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Energy Transformation German Polish Energy Dialogue Karsten Neuhoff Meeting with Polish Journalists Berlin, 5.12.2012.

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Presentation on theme: "Energy Transformation German Polish Energy Dialogue Karsten Neuhoff Meeting with Polish Journalists Berlin, 5.12.2012."— Presentation transcript:

1 Energy Transformation German Polish Energy Dialogue Karsten Neuhoff Meeting with Polish Journalists Berlin,

2 1 Background on Polish and German Energy System 2 Energy Transformation in Germany 3 Economic prospects of energy transformation 4 European dimension of energy transformation Energy Transformation

3 Comaprison energy use/person Karsten Neuhoff, Poland Germany Primary energy use (Tone of oil equivalent) per person Both countries with strong history of coal Germany shifted first to oil then to gas as domestic heating source RE growth strong in Germany (as no losses in transformation 3* bigger than depicted) German ambition – replace nuclear and fossil with efficiency and renewables Source: Based on BP Statistical Review of World Energy June 2012 and Eurostat

4 Import dependency motivates savings and substitution Karsten Neuhoff, Source: Based on BP Statistical Review of World Energy June Share of domestic consumption met by local productin Hard coal: Germany net importer since 1982, Poland since > reduced demand will not impact local mining but reduce import costs Lignite: Both Germany and Poland with large lignite share in power -> existing fields operate til approx. 2030

5 CO2 emissions / head 5 1 Poland Germany Both counries have strong reductions since 1989 due to combination linked to efficiency and economic transformation Despite lower energy use/person, high carbon larger coal share in Poland translates into similar CO2 emissions in both countries. Source: Based on BP Statistical Review of World Energy June 2012 and Eurostat

6 Investments in energy savings and renewables can reduce fossil fuel import costs Karsten Neuhoff, Fuel import costs relative to GDP (2011) Source: Based on BP Statistical Review of World Energy June 2012

7 1 Background on Polish and German Energy System 2 Energy Transformation in Germany 3 Economic prospects of energy transformation 4 European dimension of energy transformation Energy Transformation

8 Key for cost effectiveness: Energy efficiency potentials 8 Based on 7 Cent/kWh gas price, 5.5% real interest rate Source: Neuhoff et al., „Economic Viability, Financial Support, and Energy Savings“ 2

9 Competition - Chinese energy & climate policy targets 9 2 Energy efficiency target Carbon efficiency target Carbon intensity 16% Energy intensity 17% Carbon intensity 20% Energy intensity 45-50% Carbon intensity Chinese commitments to energy & carbon intensity improvements: 12 th FYP 1 Based on Review of Low Carbon Development in China, 2010 and early reports of 12th FYP

10 Experience curves – from innovation to diffusion 2 Source IEA

11 Support for renewable energy – learning and improving 2 DIW Discussion Papers 1189, Thilo Grau:: Responsive Adjustment of Feed-in Tariffs to Dynamic PV Technology Development 11 Anlagen bis 30KW

12 12 2 Costs for energy transformation – can be managed Distriubutional impacts key – deserve tailored policy Source: DIW Wochenbericht Nr

13 1 Background on Polish and German Energy System 2 Energy Transformation in Germany 3 Economic prospects of energy transformation 4 European dimension of energy transformation Energy Transformation

14 Energy transformation – investing in RE and EE to reduce fuel import costs 14 Average annual energy system costs for Europe ( ) Current Policy Initiatives: 2619 billion Euro (39% Capital cost) High Renewables Scenario: 2590 billion Euro (48% Capital cost) European fossil fuel import bill (2030 / 2050) Current Policy Initiatives: 532 / 704 billion Euro High Renewable Scenario: 375 / 154 billion Euro Savings: 157 / 550 billion Euro German FIT “predictable and transparent… long-term” investment framework 2 3 Source: based on EC 2011, Energy Roadmap 2050 Table 40/41

15 The job and productivity benefits Green investments reach macro-economic significance They can have long-term productivity gains. In the short-term, some can have high multipliers 3

16 1 Background on Polish and German Energy System 2 Energy Transformation in Germany 3 Economic prospects of energy transformation 4 European dimension of energy transformation Energy Transformation

17 The role of EU ETS for European companies Karsten Neuhoff 17 4 Gt CO 2 in EU Linear 80-95% reduction trajectory EU Target 20% full CDM 20% no off-sets 30% full CDM 30% no off-sets ETS numbers based on “The role of CDM post 2012” Climate Policy Initiative working paper

18 The impact of EU ETS for Innnovation and Investment 1.Capturing Companies’ Attention Companies with higher expectations of the future stringency of permit allocation are more likely to invest in low-carbon innovation 2.Providing Clarity for Decision Making The EU ETS directive has set a cap on ETS emissions that declines at a rate of 1.74% per year from 2013, unless reset, until This creates a long-term framework to inform company strategy. 3.Creating enabling environment for Low-Carbon Investment Power generators report the following factors are important for investment decisions: Price & access of fuels, Price & access of installations, Price & demand for electricity, Public opinion and the long term carbon price Source: (1) study by LSE/Imperial/Carlos III interviews with 800 manufacturing companies (3) study by ISI-Fraunhofer/ETH Zürich survey of 65 power companies, as part of Carbon Pricing for Low- Carbon Investment Project 18 4

19 Coordination for policies and supply chain Karsten Neuhoff 19 4 Assumed emission growth business as usual 1%/year Contribution from new low carbon technology portfolio Contribution from energy efficiency Gt CO 2 in EU Linear 80-95% reduction trajectory Renewables Directive SET Plan EU Target 20% full CDM 20% no off-sets 30% full CDM 30% no off-sets ETS numbers based on “The role of CDM post 2012” Climate Policy Initiative working paper EE Directive

20 The Need for European Action Karsten Neuhoff, Other regions accelerate implementation of carbon pricing 4 Graph: Left: Michaelowa et a., right: Andreas Türk, Sonja Klinsky, Michael Mehling, Xin Wang 2012, Climate Strategies

21 Transmission constraints – Germany in Europe 4 Karsten Neuhoff, Source: Neuhoff, K, Boyd, R., Grau, T., Barquin, J., Eachavarren, F., Bialek, J., Dent, C., von Hirschhausen, C., Hobbs, B., Kunz, F., Weigt, H., Nabe, C., Papaefthymiou, G., Weber, C., 2011, Renewable Electric Energy Integration: Quantifying the Value of Design of Markets for International Transmission, DIW Berlin, Discussion Paper, Integrated (European) energy markets

22 Grid 2020 – financing needs 4 Sources: ‘planned’ from Roland Berger 2011, ‘estimates’ from EC, Market Value (6 TSOs) 2020 Market Value (estimate scaled to 6 TSOs) Envisaged Grid Investment to 2020: Planned by TSOs (ref: Roland Berger), and EC estimate 2020 Estimates Debt Equity  1.5% annualequity growth EC estimate: approx 50% of EUR 100bn Roland Berger: approx 50% of planned investments

23 1 Background on Polish and German Energy System 2 Energy Transformation in Germany 3 Economic prospects of energy transformation 4 European dimension of energy transformation Energy Transformation

24 Vielen Dank für Ihre Aufmerksamkeit. DIW Berlin — Deutsches Institut für Wirtschaftsforschung e.V. Mohrenstraße 58, Berlin Redaktion Karsten Neuhoff


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