Achieving our Energy Transformation Philippe Benoit Head of Energy Efficiency & Environment (Climate) Division, IEA

Achieving our Energy Transformation Philippe Benoit Head of Energy Efficiency & Environment (Climate) Division, IEA GCCSI COP 19 Warsaw, 20 November, 2013 IEA 2013

Portfolio of decarbonising measures Emissions Reductions (Gt CO 2 ) 60 50 40 30 20 10 Nuclear 8% (8%) End-use fuel switching 12% (12%) CCS 14% (17%) Renewables 21% (23%) Power generation efficiency and fuel switching 3% (1%) End-use fuel and electricity efficiency 42% (39%) 0 2009 2020 2030 2040 2050

Energy efficiency: a huge opportunity going unrealised Energy efficiency potential used by sector in the New Policies Scenario 100% 80% 60% Unrealised energy efficiency potential Realised energy efficiency potential 40% 20% Industry Transport Power generation Buildings Two-thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035 OECD/IEA 2012

Market failures impede EE investment Principal-Agent Problems Moral Hazard Split Incentives Split Incentives Energy Market Failures (Externalities) Asymmetric Information Moral Hazard Adverse Selection Imperfect Information Behavioural Failures (Bounded Rationality)

25 EE Policy Recommendations Cross-sectoral 1. Energy efficiency data collection and indicators 2. Strategies and action plans 3. Competitive energy markets with appropriate regulation 4. Private investment in energy efficiency 5. Monitoring, enforcement and evaluation of policies and measures Buildings 6. Mandatory building energy codes and minimum energy performance requirements; 7. Aiming for net zero energy consumption in buildings 8. Improving the energy efficiency of existing buildings 9. Building energy labels or certificates 10. Improved energy performance of building components and systems Appliances and Equipment 11. Mandatory MEPS and labels for appliances and equipment 12. Test standards and measurement protocols for appliances and equipment 13. Market transformation policies for appliances and equipment Lighting 14. Phase-out of inefficient lighting products and systems 15. Energy efficient lighting systems Transport 16. Mandatory vehicle fuel efficiency standards 17. Measures to improve vehicle fuel efficiency 18. Fuel-efficient non-engine components 19. Improved vehicle operational efficiency through Eco-driving and other measures 20. Transport system efficiency Industry 21. Energy Management in industry 22. High efficiency industrial equipment and systems 23. Energy efficiency services for small and medium enterprises 24. Complementary policies to support industrial energy efficiency Utilities and end-use 25. Energy Utilities and end-use energy efficiency

Climate policies to address market failures Price of CO 2 /tco 2 e MtCO 2 Carbon pricing mechanisms

Market failures require policies Effective policies are key...... but is more needed?

Multiple benefits of EE Enterprise productivity Energy provider benefits Asset values Sector-wide National Public budgets Disposable income Macro impacts Poverty alleviation Job creation Energy efficiency improvement Health & wellbeing Individual Energy security Energy savings Development International Resource management Energy prices Climate change mitigation

Different strokes for different folks Benefits vs. Co-Benefits Multiple Benefits Industrial Competitiveness Country or Stakeholder A Cty/Stk B Ctry/Stk C Etc. Co-Benefit Fuel Imports Primary Co-Benefit Poverty Alleviation and Development GHG Emissions Primary Primary Co-Benefit Job Creation Co-Benefit Co-Benefit Local pollution Primary Co-Benefit

IEA fuel market reports

EE keeps producing... 2010 Energy Efficiency 2010 2013 2023 We need to keep measuring EE output year after year after year and make this more apparent 2013 2023

EJ Mtoe EE: IEA s first fuel? 180 160 140 120 100 80 60 Hypothetical energy use had there been no energy efficiency improvements Avoided energy equal to 65% of 2010 TFC 4000 3500 3000 2500 2000 1500 40 20 Total final Consumption (TFC) 1000 500 0 0 Coal Oil Gas Electricity Other Avoided energy use TFC IEA EEMR 2013

EE: largest resource in 2010 (in IEA 11) EJ 70 60 50 40 30 20 10 Mtoe 1600 1400 1200 1000 800 600 400 200 0 IEA EEMR 2013 Oil Electricity Gas Coal Other Avoided energy use 0

Renewable power doing well 42% Solar PV capacity growth 2012 19% Wind capacity growth 2012 Tracking Clean Energy Progress IEA CEM Report, 2013

Challenges to Continued Growth C Policy Uncertainties/ stop-and-go

Multiple benefits of renewables...

New global capacity in power generation: 2001-2011 Renewables... and fossil fuels Fossil fuels Renewables

Lock-In of 2 degree Emissions Gt 35 2017 30 25 20 15 Other Transport Industry 2 C trajectory Room to manoeuvre 10 5 Power generation Lock-in of existing infrastructure 2011 2015 2020 2025 2030 2035 OECD/IEA 2012 Planned fossil fuel infrastructure through 2017 will generate all energy emissions under 2DS through 2035

Over the long-term... Renewables + energy efficiency insufficient

CCS: major abatement potential Global

CCS is part of a cost-effective response Additional USD 36 trillion in investments through 2050 to reach 2DS scenario goals CCS is 10% of this 3.6 CCS Other clean energy 36.4 and if CCS not available for power, investment required in the power sector will increase by 40%

Fossil fuels dominate through 2050 Fossil fuels have a role in all IEA scenarios 2010-2050 Mtoe 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 9780 17850 13760 7660 0 2009 2050 6DS 2050 4DS 2050 2DS even under the ambitious 2DS scenario. Mtoe 12000 10000 8000 6000 9780 8660 7660 4000 2000 0 2009 2035 2050

A roadmap forward...

7 key actions for next 7 years 1. Introduce financial support mechanisms for demonstration and early deployment 2. Develop laws and regulations that effectively require new-build power capacity to be CCS-ready 3. Significantly increase efforts to improve understanding among the public and stakeholders of CCS technology 4. Implement policies that encourage storage exploration, characterisation and development for CCS projects 5. Reduce the cost of electricity from power plants equipped with capture through continued technology development 6. Prove capture systems at pilot scale in industrial applications 7. Encourage efficient development of CO 2 transport infrastructure

Support strategies for CCS Increase familiarity among Sponsors and Financiers

CCS is ready for scale-up Assembling the parts still a challenge Post-process capture Syngas/hydrogen capture Oxy-fuel combustion Inherent separation 6000km existing pipelines Existing technical standards Transport by ship (albeit in small quantities) Decades of research Natural CO 2 accumulations Pilot projects Existing large-scale projects Capture technologies are well understood but expensive. Transport is the most technically mature step in CCS. CO 2 storage has been demonstrated but further experience is needed at scale.

Strengthen outreach to the Public Carbon dioxide Methane

Burden sharing : moving upstream to fossil fuels?

Funding CCS from fossil fuels 1. Total use of fossil fuels under IEA 2DS 2010-2050: 15 600 EJ Coal 28% 150 624 000 000 Mtce Oil 39% 145 820 000 000 Mtoe Gas 33% 4 830 140 073 900 MMbtu 2. Total CCS investment (undiscounted) 2010-2050 USD 3 600 000 000 000 3. Investment divided by unit of fossil fuel Coal Oil Gas USD 6.75 / tonne USD 1.38 / bbl ( 3 cents / gallon) USD 0.24 / MMbtu

Lower costs (e.g., through more RD&D)

Impact of CCS on levelised cost of electricity: Illustrative Levelised cost 2012 USD / MWh

CO 2 USE

Using CO 2 : further research CO 2 -EOR Industrial uses Source: GCCSI Source: NETL, USA EOR is a use that leads to verifiable geological storage if appropriately monitored and regulated Currently, it the only economic use of CO2 that has the potential to achieve scales that are meaningful in a climate sense Need research into the potential and viability of ideas for non-storage uses

Hundreds not Millions : a CCS supply curve

Cumulative mass captured 2010-2050 (GtCO 2 ) CCS concentrated Ten largest countries/sectors could achieve 60% of CCS efforts.

Multiple benefits of CCS? C Enterprise productivit y Energy provider benefits Asset values Public budgets Disposable income Macro impacts Poverty alleviation Job creation Energy efficiency improvement Health & wellbein g Energy security Energy savings Developmen t Resource management Energy prices Climate change mitigatio n

AMBITION

THANK YOU! philippe.benoit@iea.org DOWNLOAD THE ROADMAP AT: http://www.iea.org/topics/ccs/ccsroadmap2013