interactions with other Sustainable Development Goals
While the EU long-term strategy aims to support the achievement of SDG13 (Take urgent action
to combat climate change and its impacts), acting on climate change provides many opportunities
to enhance sustainable development. For example, decarbonising energy and transport is
associated with improved air quality and health outcomes, especially in urban areas. Enhancing
energy efficiency across sectors is associated with multiple economic and social benefits related
to comfort, productivity, distributional effects on income and energy poverty alleviation590
.
Similarly, promoting a circular economy (e.g. smarter use of materials such as plastics) can
reduce emissions while also contributing to cleaner land and water, and healthier oceans.
Limiting methane emissions not only reduces GHG emissions but also air pollutants emissions.
Conversely, climate change, if not limited, will become a major social issue with the potential to
jeopardise sustainable development goals (SDG) focusing on poverty, hunger and water.
Importantly, not acting on climate change and allowing for increase in extreme weather events
and disasters compromises development not only in the third countries but also in Europe.
589
Integrating the environment and climate change into EU international cooperation and development:
Towards sustainable development. Guidelines No 6, Tools and Methods Series, Directorate-General for
International Cooperation and Development, European Commission.
590
IEA (2014), Capturing the Multiple Benefits of Energy Efficiency,
http://www.iea.org/publications/freepublications/publication/Multiple_Benefits_of_Energy_Efficiency.
pdf
271
However, while some synergies are well understood, knowledge about how climate action
interacts with all of the 17 Sustainable Development Goals (SDGs) of the UN is still evolving.
Identifying further synergies between climate action and sustainable development will help the
EU to be a leader in making the case for ambitious climate action, both domestically and
worldwide. As countries pursue climate action and sustainable development jointly, the EU can
also show leadership by identifying how to manage potential trade-offs.
The close relationship between climate and energy and sustainable development is recognised
through the inclusion of climate action and clean energy among the 17 SDGs591
adopted by the
UN General Assembly in 2015. The EU and its Member States have in turn committed to
implementing the 2030 Sustainable Development Agenda in full both domestically and
internationally, including through the implementation of the Paris Agreement592
.
Although knowledge of how the SDGs interact is still evolving, the literature in this area is
growing fast. Indeed, the adoption of the 17 SDGs provides a useful device for identifying
synergies, trade-offs and knowledge gaps between any one SDG and the rest. Several studies use
the framework of Nilsson et al.593
which assesses the positive and negative interactions between
SDGs on a scale, with ‘indivisible’ being the most positive relationship.
The IPCC Special Report on 1.5°C employs such a framework to assess the sustainable
development implications of mitigation options towards 1.5°C594
. It concludes that the total
number of possible synergies exceeds the number of trade-offs, although their net effect will
depend on the pace and magnitude of changes, the composition of the mitigation portfolio and the
management of the transition.
Strong synergies, with highest confidence, are for instance explicitly listed by the IPPC Special
Report on 1.5°C (see figure below) between climate action and SDGs 3 (health), 7 (clean
energy), 11 (cities and communities), 12 (responsible consumption and production), and 14
(oceans). On the other hand, some 1.5C pathways show potential trade-offs if not carefully
managed. This is the case for SDGs 1 (poverty), 2 (hunger), 6 (water), and 7 (energy access).
Some SDGs are associated with high potential for both synergies and trade-offs. A good example
is SDG 6 (clean water and sanitation). The demand side appears to have greater potential for
synergies since lower energy demand (e.g. through greater efficiency) can reduce water demand
from the energy sector, increasing availability for other uses. On the supply side, a switch to a
low carbon energy system would have to be managed with care since some low carbon energy
systems (e.g. some bioenergy systems) could use water more intensively than the system they
replace.
Also SDG16 on life on land shows trade-offs with certain mitigation strategies strongly focussed
on biomass potentially having negative impacts on biodiversity. On the other hand, not solving
climate change would have dramatic effects on biodiversity. The IPCC Special Report on 1.5C
estimated that with 2C temperature change 13% of global land area would change from one
ecosystem type to another, with 18% of insects, 16% of plants and 8% of vertebrates losing over
591
https://www.un.org/sustainabledevelopment/sustainable-development-goals/
592
See Council Conclusions on the EU response to the 2030 Agenda for Sustainable Development (June
2017) and on Climate Diplomacy (February 2018) as well as the Communication Next steps for a
sustainable European future of the European Commission (COM(2016) 739 final) which maps out how
specific EU policies contribute to sustainable development domestically and internationally.
593
Nilsson M et al. (2018) Mapping interactions between the sustainable development goals: lessons
learned and ways forward. Sustainability Science. https://doi.org/10.1007/s11625-018-0604-z
594
IPCC Special Report on Global Warming of 1.5°C (2018)
272
half their climatically determined geographic range. Often measures to enhance ecosystems result
both in mitigation and adaptation benefits (see also section 5.9.2).
Figure 119: Indicative linkages between mitigation options and sustainable development
using SDGs
Notes: The strength of connection between climate mitigation and each SDG is denoted by the length of
each bar, while the colour of shading denotes the level of scientific confidence in each interaction (darker
colours indicate greater confidence). Individual bars have different colours since they combine multiple
mitigation options. See Table 5.3 of IPCC Special Report for complete assessment.
Source: IPCC, 2018595
.
595
IPCC Special Report on Global Warming of 1.5°C (2018), Figure SPM-4.
273
Other studies demonstrating the strong linkages between SDGs and demand-side measures in the
energy sector include Grubler et al.596
and McCollum et al597
. Furthermore, IEA analysis finds
that achieving universal access to electricity by 2030 could reduce global greenhouse gas
emissions as well as improve health and gender equality, if smart technologies and efficient
appliances are used. In this case, the emissions associated with expanded energy access would be
more than offset by reductions associated with reduced use of traditional biomass598
.
The IPCC Special Report on 1.5°C also concluded that 1.5°C pathways that include low energy
demand, low material consumption, and low GHG-intensive food consumption have the most
pronounced synergies and the lowest number of trade-offs with respect to sustainable
development and the SDGs.
The relationship between gender (SDG 5) and climate change and climate policy varies. Women
and men affect the climate differently: their consumption patterns are different and they have
different CO2 footprints, e.g. through differing mobility patterns, and they are not represented
equally in decision-making in this field599
. Studies show that women and men also have different
perceptions and attitudes towards climate change. Women are in general more concerned about
this issue and more motivated to act. While women remain underrepresented in environmental,
climate and particularly energy decision-making, in some studies men have been found to be
more affected in their livelihood by climate mitigation activities in industrialised countries. A
recent study in Canada has shown that climate change is a stressor on gendered livelihood
activities for both men and women. Men are more likely to be vulnerable to climate change,
including heat stress and infectious diseases. Other studies pointed out that in terms of climate
change impacts, there is a higher likelihood for women to die in heatwaves, men higher
likelihood to be affected by floods600601602
. As more data needs to be gathered on the gendered
consequences of climate change and climate policies (an effort driven by the UNFCCC’s gender
action plan), awareness of these differences will be important in implementing any long-term
strategy.
5.8 Air pollution benefits from climate action
In terms of health impacts, the reduction of GHG is associated with lower emissions and
concentrations of air pollutants, in particular fine particles with a diameter of 2.5 μm or less
(PM2.5), nitrogen dioxide (NO2) and ozone. These pollutants have significant adverse effects on
human health and can cause respiratory and cardio-vascular diseases, among others. They are
also at the root of premature deaths. In turn, high ozone concentrations negatively affect plant
596
Grubler A, Wilson C, Bento N, Boza-Kiss B, Krey V, McCollum D, Rao ND, Riahi K, et al (2018). "A
Low Energy Demand Scenario for Meeting the 1.5°C Target and Sustainable Development Goals
without Negative Emission Technologies." Nature Energy 3, pages 515–527 (2018)
597
McCollum et al (2018) Connecting the sustainable development goals by their energy inter-linkages.
Environ. Res. Lett. 13 033006. https://doi.org/10.1088/1748-9326/aaafe3
598
IEA (2017). Energy Access Outlook 2017. From Poverty to Prosperity.
599
http://eige.europa.eu/sites/default/files/documents/Gender-Equality-and-Climate-Change-Report.pdf .
600
Sellers, S. (2018), Climate Change and Gender in Canada: A Review
601
WEDO (2016), Gender and Climate Change: A closer look at the evidence,
https://wedo.org/wp-content/uploads/2016/11/GGCA-RP-FINAL.pdf , p. 24-25
602
Studies such as: Neumayer E and Plumper T (2008), "The gendered nature of natural disasters: the
impact of catastrophic events on the gender gap in life expectancy 1981-2020" (available at:
https://www.tandfonline.com/doi/full/10.1111/j.1467-8306.2007.00563.x ) show that women are more
affected by the impact of disasters, e.g. after hurricane Katrina, African American women were among
the worst affected by flooding in Louisiana. Similarly, UN studies shown that 80% of people displaced
by climate change are women.
274
growth. Research to quantify the benefits of climate action associated with improved air quality
has progressed in recent years and highlights the significant scale of such co-benefits603 604
.
Separate research has also developed to better quantify the benefits associated with avoided
adaptation costs or the benefits of adaptation strategies themselves (see section 5.9).
The table below compares air pollution impact estimates for 2015 with estimates for 2050 in the
decarbonisation pathways605
. The combination of existing air pollution policies as well as
ambitious climate policies result in strong reductions of air pollutants by 2050 due to the
reduction in energy consumption and shift towards less polluting fuels. This results in strong
benefits in air quality, human health and ecosystems impacts. Both the CIRC and 1.5LIFE
scenarios have highest benefits (see Table below). The COMBO scenario has somewhat smaller
benefits since the reduction in emissions (i.e. PM2.5) are smaller. Premature deaths from PM2.5
and ozone exposure decrease with around 40%. Mortality benefits are valued using the benefit
ranges per life year lost, with health damage reduction in the order of magnitude of 140 to 340
billion euro and more by 2050 compared to the impact as experienced in 2015.
603
See for example European Commission (Joint Research Centre, 2017), Global Energy and Climate
Outlook 2017: How climate policies improve air quality, GECO 2017. JRC Science for Policy Report.
604
Vandyck, T., Keramidas, K., Kitous, A., Spadaro, J. V., Van Dingenen, R., Holland, M., Saveyn, B. Air
quality co-benefits for human health and agriculture counterbalance costs to meet Paris Agreement
pledges. Nature Communications volume 9, Article number: 4939 (2018).
https://doi.org/10.1038/s41467-018-06885-9
605
The GAINS model uses next to its own data, PRIMES energy projections as input to project air
pollutants from the energy system. The methodology applied results in lower estimates for pre-mature
deaths than reported in the EEA's Air quality in Europe — 2018 report. This estimated for 2015 that
PM2.5 concentrations were responsible for about 391000 premature deaths per year, and NO2 and O3
concentrations were responsible for respectively around 76000 and 16400 premature deaths per year.
275
Table 21: Air pollution control costs and benefits in the EU compared to 2015 in 2050
(EU28).606
2015
Change by 2050
CIRC COMBO 1.5LIFE
SO2 (kton) 2747 -2069 -1975 -2039
NOX (kton) 7224 -5458 -5307 -5530
PM (kton) 1478 -881 -848 -865
Premature deaths ozone and PM 2.5
(1000 cases per year)
317 -147 -142 -146
Health impacts (million life years lost due to
PM2.5)
5.3 -2.5 -2.4 -2.5
Monetary damage health PM (bn€/yr). Low
estimate
368 -174 -168 -173
Monetary damage health PM (bn€/yr). High
estimate
884 -418 -404 -414
Air pollution control costs (bn€/yr) 80 -32 -36 -45
SUM pollution control costs & health damage
(bn€/yr)
448 to
964
-206 to -450 -204 to -440 -218 to -459
Eutrophication
(Ecosystem area exceeded 1000 km2)
1016 -188 -181 -190
Acidification
(Ecosystem area exceeded 1000 km2)
100 -64 -63 -64
Note: Estimates for monetary damage based on values per life year lost from IIASA (2017)607
and
expressed in EUR 20013. Impacts on morbidity, materials, buildings and crops are not included. Possible
impacts of N2O on health are also excluded.
Source: GAINS
The estimates for reduced health damage in the table above only include benefits from reduced
mortality (by assigning a value of life years lost in monetary terms). Other types of benefits not
estimated are (1) avoided hospital admissions and healthcare costs; (2) reduced number of lost
work days resulting from avoided illnesses (3) improved crop yields; and (4) reduced ecosystem
impacts. Avoided healthcare costs increase the level of income available for other types of
consumption, while reduced work days lost and improved crop yields translate into higher output.
Also impacts on ecosystems are significant notably for acidification where ecosystem areas with
exceedance levels would halve by 2050. The trend for eutrophication is positive, though less
outspoken given that the primary source of eutrophication is not N2O emissions but other sources
of nitrogen leakage.
5.9 Climate change and its impact, how to increase resilience and
adaptation
Climate change is already occurring and its impacts are already being felt across Europe: our
continent has warmed and will warm faster than the rest of the world. The EU has experienced
heatwaves608
, record temperatures and drought during the spring and summer of 2018609
and also
606
Due to modelling timing constraints only 3 scenarios were assessed for air pollution.
607
IIASA (2017). Costs, benefits and economic impacts of the EU Clean Air Strategy and their
implications on innovation and competitiveness, Table 5, pg. 15.
608
Copernicus Programme (2018), The long hot summer just past,
https://climate.copernicus.eu/long-hot-summer-just-past
276
experienced extreme heatwaves in 2014, 2015 and 2017610
. In Lapland, in the Arctic Circle, the
average temperature for July was around five degrees Celsius higher than usual611
. Last year, the
global economic costs of weather-related disasters hit a record of € 283 billion612
.
The IPCC Special Report on 1.5°C builds upon existing knowledge on climate change impacts
and adaptation, and paints a clearer picture than ever before. The impacts of human-induced
global warming of 1°C are already being felt in the intensity and frequency of some climate and
weather extremes. Furthermore, climate models project robust differences in impacts between the
present, warming of 1.5°C, and warming of 2°C – every half a degree matters. This underlines
the importance of continued climate action (both adaptation and mitigation), not only today but
also in the future, as marginal impacts of climate change appear to be significant at any level of
warming. In general, climate-related risks are larger at higher levels of warming, and some
impacts, such as the loss of some ecosystems, may be long-lasting or irreversible.
Regarding specific impacts, the IPCC Special Report concentrates on identifying differences
between 1.5°C and 2°C and finds several striking examples of pronounced drought risk increases,
for example in the Mediterranean basin and the Middle East (see Table 22). The Report, in
particular, calls for both incremental and transformational adaptation. In particular, it notes that a
slower rate of sea level rise under 1.5ºC enables more opportunities for ecological and human
systems to adapt. However, it is important to remember that impacts of climate change are
already being felt and that global warming of 2°C is likely to be exceeded under current levels of
global climate action (for example the current NDCs are thought to be consistent with warming
of 3°C by 2100). At the current level of warming (1°C), around 4% of the global terrestrial land
area is projected to undergo a transformation of ecosystems from one type to another, with
greater areas affected at higher levels of warming (see Table 22).
While the IPCC report is global in scope, impacts will not be spread evenly across the globe. The
report highlights that some regions are at greater risk of drought and precipitation deficit, while
others face greater risks from heavy precipitation events (especially in Northern latitudes). The
report suggests a transition from medium to high risk of regionally differentiated impacts
between 1.5 and 2°C for food security. Reductions in projected food availability are larger at 2ºC
than at 1.5°C of global warming in the Sahel, southern Africa, the Mediterranean, central Europe
and the Amazon. It is clear that the climate change, even with the worst of its effects avoided,
will have significant impact on EU humanitarian and civil protection policies.
609
World Weather Attribution network has estimated that "the probability to have such a heat or higher is
generally more than two times higher today than if human activities had not altered climate.", see:
https://www.worldweatherattribution.org/attribution-of-the-2018-heat-in-northern-europe/
610
https://www.eea.europa.eu/data-and-maps/indicators/global-and-european-temperature-8/assessment
611
Finnish Meteorological Institute https://en.ilmatieteenlaitos.fi/press-release/610918514
612
https://www.munichre.com/topics-online/en/climate-change-and-natural-disasters/naturaldisasters/2017-year-in-figures.html
; Estimated global losses due to natural disasters in 2017 stand at
US$ 330 billion, of which 97% of losses was weather related This is the equivalent of €283 billion
(exchange rate applied 1.13 US$ per €).
277
Table 22: Selected Climate Change Impacts to Natural Systems at 1.5°C & 2°C
At 2°C At 1.5°C
Extreme hot days 4°C hotter 3°C hotter
Sea level rise by 2100
around 0.1m more than at
1.5°C
(less time to adapt)
0.26-0.77m
Ecosystems
13% of global land area
changes from one ecosystem
type to another
area at risk ~50% lower than at
2°C
Habitat Loss
18% of insects, 16% of plants
and 8% of vertebrates lose
over half their climatically
determined geographic range
6% of insects, 8% of plants
and 4% of vertebrates lose
over half their climatically
determined geographic range
Permafrost thawing
1.5 – 2.5 million km2
greater
than at 1.5°C
Woody shrubs encroaching
into the tundra already at 1°C
Arctic Ocean
At least one sea ice-free
summer per decade
One sea ice-free summer per
century
Coral reefs largely disappear (>99% loss) decline by 70-90%
Fisheries
Global annual marine catch
(one model)
over 3 million tonnes lower 1.5 million tonnes lower
Greater risk at 2°C than 1.5°C is specified but not quantified613
 Droughts and precipitation deficits;
 Heavy precipitation events;
 Heavy precipitation associated with tropical cyclones;
 Larger area affected by flood hazards due to precipitation;
 Spread of invasive species
 Forest fires
 Marine ice sheet instability in Antarctica and/or irreversible loss of the Greenland ice sheet
could be triggered around 1.5°C to 2°C of global warming
 Oceans (greater risk at 2°C spanning several impacts including species range shift and
impacts of ocean acidification on marine species)
Note: Impacts above are attributed a confidence level of at least medium in the IPCC report’s Summary for
Policymakers
Source: IPCC Special Report on global warming of 1.5°C
613
Some of these impacts are regional rather than global, though regions in this context are large. E.g.
heavy precipitation events are projected to be higher in northern hemisphere high latitude/high
elevation regions, eastern Asia and eastern North America. More specific phenomena within these
categories may be quantified in the underlying IPCC report.
278
Table 23: Selected Climate Change Impacts to Human Systems at 1.5°C & 2°C
At 2°C At 1.5°C
Populations exposed to
climate-related risks and
susceptible to poverty
Numbers affected expected to
increase
Several hundred million fewer
people affected than at 2°C by
2050.
Water stress
Additional 8% of world’s
population affected (based on
year 2000 population)
Affects up to 50% less of the
world’s population compared
to 2°C
Greater risk at 2°C than 1.5°C is specified but not quantified613
 Human health: heat-related morbidity & mortality, ozone-related mortality
 Vector-borne diseases (e.g. malaria, dengue): increased risk, shifting geographic range
 Crops (cereals, rice): reductions in yields and/or nutritional quality
 Reductions in projected food availability
 Risks to global aggregated economic growth
 Exposure to multiple, compound climate-related risks
 Greater adaptation needs
Note: Impacts above are attributed a confidence level of at least medium in the IPCC report’s Summary for
Policymakers.
Source: IPCC Special Report on global warming of 1.5°C.
5.9.1 The need to adapt in the EU
Successful mitigation action is the first necessary step to reduce the risk of climate change.
However, in parallel, the EU economy as a whole must adapt to the risks that will result from
already committed emissions. These risks grow as we lag behind schedule in stabilising global
temperatures. Limiting global warming to 1.5°C, compared with 2°C, could reduce the number of
people susceptible to poverty by up to several hundred million by 2050. Each 0.5ºC of warming
avoided can be significant, increasing the chances of achieving SDGs related to poverty, hunger,
health, water, cities and ecosystems. Among others, EU agricultural, Arctic and coastal
dependent communities would benefit significantly; adaptation of fragile ecosystems and the
services they provide (e.g. coral reefs) would be more effective. In general, overshooting the
1.5ºC limit will make climate-resilient development pathways (CRDPs) more elusive and impacts
on water-energy-food-biodiversity links more difficult to manage.
Conventional and incremental approaches to adaptation that do not consider long-term
sustainable development or consider adaptation and mitigation separately will not deliver the
Paris Agreement. More emphasis on ‘transformational’ adaptation measures as a complement to
‘incremental’ adaptation may be required614
. These adaptation measures and options may include
not only “hard” structural and physical measures (e.g. coastal protection, infrastructure) but also
614
Transformational adaptation, according to the IPCC (2014 AR5, Chapter 14:
https://www.ipcc.ch/pdf/assessment-report/ar5/wg2/WGIIAR5-Chap14_FINAL.pdf) "seeks to change the
fundamental attributes of systems in response to actual or expected climate and its effects, often at a scale
and ambition greater than incremental activities. It includes changes in activities, such as changing
livelihoods from cropping to livestock or by migrating to take up a livelihood elsewhere, and also changes
in our perceptions and paradigms about the nature of climate change, adaptation, and their relationship to
other natural and human systems". See also EEA 2017 climate, impacts and vulnerability report and 2016
EEA report on Urban adaptation to CC in Europe.
279
“soft” social policies (e.g. awareness, health services) and governance improvements (e.g.
implementation, cross-sector coordination, mainstreaming). A combination of both “hard” and
“soft” adaptation may produce best results615
, and joining efforts from several EU Member States
may also improve protection, e.g. monitoring and mapping jointly coastal areas for a more
reliable early warning of extreme weather616
.
It is necessary to better integrate long-term planning of emissions reduction and adaptation
because:
a) Adaptation provides opportunities and economic and social stability – climate
change will interact with other socio-economic developments617
. It can be expected that
climate change adaptation projects or the impact of climate extremes will involve a
higher level of public intervention than today618
, which calls for effective and efficient
adaptation strategies, particularly at local scale. Public resources may be severely drained
if the climate reaches certain tipping points619
On the other hand, both public and private
investments in adaptation provide opportunities and risk management opportunities that
can spur the creation of market niches: e.g. for climate services or green infrastructure. In
addition, supporting adaptation in developing countries may also bring stability and
security within the EU's borders.
b) There are co-benefits and trade-offs between mitigation and adaptation – so both
policies must be developed together as components of any credible long-term climate
action. Early integration of both adaptation and mitigation in coherent climate-resilient
development pathways entails that specific vulnerabilities are factored in when a given
economic sectors starts implementing a decarbonisation strategy. Adaptation must ensure
that low-emission agricultural techniques withstand higher temperatures, it must lead to
renewable electricity networks that are climate-proof and protect forests so that they keep
functioning as carbon sinks. Transformative climate action in cities, in particular,
depends on the right mix of mitigation and adaptation actions to both protect citizens
against climate impacts and enable emissions reduction within stringent legal and
budgetary boundaries.
(c) Adaptation improves the functionality and resilience of human and natural systems.
Effective adaptation action reduces both the vulnerability and exposure of natural ecosystems and
communities to the risks associated with climate extreme events (floods, wildfires, hurricanes,
etc.), and improves their capacity to recover and re-establish after a climate-related perturbation.
These aspects ensure that the functionality of ecosystems (e.g. absorption of CO2) is maintained
over the long-term, or at least that such functionality is recovered shortly after an extreme event.
In 2013, the European Commission adopted an EU Adaptation Strategy to tackle climate change
risks to the EU economy and society. The Adaptation Strategy focuses on developing better
knowledge and understanding of climate impacts, climate proofing of specific sectoral policies
and the promotion of action by Member States and cities through non-legislative means. The
615
OECD (2015), Climate Change Risk and Adaptation - Linking Policy and Economics,
http://dx.doi.org/10.1787/9789264234611-en
616
For example, a new European seabed map stitched together from surveys originally made for navigation
has improved storm surge forecasts in the North Sea. See: http://www.emodnet.eu/improving-storm-
surge-modelling-north-sea
617
EEA (2017), Climate change, impacts and vulnerabilities in Europe 2016,
https://www.eea.europa.eu/publications/climate-change-impacts-and-vulnerability-2016
618
Daniel Bailey (2015), The Environmental Paradox of the Welfare State: The Dynamics of
Sustainability, New Political Economy, 20:6, 793-811, DOI: 10.1080/13563467.2015.1079169
619
Steffen et al 2018, Trajectories of the Earth System in the Anthropocene,, Proceedings of the National
Academy of Sciences Aug 2018, 115 (33) 8252-8259; DOI: 10.1073/pnas.1810141115
280
recent evaluation of the Strategy highlighted the urgency for action because of the important risks
facing the EU in certain economic areas620
. For instance:
 By the end of the century, under a high emissions scenario621
and without specific adaptation
measures undertaken, the EU could experience a welfare loss of around 2% of GDP per year
by 2100, i.e. EUR 240 billion per year from only six impact sectors assessed622
:
o Weather-related disasters could affect about two-thirds of the European population
annually (351 million people per year)623
, compared with 5% of the population
between 1981-2010. This would increase the related fatalities per year by fifty times
by the year 2100 (from 3 000 deaths per year presently, to 152 000 deaths per year
by 2100)624
;
o Flooding alone may cost EU countries up to EUR 1 trillion per year in damages by
the end of the century. Most of this would be due to coastal flooding (up to EUR 961
billion). Damages from river flooding could also rise to up to EUR 112 billion
compared to EUR 5 billion today, and there is considerable increase in river flood
risk for Europe even under a 1.5º C warming scenario625
. This could also affect
transport infrastructure. By the end of the century, under a high warming scenario,
about 200 airports and 850 seaports of different size across the EU could face the risk
of inundation due to higher sea levels and extreme weather events.
 As regards agriculture, and aside from the impacts of increasing temperatures, the OECD
includes four Member States (France, Spain, Italy and Greece) as countries at risk because of
water shortages626
. In a 2°C scenario before 2100, irrigated crop yields are projected to
decline in most regions of Europe, with rain-fed yields depending on changes in water
availability627
. At EU level, the prolonged drought of 2018 has triggered higher CAP
advanced payments and derogations from greening requirements.628
Repeated droughts in
Europe will have repercussions for climate mitigation policies: the water and carbon cycles
are interlinked because CO2 rates in the atmosphere increase when terrestrial water storage
diminishes: major droughts may cause drastic regional reductions in land carbon sinks629
.
Drought is already ravaging Europe's soils, whose moisture shows a marked decreasing trend
620
Report from the Commission to the European Parliament and the Council on the implementation of the
EU Strategy on adaptation to climate change.
621
In this section, the term "high emissions scenario", unless specified otherwise, refers to the IPCC's
Representative Concentration Pathway (RCP) 8.5. In the RCP 8.5 scenario, greenhouse gas emissions
continue to rise throughout the 21st century.
622
JRC (2018), Climate Impacts in Europe, Final report of the JRC PESETA III project.
doi:10.2760/93257.
https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/climate-impacts-
europe
623
Forzieri et al. (2017), Increasing risk over time of weather-related hazards to the European population: a
data-driven prognostic study, https://doi.org/10.1016/S2542-5196(17)30082-7
624
High emissions scenario, in this particular case, means scenario SRES A1B.
625
Alfieri et al, Climate 2018, 6, 16; doi:10.3390/cli6010016: https://www.mdpi.com/2225-1154/6/1/6/pdf
626
OECD (2017), Water Risk Hotspots for Agriculture,
http://dx.doi.org/10.1787/9789264279551-en
627
Commission Staff Working Document: Evaluation of the EU Strategy on Adaptation to Climate Change
SWD(2018)461final.
628
Commission Press release – “Commission offers further support to European farmers dealing with
droughts”, Brussels, 2 August 2018. http://europa.eu/rapid/press-release_IP-18-4801_en.htm
629
Humphrey et al. (2018), Sensitivity of atmospheric CO2 growth rate to observed changes in terrestrial
water storage, https://doi.org/10.1038/s41586-018-0424-4
281
over the 1979-2017 period630
. Furthermore, moisture decrease is a crucial factor in the
ferocity and expanded reach of recent forest fires (that would jeopardise viability of forests as
carbon sink).
In addition, climate-change related risks can also have implications on the assessment of
medium-term inflation outlook by central banks. Recently, the European Central Bank (ECB)
stated that catastrophic climate change could force the ECB to rethink its current monetary policy
framework631
.
Looking at risks from a more territorial angle, evidence is mounting on the distributional effects
of climate impacts across Europe. Impacts and opportunities will not be equally spread across the
EU territory, as shown in the map632
below:
Figure 120: Risk of climate change impacts across Europe
Source: EEA.
630
Copernicus Climate Services (C3S): European State of the Climate 2017:
https://climate.copernicus.eu/climate-2017-european-wet-and-dry-indicators
631
Speech by Benoît Cœuré, Member of the Executive Board of the ECB, at a conference on “Scaling up
Green Finance: The Role of Central Banks”, organised by the Network for Greening the Financial
System, the Deutsche Bundesbank and the Council on Economic Policies, Berlin, 8 November 2018
632
Source: 617
282
There are specific climate risks that are of major concern to some EU regions and communities.
In the absence of adaptation, for instance633
:
 While Europe as a whole will be more prone to flood risk (with mean annual river flow set to
increase), water stress will be more pronounced in Southern European regions622
, and may
well cause tensions between different users of dwindling reservoirs and aquifers. Under 2°C
warming, median river flows in Mediterranean regions are expected to fall in all four
seasons.
 Higher temperatures by the end of the century are expected to have various impacts such as a
10-15% loss in outdoor labour productivity in several Southern European countries as well as
increases in heat-related mortality.
 Habitat loss and forest fires are also serious risks. 16% of the present Mediterranean climate
zone (an area half the size of Italy) could become arid by the end of the century. Drier soils in
the Mediterranean also increase the area prone to forest fires.
 Loss of Alpine tundra, even at 2°C could have important impacts on water regulation
(including for human consumption), as well as economic impacts including in the tourism
sector.
 Specific risks (e.g. hurricanes, sea level rise, extreme heat) threaten to unravel EU efforts to
support its nine Outermost Regions, most of them small and isolated islands. The impacts of
hurricanes Irma and Maria on the Caribbean in 2017, and notably on St-Martin, Guadeloupe
and Martinique (three of the EU's outermost regions) came as a stark warning of the potential
impacts such regions face.
 Big cities are more vulnerable than rural areas. They concentrate people and assets, and are
thus heavily exposed to the impacts of climate change. European cities participating in the
Global Covenant of Mayors are particularly vulnerable to floods and sea level rise, extreme
heat, water scarcity and droughts, and extreme precipitation and storms.634
5.9.2 Mitigation and adaptation: co-benefits and trade-offs
Measures to cut emissions can undermine resilience to climate change in certain contexts, and
vice versa. On the other hand, there are adaptation measures that are also beneficial for
decarbonisation (e.g. protection of certain coastal ecosystems that both tackle sea level rise and
remove CO2). A recent OECD report635
highlights that climate investments and projects must
consider the links between adaptation and mitigation to minimise climate risk: the greater the
perceived risks of a project, the higher the returns investors will demand, and the higher the costs
passed onto end users and government sources of funding. The report provides a summary of
potential synergies and trade-offs between adaptation and mitigation measures:
633
Where not otherwise specified, information provided comes from Commission Staff Working
Document: Evaluation of the EU Strategy on Adaptation to Climate Change SWD(2018)461final.
634
Global Covenant of Mayors (2018), Global Aggregation Report,
https://www.globalcovenantofmayors.org/wp-content/uploads/2018/09/2018_GCOM_report_web.pdf .
635
OECD (2017), Investing in Climate, Investing in Growth, OECD Publishing, Paris.
http://dx.doi.org/10.1787/9789264273528-en
283
Table 24: Co-benefits and trade-offs between adaptation and mitigation
Positive for mitigation Potential trade-off with mitigation
Positive for
adaptation
Reduced deforestation: sequesters
carbon and provides ecosystems
services
Agricultural practices (e.g. no till) that
can sequester carbon while boosting
farmers income
Wetland restoration: carbon
sequestration and reduced flood risk
Renewable energy – wind and solar:
lower water use than thermal
generation
Desalination: addresses water shortage
but is energy intensive
Increased irrigation: helps farmers
manage variable precipitation but can
be energy intensive
Construction of hard defences: reduces
the risk of extreme events, but
greenhouse gases are embodied in the
construction
Air-conditioning: reduces the impact
of high temperatures and help, but is
energy intensive
Potential tradeoff
with
adaptation
Inappropriate expansion of biofuels:
could exacerbate food price shocks if
biofuels displace crops
Hydropower: could increase the
complexity of managing water
resources
N/A
In some areas, the potential to maximise the mutual reinforcement between adaptation and
mitigation should guide long-term EU efforts to decarbonise and climate-proof the economy.
Examples for ecosystems, energy and cities are mentioned below.
Land and coastal ecosystems
Terrestrial and marine ecosystems globally absorb around 50% of anthropogenic emissions636
.
The rest remains for prolonged times in the atmosphere, increasing greenhouse gas
concentrations and causing climate change.
This absorption capacity has its own limits. In case of oceans this uptake is associated with
increased acidification, having negative impacts on marine biodiversity. In case of terrestrial
ecosystems, ecosystem degradation and deforestation actually result in significant greenhouse gas
emissions, while being detrimental for biodiversity. Preserving and restoring terrestrial and
marine ecosystems contribute both to mitigation and adaptation (for example, they contribute to
water retention, control floods and protect against erosion or air quality).
In general, the joint implementation of adaptation and mitigation strategies contribute to the
health, functionality and resilience of ecosystems, and therefore improve the availability and
delivering of goods and services to EU citizens. Many environmental, welfare and climate
objectives may be reached simultaneously through ecosystem-based initiatives637
. For example,
marine vegetated habitats (seagrasses, salt-marshes, mangroves and others) contribute 50% of
636
Around 50% globally, according to A. P. Ballantyne, C. B. Alden, J. B. Miller, P. P. Tans, J. W. C.
White. Increase in observed net carbon dioxide uptake by land and oceans during the past 50 years.
Nature, 2012; 488 (7409): 70 DOI: 10.1038/nature11299
637
Faivre et al. 2018; https://doi.org/10.1016/j.ijdrr.2017.12.015
284
carbon storage in marine sediments despite occupying only 0.2% of the ocean surface globally.
They reduce wave energy and raise the seafloor, and as such moderate the impacts of sea level
rise and contribute to safeguard people, infrastructure, and property along coastlines638
.
Land restoration, reforestation and reduced and avoided degradation in forests, as well as
rehabilitation of wetlands, contributes to and increased land use sink. Forests offer a good
example of the co-benefits that can arise from coordinated adaptation and mitigation. Indeed, EU
forests absorb the equivalent of just over 400 million ton CO2 (see section 4.7.1), or almost 10%
of total EU greenhouse gas emissions each year. At the same time, they lower temperatures, act
as a buffer for hydrological extremes and purify water, which means they are also crucial in
adapting to climate change. Recent case-studies in Ireland, Spain and the Czech Republic have
shown that adaptation measures and good forestry practices enhance the role of forests as carbon
sinks639
. It is important to act with a long-term perspective because aging and degraded forests,
agro-forestry systems and more recent forest plantations all require adaptation planning today in
order to withstand a changing climate.
Energy
Due to climate change alone, and in the absence of adaptation, annual damage to Europe’s
critical infrastructure could increase ten-fold by the end of the century under business-and-usual
scenarios640
, from the current EUR 3.4 billion to EUR 34 billion. Losses would be highest for the
industry, transport, and energy. One of the greatest challenges is how to assess impacts on energy
production which may occur as a consequence of the projected increase in the intensity of
extreme weather events, as research gaps include economic modelling of extreme events and
vulnerabilities of transmission infrastructure641
.
Impacts on renewable energy sources are of specific concern, given their critical contribution to
emissions reduction. There is some evidence on impacts on hydropower production due to water
scarcity, but also on wind, solar, biomass642
. As regards hydropower in particular, the main
mechanisms through which climate change can affect hydropower production are changes in
river flow, evaporation, and dam safety643
. For Europe, most studies show a positive effect of
climate change impacts on hydropower for Northern Europe and a negative effect for South and
Eastern Europe643 644 645 646 647
. The extent to which climate change affects hydropower in Europe
as a whole differs among the studies from almost no effect644
to decreases of 5-10% by the end
638
Duarte, C.M., Losada, I.J., Hendriks, I.E., Mazarrasa, I., Marbà, N. The role of coastal plant
communities for climate change mitigation and adaptation. Nature Climate Change, 3 (11), pp. 961-968
(2013).
639
European Forest Institute – 2018
https://www.efi.int/publications-bank/climate-smart-forestry-mitigation-impacts-three-european-regions
640
Forzieri et al (2018), Escalating impacts of climate extremes on critical infrastructures in Europe,
Global Environmental Change 48, 97–107,
641
Chandramowli et Felder (2014), Impact of climate change on electricity systems and markets – A
review of models and forecasts, https://doi.org/10.1016/j.seta.2013.11.003
642
See COACCH 1st
synthesis report.
643
Mideksa and Kalbekken (2010), The impact of climate change on the electricity market: A review,
https://doi.org/10.1016/j.enpol.2010.02.035
644
Hamududu and Killingtveit (2012), Assessing Climate Change Impacts on Global Hydropower,
doi:10.3390/en5020305
645
Lehner et al.,(2005), The impact of global change on the hydropower potential of Europe: a modelbased
analysis, https://doi.org/10.1016/j.enpol.2003.10.018
646
Van Vliet et al,(2016), Power-generation system vulnerability and adaptation to changes in climate and
water resources, https://doi.org/10.1038/nclimate2903
647
Teotónio et al.(2017), Assessing the impacts of climate change on hydropower generation and the
power sector in Portugal: A partial equilibrium approach, https://doi.org/10.1016/j.rser.2017.03.002
285
of the century or even before645 648
. Adaptation measures in hydropower production could offset
these impacts in Europe on a yearly average (not for all months of the year): e.g. by increasing
efficiency646
or water storage649
. As regards solar and wind energy, there are studies that indicate
that production might be negatively affected on some regions in the EU650 651 652
.
Thermoelectric generation will be under more pressure in Southern European regions where their
water cooling needs may no longer be met: they may generate up to 20% less under a 3ºC
scenario; 15% less in a 2ºC world. 641
Thermal electricity generation may suffer most from water
stress in the near term in the Mediterranean, France, Germany and Poland653
.
While the magnitude of these impacts is not expected to jeopardise Europe's long-term
decarbonisation path, it may entail higher costs and different regional energy mixes, unless
adaptive measures are deployed such as increased plant efficiencies, replacement of cooling
systems and fuel switches646
. Private stakeholders in the energy system and EU and national
policies should reinforce the right market framework to ensure that the climate impacts do not
jeopardise the EU’s stability and security of energy supply. Transitions in the electricity sector
should encompass both mitigation and adaptation planning, if they are to sustain and secure a
sustainable water–energy nexus in the next few decades.
Cities
The need to integrate adaptation and mitigation pathways is most apparent in the transformation
of European cities. They are home to 360 million people, i.e. 73% of Europe’s population, and
account for 80% of the continent’s energy consumption and for 85% of Europe’s GDP654
. Yet,
only around 40% of EU cities with more than 150.000 inhabitants have adopted adaptation plans
to protect citizens from climate impacts. Globally, a 2015 OECD report recognises that, in spite
of the important role local authorities have to deliver climate resilience through regulatory
frameworks and incentives, “support for urban adaptation remains uneven”615
.
Trade-offs between mitigation and adaptation goals must be avoided in cities. In general, for
example, densification may benefit emissions reduction (e.g. less transport needs), but can also
increase vulnerability to regional climate impacts (e.g. more people and assets in less space when
a flood occurs). Cities also suffer from higher temperatures than the surrounding areas, due to the
concentration of built environment (“heat island effect”).
There are opportunities to optimise climate action when developing joint mitigation and
adaptation in urban planning. For example, urban green spaces and green infrastructure can
deliver adaptation benefits and absorb emissions and pollution. Cities will also be major clients
for climate services and emerging businesses may provide solutions to city planners that combine
648
Chandramowli et Felder (2014), Impact of climate change on electricity systems and markets – A
review of models and forecasts, https://doi.org/10.1016/j.seta.2013.11.003
649
Berga (2016), The Role of Hydropower in Climate Change Mitigation and Adaptation: A Review,
https://doi.org/10.1016/J.ENG.2016.03.004
650
Karnauskaset al. (2018), Southward shift of the global wind energy resource under high carbon dioxide
emissions, https://doi.org/10.1038/s41561-017-0029-9
651
Tobin et al. (2018 ), Vulnerabilities and resilience of European power generation to 1.5 °C, 2 °C and
3 °C warming, https://doi.org/10.1088/1748-9326/aab211
652
Jerez et al. (2015), The impact of climate change on photovoltaic power generation in Europe,
https://doi.org/10.1038/ncomms10014
653
Behrens et al. (2017): Climate change and the vulnerability of electricity generation to water stress in
the European Union, https://doi.org/10.1038/nenergy.2017.114
654
HELIX - https://www.helixclimate.eu/
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optimal mitigation and adaptation ideas. Cities that prioritise resilient and low-emission urban
development at once will enjoy a competitive advantage and attract investments655
.
5.9.3 EU adaptation action in the global context
There is a growing need to translate into policy the growing evidence about transboundary
climate risks arising from climate change impacts in countries outside the EU. By definition,
national vulnerability assessments tend to ignore or underestimate climate risks brought about by
the global economy. Today, this is an emerging research area with few quantitative assessments
and unstable terminology: the evaluation of the EU Adaptation Strategy points at the need to
gather more knowledge.
In one of the few efforts to quantify cross-border impacts conveyed via trade in the EU, available
only for some sectors, climate impacts in third countries conveyed through negative impact on
trade flow may increase EU ”domestic” losses by up to 20%622
. As regards climate and
migration, recent findings confirm a relationship between climate change and fluctuations in
asylum applications in the EU: asylum applications could increase by 28% by the end of the
century (an average of 98,000 additional asylum applications per year)656
.
Lack of climate action in third countries will propagate to Europe not only via people
displacement and trade, but also via financial flows and value chain disruptions. The importance
of these risk pathways and the range of indirect impacts facing the EU in the future will vary
depending on future socio-economic scenarios657
, as well as on the level of future climate change.
Economic and climate intelligence on global value chains and trade flows will be crucial to
prioritise support for the adaptive capacity of fragile partners658
.
In recognition of these transboundary effects of climate change, the EU’s external policy has
embraced climate diplomacy and recognised the need to provide structural, long-term but flexible
approaches to climate resilience, especially to its most vulnerable partners such as Small Island
Developing States (SIDS) and Least Developed Countries (LDCs). In the 2016 Global
Strategy659
, the EU recognises climate change as a global challenge because climate-induced
fragility in EU partners exacerbates conflicts and undermines Europe’s security.
In developing countries, adaptive capacity determines the degree to which decarbonisation can
make progress. The Paris Agreement established a global goal on adaptation in parallel to
mitigation responding to the increasing demands from developing countries to support climate
change resilience as a component of sustainable development: as a bottom line from which to cut
their emissions as they catch up with the developed world. Both adaptation and mitigation will be
part of Paris’ ambition cycle as of 2023 and the EU, as a party, will be reporting on progress to
make both pillars of climate action mutually reinforcing and synergetic.
The EU balances adaptation and mitigation through climate action mainstreaming into
development and cooperation programmes with partner countries. In particular, this relates to the
programmes on energy, agriculture, infrastructure, water, forestry and disaster risk reduction. The
budget allocated to interventions focusing on adaptation accounted for slightly more than half of
the EU external cooperation spending on climate change over the period 2014-2017.
655
E3G (2014), “Underfunded, underprepared, underwater? Cities at risk”.
656
Missirian et al.(2017), Asylum applications respond to temperature fluctuations, Science 358, 1610–
1614 (2017), DOI: 10.1126/science.aao0432
657
also known as shared socio-economic Pathways (SSPs) under the IPCC nomenclature.
658
For instance third countries with which the EU has signed trade agreements
http://ec.europa.eu/trade/policy/countries-and-regions/negotiations-and-agreements/
659
EU's global strategy: Shared Vision, Common Actions (EU, 2016).
287
6 ROLE OF DIFFERENT ACTORS IN THE ACHIEVEMENT OF LOW CARBON AND
ENERGY TRANSFORMATION PATHWAYS
6.1 Role of Member States
National Governments have a crucial role to play in the low carbon and energy transition.
Implementing the acquis as described in section 2.3.1, requires Member States to make key
decisions with respect to security of supply, network infrastructure, energy efficiency and
renewable energy policies as well as research and innovation. Moreover, they need to decide on
their energy mix and enter regional cooperation. Circumstances are thus different in Member
States, with sectoral composition, existing infrastructure and economic development all different
in the EU's Member States. To prepare for an orderly transition it is also important that national
Governments develop their long term strategy and engage with all relevant stakeholders.
This is also recognised by the Paris Agreement which asks all Parties to communicate, by 2020,
their mid-century, long-term low GHG emission development strategies.
The Governance of the Energy Union and Climate Action Regulation asks the Commission to
prepare by early 2019 a proposal for a Union long-term strategy, and for Member States to
submit by 1 January 2020 their long-term strategies.
Against this background, the Commission’s decision to present already in 2018 the proposal for
the European Long Term Strategy is based on its wish to lead by example as regards the
preparatory process, entailing a wide stakeholder consultation, development of a robust analytical
framework and assessment of a broad range of credible pathways for the entire economy, and,
subsequently, to allow a comprehensive and inclusive debate on its proposal. This would also
allow considering the positions and visions of all Member States before delivering the final EU
strategy to the UNFCCC. Therefore, the adoption of the proposal for the EU LTS by the
Commission should not be seen as the end of a process but a beginning of the road towards the
submission of the EU LTS to the UNFCCC by 2020.
Several Member States signed the declaration660
to achieve net zero emissions at latest in 2050
pushing for an ambitious approach in the Commission's proposal. Some Member States have
already delivered their national LTS to the UNFCCC, some work intensively on them so they
will be well positioned to discuss the Commission's proposal.
The Governance of the Energy Union and Climate Action Regulation asks the Commission to
take into account the Member States’ draft National Energy and Climate Plans (NECPs) and
foresees the need for ensuring consistency between National Energy and Climate Plans (NECPs)
and the national LTS.
With national draft plans still under development, this assessment already incorporates in its
baseline the collective targets for 2030 foreseen in the Governance of the Energy Union and
Climate Action Regulation. The 2030 national objectives set in the Plans will play a key role for
the national LTS and vice versa and the long term decarbonisation perspective will play a key
role for the NECPs. The requirements in the Governance Regulation of public participation and
consultation as regards both the national plans and the long-term strategies should ensure that
local and regional actors are involved in their development, contributing to the broad acceptance
660
Green Growth Group (2018): Common statement on the long-term strategy and the climate ambition of
the EU.
https://www.ecologique-solidaire.gouv.fr/sites/default/files/2018.06.25_statement_ggg_climat.pdf
288
of the NECPs and the national LTS. Also, both Governance and UNFCCC processes will
interlink and influence each other in the future through updates.
6.2 Role of regional and local authorities
Today, 75.6% of the EU28 population live in urban areas (cities and towns and suburbs) and that
proportion is expected to remain largely stable until 2050. City governments have therefore a
particular, important and increasing role to play in implementing and enforcing climate
mitigation and adaptation policies. Urban resource planning can lead to cities that are
environmentally-friendly, energy-efficient, encourage low-carbon forms of mobility – notably
walking and cycling – and are more resilient to climate-induced hazards661
. The EU encourages
them to engage in long-term planning exercises, such as through the Covenant of Mayors662
, and
many have started these processes663
. Cities such as Copenhagen, Paris, Stockholm and
London664
are taking bold climate action. For instance, they have pledged, together with 14 cities
of the C40 network of world megacities665
, to "enact regulations and/or planning policy to ensure
new buildings operate at net zero carbon by 2030 and all buildings by 2050". Through the Urban
Agenda for the EU, Partnerships on Climate Adaptation and Energy Transition, city governments
are also encouraged to implement joint actions tackling the climate and energy challenge.''
Local and regional authorities also play a pivotal role in achieving the Energy Union objectives.
The Governance of the Energy Union and Climate Action Regulation facilitates the involvement
of all governance levels in addressing energy and climate policies by creating a permanent
Multilevel Climate and Energy Dialogue in Member States: European cities and regions have
proven to be important delivery agents for the European transition towards a more decentralised,
energy-efficient, decarbonised and resilient energy system. A permanent and regular dialogue on
climate and energy among all levels of governance and relevant stakeholders will deliver various
benefits: continuous political support, ownership, feedback loops, shared responsibility as well as
a better implementation of the necessary actions.
661
UNEP, IRP (2018), The Weight of Cities Resource Requirements of Future Urbanization,
http://www.resourcepanel.org/reports/weight-cities
662
https://www.covenantofmayors.eu/
663
In a 2015 DG ENER/Committee of Regions survey of Covenant cities 84% of the 836 respondents
called for a long term targets for the initiative. Of these 48% preferred the 80-95% GHG reductions by
2050, circa 25% carbon neutrality, 5% other targets and 23% did not specify.
664
https://www.eceee.org/all-news/news/news-2018/c40-cities-targets-net-zero-carbon-buildings-by-2030/
665
https://www.c40.org/
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The proposal for the next multiannual financial framework (MFF) of the EU makes an ambitious
commitment for climate mainstreaming across all programmes, with a target of 25%, which will
help spending a significant part of the proposed budget of the regional and cohesion policy on
climate objectives. In this context, information and access to the EU funding for local level, for
example, through the new Urban Investment Support service URBIS, and creation of regional
investment advisory hubs can further increase cities' capacity to mobilise investments for the
clean energy transition. Furthermore, the share of EU funding directly available for
municipalities is proposed to increase under the Urban Agenda cohesion policy proposal for the
next programming period 2021-2027 as the urban earmarking under the European Regional
Development Fund is increased from 5% in the current period to 6% in the next period in light of
the encouraging results of this type of activities.
Going forward, there are several areas that will require further attention:
 In terms of governance, cities in countries where local climate plans are compulsory (e.g.
Denmark, France, Slovakia and the UK) are about twice more likely to have a mitigation plan
and about five times more likely to have an adaptation plan than cities in other EU
countries666
. This indicates that national binding requirements are more effective than
voluntary schemes to develop local climate plans.
 There are remaining data limitations and gaps on local emission inventories, climate
mitigation and reporting, needed to facilitate local quantitative assessment exercises – which
would also closely need to link to adaptation planning.
 National plans are likely to be more successful if the planning and implementation capacity
of regional and local governments has been taken into account.
 Awareness and quantification of the co-benefits (e.g. health, clean air, environment) of
fighting climate change are important to stimulate the cross-sectorial transition described
above.
666
D. Reckien et al., How are cities planning to respond to climate change? Assessment of local climate
plans from 885 cities in the EU-28, Journal of Cleaner Production, 26 March 2018,
https://www.sciencedirect.com/science/article/pii/S0959652618308977?via%3Dihub
The Covenant of Mayors for Climate and Energy
Covenant of Mayors for Climate and Energy (launched in 2008) has grown into the world’s
largest voluntary movement of over 9000 municipalities committed to meet or exceed the EU
GHG mitigation targets, to improve their resilience against negative effects of climate change
as well as to promote access to sustainable energy. Cities voluntarily commit to develop local
strategies and plans on mitigation and adaptation in order to implement the EU climate and
energy targets and accept accountability for progress. The cities in the Covenant of Mayors
provide also a channel to deploy innovative energy transition solutions tested under the Smart
Cities and Communities programme. The participatory process underpinning these initiatives
as well as e.g. local energy communities makes it easier to win public support for the
transition and deriving projects such as new infrastructure.
After gradual expansion to over 50 countries, the Covenant of Mayors and a similar initiative,
the Compact of Mayors merged in 2016 to create the Global Covenant of Mayors for Climate
and Energy. This initiative, strongly supported by the Commission, has enabled building
strategic alliances and partnership for a bottom-up transition to a global low-carbon and
climate-resilient economy, keeping the momentum to meet the goals of the Paris Agreement
and the sustainable development goals at the core of the 2030 Agenda.
290
To support local authorities in making the most of the opportunities and challenges of the
transition, national and EU initiatives and policies are clearly of importance. They cover a wide
range such as how National Energy and Climate Plans are developed, what national initiatives
and legislation exist regarding local planning for climate mitigation and adaptation action,
capacity building initiatives, emission data availability allowing cities to make own emission
inventories, initiatives regarding access to finance and fiscal and economic policies including
those that are addressing environmental externalities such as air pollution.
6.3 Role of business and civil society
Achieving the EU's climate and energy objectives will require contributions from every part of
the economy and from individual citizens. Hence the policy process at all levels of the society is
key to regulate and achieve that change. In preparation for the EU's long-term GHG emissions
reduction strategy, the Commission has carried out a public consultation in the summer of 2018,
seeking input from all stakeholders (see section 7.1). Strong public participation and ownership
will not only help accelerate the implementation of current commitments in the EU, but can also
help strengthen global efforts in the short, medium and long term.
Non-state initiatives have increased significantly but the magnitude of their impact remains
difficult to quantify. Quantification of impacts depends on the baseline chosen, the methodology
for assessing additionality or overlaps of voluntary actions with policies, and the assumptions
made about the future scaling up of effort or membership. For instance UN Environment Gap
Report assessed additional emissions reductions made so far by non-state actors: in the order of
0.2-0.7 GtCO2 per year by 2030 compared to full NDC implementation667
. It estimates that
international climate initiatives involving state and non-state actors could materially contribute to
greenhouse gas reductions, going much beyond the NDCs. As a share, most global voluntary
initiatives are taking place in Europe, with a focus on the core sectors of transport, energy
efficiency and agriculture. These are key for the deep decarbonisation envisaged under the Paris
Agreement.
Some businesses have started taking action in identifying their own pathways to reach emissions
reduction of 80%, 95% or full GHG neutrality. As part of the open public consultation (see
section 7.1), different sectors provided their own analyses for change. For instance, power sector
organisations propose ambitious pathways leading to full decarbonisation, industry sector
organisations focus on the role of alternative fuels, transport and residential sectors on energy
efficiency improvements. They also shed light on new technologies.
With a view to the future, the practice of preparing such plans needs to be taken up by more
business of all sizes and from various sectors. These plans should clearly identify the
opportunities and provide sectoral knowledge, e.g. on which disruptive technologies they expect
to become economically viable and within what timeframes. This will help governments and fill
data limitations and gaps, open possibilities for measuring and reporting the impact of voluntary
climate action, while also helping direct sustainable finance and ensuring targeted investments in
innovation and competitiveness.
Civil society will need to continue increasing its role of creating awareness among citizens about
long-term decarbonisation, including action that can be taken at individual level and lifestyle
choices that each citizen can make. It plays a unique role in providing best practice examples and
holding businesses and other non-state actors accountable to their commitments and to avoid
greenwashing. Civil society organisations have already come forward to support countries, local
291
governments and businesses to come up with and understand long-term plans, even beyond 2050.
Examples for this are a number of tools released by for instance the 2050 Pathways initiative668
or
WWF's LIFE-Maximiser project669
. Synergies between civil society, enterprises and public
authorities already exist. For example, according to the Eurostat Community Innovation Survey
2014670
, the main driver of eco-innovation ("innovation with environmental benefits") was
companies' reputation, before costs of energy and raw materials and regulation. This means that
enterprises are aware about citizens’ concerns about climate and environmental issues and
actually take action to adapt to customers’ requests and to be (or seem) more friendly to the
climate and the environment For instance, as part of the open public consultation, respondents
anticipated mobility in people's daily life to see the biggest change to address climate change (see
section 7.1). Public authorities contribute to this virtuous circle by providing transparency tools
(e.g. eco-labels) that empower citizens and committed enterprises.
Overcoming obstacles for non-state climate action and long-term planning
In order to encourage climate action from non-state actors, states can help them overcome the
most common challenges they face, in particular when they are volunteering to do more than is
required by regulators. The key obstacles identified globally (UNFCCC, 2017671
), but also
applicable to Europe, include the lack of access to funding, recognition, organisational capacities
and knowledge.
An important contribution governments can make is to set the enabling environments (that for
example explicitly acknowledge the partnership principle) as well as long-term plans and visions
that provide certainty and allow non-state actors to make ambitious decisions.
Governments can thus create the conditions for non-state action to prosper, by developing
regulatory frameworks, by facilitating access to finance, by providing systems for reporting and
tracking and by providing visibility to the climate and energy action that is achieved.
Working together, learning from each other and scaling up successful approaches, are essential.
Targeted programs or platforms for different sectors are good practice for enabling and creating
relevant knowledge and organisational capacity. Strengthening these platforms, promoting the
cooperation between stakeholders and the sharing of experiences are crucial to accelerate and
scale up climate action.
The need for non-state action to be recognised and promoted can be addressed, by reporting
schemes that may also provide access to further opportunities and investments, but also through
individual award schemes, highlighting the successes of frontrunners.
668
https://www.2050pathways.org
669
http://www.maximiser.eu
670
Eurostat (2014), Community Innovation Survey 2014,
https://ec.europa.eu/eurostat/web/microdata/community-innovation-survey
671
UNFCCC (2017), Yearbook of Global Climate Action 2017, p. 28
292
7 ANNEXES
7.1 Synopsis report on consultation activities
Following the invitation by the European Council in March 2018 and a similar request by the
European Parliament to present “a proposal for a strategy for long-term EU greenhouse gas
emissions reduction in accordance with the Paris Agreement” the Commission has undertaken
several stakeholder consultation actions.
A 12-week online survey analysed in the sections below was held as well as a two-day high-level
stakeholder consultation event held in Brussels in July 2018 (analysed in section 7.1.6). A
number of position papers were also received (analysed in section 7.1.5). All types of
stakeholders were invited to participate in the consultation.
These activities aimed at collecting views and opinions on the technological and socio-economic
pathways that should be explored for a long-term EU greenhouse gas emissions reduction
strategy, as well at gathering factual information, data and knowledge, including drivers,
opportunities and challenges relevant in the context of the long-term strategy.
7.1.1 Methodology and tools of analysis of the online public consultation
The open public consultation (OPC) consisted of a questionnaire of 74 questions uploaded on the
EU Survey Platform672
. All citizens and organisations were welcome to participate. The public
consultation was open from July 17th 2018 to October 9th 2018.
The responses were checked for coordinated groups of responses, being identical or very similar
in key aspects. Four such coordinated groups of responses were detected: (1) of 4 individuals in
Germany with links to the land-use sector; (2) of 4 organisations in the petroleum and fuels sector
in Spain and Portugal; (3) of 9 respondents including individuals and two NGOs; and, (4) of 4
individual respondents from the same NGO. In the context of the number of responses (2805),
these are not judged to have a significant influence on the results.
The results are quantitatively analysed in the following sections. For each question analysed, the
number of respondents (n) is indicated [n=x]. Open questions were analysed using a keyword
coding based approach. By determining key issues and words raised in responses, grouping these
by themes and translating and searching for these in all languages, the frequency of the issue
could be identified.
In this report references are made to the questions in the Open Public Consultation questionnaire,
these are included as [PCXX], with XX representing the question number in the questionnaire.
References are also made to a category of respondents named ‘Private enterprise, professions,
trade and business associations’. This category represents the combined responses from three
groups of respondents in the OPC survey, namely: (1) Private enterprise; (2) Professional
consultancy, law firm, self-employed consultant; and, (3) Trade, business or professional
association.
7.1.2 Type and number of stakeholders participating in the online public consultation
The aim of the public consultation was to gather feedback from the general public regarding the
EU’s long-term strategy for the reduction of greenhouse gas emissions. In total, 2 805
672
https://ec.europa.eu/clima/consultations/strategy-long-term-eu-greenhouse-gas-emissions-reductions_en
293
respondents replied to the survey. Figure 121 shows the split of respondents per category
(individuals vs. professionals, organisations) and per stakeholder group.
Figure 121: Type of stakeholders in the public consultation
Source: Open Public Consultation.
With regards to geographic coverage, respondents covered 27 of the 28 EU Member States. The
countries with the highest response rate were Germany, Belgium and Spain. In addition to the EU
respondents, there were also 82 respondents that identified themselves as non-EU.
7.1.3 Main results on the general stakeholder opinion on long-term reduction of
greenhouse gases and the Paris Agreement
The following section outlines the main results and key messages as provided by the respondents
under each section of the survey. An extensive report on the public consultation covering all
questions is also to be published673
.
Respondents were asked [PC11] how much the EU should contribute to achieving the Paris
Agreement objectives (with a view towards 2050). More than half of the respondents, both
individuals and organisations, considered that the EU should already achieve a balance between
emissions and removals in the EU by 2050 (see views by respondent type in Table 21).
Of the 13 EU Member States674
that responded to the consultation either through the OPC
questionnaire or through a position paper, ten had a position on this subject, two were in favour
of 80% reductions, two for 80-95% reductions and six for a balance in emissions (net zero) by
2050.
673
https://ec.europa.eu/clima/policies/strategies/2050_en
674
On behalf of the Member State or a national government entity
294
Table 25: General stakeholder opinion on the EU’s contribution to the Paris Agreement
objectives, per respondent type
Respondent type
Reduce
greenhouse gas
emissions in the
EU by 80% by
2050 compared
to 1990 levels
Reduce
greenhouse gas
emissions in the
EU more, within
the range of 80
to 95% by 2050
compared to
1990 levels
Achieve
already a
balance
between
emissions and
removals in the
EU by 2050
as an individual in your
personal capacity [n=2024]
16% 32% 53%
in your professional capacity or
on behalf of an organisation
[n=612]
16% 31% 54%
Of
which:
Private enterprise,
professions, trade and
business associations
[n=332]
20% 37% 43%
Non-governmental
organisation, platform or
network [n=146]
5% 18% 77%
Research and academia
[n=30]
17% 20% 63%
Social partners [n=12] 17% 42% 42%
Of which:
Trade unions [n=6]
17% 33% 50%
National, regional or local
authority (mixed) [n=55]
18% 29% 53%
Other [n=37] 16% 30% 54%
Source: Open Public Consultation.
7.1.4 Summary and key messages of sector/issue specific questions
7.1.4.1 The low-carbon transition from the consumer perspective
Given the important role of consumer choices in decarbonising the economy, respondents were
asked a set of questions in this section regarding how they expect their daily lives will be affected
by the transition to a low-carbon economy and their willingness to adopt certain new
technologies. The questions covered topics such as housing, waste generation, transport and the
consumption of goods and services.
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Many respondents (56%) expect the largest changes in the daily lives of consumers to be related
to mobility.
Several questions in the open public consultation addressed the issue of mobility. The main
findings include:
 When asked about purchasing a vehicle that does not run on petrol or diesel, more than two
thirds of respondents supported this option (some supported the option only if sufficient
refuelling infrastructure were available).
 80% of respondents would consider using car-sharing services – including if an easy-to-use
and affordable service were in place.
 Many respondents would also consider avoiding private cars for short trips and opt for public
transport (47%), but some respondents highlight the importance of accessibility and
regularity of service (43%).
 Another alternative presented to respondents for short trips were (electric) bikes and other
active mobility modes – 58% of respondents would consider using such alternatives and one
third would consider using such alternatives if proper bike lanes were in place.
 With respect to longer distances, respondents were asked whether they would consider
avoiding flights or cars whenever alternatives were available. Over 80% of respondents
agreed (out of which a large majority only agreed if a convenient alternative was available).
 When respondents were asked whether better urban planning would reduce the use of private
cars and reduce congestion in urban areas, some 60% agreed but highlighted the importance
of combining urban planning with better public transport.
 Finally, more than half of the stakeholders expected that IT tools would reduce mobility
needs to some extent.
When asked about different ways of reducing energy consumption and related CO2 emissions in
buildings, many respondents expected the following measures to be of priority: improving the
energy performance of buildings through insulation, triple glazing, installing heating and water
boilers that run on renewables, installing heating and cooling equipment and using electrical
appliances with the best energy performance label and buying carbon free electricity or
generating their own renewable energy.
On the topic of waste separation, almost all respondents stated that they sort their waste; and a
considerable share of respondents (54%) mentioned that adapted infrastructure and financial
incentives would improve the rate of people that separate their waste.
When questioned about the importance of raising awareness about the impact of food
consumption on the climate, almost all respondents agreed that this was important. Furthermore,
a large majority of respondents (over 80%) stated that they would consider the impact of their
food purchases on greenhouse gas emissions (out of which an important share would consider
their impact if the necessary information was available); and many respondents (74%) would
consider changing their diets.
Respondents were also concerned about the environmental impact of their decisions when buying
products or services. 55% of respondents stated that they consider the impact of such decisions
but that they often lack the necessary information to assess the impact. Even a higher share of the
respondents (79%) considered it important to buy products and services from companies that
produce goods and services in a greenhouse gas neutral manner.
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7.1.4.2 Expectations and opinions on changes in work and the economy
Employment and a socially fair transition `
Stakeholders were asked about the effect of the low carbon transition on employment. There was
an almost equal split between respondents that expected the transition would create jobs and
respondents that either had no opinion or did not know what the effect of the transition would be.
When asked about the factors or trends that could affect jobs most in the future, the highest
ranked factor overall was ‘digitalisation’ followed by ‘socio-economic policies’ and ‘the lowcarbon
transition’(see Figure 122). Those responding in their professional capacity or on behalf
of an organization put a stronger emphasis on the low-carbon transition (45%) than those
replying in their individual capacity (18%).
Figure 122: Stakeholder opinion on the factors and/or trends that will affect jobs in the
future [only one answer possible]
Source: Open Public Consultation.
When asked whether they or their sectors would benefit from training in the context of the energy
and low-carbon transformation, 40% of respondents fully agreed with the benefits of training and
close to 40% of respondents expected that training would be beneficial to some extent.
The impact on the low-carbon transition on certain sectors
Around 45% of respondents expect that the low-carbon transition represents an opportunity for
their sector and some 10% considered the transition to be a challenge (see Figure 123). Nongovernmental
organisations and research and academia considered the transition as an
opportunity to a larger extent than private enterprises, professions, trade and business
associations where a majority perceived it as both an opportunity or a challenge.
297
Figure 123: Stakeholder opinion on whether the low-carbon transition represents an
opportunity or a challenge
Source: Open Public Consultation.
When asked about the potential of their sector to reduce greenhouse gas emissions by 2050, close
to half of respondents said that their sector could reduce emissions by more than half or entirely.
Moreover, when asked how their sector could potentially reduce greenhouse gas emissions, over
20% of respondents expected that this could be achieved through improved energy efficiency.
Others expected that the circular economy, further electrification, low carbon fuels (like
hydrogen), and new products and business concepts could help (see Figure 124). In addition,
many respondents (40%) expected that they (or their sector) will invest in innovative low-carbon
technologies as a priority.
298
Figure 124: Stakeholder opinion on the means to achieving greenhouse gas emission
reduction
Source: Open Public Consultation.
On further integrating their sectors with other sectors in order to decrease emissions and increase
efficiency, around 40% expected that this was possible and a similar proportion had no opinion or
did not know. The respondent group with the highest proportion (75%) expecting that further
integration would help was in the private enterprises, professions, trade and business
organisations group.
Many respondents (60%) expected the low-carbon transition to modernise and reinforce the
competitiveness of the EU, while close to a third of stakeholders expected this to happen only if
non-EU countries and regions also engage in the low-carbon transition (see Figure 125).
Stakeholders belonging to the non-governmental organization, platform or network category
were the most positive to the low-carbon transition for modernization and competitiveness in
general (82%), whereas private enterprises, professions, trade and business organisations (48%)
emphasized the need for non-EU countries and regions to also engage in the low-carbon
transition.
299
Figure 125: Stakeholder opinion on the impact of the low-carbon transition on EU
competitiveness
Source: Open Public Consultation.
Regarding the impact of the low-carbon transition on EU modernisation and growth, more than
half of the respondents expected the transition to help the EU modernise and grow. An additional
21% of respondents expect this to happen in case of public support and 19% in case of non-EU
countries and regions engagement in the transition.
Stakeholders were also asked, in an open question format, ‘[PC45]: How can opportunities and
challenges (in particular related to carbon intensive sectors or regions) be addressed? What key
economic transformations should the EU pursue to achieve a low carbon and resilient economy?’.
In total, n=1 523 responses were received.
 Energy was raised by n=1 018 (67%) respondents, with a variety of issues, sometimes
perceived as both opportunities and challenges. Renewable energy (as part of a clean or green
energy system) [n=378] represented an opportunity for EU industry but also a challenge in
terms of scaling up renewable energy rapidly, while many respondents agreed on the need to
phase out fossil fuels [n=322]. Other themes raised included energy efficiency in buildings
and the importance of smart grids and energy storage.
 Mobility and transport emissions were raised by n=759 (50%) respondents, with a variety of
issues, sometimes perceived as both opportunities and challenges. Cars and road transport
[n=285] were perceived almost equally as an opportunity (cleaner air) and challenge (to
reduce the use of individual vehicles), clearly linked to the need to expand and improve
public transport [n=210]. Other issues raised included electrification of transport (including
the necessity to provide sufficient charging infrastructure), the need for improved cycling
infrastructure and fuelling infrastructure for alternative fuels (such as hydrogen).
 Public policy related issues were raised by n=1 448 (95%) respondents, therefore almost
every respondent saw some role for government action, with a variety of related issues.
Respondents expressed strong opinions on taxes (carbon), pricing (Emissions Trading
System) and fiscal policy, including subsidies [n=567], the majority arguing that policy
300
should create an enabling market framework to promote the clean energy transition. Public
investment [n=498] was considered an opportunity to support research and development, but
also a challenge in terms of picking ‘picking winners’. Other issues raised included the role
of planning and spatial policy.
 Specific emissions related issues were raised by n=404 (27%) respondents, with carbon
capture, storage, use and/or removal, particularly through forestry, identified as the most
important issue among this group [n=135 respondents].
 Specific economic sectors were identified by n=913 (60%) respondents with a variety of
sectors singled out, sometimes perceived as both opportunities and challenges. Waste
management, recycling, re-use and circularity in practice [n=274] was perceived as an
opportunity to move towards a circular economy, while sustainable production [n=196] was
perceived as an essential need for industry, many identifying that sustainability should be
introduced at the product design stage (low energy use, recyclability, durability).
 Paradigm shift (such as major changes to production or consumption patterns) was identified
as a key factor by n=997 (65%) respondents, with a variety of issues, sometimes perceived as
both opportunities and challenges. Economic models – encompassing sustainable
consumption and production, circular and life cycle thinking [n=843] were raised by many
respondents, such as challenging the concept of infinite growth. Consumer behaviour
[n=358] was identified as important, representing both a challenge and opportunity to modify
consumer behaviour by improving awareness and understanding on climate impacts.
7.1.4.3 Expectations and opinions on the future of the energy system
When asked to rank675
the importance of energy technologies in the clean energy transition,
respondents indicated that renewable energy was the most preferred technology with the highest
average rating of 4.37 (see the average rating, including the ranking of technologies in Figure
126). The least important role was envisaged for fossil fuels with carbon capture and
sequestration with the lowest average rating of 2.14.
675
In the survey, respondents were asked to rank each technology on a scale of 1 (important) to 5 (not
important). For the scope of this analysis, the ranking system was inversed for ease of readability. The
technologies with the highest average rating (or score) are therefore the most important technologies
and the ones with the lowest average rating (or score) are the least important.
301
Figure 126 : Stakeholder ranking of energy technologies (from 1 (not important) to 5
(important))
Source: Open Public Consultation.
Finally, respondents were requested to answer, in an open question format, the following
questions: [PC47] ‘What are the biggest opportunities, including for the wider economy? What
are the biggest challenges, including as regards public acceptance or the availability of land and
natural resources, related to these future developments?’
 Energy was raised by n=1031 (76%) respondents, with a variety of issues, sometimes
perceived as both opportunities and challenges. Renewable energy (as part of a clean or green
energy system) [n=455] was perceived as representing an opportunity to create new jobs but
also a challenge in terms of its intermittency, while energy efficiency [n=376] was
predominantly regarded as an opportunity, such as balancing increased energy demand and
reducing energy costs. Other issues raised included energy storage, smart grids and energy
cost and affordability. On balance respondents tended to perceive these as opportunities but
with challenges to their implementation.
 Mobility and transport were raised by n=470 (35%) respondents, with a variety of issues,
sometimes perceived as both opportunities and challenges. Electric vehicles are generally
4.37
4.34
4.04
4.00
3.80
3.71
3.56
3.47
3.01
2.92
2.51
2.14
4.30
4.27
3.83
3.91
3.74
3.72
3.54
3.41
2.96
2.82
2.53
2.07
4.59
4.58
4.37
4.31
3.99
3.69
3.63
3.67
3.18
3.29
2.42
2.39
Renewable energy from wind, solar or hydro [n=2587]
Energy efficiency reducing the need to produce energy
[n=2563]
Other [n=589]
Electricity storage (e.g. batteries) [n=2523]
Hydrogen (produced in a carbon-neutral manner) [n=2411]
Other forms of renewable energy, like geothermal, wave or
tidal [n=2529]
E-fuels derived from hydrogen [n=2304]
Biogas from agricultural and domestic waste [n=2477]
Solid biomass for heat and electricity production [n=2434]
Advanced Liquid Biofuels [n=2379]
Nuclear energy [n=2457]
Fossil fuels with Carbon Capture and Sequestration [n=2441]
[PC46] In the following table listing different energy technologies, please rank each
option in the table below on what role you think they will play in the clean energy
transition?
Average rating Individuals Professionals and organisations
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seen as an opportunity to reduce noise and air pollution, but also a challenge in ensuring the
sustainability of the source of the electricity, many respondents also seeing the mobility
sector as a challenging sector to decarbonise, especially with regards to aviation and
shipping.
 Education and research related issues were raised by n=575 (43%) respondents, with a
variety of issues, sometimes perceived as both opportunities and challenges. Innovation and
research [n=359] was perceived as an opportunity to create new jobs and growth, but also a
challenge in terms of investment needs. Funding and investment [n=221] was expected to be
a challenge in terms of mobilising sufficient funding from both public and private sources.
Opportunities were noted for the European Investment Bank and the European Investment
and Structural Funds to invest in research and infrastructure projects. Other issues raised
included acceptance and human adaptability, and education and public awareness.
 Public policy related issues were raised by 93% [n=1253] respondents, with a variety of
issues, sometimes perceived as both opportunities and challenges. Taxes and fiscal policy,
including subsidies [n=314] was perceived as an opportunity to shift production and
consumption patterns (tax reform) but also a challenge in terms of fossil fuel subsidies
distorting competition. Public investment – including in research and development (R&D)
[n=278] was perceived as an opportunity to leverage private investments and support
investments in key infrastructure, whilst it was also viewed as a challenge in terms of the
overall cost of the investments needed
 Issues relating to the wider economy were identified by 54% of respondents [n=731], with a
variety of sectors singled out, sometimes perceived as both opportunities and challenges.
Sustainable production [n=503] was perceived as an opportunity to stimulate a circular
economy, but also a challenge in terms of incentivising companies and industries to change
production patterns. Trade and economic growth [n=402] was perceived as an opportunity for
strengthening European competitiveness globally (by developing new technologies) but also
entailing challenges related to international competition.
 Sustainability concerns were raised by 66% [n=892] respondents. Destruction of natural
spaces (including deforestation, and the loss of biodiversity due to monoculture plantations)
was raised by many respondents, [n=794] highlighting challenges such as the conversion of
prime forests into forest plantations and soil degradation, while preserving natural spaces was
identified as an opportunity for adaptation. Biomass sourcing [n=237] was considered an
opportunity to support the bioeconomy and create jobs in rural areas, whilst also entailing
challenges relating to biodiversity and land availability concerns.
 Paradigm shift (such as major changes to production or consumption patterns) was identified
as a key factor by 66% [n=883] respondents, with a variety of issues, sometimes perceived as
both opportunities and challenges. Economic models – encompassing sustainable
consumption and production, circular economy and degrowth [n=624] was perceived as both
an opportunity and challenge to shift to more sustainable consumption patterns and means of
production. Lifestyles and work, including “fair transition”, local economies and inequalities
[n=434] represented both opportunities (creation of green jobs) as well as challenges in terms
of economic consequences for specific regions and industries.
7.1.4.4 Stakeholder opinion on the role of forests and land use
Respondents were asked to rank activities in the land use sector and their importance in terms of
reducing greenhouse gas emissions (see Figure 127). Stakeholder ranked the role of forests as
carbon sinks as the most acceptable and important land-use activity to increase CO2 absorption
303
with the highest average rating of 4.37 while the least acceptable activity was agriculture as a
source for bio-energy (based on food crops) with the lowest average rating of 2.43.
Figure 127: Stakeholder ranking of land-use activities (from 1 (not important) to 5
(important))
Source: Open Public Consultation.
Respondents were also asked to comment, in an open question format, on the role, possibilities
and challenges related to the land-use sector: [PC49] ‘What should be the role of the land-use
sector in reducing emissions and increasing absorptions? For what purposes should biomass be
used most to reduce greenhouse gas emissions? How and which sustainability concerns should be
addressed?’. This question received n=1042 responses.
On the question of the role of the land-use sector in emissions reduction a handful of key themes
emerged in responses:
 Increasing forest areas and improving forest management were among the main focuses of
respondents, with almost all respondents recognising the key role that forests play as carbon
sinks.
 Reduced livestock production was identified as an important way in which emissions could
be reduced, as both a large emitting activity and as part of a needed shift in diet.
 In particular, soils and also peatlands were identified as important carbon sinks that could
play an important role in emissions reduction and absorption.
 Other issues also mentioned, although less frequently, included the potential for urban
farming and the need for Bio-Energy Carbon Capture and Storage (BECCS).
On the question of for which purposes biomass should be used for emissions reduction, the
following key themes emerged from responses:
4.37
4.00
3.79
3.38
3.33
3.16
3.12
2.99
2.43
4.37
3.94
3.75
3.30
3.27
3.09
3.04
2.91
2.42
4.40
4.22
3.96
3.68
3.57
3.40
3.42
3.30
2.46
Forest as a carbon sink storing CO2 [n=2366]
Protecting and enhancing soil carbon stocks on agricultural
land [n=2061]
(Agriculture)(As a source for bio-energy) based on
agricultural wastes [n=2159]
Agriculture as a source of feedstock for bio-based materials
[n=2211]
Forest as a source of material for bio-based products
[n=2271]
(Agriculture)(As a source for bio-energy) based on woody
biomass (e.g. perennials, woody and herbaceous crops,…
Agriculture as a source for bio-energy [n=2205]
Forest as a source for biomass for renewable energy
[n=2297]
(Agriculture)(As a source for bio-energy) based on food
crops [n=2066]
[PC48] In the context of a long term strategy please rank each land-use activities
in the table below to indicate which are acceptable and can be important to
reduce greenhouse gas emissions and increase CO2 absorptions (not all options
need to be ranked)
Total Individuals Professionals and organisations
304
 Opposition to the use of biomass for energy was amongst the most commonly expressed
views with many respondents sceptical of the emissions reduction/neutrality and finding food
production the key purpose of cropland.
 Local production and consumption was preferred by respondents, particularly in context of
using forest residues or industrial wastes as fuels for heating.
 Construction and furniture materials were amongst the preferred uses for biomass.
 Other issues raised, but less frequently, included the possibility for biomass to be used to
improve soil carbon retention and to produce bioplastics.
Sustainability concerns were common to many responses, with the following key themes
emerging:
 Biodiversity concerns, from continued expansion of agricultural land, or increased
production of energy crops.
 Tropical deforestation, was raised as a key issue, with fears that EU demands for biofuels for
transport was causing indirect land-use change in third countries.
 Not to convert land from food to energy production, was noted as an important social
sustainability concern.
7.1.4.5 Facilitating the low-carbon transition through education, research and innovation
This section addressed the central role of accelerating research and innovation to facilitate the
transition to a low-carbon economy. Respondents indicated that awareness raising to change
attitudes, values and mind-sets could best be done at school through education alongside local
and regional and national and EU wide campaigning. Moreover, the energy, industry and
transport sectors were considered those on which R&D efforts should focus on primarily in the
coming decade to best support the low carbon transition.
Respondents answered the following questions in an open question format: [P52] ‘On which
cross-sectoral domains should R&D efforts focus in the coming decades? Is there a particular
need for large scale deployment of certain innovative technologies? Is there a different role for
authorities and private sector in support?’. Respondents [n=1 042] focused mainly on:
 Renewable energy was mentioned by 59% [n=611] of respondents.
 Energy efficiency, included in [n=506 responses], should be targeted and improved both for
industry and regular consumers (such as efficiency in buildings).
 Industrial processes, covered by [n=333 respondents], should receive further attention,
especially to target sectors and industries with process emissions. In this context, several
respondents mentioned the importance of CCUS technologies.
 Mobility and transport - electrification, charging stations, hydrogen, public transport – was
deemed important by [n=325 respondents]. Electrification was the most common theme in
this category.
 Energy storage - batteries, decentralized storage and supply, was highlighted by [n=199]
respondents.
 Hydrogen, mentioned by [n=188] respondents, should be further improved to develop
technologies such as hydrogen fuel-cells and power-to hydrogen for energy storage, but also
to decarbonise the transport sector.
305
7.1.4.6 Financing the low-carbon transition
More than half of the respondents indicated that the sector in which they are active requires
significant additional investments to undertake the transition to a low carbon economy, with
almost half of respondents acknowledging that there is a financing gap in their sector. In addition,
over 40% of stakeholders highlighted that companies are not transparent enough about climate
change and the low carbon transition and the financial risks that they face due to these changes.
With regards to financial risks there was a significant difference between respondent groups: only
17% of the individual respondents believed companies were sufficiently transparent, compared to
52% of those responding on behalf of a private enterprise, profession, trade of business
organisation.
Respondents were asked about their opinion on the public sector’s involvement in ensuring
adequate financing for the low carbon transition. A large share agreed that the public sector
should be more involved in ensuring adequate financing, either through direct investments (32%)
or by ensuring more low cost finance for sustainable investments (51%).
7.1.4.7 Meta trends
Respondents were asked which trends currently shape our societies that are important for
reducing greenhouse gas emissions. A vast majority of stakeholders considered the economic
transition towards a more circular economy, digitalisation and the shared economy positive
trends enabling the reduction of greenhouse gas emissions. The views were relatively more
dispersed when talking about the importance of further interdependency of sectors across borders
through globalisation, with a fairly even distribution of respondents being either positive (37%),
negative (27%) or neutral (37%) to this trend.
7.1.4.8 Actors of the low carbon transition
In this section, respondents were asked which non-state actors would have the biggest impact on
their sector’s contribution to deliver on the EU’s ambition [n=2405]. About a third of the
respondents expected towns and cities would have the most impact and some comparable shares
indicated regional governments and businesses. However, when looking at the responses of
private organisations and businesses676
, close to half of respondents (45%) expected businesses to
have the most impact. Respondents were further asked to provide examples, in an open question
format, of types of initiatives of particular importance to underline the role of such actors in the
low carbon economy and energy transition. Examples included:
 Infrastructure and spatial planning was identified as one of the crucial areas for action by
regional government, towns and cities.
 Action at different levels of governance, was noted as important, whilst EU and national
level seen as playing an important role in rule setting and major decisions, an important role
was foreseen for other actors in spatial planning (regional government) and in more practical
day-to-day issues (local/city government).
 Energy generation was identified by around 1/3 of respondents as an important area for
action and initiative with many examples focusing on local, decentralised renewable energy
generation (primarily solar PV), either by individual citizens or through cooperatives or
associations.
676
Sub-category ‘Private enterprise, professions, trade and business associations’ (n=322).
306
7.1.4.9 Adaptation
Respondents were asked to rank which actions they thought would be necessary to prepare for
and adapt to the likely effects of climate change in their place of living. Respondents [2 321]
indicate an overall high level of importance given to all adaptation measures. Adapting
agriculture to the changing climate, better understanding of the security effects of climate change
on the EU and increasing the amount of green areas in cities to cope with heatwaves and floods
were ranked as the top three measures.
Finally, respondents were also asked, in an open question format, which adaption measures were
of particular importance for their sector, and why [PC64] [n=704]. Key themes mentioned
included:
 Greater preparation is needed, was a common theme across every sector, with few if any
respondents believing they were already well prepared.
 Awareness raising was noted by many as an important step, with a strong perception that few
(including policy makers) really understood the impacts of climate change, the risks and
vulnerabilities it would bring and the types of actions that would be needed.
 Adaptation measures were highlighted for a handful of specific cases, including an increase
in number of green areas and trees in cities, improved insulation and cooling of buildings,
and improved insurance.
 Mitigation as adaptation was highlighted by some respondents, with one of the key
adaptation measures being to mitigate emissions sufficiently that less adaptation would be
needed.
 Better understanding how climate change impacts in third countries might affect the EU,
such as changed migration patterns or resource scarcity, was also mentioned by some
respondents.
7.1.4.10 Stakeholder opinion on the role of CO2 removal and storage
Respondents were asked to estimate and rate the role of various CO2 removal and storage
methods and technologies in the EU in delivering negative emissions, taking into account issues
such as economic and technical feasibility, storage potential, environmental integrity and social
acceptance.
Amongst the five proposed measures direct air capture received the lowest average rating, while
other measures, intensive afforestation and woody perennial plantations were in the top three.
The most important method of capture for individuals is intensive afforestation, while for
professionals it is other options. Options mentioned by professionals include: improved land and
forest management, the protection and restoration of forests and natural ecosystems (including
reforestation), BECCS, biochar, CCU, pre-combustion capture, the sea as a carbon sink and
oceanic algal blooms.
Carbon Capture and Storage (CCS) in onshore or offshore geological sites were ranked as the
least important carbon storage technologies, while respondents estimated increased permanent
stock in plants and soils and other methods to be the most important. Once again, professionals
opted for other options over the methods presented in the table, while individuals rated increased
permanent carbon stock in plants as the most important method. The other methods highlighted
by professionals include: restoration of forests and natural ecosystems, CCU, BECCS, carbon
stocks in the sea, bio char and wood products.
307
Finally, respondents were asked to comment on, in an open question format, [PC72] ‘What main
barriers do you see currently preventing the large scale deployment of CCS, including on how to
use it to generate negative emissions? What are the particular challenges related to biomass CCS?
What type of CCU (Carbon Capture and Utilization) would lend itself to create long term
storage? Are there other technologies that should also be considered? What policies do you think
the EU should pursue to better help development and deployment?’ Respondents [n=705]
highlighted the following aspects as being important:
 On barriers to large scale CCS: Efficiency and scalability [n=163], public support and
acceptability [n=62] and economic viability [n=49] were listed.
 Challenges to BECCS (bioenergy carbon capture and storage) [n=165] was an important
point of discussion among the responses, with major concerns expressed over the actual
emissions savings achievable with this technology, many doubted that negative emissions
could be achieved and that it may in fact be counterproductive given the energy inputs
needed (in its value chain) and diversion of resources from other technologies.
 Carbon Capture and Use [n=212] was identified as a potential opportunity, particularly in the
area of building and construction materials, fuels and for specific industrial sectors such as
steel, cement and chemicals. However, there were considerably more doubts over the
efficiency, cost and feasibility of applying CCU in the power generation sector, as well as
some opposition to further CCU in the oil and gas sector.
 Other technologies that could be considered: renewable energy [n=284], ecosystem-based
carbon capture (such as re- or afforestation)
 There was also a significant minority arguing that CCS was no solution and a more
fundamental paradigm shift was needed to avoid emissions in the first place.
 With regards to policies, the need for more pilot projects and research [n=190] was
highlighted, as well as further policy discussions on, for instance, the EU-ETS function and
pricing and in public funding of elements of the CCS value chain (e.g. transport and storage
infrastructure).
7.1.5 Results of the position paper analysis submitted to the consultation
Stakeholders
In addition to the OPC questionnaire, stakeholders could also submit position papers. In total,
173 papers were submitted by the end of the OPC, of which 39 already did in reaction to the
consultation of the roadmap677 678
.
Results
Roadmap consultation papers
Submissions under the roadmap consultation covered a broad range of topics. Some stakeholders
outlined their support for an EU strategy that is in line with the 1.5C goal of the Paris
Agreement, with the long-term goal of Europe attaining net-zero emissions by 2050. The
majority of respondents did however rather emphasise considerations and elements to be included
in the strategy. Common views were the need to ensure a global rule-based order (level playing
677
https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2018-3742094_en
678
In total, 39 papers were submitted but one submission was removed as it did not comply with the
European Commission’s rules for publishing feedback
308
field) for climate action, the need to invest in further innovation, ensuring a just transition,
continue to put energy efficiency first, the cost-effectiveness of continued use of the existing gasinfrastructure
and the prominent role of the EU ETS. Moreover, several stakeholders underlined
the importance of ensuring transparency in the drafting process of the Strategy, both with regards
to modelling, methodologies and assumptions.
National, regional or local authority (20 papers)
Six Member State governments (DK, FR, NL, PT, SE, UK) and NO submitted individual
attachments to the consultation. In addition, 14 members of the Green Growth Group679
submitted a joint statement. A number or local and regional authorities also took the opportunity
to express more detailed opinions under the consultation. Within this stakeholder group there was
in general strong support for an EU long-term strategy with a net-zero target by 2050 in order for
the strategy to be compatible with the 1.5C target of the Paris Agreement, or for the strategy to
explore at least one pathway compatible with such a target. The need to build on and take into
account the conclusions of the IPCC’s Special Report on the 1.5C target was further
emphasised. Moreover, several Member States further advocated for a revision of the consistency
of the current 2030 target with the 1.5C temperature goal of the Paris Agreement and the EU’s
revised long-term target.
Trade, business or professional association (49 papers)
Attachments from this stakeholder category covered a broad range of topics, reflecting the
variation of sectors covered. Approximately 20 stakeholders expressed support for an EU longterm
target of net-zero emissions/carbon neutrality by 2050. Several stakeholders also pointed to
the need for the EU to revise its 2030 target. However, representatives from in particular the
industrial, energy and employment sectors also emphasised the need of aiming for realistic
targets in relation to cost-efficiency, competitiveness and employment security (in the context of
a “just transition”). These are not necessarily incompatible with an ambitious 2050 goal, but need
to be taken into consideration. Several submissions highlighted the key role of the EU ETS in
driving the energy transition. Another aspect brought up by many stakeholders was the need for
the Strategy to promote and ensure long-term stability and predictability for actors and investors
on the market. With regards to specific technologies, the need to put efficiency first was raised
together with its cost-effective advantages, as well as the need to promote the further
development of CCUS technology. Furthermore, achieving a full decarbonisation of the power
sector in combination with further electrification was also promoted as crucial measures to
reduce emissions. The gas-sector further emphasised both the medium-and long-term benefits of
fuel switching from coal to gas – not only could gas provide stability in the grid to complement
intermittent renewable energy sources, but the possibility of using already existing infrastructure
would promote the cost-efficiency of the energy transition. Moreover, the need for the Strategy to
adopt a technology neutral approach, or at least to the extent possible avoid to pre-empt future
technological advances.
Non-governmental organisation, platform or network (22 papers)
Several stakeholders in this category argued for the EU to set as its long-term target to attain netzero
emissions by 2050 (or earlier), in light of the 1.5C target of the Paris Agreement. In this
context many alluded to the (then forthcoming) IPCC Special Report on the 1.5C. Additionally,
some stakeholders also advocated for a revision of the 2030 target. From the environmentalist
groups, a strong emphasis was given to the land use sector and the role or restoring, protecting
and preserving forests and other ecosystems. In this context, two stakeholders emphasised the
679
Comprising of 16 EU Member States and Norway
309
share of global emissions attributed to livestock farming and consumption of related products and
promoted a transition towards a plant-based diet. The importance of further promoting and
strengthening investments for research and development of clean technologies was also
highlighted across the stakeholder group. Not only will such investments be necessary to achieve
the necessary emission reductions, but also for the EU to retain its competitiveness and
leadership role internationally.
Private enterprise (14 papers)
All stakeholders but two in this category which submitted additional attachments operate in the
energy sector. Only one enterprise expressed a firm view on the long term target, advocating to
aim for carbon neutrality by 2050 and also called for a strengthening of the 2030 target to 45%.
Several companies commented on the prominent role of the EU ETS as the main tool to steer
European and sectorial decarbonisation, with some companies advocating an increase in its scope
and strengthening of the trading scheme. Moreover, there was also a strong emphasis on the
importance of decarbonising the power sector and to aim for further electrification. CCUS
technology was also frequently mentioned as an enabling tool to further reduce emissions,
requiring more investment in research and development and an enabling policy framework.
Research and academia (3 papers)
Three entities provided input under this category. They focused on food and nutrition security,
assessment of additional mitigation potentials of certain sectors in the EU, and road transport.
Professional consultancy, law firm and self-employed consultant (2 papers)
Two individual consultants provided input. The first entry presented a review of European and
international climate policies and the second entry discussed and outlined the future for a specific
hydrogen technology.
Other (24 papers)
Several individuals and groups of concerned citizens provided additional input to the OPC.
Topics covered included, inter alia, the presentation of alternative or, according to the authors,
disregarded technologies and innovations, the need to reduce meat consumption and the moral
imperative to reduce our overall ecological footprints.
7.1.6 Results of the stakeholder consultation conference
A stakeholder conference was held on 10th
and 11th
July, at the Université libre de Bruxelles680
.
More than 1000 people attended.
The discussion on the EU’s vision for a modern, clean and competitive economy was welcomed
by all speakers and panellists. It highlighted the need to have a unified European vision ahead of
COP24. Europe’s Long Term Strategy for Greenhouse Gas (GHG) emission reduction will not
only guide European efforts in the coming decades and serve as an example for other nations and
important stakeholders.
A number of themes were addressed. Some of the most important themes regard the trends of the
energy sector, the regulatory environment in the EU, as well as the social dimension of the lowcarbon
transition. Overall, there is consensus on the need for an ambitious long-term strategy,
with many participants acknowledging that in practice this means net zero emissions at some
680
The programme of the event is available at:
https://ec.europa.eu/info/sites/info/files/decarbonisation_hlc_juillet_2018_programmes_a3_v03_web_1.pdf
.
310
point, perhaps as early as 2040, but according to most around 2050. It was recognised that this
strategy should focus mainly on the long-term in order to help decision-makers focus on the long
term, despite their everyday distractions. As a result, the strategy should specifically include
attention for measures creating negative emissions. It should help set milestones for the shortand
medium-term also in order to stimulate timely action. Most panellists emphasised the need to
view the transition ahead as an opportunity, rather than a cost or a threat. In order to demonstrate
that, the cost of inaction should be communicated more clearly.
More specifically, many panellists agreed that the key to realising the transition lies in energy
efficiency and renewable energy, these being able to deliver 80-95% of the total change required.
Electrification of heating and transport, digitisation and the further growth of solar and wind
energy were seen among the major developments needed. Other technologies such as nuclear
fission and fusion, hydrogen, CCS and natural gas were all also discussed, as potential bridges or
future hopes for a low or zero carbon future. Yet traditional sources of energy still account for a
large share of the energy mix, so the focus should not only be on electrification, but also making
all energy cleaner. It was noted that despite progress on EU policy there remain important steps
still to be taken in many sectors. Particular areas that will be challenging include end-user sectors
such as heating and transport, and important technologies such as CCS lagging significantly
behind. In addition, discussions on the role and use of natural resources noted that agriculture and
forestry have a crucial role to play in meeting food and resource needs, whilst contributing to
decarbonisation and potentially acting as carbon-sinks.
Since climate change is not only a European problem, but a global concern, panellists agree that
Europe must collaborate with its partners and show leadership. The EU also faces a lot of
competition, though, notably from China. This means that while transitioning towards a lowcarbon
economy, Europe needs to stay competitive. To achieve this, there must be investment in
infrastructure, research and the labour force. Moreover, we need to ensure that supply and value
chains and innovators stay in Europe. Now is the time to build a comparative advantage in areas
that will be of value in the future (e.g. digitalisation, battery production). Furthermore, when
thinking about the future, we have to account for a mix of solutions (there is no ‘one’ solution).
This is why it is important to keep the conversation open and to consider diverse viewpoints.
Engaging citizens and gaining their support for the developments that are taking place was
highlighted by a number of panellists. Communications and regulation were cited as significant
drivers of citizen engagement. Beyond that, panellists called for a cohesive regulatory framework
that cuts across all sectors and that reduces the overlaps between different countries. Regulation
should encourage private investment and business opportunities, while discouraging the business
(and consumer) behaviour that needs to be phased out. Although some panellists called for a
stronger price signal on carbon, the oil & gas industry believes that it is already heavily taxed and
is not in favour of an increase in carbon pricing.
Affordability was also an important angle to the discussion, whilst some renewable energy and
energy efficiency solutions are low or negative cost, it is clear that not all low carbon options are
of this nature and there are significant implications for existing industries and households. These
should not be forgotten as millions of Europeans today are energy poor. In general, it is important
to keep in mind all the possible disruptions that a transition can cause and how to address them in
a fair, just and responsible way.
311
7.2 Details on methodology and modelling
7.2.1 Description of analytical models used
MAIN MODEL SUITE: PRIMES, GAINS, GLOBIOM, GEM-E3, E3ME
The main model suite used for the scenarios presented in this assessment has a successful record
of use in the Commission's energy and climate policy impact assessments. It is the same model
suite used for the 2020 and 2030 climate and energy policy framework, as well as for the 2011
Commission’s decarbonisation Roadmaps. The model suite has been strongly enhanced over the
past years in terms of more granular representation of both energy system and GHG emissions
and removals, and the detail of representation of technologies. The model suite covers:
 The entire energy system (energy demand, supply, prices and investments to the
future) and all GHG emissions and removals.
 Time horizon: 1990 to 2070 (5-year time steps)
 Geography: individually all EU Member States, EU candidate countries and, where
relevant Norway, Switzerland and Bosnia and Herzegovina.
 Impacts: on all energy sectors (PRIMES and its satellite models on biomass and
transport), agriculture (CAPRI), forestry and land use (GLOBIOM-G4M),
atmospheric dispersion, health and ecosystems (acidification, eutrophication)
(GAINS); macro-economy with multiple sectors, employment and social welfare
(GEM-E3).
The models are linked with each other in such a way, so as to ensure consistency in the building
of scenarios (Figure 128). These inter-linkages are necessary to provide the core of the analysis,
which are interdependent energy, transport and GHG emissions trends.
Detailed model descriptions can be found on the DG CLIMA website681
, as well as in the Impact
Assessments accompanying Clean Energy for All proposals682
(notably in the Impact assessment
of the revised Energy Efficiency Directive683
).
The modelling suite was recently updated, with an extension of the time horizon till 2070,
addition of a new buildings module, improved representation of electricity sector, more granular
representation of hydrogen and synthetic fuels produced with electricity (“e-fuels”), as well
updated interlinkages of the models to improve land use and non-CO2 modelling.
681
http://ec.europa.eu/clima/policies/strategies/analysis/models_en#Models.
682
https://ec.europa.eu/energy/en/news/commission-proposes-new-rules-consumer-centred-clean-energy-
transition
683
https://eur-lex.europa.eu/resource.html?uri=cellar:56466305-b7f6-11e6-9e3c-
01aa75ed71a1.0001.02/DOC_2&format=PDF
312
Figure 128: Interlinkages between models
Source: E3MLab/ICCS684
.
MACRO ECONOMIC MODELLING
The results of these energy-system scenarios served as input for the macroeconomic modelling.
The assessment of the macro economic impacts of various decarbonisation pathways was
performed using JRC-GEM-E3685
, E3ME686
, and QUEST687
. In addition, the energy-system
scenarios also serve as input for assessing the health implications of the scenarios, via the model
GAINS.
FORECAST
The above model suite was complemented by the bottom-up industry model FORECAST688
. It is
based on a simulation approach considering the dynamics of technologies and socio-economic
drivers. The model allows addressing various research questions related to energy demand in
industry, including scenarios for the future demand of individual energy carriers, like electricity
or natural gas, calculating energy saving potentials and the impact on greenhouse gas (GHG)
emissions, as well as abatement cost curves and ex-ante policy impact assessments.
Energy-intensive processes are explicitly considered, while other technologies and energy-using
equipment are modelled as cross-cutting technologies. The energy-intensive processes module
covers 76 individual processes and products regarding their production output and specific
energy consumption.
Saving options unfold their total impact on energy consumption and GHG emissions by diffusing
through the modelled technology stock and, thus, reducing the specific energy consumption or
684
http://www.euclimit.eu/Default.aspx?Id=2
685
https://ec.europa.eu/jrc/en/gem-e3/model
686
https://www.camecon.com/how/e3me-model/
687
https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/economic-
research/macroeconomic-models_en
688
Fleiter et al (2018), A methodology for bottom-up modelling of energy transitions in the industry sector:
The FORECAST model, https://doi.org/10.1016/j.esr.2018.09.005
313
specific process-related emissions of individual production processes. Saving options can be
incremental changes as well as radically new production processes. The diffusion of saving
options is based on the payback time, which depends on energy savings, energy prices and the
carbon price.
The FORECAST model is designed as a tool that can be used to support strategic decisions. Its
main objective is to develop scenarios for the long-term development of energy demand and
greenhouse gas emissions for the industry. The model considers a broad range of mitigation
options combined with a high level of technological detail. The future production capacity by
product and the choice of production processes are exogenous input to the model, while the
investment in energy efficiency measures and heat supply technologies are based on a detailed
simulation of investment decisions.
Detailed model description of FORECAST can be found in Annex 1 of the report summarising
the relative modelling work performed for the Commission.689
Figure 129 shows the simplified
structure of FORECAST.
Figure 129: Overview of the bottom-up model FORECAST
Source: FORECAST.
7.2.2 Construction of scenarios
7.2.2.1 Baseline scenario developed with PRIMES, GAINS, GLOBIOM suite
In order to assess the trajectory that is entailed by the recent policies and objectives adopted, a
Baseline scenario was developed. As described in Section 2.2.2, EU and its Member States have
689
ICF & Fraunhofer ISI (2018), Industrial Innovation: Pathways to deep decarbonisation of Industry. Part
2: Scenario analysis and pathways to deep decarbonisation, forthcoming
Processes
Production [t/a]
- by process
Value added [€/a]
- by sub-sector
Employment [Pers./a]
- by sub-sector
Saving option
diffusion
Buildings stock
model
Heating systems
stock model
Bottom-up energy
balance
Saving options
diffusion
System efficiency
Steam generation
stock model
Fuel switch
by sub-sector, energy carrier, temp. level, end-use, country
Space heating &
cooling
Steam & hot water
Electric motors
& lighting
Furnaces
Macro
Material efficiency Circular economy
Calibration
Cross-cuttingBottom-up
CCSdiffusion
Structural change
Load curves and
demand response
Regional diss-
aggregation
Excess heat
Drivers
- GDP
- Population
- Energy prices
- Temperature
- Business cycle
Policy
- Taxes
- CO2-price
- Standards
- Grants
- OPEX support
Technology
- Efficiency
- Savings
- CAPEX
- OPEX
- Diffusion
boundaries
- Learning
- Emissions
- Lifetime
- Preferences
Input data
Structure
- Energy balance
- Emissions
balance
Results
Energy demand
- Final energy
- Delivered energy
- Useful energy
GHG emissions
- Energy-related
- EU ETS
- Process related
Costs
- Investment
- Policy cost
- Energy spending
Indicators
- Levelised costs
of process heat
- Energy savings
- Technology and
fuel mix
- SEC by process
- Technology
Market shares
- CHPgeneration
- Frozen efficiency
- Heat and cold
temperatures
Process energy
demand
314
recently agreed to strengthen the set of policies and mandatory objectives that already guide EU's
decarbonisation and energy transformation up to 2030. In addition, these policies will continue
pushing further GHG emissions reduction, and increasing energy savings and renewable energies
deployment after 2030, either because they do not have a "sunset clause" (notably ETS, and since
recently, Article 7 in revised EED), or because of the technological learning and cost reductions
that they are expected to induce. Moreover, most actions in the energy system have long-term
impacts (e.g. construction of well-insulated houses, efficient power plants or other types of
infrastructure). The Baseline captures these dynamics, but it needs to be emphasised that no
intensification of policies post-2030 was assumed and no target for GHG emissions reduction in
2050 was set.
Baseline scenario largely builds on the Reference scenario 2016 (REF2016)690
, keeping the
macroeconomic projections, fossil fuels price developments and pre-2015 Member States
policies as implemented in REF2016691
. It applies the same decision-making and cost-accounting
discount rates as REF2016 (see more information on this topic in Section 2.6.1 of REF2016
publication).
The Baseline assumes the achievement of the energy and climate 2030 targets692
, as adopted by
EU leaders on October 2014693
, further refined on May 2018 with the agreement on the Effort
Sharing Regulation and enhanced on June 2018 with the agreement on the recast of Renewable
Energy Directive and the revised Energy Efficiency Directive. The Baseline thus incorporates
several major recently agreed pieces legislation as well as recent Commission proposals:
- The revised EU ETS Directive (Directive (EU) 2018/410) which entered into force on 8
April 2018694
.
- The LULUCF Regulation (Regulation (EU) 2018/841) which entered into force on 9 July
2018695
.
- The Effort Sharing Regulation (Regulation (EU) 2018/842) which entered into force on 9
July 2018696
.
- The Energy Performance of Buildings Directive (Directive (EU) 2018/844) which
entered into force on 9 July 2018697
, according to which new buildings are assumed to be
nearly zero-energy buildings as of 2020;
690
The "EU Reference Scenario 2016 – Energy, transport and GHG emissions - Trends to 2050"
publication report describes in detail the analytical approach followed, the assumptions taken and the
detailed results, see: https://ec.europa.eu/energy/sites/ener/files/documents/ref2016_report_final-
web.pdf
691
Also the same assumptions are kept throughout all PRIMES scenarios on heating and cooling degree
days which reflect the impact of climate change; but the possible effects on availability of hydropower
or biomass are not captured.
692
The 2030 climate and energy framework did set three key targets for the year 2030: (a) at least 40% cuts
in greenhouse gas emissions (from 1990 levels), (b) at least 27% share for renewable energy, and (c) at
least 27% improvement in energy efficiency. They built on the 2020 climate and energy package.
693
Conclusions of the European Council of 23 and 24 October 2014.
694
Directive 2010/31/EU of the European Parliament and of the Council of 14 March 2018 amending
Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and
Decision (EU) 2015/1814.
695
Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the
inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the
2030 climate and energy framework, and amending Regulation (EU) No 525/2013 and Decision No
529/2013/EU.
696
Regulation (EU) 2018/842 of the European Parliament and of the Council of 30 May 2018 on binding
annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to
climate action to meet commitments under the Paris Agreement and amending Regulation (EU) No
525/2013.
315
- The Commission proposal for the recast of the Renewable Energy Directive698
. In its
agreed version by the European Parliament and the Council on June 14th
2018 it features
a 32% overall RES EU target;
- The Commission proposal for the revision of the Energy Efficiency Directive699
. In its
agreed version by the European Parliament and the Council on June 20th
2018 it features
32.5% overall Primary Energy Consumption and Final Energy Consumption target
(compared to 2007 Baseline), as well as a continuation of Art 7 of EED post-2020
without a sunset clause;
- The Commission proposal for the revision of the Eurovignette Directive700
;
- The Commission proposal for the revision of Combined Transport Directive701
;
- The Commission proposal for the revision of Clean Vehicles Directive702
;
- Regulation on electronic freight transport information703
- The Commission proposal for new CO2 standards for LDVs704
and HDVs705
.
It does, however, foresee a continuation of policies impacting non-CO2 emissions, as included in
the REF2016, but updated to include the impact on non-CO2 emissions from reductions in fossil
fuel consumption in Baseline.
Importantly, the Baseline incorporates an update of technology assumptions as conducted under
the ASSET project706
and, concerning transport, as conducted for the purpose of the recent
Commission's legislative proposals707
.
Baseline has been specifically built for the purpose of the development of long-term
decarbonisation scenarios. It does not reflect specific, short-term Member State policies, and, in
particular, no consultation with the Member States has taken place to verify that current or
updated policies are adequately represented, as currently being developed under the NECPs.
697
Directive (EU) 2018/844 of the European Parliament and of the Council of 30 May 2018 amending
Directive 2010/31/EU on the energy performance of buildings and Directive 2012/27/EU on energy
efficiency.
698
COM/2016/0767 final/2 - 2016/0382 (COD)
699
COM/2016/0761 final - 2016/0376 (COD)
700
COM/2017/0275 final 2017/0114 (COD)
701
COM/2017/0648 final - 2017/0290 (COD)
702
COM/2017/0653 final - 2017/0291 (COD)
703
COM(2018) 279 final
704
COM/2017/0676 final - 2017/0293 (COD)
705
COM/2018/0284 final
706
Modelling scenarios for development of the energy system is highly dependent on the assumptions on
the development of technologies - both in terms of performance and costs. While these assumptions
have been traditionally developed by the modelling consultants, based on a broad and rigorous
literature review, the Commission is increasingly seeking a review of these technologies by
stakeholders to make them even more robust and representative of the current projects as well as
experts’ and stakeholders’ expectations. This is why a dedicated project was launched by the
Commission in early 2018 to ensure robustness and representativeness of the technology assumptions
in model PRIMES by reaching out to relevant experts, industry representatives and stakeholders, who
are in possession of the most recent data in the different sectors. The project was concluded in July
2018 and its final report (including the finalised technology assumptions) is available here:
https://ec.europa.eu/energy/en/studies/review-technology-assumptions-decarbonisation-scenarios
707
RICARDO, 2016, Improving understanding of technology and costs for CO2 reductions rom cards and
LCVs in the period to 2030 and development of cost curves,
https://ec.europa.eu/clima/sites/clima/files/transport/vehicles/docs/ldv_co2_technologies_and_costs_to_
2030_en.pdf
316
7.2.2.2 Decarbonisation scenarios developed with PRIMES, GAINS, GLOBIOM suite
The Commission's analysis based on the PRIMES, GAINS, GLOBIOM model suite explores
eight economy-wide scenarios to achieve different levels of ambition, covering the potential
range of reduction needed in the EU to contribute to the Paris Agreement's temperature objectives
of between the well below 2°C, and to pursue efforts to limit to 1.5°C temperature change. This
translates into GHG emissions reduction for the EU in 2050 (compared to 1990) in the range
between -80% (excluding LULUCF) and -100% including LULUCF (i.e. achieving net zero
GHG emissions). All decarbonisation scenarios are based on the Baseline and have identical
technology assumptions. The general logic of the decarbonisation scenarios is presented in
section 4.1.
The decarbonisation scenarios can be split into three different categories, depending on the level
of GHG emissions reduction achieved. The pathways examined in each scenario category aim to
show how the desired level of reductions can be delivered if the current policy framework
(presented in the Baseline) is further intensified post-2030, each time intensifying the deployment
of certain technologies (or consumer choice in one scenario) in order to obtain stylised,
explorative pathways.
1. Scenario Category 1: contains scenarios achieving emissions reduction contributing to
Paris Agreement goal of well below 2°C, translated into a target of -80% GHG in 2050
(excluding LULUCF) and a continuing GHG emission reduction trend after 2050
towards net zero GHG emissions. Five pathways were considered, building on the
Baseline Scenario. Three of them focused more on the higher penetration of
decarbonised energy carriers (requiring a significant change in energy supply sectors),
while two put more emphasis on the demand side.
a. Scenarios with GHG reductions driven by decarbonised energy carriers:
i. Electrification (ELEC), including as key action electrification of the energy
demand and thus higher electricity supply
ii. Hydrogen (H2), including as a key action deployment of e-hydrogen in the
energy demand sectors and thus hydrogen production on the supply side
iii. E-fuels (P2X), including as a key action deployment of e-fuels (e-gas and eliquids)
in the energy demand sectors and thus e-fuels production on the
supply side.
b. Scenarios with demand driven GHG reductions:
iv. Energy Efficiency (EE), including as a key action energy efficiency in
buildings, industry and transport
v. Circular Economy (CIRC), including as a key action circular economy in the
industry and (to a more limited extent) in transport
2. Scenario Category 2: A scenario (COMBO) combining the pathways of Scenario
Category 1 on a moderate basis, aiming for further emissions reduction beyond the
ambition of well below 2°C. No specific emissions reduction target was assumed for this
scenario, but by construction, the emissions reduction fall between the ones of Scenario
Category 1 and Scenario Category 3, seeing a continuing GHG emission reduction trend
after 2050 towards net zero GHG emissions.
3. Scenario Category 3: Highest GHG reductions scenarios, contributing to Paris
Agreement goal of pursuing efforts to limit to a 1.5°C temperature change, translated to
a target of around -100% GHG (including sinks), i.e. net zero GHG emissions in 2050.
The two scenarios of this category build on the COMBO scenario and assume further
intensification of the implementation of actions and technologies included in that
317
scenario. In addition, net-zero emissions are achieved by compensating with negative
emissions for the “harder to abate” emissions (e.g. agriculture708
, transport), with one of
these two scenarios assuming changes in lifestyles compared to today, further reducing
GHG emissions.
i. Negative Emissions Technologies (1.5TECH), including as a key
complementary action the development of negative emissions as of 2050
(in significant amounts).
ii. Sustainable Lifestyles (1.5LIFE), including as a key complementary
action the change in consumer choice709
in transport and circular
economy in the industry.
Although each scenario, by construction, promotes certain elements stronger than others, the
scenarios are not examined as extreme options (e.g. the “hydrogen economy”, the “e-fuels
economy”, etc.), but as feasible/realistic pathways for the future based on current knowledge.
The projections of all eight scenarios tend to be quite close - almost identical - until 2030. This is
because they share the same policy drivers. The differences start becoming more visible post-
2030 and in particular closer to 2050 when deployment of different energy carriers and level of
demand becomes more differentiated, low carbon technology costs further reduce depending on
deployment, existing infrastructure (be it power generation plants, industrial sites or buildings) is
replaced or refurbished. This also reflects the inertia of the energy system and the economy as a
whole. Projections start diverging even more post-2050.
In all scenarios, deep decarbonisation is required for the ETS sectors, such as power and industry.
The purpose of the scenarios is to show the technological transition pathways available to these
sectors. In the modelling, technology choices by enterprises in the ETS sectors are driven by (i) a
carbon price and (ii) the scenario specific context. The development of the carbon price is a key
driver for these scenarios to reduce emissions but not the only one.
Carbon price represents a stylised price signal. It triggers the cost-effective deployment of zero
carbon technologies and alternative fuels by the power sector and industry. Cost-effective choices
in the power sector are of particular importance in scenarios where demand for electricity is very
high. However, which particular alternative fuel is chosen (for instance, whether hydrogen, e-gas,
or electricity is preferred) also depends on the technological and infrastructural context of the
scenario. This context is the result of coordinating policies, which develop infrastructure and
pursue R&D&I on enabling technologies, as well as setting producer expectations, consumer
preferences and public acceptance. These coordinating policies are what varies across scenarios.
As a result, industrial maturity and availability of technologies and alternative energy carriers
vary per scenario.
708
The scenarios modelled scenarios have not taken into account the potential of marine resources. The
emissions could be offset by switching to other food production sectors which are already greenhouse
gas emission negative, such as aquaculture production from shellfish and seaweed
709
As to the term of consumer choice it is important to emphasise that some consumer choice is part of
“energy efficiency family” of measures – when it concerns reduction of energy consumption per
specific activity. Consumer choice can also be in the “circular economy family” – when it relates to
reducing waste, recycling, reusing. Finally, consumer choice might mean also reducing an activity (e.g.
not taking a flight because of the carbon footprint or taking instead the train) and such measures were
modelled in 1.5LIFE scenario.
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The stylised carbon price assumed increases significantly under all scenarios, reaching 28
EUR/tCO2 in 2030 and then increasing to 250 EUR/tCO2 in 2050 under the 80% reduction
scenarios and 350 EUR/tCO2 under the scenarios that achieve net zero GHG emissions by 2050.
Real carbon price developments will be different and depend on numerous factors, including the
deployment of other policies and how they impact technology costs and deployment. For this
assessment with the PRIMES model suite it was not chosen to vary for instance other policy
levers and see how carbon prices would be impacted.
In the following, the specific characteristics and assumptions underlying the modelling of all
eight scenarios are presented, specifying which are common and which are pathway specific.
Scenario Category 1
The scenarios achieving emissions reduction well below 2°C have many similar characteristics.
Table 1 in Section 4.1 summarises the common characteristics and assumptions of Scenario
Category 1, which are also briefly discussed below.
Power decarbonisation
Continuing and further intensifying EU efforts to achieve the 2030 energy and climate targets,
extend and enhance the current trend of decarbonisation of the power sector in the long-term. The
power sector achieves decarbonisation mainly by the increasing deployment of renewables,
complemented by a stable and slightly increasing nuclear generation and a limited710
installation
of CCS units in the few remaining fossil fuels based power generation plants. Production of
district heating and industrial steam also decarbonises, mainly through the use of renewable
energy.
Electrification
This, in turn, facilitates the increasing electrification of the final energy demand, as progressively
electricity becomes an affordable and zero-carbon energy carrier. In industry, the gradual
increase of carbon prices post-2030renders fossil fuel energy carriers increasingly unfavourable.
Transport (especially light-duty vehicles) and buildings switch partly to electricity, driven by
specific drivers supporting the decarbonisation objectives. For transport in particular,
electrification is driven by the assumption of more stringent CO2 standards post-2030 and
policies encouraging shift to lower emission transport means and modes supporting
electrification (e.g. rail). For buildings, it is the multiple benefits of heat pumps (deployment of
renewables, energy efficiency and emissions abatement) that drive their deployment, in particular
in highly insulated, new and refurbished, buildings.
710
Due to limitations in geological storage and transport infrastructure of CO2.
319
Table 26: Major common characteristics of Scenario Category 1
Deployment of renewables and more flexible power system
The decarbonisation of the power sector is due largely to the mass deployment of variable RES,
especially wind and solar. To facilitate the integration of variable RES, the EU’s power system
becomes more flexible thanks to an extension and improved operation of the grids, including the
interconnectors, the installation of significant storage capacity, and the increased contribution of
demand response. While developments till 2030 are driven by the RES targets, the main driver
post-2030 is the relative competitiveness of available technologies, taking into account the price
signal delivered by the carbon price. The renewable energy sources are increasingly used in
heating and cooling, as well as in transport, where the emergence of advanced biofuels (including
biogas) is the main enabler. Their penetration though is limited by their economic and production
• Around -80% GHG emission reductions in 2050 (excluding LULUCF)
Level of Ambition
• Market Coordination for infrastructure deployment.
• Significant learning by doing for low carbon technologies.
Main Common Assumptions
• Intensification of Energy Efficiency post-2030 across the energy system.
• Average renovation rate of buildings post 2030 is minimum double than the
historical rates.
• Smoothened electricity consumption patterns, driven by increased selfconsumption,
demand response and digitalisation (making smart
appliances/building control functions wide-spread.
• Development of electricity storage for better integration of RES
• Moderate circular economy measures, with increased resource efficiency
and improved waste management compared to today
No Regret Options
• High penetration of RES in Power Generation, but also in heating & cooling.
• Increase in the advanced biofuel (and bio-methane) mandate in Transport,
reaching at least 25% in total transport fuels (excluding electricity and
hydrogen) by 2050.
• Biomass imports limited post-2030, close to 2015 levels (approx. 12 Mtoe)
Renewable Energy
• Power is nearly decarbonized by 2050.
• Nuclear still plays a role in the power sector.
• CCS deployment faces limitations until 2050. These are relaxed post-2050.
Power Sector
• Higher intensity of policies post-2030 relative to the Baseline.
• Measures increasing the efficiency of the transport system (i.e. digital
technologies, connected, cooperative and automated mobility, smart
pricing, encouraging multi-modality and shifts to lower emission transport
modes).
• Ambitious CO2 standards for LDVs and HDVs in all scenarios.
• Connected, cooperative and automated mobility.
Transport Sector
• Common carbon price for all scenarios in Scenario Group 1.
ETS
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potential, the constraints related to the sustainability criteria of biomass and competing uses in
non-energy applications in industry (wood and bio-feedstock).
Energy efficiency
Another major trend appearing in all scenarios is the decreasing energy intensity of the energy
system, due to regulatory incentives for energy efficiency, as well as cost-effectiveness of such
measures in the decarbonisation context. The intensification of the 2030 policy framework,
together with technology improvements and electrification, to name some of the main factors,
greatly boost energy efficiency in industry, buildings and transport. This is further supported by
digitalisation, making smart appliances/building control functions wide-spread.
Despite the many similarities across these scenarios, differences do exist. The common features
described above lead to significant GHG emissions reduction, but not up to the desired levels.
Reducing the remaining emissions require additional actions, especially in the sectors where
emissions are “harder to abate”, such as in industry (iron & steel, chemicals, non-metallic
minerals) and transport (heavy-duty vehicles, aviation, waterborne transport). Literature review
and discussions with stakeholders identified the availability of different options to mitigate these
emissions, which are reflected in the differences between the scenarios.
In the ELEC scenario, electricity becomes the vector for reducing emissions in the sectors where
emissions are harder to abate. In transport, more stringent CO2 standards are assumed for LDVs
compared to the other scenarios of this category (e.g. 16g CO2/km in 2050 and zero from 2060
for cars), driving electrification faster. The scenario also assumes penetration of battery HDVs
for shorter distances and trucks with pantographs for longer distances. Electric HDVs have a
more significant share than in other scenarios, especially concerning heavy goods vehicles for
shorter distances and busses. Electrification of inland navigation (inland waterways and national
maritime) and aviation remains a niche solution. Electrification of rail is further intensified. The
strong penetration of efficient heat pumps is driving further emissions reduction in buildings. For
industry, the effort focuses on strong electrification where fuel shift is possible, and in particular
of high-temperature industrial process heat.
H2 scenario foresees high deployment of hydrogen in final uses in transport, buildings and
industry, benefiting from possible applications that are currently known. This is facilitated by
properly adjusting the gas distribution grid and heating equipment to accommodate high shares of
hydrogen (allowing for a mix up to 50% in gas distribution in 2050 and 70% in 2070). Dedicated
infrastructure is assumed to facilitate high shares of hydrogen in transport. Additionally, the
blending of biogas quantities in the gas distribution grid, further reduces the quantity of fossilbased
natural gas, therefore, providing low carbon distributed gas to the final consumers (for
heating uses in buildings, industry and for heat production). Moreover, the scenario assumes
direct use of hydrogen in high-temperature industrial furnaces, produced locally via electrolysers.
In transport, some competition between hydrogen and electricity takes place for cars and vans,
the main difference coming from vehicles that cannot run on batteries, such as long mileage cars,
coaches and trucks. The hydrogen refuelling infrastructure, assumed to be deployed by 2050 in
this scenario, facilitates the uptake of hydrogen for these uses. The requirements for hydrogen in
the demand-side sectors increase the electricity needs of the system; on the other hand, the
hydrogen production and its use/storage in the grid provides at the same time medium to longterm
energy storage capacity. This is particularly important, as the large majority of additional
electricity required by the electrolysers to produce the hydrogen comes from variable renewable
energy sources.
The P2X scenario is similar to the H2 scenario, but hydrogen becomes mainly an intermediate
feedstock for the production of e-fuels (e-gas and e-liquids). E-fuels have the advantage of
having the (almost) same chemical properties as their fossil counterparts. However, their
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production is energy intensive, as a further transformation step is required, after the hydrogen is
produced via the electrolysers. Moreover carbon feedstocks are required, their future availability
at the required quantities being quite uncertain711
. The distributed gas in this scenario constitutes
of a combination of e-gas and biogas to provide end-users with a distributed gas of identical
quality as today, but with very low remaining emissions. For the transport sector, the use of eliquids
would allow for the reduction of emissions in transport modes where emissions reduction
are costly, in particular where electrification is difficult or where developing an alternative
technology/infrastructure (fuel cells and hydrogen infrastructure) requires significant changes.
The use of e-fuels in transport would reduce the biofuel requirements of the transport sector,
leaving biomass available for other uses, such as for heat, electricity and as a feedstock. Towards
2050, hydrogen is produced by electrolysis, e-gas in methanation plants and e-liquids via various
chemical routes, notably the methanol route and the Fischer-Tropsch process. To be carbon
neutral, both e-gas and e-fuel production use CO2 captured from the ambient air and biomassusing
power plants. The production of e-fuels implies that this scenario sees an even higher
electricity demand than the H2 scenario, the highest one among all scenarios, as the production of
e-fuels requires a further transformation step after the production of hydrogen. The production of
e-fuels, however, also provides medium to long-term storage services for the additional
electricity generation requirements, which are mainly satisfied through additional variable
renewable energy investments.
The above scenarios focus on alternative energy carriers. Two more scenarios focus more on
demand-driven GHG emissions reduction.
In the EE scenario, high levels of energy efficiency are pursued in all sectors, going beyond
electrification options and intensifying the use of energy efficiency technical options, especially
in the residential sector and industry. Energy consumption is thus reduced in all final
consumption sectors and particularly in buildings. The latter is driven by strong improvements of
energy performance of buildings, higher and more in-depth renovation rates, strong
improvements in heating and cooling equipment (as well as for water heating, cooking) and
electric appliances, as well as the deployment of Building Automation and Control Systems.
Energy efficiency improvements are also observed in industry, with higher efficiency of furnaces
and in low enthalpy heat uses, as well as with the increase of waste heat recovery mechanisms. In
transport, energy efficiency is achieved by the higher electrification of transport, very similar to
the ELEC scenario, combined with an intensified modal shift towards rail, waterborne transport
and collective transport modes in the urban environment.
The CIRC scenario is the one where GHG emissions reduction are driven by measures outside
the energy system. Although very close in the concept with EE scenario, reductions are not
driven by energy savings, but mainly by the more general concept of resource and material
efficiency. Recycling and re-use, product and process innovation, improved waste management,
711
The uncertainty in regards to the availability of resources to produce the carbon molecule used to
produce clean hydrocarbons should be emphasized. In particular this becomes an increasingly
important issue when considering the decreasing CO2 emissions and thus the reduced amounts of
carbon available in the system. Its origin may be biogenic, coming e.g. from the burning of biomass, or
from the air through air capture. There will also be some remaining emission sources from distributed
process emissions that might be used for the capture and use of carbon (like lime, bricks, ceramics,
clinker). The constraints in the availability of carbon are considered and accounted for in PRIMES. The
biogenic origin of the carbon molecule is identified in the model and comes from capturing CO2 from
biomass burning installations. It is modelled endogenously, and thus respects availability constraints
regarding both biomass and CO2 to capture. The air capture origin of the carbon molecule does not
consider land constraints. This is a result of the technological assumptions for the long-term, implying
relatively low land use for air capture.
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cascading use of materials and material substitution, are the main drivers of the reductions712
.
Two sectors demonstrate the impacts of going along this pathway:
 Industry benefits from increased and improved recycling, less contamination and
downgrading of materials and material substitution (especially via 3D printing), reduction
of the need especially for virgin materials (steel, non-ferrous metals, plastics, paper,
construction materials) and shift of production to the less energy demanding and lower
carbon intensity secondary materials (higher recycling). Therefore primary industrial
output reduces in volumes, although at the same time industrial value chains have an
increased value added focused on recycling and re-use, requiring increased services,
leading to reduced energy consumption and GHG emissions. The assumed impact on
primary production for the modelling in CIRC is illustrated in the below table.
 Transport benefits from integrating the sharing economy and connected, cooperative and
automated mobility, and making full use of digitalisation, automation and mobility as a
service. The vehicle fleet is smaller relative to the Baseline, but it is utilised more, it
displays higher occupancy rates, and it is renewed faster. The reduced vehicle fleet also
has secondary impacts on the industrial output of materials used in the car industry.
Finally, improved logistics and shifts from long-distance freight to near-sourcing is
assumed, together with shifts towards rail and waterborne transport. In energy terms, there
is no reliance on hydrogen or e-fuels in the transport system, but biomass use increases
coming in part from biomass that is not needed to reduce industrial emissions.
 In energy terms, there is increased waste heat recovery, and conversion of remaining waste
material into useable heat, electricity or fuel. Improved management and collection of
organic waste and biomass cascading, leading to the use of more sustainable biomass
either as a feedstock or for the production of biogas in local bio-refineries713
.
Table 27: Assumed impact of circular economy on energy intensive industries primary
production in the CIRC scenario
2050
Reduction of volumes (% change from baseline projection)
Iron & Steel -6%
Non Ferrous -3%
Chemicals -9%
Paper & Pulp -12%
Non Metallic Minerals -8%
The differences in the five pathways examined, apart from the drivers for achieving the desired
GHG emissions reduction, also have important implications for infrastructure, regarding both
changes needed in existing infrastructure and additional needs for new infrastructure.
712
The assumptions regarding the dynamics of the circular economy are somewhat conservative, as they
consider continued expansion of circularity also after 2050; therefore, 2050 is not the peak (over the
projection period) of the circular economy development in the CIRC scenario.
713
Due to the similar main characteristics of EE and CIRC, focusing more on demand-driven emissions
reduction and sharing only two low carbon energy carriers (electricity and biomass), a conscious choice
was made to push more electricity consumption in EE and more biomass consumption in CIRC, in
order for the two scenarios to present a sufficient variance in their results. As electrification is a means
of improving energy efficiency, notably in residential and transport, this option fits more with the
energy efficiency goal of EE. The CIRC does not focus on energy efficiency primarily and thus did not
need electrification as much as the EE. However, CIRC could also assume similar electrification as the
EE, which would then result in lower biomass use.
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All scenarios require significant new investments in power infrastructure and
recharging/refuelling infrastructure for vehicles and the only difference among scenarios is the
required scale. The H2 and P2X scenarios allow the use of existing infrastructure for gas, thus
allowing the use of existing heating equipment for buildings and industry. In transport, rolling out
of refuelling infrastructure for H2 is needed at a large scale, in particular in the H2 scenario. The
P2X scenario also allows the use the existing infrastructure for liquids and requires the relatively
lower deployment of recharging/refuelling infrastructure for vehicles. ELEC and EE require in
many cases replacement of existing equipment especially for long distance, and heavy duty
transport and require the use of high quantities of biofuels or technological developments which
are today at a low level of readiness. Finally, going even beyond the infrastructure, CIRC
assumes a change in the business model of road transport and industry, and requires improved
waste management practices.
The needs for infrastructure investments is also a major factor determining the speed at which
different sectors can decarbonise. As an example, for the industry, ELEC and EE deliver
emissions reduction faster as there is a lot of potentials that can be harnessed early, but then there
is a plateau as for deeper emissions reduction technological breakthroughs are needed. CIRC
delivers steady emissions reduction over the horizon, as the economy becomes circular. On the
other hand, P2X and H2 require the decarbonisation of a significantly large power sector and, for
H2 scenario, the investments in direct hydrogen applications. These two scenarios also depend on
an additional factor, technological competitiveness. Electrolysis and direct hydrogen applications,
but also electrification of high-temperature furnaces and capture of CO2 from the air, are
expected to become competitive technologies closer to 2050.
Table 1 in section 4.1 provides an overview of scenario construction. Table 28 below summarises
the main differences in scenario assumptions.
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Table 28: Main differences in assumptions of Scenario Category 1
The pathways examined in Scenario Category 1 achieve the emissions reduction for the well
below 2°C target, i.e. a 80% greenhouse gas emissions reduction (excluding LULUCF) by
exploring the possibilities offered by the leading paradigm/solution/technology of each scenario.
They do not, however, propose this one solution as the preferred option for all applications. To
achieve the emissions reduction through “one solution” in many cases, a scenario would need to
strongly exploit the economic potential of a certain pathway for a specific sector. This creates the
danger of lock-in/overreliance on a specific technology, which may not be able to deliver further
emission reductions if required. Moreover, such focused technology pathways may require using
extreme solutions, due to the lack of other options within the specific pathway, thus possibly
ignoring solutions from other pathways that have lower costs if higher ambition is required. Such
a technology specific scenario may also lead to further improvements of a specific technology –
and lower developments in another technology reflecting economies of scale due to learning and
Sector ELEC H2 P2X EE CIRC
Buildings
Promoting use
of electricity
for heating.
Promoting use of
carbon neutral
gases.
Promoting use of
carbon neutral
gases.
High rate and
depth of
renovations
Further improved
energy efficiency
in appliances.
Reduced
renovation costs
due to material
efficiency and
substitution.
Industry
Electrification
for part of high
temperature
heat.
Direct use of
hydrogen in high
temperature
furnaces.
Further improved
energy efficiency
in industrial heat
applications and
equipment.
Waste heat
recovery.
Changing
industrial value
chain, more
circular, more
recycling,
reduced primary
industrial output
on average 10%.
Waste heat
recovery.
Transport
Optimistic
learning
assumptions
for batteries.
Standards for
cars reach 16
gCO2/km
(WLTP cycle)
in 2050 and
become zero
from 2060
onwards.
Optimistic
learning
assumptions for
fuel cells.
Large scale
availability of H2
refuelling stations.
Standards for cars
reach 18 gCO2/km
in 2050
Standards for cars
reach 30 gCO2/km
in 2050
Further improved
energy efficiency
of vehicles.
Higher model
shift towards rail,
waterborne
transport and
collective
transport modes
in the urban
environment.
Standards for
cars reach 23
gCO2/km in
2050
Integrating the
sharing
economy and
connected,
cooperative and
automated
mobility.
More efficient
logistics.
Standards for
cars reach 30
gCO2/km in
2050
Other
Share of hydrogen
in distributed gas
of up to 50% in
2050 and 70% in
2070.
Hydrogen
production
provides indirect
electricity storage.
Share of e-gas in
gas distribution
grid up to 60%.
E-gas production
provides indirect
electricity storage.
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mass production. The default development pathways chosen for the techno-economic
characteristics are therefore “middle-way” pathways except for technologies, which are required
regardless of the scenario, and therefore follow an optimistic development.
Scenario Category 2
COMBO is a scenario offering an alternative approach to the pathways examined in Scenario
Category 1, aiming to combine effective solutions for each sector/mode from the
paradigms/solutions/technologies explored by specific scenarios in Category 1. Such a scenario
would require spreading of investments and more moderate deployment of different technologies
than the technology-specific solutions as explored in Scenario Category 1 scenarios.
COMBO serves as a bridge between Scenario Category 1 and Scenario Category 3. It indicates
how far emissions reduction can go using a set of technology/solutions per sector as identified in
Scenario Category 1.
It does not push for extreme deployment of specific technologies or actions. It neither focuses on
the development and deployment of specific negative emission technologies by 2050, nor
promotes actions incentivising the uptake of CO2 in our land sink. It does not include consumer
choice changes. These are options explored in Scenario Category 3, achieving net zero GHG
emissions.
The only pathway that was not included in the COMBO scenario is the one of circular economy.
The reasons for this choice were purely technical. The main difference of CIRC with the other
scenarios is resource efficiency, captured in the modelling mainly by assuming reduced industrial
output (in volumes). Including CIRC in COMBO would complicate the identification of cause
and effect of emissions reduction in the latter. Furthermore, the assumed levels of output
reduction in CIRC can be considered conservative compared to the circular economy literature;
thus including even weaker assumptions than CIRC on circularity (in line with the treatment of
the other pathways in COMBO), would not offer additional insights. Thus, it was preferred to
include circular measures only in the 1.5LIFE scenario, which has similar features with CIRC.
Scenario Category 3
Pursuing net zero GHG emissions requires, on top of the options examined above, even stronger
measures. Based on existing literature, the main additional options to consider are: investing
significantly in negative emission technologies (BECCS, direct air capture as well as better land
use management fostering increased absorption of CO2 in the natural sink) and changing
lifestyles facilitating higher sustainability. In order to better understand the impact of these
choices, two different scenarios and one sensitivity were produced.
Both scenarios are based on COMBO, with the explicit additional measures described below. The
drivers of COMBO remain the same or are further intensified. Firstly, CO2 standards for new
cars, vans and buses are assumed to be zero starting from 2040. Secondly, the limitations
assumed on CCS (due to acceptance, storage availability, transport infrastructure, etc.) are partly
relaxed and CCU is introduced (notably related to the storage of biogenic CO2 in plastic material
which is not incinerated but recycled). This makes sequestration of CO2 a more economic option,
resulting in a larger amount of CO2 ending up stored either underground or in materials. The
drivers to enhance the energy-related renovation rate and depth of renovations in buildings were
also intensified.
The last remaining – and hardest to abate emissions – mainly coming from agriculture, road
freight, aviation and cement processes, are dealt in the scenarios in two different ways.
326
The scenario 1.5TECH assumes limited additional incentives to improve the land use sink.
Instead it focuses on technical solutions to achieve net-zero GHG emissions. It increases CCS
aiming to lower more the remaining emissions. Similarly it applies more use of e-gases and fuels
based on air captured or biogenic CO2 to reduce remaining emissions. It applies negative
emission technologies via biomass coupled with CCS and the storage of biogenic CO2 in
material.
The scenario 1.5LIFE takes an alternative approach, by trying to address the issue of emission
abatement by focusing more on demand-side measures, as well as increased take up by the landuse
sink. It assumes that consumers start making different choices on certain carbon-intensive
activities, leading to more sustainable lifestyles. Towards 2050, the demand for air transport is
reduced relative to the Baseline as significant shift takes place to rail714
and significantly
increased modal shift takes place towards lower emission transport modes for both passenger and
freight transport. Also, there is an assumption that shifts in food preferences by consumers
continues towards less animal based products715
. Due to a behaviour focusing on rational use of
energy, demand for heating and cooling is lower compared to other scenarios. Increased modal
shift takes place towards lower emission transport modes for both passenger and freight transport.
The latter is also linked to improved city planning, improved logistics, integrating sharing
economy and connected, cooperative and automated mobility, and making full use of
digitalisation, automation and mobility as a service (see section 4.4.2 for resulting impacts on
transport demand). This scenario includes also the drivers and assumptions of the circular
economy scenario, complementing the lifestyle changes with changes in product design and
business models, aiming to achieve higher resource efficiency. Moreover, it explicitly introduces
on top of the above incentives to improve the land use sink. This relates to improved forest
management activities that increase sequestrations, improved agriculture practices that improve
soil carbon and afforestation.
Finally a sensitivity was included that looks into impacts on biomass requirements, fully building
on the above two scenario. On one hand it builds fully on scenario 1.5LIFE, with the combination
of changing consumer preferences, increased modal shift, a more circular economy and a high
incentive to enhance the LULUCF sink. One the other hand it applies many of the technology
options driven to the maximum in 1.5TECH, but with a focus on options that do not require
biomass. This scenario tries to see how net zero GHG emissions could be achieved while limiting
biomass demand increases. This scenario is referred to as 1.5LIFE-LB and discussed in more
detail in section 4.7.2. If not explicitly mentioned all results shown in this assessment refer to
1.5LIFE.
FORECAST scenarios
Specifically for the case of industry, detailed scenarios were developed using the model
FORECAST for the future evolution of energy demand and greenhouse gas emissions of the EU's
industry sector under varying assumptions with regard to technology innovation and diffusion.
Eight scenarios were explored716
, which can be organised in four scenario groups differentiated
by the type of mitigation options and the level of ambition in GHG mitigation:
714
A part of intra-EU air trips for leisure and personal reasons would be shifted to rail and coaches and a
reduction in the distance travelled for extra-EU trips would also take place. The number of the business
trips would be reduced thanks to the adoption of video/tele conferencing facilities.
715
The diet applied is Diet 4, as described in more detail in section 4.6.2.
716
ICF & Fraunhofer ISI (2018), Industrial Innovation: Pathways to deep decarbonisation of Industry. Part
2: Scenario analysis and pathways to deep decarbonisation, forthcoming
327
1. Scenario Group 1: Incremental improvement
2. Scenario Group 2: Best available techniques
3. Scenario Group 3: Decarbonisation scenarios (~80%) with varying technology focus
including innovations (> TRL4):
a. Focus CCS
b. Focus clean gas (renewable hydrogen and synthetic methane)
c. Focus bioeconomy & circular economy
d. Focus electrification
4. Scenario Group 4: “balanced mix” of the above-mentioned supply/mitigation options
with varying level of ambition (~80%/~95%)
Figure 130: Overview of the FORECAST scenarios.
Source: FORECAST.
Scenarios 1 and 2 illustrate possible GHG emission pathways and mitigation potentials including
only technologies that are available today. They are explorative, in the sense that GHG reductions
are a result of best available techniques (BAT) potentials (scenario 2) and past trends (scenario
1). Scenario 1 can be interpreted as a baseline scenario to which the results of scenario groups 2-4
can be compared. In terms of diffusion of today's BAT, scenario 2 is ambitious; still, it does not
allow new disruptive technologies to enter the market. These two scenarios are not further
discussed in this assessment.
Scenario groups 3 and 4 were constructed to achieve a minimum GHG reduction of 80%
compared to 1990. Scenarios in group 3 can be considered as more extreme pathways, aiming to
achieve the level of ambition mainly via the technology they are focusing upon. Scenarios in
group 4 achieve their respective target by taking advantage of all technological pathways in a
balanced way. The scenario philosophy is summarised in Figure 130.
In more detail:
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The CCS scenario includes large scale diffusion of CCS and innovative energy efficiency
measures. It is the only scenario including CCS, except for the Mix95717
where some selective
applications of CCS are also allowed for the sectors of non-metallic minerals and refineries. It
has strong assumptions on the availability of enabling transport and storage infrastructure for
CCS, as well as improved public and political acceptance of CCS.
The CleanGas scenario assumes hydrogen and e-gas718
entering the fuel mix, plus again
innovative energy efficiency measures. As an assumption, both energy carriers are assumed to be
exclusively produced via electrolysis719
using electricity from renewable energy sources.
Conventional gas in the gas grid is reduced to 20%. Production of ethylene, methanol and
ammonia switches to hydrogen-based production routes, as well the steel industry shifts to direct
reduced iron production using hydrogen. Finally, naphtha is decreasingly used as feedstock.
The BioCycle scenario includes a number of measures, starting from significant fuel-switching to
sustainable biomass, innovative energy efficiency and low-carbon production technologies, as
well as implementation of comprehensive circular economy approach throughout the entire value
chain. In particular, it is assumed that material losses are reduced, material efficiency improves
and material substitution takes pace, increased recycling and re-use of materials and changes in
use-behaviour. These assumptions lead to decreased demand for certain materials compared to
the other scenarios from Group 3: -10% for steel, -23% for cement, -12% for ethylene and -40%
for ammonia. As the scenario aims to explore whether it is possible to achieve the desired
ambition by switching to biomass, no supply limitations were considered for this specific
scenario, quantities to be supplied most likely via imports and cascading use of biomass (from
product to fuel).
In the Electric scenario, energy efficiency measures are combined with switching processes to
using electricity directly (direct reduced electricity in iron & steel) or indirectly (production of
ethylene via methanol). Similar to the biomass scenario, this scenario tries to assess the potential
of electrification assuming the required amounts of electricity are available. Electricity is
assumed to be carbon-free, supported by large scale deployment of RES-E technologies and an
electricity market design allowing for demand response and electricity prices being competitive
with other fuels.
Mix80 combines in a more balanced way the main solutions of the above scenarios and tries to
identify a more cost-efficient way to meet the desired reductions. It includes the innovative
energy efficiency measures, low carbon production innovations, hydrogen, electrification,
moderate circular economy and material efficiency improvements (less ambitious than BioCycle
only in the case of chemicals720
). On the other hand it excludes the use of CCS, limits biomass to
2015 levels and does not consider clean gas in the gas grid.
717
The role of CCS in Mix95 is mainly to address some very difficult to decarbonise processes by other
means (e.g. lime and clinker). This is a result of the radical transition taking place in all sub-sectors,
based mostly on the substitution of fossil fuels by carbon-free energy carriers.
718
The constraints in the availability of carbon, discussed in footnote 711, are not captured by
FORECAST. Sufficient carbon feedstock is assumed to be available (and transportable), although this
is somehow considered in the prices, e.g. if direct air capture of CO2 would be needed, the costs of
synthetic methane might be substantially higher than the ones assumed (from a "simpler" CO2 source).
719
According to the system boundary defined, both hydrogen and synthetic methane are accounted for as
energy carriers, which are produced outside the industry system. Consequently, CAPEX for e.g.
electrolyser is not included, however, it is considered via the price of hydrogen and synthetic methane.
720
For Chemicals, ethylene production is assumed to remain constant, while ammonia production
decreases by around -20%.
329
The final scenario, Mix95, builds on Mix80, but adds a number of additional elements. CCS is
added in major remaining process emissions (lime, bricks, ceramics, clinker). Gas is assumed to
be decarbonised, as 95% of conventional gas is assumed to be replaced by clean gas in the gas
grid – even more than in CleanGas scenario. Steam generation technologies are replaced prematurely,
there is an increased diffusion of innovative low carbon technologies in steel,
chemicals and cement, as well as faster transformation of buildings and transport sectors,
reducing the demand for conventional fuels. The latter is assumed to result in the halving of
output in refineries compared to all other scenarios (apart from that, all other circular economy
aspects are assumed to be the same with Mix80). Finally, a more ambitious recycling of plastic
products is assumed.
7.2.3 Limitations in the modelling exercise.
While the modelling exercise has been performed to the highest quality standards, one should
interpret the modelling results with caution. All models, independent of their complexity, are
stylised approximations of reality. Modelling results are based on highly uncertain assumptions,
especially when the projection goes up to a long-term horizon such as 2070. The future
development of the economy, the availability, costs and performance of the technologies721
,
market imperfections, fuel prices and emission abatement cost curves are among the main
uncertainties.
Although most relevant recent adopted legislation (or proposed by the Commission) has been
included as part of the Baseline for this exercise, all other elements of the scenarios are based on
the Reference scenario 2016 assumptions. Therefore, many of the newest national policies and
developments have not been captured (e.g. recent coal phase-out announcements). In the same
context, short-term macroeconomic and forecasts of world fossil fuel prices (key input into
energy-system modelling) may be considered in some cases as outdated. However, as the main
focus of the exercise is the period 2050-2070, the changes in the short term are unlikely to have
significant impacts on the main findings of the modelling722
.
The PRIMES scenarios in this study have a normative rather than a forecasting character. They
indicate cost-effective pathways towards the achievement of given 2050 decarbonisation
objectives, assuming perfect operation of energy markets723
and economic actors/consumer
willingness to invest in new technologies, with only certain bias reflecting non-economic
considerations (via discount rates and cost curves). Consequently, while the micro-economic
foundations (limited resources available to economic actors) and technology outlooks (difficulty
in switching to more costly technologies in the absence of policy drivers) are included in the
modelling methodology, the specific investment/energy consumption decisions might be different
from what may be observed in reality. For example, construction of a nuclear reactor or extensive
electricity transmission lines, while identified as cost-effective by the model, might not happen
because of consumer acceptance/land availability issues.724
Similarly, a decision to renovate the
house even with certain payback in a reasonable time might not happen because of split
incentives between landlord and tenant, or a car with best fuel-efficiency performance will not be
purchased because of other preferences/commodities or missing incentives (e.g. in case of
company cars). All scenarios assume favourable conditions enabling cost-effective
721
In particular, data on future technology costs are highly uncertain and thus investment results should be
interpreted with caution and more in a comparative manner across scenarios.
722
Long term energy price and technology assumptions are much more important in this aspect.
723
Notably by assuming that all investment costs are recuperated via end-user prices
724
The PRIMES model nonetheless takes into account limitations for the developments of e.g. nuclear
reactors based on country policies and space availability e.g. within existing nuclear sites.
330
decarbonisation including the removal of non-market barriers and successful coordination of
actors with different aspirations.
The investment expenditures reported by PRIMES include the majority of energy-related costs.
However, although the model includes investment and cost recovery of all types of infrastructure,
the final report of total amounts of investment expenditures does not include bio-refineries, oil
refining, oil distribution and upstream exploration and production of oil and gas. The model also
does not include investment in roads, railways, ports and airports infrastructure and in systems
facilitating sharing of vehicles etc., as these are out of the scope of the model. Investment or
hidden costs related to behavioural or organisation structural changes or in sectors outside energy
are not part of the calculation of investment expenditures either. Generally, the model does not
include the full investment expenditure of industrial plants and buildings, but only the parts that
relate to energy and efficiency and to a certain extent to the additional investment expenditure to
change process technology in the industry. For transport, the model shows total investment
expenditure in vehicles, ships, aircraft and trains and not only the energy part of this equipment.
For the hydrogen and e-fuels the investment costs in their production assets (electrolysers,
methanation plants) are fully captured in the model. It is, however, assumed that the power sector
does not pay for the indirect storage service allowed for by the storage of hydrogen, e-gas and eliquids
in their respective distribution systems. This storage allows using electricity for hydrogen
and e-fuel production at times when the maximum renewables are available and when the
marginal cost of the system is lowest. This indirect electricity storage allows for smoothing the
net load curve, maximise the contribution of variable renewables and improve system reliability.
Thus, consumer electricity prices can be lower than otherwise, but partly due to the non-payment
for the indirect storage services. However, the power system, hence the electricity consumers, do
pay for the direct storage services using power-to-X technologies and of course batteries, hydro
pumping and others. Also, the modelling assumes full exploitation of the electricity grids to share
balancing services and to access remotely located renewable sources without obstruction. A
limitation of the modelling is that the model does not represent trade of hydrogen and e-fuels
between the countries, although electricity trade is fully endogenous. Thus, the model ignores the
possible returns to scale if the facilities producing the e-fuels were concentrated and eventually
located on specific sites with access to significant electricity and gas hubs. The costs and prices
of the e-fuels do recover all types of cost in the value chain, including for transmission,
distribution and storage, but do not benefit from possible optimisation of the location of
production facilities in Europe.
Some cost aspects that relate to consumer choice are subjective and difficult to estimate. Most of
the decarbonisation scenarios create so-called disutility to the consumers, as they alter their
behaviour to an eventually less “comfortable” solution. It can be a very small change, for
example, necessity to charge the electric vehicle during a certain period (instead of having it all
the time available if running on liquid fuels) or inconvenience during house renovation. It can
also be a bigger change, for example when a consumer decides to give up on a journey (because
of its carbon footprint), not own but share a vehicle (in the context of mobility as a service) or
restricts their comfort (reduction of temperature). The disutility associated with such actions is
always subjective, and estimations of such costs are only approximations; they are used as an
(approximate) measurement of the required behavioural changes. This is why the energy system
costs the results of the scenarios are reported without disutility costs.
Finally, although the main model suite covers in detail most relevant parts and aspects of the
economy concerning the focus of this exercise on a EU28 level, certain aspects of the economy
have not been captured in the modelling, like the availability and prices of raw materials, costs
related to resilience / adaptation to climate change and investments in transport infrastructure.
Modelling results though were complemented with a number of additional modelling runs, using
331
the bottom-up industry model FORECAST and macroeconomic models (JRC-GEM-E3, E3ME
and QUEST)) to assess a range macro-economic issues stemming from the analysis of the energy
transition, including growth, employment and non-EU countries actions.
These macro-economic models face their own limitations in that they are not tailored to make
detailed projections on sector-specific developments, including for example to those related to
the transformation of the automobile industry from internal combustion engines to electric and
self-driven cars. Instead, they are structured to assess the impact of specific policies as a
deviation from baseline, which makes the definition of the baseline itself critical. As used in this
context, the models were used to assess the impact of the energy transition and decarbonisation of
the economy. As such, the models therefore do not factor in other phenomena that are likely to
impact the EU economy in the coming decades, including the development of artificial
intelligence, digitalisation or other technological trends. The baseline of the models do
nevertheless integrate expected population and labour force trends (including in particularly the
ageing of the EU population) and projections regarding total factor productivity growth. No
sensitivity analyses were conducted regarding these factors, which are common for the baseline
across the macro-economic models.
7.3 EU contribution to the Paris Agreement's temperature objectives
Many recent studies have examined cost effective global pathways to well below 2°C and report
results at global level. A small number of studies report results at regional level for different
world regions including the EU. These tend to confirm that reducing EU domestic greenhouse
gas emissions by at least 80% below 1990 levels would still be consistent with a global pathway
for keeping warming well below 2°C.
For instance the Horizon 2020 projects LIMITS725
and AMPERE726
examined different scenarios,
comparing multiple models operated by different teams around the world. A 2018 summary by
the Netherlands Environment Assessment Agency, which selects only scenarios that have 66%
likelihood or more to limit global warming to 2°C and where global cost-optimal mitigation
begins in 2020 or later727
, finds the average reduction for the EU, including the LULUCF sector,
to be 74% below 2010 levels which is around 78% below 1990 levels.
This finding is also supported by analysis conducted by the Netherlands Environmental
Assessment Agency and JRC for this report728
. Pathways keeping global warming by 2100
compared to pre-industrial below 2C with a probability of at least 66% see EU reduce GHG
emissions, including LULUCF, by 76% to 84% below 1990 levels in 2050 the more ambitious
pathway being associated with a scenario that limits technology options related to CCS.
725
Kriegler et al., 2014, Making or breaking climate targets: The AMPERE study on staged accession
scenarios for climate policy. Technological Forecasting and Social Change 90, 24–44.
726
Riahi et al., 2015, Locked into Copenhagen pledges - Implications of short-term emission targets for the
cost and feasibility of long-term climate goals. Technological Forecasting and Social Change 90, 8–23
727
van Soest et al. (2018) Global and Regional Greenhouse Gas Emissions Neutrality. Netherlands
Environmental Assessment Agency report no. 2934. http://www.pbl.nl/en/publications/global-andregional-greenhouse-gas-emissions-neutrality
In this case, well below 2°C refers to scenarios associated
with atmospheric greenhouse gas concentrations of around 450 parts per million CO2 equivalent.
Scenario's that saw global peaking in 2010 and subsequent emission reductions were not retained, given
that global emissions profiles of these projections were too high compared to actual emissions.
728
Esmeijer K., den Elzen M.G.J., Gernaat D., van Vuuren D.P., Doelman J., Keramidas K., Tchung-Ming
S., Després J., Schmitz A., Forsell N., Havlik P. and Frank, S. (2018), 2 °C and 1.5 °C scenarios and
possibilities of limiting the use of BECCS and bio-energy. PBL report 3133, PBL Netherlands
Environmental Assessment Agency, The Hague.
332
In contrast, to achieve a 1.5°C pathway, global projections typically foresee the world reaching
net zero emissions well before 2100, or rather just before 2070, using net negative emissions both
to compensate for remaining emissions from sectors that are hardest to decarbonise as well as to
remove CO2 actively from the atmosphere after 2070. Analysis conducted by the Netherlands
Environmental Assessment Agency 740
and JRC729
for this report projected similar global
projections728
. These projections see the EU reduce emissions, including LULUCF, to 91% to
96% below 1990 levels by 2050.
The main options for achieving net negative emissions involve the land sector, through a
combination of reducing deforestation drastically, enhancing the forest sink by applying forest
restoration and afforestation, and using biomass & CCS (BECCS) as an energy technology and
provider of negative emissions. Regions with a large LULUCF sink, high biomass potential
and/or high CCS potential are therefore often assumed to achieve zero emissions first in costoptimal
modelling assessments. This means that the EU is not the first large emitter to achieve
net zero emissions in most of the cost optimal global scenarios 727
.
These 1.5°C pathway scenarios rely on achieving net negative GHG emissions on a global scale
after 2070. Projections that try to avoid the need for net negative emission pathways towards the
end of the century achieve reductions on a global scale close to net zero GHG by 2050.
The above pathways for well below 2°C and 1.5°C cover all major sectors and greenhouse gases
(the so called Kyoto basket of greenhouse gases730
). This includes the land sector (which as well
as a source can also be a net sink of CO2 in the EU, leading to net absorptions of CO2) and the
international aviation and maritime sectors which are proportionally attributed to the regions
modelled.
Many stakeholders have warned against the over-reliance on negative emission technologies.
Many have underlined the need for the EU to achieve zero GHG emissions by 2050 or even
earlier.
Scientific assessments, including those of the IPCC, have also reiterated several times that
delaying action increases the likelihood of missing temperature goals, increases reliance on rapid
emissions reduction afterwards and increased the need for negative emissions, and is ultimately
more costly than acting sooner.
There are therefore good reasons why the EU should act in line with the more prudent projections
that try to limit net negative global GHG emissions in the 2nd
half of the century.
From a precautionary standpoint, there is a strong argument for the whole world to reduce
emissions more quickly than the median scientific estimates suggest is necessary, and for the EU
to take the lead in encouraging this.
Human-induced warming reached 1°C in 2017, and the best estimates of the remaining emissions
compatible with 1.5°C are still subject to significant variation. Large uncertainties remain,
including earth-system feedbacks like the impact of permafrost thawing and uncertainties of the
729
JRC (2018), Global Energy and Climate Outlook 2018 (GECO 2018), forthcoming. It should be noted
that the GECO scenarios are not a pure global cost efficient scenario because some differentiation in
action is maintained by scaling the carbon price on the basis of GDP per capita. All countries are
assumed to implement a carbon price from 2020, but the price for developing and emerging economies
is lower. By 2030, advanced and emerging economies are assumed to implement the same carbon price,
with a ’discount’ maintained only least developed countries and India. By 2050 the carbon price is
assumed to be equal globally.
730
These are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O) and the so-called F-gases
(hydrofluorocarbons and perfluorocarbons and sulphur hexafluoride)
333
warming related to non-CO2 emissions. Applying the precautionary principle it is better to show
ambition early on if it would turn out that budgets are reviewed downward again.
From an economic perspective, acting early represents an opportunity for change and innovation.
A net zero GHG world requires scale-up of a number of innovations in energy, transport and
industry, but can also be accelerated by breakthroughs in General Purpose Technologies such as
Information & Communications Technology, artificial intelligence and biotechnology731
.
Looking at high ambition can therefore be a crucial part of creating this enabling environment.
On the other hand, delayed action can increase the risks of lock-in to carbon intensive
infrastructure732 733
.
Finally, a number of studies734 735
have attempted to measure different regions' contribution to
global action using a number of potential metrics including purely equity based principles, which
may have nothing to do with economic achievability of mitigation efforts.
Höhne et al (2018)734
distinguish for instance between approaches based on technical necessity
(including cost optimisation and use of indicators such as emissions per capita, or per unit of
GDP), and approaches based on moral obligation (such as measures that takes countries’ income
levels or historical emissions into account).
On emissions intensity metrics, the EU is already a strong performer. The EU has the lowest
GHG emissions per unit of GDP of all major world economies736
and is among the low middle in
terms of GHG per capita.
731
OECD (2017). The Next Production Revolution: a report for the G20.
http://www.oecd.org/governance/the-next-production-revolution-9789264271036-en.htm
732
See for example Seto et al (2016) Carbon Lock-In: Types, Causes, and Policy Implications. Annual
Review of Environment and Resources Vol. 41:425-452.
https://doi.org/10.1146/annurev-environ-110615-085934 CO2
733
Luderer et al (2018) Residual fossil CO2 emissions in 1.5–2 °C pathways Nature Climate Change
volume 8, pages626–633. https://doi.org/10.1038/s41558-018-0198-6
734
Höhne et al (2018) Assessing the ambition of post-2020 climate targets: a comprehensive framework,
Climate Policy, 18:4, 425-441, DOI: 10.1080/14693062.2017.1294046
735
Robiou du Pont et al (2017) Equitable mitigation to achieve the Paris Agreement goals Nature Climate
Change volume 7, pages 38–43
736
Series GHG per GDP emissions from EDGAR database v4.3.2. Available at:
http://edgar.jrc.ec.europa.eu/
http://edgar.jrc.ec.europa.eu/overview.php?v=CO2andGHG1970-2016&dst=GHGgdp&sort=asc9
334
Figure 131: GHG emissions intensity vs GDP per capita for major economies
Source: JRC Global Energy & Climate Outlook (GECO) 2017737
.
Robiou du Pont et al (2017) 735
estimated the necessary 2050 reductions using a number of
different metrics to achieve globally well below 2C, as well as 1.5C. These resulted in an EU
reduction on average of around -75% for the 2C and -90% for the 1.5C objective by 2050
compared to 1990, if the global allocation method was based on convergence towards equal
annual emissions per person. The 1.5C pathway used did allow for negative emissions later on
in the century. If it would not allow for negative emissions later in the century, a per capita
convergence would see required emissions reduction converge towards -100% by 2050. Similarly
if the global allocation method was based on the need for higher mitigation for countries with
high GDP per capita a 1.5C objective would typically see EU targets of little less than -100%.
Only approaches that were taking into account the level of historical per capita emissions tended
to allocate negative reduction targets (higher than 100%) for the EU by 2050, not taking into
account the feasibility of such reductions.
7.4 Global CO2 budget
7.4.1 Global carbon budgets in light of the IPCC Special Report on 1.5°C
There is a near-linear relationship between the cumulative CO2 emissions in a given period and
the increase of the global temperature during this period, compounded by the further impact of
other greenhouse gas emissions. This relationship permits to infer the maximum remaining CO2
budget (also called carbon budget) that can be released into the atmosphere while keeping global
temperature below 2°C or 1.5°C, taking into account also the expected future non-CO2 emissions.
The IPCC Special Report on 1.5°C reflects advances since the previous IPCC report (the Fifth
Assessment Report – AR5). It provides new estimates of the remaining CO2 budget (defined as
cumulative CO2 emissions from the start of 2018 until the time of net-zero global emissions) and
quantifies the major factors (both scientific uncertainties and methodological choices) which
affect any budget estimate.
737
JRC (2017), Global Energy and Climate Outlook 2017 (GECO 2017), doi:10.2760/474356
335
Using updated calculations comparable with those of AR5 budget estimates, the IPCC 1.5°C
report gives central estimates of the remaining carbon budget of around 1170738
GtCO2 for a 66%
chance of keeping the temperature increase below 2°C and 580 GtCO2 for a 50% chance of
keeping temperatures below this 1.5°C by 2100. These estimates are around 300 GtCO2 higher
than those of AR5 due to advances in understanding and scientific methods.
The main sources of uncertainty around these central budget estimates are related to the
temperature response to CO2 and non-CO2 emissions (+/- 400 GtCO2) and the level of historic
warming739
(+/- 250 GtCO2). Furthermore, Earth System feedbacks (such as release of CO2 and
methane from permafrost thawing) could reduce this budget further, out to 2100 (-100 GtCO2
best estimate).
The remaining carbon budget estimate is also affected by the chosen measure of global
temperature. AR5 budget estimates were based on mean surface air temperature (SAT). Using an
alternative measure (Global Mean Surface Temperature – GMST, which includes the surface
temperature of the ocean itself, not just the near surface air temperature) increases the central
estimates to 1320 GtCO2 for a 66% chance of keeping the temperature increase below 2°C and
770 GtCO2 for 1.5°C (also 50% chance). Either temperature measure (GMST or SAT) is equally
correct in scientific terms. With ocean water surface temperature warming a little less fast than
air temperature, temperature measured by SAT is consistently around 0.1°C higher than
GMST740
. This means that warming of 1.5°C measured as GMST is equivalent to 1.6°C when
measured as SAT. While the scientific literature uses both measures, the 1.5°C Special Report
uses predominantly GMST.
In addition to the above factors, the remaining carbon budget is affected by future levels of nonCO2
emissions. The 1.5°C Special Report estimates that this could alter the budget estimate by
250 GtCO2 in either direction (based on a range of scenarios). It is important to note that, unlike
the scientific uncertainties described above, this variation can be thought of as a (global) policy
choice since it is influenced by mitigation action. More mitigation of non-CO2 gases (such as
methane and nitrous oxide) can increase the carbon budget.
A quantitative estimate of all these variations and uncertainties is presented in Table 2.2 of the
IPCC Special Report on Global Warming of 1.5°C.
These estimates are assuming a 2°C or 1.5°C peaking temperature. More uncertainty is added in
case of temporary exceedance of the carbon budget for a given warming threshold, followed by
net negative emissions to bring cumulative CO2 emissions back to within the carbon budget and
reduce temperatures to below 2°C or 1.5°C. This greater uncertainty is due to knowledge gaps on
ocean thermal and carbon-cycle inertia in a context of decreasing CO2 atmospheric
concentrations.
7.4.2 Emission pathways in light of the IPCC Special Report on 1.5°C
The IPCC Special Report on 1.5°C finds that if all anthropogenic GHG emissions were reduced
to zero immediately, any further warming beyond the 1°C already experienced would likely be
less than 0.5°C741
. However, given that this scenario is not realistic, it is necessary to consider
which emissions reduction pathways are consistent with the remaining emissions budget for
738
http://report.ipcc.ch/sr15/pdf/sr15_spm_approved_trickle_backs.pdf
739
IPCC estimates warming in the period 2006-15 to be 0.87°C above the level of 1850-1900 but with a
likely range of +/- 0.12°C.
740
See Section 1.2.1.1 of the IPCC 1.5°C Special Report for details
741
See Chapter 1 of the IPCC Special Report on Global Warming of 1.5°C
336
limiting warming to well below 2°C or 1.5°C – including pathways that rely on negative
emissions technologies to compensate for residual GHG emissions or correct temporary
temperature overshoots.
The Special Report’s revised central estimates of the carbon budget are around 300 GtCO2 higher
than assessments made in AR5 due to methodological improvements. Since the revised carbon
budget estimates of IPCC Special Report on 1.5°C are based on extremely recent literature742
,
most global and regional emissions reduction pathways are based on approaches consistent with
AR5 estimated budgets rather than the budgets of the Special Report. This includes those
produced by the JRC and Netherlands Environmental Assessment Agency in the context of this
document (see section 7.3).
New assessment of the literature on both budgets and pathways is expected to begin immediately,
to inform the publication of the IPCC's sixth Assessment Report in 2020-2022. Once the revised
budget estimates of the IPCC Special Report on 1.5°C are taken into account, new pathways may
indicate that it is possible to remain consistent with well below 2°C or 1.5°C while reducing
emissions more slowly than AR5-based pathways might indicate, or more importantly that
maintaining the same short-term pace as AR5-based pathways could reduce the need for net
negative GHG emissions later this century.
For instance, a recent study by Kriegler et al. (2018)743
compares for different budget estimates
how they could be achieved, and to which extent they can avoid temperature overshoot and/or the
need to use carbon dioxide removal technologies. It finds that for 1.5C budgets near the upper
end of the revised IPCC’s budget estimates744
, it may be possible to achieve these with emission
pathways without carbon dioxide removal technologies, but only if the steepest possible global
emissions reduction are pursued.
Even in the absence of updated projections, it is clear that there are no grounds for complacency.
To place the IPCC Special Report on 1.5°C budget revisions in context, 300 GtCO2 is equivalent
to around 8 years of current global emissions, and any central budget estimate is subject to an
uncertainty range of at least this magnitude in either direction. Therefore, the precautionary case
for faster reductions is compelling. A budget increase of 300 GtCO2 could postpone the necessary
timing of global net zero emissions by 1-2 decades at most and would not postpone the more
immediate task of reducing emissions compared to today’s levels. In a scenario where all
countries achieve only their NDC pledges under the Paris Agreement, even the IPCC’s largest
central estimate of the likely 2°C budget would be exceeded at around 2050 and the new 1.5C
budget (50% likelihood) of the IPCC would be exceeded well before 2040745
.
7.5 The specificities of methane emissions and other short-lived climate
pollutants
Short-lived and long-lived climate pollutants
742
It should be noted however, that the basic science underpinning the revised estimates is not new. See for
example Figure 2.3 of the IPCC Fifth Assessment Report, Synthesis Report.
743
Kriegler E, Luderer G, Bauer N, Baumstark L, Fujimori S, Popp A, Rogelj J, Strefler J, van Vuuren DP.
2018 Pathways limiting warming to 1.5°C: a tale of turning around in no time? Phil. Trans. R. Soc. A
376: 20160457. http://dx.doi.org/10.1098/rsta.2016.0457
744
The study finds that for budgets of 650 GtCO2 and higher, the steepest emissions reduction scenario can
be achieved without using Carbon Dioxide Removal Technologies.
745
Refers to the GMST-based budgets from Table 2.2 of the IPCC Special Report on 1.5°C. 1320 GtCO2
for 66% chance of 2°C and 770 for 50% chance of 1.5°C. See also Section 7.4.1.
337
The warming potential of a GHG varies according to the characteristics of the gas. Warming
potential of a gas is determined by two main factors: the intensity of the near-instantaneous
radiative forcing, and its time of residence in the atmosphere. Both factors differ significantly
across greenhouse gases. To illustrate, one molecule of methane causes instantaneous radiative
forcing an order of magnitude stronger than CO2, but it remains in the atmosphere for a much
shorter time (around a decade). Most of the HFCs, who behave similarly, and methane are
therefore called short-lived climate pollutants (SLCP). By contrast, gases that remain in the
atmosphere for much longer period, often centuries and even millennia such as CO2, N20, SF6,
NF3, as well as some HFCs and PFCs are called long-lived climate pollutant (LLCP).
Responsiveness of temperature on SLCP and LLCP emissions reduction
Reductions in the level of SLCP emissions lead to fast drops in concentrations, thus translating
into relatively fast decreases in additional warming. By contrast, even if emissions of LLCPs
stop, these gases remain in the atmosphere for a significant period of time. Consequently, the
warming effect of past emissions continues for a long time (Figure 132).
Figure 132: Temperature response to CO2 and CH4 emissions
Source: Adapted from Allen et al. (2017)746
.
The Global Warming Potential 100 (GWP100) is the most used metric to compare the warming
potential of different GHGs over a period of 100 years. GWP100 as used in the 4th
Assessment
Report of the IPCC is also the metric used in the 2006 IPCC Guidelines for National Greenhouse
Gas Inventories. As such, GWP100 is the most common metric used in policy: parties, including
the EU, that committed to NDCs with explicit GHG reduction targets under the Paris Agreement
for a basket of GHGs have done so typically using GWP100 as the metric to aggregate and
compared GHG emissions and reductions.
746
Allen et al. (2017), Climate metrics under ambitious mitigation, Oxford Martin School, briefing
November 2017.
CO2
CH4
CO2
CH4
CO2
CH4
CO2
CH4
Constant emissions Falling emissions
Time
Emissions
Time
Emissions
Time
Temperature
Time
Temperature
338
GWP100 is defined as the sum747
of radiative forcing over a time horizon of 100 years of one
kilogram of a certain gas emitted today, relative to the accumulated radiative forcing of one
kilogram of CO2 emitted today over this same 100 year time period748
.
By definition, the GWP of CO2 is therefore always one. The cumulative radiative forcing of
methane (CH4) as defined in the 4th
Assessment Report of the IPCC is 25 times higher than of
CO2, but most of the radiative forcing occurs early in the 100 year time period used for the
assessment. By con²trast, the radiative forcing caused by CO2 is more constant. Furthermore,
parts of the CO2 remain in the atmosphere beyond the 100 year time horizon. If the GWP were to
be estimated for a shorter period of time, then the cumulative radiative forcing of CH4 compared
to CO2 would be significantly higher in relative terms: 72 times for a 20 year period in the 4th
Assessment Report of the IPCC (see table below).
Table 29: Lifetimes, radiative efficiencies and GWPs relative to CO2 as presented in the
IPCC 4th
Assessment report.
Chemical
Formula
Lifetime
(years)
Radiative
Efficiency
(W m–2 ppb–1)
Global Warming Potential for Given Time
Horizon
20-yr 100-yr 500-yr
CH4 12 0.00037 72 25 7.6
N2O 114 0.00303 289 298 153
Selected number of Hydrofluorocarbons
HFC-134a 14 0.16 3830 1430 435
HFC-143a 52 0.13 5890 4470 1590
Selected number of Perfluorinated compounds
SF6 3200 0.52 16300 22800 32600
NF3 740 0.21 12300 17200 20700
PFC-14 50000 0.10 5210 7390 11200
Source: Based on IPCC, 4th
Assessment report, Working Group I, Section 2.10, table 2.14.
GWP100 therefore tends to overestimate the temperature response in the long run of the current
emission of a SLCP compared to an emission of a LLCP. However, the converse also holds:
GWP100 tends to underestimate the temperature response in the short term of an emission today
of a SLCP compared to an emission of a LLCP.
The choice of time period to assess warming potential has policy implications. If the primary
concern is to stabilise temperature change in the long run, e.g. by the end of this century, then a
reducing in annual emissions of SLCPS today has a similar effect to a reduction in a couple of
decades, as long as this shift to annual emissions reduction has taken place by somewhere the
second half of the century.
However, such flexibility does not exist for LLCPs such as CO2 for which temperature impacts
being determined by the cumulative emissions, including the emissions of the past. If the
cumulative emissions are too high to reach a certain temperature goal, then only active removal
747
Technically it is rather the integral of radiative forcing over time.
748
IPCC (2007) Fourth Assessment Report
https://www.ipcc.ch/publications_and_data/publications_ipcc_fourth_assessment_report_synthesis_rep
ort.htm
339
of these LLCPs from the atmosphere will lead to the achievement of a certain temperature goal
within the century. That is why many projections require net negative CO2 emissions in the
second half of the century to compensate for excessive CO2 emissions in the past.
These difference in warming potential might result in the conclusion that all focus in the short
term should be to reduce LLCPs rather than SLCPs, to avoid the need for negative emissions
later on where possible. Such a conclusion would, however, be short-sighted. Several reasons can
be put forward to explain this:
First, with temperatures already up by over 1C, there is a serious risk of overshooting
temperature goals. This danger looms particularly large for the 1.5C goal for which most
projections already assume some level of overshoot of temperatures during this century.
Reducing SLCPs as soon as possible can contribute to avoiding these overshoots, or to limit their
magnitude. Second, a reduction of emissions like CH4 - for instance, from sectors like
agriculture, the energy system and the waste management system - will require a sustained effort
over time, and can benefit from behavioural changes, all that cannot be achieved in a short
amount of time. Third, any remaining emissions of SLCP like CH4 will continue to have a
warming impact. So the lower they eventually become, the lower their warming impact by the
end of the century, but also the larger the remaining allowed cumulative budget for LLCPs
becomes. Finally, some SLCPs are air pollutants or air pollutant pre-cursors and their reduction
will lead to improvement of air quality.
A number of stakeholders have argued that the GWP should be adjusted towards a 20 year time
horizon and to thereby focus more mitigation effort on methane. Such a change would increase
the relative importance of methane in our policy framework - but would also provide a metric
that, in relative term, would downgrade the need to reduce LLCPs like CO2. While no metric can
perfectly capture the differences in temperature dynamics between GHGs over time, GWP100 is
a transparent and well-known metric which provides a relatively good representation of the
importance of the different gases for the achievement of our temperature goals and the
perspective of the Paris agreement. The assessment as undertaken in this report is therefore using
the GWP100 metric.
7.6 Sectoral Industry Transformation
7.6.1 Iron & Steel
As an energy-intensive industry, the European steel industry accounted in 2016 for about 7% of
the verified emissions of all stationary installations of the European Union and around 22% of
industrial emissions excluding combustion (Figure 133).
340
Figure 133: EU28 Historical GHG Emissions for Iron & Steel Sector (in MtCO2eq)
Source: EEA749
.
Steel making consists of two main processing routes, each having about equal share in the steel
making process in Europe: primary steel making (60% share), based on the iron ore reducing
process in a blast furnace (BF), and secondary steel re-melting (40% share), either using direct
reduced iron or scrap metal in an electric arc furnace (EAF). The majority of the emissions come
from the iron reduction process, where there is a chemical reaction between carbon and iron ore,
producing molten iron, which is then converted to steel. Therefore the two main methods to
decarbonise steel is either to increase the use of secondary steel making route, which can be even
almost carbon free in the case of low carbon electricity generation, or to reduce the carbon
intensity of the BF route.
The efforts so far to reduce the emissions from the BF route have mainly focused on resource
efficiency (energy and material), as well as improved process control. Therefore the additional
potential for improvement through technological improvements (mainly via energy efficiency) of
the specific process are diminishing.750
In general, studies751 752
indicate that without direct reduced iron (DRI) or CCS and CCU, the
shift away from BF to EAF (using scrap metal) can lead to sector emissions reduction around 25-
30% compared to 2010753
. In the cases of hydrogen, electrolysis or CCS and CCU the reductions
can be much higher. One of the alternatives for deep decarbonisation so far seems to be the
749
https://www.eea.europa.eu/data-and-maps/data/data-viewers/greenhouse-gases-viewer
750
ICF (2015), Study on Energy Efficiency and Energy Savings Potential in Industry and on Possible
Mechanisms,
https://ec.europa.eu/energy/sites/ener/files/documents/151201%20DG%20ENER%20Industrial%20EE
%20study%20-%20final%20report_clean_stc.pdf
751
Boston Consulting Group (2013), Steel’s Contribution to a low-carbon Europe 2050
https://www.bcg.com/publications/2013/metals-mining-environment-steels-contribution-low-carbon-
europe-2050.aspx
752
Otto et al. (2017), Power to Steel: Reducing CO2 through the integration of renewable energy and
hydrogen into the German Steel Industry, https://doi.org/10.3390/en10040451
753
A maximum share of 44% for EAF is assumed in the Roadmap of the Steel Industry.751
341
replacement of BF route by EAF using DRI,754
reducing the carbon intensity of the specific
process by 30-36% when based on conventional methods and fuels.751 755
If the DRI is produced via either hydrogen or electrolysis iron ore reduction it allows for
electrification of the most energy-intense step in iron making756
, leading to reductions up to 85-
95%.757 758
However, it has to be noted that nowadays, due to the high cost of gas, there is very
limited production of DRI in Europe, that has therefore to be imported; in addition most of EAF
in Europe requires the use of DRI in combination with scrap metal.
There are currently three projects on hydrogen-based steelmaking announced in the EU:
HYBRIT, SALCOS and H2Future/Susteel. While the first two aim at using today’s available
direct reduction technology, the H2Future project plans to use the plasma smelting reduction
technology. These technologies do not require the use of CCS and CCU as CO2 emissions are
avoided.
Another alternative is to combine a technology using natural gas with CCS. This has the potential
to significantly bring down steel’s emissions and reductions to around 80%, for example with the
deployment of technologies like HIsarna (smelting reduction) or ULCORED (direct reduction) –
both connected to CCS (or CCU).
The shift from primary steelmaking to secondary smelting of steel scrap depends on various
factors, including the availability and quality of scrap metal within the EU market and on the
quality of the final product759
. Europe has a large stock of steel, nevertheless there are many
factors that significantly reduce the amounts of steel that can be recycled, most importantly low
collection rates, losses in the processes, downgrading of steel and copper contamination.760
Moreover, increasing amounts of scrap have been exported from the EU with the subsequent loss
of potential resources.761
These issues can be resolved to a large degree by improving circular economy practices, thus
significantly increasing the availability of scrap, so that the secondary route can increase its share
from around 40-45% today up to 85% in 2050, according to some studies762
. The combination of
these measures can reduce the emissions of the sector by around 75%, as primary production
would continue to serve the rest of demand. Demand side measures in the context of the circular
754
DRI can be considered as a source of clean iron units that can be used both in the EAF and the BF route.
755
European Commission (2018), European Steel. The Wind of Change,
https://publications.europa.eu/en/publication-detail/-/publication/fb63033e-2671-11e8-ac73-
01aa75ed71a1/language-en.
756
Under the ULCOS program, supporting low-energy primary steel making, this is known as ULCOWIN
and ULCOLYSIS.
757
EUROFER (2014), A Steel Roadmap for a low carbon Europe 2050,
http://www.nocarbonnation.net/docs/roadmaps/2013-Steel_Roadmap.pdf
758
ECOFYS & Fraunhofer ISI (2018), Impact on the Environment and the Economy of Technological
Innovations for the Innovation Fund (IF),
https://publications.europa.eu/en/publication-detail/-/publication/669226c7-b6ff-11e8-99ee-
01aa75ed71a1/language-en/format-PDF/source-77120765
759
Today the secondary steel melting of steel scrap is mainly used for relatively basic construction steels,
which can tolerate a less precise composition.
760
According to BCG (2013)751
the maximum share of scrap steel based on current practices is 44%. This
is also related to the contaminants that are present in the scrap steel, which make the steel produced
from recycled steel of lower quality than virgin steel.
761
Iron and steel is the most traded waste and scraps by mass. In 2016 about 18 million tons were exported
by the EU, 3 million were imported and 27 million were traded among EU Member States. See
indicator 18 in the Raw Materials Scoreboard (http://rmis.jrc.ec.europa.eu/?page=scoreboard#/ind18).
762
Material Economics AB (2018), The Circular Economy,
http://materialeconomics.com/latest-updates/the-circular-economy
342
economy could then further reduce steel produced by the primary route, like increased use of
aluminium in manufacturing and reduction of the number of circulating cars due to transport
becoming a service.763
The main technological pathways, with projects under development, emissions reduction and
market entry are summarised in Table 30:
Table 30: Low Carbon Projects under development in Iron & Steel
Technology option Examples
TR
L
Max. emissions
reduction
Market
entry
DRI RES-H2 HYBRIT, GrINHy, H2Future,
SuSteel, SALCOS
7 up to 80% 2030/2035
DRI RESElectrolysis764
SIDERWIN, ULCOWIN 6 up to 90% 2025/2030
Bath smelting765
HIsarna 5-6 up to 20% 2025[e]
Top gas
recycling766
ULCOS-BF, IGAR 7 up to 30% 2020/2025
Carbon capture
and usage
Carbon2Chem, Steelanol 5-7
case specific: an LCA
is needed for each
project to determine
the GHG reduction
potential.
2025/2030
Near net shape
casting
Castrip, Salzgitter, ARVEDI ESP 8-9 up to 60% 2015
Source: Ecofys & Fraunhofer ISI 758 767
.
Overall, studies performed for the Iron & Steel Sector indicate a large range of possible GHG
reductions.768
The roadmap commissioned by the steel industry769
reports possible reductions
ranging between 10% and 36% by 2050 compared to 2015770
, but without the use of CCS or
CCU. The inclusion of the latter options could further increase the reductions to 60%, under
certain limiting assumptions. Other breakthrough solutions, like the direct use of hydrogen, were
not considered in that roadmap.
763
In the context of a circular economy, the reductions in demand could possibly reach the point where the
available scrap steel would be able to cover most of the demand.
764
SALCOS can also operate with a mixture of H2 and natural gas, with TRL 7-9, emissions reduction up
to 95% and expected market entry 2020/2025.
765
Higher potentials with CCU/S: up to 80%.
766
Higher potentials with CCU/S. up to 60%.
767
An updated version of the table can be found in the forthcoming report: ICF & Fraunhofer ISI (2018),
Industrial Innovation: Pathways to deep decarbonisation of Industry. Part 1: Technology Analysis,
forthcoming
768
Umweltbundesamt (2018), Comparative analysis of options and potential for emission abatement in
industry,
https://www.umweltbundesamt.de/sites/default/files/medien/1410/publikationen/2018-07-16_climate-
change_19-2018_ets-7_analyse-minderungspotenzialstudien_fin.pdf
769
Boston Consulting Group (2013), Steel’s Contribution to a low-carbon Europe 2050
https://www.bcg.com/publications/2013/metals-mining-environment-steels-contribution-low-carbon-
europe-2050.aspx
770
Own estimate based on the results of the study.
343
The analysis performed by PRIMES has a more positive view on the possible reductions in iron
and steel. In the case of the scenarios achieving 80% GHG reduction, the energy related CO2
emissions in iron & steel are projected to decrease between 81% (in the EE scenario) up to 92%
(in the H2 scenario) compared to 2015. The 1.5C scenarios are projected to deliver even higher
emissions reduction up to 97% (see Table 31).
Table 31: Total CO2 emissions reduction in Iron & Steel by 2050 compared to 2015
Source: PRIMES.
Figure 134 shows the different energy mixes in the scenarios compared to the Baseline. The
sector had a final energy consumption of around 50 Mtoe in 2015771
and a projected demand in
Baseline of 42 Mtoe in 2050, out of which 14 Mtoe of electricity, 9 Mtoe of natural gas, 9 Mtoe
of biomass and 8 Mtoe of solid fossil fuel.
The Baseline achieves the GHG emissions reduction by switching to less carbon intensive fuels
in energy combustion, notably from solids to biomass and electrification to a certain extent, as
well as by reducing energy demand by further improving energy efficiency.
The scenario results confirm, as for most industries, that several alternative options exist for this
sector in the context of the -80% ambition, with solids almost eliminated from the fuel mix. The
direct use of hydrogen together with circular measures that would increase the availability of
scrap metal and thus the use of the secondary production are the solutions deployed additionally
for achieving net zero GHG emissions reduction.
771
Source: Eurostat
Iron & Steel Baseline ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
Total CO2
Emissions
-60% -88% -92% -88% -82% -91% -90% -97% -97%
344
Figure 134: Differences in final energy consumption in Iron & Steel compared to Baseline
in 2050 by fuel and scenario
Source: PRIMES.
The complementary bottom-up analysis using FORECAST leads to similar conclusions as with
PRIMES772
. The GHG emissions reduction compared to 2015 for the 80% ambition scenarios
range between 69% (BioCycle Scenario, the weakest scenario to deliver the desired emission
reductions) up to 88% (CleanGas scenario), with the Mix80 scenario delivering 88% GHG
reductions. Finally, the more ambitious Mix95 scenario delivers 96% reductions (see Table 32).
Table 32: Total GHG emissions reduction in Iron & Steel by 2050 compared to 2015
Iron & Steel CCS CleanGas BioCycle Electric Mix80 Mix95
Energy related GHG
emissions (without CCS)
-56% -88% -70% -84% -88% -97%
Process GHG emissions
(without CCS)
-37% -80% -57% -80% -84% -91%
Total GHG emissions
(with CCS)
-85% -88% -69% -83% -88% -96%
Source: FORECAST.
The drivers for GHG emissions reduction in the FORECAST scenarios are listed below. Figure
135 presents the final energy demand by process, showing the move from the BF route to EAF
and other technologies under development today.
772
Considering always the differences between the two models and the scenario approach followed in each
case.
-25
-20
-15
-10
-5
0
5
10
15
20
25
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE
DifferencecomparedtoBaselinein2050(inMtoe)
Egas Hydrogen Electricity
Biomass Reduced Demand Natural Gas (incl. coal gas)
Steam Solids Fossil Based Liquids
Other (solar, geothernal)
345
 For all scenarios energy efficiency innovations (near net shape casting, top-gas
recycling) and faster increase of EAF (mainly used for construction steel).
 CCS allows retaining current fuel mix (with less coal due to energy efficiency) with a
slightly increased role for biomass. About 54 MtCO2 are captured and stored in 2050.
 In CleanGas, reductions are achieved by hydrogen based direct reduction replacing 88%
of the BF steel production route and the consumption of distributed gas, which is
assumed to have only 20% of conventional gas.
 BioCycle foresees significant amounts of biomass used for co-firing, high quality EAF
allowing shares for new products, reinforced steel, material efficiency and substitution
(steel replaced by biomass-based products in construction).
 In Electric, about 80% of conventional BF production in 2050 is substituted by direct
reduction based on electrolysis (assumed to be available after 2030).
 Mix80 combines the solutions of carbon free steel (via hydrogen based direct reduction,
plasma and electrolysis steel) with recycling and material efficiency solutions of
BioCycle (less ambitious though).
 Mix95 builds on Mix80, fully replacing BF steel by the alternative routes (instead of just
80-90%) combined with the assumption of having 95% clean gas (replacing natural gas)
in the gas distribution grid.
Scenarios CleanGas, Electric, Mix80 and Mix95 report a significant increase in electricity
consumption, either for the production of hydrogen or due to the increased used of the EAF route.
Compared to 2015, where electricity consumption was around 115 TWh, electricity production
for direct use may more than double, ranging between 100 TWh for BioCycle up to 282 TWh in
the case of Electric. The more balanced scenarios Mix80 and Mix95 report consumption around
150 TWh. Accounting also for the electricity required for the production of feedstocks, clean gas
and hydrogen, electricity consumption increases exponentially, reaching 1,064 TWh for
CleanGas, 690 TWh for Electric and Mix95 and 550 TWh for Mix80.
Figure 135: Final energy demand in the iron & steel industry by energy carrier (excluding
production of feedstocks, clean gas and hydrogen)
0
50
100
150
200
250
300
350
400
450
2050 2050 2050 2050 2050 2050
3a CCS 3b CleanGas 3c BioCycle 3d Electric 4a Mix80 4b Mix95
Iron and steel
Finalenergydemand[TWh]
Other fossil Fuel oil Coal Natural gas
District heating Ambient heat Waste non-RES Biomass
Electricity Hydrogen Egas
346
Source: FORECAST.
The identified solutions imply certain challenges.757
Most of the technologies discussed in this
section for deep decarbonisation have a low technology readiness level (TRL), thus more R&D
will be required before commercialisation of these technologies. For the shift from the BF route,
existing facilities will need to be replaced by new plants, while - since these plants will be mostly
electrified - a very high share of carbon-free electricity is necessary to deliver the high emissions
reduction. The transformation to nearly zero steel making is possible, see for example Figure
140, but it will take time and determination, starting from now, and spreading the technologies
across the sector, so the total steel production is nearly zero carbon in 2050. As for the increased
recycling and other circular economy measures, concentrated policies across Europe will need to
be introduced.
Figure 136: Staged transformation of a steel plant to hydrogen reduction and electric arc
furnace through use of natural gas in transition stages in SALCOS
Source: SALCOS773
.
At the same time this transition presents significant opportunities for the industry, as it can
further modernise, reducing its costs along with its carbon intensity. The replacement of older
plants could allow for opportunities of industrial symbiosis e.g. with chemical industries for the
production of plastics or fertilisers, in which case application of CCS or CCU could provide
economic co-benefits.
773
https://salcos.salzgitter-ag.com/. SALCOS plans to proceed in stages: (Status quo) add a natural gas
based direct reduction plant for iron ores to the actual plant layout at the integrated site in Salzgitter.
The direct reduced iron from this plant is to be fed to the existing blast furnaces (CO2 reduction: 10%,
as natural gas used for reduction has a certain amount of hydrogen content). (Stage 1a and b)
Additionally, large amounts of hydrogen may be fed to the process, replacing the needed natural gas
partly. The hydrogen will be produced via electrolysers operated with power from renewable resources.
(CO2 reduction: 18%). (Stage 2) Addition of an electric arc furnace plant, to be fed with the direct
reduced iron from the then already existing direct reduction plant (CO2 reduction: 26%). (Stages 3a and
3b) Further steps are principally based on the same approach as the steps before, leading to the
complete transformation of steelmaking from the blast furnace/basic oxygen technology to direct
reduction/electric arc furnace route in the decades to come. The maximum CO2 reduction possible by
the SALCOS concept in this ultimate configuration is 95%.
347
7.6.2 Chemicals
The European chemicals industry accounted in 2016 for around 4% of the verified emissions of
all stationary installations of the European Union and 14% of industrial emissions excluding
combustion774
(Figure 137).
Figure 137: EU28 Historical GHG Emissions for Chemicals Sector (in MtCO2eq)
Source: EEA.
Chemicals is a very complex, wide and diverse sector, with even more diverse subsectors. The
petrochemical and the basic inorganic subsectors produce the organic (olefins, alcohols,
aromatics) and inorganic (ammonia, chlorine) building blocks for the chemical industry. The
polymer (plastics) and specialty chemical (paints, dyes) subsectors produce intermediate or end
user products, while the consumer chemicals (soaps, cosmetics) are sold to end customers.775
Petrochemicals, basic inorganic and polymer subsectors account for roughly 70% of the sectors
GHG emissions, and therefore these are the subsectors most studies focus upon.
Analysis for this report and other studies750 775 776 777
indicate that energy efficiency improvements
and fuel switching can reduce significantly emissions in 2050 compared to 2010 by 55-60%,
largest share of reductions coming from fuel switching778
.
774
Some chemical company data are reported under the fuel combustion category; hence, actual emissions
of the chemical industry may be higher.
775
ECOFYS & CEFIC (2013), European Chemistry for Growth,
http://www.cefic.org/Documents/RESOURCES/Reports-and-Brochure/Energy-Roadmap-
The%20Report-European-chemistry-for-growth.pdf.
776
JRC (2017), Energy Efficiency and GHG emissions: Prospective scenarios for the Chemical and
Petrochemical Industry,
348
Deeper emissions reduction are also technically possible, 85% or even above, but would require
change of feedstock, application of CCS and CCU technologies and increased recycling. In
particular, the lower use of fossil-based feedstock, replaced by the use of hydrogen, bio-based
material and recycled materials, show strong potential for emissions reduction. Although many
new business opportunities are created, at the same time significant investments would be needed
so that industrial plants could adapt to this business model.
The potential of bioeconomy is not clear, with conflicting evidence. Bio-based ammonia and
methanol production may not have a high potential, unless low cost e-gas is available, contrary to
the bio-based production of cracker products (from naphtha to e.g. bio-ethanol), assuming though
increased availability of sustainable biomass in Europe.775 779 780
On the other hand, the use of
low carbon hydrogen and CO2 as feedstock for the production of low-carbon methanol shows
strong potential for emissions reduction, but has a number of pre-requisites including wide
availability of affordable renewable energy.750 781
It is particularly worth highlighting the importance of improved recycling of plastics. Today only
60% of plastics is recovered in average in Europe, with 60% used for energy recovery purposes.
Plastic waste can be significantly reduced by increasing the mechanical and feedstock
recycling782
up to 60-70% of yearly plastic waste volumes.762 780
Another study finds that out of
the 106 Mt of chemicals delivered to customers, up to 60% can be recycled and re-used.783
This
would require standardisation, improved collection and sorting and would result in both more
limited use of raw material (of fossil origin)784
, as well as less energy, since recycled plastic is a
less energy demanding process. As a result a cascading use of plastics would be introduced, with
downgrading (with mechanical recycling) or upgrading (with feedstock recycling) or after the
plastics have degraded to energy recovery.
Moreover the chemical industry can be an ideal consumer of the CO2 produced in its own
processes or from other industrial sectors (iron & steel, cement, refineries), leading to the
avoidance of emissions if embedded in long lived material or at least the reduced use of fossil
fuel777
. As an example the production of methanol from hydrogen and CO2 is identified as a
beneficial option, assuming that it is economic in the future. Certain studies calculate the
potential for capturing and storing or using CO2 to 90% for petrochemicals, basic inorganics and
polymers and 75% for specialty and consumer chemicals.775
https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/energy-efficiency-
and-ghg-emissions-prospective-scenarios-chemical-and-petrochemical
777
Dechema (2017), Low carbon energy and feedstock for the European Chemical Industry,
https://dechema.de/dechema_media/Downloads/Positionspapiere/Technology_study_Low_carbon_ener
gy_and_feedstock_for_the_European_chemical_industry.pdf
778
According to 750
, the economic potential of energy efficiency is much lower than the technical one.
779
In EU the two main bio=based materials available for the production of bio-chemicals are straw and
forest products.
780
ECOFYS & Berenschot, 2018, Chemistry for Climate,
https://www.vnci.nl/Content/Files/file/Downloads/VNCI_Routekaart-2050.pdf
781
Ramboll (2018), Identification and analysis of promising carbon capture and utilisation technologies,
including their regulatory aspects, forthcoming,
https://ec.europa.eu/clima/events/stakeholder-event-carbon-capture-and-utilisation-technologies-
technological-status_en
782
Mechanical recycling refers to the mechanical processing of waste plastics to produced recycled
polymers. Feedstock recycling refers to the chemical or thermal processes breaking down polymers into
products that can directly replace raw material.
783
Accenture (2017), Taking the EU chemicals industry into the circular economy,
https://www.accenture.com/us-en/_acnmedia/PDF-45/Accenture-CEFIC-Report-Exec-Summary.pdf
784
According to 775
, EU production of polymers could reduce by 7%
349
The main technological pathways in the chemicals sector, with projects under development,
emissions reduction and market entry are summarised in Table 33:
Table 33: Low Carbon Projects under development in Chemicals
Technology option Examples TRL Max. emissions reduction
Market
entry
CCU – Methanol
Carbon
International
Iceland
6-7
Eliminates (almost) all emissions, if
renewable power is used and
depending on the (accounting of the)
source of CO2, and the energy used to
capture the CO2.
2030785
CCS for ammonia Capturing of
process
emissions from
syngas
production
already
happening.
6-7
(Almost) all process emissions, which
forms typically 2/3 of the CO2
emissions of ammonia production
2025
Hydrogen based
ammonia
Renewable
electricity  H2,
turned into NH3
6 (Almost) all emissions
In the
near
future
Source: Ecofys & Fraunhofer ISI 758 767
.
Many of the above potentials can be realised if chemical plants are installed together in industrial
parks with plants from the chemical or other sectors, sharing their energy and material
resources.777
Overall, studies performed for the chemicals sector indicate strong GHG reduction
possibilities.768
The most recent study by the chemicals sector777
explored options towards a
carbon-neutral future for the industry, including synergies and opportunities of industrial
symbiosis with other process industries, in which the chemical industry can valorise side streams
and waste from other sectors. The three scenarios assessed different ambition levels, on top of a
business as usual scenario. The theoretical maximum potential identified by the industry would
allow for a reduction of CO2 emissions up to 210 MtCO2 annually (max) in 2050 compared to
2015 (175% of CO2 emissions reduction). The other two ambition levels considered
corresponded to 59% and 84% of the anticipated emissions in 2050. The focus in these scenarios
was mainly the utilisation of alternative carbon feedstock (mainly electrolytic hydrogen, CO2 and
bio-based raw materials), together with further electrification of processes and energy efficiency.
A particular issue noted in the study is that the considered hydrogen based technologies require
high amounts of low carbon electricity, up to 4900 TWh for the max scenario, 1900 TWh for the
second most ambitious one.786
PRIMES projects emissions reduction along the above lines. In the case of the scenarios
achieving 80% GHG reduction, CO2 emissions in chemicals are projected to decrease between
64% (in the P2X scenario) up to 70% (in the CIRC scenario) compared to 2015. The 1.5°C GHG
scenarios deliver negative emissions (see Table 34). These negative emissions are achieved due
to a combination of additional use of CCS and the potential of CO2 storage in materials. In
785
Moderate plant already operational in Iceland.
786
The electricity demand is mainly driven the high electricity intensity of electrolysis to produce
hydrogen.
350
particular, the 1.5°C scenarios include the possibility of sequestering in petrochemical materials,
such as plastic787
, CO2 captured in the power sector (including onsite CHP plants and industrial
boilers) or in industrial processes in sectors other than chemicals (this illustrates the possibilities
of symbiosis in industry and the role of CCU). If biomass based, these will result in negative CO2
emissions in industrial processes of the chemicals sector, as long as the plastic is not incinerated
but rather re-used, recycled or landfilled.
Table 34: Total CO2 emissions reduction in Chemicals by 2050 compared to 2015
Source: PRIMES.
Figure 138 illustrates the differences in the fuel mix by scenario and compares to the Baseline.
The Baseline achieves its GHG emissions reduction through energy efficiency, which
significantly carbon intensive fuels, together with increased use of biomass. Final energy
consumption drops in from 51 Mtoe in 2015788
to 39 Mtoe in 2050 in Baseline projections, with
16 Mtoe electricity, 9 Mtoe steam, 9 Mtoe natural gas and 3.5 Mtoe biomass. In the chemicals
sector also, PRIMES confirms the existence of many available options for the sector in the
context of the -80% ambition, with the further reduction of natural gas appearing in all scenarios.
Electrification together with demand side measures (energy efficiency, circular economy) are the
deployed solutions for achieving net zero GHG emissions reduction in the PRIMES scenarios.
787
Storage into materials may also be in minerals (through a process called mineralisation) or new
materials. In the case of plastics, storage of CO2 implies the re-use, recycling or landfilling of these
plastics at end of life. Otherwise, their incineration would lead to CO2 emissions.
788
Source: Eurostat
Chemicals Baseline ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
Total CO2
Emissions
-43% -67% -69% -64% -65% -70% -71% -143% -118%
351
Figure 138: Differences in final energy consumption in Chemicals compared to Baseline in
2050 by fuel and scenario
Source: PRIMES.
The complementary bottom-up analysis using FORECAST leads to similar conclusions as with
PRIMES, showing also the high potential of emissions reduction using CCS in chemicals. The
GHG emissions reduction compared to 2015 for the 80% ambition scenarios range between 63%
(BioCycle Scenario) up to 90% (CCS scenario), with the Mix80 scenario delivering 76% GHG
reductions. Finally, the more ambitious Mix95 scenario delivers 91% reductions (see Table 35).
Table 35: GHG emissions reduction in Chemicals by 2050 compared to 2015
Source: FORECAST.
The drivers for GHG emissions reduction in the FORECAST scenarios are listed below. Figure
138 presents the final energy demand by process, showing the significant decrease in
consumption in the ethylene process, some of it being permanent and some shifting mainly to
methanol-based ethanol, using hydrogen (for methanol). Similarly ammonia in all scenarios,
except BioCycle, is produced via the hydrogen route. In more details, it is assumed:
 For all scenarios energy efficiency innovations (for chlorine oxygene depolarised
cathode, catalytic cracking of naphtha, use of selective membranes).
-20
-15
-10
-5
0
5
10
15
20
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFEDifferencecomparedtoBaselinein2050(inMtoe)
Egas Hydrogen Electricity
Biomass Reduced Demand Natural Gas (incl. coal gas)
Steam Solids Fossil Based Liquids
Other (solar, geothernal)
Chemicals CCS CleanGas BioCycle Electric Mix80 Mix95
Energy related GHG
emissions (without CCS)
-21% -84% -74% -74% -76% -95%
Process GHG emissions
(without CCS)
-2% -63% -40% -63% -68% -80%
Total GHG emissions
(with CCS)
-90% -77% -63% -70% -73% -91%
352
 In CCS natural gas is the dominant fuel, while CCS is used for ammonia, ethylene and
methanol. About 85 MtCO2 are captured and stored in 2050.
 In CleanGas, reductions are achieved by utilisation of alternative feedstock (hydrogen
for ethylene, ammonia and methanol) and the consumption of distributed gas, which is
assumed to have only 20% of conventional gas. Also CCU applications for capturing
CO2 to be used as feedstock with hydrogen for the production of methanol and
subsequently ethylene.
 BioCycle foresees significant amounts of biomass and biogas, together with the use of
biomass as a feedstock for producing methanol and subsequently ethylene. Moreover the
scenario includes a number of circular economy measures (ambitious plastics recycling,
bio-based plastics, substitution of plastics by bio products, reduced fertiliser demand,
material efficiency).
 In Electric, use of electric boilers and electrolytic hydrogen replacing up to 80% naphtha
and natural gas as feedstock for the production of ethylene, ammonia and methanol.
 Mix80 reductions are driven by combining the utilisation of alternative feedstock
(hydrogen for ethylene, ammonia and methanol) with the circular economy solutions of
BioCycle (but less ambitious ones).
 Mix95 builds on Mix80, combined with the assumption of having 95% clean gas
(replacing natural gas) in the gas distribution grid and hydrogen fully replacing naphtha
and natural gas as feedstock.
Similarly to Iron & Steel, scenarios CleanGas, Electric, Mix80 and Mix95 report a significant
increase in electricity consumption, either for the production of hydrogen or due to increased
used of electric processes. Compared to 2015, where electricity consumption was 181 TWh,
electricity production for direct use may increase by 78%, ranging between 169 TWh for
BioCycle up to 323 TWh in the case of Electric. The more balanced scenarios Mix80 and Mix95
report consumption around 300 TWh. Accounting also for the electricity required for the
production of feedstocks, clean gas and hydrogen, electricity consumption increases radically,
reaching 1,097 TWh for CleanGas, 1,080 for Mix95, 1,016 TWh for Electric and 849 TWh for
Mix80.
353
Figure 139: Final energy demand in the chemical industry by energy carrier (excluding
production of feedstock hydrogen and clean gas)
Source: FORECAST.
A particularly interesting aspect of the chemical industry is its feedstocks. The main commercial
method of producing ethylene is through steam cracking of a variety of hydrocarbon feedstock,
with naphtha, ethane and LPG being the main ones. Ammonia is produced via the Haber-Bosch
synthesis, using hydrogen mainly generated via steam reforming form natural gas. In order to
decarbonise, the fossil feedstock either needs to be replaced by carbon-free hydrogen (in
FORECAST assumed to be produced through electrolysis with carbon free electricity) or by biobased
feedstock, or to be used with CCS (for permanent storage) or CCU for storage in materials,
which at the end of their life-time would either be re-used, recycled or landfilled (not
incinerated). If CCU is used with biogenic material then this leads to negative emissions. Figure
140 presents the developments in the chemical feedstocks across scenarios. In CCS nothing
changes, but CO2 emissions are stored. In Biocycle fossil feedstock is substituted by biomass
(without CCS) and due to the increased circularity total feedstock input reduced, while in
CleanGas, Electric and the Mix scenarios feedstock is substituted by hydrogen.
0
100
200
300
400
500
600
700
2050 2050 2050 2050 2050 2050
3a CCS 3b CleanGas 3c BioCycle 3d Electric 4a Mix80 4b Mix95
Chemical industry
Finalenergydemand[TWh]
Other fossil Fuel oil Coal Natural gas
District heating Ambient heat Waste non-RES Biomass
Electricity Hydrogen Egas
354
Figure 140: Energy Content of feedstock demand for ethylene, ammonia and methanol
production by type of feedstock and scenario in 2050
Source: FORECAST.
To conclude, the major challenges for the chemical industry are feedstocks, process emissions
and the high share of natural gas. Overall, the analyses performed indicate towards three
pathways for the chemical industry:
 Circular economy, combined with increased use of bio-based material as feedstock. The
limitations of this approach seem to be on the access to sufficient sustainable biomass
feedstock.
 Electrification, combined with the use of hydrogen as feedstock. This pathway tends to
have very high investments in renewable generation, electrolysers and other
infrastructure, thus possibly being the highest cost pathway, but at the same time is the
one with the highest reduction of emissions.
 CCS may be a less costly route and combined with biomass it leads to the generation of
negative emissions (via BECCS). It does entail though risks of lock-ins, if industry rellies
most on this technology, while it needs to surpass public acceptance issues and solve the
infrastructure problem of transportation and storage of CO2.
 A combination of these options seem to be the most promising approach. Industrial
symbiosis can further support this option, as it can provide for the high demand for
hydrogen and CO2 as feedstock, together with other benefits related to the provision of
heat, waste management etc.
7.6.3 Non-metallic minerals
Together, cement and lime sectors accounted for about 8% of total greenhouse gas (GHG)
emissions in the scope of the EU Emissions Trading Scheme (ETS) in 2016 and for about 28% of
industrial sector emissions within the ETS. In 2016, CO2 emissions in the cement industry were
about 112 MtCO2, while they were at about 30 MtCO2 in the lime industry (Figure 141).
0
100
200
300
400
500
600
700
800
2015 CCS CleanGas Biocycle Electric Mix80 Mix95
Feedstockenergycontent[TWh]
Natural gas Naphtha Biomass Hydrogen
355
Figure 141: EU28 Historical GHG Emissions for Non-Metallic Minerals Sector (in
MtCO2eq)
Source: EEA.
The sector of non-metallic minerals is an energy intensive sector, which includes three main
subsectors: cement, glass and ceramics. Together with the iron & steel and the chemicals sectors,
they account for 70% of total industrial emissions. Cement (and lime) is the main emitting
subsector, responsible for 80% of the sector’s emissions. The remaining emissions of the sector
originate from glass and ceramics.
Cement has two main sources of CO2 emissions: the burning of fossil fuels in the clinker/lime
furnace and the process related emissions from the decarbonisation of the limestone. Together
these two sources make up about 85% of total CO2 emissions of the entire Portland Cement
production value chain.
By using today's best available techniques, mitigation potentials are limited, including energy
efficiency750
, fuel switching to less carbon intensive fuels (namely biomass) and reducing the
clinker content in the cement. For instance, the remaining thermal efficiency potential until 2050
is estimated to be less than 10%.789
Thus, breakthrough technologies are essential to achieve the
necessary reductions, which together with circular measures (resource, material and product
efficiency) and CCS or CCU, can reduce emissions up to 75% compared to 2010.790
A similar reduction potential is assessed on a global level by IEA791
, where it is found that the
integration of CCS and CCU in the cement production can reduce global cement emissions
between 2014 and 2050 by 48%, while new technologies for the reduction in the clinker to
cement ratio in cement by 37%. On the other hand, although the UK Industrial Decarbonisation
& Energy Efficiency Roadmaps to 2050 for cement792
identifies a similar very high potential for
789
CSI and ECRA (2017), Development of State of the Art Techniques in Cement Manufacturing,
https://www.wbcsd.org/Sector-Projects/Cement-Sustainability-Initiative/Resources/Development-of-
State-of-the-Art-Techniques-in-Cement-Manufacturing
790
CEMBUREAU (2013), The role of Cement in the 2050 Low Carbon Economy,
https://cembureau.eu/media/1500/cembureau_2050roadmap_lowcarboneconomy_2013-09-01.pdf
791
IEA, 2018, Technology Roadmap. Low Carbon Transition in the Cement Industry,
https://www.iea.org/publications/freepublications/publication/TechnologyRoadmapLowCarbonTransiti
onintheCementIndustry.pdf
792
WSP, Parsons Brinckerhoff, DNV GL (2015), Industrial Decarbonisation & Energy Efficiency
Roadmaps to 2050 - Cement,
356
CCS and CCU, leading to 62% of reductions, it finds less benefits in reduction of the clinker
content, at around 5-10%. Both studies identify also the fuel switch to biomass as an important
emissions reduction solution.
The options for the EU lime industry seem similar to the ones of cement.793
Two thirds of GHG
emissions are attributed to process emissions, the rest being energy related. Although the energy
related emissions can be addressed to a large extent by energy efficiency, electrification and use
of low carbon fuels, process emissions require as in the case of cement the capturing of CO2,
either to be stored underground (CCS) or to be used (CCU).
The big uncertainty in cement, highlighted in the sometimes contradicting expectations on how
much the carbon intensity of cement can be reduced, is related to the generally low TRL of the
many innovative technologies that are in the stage of R&D today. These options range from new
raw materials to new cement alternatives, but even extend to the more efficient use of concrete in
the construction sector, when considering the entire value chain. There are various concepts
under development, with a large number of concepts and projects covering different ambition in
reducing cement carbon intensity, from 30% to even 90%, and with the tendency to have specific
applications.
Low carbon cements are substances made from alternatives to Portland clinker, which can be
produced using less energy and release fewer emissions in productions. Some novel cements can
even lead to reinforced concrete.794
One of the most advanced binders is claimed to be Solidia,
which, based on company claims, could possibly reduce CO2 emissions up to 70%795
compared to
the standard ones. This is mainly achieved by altering the raw materials used, thus reducing
process and combustion emissions. So far, these cements have been slowly penetrating the
market. Experts justify this for a variety of reasons, most notably the existing regulatory
framework, which is based on the Portland cement, their low technological maturity and the
limited applications they may have, e.g. precast concrete.
Significant potential lies also in the increased material efficiency and substitution,762
in the
context of a circular economy, not considered in most analyses. Although cement cannot be
recycled as other material, there is an opportunity to recover up to 30-40% of unused clinker
from concrete at end to life, replacing new cement. If used to produce higher strength aggregates,
the recovered cement can replace up to 80% of new cement in construction, saving almost half
the CO2. Moreover, if building components could be re-used and buildings designed for
disassembly, the need for new cement production would decrease. Another alternative is woodbased
construction, since timber can have similar applications to reinforced concrete. Despite
though the obvious benefits in carbon savings, it is often viewed that wood-based construction
entails more risks due to its reduced stability, ability to handle compression and shorter lifecycle.
In general though, an opportunity lies here, which needs further assessment compared to other
options.
The main technological pathways in the cement/lime sub-sector, with projects under
development, emissions reduction and market entry are summarised in Table 36:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/4166
74/Cement_Report.pdf
793
ECOFYS, 2014, A competitive and Efficient Lime Industry,
https://www.eula.eu/sites/eula.eu/files/publications/files/A%20Competitive%20and%20Efficient%20Li
me%20Industry%20-%20Technical%20report%20by%20Ecofys_0.pdf
794
Chatham House (2018), Making Concrete Change,
https://www.chathamhouse.org/sites/default/files/publications/research/2018-06-13-making-concrete-
change-cement-lehne-preston.pdf
795
http://solidiatech.com/wp-content/uploads/2018/05/ERA-Discovery-FINAL.pdf
357
Table 36: Low Carbon Projects under development in Cement & Lime
Technology option Examples TRL
Max. GHG emissions
reduction
Market
entry
Low carbon cement
(-50%)
(new binder)
Celitement 6 50% 2022
Less carbon cement
(-30%)
(new binder)
Aether 6-7 30% 2020
CCS Post combustion 8-9 95% 2022
CCS (direct separation) LEILAC
project
5-6 ~70%* 2025
Low Carbon cement
(-70%)
(CCU: CO2 absorbing
concrete)
Solidia 8 70% 2020
* only process related emissions
Source : Ecofys & Fraunhofer ISI 758 767
.
The European glass and ceramics industry accounted in 2016 for around 2% of the verified
emissions of all stationary installations of the European Union and around 6% of its industrial
emissions excluding combustion.
Moving to the decarbonisation potential of the glass and ceramics sub-sectors, this is mainly
centred around the drying and firing process. Certain energy efficiency improvements can be
performed, but their potential is found limited due to the advances the past period. As both subsectors
today use mainly natural gas for producing heat, the biggest reductions can be achieved
by switching the fuel to electricity or biogas. In the case of glass use additional reductions can be
achieved through the use of CCS, as well as with increased recycling, re-use and other circular
interventions.
In UK Industrial Decarbonisation & Energy Efficiency Roadmaps to 2050 the maximum
potential reductions compared to 2012 were around 60% for ceramics796
and 90-96% for glass797
(higher reductions corresponding to the inclusion of CCS and CCU). The 2012 Roadmap of the
ceramics industry identifies a potential of reducing emissions by 78% compared to 1990 levels,
requiring electrifications of half the kilns, while the other half retrofitted to clean gas.798
The main technological pathways in the glass/ceramics sub-sector, with projects under
development, emissions reduction and market entry are summarised in Table 37:
796
WSP, Parsons Brinckerhoff, DNV GL (2015), Industrial Decarbonisation & Energy Efficiency
Roadmaps to 2050 - Ceramic Sector,
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/4166
76/Ceramic_Report.pdf
797
WSP, Parsons Brinckerhoff, DNV GL (2015), Industrial Decarbonisation & Energy Efficiency
Roadmaps to 2050 – Glass,
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/4166
75/Glass_Report.pdf
798
Cerameunie (2012), The Ceramic Industry Roadmap. Paving the way to 2050,
http://www.cepi.org/system/files/public/documents/publications/environment/2011/roadmap_final-
20111110-00019-01-E.pdf
358
Table 37: Low Carbon Projects under development in Glass and Ceramics
Technology option Examples TRL
Max. emissions
reduction799
Market
entry
RES
Electrification
- 5-8800
up to 80%
2015/2020
[e]
Oxy-fuel
combustion
incl. heat
recovery801
OPTIMELT 7[e] up to 60% 2025[e]
Waste heat
Recovery
Organic Rankine
Cycle
8-9802
up to 15%803
Batch
preheating 8 up to 15% [e] -
Recycling804
- 9 up to 60% Source:
Ecofys & Fraunhofer ISI 758 767
.
In the case of the scenarios achieving 80% GHG reduction, the CO2 emissions in non-metallic
minerals are projected to decrease between 61% (in the ELEC scenario) up to 71% (in the CIRC
scenario) compared to 2015. The 1.5°C scenarios deliver 83-86% reductions (see Table 38).
Reduction in process emissions are mainly achieved by the application of CCS.
Table 38: Total CO2 emissions reduction in Non Metallic Minerals by 2050 compared to
2015
Non-metallic Minerals Baseline ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
Total CO2
emissions
-28% -61% -68% -66% -63% -71% -69% -83% -86%
Source: PRIMES.
The changes of fuel mix by scenario are reported in Figure 142, which indicates the differences
in energy consumption compared to the Baseline. The Baseline achieves its GHG emissions
reduction through a combination of energy efficiency, together with increased use of biomass and
natural gas. The sector had a final energy consumption of 34 Mtoe in 2015805
and a projected
demand in baseline of 31 Mtoe in 2050, out of which 15 Mtoe natural gas, 5 Mtoe of biomass, 6
Mtoe of electricity.
PRIMES confirms a similar pattern of emissions reduction in the scenarios meeting the -80%
ambition, based notably on strong reductions of natural gas and increased use of biomass.
Electrification, enhanced energy efficiency and primarily the use of hydrogen and e-fuels are
additional possibilities, which emerge in scenarios involving new fuels and in particular in the
799
Reductions partly lower for ceramic industry (e.g. gasification of biomass up to 29%, oxy-fuel
firing/oxygen enrichment up to 12.5%).
800
Lower TRL in the ceramic industry (5-6). Higher TRL in the glass industry (8).
801
Mainly for glass industry. Example for container glass.
802
Lower TRL in the ceramic industry for special projects e.g. DRYficiency project (around TRL 5).
803
Mainly for glass industry.
804
Mainly for glass recycling.
805
Source: Eurostat
359
1.5°C scenarios. For abating industrial process emissions in this sector, CCS seems to be the
preferred option according to the PRIMES projections.
Figure 142: Differences in final energy consumption in Non-Metallic Minerals compared to
Baseline in 2050 by fuel and scenario
Source: PRIMES.
The complementary bottom-up analysis using FORECAST leads to similar conclusions as with
PRIMES, with CCS being again the most effective solution. The GHG emissions reduction
compared to 2015 for its -80% decarbonisation scenarios range between 45% (the Electric
Scenario) up to 81% (CCS scenario), with the Mix80 scenario delivering 56% GHG reductions.
Finally, the more ambitious Mix95 scenario delivers 86% reductions (see Table 39). About 120
MtCO2 are captured and stored in 2050 in CCS scenario and 39 MtCO2 in the case of Mix95.
Table 39: GHG emissions reduction in Non-Metallic Minerals by 2050 compared to 2015
Non-Metallic Minerals CCS CleanGas BioCycle Electric Mix80 Mix95
Energy related GHG
emissions (without CCS)
-52% -83% -88% -69% -71% -95%
Process GHG emissions
(without CCS)
9% -26% -43% -28% -45% -45%
Total GHG emissions
(with CCS)
-81% -50% -62% -45% -56% -86%
Source: FORECAST.
The drivers for GHG emissions reduction for cement and lime in the FORECAST scenarios are
listed below.
-20
-15
-10
-5
0
5
10
15
20
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE
DifferencecomparedtoBaselinein2050(inMtoe)
Egas Hydrogen Electricity
Biomass Reduced Demand Natural Gas (incl. coal gas)
Steam Solids Fossil Based Liquids
Other (solar, geothernal)
360
 For all scenarios energy efficiency innovations (low-carbon cement types, recarbonating
cement/concrete) and material efficiency through a reduction in the clinker
share.
 In CCS the fuel switch is driven by prices, with post-combustion and direct separation
CCS in place.
 In CleanGas, reductions are achieved by using more biomass and RES-waste and
consuming more distributed gas, which is assumed to have only 20% of conventional
gas.
 BioCycle foresees higher amounts of biomass and RES-waste, together with circular
economy measures (concrete recycling and re-use, efficient concrete use, material
substitution by biomass, carbon reinforced concrete).
 In Electric, cement is produced through electric clinker kilns.
 Mix80 combines the recycling and material efficiency solutions of BioCycle with fuel
switching to low carbon fuels.
 Mix95 adds to Mix80 CCS for lime and conventional clinker, combined with the
assumption of having 95% clean gas (replacing natural gas) in the gas distribution grid.
The drivers for GHG emissions reduction for the glass and ceramics in the FORECAST scenarios
are listed below.
 For all scenarios energy efficiency innovations (oxy-fuel and use of waste heat) and
faster increase in recycling of glass containers.
 In CCS there is a fuel switch to natural gas, but economic applications of CCS are
restricted only for the late-combustion in the glass sector. There is also an increase in flat
glass recycling.
 In CleanGas, reductions are achieved by the consumption of distributed gas, which is
assumed to have only 20% of conventional gas. There is also an increase in flat glass
recycling.
 BioCycle foresees higher amounts of biomass, together with circular economy measures
(re-use of glass and more efficient glass use).
 In Electric, electric furnaces replaces gas. There is also an increase in flat glass
recycling.
 Mix80 combines electric furnaces with the recycling and material efficiency solutions of
BioCycle.
 Mix95 is similar to Mix80, combined with the assumption of having 95% clean gas
(replacing natural gas) in the gas distribution grid.
361
Figure 143: Final energy demand in the non-metallic minerals industry by energy carrier
Source: FORECAST.
The analysis confirms that the non-metallic minerals industry, and in particular the cement and
lime production, is one of the hardest to abate source of emissions. Without CCS, the success in
decarbonising the sector will depend on the diffusion speed of low carbon cements and
fundamental improvements in material efficiency and recycling in the construction industry.
These in turn may require significant changes in current value chains and business models.
7.6.4 Pulp & Paper
The European pulp and paper industry accounted in 2016 for around 1.5% of the verified
emissions of all stationary installations of the European Union and around 5% of industrial
emissions excluding combustion (Figure 144).
0
50
100
150
200
250
300
350
2050 2050 2050 2050 2050 2050
3a CCS 3b CleanGas 3c BioCycle 3d Electric 4a Mix80 4b Mix95
Non-metallic mineral products
Finalenergydemand[TWh]
Other fossil Fuel oil Coal Natural gas
District heating Ambient heat Waste non-RES Biomass
Electricity Hydrogen Egas
362
Figure 144: EU28 Historical GHG Emissions for Paper & Pulp Sector (in MtCO2eq)
Source: EEA.
This sector produces paper and pulp, the wood-based resource used to produce paper. Pulp is
produced mechanically, chemically or from recycled paper, with its intended quality determining
the processing steps and the raw materials to be used. Drying the paper web is then the important
energy-consuming process in paper mills.
The two main mitigation pillars for pulp & paper are improving energy efficiency and switching
to low-carbon fuels and electricity. The European Paper industry has greatly improved its energy
efficiency over the last decades using waste heat and improved drying techniques. In addition,
fuel switching from fossil fuels to renewable sources like biomass (and electricity) has already
taken place to a significant extent, but there is further potential.
When it comes to decarbonising the paper industry, the industry has the advantage of having
direct access to bio-based materials. In addition, the paper industry only generates energy-related,
but no process-related emissions (like for example the cement industry) which are much more
difficult to reduce. Finally the demand for steam in the paper industry is quite flexible in terms of
the energy carrier used for its production (in contrast to furnaces in the high-temperature range,
e.g. in the steel industry). The above allow for many possibilities regarding fuel-switching to low
carbon fuels, which can be performed purely on an economic basis. The full electrification of the
sector seems particularly appealing, as the sector could be used to increase flexibility of the
energy system e.g. by providing demand side flexibility806
. The competition for biomass with
other sectors may prove a challenge for the future.
Another opportunity for paper and pulp is the Black liquor gasification (BLG). This is a
technique used in pulp mills to generate surplus electricity or bio fuel. In the black liquor
gasification process concentrated black liquor is converted into inorganic compounds (mainly
sodium and sulphur) suitable for the recovery of cooking chemicals and combustible fuel gas
806
CEPI (2017), Investing in Europe for Industry Transformation,
http://www.cepi.org/system/files/public/documents/publications/innovation/2017/roadmap_2050_v07_
printable_version.pdf
363
comprising primarily hydrogen and carbon monoxide. BLG is often discussed in the context of
the future paper factory becoming a biorefinery.807
Recycled fibre quality can be improved by improving the collection, sorting (e.g. by filler
content, brightness, fibre length) and Ecodesign for recycling. This will allow more efficient
treatment and refining of fibres. New recycling technologies like the before mentioned steam
forming without wetting and drying could even further decrease energy demand in the paper
industry. Digitalisation might also provide the next generation of efficient recycling technologies.
The main technological pathways in the pulp and paper sector, with projects under development,
emissions reduction and market entry are summarised in Table 40:
Table 40: Low Carbon Projects under development in Paper & Pulp
Technology option Examples TRL
Max. emissions
reduction
Market
entry
New drying
techniques
Impulse drying808
8-9 up to 20% 2020[e]
Foaming of fibrous
materials
5 n.a. 2025
Black liquor
gasification
8-
9[e]
up to 11% 2020[e]
Enzymatic pre-
treatment
6-8 up to 5% 2025[e]
Heat recovery e.g. paper809
9 up to 5% Source:
Ecofys & Fraunhofer ISI 758 767 758
A number of studies of possible pathways for the decarbonisation of the sector have been
performed.768 810
The European forest fibre and paper industry has recently expressed the position
that the above mentioned measures can lead to an 80% decarbonisation of the sector compared to
1990, while at the same time increase its added value in Europe by 50%.806
The analysis performed by PRIMES provided mixed possibilities for the industry, depending on
the pathway.811
In the case of the scenarios achieving 80% GHG reduction, the emissions in nonferrous
are projected to decrease between 65% (in the EE scenario) up to 87% (in the P2X
scenario) compared to 2015. The 1.5°C GHG scenarios deliver much higher reductions at 94%
(see Table 41).
807
JRC (2015), Best Available Techniques (BAT) Reference Document for the Production of Pulp, Paper
and Board,
https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/best-available-
techniques-bat-reference-document-production-pulp-paper-and-board-industrial
808
Selected options like for example “superheated steam drying” can have lower TRLs (e.g. 3-5 in WSP
Parsons Brinckerhoff (WSP) und DNV-GL 2015d). The example shown here is for “impulse drying”.
809
Also for mechanical pulp.
810
JRC (2018), Prospective scenarios for the pulp and paper industry,
http://publications.jrc.ec.europa.eu/repository/bitstream/JRC111652/kjna29280enn_jrc111652_online_r
evised_by_ipo.pdf
811
For the CIRC and 1.5 LIFE scenarios a 30% reduction in the output of pulp was assumed, due to
increased recycling and digitalisation, with the wood saved used in construction instead to substitute
cement and other materials. In PRIMES CCS in pulp and paper is not applied except in CHP
installations. Emissions of these installations are recorded under the power sector.
364
Table 41: Energy related CO2 emissions reduction in Pulp & Paper by 2050 compared to
2015
Pulp &
Paper
Baseline ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
CO2
emissions
reduction
-67% -79% -83% -87% -65% -77% -91% -94% -94%
Source: PRIMES.
The sector had a final energy consumption of 34 Mtoe in 2015812
and a projected demand in
Baseline of 25 Mtoe in 2050, out of which 11 Mtoe of electricity, 8 Mtoe of biomass, 3.5 Mtoe
natural gas and 2.5 Mtoe of steam.
The changes in fuel mix are reported in Figure 145 by scenario, measured as differences in
energy consumption compared to the Baseline. Further electrification in this sector, combined
with enhanced energy efficiency and the use of e-gas and biogas seem to be a valid combination
for reducing emissions.
In the CIRC and 1.5LIFE scenario, the reduction of total final demand due to energy efficiency
improvement and the recycling of paper imply a significant reduction of demand for energy
products, compared to the Baseline. The scenarios achieving 80% GHG reduction show that a
single solution is not sufficient to drive deep emissions reduction. Measures regarding the amount
and the type of paper material used in the economy, in particular for packaging, and
digitalisation, which may replace paper, can further reduce the demand for paper and pulp, and
thus energy demand and GHG emissions.
812
Source: Eurostat
365
Figure 145: Differences in final energy consumption in Pulp & Paper compared to Baseline
in 2050 by fuel and scenario
Source: PRIMES.
FORECAST produced a range of lower GHG reduction potentials compared to PRIMES for the
pulp and paper sector. The GHG emissions reduction compared to 2015 for its -80%
decarbonisation scenarios range between 42% (the Electric Scenario) up to 99% (CCS scenario),
with the Mix80 scenario delivering 50% GHG reductions. Finally, the more ambitious Mix95
scenario delivers 88% reduction (see Table 42).
Table 42: GHG emissions reduction in Pulp & Paper by 2050 compared to 2015
Pulp & Paper CCS CleanGas BioCycle Electric Mix80 Mix95
Total GHG emissions813 -98% -50% -50% -42% -50% -88%
Source: FORECAST.
The drivers for GHG emissions reduction in the FORECAST scenarios are listed below. Figure
146 presents the final energy demand by energy carrier.
 For all scenarios energy efficiency innovations (enzymatic pre-treatment, innovative
paper drying, black liquor gasification) and ambitious recycling.
 In CCS Scenario, CCS is adopted by big emitters closer to 2050. About 20 MtCO2 are
captured and stored in 2050.
 CleanGas GHG reductions are driven by the consumption of distributed gas, which is
assumed to have only 20% of conventional gas, together with biomass.
813
The reason for the high reduction in the CCS scenario is that by deploying CCS even to only half the
paper mills (to the bigger emitters), together with the biomass in the energy mix, results in BECCS thus
leading to negative emissions.
-15
-10
-5
0
5
10
15
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFEDifferencecomparedtoBaselinein2050(inMtoe)
Egas Hydrogen Electricity
Biomass Reduced Demand Natural Gas (incl. coal gas)
Steam Solids Fossil Based Liquids
Other (solar, geothernal)
366
 In BioCycle, there is a strong focus on biomass, together with strong circular economy
measures (maximum paper recycling and re-use, wood fibre products replace plastics,
improved material efficiency).
 In Electric, electric boilers and heat pumps are the main drivers.
 Mix80 is based on the combination of Electric and BioCycle (without the extensive use
of biomass).
 Mix95 is similar to Mix80, combined with the assumption of having 95% clean gas
(replacing natural gas) in the gas distribution grid.
Figure 146: Final energy demand in pulp & paper by energy carrier
Source: FORECAST.
The scenarios confirm the high potential of the industry to decarbonise through electricity and
biomass. If the large paper mills are also equipped with CCS then the industry can generate
negative emissions and compensate other, hard to abate, emissions, like process emissions in
other industries.
The FORECAST scenarios also indicated a risk for lock-in due to the upcoming necessary
investments to replace old installations in the coming decade. If proper incentives are not in
place, like a sufficiently high CO2 price, industry may continue to invest in fossil fuel based
steam generation with a lifetime of 20-30 years.
7.6.5 Non-ferrous metals
The non-ferrous metals sector covers base metals (aluminium, copper, lead, zinc, nickel and tin),
precious metals (gold, silver, etc.) and the so-called technology metals (molybdenum, cobalt,
silicon, selenium, manganese, etc.). Aluminium production covers the largest part of the
emissions of the sector, after combustion (Figure 147).
0
50
100
150
200
250
300
350
2050 2050 2050 2050 2050 2050
3a CCS 3b CleanGas 3c BioCycle 3d Electric 4a Mix80 4b Mix95
Paper and printing
Finalenergydemand[TWh]
Other fossil Fuel oil Coal Natural gas
District heating Ambient heat Waste non-RES Biomass
Electricity Hydrogen Egas
367
Figure 147: EU28 Historical GHG Emissions for Non-Ferrous Metals Sector (in MtCO2eq)
Source: EEA.
As an electricity-intensive industry the European aluminium sector accounted in 2016 for around
1% of the verified emissions of all stationary installations of the European Union and around 2%
of its industrial emissions excluding combustion. In aluminium production, two main process
routes can be distinguished: primary aluminium production from bauxite and the much less
energy-intensive aluminium production using scrap and electricity as main inputs. The gradual
electrification of fossil-fuel based processes has led to the significant decrease of emissions and
increase of the energy efficiency of the sector.
Conventional aluminium smelting from ore is a multi-stage, energy-intensive process. Of the
main process stages, electrolysis via the Hall-Héroult (H-H) route is the most energy intensive
one (with a share of 83%), with alumina production from bauxite being the next more intensive
(15%), but also the main generator of solid / effluent waste.
A project that has attracted attention in the sector is “the Elysis process”. In May 2018, Alcoa and
Rio Tinto announced the World’s first “carbon-free” aluminium smelting process, called
“Elysis”. The emerging technology is currently producing metal at the Alcoa Technical Center,
near Pittsburgh, USA.814
Alcoa and Rio Tinto launch new Joint Venture for larger scale
development and commercialization of the process. The development is being supported by
Alcoa, Rio Tinto, the Government of Canada, the Government of Quebec and Apple, with a
combined investment of $CAN188 million. The technology is expected to become commercially
available around 2024.
Perhaps the highest potential for reductions for both aluminium and copper, complementing the
emissions reduction to be achieved in the primary production, is the shift to more secondary
814
https://elysistechnologies.com/en#unprecedented-aluminium-partnership
368
production through further recycling and re-use. This could then bring significant benefits, as the
recycling of aluminium reduces energy consumption by 95% and emissions up to 98%. Moreover
it opens up the possibilities for fuel switching to the least carbon-intensive fuel for use in
combustion, be it electricity, clean gas or biomass.
Re-use of existing aluminium is seen as an interesting opportunity for making “order-ofmagnitude”
carbon/energy savings per tonne of metal. Recycling also offers substantial resource
efficiency and other environmental benefits. Today aluminium recycled from end-of-life products
covers 27%, according to one study762
with the possibility to increase up to 55%, or slightly
above 50% according to a different source815
. The key barriers are the ability to isolate and gather
this recyclable material easier and the infrastructure to handle it, as this would prevent its downcycling
and enable the production of high-quality secondary aluminium. At the same time it is
important to reduce the losses of aluminium throughout its use cycle, as 25-30% of aluminium is
estimated to be lost.
Energy efficiency could also bring some further reductions both in cost and in energy
consumption for aluminium. There are some promising technologies, which could deliver overall
energy savings up to 45% but they have very low TRL. A more advanced solution, currently in
pilot phase, is the carbo-thermic reduction (non-electrolytic process), which could deliver around
20% energy savings.
CCS does not seem to be an option of first priority for the non-ferrous metals due to the smaller
size of the installations and emissions in comparison to the sectors discussed so far.
The main technological pathways in the non-ferrous metals sector, with projects under
development, emissions reduction and market entry are summarised in Table 43:
Table 43: Low Carbon Projects under development in Non-ferrous Metals
Technology option Examples TRL
Max. emissions
reduction
Market
entry
Low emission electrolysis HAL4e 5-6 n.a. 2023
Inert anodes/wetted
drained cathodes
5 up to 35% 2020/2025
Magnetic billet heating 5-9816
n.a. 2010/2020817
Waste heat recovery818
8-9 n.a. Source:
Ecofys & Fraunhofer ISI 767
.758 767
.
Overall, studies performed for the non-ferrous sector indicate the possibility for limited GHG
reductions.768
Nevertheless, according to the 2012 vision of the aluminium industry819
, a
decarbonised power sector could reduce the direct emissions of the industry by 70% and the total
815
JRC (2018), Raw materials scoreboard 2018, https://publications.europa.eu/en/publication-detail/-
/publication/117c8d9b-e3d3-11e8-b690-01aa75ed71a1
816
Lower TRLs in the copper industry (5), higher TRLs in the aluminium industry (8-9).
817
2020 for the copper industry.
818
Example for copper.
819
European Aluminium Association (2012), An aluminium 2050 roadmap to a low-carbon Europe,
https://european-aluminium.eu/media/1801/201202-an-aluminium-2050-roadmap-to-a-low-carbon-
europe.pdf
369
emissions (including indirect) up to 79% by 2050. But for this to happen research into new
technologies is needed to eliminate direct emissions attributable to carbon anode consumption,
while also recycling rates for aluminium should further increase (saving up to 95% of the energy
required in primary production). On the contrary, copper sector supports that its production
process has almost reached its technological plateau and the opportunities for further energy
reductions are very limited, with a reduction of carbon emissions by 25% by 2050 being a
realistic estimate.820
The analysis performed by PRIMES provided mixed possibilities for the industry, depending on
the pathway. No significant changes were assumed in technologies or highly increased recycling
rates of aluminium. In the case of the scenarios achieving 80% GHG reduction, the emissions in
non-ferrous are projected to decrease between 68% (in the EE scenario) up to 87% (in the H2
scenario) compared to 2015. The 1.5°C scenarios deliver much higher reductions, between 93-
94% (see Table 44).
Table 44: Energy related CO2 emissions reduction in Non-Ferrous Metals by 2050
compared to 2015
Non-
ferrous
Baseline ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
CO2
emissions
reduction
-53% -72% -87% -84% -68% -69% -90% -94% -93%
Source: PRIMES.
The sector had a final energy consumption of 9.5 Mtoe in 2015821
and a projected demand in
Baseline of 8 Mtoe in 2050, out of which 5.5 Mtoe of electricity and 2 Mtoe natural gas. The
main drivers for these reductions are reported in Figure 148, which indicates the differences in
energy consumption compared to the Baseline. In general, overall energy consumption levels
change little; the differences between scenarios are more related to fuel switching to lower carbon
intensity fuels.
820
European Copper Institute (2014), Copper's Contribution to a Low-Carbon Future,
https://copperalliance.eu/benefits-of-copper/sustainable-development/low-carbon-future/
821
Source: Eurostat
370
Figure 148: Differences in final energy consumption in Non-Ferrous compared to Baseline
in 2050 by fuel and scenario
Source: PRIMES.
FORECAST results confirmed the more limited possibilities of emissions reduction for this
sector, compared to the other industry sectors, noting though at the same time that the sector has
already significantly reduced its emissions compared to 1990. The GHG emissions reduction
compared to 2015 for its -80% decarbonisation scenarios range between 33% (the CCS Scenario)
up to 47% (CleanGas scenario), with the Mix80 scenario delivering 41% GHG reductions.
Finally, the more ambitious Mix95 scenario delivers 57% reductions (see Table 45).
Table 45: GHG emissions reduction in Non-Ferrous by 2050 compared to 2015
Source: FORECAST.
The drivers for GHG emissions reduction in the FORECAST scenarios are listed below. Figure
149 presents the final energy demand by energy carrier.
 For all scenarios energy efficiency innovations (Hal4E, inert anodes & wettable
cathodes, magnetic billet heating) and faster increase of recycling.
 In CCS Scenario, natural gas remains dominant.
-3
-2
-1
0
1
2
3
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFEDifferencecomparedtoBaselinein2050(inMtoe)
Egas Hydrogen Electricity
Biomass Reduced Demand Natural Gas (incl. coal gas)
Steam Solids Fossil Based Liquids
Other (solar, geothernal)
Non-Ferrous Metals CCS CleanGas BioCycle Electric Mix80 Mix95
Energy related GHG
emissions (without CCS)
-52% -80% -67% -62% -62% -94%
Process GHG emissions
(without CCS)
-11% -11% -17% -11% -17% -17%
Total GHG emissions
(with CCS)
-33% -47% -43% -38% -41% -57%
371
 CleanGas is based on the consumption of distributed gas, which is assumed to have only
20% of conventional gas.
 In BioCycle, there is some switch to biomass and biogas, plus an increase in recycling
rates due to higher quality in sorting.
 In Electric, induction heating in foundries and electric furnaces drive the reductions.
 Mix80 is based on the Electric scenario, together with an increase in recycling rates.
 Mix95 is based on Mix80, combined with the assumption of having 95% clean gas
(replacing natural gas) in the gas distribution grid.
Figure 149: Final energy demand in the non-ferrous industry by energy carrier
Source: FORECAST.
7.6.6 Refineries
As an energy-intensive large industry, the European refineries accounted in 2016 for around 7%
of the verified emissions of all stationary installations of the European Union and around 23% of
industrial emissions excluding combustion (Figure 150).
0
20
40
60
80
100
120
2050 2050 2050 2050 2050 2050
3a CCS 3b CleanGas 3c BioCycle 3d Electric 4a Mix80 4b Mix95
Non-ferrous metals
Finalenergydemand[TWh]
Other fossil Fuel oil Coal Natural gas
District heating Ambient heat Waste non-RES Biomass
Electricity Hydrogen Egas
372
Figure 150: EU28 Historical GHG Emissions for Refineries Sector (in MtCO2eq)
Source: EEA.
The petroleum refineries sector is composed of two key groups: the refined petroleum products
and the coke oven products. Refined petroleum products accounted for 92% of the sector’s
emissions. They are derived from crude oils, which are distilled in the refinery into a number of
fractions (petroleum gases, naphtha, asphalts and residue). Depending on the refinery’s
complexity these fractions can be upgraded into commercial products, like kerosene and gasoline.
Between 1992 and 2010, EU refineries have increased their energy efficiency by 10%, picking
most low hanging fruits. Still BAT techniques in 3 major categories of the refining process have
the potential to reduce refinery emissions by 25%.822 823
Moreover improved waste heat recovery
can deliver 10% further reductions.
A major opportunity for the refineries seems to lie in the CCS technology, due to usual large size
of the refineries, producing large amounts of CO2 at high concentration. The ideal target for CCS
is the methane reformation unit, producing hydrogen and a CO2 stream at very high
concentration, almost at 100%. The surplus hydrogen produced824
can then be used as a fuel
elsewhere. Application of CCS to other refinery processes can still significantly reduce emissions
822
WSP, Parsons Brinckerhoff, DNV GL (2015), Industrial Decarbonisation & Energy Efficiency
Roadmaps to 2050 - Oil Refining,
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/4166
71/Oil_Refining_Report.pdf
823
Concawe (2018), Low Carbon Pathways. CO2 efficiency in the EU Refining System 2030/2050,
https://www.concawe.eu/wp-content/uploads/2018/04/Rpt_18-7.pdf
824
Normally hydrogen is used in the refineries themselves, thus only the required amounts of hydrogen are
produced. For using it as a fuel elsewhere capacities of Steam Methane Reforming need to be
expanded.
373
between 90-96%, though these technologies have not reached the commercial stage still. Towards
2050, electrolysis is expected to be competitive with steam reforming, with uncertainty on which
technology will prevail, depending also on the underlying variable costs (fuels, emissions).825
Demand side trends and measures, will also lead to reduced consumption of fossil-fuel based
liquids in transport and thus also to reduced emissions.
The main technological pathways in the refineries sector, with projects under development,
emissions reduction and market entry are summarised in Table 46:
Table 46: Low Carbon Projects under development in Refineries
Technology option Examples TRL
Max. emissions
reduction
Market
entry
Carbon Capture and
Storage
Lacq/TOTAL 8-9
60% (net; 90% gross
reduction)
2025
RES-H2 7 up to 50% 2020
Bio-based refinery REPSOL
approach
6 up to 30% 2025
Power to Gas/Liquid
(synthetic fuels)
6 80% 2025
Advanced biofuels 8-9 n.a. 2020
Source: Ecofys report 758 767 758
According to a recent study published by the refining industry, a combination of energy
efficiency, low carbon electricity and CCS could lead to emissions reduction up to 70%
compared to 2012.823
The analysis performed by PRIMES projected similar results. In the case of the scenarios
achieving 80% GHG reduction, the energy related CO2 emissions in refineries are projected to
decrease between 77% (in the H2 scenario) up to 80% (in the CIRC scenario) compared to 2015.
The 1.5°C scenarios can lead to higher reductions, up to 90% (see Table 47).
Table 47: Energy related CO2 emissions reduction in Refineries by 2050 compared to 2015
Refineries Baseline ELEC H2 P2X EE CIRC COMBO 1.5 TECH 1.5 LIFE
CO2
emissions
reduction
-47% -79% -77% -78% -79% -80% -83% -90% -90%
Source: PRIMES.
The sector had a final energy consumption of 46 Mtoe in 2015826
and a projected demand in
Baseline of 32 Mtoe in 2050, out of which 18 Mtoe of fossil liquids, 6 Mtoe natural gas, 4 Mtoe
of steam and 3 Mtoe of electricity. The main drivers for these reductions are reported in Figure
151, which indicates the differences in energy consumption compared to the Baseline. In general,
the main differences come by a significant decrease in final energy demand, up to almost 50% in
1.5 LIFE, related also with the increase in Electric Vehicles and corresponding decrease in fuel
825
ASSET project (2018), Sectorial integration long-term perspective in the EU energy system,
https://ec.europa.eu/energy/en/studies/asset-study-sectorial-integration
826
Source: Eurostat
374
consumption. ELEC and CIRC are the only scenarios which reduce emissions not by demand
reductions (energy efficiency) in the sector, but by fuel substitution of fossil liquids by
electricity.827
.
Figure 151: Differences in final energy consumption in Refineries compared to Baseline in
2050 by fuel and scenario
Source: PRIMES.
The analysis using FORECAST indicates the possibility for high reductions. The GHG emissions
reduction compared to 2015 for its -80% decarbonisation scenarios range between 71% (the
Electric scenario) up to 83% (CCS scenario), with the Mix80 Scenario delivering 71% GHG
reductions. Finally, the more ambitious Mix95 scenario delivers 96% reductions (see Table 48).
Table 48: Total GHG emissions reduction in Refineries by 2050 compared to 2015
827
This is because electrification of certain industrial processes is less efficient than thermal processes in
high-temperature applications and at the same time reduces the potential of energy savings through heat
recovery.
-25
-20
-15
-10
-5
0
5
10
15
20
25
ELEC H2 P2X EE CIRC COMBO 1.5TECH 1.5LIFE
DifferencecomparedtoBaselinein2050(inMtoe)
Egas Hydrogen Electricity
Biomass Reduced Demand Natural Gas (incl. coal gas)
Steam Solids Fossil Based Liquids
Other (solar, geothernal)
Refineries CCS CleanGas BioCycle Electric Mix80 Mix95
Energy related GHG
emissions (gross)
-70% -79% -77% -71% -71% -96%
Process GHG emissions
(gross)
-83% -85% -90% -89% -89% -98%
Total GHG emissions
(net)
-83% -79% -77% -71% -71% -96%
Refineries CCS CleanGas BioCycle Electric Mix80 Mix95
Total GHG emissions -83% -79% -77% -71% -71% -96%
375
Source: FORECAST.
The drivers for GHG emissions reduction in the FORECAST scenarios are listed below. Figure
152 presents the final energy demand by energy carrier.
 For all scenarios energy efficiency innovations, but most importantly significant
penetration of EVs, reducing the demand for diesel and gasoline.
 In CCS, reductions are achieved by the installation of post-combustion CCS and oxyfuel
CCS technologies, combined with faster switch to natural gas as energy carrier.
About 14 MtCO2 are captured and stored in 2050.
 CleanGas, combines the consumption of distributed gas, which is assumed to have only
20% of conventional gas, with blue fuel synthesis to capture CO2 and use them for the
production of e-fuels (for the remaining non-electric vehicles).
 BioCycle foresees significant amounts of biomass used as feedstock and for heating of
columns. Moreover, biofuels are produced to serve the remaining liquid fuel demand;
 In Electric, columns are heated by electricity.
 Mix80 is based on fuel switching to electricity.
 Mix95 adds CCS to the remaining emissions of Mix80, combined with the assumption
of having only clean gas (no natural gas) in the gas distribution grid. About 7 MtCO2 are
captured and stored in 2050. Final energy demand decreases strongly because this is the
only scenario assuming a strong decrease in consumption of oil production in the
economy as a whole, and thus less production in refineries.
Figure 152: Final energy demand in the refining industry by energy carrier
Source: FORECAST.
In the context of the Paris agreement, reduced demand for fossil fuel based fuels should be
expected and may prove as a challenge to the industry. At the same time though opportunities
arise in the refining of clean molecules, which would allow refineries to be integrated into local
0
50
100
150
200
250
2050 2050 2050 2050 2050 2050
3a CCS 3b CleanGas 3c BioCycle 3d Electric 4a Mix80 4b Mix95
Refineries
Finalenergydemand[TWh]
Other fossil Fuel oil Coal Natural gas
District heating Ambient heat Waste non-RES Biomass
Electricity Hydrogen Egas
376
economic value chains for the production of heat, hydrogen and synthetic fuels, biofuels and
CO2.828
This will allow refineries to continue supplying the market with fuels and remain
competitive in an international context. Note though that in these cases, like the production of
synthetic fuels, emissions reduction can be achieved only if electricity is carbon free.
7.6.7 Circular Economy: The opportunities for industry
Circular economy presents a great potential for emissions reduction and many other opportunities
for the industry. Ambitious demand side measures in the form of materials recirculation,
increased product efficiency and circular business models can reduce emissions significantly in
heavy industry by up to 60% in 2050 compared to 1990.762
It offers opportunities for a more
efficient use of materials, complementing the efforts in increasing energy efficiency and reducing
costs. To reap these benefits significant changes need to take place in our economy (see Box 1).
Figure 153: A circular economy
Source: European Parliamentary Research Service 829
.
828
CIEP (2018), Refining the Clean Molecule,
http://www.clingendaelenergy.com/publications/publication/refinery-2050-refining-the-clean-molecule
829
http://www.europarl.europa.eu/thinktank/infographics/circulareconomy/public/index.html
377
Figure 154: Material flows in the economy (EU-28, 2014)
Source: Mayer et al (2018)830
.
830
Mayer et al (2018), Measuring progress towards a Circular Economy - a monitoring framework for
economy-wide material loop closing in the EU28, Journal of Industrial Ecology, doi:
10.1111/jiec.12809
378
Box 1: The Circular Economy
The current economic model is close to linear, often described by extraction, production, use and
disposal. In a circular economy raw materials are sourced sustainably and used for production more
efficiently, taking into consideration from the product design phase the use, repair, disassembly,
remanufacturing and reuse of the products. After a certain level of degradation, the components of the
product are gradually recycled, each component allowing for a possibly different number of reuse
cycles (Figure 153). This way a circular economy minimises waste, especially when the materials used
are fully recyclable. It also reduces extraction of new raw materials.
In order to transit to a circular economy it is also necessary to revisit the existing value chain model of
our economy. The current model could lead to a moderate circular economy, with increased recycling
and some limited reuse. To reap the benefits of circular economy though, certain changes need to take
place in the value chains. Products will be decreasingly bought and consumed; instead they will have
increased durability and be leased, rented or shared by the consumers. Industrial and manufacturing
processes will be redesigned so that material loss in the production and between the different lifecycles
phases of each product or material are minimised. Cascading use of material will lead to a diversified
reuse across the value chain, for example cotton clothing first reused as second hand apparel, then as
fibre-fill in upholstery in the furniture industry and later in stone wool insulation for construction
(“Towards the Circular Economy”, 2013, Ellen McArthur Foundation).
A major objective of the circular economy is to retain value within the economic system (valueretention
processes). In a circular economy companies may sell less new products than in the current
linear one. At the same time though value creation opportunities will arise, both in terms of cost
reductions and the increase of services offered together with the product. In terms of costs, due to the
reverse cycle, energy, material and labour costs per product are expected to be reduced. New services,
enabled by the digitalisation of the economy, will facilitate reusing or sharing the use of products, while
offering advanced lifetime prolongation options for the products and logistical support via reverse
logistics. This will maximise the utility of the customers, while significantly reducing environmental
impacts.
What would be the impact of these changes? These changes will have a number of impacts on the
economy, the environment, the GHG emissions and the energy system. Improved waste management
allows materials to go back into the economic cycle, thus, reducing the input of raw materials. The
quantities of virgin material used as feedstock will reduce, part of it replaced by increased recycled and
uncontaminated material, which requires much less energy and carbon intensive processes for its
processing, and part from the cascading use of material and reduced material loss during the processing
phase. Industries will enter partnerships, sharing their infrastructure and their material inputs / outputs /
waste in the context of increasing trends of industrial symbiosis. Mobility will become a service, with
cars shared and operated in fleets, increasing the occupancy rates of cares and reducing their numbers
and thus the material required for their production.
As part of its continuous effort to transform Europe's economy into a more sustainable one and to
implement the ambitious Circular Economy Action Plan, in January 2018 the European Commission
adopted a new set of measures (COM(2018) 29 final), including:
 a Europe-wide EU Strategy for Plastics in the Circular Economy,
 a Communication on options to address the interface between chemical, product and waste
legislation that assesses how the rules on waste, products and chemicals relate to each other,
 a Monitoring Framework on progress towards a circular economy at EU and national level. It
is composed of a set of ten key indicators which cover each phase – i.e. production,
consumption, waste management and secondary raw materials – as well as economic aspects –
investments and jobs - and innovation.
 A Report on Critical Raw Materials and the circular economy that highlights the potential to
make the use of the 27 critical materials in our economy more circular.
379
The Material Economics report762
identifies four materials and two value chains, accounting for
more than half of industrial CO2 emissions today, that could significantly reduce their emissions
by 2050. Increased recycling and reduced losses during production in steel, plastics, aluminium
and cement can deliver about 40% reductions in emissions (Figure 155). Additional reductions
can be achieved by the reduced material used for buildings and cars, when these are used and
produced more efficiently.
Figure 155: EU Emissions reduction potential from a more circular economy
Source: Material Economics
762
.
Quantification of the impacts of circular economy in industry with PRIMES confirms the high
economic and emissions reduction potential of this pathway. The CIRC scenario assumes an
Box 2: Circular Economy Examples
Short-loop recycling of plastics in vehicle manufacturing: Renault initiated a collaboration with
multiple stakeholders with the aim of establishing a closed loop for plastics maintained wholly within
the local automotive industry. As a result 36% of the total mass of a new vehicle is made from recycled
materials; in a new Espace 20% of plastic is from recycled material. (Source: Ellen Macarthur
foundation)
Re-using old bricks to build a greener future: “Gamle Mursten” (“Old Bricks”) is a large-scale
cleantech production company with patented cleaning technology for reusing building waste without
the use of any chemicals, saving more than 95% of the energy otherwise used to manufacture new
bricks. (Source: State of Green)
Product as a service: HP is gradually moving into the product as a service business model by focusing
on leasing, renting and other service contracts for ink, print and PC services. Compared with
conventional business models, printers using this service generate up to 67 percent less materials
consumption per printed page. (Source: HP)
380
average reduction of physical output for most energy intensive industries around 10% by 2050,
although the sectoral value added is retained at the same level assuming higher valued products.
Moreover it assumes other circular economy measures, like increased recycling and reuse,
improved waste management and reduced losses of material. Combined with moderate energy
efficiency and fuel-switching, compared to the other scenarios, it leads to a scenario which
achieves the 80% ambition at the least energy related investment cost.831
Circular economy is a big opportunity to create new markets, new technologies and new
synergies (see Figure 156, Box 2).832
In a moderate form it will improve waste management and
reduce primary raw material required. A more ambitious approach, bringing additional changes
in the current supply chains, utilisation patterns and product design for more re-usable and
recyclable products, can deliver significant more benefits. A very ambitious approach could lead
to even full circularity, but this would require also significant behavioural changes and deep
business model transformation. Any level of ambition though does require a relevant level of
changes to the regulatory framework and significant investment and innovation to create the
proper conditions that could foster the development of a circular economy.833 834
Figure 156: Circular economy impacts on industry
Source: Climact.
While the EU is at the forefront of the circular economy transition increasing the use of the
secondary raw materials, a lot remains to be achieved in order to make the economy truly
circular. In addition, these high recycling rates for a number of materials cannot cover the
demand for these metals due to long product life-cycles (e.g. in buildings) and significant
ongoing accumulation of products in households, although in some cases (e.g. steel, glass, paper)
relatively large quantities of used material are being made available due to non-perishable nature
831
The energy related investment costs do not include certain additional costs that would be related to
circular measures, like the improved of material collection methods, handling and transporting material
for preparing their reuse etc.
832
Climact (2018), Net Zero By 2050: From Whether to How,
https://europeanclimate.org/wp-content/uploads/2018/09/NZ2050-from-whether-to-how.pdf
833
Climate Strategies & DIW Berlin (2018), Filling gaps in the policy package to decarbonise production
and use of materials, https://climatestrategies.org/wp-content/uploads/2018/06/CS-DIW_report-
designed-2.pdf
834
CEPS (2018), The Role of Business in the Circular Economy,
https://www.ceps.eu/system/files/RoleBusinessCircularEconomyTFR.pdf
381
of those materials and technological ease of sorting and purification. Moreover, for most of the
raw materials needed in renewable energies or high tech applications, such as rare earth elements,
indium, gallium or lithium, secondary production only represents a marginal contribution (often
only around 1% or less) in meeting fast growing materials demand. An additional issue creating
challenges to recycling is the increasing complexity in the composition of products (e.g.
electronics).
7.6.8 CCU
Carbon, capture and utilisation (CCU) is a technology closely linked with the circular economy.
Capturing CO2 emissions from waste management processes (incineration), combustion or
process emissions, which would otherwise be released, represents the last chance to keep the
carbon in the technical use sphere. It thus supplements the options of reuse and material
recycling, and is of particular relevance for mixed organic wastes and hazardous wastes, as the
chemical structure of the contained compounds is destroyed, their harmful properties thus being
eliminated, as CO2 is converted to other carbon-based substances. CCU could allow CO2
utilisation into one or several cycles, depending the application, avoiding the use of an equal
carbon amount of fossil based resources. Its applications are quite wide, ranging from fuels to
chemicals and minerals, see Figure 159.
Figure 157: Overview of CO2 sources, utilisation options and end of life considerations
Source: IASS Potsdam835
.
GHG emissions reduction from CCU processes depend largely on the energy used and there is a
general agreement that energy inputs in the processes need to be low carbon so the application of
835
http://www.iass-potsdam.de/en/research/emerging-technologies/ccu
382
CCU technologies results in overall reduction of emissions. Large volumes of affordable
renewable energy and integration in existing industrial systems would be needed for CCU
technologies to deliver substantial climate benefits. The current mitigation potential is thus
limited, however in the future, when the power becomes low carbon, and the overall emissions
reduce, the share of CO2 captured for CCU products can substantially increase, see Figure 158.
Figure 158: Global CO2 emissions and the role of CCU
Source: SAM HLG Opinion on CCU 836
.
CCU technologies present a number of opportunities not directly linked to climate change
mitigation such as boosting European industry competitiveness, offering a technological
advantage, providing an alternative carbon feedstock for the chemical industry, increasing energy
security, providing energy storage options and synthetic fuels that can be used in existing
infrastructure.
Some of the CCU technologies are still in various stages of technological development, their
costs are high in comparison to conventional products and necessitate novel business models
coupling industrial flows of different plants. In the case of CCU the specificities of each specific
project may be more important than the technology as such. Detailed life-cycle and economic
assessment would be needed on a project level to determine impacts of individual projects and to
avoid emission shifting from one sector to another with "simply" delayed emission release, as
well as gaps in coverage (e.g. exception for the waste incineration sector).
A possible commercial application of CCU is for the production of synthetic fuels, providing an
alternative low carbon carrier to biofuels in transport, and thus reducing the need for importing
biomass in the EU and allowing reallocation of domestic production for use in other harder to
abate sectors or for the production of negative emissions. Their large CO2 binding volume and its
higher price than methane could make this option attractive in the future, when their price is
competitive with the price of fossil fuels.837
On the negative side, such liquid fuel applications of
CCU means that the CO2 is relatively quickly released to the air again after use. This is why their
836
Scientific Opinion of the SAM HLG (2018), Novel Carbon Capture and Utilisation Technologies,
https://ec.europa.eu/research/sam/index.cfm?pg=ccu
837
Currently the price of Sunfire’s synthetic fuels derived from CO2 for example, is twice as high as the
benchmark price.781
383
production is often considered together with CO2 captured from Direct Air capture plants.838
PRIMES runs indicated that such an option could deliver the desired ambition, but at a higher
cost than other options. The CO2 feedstock used for synthetic fuels can be seen in Figure 159
(mainly coming from DACs).
Figure 159: CO2 Feedstock used for the production of Synthetic Fuels (in MtCO2)
Source: PRIMES.
CCU can be developed along CCS in CCS/CCU clusters. There are a few of these CCS or CCU
clusters under development around major industrial sites in Europe such as the Ports of
Rotterdam, Antwerp and Marseilles, Tees Valley.839
A high density of industrial sites could make
economically viable the development of a common CO2 infrastructure for capturing and using
CO2 even from installations with low emissions. The CO2 that cannot be used economically can
be piped to geological storage sites.
In the context the circular economy the focus of the final use of CCU would be in materials. CCU
based materials, in contrast to CCU fuels, have the further advantage that they can be used
several times and feed into material recycling. Materials can be plastics, building material
substitutes or other materials that will be derived from CCU processes. Their lifespan depends on
the end use of the CCU product. Examples would be the application in the automotive sector (e.g.
polyurethane car seat cushions) or in the construction sector (e.g. concrete building blocks).
Materials in general are suited for integration to the circular economy, as the overall lifespan can
be elongated via material recycling.840
7.6.9 Industrial Symbiosis
In industrial symbiosis, traditionally separated industries are brought together in partnerships,
optimizing the use of resources and minimizing waste and associated costs. The physical
838
One such innovative approach is considered by Carbon Engineering (http://carbonengineering.com/),
claiming that this technology can become economic in the near future.
839
European Commission (2017), SET-Plan Action 9 on CCS and CCU Implementation plan,
https://setis.ec.europa.eu/system/files/set_plan_ccus_implementation_plan.pdf.
840
Identification and analysis of promising carbon capture and utilisation technologies, including their
regulatory aspects. 781
0
50
100
150
200
250
300
350
400
450
500
FeedstockforSyntheticFuels
(CapturedMtCO2)
COMBO
P2X
1.5TECH
1.5LIFE
384
exchanges between industries may include materials, energy, water and by-products. As a result,
industries enjoy economic gains, while reducing environmental impacts and costs.
The typical model that has been applied in several regions of the world is where an “anchortenant”
organisation with energy and by-product linkages is connected to companies physically
located nearby.841
This is usually a result of the so-called unplanned symbiosis, like the
Kalundborg industrial site located in Denmark842
. Kalundborg Symbiosis started more than 40
years ago and is one of the most well-known and well-described industrial symbiosis in the
world. Kalundborg Symbiosis includes world-leading as well as smaller companies, with clear
benefits for all of its participants (Figure 160).
Figure 160: The Kalundborg Symbiose
Source: Kalundborg Symbiose.
An alternative model is the so called managed network, where a third part can work as a
facilitator for existing companies or even centrally plan the site and attract new businesses.843
Prime examples of this model are ports, like the Ports of Rotterdam844
, Amsterdam845
and
Antwerp846
. Such cases may be further supported with the increasing digitisation of industry,
allowing to more easily monitor the available input and output resources, as well as waste, and
identify opportunities for collaboration.
841
Baas (2011), Planning and Uncovering Industrial Symbiosis, https://doi.org/10.1002/bse.735.
842
http://www.symbiosis.dk/en/
843
Trinomics (2018), Cooperation fostering industrial symbiosis: market potential, good practice and
policy actions,
https://publications.europa.eu/en/publication-detail/-/publication/174996c9-3947-11e8-b5fe-
01aa75ed71a1/language-en
844
Wuppertal Institut for the Port of Rotterdam (2016), Decarbonisation Pathways for the Industrial Cluster
of the Port of Rotterdam, https://www.portofrotterdam.com/sites/default/files/rapport-decarbonization-
pathways-for-the-industrial-cluster-of-the-port-of-rotterdam.pdf?token=4Ri58reM.
845
Port of Amsterdam (2017), The Sustainable Port,
https://www.portofamsterdam.com/sites/poa/files/media/havenbedrijf/duurzaamheidsplan_en_digitaal_
2017.pdf
846
Vansteenbrugge, J. (2012), Industriële symbiose in havengebied - taakstelling voor de ruimtelijke
planning?
https://lib.ugent.be/fulltxt/RUG01/001/887/236/RUG01-001887236_2012_0001_AC.pdf
385
Although the existing quantitative evidence supporting the case of industrial symbiosis are
limited, mainly due to the complexity of such an exercise, the cases of potential win-wins are
clear. Industrial symbiosis is expected to become more prominent as sectors seek to reduce GHG
emissions.847
A broad and EU wide assessment of the future of industrial symbiosis was
undertaken in EPOS, SPIRE project in 2016.848
Nevertheless, for these benefits to be realised a
number of barriers need to be removed and coordination of interested parties needs to be
facilitated.849
847
VUB-IES (2018), Industrial Value Chain. A bridge towards a carbon neutral Europe,
https://www.ies.be/files/Industrial_Value_Chain_25sept_0.pdf.
848
https://www.spire2030.eu/epos
849
Öko-Institut, ECORYS, IDEA, Acteon, Copenhagen Resource institute (2016), Study on the energy
savings potential of increasing resource efficiency, study for the European Commission, DirectorateGeneral
for Environment,
http://ec.europa.eu/environment/enveco/resource_efficiency/pdf/final_report.pdf
386
7.7 GHG Pathways towards 2050 (GtCO2eq)
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
Baseline
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
ELEC
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
H2
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
P2X
387
Source: PRIMES/GAINS/GLOBIOM
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
EE
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
CIRC
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
COMBO
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
1.5TECH
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
1.5LIFE
-1
0
1
2
3
4
5
6
2005 2020 2035 2050
1.5LIFE-LB
388
8 LIST OF ACRONYMS
ACER Agency for the Cooperation of Energy
Regulators
ASEAN Association of Southeast Asian Nations
ATM Air Traffic Management
BACS Buildings Automation, Control and Smart
systems
BAT Best Available Techniques
BAU
BF
Business as Usual
Blast Furnace
BECCS Bio-Energy With Carbon Capture And Storage
BEMIP Baltic Energy Market Interconnection Plan
BEV Battery Electric Vehicle
CAP Common Agricultural Policy
CBA Consumption-Based Accounting
CCS Carbon Capture and Storage
CCU Carbon Capture and Utilisation
CDR Carbon Dioxide Removal (technologies)
CE4AE Clean Energy for All Europeans legislative
package
CEF Connecting Europe Facility
CEM Clean Energy Ministerial
CESEC Central and South-Eastern Europe
Connectivity
CHP Combined Heat and Power
C-ITS Cooperative Intelligent Transport Systems
CNG Compressed Natural Gas
COP Conference Of the Parties
CSP Concentrating Solar Power (plant)
CWREM Central-West Regional Energy Market
DAC Direct Air Capture
DACCS Direct Air CO2 Capture and Storage
389
DRI
EAF
Direct Reduced Iron
Electric Arc Furnace
EASA European Aviation Safety Agency
ECAC European Civil Aviation Conference
EEA European Environmental Agency
EE Energy Efficiency
EED Energy Efficiency Directive
EEDI Energy Efficiency Design Index
EFSI European Fund for Strategic Investments
EGA
EII
Environmental Goods Agreement
Energy Intensive Industry
ENISA European Union Agency for Network and
Information Security
EPBD Energy Performance in Buildings Directive
EPI European Processor Initiative
EPRI Electric Power Research Institute
ERA European (Union) Railway Agency
ERDF European Regional Development Fund
ERMTS European Railway Traffic Management
System
ESG Environmental, Social and Governance
ESR (European Union) Effort Sharing Regulation
EU European Union
EU ETS European Union Emissions Trading System
EUROCONTROL European Organisation for the Safety of Air
Navigation
EV Electric Vehicle
FAO Food and Agriculture Organization
FCEV Fuel Cell Electric Vehicle
FDI Foreign Direct Investments
FEC Final Energy Consumption
F-gas Fluorinated gases
390
FORECAST (model) FORecasting Energy Consumption Analysis
and Simulation Tool
FTA
G20
Free Trade Agreement
Group of 20850
G4M (model) Global forest model
GAINS (model) Greenhouse gas and Air Pollution Information
and Simulation
GCC Gulf Cooperation Council
GCCA Global Climate Change Alliance
GDP Gross Domestic Product
GEEREF Global Energy Efficiency and Renewable
Energy Fund
GEM-E3 (model) General Equilibrium Model for Economy-
Energy-Environment
GHG Greenhouse Gas
GIS Geographical Information System
GIC Gross Inland Consumption
GLOBIOM (model) Global Biosphere Management Model
GMST Global Mean Surface Temperature
HDV Heavy-Duty Vehicles
HFC HydroFluoroCarbon
HPC High Performance Computing
HVDC High Voltage Direct Current
IAEA International Atomic Energy Agency
ICAO International Civil Aviation Organisation
ICE Internal Combustion Engine
ICT Information and Communication Technology
IEA International Energy Agency
IGA Intergovernmental Agreement
850
The Group of Twenty (G20) is a forum made up of the European Union and 19 countries: Argentina,
Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, Russia,
Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States.
391
IMAGE (model) Integrated Model to Assess the Global
Environment
IMO International Maritime Organization
INDC Intended Nationally Determined Contribution
IPCC Intergovernmental Panel on Climate Change
IRENA International Renewable Energy Agency
IT Information Technology
ITER International Thermonuclear Experimental
Reactor
JRC Joint Research Centre
LDV Light-Duty Vehicles
LED Light-Emitting Diode
LLCP Long-Lived Climate Pollutants
LNG Liquefied Natural Gas
LPG Liquefied Petroleum Gas
LULUCF Land Use, Land-Use Change, and Forestry
MAC Mobile Air Conditioning
MAGICC (model) Model for the Assessment of Greenhouse Gas
Induced Climate Change
MARPOL Marine Pollution
MBM Market-based Measure
MFF Multiannual Financial Framework
MRV Monitoring, Reporting and Verification
MS (EU) Member State
MSR Market Stability Reserve
NACE Nomenclature statistique des Activités
économiques dans la Communauté Européenne
NDC Nationally Determined Contribution
NEA Nuclear Energy Agency
NECPs National Energy And Climate Plan
NEEAP National Energy Efficiency Action Plan
NGO Non-Governmental Organisation
392
NPP Net Primary Productivity
NREAP National Renewable Energy Action Plan
NSCOGI North Seas Countries’ Offshore Grid Initiative
NUTS Nomenclature des Unités Territoriales
Statistiques
NZEB Nearly Zero-Energy Building
OECD Organisation for Economic Co-operation and
Development
OPC Open Public Consultation
OPEC Organization of the Petroleum Exporting
Countries
PACE Property Assessed Clean Energy
PBA Production-Based Accounting
PCI Projects of Common Interest
PEC Primary Energy Consumption
PFC PerFluoroCarbon
PHEV Plugin Hybrid Electric Vehicle
PINC Programme Indicatif Nucléaire de la
Commission européenne
(Nuclear Illustrative Programme presented
under Article 40 of the Euratom Treaty)
POLES-JRC (model) Prospective Outlook on Long-term Energy
System, model version developed and operated
by JRC
PRIMES (model) Price-Induced Market Equilibrium System
PV Photovoltaic (energy)
QUEST (model) QUarterly Economic Simulation Tool
R&D Research and Development
R&I Research and Innovation
RDI Research, Development and Innovation
RES Renewable Energy Sources
RFC Rail Freight Corridor
SAT Surface Air Temperature
393
SDG (United Nations) Sustainable Development
Goal
SET (Plan) Strategic Energy Technology Plan
SLCP Short-Lived Climate Pollutants
SME Small and Medium-sized Enterprise
SOC Soil Organic Carbon
SPIPA Strategic Partnerships for the Implementation
of the Paris Agreement
SWD Staff Working Document
TCBA Technologically-Adjusted Consumption-Based
Accounting
TEN-E Trans-European Networks for Energy
TEN-T Trans-European Networks for Transport
TRL Technology Readiness Level
TSD Trade and Sustainable Development
UN United Nations
UNEP United Nations Environment Programme
UNFCCC United Nations Framework Convention on
Climate Change
VAT Value Added Tax
VRT Variable Rate Technology
WLTP Worldwide harmonized Light vehicles Test
Procedure
WMO
WTO
World Meteorological Organization
World Trade Organization