European Commission: Environment Directorate General Slide: 1 EU Climate policies &Bio-energy Estonian conference on “The contribution of agriculture to energy production” Talinn, 7 Ocotber 2005 Erik Tang Climate Change & energy DG Environment

European Commission: Environment Directorate General Slide: 2 The state of play : The Science is robust Most of the earth’s warming over the last 50 years (0.6° C) can be attributed to human activities Most of the earth’s warming over the last 50 years (0.6° C) can be attributed to human activities Global temperature will increase by 1.4 – 5.8°C over next 100 years Source: IPCC TAR

European Commission: Environment Directorate General Slide: 3 Terrestrial ecosystems and biodiversityTerrestrial ecosystems and biodiversity Glaciers, snow and iceGlaciers, snow and ice Marine ecosystemsMarine ecosystems AgricultureAgriculture EconomyEconomy Human healthHuman health Factual signs: Impacts in Europe EEA (2004): Impact of Europe’s changing climate

European Commission: Environment Directorate General Slide: 4 Climate change impacts: Agricultural yields will be affected

European Commission: Environment Directorate General Slide: 5 Where do we stand today now?

European Commission: Environment Directorate General Slide: 6 Where do we stand today now- EU10

European Commission: Environment Directorate General Slide: 7 Where do we stand today now- EU25

European Commission: Environment Directorate General Slide: 8 The 550ppm scenario: Cut global emission by 15-20% by 2050 as compared to 1990 Source: GCNRS/LEPII-EPE/RIVM/MNP/ICCS-NTUA/CES-KUL study

European Commission: Environment Directorate General Slide: 9 major impacts on future energy systems Source: GCNRS/LEPII-EPE/RIVM/MNP/ICCS-NTUA/CES-KUL study

European Commission: Environment Directorate General Slide: 10 Energy efficiency is key in reducing global GHG emissions

European Commission: Environment Directorate General Slide: 11 ECCP: Most important EU legislation in implementation relating to climate change PAM Reducion potential (Mt CO2-eq.) Entry into force Starting to deliver EU emission trading scheme Link JI/CDM to emission trading /2008 Revision of the Monitoring Decision Dir. on the promotion of CHP Dir. on energy performance of buildings Dir. on the promotion of transport bio-fuels Dir. on the promotion of electricity from renewable energy sources Landfill directive ACEA voluntary agreement Energy labelling directives

European Commission: Environment Directorate General Slide: 12 Develop new technologies: Reverse spending on international R&D for energy

European Commission: Environment Directorate General Slide: 13 EU agricultural emissions decreased 8% in

European Commission: Environment Directorate General Slide: 14 post 2012 : objective and process l EU goal : limit global warming to 2°C l European Spring Council March 2005: “looks forward to considering medium and longer term emission reduction strategies, including targets” / Commission is invited “to prepare a report on benefits and costs taking account both of environmental and competitiveness considerations” l ISC group on post 2012 l stakeholder consultation (170 replies in total, including CEPF, future forests, CEPI) l Commission report to be issued in January 2005

European Commission: Environment Directorate General Slide: 15 issues post 2012 & agriculture & forestry sector l climate change impacts : EU & world- wide (costs of non action) l adaptation : EU & world-wide l LULUCF (deforestation, sinks) l mitigation strategies : bio-energy as a CO2 neutral energy source

European Commission: Environment Directorate General Slide: 16 agricultural & forestry sector & climate change nitrates directive nitrates directive RES-E Directive RES-E Directive biofuels directive biofuels directive Common Agricultural Policy – set aside and energy crops scheme Common Agricultural Policy – set aside and energy crops scheme Rural Development Policy (forestry) Rural Development Policy (forestry) looking forward : l Biomass action Plan l Structural & Cohesion Funds l Future 2020 targets for RES?

European Commission: Environment Directorate General Slide: 17 ETS & (biomass) renewables l one uniform price/ EU market for CO 2 allowances… l affecting the competitive situation of the various primary energy sources l renewables get cost advantage as they do not need to surrender CO 2 allowances l liberalisation opens market for innovative suppliers, eg. renewables

European Commission: Environment Directorate General Slide: 18 Source: Point Carbon's Carbon Market Daily 3 October 2005 EUA 2005 (€/tCO 2 ) €22.75 EU ETS: price and traded volumes

European Commission: Environment Directorate General Slide: 19 ETS & (biomass) renewables l impact on improved competitiveness of bio- energy depends on allowance price (scarcity) l expected moderate prices in first trial period will bring limited incentives, but : m can tip the balance for near competitive applications m raises awareness of carbon constraint and search for alternatives to fossil fuels m comes on top of other dedicated instruments (eg. RES- E) … m and high oil prices

European Commission: Environment Directorate General Slide: 20 ETS & (biomass) renewables l short term direct impacts: m increased use of co-firing in coal power plants m increased use of biomass in pulp&paper l longer term : allowance price impacts on m investments decisions; m make or buy decision for energy users m emergence of new “low carbon energy” suppliers

European Commission: Environment Directorate General Slide: 21 JI/CDM link to ETS l An indirect link exists as of 2008 through international emissions trading l Linking proposal: to provide more flexibility and certainty to legal entities l In concrete terms, linking means that JI/CDM credits can be used by operators to fulfil their domestic obligation l Linking implies the recognition of JI/CDM credits as equivalent to allowances

European Commission: Environment Directorate General Slide: 22 JI/CDM link to ETS l avoiding double counting : no ERUs for installations covered by the Directive l Baseline takes into account environmental acquis in EU and accession countries l provisions for control of MS which projects “come in”

European Commission: Environment Directorate General Slide: 23 bio-energy scenario 2010 – 2020 : GHG emission reductions

European Commission: Environment Directorate General Slide: 24 bio-energy scenario 2020 : energy

European Commission: Environment Directorate General Slide: 25 outlook for bio-energy l Review RES-E Directive l Biomass action Plan l Common Agricultural Policy & Rural Development Policy l Structural&Cohesion Funds l Future 2020 targets for RES

09/2005 Slide 26 Well-to-Wheels analysis of future automotive fuels and powertrains in the European context A joint study by EUCAR / JRC / CONCAWE Overview of Results

09/2005 Slide 27 General Observations: Costs l A shift to renewable / low carbon sources is currently costly m However, high cost does not always result in high GHG emission reductions m At comparable costs GHG savings can vary considerably l The cost of CO 2 avoidance using conventional biofuels is around m €/ton CO 2 when oil is at 25 €/bbl m €/ton CO 2 when oil is at 50 €/bbl l Syn-diesel, DME and ethanol from wood have the potential to save substantially more GHG emissions than current bio-fuel options at comparable or lower cost per tonne of CO 2 avoided. m Issues such as land and biomass resources, material collection, plant size, efficiency and costs, may limit the application of these processes

09/2005 Slide 28 Potential of biomass residues l Availability of biomass for biofuels is less than for bio-energy: m Advanced biofuels plants need to be large for reasonable economics m Crop residues are mostly highly dispersed: better suited to local heating. l STRAW is the most concentrated residue m can be taken when soil water-retention is not critical m that means in the best cereals-growing areas: 37% of EU 25 wheat m Straw/grain ratio about 0.65 in these high-yield regions m total about 600 PJ/y l FOREST RESIDUALS cost rises steeply with transport distance m above 365 PJ/y in EU 25 it becomes more expensive than pulp wood m practically all wood-industry waste is recycled inside the industry l BIOGAS availability depends on price: m much of the potential feedstock is too dispersed for economic plant size

09/2005 Slide 29 Alternative use of primary energy resources - Biomass Wood gasification or direct use of biomass for heat and power offers greatest GHG savings Potential for CO 2 avoidance from 1 ha of land Reference case: 2010 ICE with Conventional fuel CO 2 savings per hectare are better for advanced biomass than ethanol or biodiesel Using biomass for electricity generation offers even greater savings

09/2005 Slide 30 Conclusions l A shift to renewable/low fossil carbon routes may offer a significant GHG reduction potential but generally requires more energy. The specific pathway is critical l No single fuel pathway offers a short term route to high volumes of “low carbon” fuel. m Contributions from a number of technologies/routes will be needed. m A wider variety of fuels may be expected in the market m Blends with conventional fuels and niche applications should be considered if they can produce significant GHG reductions at reasonable cost l Transport applications may not maximize the GHG reduction potential of renewable energies l Optimum use of renewable energy sources such as biomass and wind requires consideration of the overall energy demand including stationary applications m More efficient use of renewables may be achieved through direct use as electricity rather than road fuels applications

09/2005 Slide 31 The study report will be available on the WEB: For questions / inquiries / requests / notes to the consortium, please use the centralised mail address: Well-to-Wheels analysis of future automotive fuels and powertrains in the European context