2018 key publications

The deep decarbonisation of Europe’s energy system changes the role of gas and the existing gas infrastructure. Achieving net-zero emissions does not leave room for unabated combustion of fossil gas.

In this briefing, E3G looks at the potential contribution of different options for ‘renewable or decarbonised’ gas to the decarbonisation of the energy sector. It assesses what each option means for gas infrastructure use and planning, alongside technical and economic potentials and compatibility with a net-zero economy.

It finds:

• Europe should continue to innovate and explore different forms of renewable and decarbonised gas to test full potential and impacts. However, not all forms of renewable or decarbonised gas are compatible with a net-zero emissions society.
• The future prospect of renewable and decarbonised gases is no reason to slow down electrification or efficiency at this stage: considerable levels of efficiency and electrification are needed in all scenarios that are compatible with the Paris Climate Change Agreement.

Big changes to gas networks are needed in the transition to a net-zero emissions society. Big changes to gas networks are needed in the transition to a net-zero emissions society.  None of the Paris-compliant scenarios with renewable or decarbonised gas show increasing gas demand and most of them show a sharp decline in gas volumes compared to today. This suggests there is no justification for the expansion of the gas networks, in particular not for imports.

• Limited potential and – currently – unfavourable economics require defining where the use of decarbonised or renewable gases would be of highest societal value. The focus should be concentrated on hard-to-decarbonise sectors.
• There is currently no consensus on

1. which forms of renewable or decarbonised gas are most likely to succeed. Each form of renewable or decarbonised gas comes with infrastructure challenges and choices of its own.
2. which sectors would generate significant demand. In many sectors, renewable or decarbonised gases would compete with alternatives such as fossil gas itself, electrification or demand-side measures.

• The EU’s planning processes can become a guide for investors as to the future value of gas networks, by:

1. giving sufficient granularity to distinguish between sources, production processes and end products for renewable and decarbonised gas, to reflect their differing infrastructure and climate impacts.
2. developing scenarios that assess impacts of electrification, efficiency, and renewable and decarbonised gases together to offer nuance between “all-electric” and “business as usual” scenarios.
3. accounting for costs related to changes in infrastructure for the purposes of making the network fit for renewable or decarbonised gas.

Read the full report.

E3G is an independent climate change think tank operating to accelerate the global transition to a low carbon economy. E3G are the independent experts on climate diplomacy and energy policy.

This report investigates how a more circular economy can contribute to cutting CO2 emissions. It explores a broad range of opportunities for the four largest materials in terms of emissions (steel, plastics, aluminum, and cement) and two large use segments for these materials (passenger cars and buildings). The key conclusion is that a more circular economy can make deep cuts to emissions from heavy industry: in an ambitious scenario, as much as 296 million tons CO2 per year in the EU by 2050, out of 530 Mt in total – and some 3.6 billion tonnes per year globally. Making better use of the materials that already exist in the economy thus can take the EU industry halfway towards net-zero emissions. Moreover, doing so often is economically attractive. Initiatives for a more circular economy, therefore, deserve a central place in EU climate and industrial policy.

Read the full report.

Material Economics is a management consulting firm advising companies on the link between sustainability and business performance.

The ‘Breaking Through’ report assesses the latest state of play of 70 low-CO2 process technologies currently under development in Europe for the Iron and Steel, Chemicals, Cement and Concrete, Pulp and Paper, and Ceramics industries. The report provides a snapshot of the current situation by assessing current industrial process innovations based on their CO2-emission reduction potential, energy demand, costs, and technological readiness. It also sheds light on the magnitude of the decarbonisation challenge ahead for these industrial sectors. The analysis demonstrates that there is not a lack of solutions or technologies available to enable decarbonisation of the EU industrial sectors, but stronger efforts are needed to drive further development of these technologies from ideas to commercialisation.

Read the full report.

The Institute for European Studies (IES) at the Vrije Universiteit Brussel (VUB) is an academic Jean Monnet Centre of Excellence and a policy think tank that focuses on the European Union in an international setting. The Institute advances academic education and research in various disciplines and provides services to policy-makers, scholars, stakeholders and the general public.

In the near future, more stringent climate policies will affect economic performance of coal and other fossil fuel assets. According to the new report by Warsaw-based independent think tank WiseEuropa Institute – “The climate finance domino. Transition risks for the Polish financial sector” – this issue is particularly significant for Poland. The country faces a double challenge of high share of coal-based power generation and high investment needs associated with the necessary modernisation of the energy sector infrastructure in the coming years.

Read the report.

PGE, Poland’s largest utility, is facing a strategic choice that will determine the company’s financial stability in the years ahead: stick with its current fossil fuel-heavy generation profile or begin transitioning to a renewable energy-based portfolio to start to address rising environmental and market risks.

The issue forcing this decision is the European Union’s new round of air pollution emissions standards that take effect in 2021. These new, stricter standards—agreed to by EU member states last year and listed in a Best Available Techniques Reference Document (BREF)—will hit PGE hard. First, they require environmental upgrades whose cost will undermine the competitiveness of the associated power plants.

Second, PGE will hope to use payments under Poland’s new capacity market to fund the upgrades, but may find itself less able to secure these, given higher costs as a result of BREF and rising carbon prices. Critically, capacity payments and carbon prices are risks largely or wholly outside PGE’s control.
PGE is majority-owned by the Polish government. It is overwhelmingly dependent on coal and lignite for its electricity generation. The company’s hard coal and lignite plants accounted for 91% of total generation in 2017, compared with 4% from renewables, with the balance supplied by gas and biomass. The company’s bias toward coal increased last year with its acquisition of the Polish assets as part of a strategic divestment by French utility EDF.

As a result, PGE is one of Europe’s biggest polluters and will be one of the European utilities most affected by the new emissions standards.
Company data for PGE’s emissions of nitrogen oxides, sulphur oxides and dust for 2016 and/or 2017 show that just four out of 15 of the utility’s smokestacks met the 2021 BREF standards for all three pollutants. In other words, PGE has a choice: it can move to close the non-compliant units and turn to cleaner alternatives, or it can invest to upgrade their environmental performance.

PGE’s decision thus far has been to double down on its coal facilities, launching a major programme to upgrade its non-compliant units. In its 2017 annual report, the company said it plans to invest a further PLN 1.9 billion (€475 million)1 to meet the 2021 standards. In recent announcements PGE has stressed its desire to go green, but we find evidence to the contrary: In 2017, capital expenditures in renewable energy fell 44% to just 1% of the group’s total.

This report demonstrates that PGE’s coal-heavy approach is misguided and will end up costing the utility much more than pursuing a strategy based on building new renewable energy generation.

To reach that conclusion, we use published BREF capital expenditure data at two of PGE’s power plants, and our own estimates for additional costs, to calculate the impact of the new emissions standards on the levelised cost of electricity (LCOE) generation. We estimate BREF compliance would raise generation costs by 15% to roughly €40/MWh for a sample lignite power plant, and by 10% to €50/MWh for a coal-fired combined heat and power (CHP)
plant.

Read the full report.

The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

The 2018 BRICS Summit coincides with the celebration of the centenary of Nelson Mandela, a moment freighted with symbolism against the backdrop of an enhancing sense of disunity and lack of agency in the world. Former President Obama will deliver a speech at the Nelson Mandela Annual Lecture on 17 July and it is expected that this will be his most important speech since leaving the White House and one that will set the tone for his post-presidency.

The Summit took place in Johannesburg, South Africa, on 25-27 July and is complemented by a rich calendar of events throughout the rest of the year. In particular, the South African ambition is
to strengthen the BRICS cooperation in Africa through inclusive growth and advancing the
4th industrial revolution “as a means of leapfrogging development stages and bridging the digital divide”.

WHY DOES BRICS MATTER?
The Leaders of Brazil, Russia, India, China and South Africa represent over 3 billion people or 42% of the world population. They contribute to 20% of global GDP and are responsible for over 40% of
global CO2 emissions and for 65% of global coal use. Global climate security critically depends on
the BRICS, especially China and India, developing and transitioning away from fossil fuels.

Read the full report.

As a new and more fragmented geopolitical order arise, both developed and emerging powers will
need to re-assess their relations with traditional and non-traditional allies. China’s choices will
increasingly influence the dynamics, scope and ambitions of bilateral, regional and multilateral
relations, the more so as the US redesign its trade and security approach and disengage from rulesbased cooperation.

An integrated European electricity market will benefit consumers through lower prices, more cost-effective integration of renewable resources, and improved system reliability. A central question often asked in the context of the IEM is: can Poland rely on resources from neighbouring countries in a crisis situation? Is it safe to integrate market when national transmission system operators (TSOs) are responsible for managing energy systems in Europe.

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Forum Energii is a think tank, focused on forging the foundation for a clean, innovative, safe and efficient energy sector based on data and analysis.

COP24 – the climate summit in Katowice will be the largest gathering in the world under the auspices of the United Nations this year. The Forum Energii has developed the Manual, which allows its users to orientate in the international negotiations on climate. It contains a set of tips on how to get involved in the process, how to positively influence the negotiations and build the image of Poland.

Forum Energii is a think tank, focused on forging the foundation for a clean, innovative, safe and efficient energy sector based on data and analysis.

his exploratory analysis aims to identify the main methodological challenges related to tracking and assessing the low carbon transition, covering both issues:

• of content
  – Which indicators should inform which questions?
  – To what level of precision should the tracking of these strategies go?
  – How should the information be structured to make it relevant to the debate?
• and of governance
  – What are the respective roles for institutional actors, stakeholders and experts in the process?
  – How should the tracking, assessment and revision of the strategic plans be coordinated with the political cycle?
  -What issues are raised in terms of transparency of the process and independence of institutions?

Read the full report.

This addendum1 to the study “From cradle to grave: e-mobility and the French energy transition” presents a detailed analysis of the environmental impacts of electric vehicles for three additional European Union Member States, as well as compares the results with a European Union average, over their entire life-cycle (from cradle to grave). Spain, Italy and the United Kingdom have been analysed.

Although electric vehicles can significantly improve air quality in cities in terms of nitrous oxide and particulate emissions, this addendum is focused on the carbon footprint of vehicles.

The Life Cycle Analysis based model that was used in the French energy transition study “From cradle to grave: e-mobility and the French energy transition” has been applied to these additional EU Member States in order to express and compare the carbon intensity of electric vehicle usage across the continent.

The results show that shifting to electrified vehicles does on average significantly reduce GHG emissions compared to ICEVs, in both timeframes and for all countries in the scope of the study. There are significant differences between countries, the national electricity mixes being a determining factor responsible for the level of carbon advantage compared to ICEVs. There is also a wide variation of carbon footprint among the different electrification options (fully electrified or partially electrified vehicles), yet the BEVs always have a lowest carbon impact than partially electrified vehicles, except for sedans in Italy in the present situation: carbon footprints are relatively similar. The difference among electrification options is wide today among PHEVs and BEVs; this gap tends to significantly decrease in 2030 for sedans, but remains for small city cars. The carbon footprint of EV-REX vehicles drastically decreases among 2017 and 2030 to reach the BEVs level.

Read the full report.

The 2015 Paris Climate Agreement created a global imperative to reduce emissions and deliver clean growth. South East Asia is on the cusp of transformational change as governments, business and individuals increasingly recognise the urgent need to reduce emissions and transition to clean growth by turning their Nationally Determined Contributions (NDCs) into viable investment plans for clean energy infrastructure.

Read the full report.

The 2050 Pathways Platform is an initiative that was launched in Marrakech at COP22. The objective of the Platform is to support countries, states, regions, cities and companies seeking to devise long-term, net zero-greenhouse gas, climate- resilient and sustainable development pathways. For further detail on the Platform, please visit the UNFCCC webpage. The 2050 Pathways Platform is supported by the French Ministry of Europe and Foreign Affairs and the European Climate Foundation.

Horizon to Horizon guide outlines a step by step process to designing a long-term strategy for Pacific Island countries, identifying and solving roadblocks to implementation, and determining financing needs and sources.

A Strategic Mitigation, Adaptation and Resilience Tool (SMART) accompanies the Horizon to Horizon guide. SMART supports decision making by Pacific leaders, by enhancing the understanding of where mitigation actions interact with adaptation and resilience priorities.

Combined, these resources aim to simplify the process for developing and implementing long-term, low emissions development strategies while drawing out the interconnected benefits of long-term planning for other strategic country-specific priorities.

Read the full report.

The 2050 Pathways Platform is a multi-stakeholder initiative launched at COP 22 by High-Level Climate Champions Laurence Tubiana and Hakima El Haite to support countries seeking to develop long-term, net zero-GHG, climate-resilient and sustainable-development pathways. Designed as a space for collective problem-solving, the platform will also build a broader constellation of cities, states, and companies engaged in long-term low-emissions planning of their own, and in support of the national strategies.

Read the ICP hub briefing of the Global Climate Action Summit 2018 here.

CLIMATE & ENERGY OBSERVATORY

Where does France stand?

Visit their website here.

Read the report here.