ENERGY AND CO 2 EMISSIONS SCENARIOS OF POLAND

Transcription

1 d ENERGY AND CO 2 EMISSIONS SCENARIOS OF POLAND

2 This report was prepared under the direction of Dr. Fatih Birol, Chief Economist of the International Energy Agency (IEA). The principal authors are IEA senior analysts Paweł Olejarnik and Maria Argiri. Several members from IEA s Office of the Chief Economist also provided essential input. As this report is a Working Paper, comments and questions are welcome and should be directed to pawel.olejarnik@iea.org.

3 Energy and CO 2 emissions scenarios of Poland OECD/IEA 2010d Executive summary Using the latest available energy and economic data, this report provides two scenarios for energy and CO 2 emissions in Poland s energy sector up to In the Reference Scenario, which assumes a continuation of current policies and an average annual GDP growth of 3.5%, Poland s primary energy demand reaches close to 115 Mtoe by 2030 or around one-fifth higher than in Compared to an average annual growth of 1.1% in the period , over the next 22 years Poland s energy demand is projected to grow by 0.7% each year. The projected growth in energy demand is driven by the transport sector (10 Mtoe) and power generation (8 Mtoe). Several key shifts occur in Poland s energy mix in the Reference Scenario. Importantly, both from an energy security and environmental perspective, the dominance of fossil fuels declines by ten percentage points to reach a share of 85% by This decline results from a growth in renewable energy, mainly wind and biomass, whose share nearly doubles by 2030 to reach 12%. Nuclear power is projected to be introduced towards the end of the period and accounts for 3% of the fuel mix in The dominance of coal in Poland s energy mix will weaken substantially, declining to 38% in 2030, from 56% in Poland s energy intensity has fallen by more than half since 1990, as the country transformed itself by scrapping and a modernising capital stock in the industry, buildings and power generation sectors, but significant potential for efficiency gains still remains. Today, the energy intensity of the Polish economy is around double that of the European Union average, but with a projected average annual decline of 2.7%, in 2030 Poland s energy intensity in the Reference Scenario remains only 5% higher than current level of the European Union. This improvement results in a halving of Poland s CO 2 intensity by 2030, with total CO 2 emissions from fuel combustion reaching 302 Mt or 2% higher than in With rising incomes and improvements in road infrastructure, Poland s vehicle fleet grows by more than 50% by 2030, highlighting the crucial importance of the transport sector when formulating energy policy. Fuelled largely by a surge in Poland s passenger light-duty vehicle ownership rate from just under 200 vehicles per thousand people in 2003 to above 400 in 2009, the transport sector accounted for nearly three-fourths of the increase in total final energy consumption over the last seven years. In 2008, for the first time, demand from the transportation sector exceeded that of industry and became the second most important sector in total final consumption after buildings. In the Reference Scenario, the transport sector accounts for more than 55% of the increase in final energy consumption between 2008 and Over three-fourths of the increase comes from oil consumption and another 20% from biofuels. Road oil demand is projected to grow on average by 2% per annum in the Reference Scenario, contributing the most to a rise in Poland s total oil demand from 25 Mtoe in 2008 to 31 Mtoe in New EU energy policies concerning fuel efficiency standards and biofuels, changes in the evolution of the composition of Poland s vehicle fleet, improved public transportation, as well as technological breakthroughs, can all change the projected transport energy demand in the Reference Scenario and consequently Poland s oil security. Efforts to reduce CO 2 emissions in the power sector, in compliance with European Union directives, are leading to significant changes in Poland s electricity mix, with the share of coal dropping substantially between now and In the Reference Scenario, Poland s electricity Page 3

4 Energy and CO 2 emissions scenarios of Poland OECD/IEA 2010 Page 4 generation grows by 1.7% on average per annum over the projection period to reach 225 TWh by 2030 a 45% increase compared with Electricity generation from coal increases moderately, from 143 TWh in 2008 to 150 TWh in 2030 and its share drops from 93% to 67%. There are significant opportunities to modernise the power generation fleet in Poland, as more than three-fourths of coal capacity is between 20 to 50 years old and a quarter of it is older than 40 years, emphasising the requirement for substantial new investment in the short and medium term. Despite improved generation efficiencies, these new investments depending on the choice of fuel can lock-in CO 2 emissions for at least a generation and scrapping them before the end of their lifetime is usually costly. Gas-fired generation is projected to rise nearly six fold by 2030, largely substituting for coal. Securing needed supply of gas, whether through pipeline and LNG imports and/or domestic conventional and unconventional production, will be crucial. Over 45% of the increase in electricity generation between 2008 and 2030 is projected to come from renewables, notably wind power and biomass. The share of renewables in total electricity generation increases from 4% in 2008 to 17% by 2020 and stays at this level up to 2030, based on incentives provided by the government. This increase is part of Poland s target, as defined in the European Union s renewables directive, to achieve 15% of renewables in the energy mix by Nuclear power makes inroads into Poland s electricity mix contributing to efforts to enhance security of supply and to achieve the transition to low-carbon electricity generation. Following a number of steps to shape a policy framework for nuclear power, the Polish government published a roadmap in August 2009, with the aim of commissioning a first plant in In the Reference Scenario nuclear power capacity reaches 1.6 GW in 2030, accounting for 5% of total electricity generation. The power sector could face challenges in raising the substantial investment needed to meet rising demand and to replace ageing power plants. In the Reference Scenario, total investment in the power sector over the period amounts to EUR195 billion (PLN688 billion) or 1.3% of GDP on an annual basis. Over two-thirds of this amount or EUR134 billion (PLN471 billion) is needed to build 92 GW of new capacity. The remaining is needed in distribution and transmission. Power sector investment needs are the highest in the period , when a total of EUR126 billion (PLN445 billion) is required. This is due to more replacement capacity being needed during this period, along with an increase in more capital-intensive nuclear and renewables-based capacity. The recent discovery of significant unconventional gas deposits in Poland could prove a game changer, both for Poland and possibly Europe, by helping to satisfy rising demand, reducing import dependency and slowing the growth in CO 2 emissions by encouraging fuel switching from coal to gas. Poland s unconventional gas resources are estimated to range from 1.5 to 3 trillion cubic metres, however, it may take between five to ten years before a complete assessment of the commercialisation of these resources is available. Motivated by the success story of unconventional gas in the United States, several major and independent oil and gas firms are now exploring for the prospects of shale and tight gas in Poland but exploitation of these unconventional sources should not be taken for granted. Barriers and obstacles that will first need to be overcome include the geological characteristics of the resources yet to be appraised, limitations on physical access to the resource base, the ability to comply with environmental and fiscal regulations, access to water and the proximity to existing pipeline infrastructure. This report also includes a climate-policy scenario corresponding to a global long-term stabilisation of greenhouse-gas concentration at 450 parts per million of CO 2 equivalent. The

5 Energy and CO 2 emissions scenarios of Poland OECD/IEA 2010d 450 Policy Scenario corresponds to an increase in global temperature of around 2 C. This will require innovative policies, an appropriate regulatory framework, the rapid development of a global carbon market and increased investment in energy research, development and demonstration. Poland s total primary energy demand in 2030 in the 450 Scenario is 9% lower than in the Reference Scenario at 104 Mtoe. In contrast to oil, natural gas and particularly coal, demand for nuclear power and renewables grow significantly above the levels achieved in the Reference Scenario. Total CO 2 emissions in the 450 Scenario fall from 296 Mt in 2008 to 196 Mt by Poland s CO 2 emission savings in this report are equal to 8.5% of the 1.2 Gt of additional abatement in the European Union, estimated in the IEA s World Energy Outlook End-use efficiency is the largest contributor, representing 38% (or 40 Mt) of the savings by Faster deployment of renewables is the second largest contributing measure, providing 25% (or 26 Mt) of the reduction, followed by the introduction of carbon capture and storage towards the end of the projection period, and the greater use of nuclear power. With policy makers around the world turning to electrification of the transport sector as a means of strengthening climate policy, improving energy security and providing new avenues of economic growth, the importance of strengthening of transmission and distribution networks along with decarbonising the power sector will grow. For example, CO 2 emissions per kilometre from an electric vehicle in the 450 Scenario are more than half the level if the electricity was generated using the fuel mix from the Reference Scenario. The profound shifts in energy demand and supply in the 450 Scenario require cumulative additional investment of EUR113 billion (PLN397 billion) in the period , primarily in the transport and power sectors. Importantly, two-thirds of this investment is needed the period , when the majority of abatement in CO 2 occurs. By 2030, annual incremental investment reaches 1.2% of projected GDP or EUR8.9 billion (PLN31.5 billion). The cost of the additional investments is offset by economic, health and energy-security benefits. Importantly, energy bills for industry, buildings and transport are EUR132 billion (PLN464 billion) lower over the projection period relative to the Reference Scenario, implying a significant reduction in spending on oil and gas imports. Ensuring strong economic growth in Poland in the decades ahead will undoubtedly require crucial decisions and investments in the energy sector that take account of the various constraints that are often interconnected. The Polish economy posted positive growth during the global financial and economic crisis and the underlying trends in this report assume that Poland s growth is expected to remain substantially higher than the European Union average over the projection period. In response to growing concerns over energy security and climate change, the Energy Policy of Poland until 2030 and the future National Programme for Reductions of Emissions aim at putting Poland on a sustainable energy path by promoting energy efficiency, renewables, nuclear and other advanced low-carbon technologies. This report provides a quantitative framework for the strategic decisions that need to be made in the Polish energy sector, in the context of existing and planned European energy and climate regulations and other likely developments in global energy markets. Page 5