The study further analyses the implications for the European energy system over the next five to 10 years. A key finding is that it is entirely feasible to power Europe’s electricity sector through renewables and that the costs of full decarbonisation by 2050 do not vary significantly amongst the different pathways in the long term. Furthermore, the study has found that CO2 capture and storage (CCS) is an essential component of any scenario.
In order to reduce GHG emissions by 80 percent below 1990 levels by 2050, the ECF study – carried out by the consultancy McKinsey – emphasizes that all abatement measures in all sectors must be implemented to their maximum potential. The definition of this potential is abatement options below 100 euros per tonne CO2, which were examined in a McKinsey study in 2009. Such measures include huge energy efficiency improvements and the full decarbonisation of the power sector.
Because of the pivotal role of the power sector, the study focuses on this sector. It examines several different pathways or energy mixes that can deliver this CO2 emission free power sector by 2050.
Parting from a collection of basic assumptions – including International Energy Agency (IEA) fossil fuel price projections, a significant expansion of grid interconnections in Europe, market demand for low-carbon investments, increased global emission reduction efforts and industry consensus learning rates for existing technologies – the study finds that such a huge transformation is possible if started in earnest within the next five years.
One of the key conclusions of the study is that across different scenarios defined by different energy mixes – ranging from a baseline business as usual scenario through a scenario with 40 percent renewable energy to one with 80 percent renewables – the electricity prices do not vary significantly in the long run. In the short run, given the comparatively greater investment need for renewables in comparison to other technologies, the scenarios with higher shares of renewables show a greater increase in costs. This disparity would level off over time as most renewable energy has very low operating expenditure.
The study also finds that CCS is an essential component of all pathways, regardless of the percentage of energy production made up by renewables, as it is assumed to be applied on half of all heavy industry. The report also highlights the additional CO2 emission abatement potential of combining biomass combustion with CCS.
The policy recommendations extrapolated from the results contained in the study include a need for long term deployment strategies for CCS and key renewables at member state level; a policy framework to promote pan-European resource optimization as a basis to fund and build necessary grid interconnections; and develop complementary measures to the EU Emissions Trading Scheme (ETS) to drive investment, such as a CO2 Emission Performance Standard (EPS) and forward capacity markets to provide predictability for capital-intensive investments.
Access the full ECF study here.