Transition to a Low-Carbon Economy in Poland. Erika Jorgensen and Leszek Kasek World Bank, Europe and Central Asia Region December 17, 2010 Warsaw
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1 Transition to a Low-Carbon Economy in Poland Erika Jorgensen and Leszek Kasek World Bank, Europe and Central Asia Region December 17, 2010 Warsaw
2 Poland s energy mix is dominated by coal to such an extent that it is an outlier in both Europe and globally. Electricity generation by fuel, 2007 Coal Oil Gas Nuclear Renewables Other 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% EU27 EU10 PL Note: Energy consumption is gross inland consumption of energy.
3 Although Poland has made considerable advances in energy efficiency in the past 20 years, it has not yet reached Western European standards. Energy intensity in the EU and Poland, in toe/m PL energy intensity EU27 energy intensity PL EU Note: Energy intensity is the ratio of gross inland consumption of energy (in toe, tons of oil equivalent) to GDP (in millions of euros at 2000 prices).
4 As an EU member state, Poland is subject to EU policies on climate change mitigation. Breakdown of EU regulations by sector groups ETS sectors (that must use the EU Emissions Trading Scheme for CO 2 permits) Power Non-power Power stations and Oil refineries, coke ovens, iron and steel, other large fuel cement, glass, lime, bricks, ceramics, and combustion pulp, paper and board, petrochemicals, installations ammonia, aluminum, acid production, and aviation (possibly covered from 2011 or 2012). Non-ETS sectors (with national targets) Transport, construction, services, smaller industrial and energy installations, agriculture, and waste.
5 A suite of complementary and interlinked models were developed for this low carbon growth assessment for Poland MacroMAC curve Multi-region CGE Peer-reviewed model applied to Poland Impact of EU package ROCA Model Dynamic stochastic GE Poland model + energy and climate redesign Macro impact of options MEMO Model MicroMAC Curve TREMOVE model (road transport) Passenger, freight TREMOVE Plus Model Marginal abatement cost (NPV cost per tco 2 e) ~125 technology options
6 Business-as-usual scenario: Total emissions are projected to rise by about 20% by 2020, but which sectors will require the most intervention is harder to predict. GHG emissions in Poland, 2005 and 2020 scenarios, MtCO 2 e Changes in GHG emissions in Poland, 2020 scenarios vs. 2005, in % non-ets ETS 2020~EU targets 2020 ROCA BAU 2020 MEMO BAU 2005 non-ets ETS ~EU targets 2020 ROCA BAU 2020 MEMO BAU Total Total Note: The MEMO ETS and non-ets projections are corrected for small energy installation. The ROCA model produces CO 2 emissions so equivalent GHG emissions were estimated. Poland s EU ETS target is assumed to be the same (as a percentage change) as the EU-wide target.
7 Technical options for emissions abatement: Emissions can be cut by 1/3 by 2030 by applying existing technologies, at an average cost of /tco 2 e. Microeconomic marginal abatement cost (MicroMAC) curve for Poland, 2030 Emission abatement cost EUR/tCO 2 e Retrofit building envelope, commercial 10 Diesel LDV effectiveness Gasoline LDV effectiveness Basic retrofit building envelope, residential New built efficiency package, residential Cogeneration Recycling new waste Average cost: ~10 EUR/tCO 2 e Nuclear Organic soils restoration Biogas On-shore wind Iron & Steel CCS, new built Biomass co-firing Biomass dedicated Coal CCS Chemicals CCS, retrofit Off-shore wind Advanced retrofit building envelope residential Landfill gas electricity generation Iron & Steel CCS, retrofit CCS in downstream Abatement potential MtCO 2 e in 2030 Note: Each column is one of the 123 abatement measures. The height of the columns is the cost in per abated tco 2 e. The width is the amount emissions can be reduced against business-as-usual levels projected for Some measures are shown with net benefits (negative costs).
8 Costs to growth: Total costs peak in 2020, and by 2030, growth recovers. Micro-packages that cut emissions most do not necessarily harm growth the most. Decomposition of GDP impact of low carbon package, in % chemical process optimization mixed energy/fuel efficiency agriculture interventions industry CCS and distrib. maintainance energy efficiency fuel efficiency energy sector investments GDP deviation from BAU Note: Change in real GDP is measured against business-as-usual scenario. Categories are micro-packages (mitigation options grouped by economic characteristics).
9 Impact on GDP growth of each technical option: The ranking of options shifts. Onshore wind and small hydro enhance growth more than some energy efficiency measures. Macroeconomic marginal abatement cost (MacroMAC) curve, 2030 Note: Each column is one of the 119 abatement measures. The height of the columns is the marginal abatement impact in percent of GDP (for each percent of GHG abatement) compared to business-as-usual in The width is the percent emissions can be reduced. The area of any rectangle equals the GDP effect (loss or gain) of carbon abatement via any specific lever.
10 US$ per tco2 % vs BAU Implementing EU policy: Poland bears a modest economic burden despite dependence on coal and expected strong baseline emissions growth in sectors such as transport. EU package: carbon prices and macroeconomic impact Carbon Prices Macroeconomic Impact Poland EU Poland EU ETS carbon price Non-ETS carbon price GDP EITE output Unemployment Note: EU 26 is rest of the EU excluding Poland. The carbon price in non-ets sectors is a shadow price. EITE is energy- and trade-exposed sectors. Unemployment is the change in the rate in percentage points.
11 Three critical sectors ENERGY: The structure of the power sector will shift only slowly, even with government commitment to reduce emissions. ENERGY EFFICIENCY: These measures promise low cost abatement that delinks emissions from growth, but implementation is not easy. TRANSPORT: Poland needs to consider how to address the sector with the fastest growing emissions transport. Behavioral change, rather than technology, is needed; and this may pose a tough policy challenge.
12 Thank you! Final report scheduled for February For more information, contact: Erika Jorgensen at Leszek Kasek at
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