Transcript CCC Wales Presentation

Building a Low-Carbon Economy –
The UK's Contribution to Tackling
Climate Change
www.theccc.org.uk
Structure of the presentation
1.
The 2050 target
2.
The first three budgets
3.
Wider social and economic impacts of budgets
1. The 2050 target
(i)
Required global emissions reduction
(ii)
Appropriate UK contribution
(iii)
Technologies for meeting required reductions
(i) Required global emissions reduction
What’s changed?
• Advances in science
• Actual emissions higher
than forecast
Assessment of damage
Decision rule
• keep temperature
change close to 2°C
• and probability of 4°C
increase at very low
level (less than 1%)
•
•
Global trajectories
considered
Early or later peak
(2015 vs. 2030)
3%/4% annual
emissions reduction
•
•
Required global
emissions reduction
of 50%
20-24 GtCO2e
emissions in 2050
8-10 GtCO2e in
2100
(ii) Appropriate UK contribution
50% global reduction
Burden share
• Alternative methodologies (contract and
converge, intensity convergence, triptych
etc.)
• Equal per capita emissions:
̶
20-24 GtCO2e total at global level in
2050
̶
Implies 2.1-2.6 tCO2e per capita
All GHGs
2.1-2.6 CO2e per
capita gives a UK
reduction of at least
80% in 2050
Aviation and
shipping included
(ii) Appropriate UK contribution (cont.): the scale of
the challenge
695 Mt CO2e
International aviation
& shipping*
42
UK non-CO2 GHGs
98
Other CO2
Industry (heat &
industrial processes)
108
Residential &
Commercial heat
103
Domestic transport
Electricity Generation
134
159 Mt CO2e
184
2006 emissions
* bunker fuels basis
77% cut
(= 80% vs. 1990)
2050 objective
(iii) Meeting required reductions
Reducing power sector emissions:
Renewables (wind, marine, biomass, solar), nuclear, CCS
Application of
power to transport
and heat
Reducing transport emissions:
• Electric/plug-in hybrids
Reducing heat emissions:
• Electric heat (e.g. heat pumps,
storage heating)
(iii) Meeting required reductions (cont.): power
sector evolution
Emissions intensity to 2050
Power generation to 2050
600
TWh electricity generation per year
600
g/CO2 per kWh
500
500
400
300
400
200
300
100
200
2000
0
2006
2010
2020
2030
2050
90% path
2010
2020
2030
2040
2050
(iii) Meeting required reductions (cont): UK path to an
80% or more reduction in 2050
Wind and nuclear
Other renewable
and CCS
Energy efficiency
improvement
Renewable heat
Electric heat
Electric cars/plug in
hybrids
2008
2020
2050
1-2% of GDP
in 2050
2. The first three budgets
(i)
Level of budget (factors we have considered, CCC
proposals)
(ii)
Use of credits to meet budget
(iii) Feasible emissions reductions
(i) Level of budget: factors considered
The path to 2050
• 2020 ambition needed to
make path to 2050
technically feasible
• Early action needed as
contribution to global
emission containment
PROPOSED
BUDGETS
European Union
strategies
2008-12
2013-17
2018-22
• 30% reduction in GHG by
2020 versus 1990 if
global deal at
Copenhagen
• 20% unilateral cut
Bottom up sector by sector
analysis
• Technical feasibility
• Costs of achieving
reductions
• Policies in place or needed
to drive emissions
reductions
(i) Level of budget (cont.): CCC proposals
Intended budget
• To apply once a global deal has been agreed
Interim budget
• To apply before there is a global deal
• Should prepare for the Intended budget
Intended: 42% below 1990 in 2020
(31% % below 2005)
Interim: 34% below 1990 in 2020
(21% below 2005)
(i) Level of budget (cont.): Indicative emissions
reductions to 2020 and 2050
Annual UK GHG Emissions (MtCO2e)
700
Average annual reductions of 2.8%
from 2007 – 2020
=> 42% below 1990 in 2020
600
500
Average annual reductions of 3.5%
from 2020
=> 80% below 1990 in 2050
400
300
200
100
0
2007
2020
2030
2040
2050
(i) Level of budget (cont.): scenarios for global
aviation emissions
3
2.5
GtCO2
2
1.5
1
0.5
0
1990
2000
2010
2020
2030
2040
2050
2050 emissions of up to 2.4 GtCO2 could account for around 10-12% of total allowed GHG
emissions and 20% of total CO2 emissions
(i) Level of budget (cont.): treatment of aviation and
shipping
Aviation
•
•
•
•
EU ETS allocation arbitrary,
making reconciliation with national
budget inclusion problematic
Do not include in formal legal
‘budget’
But allow for in budget setting
And Committee to monitor
progress and policies
Shipping
•
Precise UK or even European share
difficult to define
•
Do not include in formal legal
‘budget’
Committee to monitor progress and
policies
Global sectoral deal ideal way
forward
•
•
(ii) Use of credits to meet targets
•
•
•
Pros
Minimise costs
Promise of finance flow may help in
global deal negotiations
Finance flow helps achieve low carbon
developing economies
•
•
Cons
Essential for developed economies to
drive domestic emissions reductions
and illustrate feasibility of low carbon
economy
CDM type credits (versus notional BAU)
can never be as robust as allowances
within cap and trade system
Committee distinguishes between:
• European Union Allowances (EUAs) in EU ETS
• Offset credits (e.g. CDM)
Committee position
• No restrictions on use of EUAs to meet budget
• Restrictions on use of offset credits
• No purchase by government to meet Interim budget
• Purchase may be appropriate to transition between Interim and Intended
budgets
• This strategy is consistent with meeting 2050 target
(iii) Feasible emissions reductions - Power
600
500
g/CO2 per kWh
Power
•
Renewable and nuclear
•
Preparation for CCS
•
Required policies
- EU ETS longer term
extension
- CCS demonstration
- Price/non-price policies
to drive renewables
400
300
200
100
0
2006
2010
2020
Scenarios
•
40% emission reduction by 2020
- 30% of electricity supply renewable, nuclear in 2020s
- Less renewables (e.g. 25%) and some nuclear by
2020
•
Costing 0.2% of GDP
•
Average carbon intensity in 2020 around 300g/kWh, from
current 500g/kWh
2030
2050
(iii) Feasible emissions reductions – Power (cont.):
CCC position on coal generation
No role for conventional
coal beyond early
2020s
CCS not proven at
production scale
New coal investment only
with full expectation of
retrofit in early 2020s
Policy options:
• Requirement for retrofit
• Carbon price underpin
• Carbon intensity limits (g/kWh)
(iii) Feasible emissions reductions – Energy use in
buildings and industry
Our approach
•
•
•
Technical potential
Cost effective potential
Realistically achievable potential
Commercial
•
•
Residential
•
•
•
Technical potential over 100
MtCO2
Realistic potential
- Energy efficiency potential
22 MtCO2
- Renewable heat potential 10
MtCO2
Policy
- Supplier Obligation
- EPCs
- Appliance standards
- Renewable heat
•
•
Technical potential over 30
MtCO2 in energy efficiency
and micro-generation
Realistic potential 511MtCO2.
50% covered by caps
Need for wider policy
coverage
Industrial
•
•
•
Technical potential 7 MtCO2
Realistic potential 4-6 MtCO2
95% covered by caps
(iii) Feasible emissions reductions – Transport
Improved carbon efficiency of vehicles
Cars: Improved fuel efficiency,
electric/plug in hybrids offer potential for
12 MtCO2 emission reduction by 2020
Demand side measures: indicative
Eco driving: 3 MtCO2
Enforcing speed limit: 3 MtCO2
Vans : Fuel efficiency improvement,
electric/plug in hybrids offer potential for
at least 3 MtCO2 in 2020
Journey planning and modal shift:
HGVs: Fuel efficiency improvement
offers potential for at least 1 MtCO2 in
2020
Demand Management:
Need ambitious EU targets and domestic
implementing mechanisms (information,
fiscal levers)
Information and encouragement.
Response is inherently uncertain
3 MtCO2
•
Eddington Review
(iii) Feasible emissions reductions – Agriculture
•
7% of all UK GHG emissions: 44 MtCO2e
•
Preliminary cost curve analysis suggests technical potential of
15 MtCO2e: some controversial, some not
•
No policies currently in place to drive emissions reductions;
no reductions included in budget calculations
•
Further work needed to:
- Identify realistic potential
- Design policies
(iii) Feasible emissions reductions - scenarios
Criteria:
•
Cost per tonne of carbon saved
•
Measures required on the path to 80% in 2050
•
Practical given constraints on deliverability
Current Ambition
Current detailed policies plus 30%
renewable power generation
Extended Ambition
Existing policies plus policy intent
Stretch Ambition
Includes measures where there is no
current policy or commitment
•
•
Extended Ambition delivers Interim Budget
Intended Budget requires either credit purchase or some Stretch
Ambition actions
(iii) Feasible emissions reductions – resource cost of
meeting the Intended budget
2020 abatement cost as % of 2020 GDP
0.8
0.7
0.6
0.5
Additional
knock-on
and
dynamic
effects
“Resource costs”
0.4
0.3
0.0%
Cost
from
macro
models
0.3-0.8%
0.1%
0.2
0.3%
0.1
0.2%
Electricity
Other measures Purchase of
decarbonisation (buildings,
EUAs and
industry,
international
transport)
credits
Total
resource
cost
Total
estimated
impact on
2020 GDP
3. Wider social and economic impacts of
budgets
•
Competitiveness
Fuel Poverty
Security of supply
Fiscal
Regional
Risk in specific sectors accounting for less than
1% of UK GDP and employment
Risk can be mitigated by appropriate policy e.g.
free allowance allocation , border carbon price
adjustments, sectoral agreements
•
1.7 million increase in fuel poverty numbers but
mitigation possible at manageable cost
•
•
Technical: supply intermittency manageable
Geopolitical and economic volatility: positive
impact of reduced dependence on imported oil
and gas
•
•
•
Positive impacts from auctioning (£9 bn p.a.)
Negative VED and fuel duty effect (£4 bn p.a.)
£500 m p.a. to offset fuel poverty effects
Significant difference in pattern of opportunities and
challenges: important role for devolved
administrations
Abatement opportunities in Wales –
Extended Ambition Scenario
Sector
UK abatement
2020 (MtCO2e)
Wales abatement
2020 (MtCO2e)
Wales’s share of
UK total
Buildings
35
2
6%
Industry
7
0.4
5%
Road Transport
19
0.9
5%
Agriculture &
Forestry*
6
0.5
8%
Waste*
6
0.3
6%
* Not in Interim budget
In achieving required emissions reductions, there will be an important
role for devolved policy measures in Wales, for example:
•
Promotion of energy efficiency in buildings and industry
•
Policy framework for microgeneration technologies
•
Develop the policy framework for agriculture and land use
Wider economic and social impacts in Wales
Economic impacts
•
Potential risk of competitiveness
loss resulting in output and
employment impacts in Wales of up
to 2.5% of GVA and 1.4% of
employment
•
Employment impacts may be
localised given the concentration of
certain sectors in Wales
•
In practice, we do not expect these
impacts to ensue as any risk can be
mitigated by appropriate policy
•
Opportunities for growth are likely to
exist in low-carbon sectors
Fuel poverty impacts
•
Carbon budgets are likely to
increase the number of households
in fuel poverty in Wales by around
130,000 in 2022
•
Energy efficiency measures could
reduce this impact by around 30,000
households
•
Mitigation of the impact is possible at
a manageable cost
•
Welsh Assembly Government has a
role to play
Conclusion
•
80% cut in GHG emission by 2050 relative to 1990: all
GHGs, aviation and shipping included
•
Unilateral 34% cut in GHGs by 2020 relative to 1990 (21%
relative to 2005)
•
42% cut in GHGs by 2020 relative to 1990 (31% relative to
2005) after global deal is achieved
•
34% cut predominantly through domestic emissions
reduction
•
42% through domestic emissions reduction and credit
purchase
•
2020 cost less than 1% of GDP