Sectoral Emission
Reduction Potentials and
Economic Costs for Climate Change
(SERPEC-CC)
Summary report
Bart Wesselink • Yvonne Deng
October 2009
Preface
This report presents an overview of the key results of the ‘Sectoral Emission Reduction Potentials and
Economic Costs for Climate Change’ project (SERPEC‑CC). The project was carried out by a consortium of:
• Ecofys Netherlands BV (lead partner)
• Institute of Communication and Computer Systems (ICCS) of National Technical University of Athens (NTUA)
• Institute for Prospective Technological Studies (IPTS) - EC Joint Research Centre (JRC)
• AEA Energy and Environment
• CE-Delft
October 2009
Financial support from the Directorate General (DG) for Research, Technology and Development (under
the European Community Sixth Framework Programme) and DG for Environment of the European
Commission as well as of the Dutch and German ministry of Environment (VROM and BMU) is
acknowledged. This paper reflects the opinion of the authors and does not necessarily reflect the opinion
of the European Commission, VROM and BMU on the results obtained.
Further information:
Ecofys Netherlands BV
T: +31 (0) 30 662 33 00
E: [email protected]
W: www.ecofys.com
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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Executive summary
With technical measures, greenhouse gas emissions in the EU27 can be reduced to 25% below 2005
emissions in 2020 and 40% in 2030. The key to realising this potential is the full deployment of
low-carbon technologies in each cycle of renewal of technologies (e.g. industrial plants, power plants,
cars). The additional costs to society of reaching such reductions can be negligible. This is because over
the lifetime of technologies, (fossil) energy savings more than compensate for investment costs.
The conclusion on costs is sensitive to input assumptions on future energy costs and should be
regarded as a scenario outcome.
The SERPEC-CC project (Sectoral Emission Reduction Potentials and Economic Costs for Climate Change)
has mapped out the potential represented by 650 relevant technologies for reducing the emissions of
greenhouse gases in the European Union across ten major sectors. It also investigated the associated
costs to society.
The potential of low-carbon technologies
SERPEC concludes that the abatement potential for greenhouse gas emissions in the EU27 is 30% below
the 1990 level by 2020 and 45% by 2030. Compared to the 2005 level, the potential reduction in 2020 is
-25% and ‑40% in 2030 (Figure 1).
SERPEC assumes that low-carbon technologies are applied in each cycle of renewal or renovation of
industrial plants, power production plants, buildings, cars, trucks and electric appliances. Renewal rates
- at the end of an installation’s technical lifetime – ranges from 10 to 15 years, for e.g. refrigerators and
cars, up to 50 years for industrial plants. At the same time, the rate of improvement of existing installations
(retrofitting industrial plants or renovating houses) is assumed to double to 2-3% per year. Some limitations
are also assumed, for instance there is a practical maximum to the market growth rates of new technologies
because new factories for producing wind turbines or solar panels cannot be built straightaway.
This maximum feasible reduction potential in 2030 is supported by several other (model) studies
and is bounded by the inertia of capital replacement rates and maximum market growth rates of new
technologies. Reductions beyond this level could be achieved through structural changes in the economy
(increasing material efficiency, or modal changes in transport) and behavioural changes.
The abatement potential was identified via a bottom-up approach in which we assessed the maximum
deployment and associated social costs of around 650 individual low-carbon technologies in different
sectors of the economy. Here, we estimated the CO2 abatement potential of these technologies against
the performance of similar technologies in 2005, a ‘frozen technology reference level’ approach (FTRL).
This FTRL-reference is visualised in Figure 1 at the macro-economic level. Policy makers often work from
a reference scenario that includes ongoing technology development, both autonomous and affected by
policies (baseline or ‘business as usual scenario’). This is illustrated by the PRIMES-2007 baseline in
Figure 1.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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8,000
abatement potential
7,000
Mt CO2eq
6,000
5,000
4,000
3,000
2,000
1,000
0
2000
Base
2005
Reduction
2010
2015
2020
2025
2030
FTRL
Figure 1 E
mission curves for the EU27. The lower line shows the level of potential reductions. The ‘frozen technology
reference level’ assumes that technologies from 2005 are used. The ‘base level’ refers to an assumption
of continuing autonomous technological development of low-carbon technologies, both autonomous and
driven by current policies. Dots show monitoring and outlook data (adapted from EEA, 2009).
The costs of low-carbon technologies
Besides the technical potential, SERPEC also investigated the cost of low-carbon technologies to society.
The bottom-up methodology used identified (per sector, technology and country) all of the costs of
capital investments and operation and maintenance, over and above the reference technology, assuming
a discount rate of 4%. These costs fall over time, as new technologies become mainstream. The financial
benefits of energy savings are accounted for, but taxes and subsidies are excluded. This cost calculation
method, which is also referred to as the ‘social cost method’, allows for comparison of the ‘bare’ costs of
technologies across measures, sectors and countries.
Some technologies have a negative cost, in other words they imply a net welfare gain from a societal
point of view. A positive cost indicates a net welfare loss. SERPEC arranged the abatement options in
order of increasing costs per ton of abated CO2 emissions. This results in the ‘marginal abatement cost
curve’ (MACC) shown in Figure 2.
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agricultural measures
300
electric cars
250
biomass-heated buildings
eco-efficient cars & trucks
200
e/t CO2eq
150
cement: clinker substitution
PV
100
onshore wind
50
0
-50
-100
-150
-200
offshore wind
geothermal + CSP
500
1000
1500
digestion of manure
fluorinated gases
reduce biowaste landfilling
biofuel in transport
industrial CCS
N2O reduction industry
2000
2500
buildings: energy conversion
buildings: efficient electr. appliances
new fossil power plants
hydropower
energy-savings industry (retrofit)
refineries: process improvements
energy-savings industry (new plants)
paper recycling
aviation
3000
3500
wave & tidal power
agriculture nitrification inhibitors
biomass-based power
insulation in buildings
Mt CO2eq
Source: Ecofys
Figure 2 C
ost-curve scenario for the EU27 in 2030. Cumulative abatement is relative to the FTRL reference emission in
2030 (see Figure 1). Technologies are aggregated into clusters for clarity.
The MACC in Figure 2 shows that a large share of the technologies have negative abatement costs
(€/t CO2eq). This is because over the lifetime of technologies, (fossil) energy savings more than
compensate for investment costs. The area above this part of the MACC represents the total revenues
from cost-efficient abatement options. This area is comparable or even bigger than the net Costs that
come with options on the positive side of the cost curve. The overall societal costs of reaching the total
reductions potential in 2030 are therefore negligible or even negative1.
This conclusion is sensitive to input assumptions on future fossil energy prices, learning rates of
technologies and discount rates. Results should therefore be regarded as a scenario outcome. As an
illustration, compared to the social cost perspective, the private end-user faces higher discount rates and
taxed energy prices. The former increases abatement costs, whereas the latter decreases the abatement
costs because of higher revenues from energy savings. As a net result, the abatement costs (€/t CO2eq)
for low-carbon power producers increase whereas those of private car-owners decrease.
1. Note that the MACC is presented against the FTRL baseline. In theory, the difference in 2030 between the FTRL and the PRIMES-2007 baseline,
around 1,500 Mt CO2eq, would be abated through the most cost-efficient options and the average costs of the remaining abatement potential would
increase. In practice, however, it is highly unlikely that such ideal abatement behaviour occurs. Our conclusion on overall social costs is therefore
based on the overall cost-curve, measured against FTRL emissions.
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Table of contents
1.
Introduction
7
1.1
The SERPEC-CC project
7
2. Methodology
8
2.1Reference case - baselines
2.2The GHG reduction technologies
2.3 Specific abatement costs
2.4Marginal abatement cost curves
2.5 Deployment potentials and scenarios
8
10
11
12
12
3. Baselines, mitigation potentials and costs
16
3.1
Overview EU27
3.2 Sectoral overview
3.3Member States overview
3.4The non-trading sectors
16
19
28
30
4. Bottom-up and top-down comparison
37
5. Sensitivity analysis
40
5.1
Social versus private (end-user) perspective
5.2Reference CO2 factor of electricity production
5.3The order of cost-efficient options
40
42
43
References
44
Glossary
45
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1. Introduction
1.1 The SERPEC-CC project
SERPEC identifies the potential reduction of greenhouse gas emissions in the EU in 2020 and 2030 by
deploying technologies that are on the market, or near introduction, today, at the maximum possible
rate, while maintaining the same economic structure.
The aim of the project Sectoral Emission Reduction Potentials and Economic Costs for Climate Change
(SERPEC‑CC, hereafter named SERPEC) is to identify the potentials and social costs of technical control
options to reduce greenhouse gas emissions across all European Union sectors and Member States in
2020 and 2030. The results are presented in so-called marginal abatement cost curves (MACCs, or also
called cost curves) that provide a least-cost ranking of options across technologies and sectors in the EU.
In general, emissions reduction potentials and MACCs provide strategic information for policy makers.
The results presented in this summary report are based on ten sectoral inventories (Table 1), each
published as a separate report.
Table 1 Overview of sectors included in SERPEC-CC.
SERPEC sector
Gases
Category1
Part of Effort
sharing decision2
Built environment
CO2
Non-ETS
Transport (road, rail, passenger aviation)
CO2
Non-ETS /ETS
Yes
Yes
Agriculture
CH4, N2O
Non-ETS
Yes
3
Fluorinated greenhouse gases
HFCs, PFCs, SF6
Non-ETS
Yes
Waste (landfilling)
CH4
Non-ETS
Yes
LULUCF
CO2
Non-ETS
No
Transport (maritime)
CO2
Non-ETS
No
Fugitive emissions (energy sector)
CH4, CO2
Non-ETS
Yes
Energy sector – power supply
CO2
ETS
Small share
Industry and refineries
CO2
ETS
Small share
1. ETS is sector that is included in the European Emissions Trading scheme, non-ETS is not included. Note, that the electricity use of the non-ETS
sectors causes so-called indirect emissions in the electricity sector, which is part of the ETS.
2. See EC (2009), the effort sharing decision defines emission reduction targets for the non-ETS sectors per EU Member State.
3. Aviation is part of ETS.
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2. Methodology
2.1 Reference case - baselines
The CO2 reduction potential of new technologies is compared with the average performance of
comparable technologies in 2005.
Our reference for the development of energy related CO2 emissions over time was modelled by a
so-called Frozen Technology Reference Level scenario (FTRL). The FTRL scenario holds all the
characteristics of the PRIMES 2007-baseline scenario (EC, 2008; Capros et al., 2008), such as an average
economic growth rate of 2.2% per year until 2030, with the exception of technology characteristics
of sectors which remain ‘frozen’ at the 2005-level. As a result, autonomous and policy-driven energy
and carbon efficiency improvements are not taken into account. For demand side electricity savings
measures, we also used this 2005-technology status as a reference. This was done by using a single
averaged value for the CO2 emissions of the reference electricity production. This value was set at 0.5 t CO2/MWh and reflects an average marginal power production plant in the EU.
The rationale for using a FTRL scenario is, that in our bottom-up identification of abatement potentials we
also use 2005 technologies as a reference. Thus, the overall bottom-up identified abatement potential
should be compared with this macro-economic FTRL scenario.
For policy makers, however, a baseline scenario that includes ongoing technology development, both
autonomous and affected by policies, is more useful. For that reason, we also present the PRIMES
2007-baseline scenario (EC, 2008; Capros et al., 2008). This scenario includes autonomous technology
improvements and policies and measures implemented in the Member-States up to the end of 2006
and was used as the basis for proposed additional policies in the Commissions’ 2008 Energy & Climate
package2 (see Figure 3). Note, that we did not assess to what extent the abatement potential of individual
measures is already utilised by current (climate) policies.
For so-called process emissions of CO2, nitrous oxide (N2O), methane (CH4) and fluorinated gases
(F-gases) we calculated new baselines, which include the impact of standing policies3.
2. See http://eur-lex.europa.eu/JOHtml.do?uri=OJ:L:2009:140:SOM:EN:HTML for final legislative texts on Climate Package
3. Baselines are comparable to the baselines included in the Commissions 2008 Climate Package, see IIasa (2008)
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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8,000
7,000
Mt CO2eq
6,000
5,000
4,000
3,000
2,000
1,000
0
2000
Base
2005
2010
2015
2020
2025
2030
FTRL
Figure 3 E
mission curves for the EU27, showing the Frozen Technology Reference development (FTRL, upper line) and
the PRIMES 2007-baseline (Base, lower line).
Energy prices
To calculate the revenues from energy savings, we used energy prices (development) from the PRIMES
baseline scenario (EC, 2008; Capros et al., 2008), which are time and energy carrier specific. Some
key EU-averaged values are shown in Table 2. The cost calculations are sensitive to the energy price
assumptions (see Chapter 5). When comparing the SERPEC results with other studies, it is imperative to
look closely at the energy price scenarios used.
Table 2 Key energy data (Source: PRIMES baseline scenario)
Pre-tax prices
Oil price
Natural gas
Biomass
Hard coal
Electricity production costs2
Electricity, retail price2
€/boe
€/GJ
€/GJ
€/GJ
€/MWh
€/MWh
1
Taxed prices3
Oil price
Natural gas
Biomass
Hard coal
Electricity production costs
Electricity, retail price
€/boe1
€/GJ
€/GJ
€/GJ
€/MWh
€/MWh
2005
2020
2030
50
5.6
6.5
2.1
49
86
65
7.2
9.4
2.3
55
101
70
7.7
10.4
2.5
57
112
2005
2020
2030
100
5.6
6.5
2.1
67
127
115
7.2
9.4
2.3
73
144
120
7.7
10.4
2.5
75
157
1. Barrel oil equivalent
2. These values were derived from the PRIMES baseline pre-tax electricity costs for industry and households, respectively, corrected for a 11 €/MWh CO2 cost (22 €/t CO2 ∙ 0.5 t CO2/MWh). The electricity wholesale price matches the short term marginal costs of an average gas-fired power plant with a 45% efficiency.
3. Taxed energy prices are applied in the so-called private end-user approach, see Chapter 3.4.2.
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2.2 The GHG reduction technologies
In this study, we assessed the potential of individual technologies to reduce GHG emissions. Structural
changes in the economy, as well as behavioural changes, were not considered. All the identified
technologies are either already applied today, or will become commercially viable in the near future.
To identify their abatement potentials we estimated maximally feasible implementation rates, often
governed by the turnover rate of existing technology stock (see Chapter 2.5).
Overall, we identified around 650 individual technology measures. Illustrative measures per sector are:
•P
ower supply: Renewable power generation, new fossil fueled power generation including the
application of carbon capture and storage (CCS).
• Industry and refineries: Application of combined heat and power (CHP), sector specific energy
demand savings through retrofitting and renewal of production capacity, cross-cutting energy
demand savings, retrofitting measures to reduce N2O and CCS for pure CO2 -streams in the chemical
sector.
•B
uilt environment: Insulation, advanced heat supply technologies, more efficient electric
appliances (lights, refrigerators, etc.).
•R
oad transport: Improved engines, reduced tire resistance, eco-driving, electric and hybrid cars,
biofuels.
•A
ir transport: Improved air traffic management and other operational procedures, improved
aerodynamics, advanced engines.
•M
aritime transport: Towing kite, fuel switching.
•A
griculture: Precision farming, anaerobic digestion of manure, improved management to decrease
enteric emissions.
•W
aste: Diversion of biodegradable waste from landfilling to composting, anaerobic digestion,
incineration and recycling of paper.
• F luorinated greenhouse gases (cross sectoral): Application of natural refrigerants, reduction of
refrigerant leakage.
• F ugitive emissions (cross energy sectors): Enhanced degasification in coal mining, reducing chronic
leakage of natural gas transport through pipelines.
• Land use, land use change and forestry: Continued afforestation and forest management.
Technology learning
For technologies that are currently on the market, but have not yet fully matured, we assume a
decrease of investment costs over time, due to technology learning and economies of scale. For these
technologies, we derived so-called progress ratios from literature (see Table 3) which express the
expected cost-reduction of technologies following a doubling of market capacity.
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Table 3 Rates of cost reduction of technologies, expressed by progress ratios1
Technology
Progress ratio
Electric cars
Hybrid cars
PV
Off shore wind
On shore wind
Hydro power
Wave energy
Biomass fuelled electricity
Solar concentrated power (SCP)
0.83
0.83
0.79
0.91
0.93
1
0.85
0.85 - 0.97
50% cost reduction untill 2030
1. A progress ratio of 0.83 indicates that a doubling of capacity (e.g. GW installed for power generation) reduces costs by 17% (1 – 0.83). Ratios have
been assumed to be constant over time.
2.3 Specific abatement costs
The specific abatement cost of a measure reflects how much money is spent (positive €-values) or saved
(negative €-values) compared to the cost of a reference, when abating one kilotonne of greenhouse
gases in a certain year.
The specific abatement cost of a measure (€/t CO2 eq) is calculated from the sum of annualised
investment costs and annual operation and maintenance (O & M) costs minus the annual financial
savings from the measure’s energy costs, divided by mean annual greenhouse gas emissions savings of
the measure. Both the CO2 savings and the costs are relative to a reference situation:
specific costs =
annualised capital costs + annual O & M - annual energy cost savings
annual CO2 emissions savings
Capital costs are annualised over the technical lifetime of the measure using a discount rate of 4%.
This value is similar to government bond rates. The annual operation and maintenance costs are assumed
to remain fixed over the depreciation period. Energy savings are calculated against energy prices before
taxation (see Table 2). All prices and costs are expressed in 2005 €, unless otherwise stated.
This cost calculation method used is also referred to as the ‘social cost method’. The method allows for
comparison of the ‘bare’ costs of technologies, across measures, sectors and countries. A negative cost
indicates that from a social perspective there will be a net economic gain from taking these measures,
while a positive cost indicates a net economic loss. Note, that the so-called private ‘end-user’ perceives
higher energy prices and discount rates (9% or higher). As a result, the cost-curve looks different from a
private end-user perspective (see also Chapter 5).
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2.4 Marginal abatement cost curves
The abatement options can be sorted by increasing costs per ton of abated CO2. This results in a so-called
marginal abatement cost-curve (MACC), an illustration of which is shown in Figure 4.
b
e/t CO2
a
Positive costs
(>0 e/t CO2)
Negative costs
(<0 e/t CO2)
Mt CO2
Figure 4 Illustration of a marginal abatement cost curve (MACC). Specific costs of measures, ranked in ascending order,
are plotted versus cumulative abatement. The total cost of abatement is equal to the area under the curve.
The left-hand side of the illustrative MACC in Figure 4a shows technologies which have negative
abatement costs (€/t CO2 eq). This can occur when over the lifetime of technologies, (fossil) energy
savings more than compensate for investment costs and/or operation and maintenance (O & M) costs are
lower than the reference O & M costs. The options on the right hand side of Figure 4a have positive costs.
Figure 4b illustrates how the area under the curve represents the total cost of abatement, i.e.
Total cost (€) = Specific cost (€/t CO2 eq) x Abatement (t CO2 eq)
On the left-hand side of the MACC in Figure 4b, this total cost is negative, since the measures have
negative specific costs. On the right-hand side, it is positive. The overall social costs of reaching the total
reductions potential can thus become negligible or even negative.
2.5 Deployment potentials and scenarios
The maximum rate of replacement of industrial plants (2–4%/yr), power plants (2–3%/yr), buildings
(1%/yr) and renovation of the building shell (2.5%/yr) determine to a large extent the deployment rate
and abatement potential of new technologies in 2020 and 2030.
Most technologies in SERPEC are already available today. How did we estimate the deployment rate of
these technologies? Why not simply imagine a scenario in which all buildings in the EU are equipped with
PV modules, as of today? In theory this is possible, but in practice there is inertia in the deployment rate
of many technologies, determined by the replacement rate of, for instance, power plants or cars.
We assessed these replacement rates and associated deployment rates of technologies as follows.
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Retirement and renewal of stock
Table 4 shows stock turnover, retrofit and maximum market growth rates (in% per year) for different
market segments. The table shows that the maximum market growth rate of renewables is large (between
8% and 20% per year). The stock turnover of passenger cars is also large, with 8% per year. The renewal
of the buildings stock occurs at a much slower pace of 1% per year.
In industry, the sensitivity of the total abatement potential to the assumptions on the stock turnover rate
was tested by applying a turnover rate of zero. This resulted in an overall 10% lower abatement potential
in 2030. This fairly small difference is explained by the fact that the bundle of retrofit measures in
industry has a large reduction potential as well (see below). Under the assumption of no stock turnover,
these measures apply to a larger volume of ‘old’ stock that remains in production. The increased potential
from retrofitting compensates a large amount of the potential ‘lost’ due to lack of stock turnover into
more efficient new stock.
Table 4 Stock turnover, retrofit and maximum market growth rates
Segment
Metric
%/yr
Industrial plants
Power plants
Passenger cars
Freight trucks
Airplanes
New buildings
Renovation of buildings
Growth different renewable electricity technologies
Stock turnover
Stock turnover
Stock turnover
Stock turnover
Stock turnover
Stock turnover
Retrofit
Market growth
2 – 4
2.8 – 3.3
8
5
2.5
1
2.5
8 - 23
Retrofit measures
For so-called retrofit measures the rate of implementation is not, or to a lesser extent, limited by the
inertia of stock renewal. Other factors play a role in the deployment rate of technologies such as limited
knowledge, lack of polices etc. In most cases, we chose to present the full technical potential of retrofits
in 2020 and 2030, thus implicitly assuming that a period of 15 to 25 years ahead is potentially sufficient
to reach full implementation of these technologies.
The renovation rate of buildings was assumed to occur at a maximum rate of 2.5% per year (current rate
is around 1% per year, see Table 4). Insulation measures (roof, wall, floor, windows) and implementation
of advanced heating systems were assumed to be implemented as part of a bigger project of buildings
renovation. As a consequence, of this ‘coupled renovation’, the maximum implementation rate of these
measures follow the rate of renovation.
Deployment scenarios
A set of technologies on a cost-curve, sorted on increasing unit costs (€/t CO2), suggests a
straightforward ranking of technologies, in which ‘society’ deploys the full potential of the cheapest
option first, then moves on to the next option, etc. In several sectors however, the definition of such an
order is not straightforward and we had to define a deployment scenario.
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Power sector
The overall deployment potential for new electric power technologies between 2005 and 2030 was
defined by the total electricity demand development and the fraction of 2005-production capacity that
retires between 2005 and 2030. The large portfolio of power supply options could easily ‘over-supply’
this deployment potential. Deploying technologies in the order of cost-efficiency (€/t CO2) would put
the single technology of new most efficient fossil fuelled power plants upfront, which could in principle
supply the full deployment potential. However, the CO2 savings from this option are lowest (see
illustration in Chapter 5.3. We therefore defined a step-wise deployment scenario along the following
principles:
• Implement the single outstanding, most cost-efficient option first: demand-side electricity savings.
• Achieve maximum CO2 abatement on the supply side. In practice, this implies deployment of
renewables at their maximum rate.
• For the remainder of required new production capacity, deploy new, efficient fossil-fuelled power
plants, which are equipped with CCS from 2015 on.
Biomass
In this study, we assumed that biomass energy will be supplied only by EU-internal sources. Sustainable
EU domestic biomass potentials were derived from EEA (2006). This study categorises biomass into
forestry biomass, agriculture biomass, waste and biogas. Overall in our scenario, 50% of the biomass
potential is used in 2020 and 65% in 2030. Key-data for the biomass options are given in Table 5.
Table 5 Key-data for biomass options (PJ/yr).
Sector
Transport: liquid biofuels1
2020
2030
1,750
2,630
Power supply: co-firing coal
580
270
Built environment: heating
610
900
1,380
3,280
2
Power supply: combustion/gasification
Total allocated
4,300
7,070
Total potential supply from EU27 domestic sources
8,660
10,640
1. 10% of transport fuels assumed to be biofuels in 2020, 14% in 2030
2. Decreasing co-firing results from our scenario assumption that coal (co-) fired power plants that reach the end of their lifetime are largely replaced by renewables.
Transport: passenger cars
Assessing the maximum CO2 abatement for cars through measures such as advanced power trains, full
hybrids and electric cars actually requires a fleet composition scenario. Table 6 provides an overview of
this overall SERPEC fleet composition scenario for passenger cars. Typically, the ‘cross cutting’ measures
of improved aerodynamics and eco-driving apply to the whole fleet whereas the measure of introducing
biofuels applies to the petrol and diesel fuelled part of the fleet.
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Table 6 Overview of fleet composition scenario applied in SERPEC
EU27 fleet composition (%)
2005
2020
2030
Electric cars
0
3
19
Full hybrid diesel
0
2
6
Full hybrid petrol
0
6
12
New power trains diesel
0
19
27
New power trains petrol
0
24
36
100
45
0
Conventional cars
Waste: reduced landfilling of biodegradable waste
As a scenario for the total amount of biodegradable municipal solid waste (BMSW) that can be further
diverted from landfilling, we assumed that in 2020 the BMSW to landfill is reduced with 50% compared to
the baseline development and in 2030 all biodegradable waste is diverted from the landfill.
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3. Baselines, mitigation potentials and costs
Greenhouse gas emissions in the EU in 2030 can decrease to 40% below 2005 emissions in 2030.
Relative to the business as usual emission in 2030, the reduction is 45%. The overall social costs
of reaching these potentials are negligible or even negative. This is because over the lifetime of
technologies, (fossil) energy savings more than compensate for investment costs. This conclusion is
sensitive to the assumptions on future fossil energy prices.
3.1 Overview EU27
The overall result of our inventory of the maximum deployment of emission reduction technologies is
shown in Figure 5. Overall, emissions could be reduced by 25% from the 2005 level in 2020 and 40% in
2030. Compared to the PRIMES-2007 baseline, emissions in 2030 can be reduced with 45%.
8,000
abatement potential
7,000
Mt CO2eq
6,000
5,000
4,000
3,000
2,000
1,000
0
2000
Base
2005
Reduction
2010
2015
2020
2025
2030
FTRL
Figure 5 Emission curves for the EU27 showing the Frozen Technology Reference Level (FTRL), the PRIMES-2007 baseline,
which includes the future impact of climate policies in place at the end 2006 and the overall abatement
potential identified in this study. Dots show monitoring and outlook data (adapted from EEA, 20094).
Thus, the SERPEC study confirms that today’s portfolio of low carbon technologies is sufficient to reach
to deep reductions. The key to seizing this potential is the full deployment of low-carbon technologies in
each cycle of renewal or renovation of industrial plants, power production plants, buildings, freight and
passenger cars alike.
4 EEA website visited on 22 July 2009. 2010 are projections with all (existing and additional) measures (WAM) (source: GHG_2010_projections_
v2008EEA20251I.xls). 2000, 2005 and 2010 data are scaled to the (somewhat lower) 2000 values used in SERPEC.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 16 -
When all the abatement options are ranked along their cost efficiency (€/t CO2), a so-called marginal
abatement cost curve for the European Union in 2020 and 2030 emerges (see Figure 6). The cost curves
show what abatement options are cheapest per tonne of CO2 abated. In 2020 and 2030, the overall
benefits (negative part of the curve) and costs (positive part of the curve) more or less balance out. This
means that over the lifetime of technologies, (fossil) energy savings compensate for investment costs.
300
e /t CO2eq
200
100
0
500
1000
1500
2000
2500
3000
3500
4000
4500
-100
-200
-300
Mt CO2eq
2020
2030
Source: Ecofys
Figure 6 A
batement potential and specific costs of abatement options in the EU27 in 2020 and 2030. The abatement
potential is relative to the frozen technology reference scenario.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 17 -
The abatement potentials and costs of the key measures which contribute to this reduction potential are
shown in Table 7 aggregated into 37 clusters.
Table 7 Clustered measures. Reductions are relative to the FTRL in 2030.
Cluster
Transport: Passenger aviation2
Waste: Recycling of paper
Industry: New BAT installations
Refineries: process improvements
Industry: energy efficiency (retrofit)
Power: Hydropower
Power: efficient new fossil fuelled power3
Buildings: Appliances
Maritime Transport: Towing kite/Air cavity
Buildings: energy conversion (heating /cooling systems)
Power: Geothermal
Power: CSP
Power: Wind Off Shore
Power: Wind On Shore
Power: PV
Industry: clinker reduction and use of waste-fuel
Buildings: heat demand (e.g. insulation)
Power: Biomass electricity
Power: new coal + CCS3
Fugitive Emissions energy sector: mix of measures
Industry: N2O reduction
Agriculture: Nitrification inhibitors
Industry: CCS
Transport: Passenger cars – Biofuels
Waste: reduce BMSW to landfill
F-Gases: mix of measures
Agriculture: Anaerobic digestion of manure
Transport: Fuel efficient passenger cars
Transport: efficient freight trucks
Power: Ocean (Tidal and Wave)
Buildings: energy conversion –biomass
Transport: Passenger cars – Electric
Agriculture: improved cattle fodder/genetic
Agriculture: reduced N-application
Maritime Transport: Fuel switch
CHP: Chemicals and Refineries4
CHP: Industry (excl. Chem. + Refineries)4
Specific cost1
Abatement
€/t CO2
-171
-155
-107
-78
-74
-72
-70
-60
-60
-54
-51
-35
-23
-22
-21
-20
-12
-9
-2
1
2
10
19
19
33
42
44
45
49
58
81
252
566
784
1733
18
84
Mt CO2
84
10
461
79
169
68
5
248
41
322
12
49
213
199
208
33
545
235
14
33
75
59
44
63
24
23
31
259
52
14
55
99
37
32
12
149
74
Cum. abatement
Mt CO2
84
94
555
634
803
871
876
1124
1164
1487
1499
1548
1761
1960
2169
2202
2747
2981
2995
3029
3104
3163
3207
3270
3294
3317
3348
3606
3658
3672
3727
3826
3863
3895
3907
1. S
ensitivity of the specific costs to several parameters is illustrated in Chapter 5.
2. Reduction potential is largely covered by the PRIMES baseline; the potential thus reflects business as usual improvements.
3. The abatement potential of fossil fueled power technologies is low because of our maximum CO2 abatement scenario assumptions in which
electricity demand savings and renewables are deployed first, see Chapter 2.5.
4. Combined Heat and Power production (CHP) is shown separately, this option is included in the Industry and refineries sector report, but was
excluded from the overall cost-curves to avoid double counting with power-supply options that have higher CO2 abatement potential per MWh
electricity produced.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 18 -
3.2 Sectoral overview
Table 8 shows an overview of baseline emissions development and abatement potentials per SERPEC
sector. Key results per sector are briefly discussed below.
Table 8 Sector overview of baseline development and emissions levels after maximum abatement (Mt CO2 eq).
2005
2020
2030
Sector
Level
Baseline
Baseline1
Reduced
Baseline
Reduced
Built environment
Total
1,436
1,760
1,168
1,830
1,024
- of which direct
738
748
416
743
290
Total
920
1,015
863
1,028
810
- of which direct2
887
976
805
986
695
Transport (road, rail)
Transport (passenger aviation)3
Total
147
218
224
255
269
Industry and refineries4
Total
1,551
1,831
1,253
1,912
1,276
- of which direct
907
975
596
981
571
Agriculture
Total
501
487
326
487
328
Waste (landfilling)
Total
132
84
69
61
27
Fluorinated greenhouse gases
Total
72
78
53
78
55
Fugitive emissions (energy sector)
Total
106
78
61
68
35
Energy sector - power supply
Total
1,375
1,483
1,041
1,463
537
4,982
5,321
3,779
5,395
3,025
Total
5
1. The baseline includes before-2007 policies, for energy related emissions data are from PRIMES-2007 baseline, for non-CO2 emissions baselines
were established in the SERPEC study.
2. Indirect emissions are from electricity use, largely by electric cars (2020, 2030). Though upstream emissions from bio-fuels are ‘indirect’, we chose
to apply a 50% reduction of direct emissions to each unit of biofuel that replaces traditional fuels.
3. Aviation is passenger aviation only. Reduced emissions for this sector are comparable to baseline emissions; this indicates that no abatement
potential beyond ‘business as usual’ was identified.
4. The figures here exclude potential for CHP (to avoid double counting with the potential in the power supply sector). For CHP potentials, see
Chapter 3.2.4.
5. Total emissions include maritime emissions. Due to uncertain baseline emissions and abatement potentials data are not show on the maritime
sector level
3.2.1 Built environment
The direct emissions in the built environment sector, from burning of fossil fuels, in 2005 equalled some
15% of overall greenhouse gas emissions in the EU27. When the emissions associated with electricity
use (so-called indirect emissions) are included, the emission share of this sector is approximately 30%.
These emissions are expected to increase further in the future, mainly as a result of increased electricity
consumption.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 19 -
300
2,000
200
e/t CO2eq
Mt CO2eq
2,500
1,500
1,000
500
0
2000 2005
100
0
500
-100
1000
1500
2000
-200
2010
2015
2020
2025
2030
-300
Mt CO2eq
Base (dir. + ind.)
Reduction (dir. + ind.)
FTRL (dir. + ind.)
2020
2030
Source: Ecofys
Figure 7
Left:Emission curves (direct + indirect) for the EU27 showing the Frozen Technology Reference development (FTRL),
the PRIMES baseline and the overall abatement potential identified in this study. Right:The abatement potential in the costs curves is relative to the FTRL.
In this study, we identified a large abatement potential that can reduce emissions in the built
environment to 19% below 2005 emissions in 2020 and 29% in 2030 (see Figure 7).
Savings on heat demand combined with efficient and low-carbon heat supply systems can reduce the use
of fossil fuels and associated direct CO2 emissions in the built environment with as much as 60% in 2030,
compared to 2005. Absolute CO2 savings related to electricity savings (e.g. boilers, lighting, refrigerators,
and washing machines) are, relative to the reference, of the same order of magnitude as savings on direct
emissions. However, due to the strong autonomous increase in electricity use, the resulting electricityassociated CO2 emissions (indirect) do not fall below the 2005 level in 2030 (+5%).
A large share of the reduction potential can be achieved at negative costs, that is with net economic
savings. As may be expected, amongst the measures which have a negative total cost, the largest
potential exists for energy savings measures. Other measures with a large abatement potential, but still
at positive cost, include retrofitting with heat pumps, use of biomass and solar water heaters.
3.2.2 Transport
The transport sector contributed approximately 20% to the overall greenhouse gas (GHG) emissions in
the EU in 2005. Within the sector, road transport is the dominant (> 90%) source of emissions. Transport
emissions are expected to increase further in the near future and will make up an even bigger part of
overall EU GHG-emissions.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 20 -
500
1,200
400
1,000
300
e/t CO2eq
Mt CO2eq
1,400
800
600
400
100
0
100
-100
200
0
2000 2005
200
200
300
400
500
-200
2010
2015
2020
2025
2030
-300
Mt CO2eq
Base (direct)
Reduction (direct)
FTRL (direct)
2020
2030
Source: Ecofys
Figure 8
Left:Emission curves for direct emissions from road transport in the EU27 showing the Frozen Technology Reference
development (FTRL), the PRIMES baseline and the overall abatement potential identified in this study.
Right:The abatement potential in the costs curves is relative to the FTRL.
The total (direct + indirect) emissions from road transport can be reduced by 6% in 2020 and 12% in
2030, compared to 2005 levels. These rather moderate reductions, despite quite optimistic assumptions
on technology implementation rates (see Chapter 2.5), illustrate the very challenging task of achieving
absolute emission reductions in the transport sector. Note, that two important abatement options,
biofuels and electric cars, may have zero ‘tank to wheel’ emissions but still cause ‘upstream’ emissions
that were included in our calculations. Reductions in these upstream emissions, for instance through
second generation biofuels and renewable electricity production (for electric cars) are a prerequisite for
deeper emission reductions in the transport sector.
Most of the abatement comes at positive social costs. Options with negative costs are eco-driving and
improved tires (performance). Note, though, that from an end-user perspective, a very large share of
the options have negative costs. This is because taxes on transport fuels strongly increase the financial
benefit that consumers receive from buying fuel-efficient cars. This is illustrated in Chapter 5.1.
3.2.3 Agriculture
Over the period 1990 to 2005, emissions from this sector in the EU27 fell by around 15% and in 2005
represented approximately 10% of the overall greenhouse gas emissions in the EU27. Within the sector,
agricultural soils, enteric fermentation and manure are the main emissions sources. Projections show
European agricultural emissions declining through to 2010, after which they remain relatively stable
out to 2030. Against projected baseline emissions, we demonstrate that the maximum technically
available potential in 2020 is 160 Mt CO2eq/yr, which would represent a 35% reduction against European
agricultural sector emissions in 2005 (see Figure 9).
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 21 -
300
500
200
e/t CO2eq
Mt CO2eq
600
400
300
200
100
0
2000 2005
100
0
-100
20
40
60
80
100 120 140 160 180
-200
2010
2015
2020
2025
2030
-300
Mt CO2eq
Base (dir. + ind.)
Reduction (dir. + ind.)
FTRL (dir. + ind.)
2030
Source: Ecofys
Figure 9
Left:Agriculture: business as usual baseline emissions and maximum identified abatement potential.
Right:The abatement potential in the costs curves is relative to the FTRL.
For the year 2020, 47 Mt CO2 eq/yr of emission reductions were identified at zero or negative cost
compared to baseline emissions. The set of most cost-effective measures (< 20 €/t CO2 eq) includes:
precision farming, adding nitrification inhibitors to soils (both reducing N2O from soils), centralised
anaerobic digestion of manure (reducing N2O and CH4 emission that would otherwise occur from manure
storage or application) and improvement of lifetime and efficiency of livestock (reducing enteric CH4 emissions).
3.2.4 Industry and refineries (including CHP)
The industry and refineries sectors had a share of around 25% in the overall greenhouse gas emission
in the EU in 2005. When the emissions associated with electricity use (so-called indirect emissions) are
included, the emission share of this sector is approximately 30%. We identified an overall GHG abatement
potential that can reduce these emissions in 2030 to 30% below 2005 emissions (see Figure 10).
The main contributions of measures/sectors to these reductions are: building of new energy efficient
production facilities, retrofitting existing stock with new energy efficient equipment, applying combined
heat and power production (CHP), effectively reducing all current emissions of nitrous oxides and
applying carbon capture and storage (CCS) to pure CO2 streams in the chemical industry.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 22 -
2,500
e/t CO2eq
Mt CO2eq
2,000
1,500
1,000
500
0
2000 2005
2010
2015
2020
2025
2030
200
150
100
50
0
-50
-100
-150
-200
200
400
600
800
1000
1200
Mt CO2eq
Base (dir. + ind.)
Reduction (dir. + ind.)
FTRL (dir. + ind.)
2030
Source: Ecofys
Figure 10
Left:Emission curves for the industry and refineries sector, including CHP options. Emissions refer to the sum of
direct and electricity related (indirect) emissions.
Right: Cost curve is for 2030 and reductions are relative to FTRL.
Overall, nearly 70% of the reductions are calculated at negative specific costs (€/t CO2). These results
simply reflect the fact that large long-term energy (cost) savings can be obtained in the industries
and refineries sector. Note, however, that we calculated costs from a social perspective, using pre-tax
energy costs and a discount rate of 4%, to annualise additional capital costs over the prolonged lifetime
of industrial technologies (several decades). This social cost perspective is quite different from the
industrial end-user perspective, where upfront investments are a major barrier and future (long-term)
costs and revenues are valued at much higher discount rates.
3.2.5 Energy sector: power supply
The power supply sector had a share of around 28% in the overall greenhouse gas emission in the EU
in 2005. Electric power production in the EU is expected to grow with a steady 1.3% per year in the
PRIMES-2007 baseline development. As a result, CO2 emissions will increase, unless new low-carbon
power supply technologies are implemented. In this study, we identified the deployment potential of
technologies that can reduce emissions in the power sector to 25% below 2005 emissions in 2020 and
60% in 2030 (see Figure 11).
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 23 -
200
2,500
150
2,000
100
e/t CO2eq
Mt CO2eq
3,000
1,500
1,000
500
50
0
-50
200
400
600
800
1000
1200
-100
0
2000 2005
2010
2015
2020
2025
-150
2030
Mt CO2eq
Base
Reduction
2020
FTRL
2030
Source: Ecofys
Figure 11 Left:CO2 emissions from power production. Emission curves for the EU27 showing the Frozen Technology Reference
development (FTRL), the PRIMES baseline and the overall abatement potential identified in this study.
Right:The abatement potential in the cost curves is relative to the FTRL (corrected for electricity demand savings).
Results of our deployment scenario (see Chapter 2.5) are shown in Figure 12. The overall emissions
reduction potential and the costs associated with this deployment portfolio are shown in Figure 11. Under
the scenario conditions chosen in this study, 45% of the potential has negative costs in 2020 and 80% in
2030. The reduction of costs over time is a result of the assumed (steep) learning, and associated costs
decrease, of renewable energy technologies. Chapter 5 discusses some sensitivities of these outcome to
input parameters (discount rate and costs of reference electricity production).
Electricity production EU27
5
PWh/yr
4
3
2
1
0
2005
2010
2015
2020
2025
2030
New fossil other
New coal (with CCS)
New coal (no CSS)
New gas (NGCC)
New nuclear
Biomass gasification
Biomass combustion
Biomass digestion
Geothermal
CSP
Large scale PV
BIPV
Ocean tidal
Ocean wave
Onshore wind
Offshore wind
Hydro
Exist. coal-co-firing
Exist. coal
Exist. gas
Exist. nuclear
Exist. fossil other
Demand (FTRL)
Demand (after
maximum savings)
Source: Ecofys
Figure 12 Scenario for deployment of new electricity production technologies. In the scenario, the FTRL level is
corrected for the maximum electricity demand savings identified in the built environment and industry and
refineries sectors.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 24 -
3.2.6 Waste
Overall, the waste sector in Europe produces about 130 Mt CO2eq per year from methane emission from
landfills. This is around 2% of the overall greenhouse gas emissions in the EU in 2005.
Under business-as-usual conditions, methane emissions from landfills are expected to decrease to
approximately 80 Mt CO2eq in 2020 and 60 Mt in 2030 (see Figure 13). This is the result of improved
landfill conditions and a strong reduction of biodegradable waste (BMSW) that goes to landfills; both
developments result from the further implementation of the Landfill Directive.
160
300
140
200
e/t CO2eq
Mt CO2eq
120
100
80
60
40
0
5
-100
10
15
20
25
30
35
40
-200
20
0
2000 2005
100
2010
2015
2020
2025
2030
-300
Mt CO2eq
Base
FTRL
2030
Source: Ecofys
Figure 13.
Left:Baseline development and technical reduction potential of methane emissions from landfills in the EU27.
Right:The abatement potential in the cost curve is relative to the FTRL.
As a scenario for the total amount of BMSW that can be further diverted from landfilling, we assumed that
in 2020 the BMSW to landfill is reduced with 50% compared to the baseline development and in 2030
all biodegradable waste is diverted from the landfill. As a result, methane emissions reduce by around
60% compared to the baseline in 2030 (see Figure 13), which is 80% below the 2005 level. The baseline
emissions in 2030 do not drop to zero, because historically landfilled waste will continue to produce
methane emissions.
BMSW can be diverted from landfill into five waste technologies: anaerobic digestion, composting,
mechanical biological treatment, incineration and paper recycling. Some 25% of the BMSW volume
consists of recyclable paper. Re-using this paper as input for pulp production is by far the most costefficient option (see Figure 13).
3.2.7 F-Gases
Together, emissions of hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride
(SF6) amount to 70 Mt CO2eq in 2005, some 1.4% of the overall greenhouse gas emissions in the EU.
Implementation of EU F-gas regulations can potentially decrease emissions to 54 Mt CO2eq in 2020.
The baseline assumption is very uncertain though. A recently but clear trend is observed in which
HCFC containing refrigerants are replaced by HFCs. HFCs do not deplete the ozone layer but are
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 25 -
potent greenhouse gases. Thus, the transition away from ozone depleting substances like HCFCs has
implications for the future climate. When such HFCs are not only applied in new but also in existing
refrigeration systems, the total F-Gas emission in the baseline will increase to around 80 CO2eq in 2020
and 2030 (see Figure 14). The uncertainty in the baseline emphasises the need for improvement of
monitoring of F-Gas emissions, as has already been announced in Regulation (EC) No 842/2006.
On top of this baseline emission, we have identified an overall abatement potential of 26 Mt in 2020.
The most important (additional) abatement options are leakage reductions in the refrigeration and air
conditioning sector, especially on commercial refrigeration systems, and mobile air conditioning systems
in cars. The costs of leakage reduction options for different applications of the refrigeration and air
conditioning sector vary between 25 € and 100 € per t CO2eq.
90
900
80
700
e/t CO2eq
Mt CO2eq
70
60
50
40
30
300
100
-100 0
20
0
2000 2005
500
5
10
15
20
25
30
-300
2010
2015
2020
2025
2030
Mt CO2eq
Base (direct)
Reduction (direct)
Reduction (extra)
2020
Source: Ecofys
Figure 14 Left:Baseline and abatement potential for F-Gases in the EU27. The lower dotted line includes the (uncertain) phaseout of HFC-containing refrigeration systems between 2020 and 2030 (see main text).
Right: The abatement potential in the cost curve is relative to the Base.
The earlier mentioned ‘HFC-uncertainty’ in the baseline development is also reflected in the abatement
potential. The baseline assumption that all existing refrigeration units that are still using HCFCs will be
retrofitted with HFC refrigerants implies that these HFCs can be removed from these units, and replaced
by new systems with natural refrigerants, when they reach the end of their lifetime between 2020 and
2030. A first order estimate of this impact, around 20 Mt CO2eq of abatement in 2030, is shown in Figure 14. The costs of this uncertain option were not assessed.
3.2.8 Fugitive emissions
Fugitive emissions from fossil fuels are intentional or unintentional releases of greenhouse gases (GHGs)
from the production, processing, transmission, storage, and delivery of fossil fuels. We focused on the
reduction of methane emissions as these cover 80% of the fugitive emissions.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 26 -
140
12
120
10
100
8
e/t CO2eq
Mt CO2eq
Fugitive emissions contributed approximately 2% to the overall greenhouse gas (GHG) emissions in the
EU27 in 2005. As oil, coal and natural gas production are all forecasted to decline in the EU, the (frozen
technology) reference level forecasts a decline in emissions up to 2030. Against this reference level, we
identified an abatement potential of 33 Mt CO2eq in 2030 (see Figure 15). This is a 50% reduction compared
to the baseline. Out of this abatement potential, 13 Mt CO2 eq can be realised in the solid fuels (coal mining)
sector. The emission reduction potential for reducing emissions in the oil and natural gas sector is 21 Mt CO2eq. Approximately 10 Mt CO2eq emissions in the EU27 can be reduced against negative costs and
an extra 20 Mt CO2eq emissions can be reduced at low costs (below 3 €/t CO2eq).
80
60
40
20
0
2000 2005
6
4
2
0
5
-2
2010
2015
2020
2025
2030
10
15
20
25
30
35
-4
Mt CO2eq
FTRL
Reduction
2030
Source: Ecofys
Figure 15
Left:Baseline development and technical reduction potential of methane emissions from fugitive emissions in the energy sector in the EU27.
Right: The abatement potential in the costs curves is relative to the FTRL.
3.2.9 LULUCF
Monitoring data indicate that CO2 sequestration in forests of the EU today amounts to around 517 Mt CO2
per year (see Figure 16). This CO2 sink compares to a total of around 5200 Mt CO2eq emissions in the EU,
which largely originate from the use of fossil fuels. Afforestation accounts for a carbon sink of 54 Mt CO2,
whereas around 461 Mt CO2 is sequestered in the existing EU forest stock. As a baseline development for
the period of 2005 to 2030 we assumed a continuation of the CO2 sequestration monitoring trend. Thus,
the baseline assumes that current forest management practices and changes in forest area will continue
in the future. The future baseline does not account for factors such as changing age class structure,
climate change and changing wood demand.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 27 -
1985
-400
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
Mt CO2eq
-450
-500
-550
-600
-650
-700
Monitoring
Trend
Figure 16 Current and future trend of net CO2 emission reductions through forests based on UNFCCC category “5 A Total Forest Land”.
Our literature review showed that only limited data is available to estimate the future impacts and costs
of additional afforestation and forest management activities in the EU. Because of these limitations,
we were not able to establish quantified estimates of the CO2 potentials and costs of such measures.
In general though, literature indicates that the potential for extra afforestation and forest management,
to arrive at CO2 sequestration beyond the assumed baseline trend, may be relatively small.
3.3 Member States overview
Greenhouse gas emissions in the EU27 in 2030 can decrease to 40% below 2005 emissions in 2030.
Indicative results suggest that on the Member State level, the reductions potentials range between
+10% to ‑10% (6 countries), ‑10% to ‑25% (4 countries), ‑30% to ‑50% (14 countries) and -50% to -60%
(3 countries).
The overall abatement potential presented in the previous chapter was calculated ‘from the bottom up’
per EU member state. For the most relevant parameter, member state specific data were used, such
as activity developments (car fleet, livestock numbers, crop areas by type), energy use, age-structure
of power plants, solar irradiation levels (PV), potentials for wind-energy and for characteristics such
as fertiliser application and manure management practice (agriculture). Results are shown in Table 9
and should be regarded as a first order estimate which may differ from more in-depth country specific
studies.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 28 -
Table 9 O
verview of indicative emission reduction potentials for EU member states. Numbers are first order estimates only.
Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Base year emission
(2005)
Reduction in 2030 vs.
2005
Mt CO2eq
99
147
52
7
103
58
11
80
674
857
96
72
67
544
11
20
15
2
198
257
80
122
47
19
419
118
616
Category1
2
3
3
2
2
3
3
3
3
4
3
3
4
2
1
3
1
1
3
3
3
1
1
1
3
3
4
1
Categories: 1: +10% to -10%; 2: -10% to -25%; 3: -25% to -50%; 4: -50% to -60%
Table 9 shows a considerable spread of abatement potentials among the EU Member States. Reductions
range between +10% to ‑10% (6 countries), ‑10% to ‑25% (4 countries) and ‑25% to ‑50% (14 countries)
and -50% to -60% (3 countries). Note, that these results should be regarded as indicative and a starting
point for further, in-depth, country specific studies.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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3.4 The non-trading sectors
The combined sectors of road transport, built environment, agriculture and waste have the technical
potential to reduce their emissions (direct plus indirect electricity-related) in 2020 by 20% compared
to 2005 emissions and in 2030 by 27%. The costs for society of reaching such reductions are negligible
or even negative. This is because over the lifetime of technologies, (fossil) energy savings more than
compensate for investment costs.
The Effort Sharing Decision (ESD) was agreed by the EU as part of the Climate and energy package in
December 2008 (EC, 2009). It sets national emission limits for greenhouse gas (GHG) emissions in the
so-called ‘non-trading’ sectors not covered by the EU Emission Trading Scheme in the 27 EU Member
States in 2020. The ESD covers sectors such as road transport, waste treatment, agriculture and the built
environment, but excludes the sectors of maritime transport and land use, land-use change and forestry
(LULUCF), which are not part of the Emissions Trading Scheme either.
The EU-average target under the ESD is a 10% emissions reduction in 2020, compared to 2005 emissions.
This target relates to the direct emission from the non-trading sectors only. An international agreement
on climate change may lead, if appropriate, lead to a revision of this target.
As part of the SERPEC study, we assessed the abatement potentials and costs of four sectors that to a
large extent cover the ESD: agriculture, road transport, buildings and waste.
3.4.1 Overview of results
Abatement potential
Figure 17 shows the emission development and abatement potential for a set of non-ETS sectors. In 2020,
emissions can be reduced to 20% below 2005 level, in 2030 this is 27%.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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4,500
4,000
Mt CO2eq
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2000
Base
(dir.+ind.)
2005
Reduction
(dir.+ind.)
2010
2015
2020
2025
2030
FTRL
(dir.+ind.)
Figure 17 Direct and indirect emissions from agriculture, road transport, buildings and waste sectors in the EU27.
Upper line shows FTRL development, middle line the PRIMES-2007 baseline and the lower line the
abatement potential identified in this study.
Figure 18 shows (only) the direct emissions for the non-ETS sectors, as well as the ESD-target of ‑10%
compared to 2005 which relates to direct emissions only. The potential to reduce direct emissions,
compared to 2005 emissions, is 28% in 2020 and 41% in 2030.
3,500
3,000
Mt CO2eq
2,500
2,000
1,500
1,000
500
0
2000
Base
(direct)
2005
Reduction
(direct)
2010
FTRL
(direct)
2015
2020
2025
2030
2020
target non-ETS
Figure 18 Direct emissions from agriculture, road transport, buildings and waste sectors in the EU27. Upper line
shows FTRL development, middle line the PRIMES-2007 baseline and the lower line the abatement potential
identified in this study.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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Costs
When all the abatement options are ranked along their cost efficiency (€/t CO2), a so-called marginal
abatement cost curve for the European Union in 2020 and 2030 emerges (see Figure 19). The cost curves
show what abatement options are cheapest per tonne of CO2 abated. In 2020 and 2030, the overall
benefits (negative part of the curve) and costs (positive part of the curve) more or less balance out. This
means that over the lifetime of technologies, (fossil) energy savings compensate for investment costs.
300
e/t CO2eq
200
100
0
500
1000
1500
2000
-100
-200
-300
Mt CO2eq
2020
2030
Source: Ecofys
Figure 19 Cost-curve for the agriculture, transport, buildings and waste sectors in the EU27 in 2020 and 2030.
Cumulative abatement is relative to the FTRL reference emission in 2030 (see Figure 17).
The abatement potentials and costs of the key measures which contribute to this reduction potential are
shown in Table 7, aggregated into 14 clusters.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 32 -
Table 10 Top-14 of (clustered) abatement measures in the non-ETS sectors. Reductions are relative to the FTRL in 2020
Waste:
recycling of paper
Buildings: heat demand (e.g.
insulation)
Buildings: appliances
Buildings: energy conversion (heating/
cooling systems)
Agriculture: nitrification inhibitors
Transport: efficient freight trucks
Waste:
reduce BMSW to landfill
Agriculture: a
naerobic digestion of
manure
Transport: passenger cars - biofuels
Buildings: energy conversion - biomass
Transport: f uel efficient passenger cars
Agriculture: i mproved cattle fodder/
genetic
Transport: passenger cars - electric
Agriculture: reduced N-application
Specific
cost
Abatement
direct
Abatement
indirect
Abatement
total
Cum.
abatement
€/t CO2
-155
Mt CO2
3
Mt CO2
0
Mt CO2
3
Mt CO2
3
-115
-82
288
0
107
150
395
150
399
549
-45
10
24
34
93
59
18
11
143
0
0
0
236
59
18
11
785
844
862
874
43
50
59
69
31
42
30
152
0
0
6
0
31
42
36
152
905
947
982
1134
288
496
602
33
25
29
0
-9
0
33
16
29
1167
1183
1212
3.4.2 Packages and policies
The ESD is new on the EU and Member State policy agenda. We therefore assembled three packages of
measures that could help reach the non-ETS target in 2020 with EU-internal measures:
• A package with the least cost to society.
• A package with the least cost for the private end-user. In this package, the specific costs of
measures (€/t CO2) are calculated at energy prices after taxation and capital costs are discounted
against a rate of 9% rather than 4%.
• A package that requires the least number of measures.
Reaching the EU-average ‑10% reduction target in 2020 (compared to 2005) with EU-internal measures,
requires an abatement of around 400 Mt CO2 eq compared to the FTRL baseline in 2020 (see Figure 18).
Figure 20 shows that in theory this target can be reached with a full set of cost-effective measures, both
from a social and a private end-user perspective5.
5. Note that the cost-curve is presented against the FTRL baseline. In theory, the difference in 2020 between the FTRL and the PRIMES-2007 baseline,
around 820 Mt CO2 eq, would be abated through the most cost-efficient options and the average costs of the remaining abatement potential would
increase. In practice, however, it is highly unlikely that such ideal abatement behaviour occurs. Our conclusion on overall social costs is therefore
based on the overall cost-curve, measured against FTRL emissions.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 33 -
200
150
e/t CO2eq
100
50
0
100
-50
200
300
400
500
600
700
800
900
-100
-150
-200
Mt CO2eq
Social
Private end-user
Source: Ecofys
Figure 20 C
ost-curve for direct emission reduction from non-ETS sectors in the EU27 in 2020 (the curve shows
clustered measures). Abatement potential is relative to the FTRL reference level. Note that cost-efficiency
numbers includes effects on indirect emissions. Dotted line indicates required abatement to reach 10%
reduction of emissions in 2020, compared to 2005 emissions.
Note, that the private, end-user, cost-curve lies mostly below the social cost-curve. This is because the
private end-user has higher (taxed) energy prices; as a result the financial revenues from energy savings
are much bigger and technologies become (more) cost-efficient sooner (see Chapter 5.1). The aggregated,
clustered, results of the three policy packages are shown in Table 11.
Table 11 Three packages of clustered measures to meet the 2020 ESD target with EU-internal measures.
€/t CO2
Mt CO2
Mt CO2 (Cum.)
Least cost: society
Waste: Recycling of paper
-155
3
3
Buildings: heat demand (e.g. insulation)
-115
288
291
-45
93
385
10
59
444
Waste: Recycling of paper
-115
3
3
Transport: efficient freight trucks
-148
18
22
Buildings: heat demand (e.g. insulation)
-103
288
310
Transport: Fuel efficient passenger cars
-100
152
462
Buildings: heat demand (e.g. insulation)
-115
288
288
Transport: Fuel efficient passenger cars
69
152
440
Buildings: energy conversion (heating/cooling systems)
Agriculture: Nitrification inhibitors
Least cost: private end-user
Least measures
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 34 -
The most striking conclusion from this aggregated overview is that, from a social cost-perspective,
transport measures are not cost-efficient to reach the target, whereas from a private end-user perspective
they are. The ‘least measures’ approach confirms the focus on the two clusters of measures, i) implement
fuel-efficient cars at the maximum rate and ii) insulate buildings at the maximum rate.
Policy instrument overview
A key question for policy makers is to what extent the package of existing, recently adapted and pipeline
policies of the EU, in combination with additional national policies, is sufficient to reach to the 2020
non-ETS policy target. Such quantitative assessment was beyond the scope of this project. Moreover, the
recently changed economic context would probably require an even broader re-assessment of activity and
energy use developments as well as of policy impacts. A generic overview of policies is given in Table 12.
Table 12 Overview of non-ETS policies
Measure
Current EU Policies
already affecting the
measure
Outlook for further EU policies
Existing national policies
which could contribute to
realisation of the measures
Directive 2002/91/EC
(Energy Performance
of Buildings Directive,
EPBD)
Various options are suggested
in the proposed recast of the
EPBD (COM (2008) 780 final) to
improve current directive, such as
abolishing the 1,000 m² threshold
to include all buildings.
• Green loans for retrofit
(Germany, Great-Britain,
Ireland, France, Spain)
•S
timulation programs
and financial incentives
(Netherlands)
Reduce
N-application
Directive 91/676/EEC
(Nitrates directive)
EU Soil Framework Directive,
CAP Reform
Nitrification
inhibitors
Not covered
Reduced
grazing on wet
areas
Use of genetic
resources
Thematic Strategy
for Soil Protection
(COM(2006) 231)
Review of Nitrates Directive
programmes may highlight the
possibility for use of nitrification
inhibitors.
CAP reform,
EU Soil Framework Directive
National policies for surface
water projection (limiting
fertiliser and manure use).
Investigation of the
effectiveness of NVZ Action
Programme measures in
England.
On-farm
anaerobic
digestion,
centralised
anaerobic
digestion
Waste (Waste
Framework Directive,
Landfill Directive,
Packaging Directive)
and Renewable Energy
policy. Digestate
Quality Protocols
Buildings
Improving
building shell
(residential and
non-residential)
Agriculture
Funding made available for
research and development of
breeds and varieties.
A reformed CAP that encourages
the use of alternative breeds
Access to capital funding under
rural development programmes
would substantially lower financial
barriers.
E.g. UK - Biomass strategy,
Germany - Renewable Energy
Act 2004
Transport
Eco-driving
• Directive limiting CO2
emission to
120 g/km (Regulation
(EC) No 443/2009)
• Directive EU
2006/32/EC (Energy
services directive)
Proposed directive making Tyre
Pressure Monitoring Systems
(TPMS) compulsory on new car
types from 2012
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
• Public awareness campaigns
• Tyre pressure campaigns
• Driving instructor training
• Eco driving competitions
• Large scale national
programs such as the Dutch
‘het nieuwe Rijden’.
- 35 -
Measure
Current EU Policies
already affecting the
measure
Driver training
road freight
• Directive EU
2006/32/EC (Energy
services directive)
• Directive EU
2003/59/EC
Tyre Pressure
Monitoring
Systems (TPMS)
Low rolling
resistance tyres
Biofuels
Advanced
power trains
Hybrid cars
• Limit on rolling
resistance
• Directive limiting CO2
emission to 120 g/
km
• EU directive obliging
member states to
supply 10% of the
energy demand by
biofuels in 2020
• Additional
sustainability
demands on
biofuels.
• Directive limiting CO2
emission to 120
g/km
• Regulation (EC) No
443/2009
• Directive limiting CO2
emission to
120 g/km
Directive limiting CO2
emission to 120 g/km
Outlook for further EU policies
Existing national policies
which could contribute to
realisation of the measures
• Training of fleet managers
and subsequently their
employees in Eco driving
(before EU requirement).
Proposed directive making TPMS
compulsory on new car types from
2012
Proposal for a directive/ regulation
on tyre labelling
Stimulation of cars with TPMS
by public procurement policies
• Awareness campaigns
• Lists of ‘green’ tyres for
example in the ‘de nieuwe
band’ campaign in the
Netherlands
• Tax exemptions
• Mixing with regular fuels
• Stimulating niche
application
• Tax exemptions for fuel
economic cars
• Higher taxes for fuel
inefficient cars
• Tax benefits
• Public procurement
LULUCF
Afforestation
and
management
2003 reform of the
Common Agricultural
Policy (CAP)
Czech Republic: state support
for the conversion of nonutilised agricultural and other
areas into forests.
F-gases
Regulation (EC) No.
842/2006
Review of regulation planned for
2011;
Additional policies to achieve a
longer-term transition towards
natural refrigerants
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
• Denmark and Norway: taxes
per kg CO2 equivalent
• Germany: ChemikalienKlimaschutzverordnung –
ChemKlimaschutzV
- 36 -
4. Bottom-up and top-down comparison
Bottom-up technology assessments and top-down integrated simulated models arrive at comparable
abatement potentials and carbon costs. The inertia of capital replacement and maximum market growth
rates of new technologies appears to put a ‘physical’ limit on reductions beyond minus 40% to 50% in
2030, compared to business as usual in 2030.
The assessment of greenhouse gas abatement potentials and costs is an important aspect of policy
preparation and decision-making. Such assessments are either based on integrated environmentaleconomic (simulation) models, such as the PRIMES model, often typified as ‘top-down’ approaches,
or on more base data intensive and detailed so-called ‘bottom-up’ technology inventories, such as the
inventory carried out by Blok et al. (2001) and the current SERPEC-CC study.
Comparing PRIMES and SERPEC abatement potential and costs
As part of this project several PRIMES-scenarios were developed. In three of these, the overall EU-internal
emission reduction targets in 2030 were set at 30%, 35% and 40% (compared to 1990) respectively,
while simultaneously achieving a 25% renewable energy share in gross final energy use in 2030. These
scenarios were based on the PRIMES‑2007 baseline definitions (see Chapter 2.1).
To arrive at these targets, PRIMES carbon prices were calibrated at 53, 69 and 85 €/t CO2 respectively. In
addition, in the PRIMES-2007 baseline carbon prices were calibrated at 22 €/t CO2. These four scenarios
represent an aggregated cost-curve of the PRIMES model. Figure 21 illustrates that the high end of this
cost-curve compares well with the bottom-up cost-curve from the SERPEC study. Here we used the costcurve calculated from the so-called ‘private’ perspective (see Chapter 5.1) which resembles more closely
the energy price and discount rate settings of the PRIMES model.
At the low end of the cost-curve the match between PRIMES and SERPEC is poor. This is not surprising,
as marginal cost-curves of economic models typically start at a value of zero rather than at negative
values; in other words, opportunity and transaction costs are taken into account, which bottom-up
studies do not account for.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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-30%
300
-35%
e/t CO2eq
200
-40%
baseline
100
0
500
1000
1500
2000
2500
3000
3500
4000
4500
-100
-200
-300
Mt CO2eq
Serpec
Primes
Source: Ecofys
Figure 21 Cost-curve for the EU27 in 2030, calculated from the private, end-user, perspective. The dotted line
represents the cost-curve from PRIMES, calculated from 4 PRIMES scenarios in which carbon prices were
calibrated at 22, 53, 69 and 85 €/t CO2, respectively, to arrive at the baseline emission in 2030 and 30%,
35% and 40% emission reduction compared to 1990 emissions, respectively. Cumulative abatement is
relative to the FTRL reference emission in 2030.
General comparison of assessments
A more extensive comparison between these top-down and bottom-up approaches is provided by
Hoogwijk et al. (2008). Figure 22 shows results from that study at the OECD level. In the top-down model
studies, the abatement was maximised by imposing tax levels of 100 US $/t CO2. Figure 22 also includes
results for the EU27:
• Results from McKinsey (2009)6
• The bottom-up assessment from SERPEC. To compare results with the other studies, we calculated
the SERPEC abatement in 2030 against the PRIMES business as usual baseline, and applied a
cut-off at 100 €/t CO2.
• The PRIMES scenario that was calibrated at carbon prices of 85 €/t CO2 which is fairly comparable to
the 100 US$ or €/t CO2 limit imposed on the other studies.
Though the business as usual baselines at which reductions are calculated differ (Hoogwijk et al., 2008),
a clear picture emerges which shows that both aggregated top-down models and bottom up estimates arrive
at an average abatement in 2030 of 40 – 45% reduction compared to the business as usual scenario.
Most likely, all approaches, either top-down or bottom-up, face the inertia of capital replacement and
maximum market growth rates of new technologies. These put a ‘physical’ limit on faster and deeper
reductions. Thus, the 40 – 45% reduction in 2030, compared to the baseline, may also reflect a ‘physical’
maximum for the EU economy, unless behavioural changes reduce activity levels.
6. These are aggregated regional estimates, presented as part of a global assessment. Abatement options up to 100 €/t CO2 were included.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 38 -
bottom-up
SERPEC: bottum-up (EU27)
McKinsey, 2009 (EU27)
AR4-update (high)
AR4-updated (low)
SERPEC: PRIMES (EU27)
top-down models
ENV-Linkages
IMAGE
AIM/CGE
E3MG*
E3MG
Message Macro
Worldscan
0
10
20
30
40
50
60
% emission reduction relative to baseline in 2030
Figure 22 M
aximum emission reductions at abatement costs below 100 $ or €/t CO2 compared to business as usual
baselines in 2030. Lower nine bars represent results for the OECD from energy-environment-economy
models, AR4-updates refer to updates of the IPPC Fourth Assessment report (IPPC, 2007) (for further info,
see Hoogwijk et al., 2008). McKinsey and SERPEC studies refer to estimates for the EU27.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 39 -
5. Sensitivity analysis
A cost curve illustrates which technology is cheapest per ton of CO2 abated. A cost curve should be
regarded as a scenario outcome that is especially sensitive to assumptions on energy prices. As an
illustration, compared to the social cost perspective, the private end-user faces higher discount rates
and taxed energy prices. The former increases abatement costs, whereas the latter decreases the
abatement costs because of higher revenues from energy savings. As a net result, the abatement costs
(€/t CO2 eq) for low-carbon power producers increase whereas those of private car-owners decrease.
It is important to note, that cost curves as shown in this report, as tangible and straight forward as they
may seem, are a function of input parameters. In this chapter, we show that the cost-curve is sensitive to
a number of input parameters:
• the discount rate and energy prices
• the reference CO2 emissions factor used for electricity
• the value of the denominator of the specific costs (€/t CO2).
These examples illustrate that the MACC results should be regarded as a scenario outcome, which
could look different under different input conditions. Because of these sensitivities, we recommend
that the cost-curves be interpreted in a fairly generic way, rather than focussing on the precise position
of individual options. The three examples in this chapter also illustrate that comparing the costeffectiveness of options, within one study or across studies, is not always straightforward and should be
carried out with great care.
5.1 Social versus private (end-user) perspective
The SERPEC cost-curves are based on a ‘social’ cost perspective, in which we use discount rates of
4% and energy prices before taxation. Firstly, the outcomes of this exercise are sensitive to these
assumptions. Secondly, the end-user perspective, here the power producer, can be quite different.
This is illustrated in Figure 23 for the renewable power production options.
The figure shows the specific costs of options in 2030 under three scenarios:
• The standard case (lower curve), in which we applied a 4% discount rate and a reference cost7 of
electricity production of 57 €/MWh (112 €/MWh for BIPV) according to Table 2;
• The end-user perspective, in which the discount rate is set at 9% and a reference cost of electricity
production of 157 €/MWh for BIPV.
• A third case in which the discount rate is 9% and the reference cost of electricity is kept low, around the
2005 level of 45 €/MWh (125 €/MWh for BIPV).
7. The production costs of a new technology are compared with this reference cost. When the new technology has lower production costs than the
reference, this results in negative specific costs on the cost-curve.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 40 -
In our default situation the vast majority of the renewable options are cost efficient in 2030. When we
change the discount rate from 4% to 9% over half of the options are no longer regarded as cost-efficient.
When, in a next step, the production costs of the reference technology in 2030 are kept low, the majority
of the renewables curve shifts into the positive cost-range.
This exercise illustrates, that the societal cost-calculations should be regarded as a scenario outcome
that should not be confused with the end-users (investors) perspective.
200
150
e/t CO2eq
100
50
0
200
400
600
800
1000
1200
-50
-100
-150
Mt CO2eq
Social
End user+lower prices
End user
Source: Ecofys
Figure 23 Sensitivity of cost curve for renewables in 2030. Lower curve is calculated at default discount rate (4%) and
reference cost of electricity production (57 €/MWh), in the middle curve the discount is increased to 9%, in the
upper curve the discount rate is 9% and the reference costs for electricity production are set at 45 €/MWh.
Even more interestingly, the sensitivity of the transport cost-curve shows the opposite dynamics to
those found for the power sector (see Figure 24). Upon taxation of transport fuel prices, the end-user
perspective, the financial revenues from energy savings are much bigger and technologies become
(more) cost-efficient sooner.
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 41 -
500
400
300
e/t CO2eq
200
100
0
50
-100
100
150
200
250
-200
-300
-400
-500
Mt CO2eq
Social
Private
Source: Ecofys
Figure 24 C
ost-curve for transport (2020) in two variants: i) social cost perspective (upper curve), ii) 9% discount rate
and fuel prices after taxation (lower curve).
5.2 Reference CO2 factor of electricity production
In SERPEC we used a reference emissions factor for electricity production of 0.5 €/t CO2. This factor
represents an average marginal fossil-fuelled power production plant in the EU. This single factor
was used in all sectors to calculate the CO2 effects of electricity use and was, consistent with our FTRL
approach, kept constant over time.
A different reference emission factor would change the CO2 effect that is attributed to a technology, but
this could have different effects for different types of measures. This feature is illustrated in Table 13 for
three technologies:
• efficient appliances like refrigerators which save electricity,
• heat pumps which save on primary energy but increase electricity use, and
• electric cars which also save on primary energy but increase electricity use.
When a high emissions factor (0.75) is used, the specific costs of energy efficient refrigerators decrease,
because, per euro of costs, more CO2 is saved. Contrary, the specific costs of heat pumps and electric
cars increase because, per euro of costs, more electricity-related CO2 is generated (while the CO2 saved
on primary fuels remains the same). When using a low emissions factor (0.25), the opposite effect is
observed (see Table 13).
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 42 -
Table 13 Sensitivity of three abatement options that result in either a net decrease or a net increase in electricity use
(while saving on primary fuels in the latter case).
SERPEC
Variant 1
Variant 2
0.5
0.25
0.75
Reference emissions factor (t CO2/MWh)
Specific costs (€/t CO2)
Energy efficient wet appliances
39
79
26
Heat pumps in new buildings
167
117
296
Electric cars
252
199
343
Though the order of cost-efficiency does not change in this example, the absolute values do. This
illustrates that comparing the cost-effectiveness of options, within one study or across studies, is not
always straightforward and should be carried out with care.
5.3 The order of cost-efficient options
In certain sectors, for example the power sector, a portfolio of cost-efficient abatement options is
available (see Chapter 2.5, section Deployment scenarios). Intuitively, the most cost-efficient option on
the MACC may be perceived as the favoured one. The following example shows that such a conclusion
cannot necessarily be drawn (Joosen & Harmelink, 2006).
Table 14 shows two mitigation options. Where option A is the most cost-efficient (€/t CO2), it is clear that
option B has higher financial benefits and CO2 savings per MWh. This sensitivity is specific for options
with negative costs, especially at the cost-negative ‘tail’ of the cost-curve, and illustrates that in this
range the order of abatement options should be interpreted with care.
Table 14 Illustrative cost-efficiency example for two abatement options
A
B
-5
-10
Net CO2 reduction (t CO2/MWh)
0.1
0.5
Cost-efficiency (€/t CO2)
-50
-20
Net benefits (€/MWh)
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
- 43 -
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Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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Glossary
BIPV
Building Integrated Photo Voltaic
BMSW
Biodegradable Municipal Solid Waste
CHPCombined heat and power production
CCSCarbon capture and storage
direct emissionsGHG emissions from primary fuels or other sources that occur within a sector (as opposed
to indirect emissions)
ESDEffort Sharing Decision
ETSEmissions Trading Scheme
FTRLFrozen Technology Reference Level
GHGGreenhouse gas
indirect emissionsGHG emissions from electricity production that occur in the energy sector and are
attributed to electricity end-use sectors
LULUCFLand Use, Land Use Change and Forestry
MACCMarginal abatement cost curve
O & M
Operation and Maintenance
SERPEC‑CC
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change
yr
year
Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC)
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