REALISTIC POSSIBILITIES FOR CARBON DIOXIDE NEUTRALIZATION ARE THERE ANY?

REALISTIC POSSIBILITIES FOR CARBON DIOXIDE NEUTRALIZATION ARE THERE ANY? Christian Breyer 1 and Pasi Vainikka 2 1 Professor for Solar Economy, Lappeenranta University of Technology 2 Principal Scientist at VTT and Adjunct Professor at LUT Nordic Energy Management 2015 Helsinki, 10.06.2015

Climate Change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen. Nicholas Stern, Economics of Climate Change, 2006

/ AGENDA new investments in non-renewable energy technologies (except gas) may end as stranded investment existing energy subsidies for non-renewable energy technologies are a major risk for the energy transformation and CO 2 reductions solar and wind are the least cost solutions for energy atmospheric CO 2 can be used as a raw material in the new energy world energy system transformation is part of digitalisation - we are heading towards energy cloud

/ AGENDA new investments in non-renewable energy technologies (except gas) may end as stranded investment existing energy subsidies for non-renewable energy technologies are a major risk for the energy transformation and CO2 reductions solar and wind are the least cost solutions for energy atmospheric CO 2 can be used as a raw material in the new energy world energy system transformation is part of digitalisation - we are heading towards energy cloud

/ IMPLICATION As much as 80% of the coal, oil and gas reserves are unburnable, and this unburnable carbon represents potentially stranded assets. Unburnable carbon will be reached in just 16 years if energy consumption continues unfettered. Source: The fossil fuel bailout: G20 subsidies for oil, gas and coal exploration Overseas Development Institute, Oil Change International

/ STRANDED INVESTMENTS Current coal plant fleet is violating climate change targets, every new plant will worsen the situation Investment managers start to put coal companies on their sell lists AND execute it (such as the largest investor globally, the Government Pension Fund of Norway) Source: Carbon Tracker, several reports in 2014 and 2015

/ WHAT HAS BEEN PROPOSED? Former Shell chairman Jorma Ollila 20 May 2015: The number one action on global level: The substantial subsidies the fossil fuels enjoy, should be removed. Available in Finnish at: http://www.katsomo.fi/#!/jakso/479084?toista time.: 01h03min10s

/ HOW BIG ARE THESE SUBSIDIES?

/ SUBSIDIES: COAL Key insights: Societal extra costs of coal in China are about 150 $/MWhe (key reason for shift to wind and solar PV in China) Societal subsidies in Germany are about 100 $/MWhe (more than total costs of wind and plus costs for coal fuel and plant more than solar PV TODAY) Why do societies accept this financial and health burden? 50 $/MWhe multiply with 10 to get $/MWhe

/ SUBSIDIES: GERMANY Case of Germany: there are subsidies for RE subsidies for fossil-nuclear are higher nuclear got AND get the highest subsides per kwh of all technologies subsides in total are 649 b (fossil-nuclear) plus 102 b (RE) in 1970-2014 total societal costs of RE are lower than those of fossil-nuclear energy source: FÖS, 2014. Was Strom wirklich kostet

/ RESOURCES Unit: terawatt years Source: Perez R. and Perez M., 2009. A fundamental look at energy reserves for the planet. The IEA SHC Solar Update, Volume 50

/ SOLAR PV MODULE PRICE Source: Agora Energiewende, 2015. Current and Future Cost of Photovoltaics

/ UTILITY SCALE Solar PV as least cost sources in more and more regions around the world Examples are the US, Chile, Emirates, and many more

/ CO 2 REDUCTION BENEFITS download at: www.researchgate.net/publication/276295389_profitable_climat e_change_mitigation_the_case_of_greenhouse_gas_emission _reduction_benefits_enabled_by_solar_photovoltaic_systems

/ MAIN LOW CARBON OPTIONS

/ COST OF CLEANTECH source: Agora Energiewende, 2014. Comparing the Cost of Low- Carbon Technologies: What is the Cheapest option; Grubler A., 2010. The costs of the French nuclear scale-up: A case of negative learning by doing, Energy Policy, 38, 5174 PV-Wind-Gas is the least cost option nuclear and coal-ccs is very expensive nuclear and coal-ccs are risky technologies nuclear economics will become worse due to negative learning curve

/ LOW CARBON INVESTMENTS source: Schneider M. and Froggatt A., 2014. The World Nuclear Industry Status Report

Kaleva 31.3.2015: 400 kw, puolet jalkapallokentän pinta-alasta Aletaan asentaa lähiviikkoina ja tuotannossa kesäkuussa Noin 10 % painotalon vuotuisesta sähkönkulutuksesta Kirkkaana kesäpäivänä 90% TEM tukee 30 % kustannuksista Tuen jälkeen Kalevan investointikustannukset ovat vajaat 400 000 euroa Ilman tukea: 1.35 /W!?

PV COST IN FINLAND LUT SOLAR POWER PLANT Photo: Antti Kosonen Source: Antti Kosonen, Jero Ahola, Christian Breyer, 2014. Large Scale Solar Power Plant in Nordic Conditions. EPE'14 ECCE Europe

/ ZERO CO 2 IN FINLAND? 9 scenarios for 2050 assumptions had been calculated for all energy sectors Result 1: zero CO 2 emissions in 2050 in Finland possible Result 2: 100% renewable scenario is cost competitive (and the low risk option) Result 3: main energy sources are wind, biomass, solar, hydropower More information Yle Uutiset (Sunday) Yle News LUT press release Turku tomorrow

/ ZERO CO 2 IN FINLAND? 2012 Reference 2020 Reference 2050 Basic (Maximum 145 TWhth biomass) 100 % RE Low Nuclear (1.6 GWe) Medium Nuclear (2.8 GWe) New Nuclear (4 GWe) 2050 Low Biomass (Maximum 113 TWhth biomass) 100 % RE Low Nuclear (1.6 GWe) Medium Nuclear (2.8 GWe) New Nuclear (4 GWe) 2050 Reference Business As Usual (BAU) Test scenarios Target of essentially zero carbon emissions from energy sector Target of complete energy independence Finland as an island source: Child M. and Breyer Ch., 2015. Pathways towards long-term sustainability for the Finnish energy system, 17th Intern. Conf. of the FFRC and the Finland Futures Academy: Future Studies Tackling Wicked Problems, Turku, June 11-12

/ ZERO CO 2 IN FINLAND? Technology 2012 2020 2050 Basic 100% RE 2050 Basic Low Nuclear 2050 Basic Medium Nuclear Installed Capacity GWe 2050 Basic New Nuclear 2050 Low Biomass 100% RE 2050 Low Biomass Low Nuclear 2050 Low Biomass Medium Nuclear 2050 Low Biomass New Nuclear Wind onshore 0.175 1.6 30 22.5 16 10.5 38 32 34.9 21 3 Wind offshore 0 0.9 5 5 5 5 6 6 6 6 1.5 Solar PV 0.01 0.1 30 30 30 30 35 35 35 35 1 Hydro - Run of river 2.595 3.111 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 CHP - DH 3.49 3.5 9 8 7.5 7 8.5 7.5 7 6 4 Condensing 2.045 1.5 0 0 0 0 0 0 0 0 3 Nuclear 2.75 4.3 0 1.6 2.8 4 0 1.6 2.8 4 6 PtG - CH₄ 0 0 23.5 19.6 17.6 17.6 29.4 27.4 25.4 23.5 1.0 PtG - H₂ 0 0.142 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 2050 BAU Key insights: Getting the least cost mix of technologies is a manual balancing act using EnergyPLAN EnergyPLAN separates electrolysers for different end products in reality integrated source: Child M. and Breyer Ch., 2015. Pathways towards long-term sustainability for the Finnish energy system, 17th Intern. Conf. of the FFRC and the Finland Futures Academy: Future Studies Tackling Wicked Problems, Turku, June 11-12

Total annual costs (M /a) / ZERO CO 2 IN FINLAND? 30000 25000 20000 * WACC 7% 15% BAU: + 3 b New Nuclear: + 2 b 15000 10000 5000 Variable costs - other Variable costs - CO₂ Variable costs - fuel Fixed operation costs Annualized investment costs 0 2012 2020 2050 Basic 100% RE 2050 Basic Low Nuclear 2050 Basic Medium Nuclear 2050 Basic New Nuclear 2050 Low Biomass 100% RE 2050 Low Biomass Low Nuclear 2050 Low Biomass Medium Nuclear 2050 Low 2050 BAU Biomass New Nuclear ** CO 2 price 75 150 /t BAU: + 1.9 b rather likely according to Luderer G. et al., Environ.Res.Lett., 8, 034033, 2013 Key insights: Stranded investments in nuclear/ coal power stations not accounted (higher WACC?*) Test scenarios have high level of investment Reference scenarios have high level of fuel and CO₂ costs (risk of high CO 2 price**)

/ THE NEW ROLE OF CO 2 100% renewable energy power system design (left) PV-wind based hydrocarbon fuels key technology is CO 2 from air (or bio-ccu) full replacement of fossil hydrocarbon possible

POWER PLANT TRANSMISSION RESIDENTIAL INDUSTRIAL COMMERCIAL ONE-WAY POWER SYSTEM THE ENERGY CLOUD

A WORLD ELECTRIFIED BY SOLAR AND WIND KIITOS.