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Gas in transition
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CLIMATE & ENERGY
GREEN GAS THE NEXT BIG STEP
SCIENCE
BUSINESS
MARKETS
CITIES
Blockchain and the energy transformation
Companies under pressure on climate risk
Fog lifted from flexibility
Low carbon heating the Danish way
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THINK OUTSIDE THE BLOC
Why leaders and laggards need to work together The Nordic countries—Denmark, Finland, Iceland, Norway and Sweden—have long been acknowledged as leaders in the energy transformation. They were early adopters of energy-efficient district heating networks and today they are collectively leading the switch to electric vehicles. Indeed, the region’s achievements are to be showcased in 2018 at the Clean Energy Ministerial (CEM) and Nordic Clean Energy Week. Yet, while the Nordic bloc moves forward, progress worldwide is still far too slow if the global temperature rise is to be kept to below 2ºC, or even 1.5ºC, as agreed in the international climate deal signed in Paris in 2015. As Fatih Birol, executive director of the International Energy Agency, said in March, “The significant growth in global energy-related carbon dioxide emissions in 2017 tells us that current efforts to combat climate change are far from sufficient.” To reduce this gap between action and reality, all countries and industries need to work together to find the best solutions to cut emissions in a timely and affordable manner. This means that countries lagging behind on the transition would do well to look to Scandinavia for inspiration, but the region would, in turn, be well advised to look beyond, as well as within, its borders. While Denmark has broken many wind records, poor policy choices have limited the uptake of electric vehicles compared to neighbouring Norway with its bullish incentives or the ambitions of the US state of California. And regions often seen as energy transition laggards are offering fresh inspiration with new market platforms, micro-grids and flexible solutions. Nordic countries should explore these initiatives and ensure leadership where it is lacking. An absence of common standards, such as for electric car plugs, is posing unnecessary challenges for industries at the forefront of the transition. The energy transformation is a monumental challenge, but when there’s a will there’s a way as delegates of the International Maritime Organisation, the UN shipping agency, proved in April when its members (173 countries) agreed to reduce emissions from the sector to no more than half of 2008 levels by 2050. As Thomas Edison is credited with saying, “There’s a way to do it better. Find it.”
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FORESIGHT
Content
MARKETS THE MISSING MARKET
Taking into consideration the nonenergy benefits of energy efficiency are vital for the sector’s growth Page 12
THE ROLE OF GAS
Decarbonisation is key if gas is to play a future role in the global energy mix, meaning more investment and research in green gas technologies Page 18
FOG LIFTED FROM FLEXIBILITY
Buzzwords can be dangerous if they mean different things to different people Page 24
THE TIDE IS TURNING
The shipping industry has finally agreed to reduce its emissions, but investors need to dig deeper into their pockets to support innovation in the sector Page 30
CITIES
BUSINESS
ELECTRIC AVENUE
How electric vehicles have taken over one street in Norway, but better charging solutions still needed
COMPANIES UNDER PRESSURE
The risks to business from climate change is the responsibility of boards Page 60
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LOW CARBON HEATING THE DANISH WAY
SCIENCE
The practice of heating networks of homes and businesses from a central generator is growing in popularity across Europe as a low carbon solution Page 44
NEW KID ON THE BLOCK
Blockchain is constantly in the headlines, but can it support the energy transition?
POLICY GOVERNMENT IN NEUTRAL AS BUSINESS DRIVES SHIFT TO ELECTRIC CARS IN DENMARK
Jeppe Juul, senior transport policy officer at the Danish NGO the Ecological Council and president of the board of Transport & Environment (T&E), the Brussels-based organisation that helped break the dieselgate scandal, in conversation with FORESIGHT Page 64
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HERE COMES THE SUN
Bornholm, Denmark’s “sunshine island,” is a test bed for new energy technologies, including experiments with solar directed at achieving heating, cooling and electricity generation from a single source Page 48
IN BRIEF / Danish business leaders have their say on how to speed up the energy transition / Page 8 THE BIG PICTURE / Wood is becoming the low carbon material of choice / Page 10
FORESIGHT
PHOTO ESSAY / A walk through
the streets of Denmark's capital Copenhagen to see how the city’s space and light accommodate people and increasingly facilitate the generation and use of clean energy / Page 50
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Ahead of the Clean Energy Ministerial (CEM9) and Nordic Clean Energy Week (NCEW), taking place in Copenhagen and Malmö in 2018, FORESIGHT spoke to Danish business leaders about ways to speed up the energy transition
Encouraging electrification
Plugging in
Ole Bigum is head of operations at K2 management, a Danish consultancy providing engineering services for developers of wind and solar power
Casper Kirketerp-Møller is CEO of Clever, a Danish company focused on making it easier to charge electric vehicles
Q: What should be at the top of the CEM9 agenda? A: Electrification and the storage technologies that enable electrification because, despite the commercial success of wind and solar power, electrification has not yet gained much traction. We haven’t been as successful in increasing the share of green power in total energy consumption as we have been in reducing the costs of producing that energy. If we allow that pattern to continue, it will inevitably slow down demand for new green power projects and so anyone who is serious about accelerating the green transition needs to focus on electrification.
Q: What do you expect from the CEM9? A: The transport sector accounts for almost 25% of carbon dioxide emissions in the EU. I would therefore like ministers to work out some common solutions to accelerate the electrification of transport. This means looking beyond large production and distribution entities and focusing on end consumers.
Q: What steps should ministers agree to increase electrification? A: They could definitely help by deciding on targets for electrification and investments in storage solutions. Although formally agreed targets would be preferable, voluntary targets including an agreement on measurement methods, would be a huge step forward, as it would allow countries to learn from the best in class. We need to be able to compare how countries are managing electrification based on the same data, such as the number of electric cars on the road, the share of electric cars in a country’s fleet or investments in storage technologies. And countries need to report on these targets on a regular basis. We know from experience that international targets can focus minds nationally and internationally and that this, in turn, helps attract investment. Even though energy consumption patterns will become more local, international attention could be a major driver for electrification.
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Q: Which concrete outcomes would you like to see? A: The electrification of transport won’t happen unless potential new car owners are confident that they can travel from one destination to another, across countries, without worrying about whether they can charge their car. Transnational solutions are essential. Those of us trying to build a new green cross-border transport system often run up against the might of a 100-year-old gasoline infrastructure. It can be a hassle to get permission to develop an electric charging site and the best ones are often already occupied by players selling traditional fuel. A decision by leaders to allow electric charging site developers to have access to the right sites along the main highways would significantly speed up the creation of new effective transnational infrastructure. Q: Do we need the same infrastructure everywhere? A: No, but we do need to make it more user friendly, and ministers could help by calling, for instance, for a common plug-standard worldwide for electric cars. Q: Can electric vehicles conquer the world without full political backing? A: A: Electric cars are here to stay. Any political signal to show that governments are turning their backs on the fossil fuel industry and are fully behind the electrification of vehicles will boost investment and speed up the installation of infrastructure.
FORESIGHT
TEXT Anna Hedegaard - ILLUSTRATION Anders Morgenthaler
In Brief
Read the full versions of these and other interviews on foresightdk.com
Looking for inspiration Peder Andreasen is outgoing CEO of Danish transmission system operator (TSO) Energinet.dk Q: Why is CEM9 important? A: To increase the share of renewable energy in the grid from 50% to 100% is no mean feat. During CEM9 I will be looking for inspiration from countries and regions that are, at face value, lagging behind Denmark and other Nordic countries in terms of the energy transition. Q: Who do you think may provide this inspiration and why? A: I am particularly eager to speak to ministers and participants from Africa, India and the US. To ensure security of energy, these regions out of pure necessity have often implemented solutions that enable consumers to adjust their energy demand to the supply situation. We may be able to learn from them to allow Denmark and other countries to have 100% renewable energy in our grids. Q: Can Denmark really learn from these countries? A: Yes! They are interesting exactly because of their lack of infrastructure. In regions where consumers cannot or do not want to rely on grid services, new market platforms, micro-grids and flexible solutions are popping up. In Brooklyn, US, for example, citizens have started building their own micro-grid based on a blockchain platform that allows local owners of solar panels to sell excess power directly to their neighbours, peer-to-peer, without communicating with the central grid. The neighbourhood is also looking to add batteries and electric vehicles to the micro-grid, turning citizens into energy prosumers: consuming and producing power, and enabling the neighbourhood to keep the lights on in case of a hurricane. These solutions are smart and show how digitalisation has massive potential to change the way we consume energy, especially if we can find ways to scale them up to cover thousands of electric vehicles and heat pumps.
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The Big Picture Energy use in buildings and for building construction represents more than one-third of final energy consumption and contributes to nearly one-quarter of greenhouse gas emissions worldwide. The use of timber is increasingly seen as a way to help cut the sector’s energy use, bills and emissions thanks, in part, to wood’s lightness and speed in construction. There is also growing evidence of the mental and physical health benefits of working or living in a green building. Inspired by Cidori, a traditional toy made from wooden sticks, the GC Prostho Museum and Research Centre in Aichi Prefecture, Japan is an eye-catching example of what can be achieved with timber. The museum was designed by the architectural firm Kengo Kuma & Associates PHOTO Daici Ano
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FORESIGHT
ENERGY EFFICIENCY
market by banks and financial institutions, includes various recommendations. These include, “Improving regulatory frameworks […] making financial institutions more aware of energy efficiency financing [and] raising awareness about the multiple benefits of energy efficiency projects.” Key to the focus on benefits is the call to pay more attention to those that are not associated with energy savings directly, such as higher asset values, reduced climate risk and better air quality. These non-energy benefits (NEBs) of energy efficiency investments are a relatively recent topic of interest for project promoters and financiers (box page 15). Raising awareness about them can be, “One of the most effective measures to increase investment and financing flows to energy efficiency projects,” says the UNECE report. It suggests, “Developing a system of assigning value to non-economic benefits,” so that energy efficiency can be properly taken into account when making investment decisions.
The missing market Energy efficiency is regularly touted as a cornerstone of the transition to a renewable energy economy, yet until now there has been little sustained effort to create a market for energy savings
In 2016, the world would have used 12% more energy had it not been for energy efficiency improvements since 2000—equivalent to adding another European Union in the global energy market
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he International Energy Agency (IEA) estimates that investment in reducing the volume of energy wasted, commonly referred to as energy efficiency, must increase five-fold—to more than $1 trillion a year—to effectively contribute to limiting global warming to 2°C (and preferably to 1.5°C) by 2050 as stated in the Paris climate agreement. A recent UN report highlights the roles of policy and finance in creating a market for energy efficiency and how new reporting obligations for financial institutions are likely to increase investor appetite. To unlock the global economic potential of energy efficiency, however, much more attention needs to be paid to the non-energy benefits of investments in energy savings, such as improved production efficiency and quality for businesses, and cleaner air for everyone. Published in December 2017, the report “Overcoming Barriers to Investing in Energy Efficiency” by the United Nations Economic Commission for Europe (UNECE) and the Copenhagen Centre on Energy Efficiency, a joint initiative of the Danish government, UN Environment and the Technical University of Denmark, brings voices from outside the energy efficiency world into the debate. A wide range of experts including financial institutions, international and intergovernmental organisations, non-profit organisations and academia, were surveyed for the report, which, in addition to citing well-documented challenges to investment in energy efficiency, such as low energy prices and a lack of understanding of the FORESIGHT
TEXT Clare Taylor PHOTO Chris Barbalis /Unsplash
INCREASED VALUE FOR BUILDINGS To date, the top NEB is increased asset value in buildings because of, “The increased rentability, lower gap periods and reduced regulatory risks attached to high performing commercial properties,” says Peter Sweatman, an energy efficiency entrepreneur. He cites the work underway by the non-profit Buildings 2030 aimed at better capturing the health benefits of energy efficiency measures. “This is particularly interesting in the context of future low carbon cities and air quality concerns,” he says. Steve Fawkes, a senior energy efficiency expert based in the UK, comments, “It is hard to establish a standardised way of assessing the different types of NEBs in many situations. I think that the real challenge is to persuade people who develop and then assess projects that NEBs can have a monetary value and often it is much more than the value of energy savings.” He gives as an example how, “A small reduction in absenteeism because a building is greener and more pleasant to work in will be worth much more than the energy cost savings.” Such gains have been won until now mainly because of policy drivers, including regulation related to minimum energy efficiency standards (MEES, formerly known as Minimum Energy Performance Standards or MEPS). In a January 2018 report, the High Level Expert Group (HLEG) on Sustainable Finance, established by the European Commission in 2016, gives the example of the Netherlands. “Here such standards are proving highly effective at promoting the cost-effective upgrades of properties… and encouraging banks to review the energy performance of their asset portfolios.” The report cites how
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Green buildings Policy measures have led to an emerging energy efficiency market in the EU buildings sector. This was estimated in 2015 at €109 billion. The Bosco Verticale (Vertical Forest) building in Milan, Italy is an innovative example of a highly energy efficient construction
Dutch bank DNB found that 46% of bank loans related to commercial real estate currently involve collateral with energy performance certificates (EPCs) at the high end of the energy wastage scale. “Starting in January 2023, however, all Dutch office buildings must have at least a level C energy label, or else be taken out of use,” prompting banks to identify ways to improve the energy efficiency of their loan book. In some European countries, energy efficiency standards legislation makes it illegal to let energy inefficient properties. “In the UK and the Netherlands, the regulations on MEES will put a significant proportion of financed assets in the real estate sector at risk of becoming stranded and non-financeable,” says Fawkes. “This is a wake-up call to investors.” Hence, FORESIGHT
making a building less energy leaky will not only benefit the occupiers of the property, but also the owners and the financiers, who will be left with a more profitable building.
POLICY BOOST Efforts to boost energy efficiency through policy have experienced some success globally. Investment in the sector grew in 2016 despite lower energy prices and the emerging energy efficiency market in the EU buildings sector was estimated in 2015 at €109 billion. Measures aimed at meeting the EU target of 20% energy savings by 2020 and recovery measures implemented in the building sector as a response to the 2008 financial and economic crisis, such as sup13
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Energy saving wins
The myriad benefits of energy efficiency
Health and wellbeing
Energy savings
Environmental sustainability
Asset values
Local air pollution
ENERGY
Disposable income
Macroeconomic development
EFFICIENCY IMPROVEMENT
Public budgets
Industrial productivity
Energy access
Energy security
SOURCE IEA
Energy prices
port for maintaining jobs in small and medium-sized businesses,” were largely responsible for the creation of this market, says Yamina Saheb, senior climate and energy policy analyst at OpenExp, a think-tank based in Paris, France. Current policies, however, still fall short of what is needed, says Saheb, as most retrofits are not “deep” renovations (to low or zero energy consumption level). More ambitious policy goals, combined with public finance to significantly reduce payback times for investment in building materials that reduce energy use, will transform this market and significantly lower costs, she believes. Fawkes insists that getting a conversation going now on the issue is vital. “The key thing here is to continue to talk about the existence of NEBs and get project developers and investors to include them in economic assessments.” The HLEG recommends that the European Commission draws up a process to 14
show financial institutions how to better identify and measure the multiple value streams that remove the risk of energy efficiency investments.
FINANCING ENERGY EFFICIENCY At a global level, outputs from the Task Force on Climate-related Financial Disclosures (TCFD), set up by the G20 countries to help companies improve their ability to assess and price climate-related risk and opportunities (page 60), are going some way towards responding to one of the main recommendations from the UN report, namely, “To make financial institutions more aware of energy efficiency financing.” Fawkes says that the types of policies that will really affect financial institutions are very much linked to the recommendations from the TCFD. “These would be banking regulations that require financial institutions to assess and report climate-related risks,” says Fawkes. FORESIGHT
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He highlights that France, the Bank of England and others are already “heading this way.” Introduced in August 2015, Article 173 of France’s law on “energy transition for green growth” requires investors to report on how their activities contribute to the energy transition and the fight against climate change. The UK government has indicated too that it could be willing to force companies to disclose the financial risks they face from the effects of climate change and the move away from fossil fuels to cleaner sources of energy, potentially motivating investors and financial institutions to acquire “green” or energy efficient assets that have lower risk. This, in turn, is also likely to increase demand for energy efficiency investment opportunities as part of a greener financial system. The DEEP database, the biggest database of energy efficiency projects in Europe, “Shows the continued cost competitiveness of energy efficiency investments and reveals gaps in the data in multiple non-energy benefits that could drive many more similar projects if factored into investment decisions,” says Sweatman.
INCREASING INVESTOR APPETITE According to Fawkes, there are four key elements if energy efficiency is to attract increased investor appetite and mass-scale investment. These are: standardisation in the way that projects are developed and documented; finance; large-scale project pipelines; and supply-side capacity. “Along with standardisation, we need finance for projects and for development, which is a completely different type of funding: a high-risk equity-type investment,” says Fawkes. “Project pipe-
“This is a wake-up call to investors” lines must be at the scale that investors need, in the order of hundreds of millions of euros. And as well as building capacity on the supply side, on the demand side, more people need to know about the benefits of energy efficiency investment, especially the more strategic and more attractive non-energy benefits.” HLEG also underlines the need to continue to dismantle regulatory barriers that it says have impeded the flow of private capital to the energy efficiency sector. Its report highlights how until last year, Eurostat, the part of the Commission responsible for harmonising statistical methods across the EU, was applying an overly strict interpretation of international financial FORESIGHT
WHAT ARE NON-ENERGY BENEFITS (NEBS)? 1. Macroeconomic development Energy efficiency improvements can deliver benefits across the whole economy. In general, analysis of GDP changes due to large-scale energy efficiency policies show positive outcomes with economic growth ranging from 0.25% to 1.1% a year. The potential for job creation ranges from eight to 27 job years for each €1 million invested in energy efficiency measures. 2. Public budgets Energy efficiency improvements can have significant impacts on public budgets, for example, by reducing fuel costs for heating, cooling and lighting, or reducing the budget for unemployment payments when energy efficiency policies lead to job creation. An initial evaluation of initiatives to advance energy efficiency in buildings, for example, calculated a value of $41 billion to $55 billion to the European public budget. Health and well-being Energy efficiency retrofits in buildings, such as insulation, can improve occupant health and well-being, particularly among vulnerable groups such as children, the elderly and those with pre-existing illnesses. The potential benefits include improved physical health, such as reduced symptoms of respiratory and cardiovascular conditions, rheumatism, arthritis and allergies, as well as fewer injuries, and even improved mental health through reduced chronic stress and depression. Improving indoor air quality through energy efficiency measures could save the EU economy as much as $259 billion annually. Industrial productivity Industrial energy efficiency measures deliver substantial benefits in addition to energy cost savings, such as enhancing competitiveness, profitability, production and product quality, and improving the working environment while also reducing costs for operation and maintenance, and for environmental compliance.These benefits can be up to 2.5 times the value of energy savings. Energy delivery Utilities and energy providers gain in a variety of ways from energy efficiency measures. Direct benefits include lower costs for energy generation, transmission and distribution, improved system reliability, dampened price volatility in wholesale markets and the possibility of delaying or deferring costly system upgrades. Providers can also benefit indirectly through benefits that accrue to customers, which in turn can reduce arrears and administrative costs for utilities.
Source IEA 15
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Energy efficiency spending Investment by region and sector
BY REGION
BY SECTOR
USD billions
Transport 26%
250
Buildings 54%
200
150
USD 231 BILLION
100
50
Industry 16%
0
China
Europe
2016
North-America
rules to EPCs in government accounts. “This led to some local authorities being unable to invest in much needed energy saving measures… because of uncertainty as to whether these would be on or off government balance sheets.” Clarification of the rules since September 2017 means that local authorities and governments can now invest in energy savings while complying with the EU treaties, opening the way for, “Billions of new investments to make European buildings more energy efficient.” A second constraint stressed in the report is the, “Lack of systematic tagging by financial institutions of loans to the building sector with energy performance and wider environmental data.” Green tagging requires banks to identify the environmental attributes of their loans and underlying asset collateral as a way of scaling up sustainable finance. “Without this information, banks are unable to price loans effectively or generate a pipeline of energy efficient mortgage assets that comply with the criteria for access to the growing green bond market,” says the report. But it 16
Other
Energy efficiency investment grew 9% in 2016, with growth strongest in China. The buildings sector continues to dominate global investment.
adds that this is changing. The European Mortgage Federation is developing a standardised energy efficient mortgage, which will enable a correlation to be made between efficiency improvements and the lower probability of borrowers defaulting on their loans. A growing number of European banks are also starting to tag their commercial and real estate loans, states the report. “To create a market place for energy efficiency, we need to have demand and supply,” concludes Fawkes. “We have both, but we need to accelerate the growth of this market and work to improve the quality of supply and demand,” he says. “On the demand side, it’s clear that the financial community is making efforts to better understand the nature of energy efficiency, how to make it financeable and how to assess value and risk. But to ramp up demand from the market, more people need to know the benefits of energy efficiency, especially the more strategic and more attractive non-energy benefits. Mere energy cost savings is not enough.” • FORESIGHT
SOURCE IEA
2015
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TRANSITION
Gas has a part to play in the integration of renewable energy and the reduction of carbon dioxide emissions. But decarbonisation efforts must intensify if it is to retain a significant role in a future, sustainable energy mix
W
ith considerably lower carbon dioxide emissions (CO2) than coal and oil, natural gas is often seen as an instrument for weaning the world off its fossil fuel dependence, easing the way to a decarbonised future. Natural gas can also contribute to the smooth functioning of the power system through its long-term storage capabilities and flexibility, with modern gas plants able to quickly ramp up and down to respond to changes in output of variable renewable energy generation, facilitating their integration in the electricity mix. Natural gas is, however, far from being the only flexibility mechanism available for the power system. Moreover, like coal and oil it is also a fossil fuel and will have to be decarbonised or replaced by so-called green gases if international climate commitments— particularly the Paris agreement to keep the global temperature rise to below 2°C—are to be met. “Natural gas has an important role to play as part of a diversified portfolio,” believes David Littell of the Regulatory Assistance Project (RAP), a global group of former regulators offering energy policy advice. “But it’s important not to over invest. In the long term, all fossil fuels will have to decrease dramatically.”
SHORT BRIDGE Even the role of natural gas as a bridge to renewables is a short one unless natural gas use is coupled 18
with high levels of carbon capture and storage (CCS), the International Renewable Energy Agency (IRENA) says in its 2017 joint energy transition study with the International Energy Agency (IEA). The study warns of the risk of path dependency and future stranded assets, such as pipelines and liquefied natural gas terminals (LNG), if natural gas deployment expands significantly without long-term reduction emissions goals in mind, leaving infrastructure unused and investors out of pocket. CCS, in which carbon dioxide is captured and stored underground, has not advanced far to date. A lack of support from policymakers and investors, who have favoured technologies considered to be more secure like wind and solar, plus low carbon prices, has held back investments. Yet the European Academies Sciences Advisory Council (EASAC) suggests in a recent report that the world will miss its target to limit the temperature rise to 2°C without CCS. DNV GL, a Norwegian-German risk management company, agrees with this assumption. In January 2018 it launched a framework for certifying the geological storage of carbon dioxide and a recommended practice for the design and operation of CO2 pipelines in an attempt to improve dialogue and investor predictability around CCS. DNV GL’s 2017 Energy Transition Outlook lays out a single, “most likely” scenario rather than targeting FORESIGHT
TEXT Heather O’Brian ILLUSTRATION Louise Rosenkrands
THE ROLE OF GAS
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a desired outcome. In the scenario, natural gas surpasses oil and coal to become the world’s largest primary energy source in about 2035. The scenario also sees gas peaking in 2035 at a level 14% greater than in 2017, before experiencing a moderate decline as renewables increasingly dominant the electricity market.
FUEL SWITCHING Meantime, switching to natural gas from other more polluting fuels may be an appropriate short and medium-term solution in some places and sectors. The shift to natural gas and away from coal in countries like the US and the UK has contributed to cutting carbon dioxide emissions. “It makes sense to start fighting emissions from coal before you start fighting emissions from gas, even though gas is still only a partial decarbonising solution,“ says Sverre Alvik, who heads DNV GL’s research on the energy transition. Yet even partial solutions are not always easy to achieve, with some countries still tempted to use coal. “Our perspective in north-west Europe is massively climate-centred, but this view isn’t shared by much of the world,” explains Jonathan Stern, distinguished research fellow and founder of the natural gas programme at the Oxford Energy Institute in the UK. “For most countries, the priorities are energy security, affordability and access to energy. In that context, gas still faces problems in much of the world because of affordability issues.” At the same time, Littell of RAP points to a “fervent debate” about the best strategy to pursue in some emerging markets and whether it might make more sense to push more for renewables when decommissioning polluting
“The existing European gas network can transport energy at a cost much lower than new electric infrastructure and its storage capabilities can manage the seasonality and variability of demand”
coal or diesel plants and a little bit less for gas. “There are big questions about the extent you should shift to natural gas. If you import LNG, you need import terminals and that is substantial infrastructure. There are also substantial energy losses if you have to liquefy and regassify so it’s less climate friendly,” he says. In the European Union, renewable energy acFORESIGHT
counted for over 30% of total power generation in 2017 while 50% is targeted for 2030 and the power sector is expected to be nearly completely decarbonised in 2050. As a power sector with 100% renewables is no longer seen as an unachievable task, attention is gradually shifting to heating and transport, where increasing the share of green energy is seen as more dif-
ficult. Electrification could help increase the weight of green energy in these sectors as well, but many observers also expect gas to play an important role. While there is a growing consensus that electric vehicles will dominate the future passenger car market, natural gas and other alternative fuels could carve out a stronger position in the trucking and maritime sectors. Natural gas vehicles (NGVs) open the way to renewable NGVs powered by compressed biomethane or liquefied biomethane and based on the development of local resources as part of a circular economy, according to Sylvie Cornot-Gandolphe, a research associate with French think-tank IFRI and author of a January 2018 report on the role of gas in the European energy transition. Gas will also retain a significant role in heating, which accounted for some 41% of European gas demand in 2016, she says. “The European gas network, already well developed and integrated, can transport energy at a cost much lower than new electric infrastructure and gas storage capabilities can manage the seasonality and the variability of demand.” As is the case for transport, natural gas could be replaced in heating by renewable versions.
BIOGAS POTENTIAL There are a number of potential paths to a cleaner gas future, including the development of biogas. Among renewable gas alternatives, biogas produced from the anaerobic digestion of biomass is the most advanced, 19
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although penetration varies greatly depending on the incentives in place. Frontrunners in biogas use include sewage treatment facilities, which need energy to run and have a convenient source in wastewater sludge. Farmers have also produced biogas in small-scale facilities fuelled by manure and other agricultural waste to provide power to their farms. The industry is now increasingly scaling up, forcing costs down. Biogas can be upgraded to biomethane to be used in the grid and as a clean fuel source in transport. Finland’s Gasum earlier this year opened a filling station at an IKEA furniture store selling biomethane from waste produced at the retailer’s restaurant. Italy has introduced incentives for both biomethane and liquid biofuels as it aims to reach a 2020 target for 10% renewable energy in transport. The city of Nottingham, in central England, recently rolled out what it claims is the world’s largest biogas bus fleet, just a few years after UK waste management and renewable energy group GENeco debuted its Bio-bus, also known as the “poo bus,” the first bus in the UK to be powered by gas derived from food, sewage and commercial liquid waste. “There is enormous potential in biogas,” says David Newman, president of the World Biogas Association (WBA). “On a global level, if you were to take all the food waste that is thrown away and make bio-
gas, it would be equivalent to taking every car off the road in Europe and removing 500 million tonnes of CO2.” Newman expects biogas use in the EU to more than double to some 70 million tonnes of oil equivalent (mtoe) in 2030 from 30 mtoe now, but remain far below the potential he sees of some 140 mtoe for that year. Energy group Engie also has high expectations of renewable gas, estimating that biogas from 20
agricultural and other wastes could grow in France, for example, from about 1% of gas consumption now to 10% in 2025 and 30% by 2030 before hitting 100% by 2050.
DANISH LESSONS Lessons could be learned from Denmark, which already covers 10% of gas demand with biogas and has committed to being free of fossil fuels by the middle of the century. Trade association Green Gas Denmark, using estimates from Aarhus University, believes the
country’s gas grid could be 100% green as soon as 2035. Ole Hvelplund, CEO of Danish Nature Energy, says biogas growth in Denmark has been supported politically through a bipartisan 2012 energy agreement and subsidies, which reduce in increments over time. “We need subsidies at the moment, but we are trying to reduce costs in all processes to make this technology more commercial,” he says. “Denmark has a target to become independent of fossil fuels and so it’s not a question of if but how we get renewable resources in the gas system,” says Jeppe Danø, market director for gas at Danish gas and power transmission system operator Energinet.dk. He points to the benefits of coupling electricity and gas. “We have a huge amount of flexibility in the gas system, a storage capacity of one billion cubic meters of gas, equivalent to about one billion Tesla batteries, that can provide a large degree of flexibility for both electricity and heating.” Via Denmark’s combined heat and power plants, renewable biogas can be injected into the power system, primarily for peak production needs. “Providing power from biogas doesn’t make much sense a lot of the time because there are other renewable sources like wind and solar that are cheaper, but there is role FORESIGHT
Accelerating future energy solutions
An efficient transition towards a fossil free future depends on our ability to store and integrate renewable energy. Europe’s gas infrastructure can store significant amounts of energy and balance fluctuating power production. However, gas systems are today predominantly filled with fossil gas. We have established some of the largest biogas facilities in Northern Europe, replacing fossil gas with green gas. Join us on the journey. eon.dk
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for it to play when the wind is not blowing and the sun is not shining,” says Hvelplund. Energinet.dk’s Danø anticipates power-to-gas technology will mature in the next decade or so, a development he sees being facilitated by the sharp drop in electricity prices due to the introduction of more wind and solar. “By 2050, we think it is realistic that biogas, power-to-gas and also gas created from synthetic processes will all be feasible price-wise,” he says.
GREEN HYDROGEN
a proportion that is generally seen as feasible without needing to change the pipelines. In transport, there is likely to be a niche for hydrogen fuel-cell vehicles, which currently have the advantage over electric vehicles of longer range and quicker fuelling times, although the high costs of the technology and refuelling stations are a big problem.
“Denmark has a target to become independent of fossil fuels and so it's not a question of if but how we get renewable resources in the gas system”
Hopes for power-to-gas, which could provide one option for storing renewable electricity in excess of immediate demand, are largely pinned on hydrogen. When produced from renewable sources, hydrogen is free of greenhouse gas emissions and potentially an enormous contributor to decarbonisation efforts, but uncertainty about the possibility of scaling is high. Hydrogen has traditionally been produced from natural gas through a steam reforming process that requires a CCS mechanism to be considered as a clean energy source. Attention now is increasingly focused on green hydrogen produced by the electrolysis of water powered by wind and solar photovoltaic facilities. “Either way you do it, it’s expensive,” says Stern. The lack of a regulatory framework indicating how a hydrogen project could pay back its investment has impeded development, he states. European regula-
Hydrogen fuel cells could be interesting for longhaul tracking and Toyota last year began testing the world’s first heavy-duty fuel cell truck. Fellow Japanese auto makers Honda and Nissan are also counting on there being a wider market for hydrogen fuel cells and the US state of California plans to have five million zero emission vehicles on its roads by 2030 supported by 200 hydrogen fuelling stations alongside 250,000 electric vehicle charging stations.
tors have begun taking a look at the issue and Stern suggests that now is the time to make a decision about the future of this technology. “We’ve talked a lot, so either we need to stop talking or someone has to move forward with a commercial scale project.” One option to begin the move to a hydrogen gas grid would be to use existing infrastructure, initially blending a 15% to 20% hydrogen mix into natural gas,
While initial progress has been made in the development of a cleaner gas industry, a massive acceleration in investments is clearly needed if gas is to contribute significantly to a future, decarbonised energy mix. Green gas pioneers are hoping to bring down the costs of technology, following the path already blazed by the wind and solar industries and attracting new capital to accelerate growth. Policymakers can also help, providing initial economic support when appropriate and pursuing measures to prop up the price of carbon penalties, one driver for the creation of decarbonised gas that has been sorely neglected in most places. Although the prospects for large-scale development of technological options like hydrogen and CCS are unclear, their potential should not be overlooked. DNV GL hazards a guess that global temperatures will rise 2.5°C under the scenario laid out in its 2017 Energy Transition Outlook. “We’ve looked at how to close the gap and there is no silver bullet,” says Alvik. “You need a combination of actions: a further uptake of renewables, further energy efficiency and some CCS and other measures to make gas greener.” •
STEP ON THE GAS
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FORESIGHT
Above and beyond Sonderborg, a town in the far south of Denmark, is well on its way to achieving zero emissions of CO2 by 2029. It all started in 2007, when the town entered a public-private partnership, ProjectZero, with the aim of reducing Sonderborg’s contribution to global warming. Initially the intention was to cut CO2 emissions by 25 per cent by 2015. Time passed, investments were made, patterns of energy use changed. By 2016, the entire Sonderborg-area had cut its emissions by 35 per cent. It is now on target for zero emissions by 2029.
To learn more visit ProjectZero at www.projectzero.dk
Bright Green Business
TRANSITION
FROM FLEXIBILITY Every generation has its buzzwords. Flexibility is the current in-word of the energy transition. Like many overused phrases, it means different things to different people, carrying the risk that ideas get lost in translation, not only slowing the race against time to reduce greenhouse gas emissions and climate change, but also threatening energy security and endangering the bottom line of companies working in the field
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TEXT Philippa Nuttall Jones ILLUSTRATION Louise Rosenkrands
FOG LIFTED
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he Oxford English dictionary gives three definitions of flexibility: first, the quality of bending easily without breaking; second, the ability to be easily modified; and third, a willingness to change or compromise. All three definitions are important when discussing flexibility in terms of the energy transition: the power system has to be reliable and able to bend easily to meet different demands without breaking; it has to be easy to modify and react quickly to changes to accommodate the challenges of decarbonised energy production and consumption; and it can only be truly cost-effective, correctly regulated and make use of the right technology in the right circumstances if policymakers, system operators and ultimately consumers are willing to change. “Nowadays everybody talks about flexibility in the context of the energy transition, but each person has something different in mind,” says Emanuele Taibi from the International Renewable Energy Agency (IRENA). Flexibility in energy is for many treated as a sleeping giant they fear to wake. “People give a negative connotation to the need for flexibility driven by solar and wind, however existing systems with large shares of inflexible generation such as nuclear were among the first to adopt flexibility on the demand side,” he states. US President Donald Trump is a prime example of a leader believing that the need for flexibility is connected with renewable energy. He applauds fossil fuels as strong and reliable and ridicules renewables as weak and unpredictable. Increasing reliance on renewables will put the country “at grave risks of brownouts and blackouts,” cause businesses to “come to a halt” and the American family to suffer “lost jobs and a very diminished quality of life,” he warned be-
“What is new is the need to access the potential for flexibility in real time on the demand side as well as the supply side”
fore announcing that the US would pull out of the international climate deal agreed in Paris in 2015. Australian Prime Minister Malcolm Turnbull and his government used a blackout following a cyclone in 2016 to argue against “aggressive” renewable energy targets and suggest that renewables were incapable of “keeping the lights on.” And a report by a group FORESIGHT
of members of parliament in the UK in the same year states that coal power station closures and a drive for renewable energy has left the country facing “intermittent blackouts for the foreseeable future.” Such claims have been discredited many times over. Experts agree that increasing power system flexibility is not only key to managing the decarbonisation of the world’s energy use, it is possible and affordable.
REAL TIME DEMANDS “The penetration of renewable sources of electricity such as wind and solar will increase dramatically over the coming years,” says John Lowry from Eirgrid, the Irish power transmission operator and director of EU-SysFlex, a project his company is leading with French energy behemoth EDF to ease the way for system operators challenged by the need for more flexibility. “While presenting much opportunity in terms of decarbonisation, the increase in wind and solar, coupled with the trend towards the electrification of heat and transport, advances in energy storage as well as consumer behaviour, brings many challenges and complexities from a system operation perspective,” he states. However great the challenge, system operators will have to adapt to this new world environment, insists Lowry. “Core to this is system flexibility.” To what extent more flexibility takes system operators into a new world is up for debate, says Michael Hogan, senior advisor at the Regulatory Assistance Project (RAP) in Brussels. He appears sanguine about the task ahead, emphasising that, on the supply side at least, the concept of flexibility is nothing new. “Demand varies more or less constantly over time and the power system has to follow this and so we already have a range of resources that are capable of operating flexibly.” What is new, he states, is the need to access the potential for flexibility in real time on the demand side as well as the supply side. The Brattle Group, a US consultancy, defines a resource as flexible, “When it can react to operational signals to ramp its power generation up and down to help meet the needs of the system over multiple hours and minute-to-minute.” Brattle’s Judy Chang also suggests that isolating wind and solar as troublemakers is not an efficient approach. “In the context of the energy transition, it may also be helpful to think about flexibility of the system as a whole, hence the entire portfolio of resources,” she says. “A customer who can turn off her air conditioning during a hot summer afternoon to respond to high prices and tight system conditions [is] a perfectly flexible resource.” Lowry says that the extent to which large-scale electricity grids can respond to changing circum25
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stances in milliseconds—and remain stable—is a challenge not be underestimated in the context of integrating high levels of variable sources of renewable energy. Hogan suggests that a decent dose of common sense and rationality would help clear up many of the myths being peddled about the energy transition and flexibility. His first line of attack is cost.
RESOURCE ADEQUACY SILLINESS An energy system with more variable generation does not need to cost more, says Hogan. “It could even make the cost of electricity cheaper for the consumer,” he adds. “We need to find the right ways of making the whole system more responsive [not] simply continue the approach we have followed in the past of relying on large, central generators to provide whatever flexibility was needed.” He pulls out two assumptions that need to change: first the idea that flexibility comes only from the supply side; and second the need for system operators to meet overblown minimum resource adequacy levels that made little sense in the past and even less sense in the decentralised energy systems of the future. “We have traditionally consistently overbuilt central generating resources to appease unfounded fears of widespread blackouts, but it is impossible to build enough generation to guarantee there will never be shortages as there will always be things that we can’t foresee and even if you could it would be economic folly,” says Hogan. “The cause of widespread blackouts is virtually always in the transmission and distribution system rather than in a shortage of available generation.” The cost of being “silly about resource adequacy” means that prices for consumers have been pushed up needlessly and scarce investment capital has been diverted from the transmission and distribution networks, where it would be of most use, says Hogan. He believes that more network investment would go a long way to meeting the need for greater system flexibility. “We need to start being smarter regarding how we assess a system’s sufficiency and fitness for purpose.” Chang agrees. “The traditional view of resource adequacy is not as useful today as it has been in the past,” she states. “In a more dynamic system, resources not only need to provide enough power, but they collectively need more capabilities to provide power at the right time.”
PLETHORA OF TECHNOLOGY “Cost has a major role in driving both the rate of change and the evolving mix of supply technologies in the energy transition,” says Chang. There is no shortage of choice of technology for managing flex26
ibility. Brattle refers to the, “Wide range of existing resources that can provide the required flexibility, including existing natural gas-fired capacity, geothermal, hydroelectric and pumped storage, biomass, oilfired peaking units, solar, and demand response resources.” It also sees a role for, “Fast-acting grid-scale battery storage technologies.” Edwin Haesen, associate director at Ecofys, an energy and climate change consultancy in Brussels, highlights how countries with significant proportions of renewables in the system are already using different tools to promote flexibility. “Denmark manages with very high wind because it is very well interconnected, while other countries, such as France, the UK and Belgium are frontrunners on demand response, which is an efficient low-cost solution,” he states. Demand response allows consumers, whether residential, commercial or industrial, to adjust their use of resources, consumption or generation, at strategic times.
“There is a wide range of existing resources that can provide the required flexibility, including existing natural gas-fired capacity, geothermal, hydroelectric and pumped storage, biomass, oil-fired peaking units, solar, and demand response resources”
AVOID STRANDED ASSETS Hogan believes that countries need to avoid getting locked into investments that turn out to be the wrong choice and that quickly become stranded assets. “In the current environment of rapid change and technology evolution, especially in the way we use electricity, we can no longer afford for even smart, well-meaning central planners in state governments or at the European Commission’s energy department to take decisions that lock countries into too much of the wrong kinds of centrally procured resources for the next 25 years.” While he believes the replacement of high-carbon resources with zero-carbon resources will continue to be policy driven for some time, Hogan suggests the best solution for finding the right and most cost-effecFORESIGHT
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wind turbine Storage solution
transformer
power grid
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Flexibility is easy and affordable
High volumes of renewable energy can meet supply and demand
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Demand + Charging
A conceptual depiction of a day’s hourly demand and supply in a high renewables penetration system, roughly based on a California-like future
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tive tools for more flexibility is leaving it up to market forces. “Allowing market participants to see the full cost of dealing with that demand and allowing the market to deliver the most cost-effective responses,” is his favoured approach. Governments, however, have a continued, critical role, he says, for pro-active network planning and investment. “And in ensuring that markets remain competitive and to prevent market power abuse.” For Haesen another way of avoiding the cost of stranded technological assets is to tackle flexibility needs at a regional level, “So that national sub-optimal solutions are avoided and best practice is shared from one country to another.” Indeed, working together is highlighted by various experts as another aspect of a successful flexible energy system. “Better inter-regional coordination in 28
Storage
planning and system operations can help to address wind and solar variability [and] benefit electricity users,” states Brattle. Kristian Ruby, head of Eurelectric, an association representing the EU electricity industry, concurs that better coordination is essential for managing the move from centralised electricity generation to decentralised generation that comes with the dispersed location and ownership of renewable energy capacity. Meeting the three definitions of flexibility may still seem like a tall order, but as Haesen says, not that long ago many countries did not believe renewables could make up more than 5% to 10% of their power systems. “Now many agree that 40% to 50% is manageable and many experts suggest that by 2050, 80% could be possible,” says Haesen. “People are flexible. They adapt.” • FORESIGHT
SOURCE The Brattle Group
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TEXT Iva Pocock - PHOTO The Fjords / Aurland Photography
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FORESIGHT
If the global marine transportation sector were a country, it would be ranked sixth in terms of CO2 emissions. A number of progressive leaders in the industry are starting to explore alternative ways to propel their ships, but more investment is needed
THE TIDE IS TURNING
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hipping, the industry that is largely out of sight, out of mind and outside of the international Paris climate agreement, is finally coming under pressure to change its means of propulsion. The sector’s fuel of choice is heavy fuel oil (HFO), a cheap, highly toxic and viscous residual from crude oil refineries. When burned it emits high levels of black carbon, a substance that is 3200 times more powerful a climate warming forcer than carbon dioxide (CO2) per tonne and is linked to increased heart and lung disease among those who inhale it. When spilt it is disastrous to wildlife and livelihoods. Being generally high in sulphur, HFO (which in 2017 accounted for over 80% of marine fuel, according to the International Energy Agency) and the other main shipping fuel, distillate fuel, produce significant amounts of sulphur dioxide (SO2) and particulate emissions, which are responsible for acid rain and respiratory diseases. The dominance of these fuels, however, may be about to change. Within the bureaucratic machinery of the International Maritime Organisation (IMO), the United Nation’s shipping agency, there are four different but closely related initiatives that are set to influence shipping’s fuel options. First, a cap on the sulphur level of permitted fuels will come into effect in 2020. Second, technical discussions have started about abatement measures for emissions of black carbon. Third, an initial greenFORESIGHT
house gas reduction strategy that envisages for the first time a reduction in total greenhouse gas emissions from international shipping was adopted by the IMO in April. This would mean a reduction in carbon emissions from shipping to no more than half of 2008 levels by 2050. Last, at the same meeting, an IMO sub-committee was directed to develop a ban on heavy fuel oil use and carriage for use by ships in the Arctic.
ENVIRONMENTAL PROTECTION The initial proposal to reduce the risks posed to the Arctic by implementing a HFO shipping use ban was co-sponsored by Finland, Germany, Iceland, the Netherlands, New Zealand, Norway, Sweden and the US. At the April IMO meeting it was supported by 14 other countries, including Denmark, but not by Russia, Canada, China, the Bahamas and the Marshall Islands. Given these differing opinions, the ban is being developed “on the basis of an assessment of the impacts” and on an “appropriate” timescale. “The motivation is of course environmental protection. Oil spills in the Arctic Ocean would be a huge risk to the sensitive Arctic environment. The properties of HFO mean the environmental consequences could be particularly serious and long-term,” says Laura Sarlin of Finland’s Ministry of Transport and Communications. “A single HFO spill could have devastating and lasting effects on fragile Arctic marine and coastal environments. In addition, Arctic shipping is projected to 31
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continue to rise, thus increasing the risk of a spill,” said the eight co-sponsors in their formal proposal, arguing for the ban on HFO to be implemented “as soon as possible” and that any delay in its implementation “should be short-lived.” The decision by IMO members in April to move towards a ban on HFO use by shipping in the Arctic was applauded by the Clean Arctic Alliance, an international coalition of NGOs committed to phasing out its use as marine fuel in the region. “A ban is the simplest and most effective way to mitigate the risks of the world’s dirtiest fuel to the Arctic,” said the Alliance’s Sian Prior after the meeting. “Now we’re calling on the IMO to ensure that this ban will be in place by 2021.” A ban on HFO in the Arctic is supported by over 70 companies, politicians and explorers, including Ikea, the British explorer Ranulph Fiennes and members of the European Parliament. They have all signed up to the Arctic Commitment, a joint initiative of the Clean Arctic Alliance and Norwegian cruise ship operator Hurtigruten, which calls for a phase-out of HFO from Arctic shipping. A switch from HFO to higher quality fuels in the Arctic would reduce black carbon emissions by 33%, CO2 emissions by 55%, SO2 emissions by 95% and sulphate (SO4) particulate matter by 93%, says Prior. The mandatory global cap on marine fuel sulphur content, to be implemented in 2020, is expected to expand the range of fuels in use globally, says the Arctic HFO ban’s original co-sponsors. “Therefore, by 2021 it is expected that marine distillate fuels will be increasingly available and that many ships will have switched to using them.”
GREENHOUSE GASES While a switch to low-sulphur distillate marine fuels will radically reduce black carbon and sulphurous emissions, it will not tackle global shipping’s substantial greenhouse gas emissions. And for many experts the IMO’s recently agreed 2050 emissions reduction deadline is too distant. Indeed, the non-profit Clean Shipping Coalition estimates that emissions would need to be cut by between 70% and 100%, rather than the proposed 50%, by 2050 to align shipping with the goals of the Paris agreement. “If it were a country, the global marine transportation sector would have ranked sixth in terms of CO2 emissions in 2015, just below Germany and well above Korea,” according to the International Council of Clean Transportation. In a study released in October 2017 into the trends in global shipping for the years 2013-2015, the council found that emissions increased over this period, with efficiency improvements more than offset by increases in activity. 32
The shipping industry has just 12 years of its fair share of carbon emissions left at current rates if humanity is to prevent the temperature rising beyond the critical 1.5ºC threshold, says Faig Abbasov of the Brussels-based NGO Transport and Environment. It assigned shipping a portion of the remaining global carbon budget according to the 1.5ºC scenario developed by the Intergovernmental Plan on Climate Change and using current emissions projections for the sector. “We argue that shipping should be given no more than 2.3% of the remaining budget,” says Abbasov. Gavin Allwright of the International Windship Association, which promotes the use of wind propulsion in commercial shipping, says the shipping industry is probably at least five years behind other sectors in terms of greenhouse gas reduction. His association was one of the organisers of Ambition 1.5ºC, a joint effort in November 2017 to drive the sector’s decarbonisation agenda. Over 150 industry repre-
“We need a much greater sense of urgency in the industry”
sentatives, including Kjartan Ross of Green Ship of the Future, a public private partnership from across the maritime industry, and Maria Bruun, skipper of trade and employer organisation Danish Shipping, gathered at the most recent Conference of the Parties to the UN climate convention meeting, held in Bonn. Describing themselves as, “Shipping’s most ambitious and commercially-savvy leaders” their aim was to map out a draft action plan of how shipping can contribute its fair share of greenhouse gas reductions and decarbonise enough to help meet the target of limiting the global temperature rise to 1.5ºC. “We have an initial [IMO] greenhouse gas strategy but measures to implement that won’t be in place until 2023 at the earliest as things stand today,” says Allwright. “The need for a high ambition approach was one of the reasons we worked on this shipping Ambition 1.5ºC event, as this will be too little too late. We need a much greater sense of urgency in the industry.”
MARITIME RENEWABLES The consensus among the shipping experts gathered in Bonn was that the industry already has the technology toolbox required for decarbonisation. Options include fuel cells, battery powered ships, hybrid ships FORESIGHT
Eighteen per cent of global ships are registered in Panama, which supported a much less ambitious emissions reduction deal
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How to stop the Arctic turning black
A ban on heavy fuel oil use by ships will significantly cut emissions
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SOURCE Transport and Environment on GHG emissions
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The use of a particulate filter would further reduce black carbon up to 90%
and wind propulsion technologies. The shipping sector with the most breakthroughs in sustainable technology and new fuel use is the cruise and ferry sector. “Passengers are saying that when I am sitting in my deck chair I’d like to get up without being covered in soot,” says Allwright. The Ampere is the world’s first all-electric ferry launched in Norway in 2015. As of February 2018 it has reduced CO2 emissions by 95% and operating costs by 80%, showing that environmental measures can be good for the industry’s bottom line, too. The Norwegian parliament has decided that all tenders new tenders for ferries must stipulate zero-emission and low-emission technology, says Lars Christian Espenes of the Norwegian Maritime Authority. “Many new electric and hybrid ferries will be built and put into service in the next few years,” he adds. The first hydrogen fuelled Norwegian ferry will be in service by 2021. FORESIGHT
“We expect more to come,” says Espenes. A joint green coastal shipping programme run by the Norwegian government and industry aims to create the world’s most effective and environmentally-friendly fleet of coastal vessels, he says. Other examples of the ferry and cruise sector leading the way are the hybrid ships being built by progressive expedition tour operator Hurtigruten. “They are based on distillate fuels now, but will be able to operate on batteries within the lifetime of the ship,” says the Clean Arctic Alliance’s Prior. The company estimates that the new hybrid technology will reduce fuel consumption and CO2 emissions from the ships by 20%, saving more than 3000 metric tons of CO2 per year. In Finland, there are many individual showcases of emissions reduction. “For instance, an electric ferry operating in the Turku archipelago, a Finnish company specialising in rotor sails and a big LNG-fuelled 33
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passenger ship that can use biogas as fuel that is produced from the food waste on board,” says the transport ministry’s Sarlin.
BARRIERS TO ACTION Despite these existing pioneering vessels and those already under construction in shipyards, industry leaders gathering in Bonn agreed that building more demonstrator vessels for the trialling of new technologies is a key baseline requirement of any decarbonisation action plan. “We simply don’t have enough demonstrator vessels,” says Allwright. “If you have three points of reference on any technology, three applications that are being demonstrated commercially, that breaks through into commercial reality.” In the case of wind technology, most, if not all, wind-assisted and primary wind technologies have been tested 34
and certified by certification societies and are now available to shipping companies. “There are a handful of wind-assisted vessels out there operating at the moment but it’s not enough,” says Allwright. Another barrier to the commercial uptake of wind technologies is the perception that wind or wind-assisted propulsion is a step backwards. “The majority of it now is very high tech. It’s all automated. We are not going to have hundreds of crew members up in the rigging,” says Allwright. “There is auto-furling for soft sail, there are hard sails, there are rotors, there are kites.” He says the final barrier to uptake of these technologies is the current rate of return on investment. Retrofitting with a wind-assisted technology will reduce fuel bills by up to 30% and a new-build ship that is optimised for wind can reduce fuel costs by 50%. FORESIGHT
Plain sailing Emissions from the first all-electric ferry in Norway are 95% lower and costs 80% lower than fuel-powered counterparts
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“If the figure for a tonne of fuel were around $600 then we could have an economic discussion without a boardroom of directors laughing,” he says. “At that point you start to come into the three and a half years return on investment.” Since September the price per tonne of low-sulphur fuel in Rotterdam has been on an upward trend and is currently around $580. “Now that’s before the world-wide sulphur cap is coming on and that’s going to put strain on the refineries,” says Allwright.
“I would like to see fund managers and pension funds being more active in the shipping green tech sector especially for smaller companies with innovative technologies”
“Because the price for heavy fuel oil is so low at present, the return on investments is around four and a half to five years and the shipping companies don’t want to deal with anything more than three years,” says Allwright. Over the past six months the price of a tonne of heavy fuel oil in Rotterdam has been averaged around $350. FORESIGHT
TESTING, TESTING Regardless of fuel prices, by early next year there will be at least five examples of Flettner rotor vessels in operation. They work by using electricity to spin cylinders that suck the ship forward using what is called the Magnus effect. “Maersk shipping, the biggest shipping company in the world, is going to be testing two next year and Viking shipping line is going to be retrofitting this year onto one of their ferries,” says Allwright. In Norway, plans are on course for an unmanned electric container ship, Yara Birkeland, to start service in 2019. Initially a detachable bridge with equipment for manoeuvring and navigation will be included. In 2020 it should be fully autonomous and will sail within 12 nautical miles of the coast between three ports in southern Norway. In Japan, Eco Marine Power, a marine renewable technology company, is planning sea trials of its integrated rigid sail and solar power system in cooperation with strategic partners and ship owner Hisafuku Kisen KK. “This includes studying the routes and operational profile of several ships to determine which will be most suitable for the sea trials,” says Greg Atkinson of Eco Marine Power. As a start up venture in marine renewable energy technology it is hard to attract investors, he says. “I would like to see fund managers and pension funds being more active in the shipping green tech sector especially for smaller companies with innovative technologies,” he adds. “Also banks and funds that provide loans for new ship building projects should also start to consider sustainability as part of their lending requirements.” In February, Dutch bank ING and the European Investment Bank agreed to support green investments for the European shipping market for a total value of €300 million. The facility can be used for projects with a green innovation element covering the construction of new vessels or retrofitting of existing vessels. Three years ago many marine renewable energy technologies were mostly on engineers’ design blocks. Now they are slowly becoming a reality. It seems the tide is finally turning on the shipping industry’s means of propulsion.• 35
TRANSITION
The past few years have seen a growing awareness and buzz around cryptocurrencies and blockchain and how these technological tools will alter the way business is done. It is easy for customers to see the attraction of a decentralised data system for the energy sector, but it remains to be seen whether blockchain can deliver on its promises and support the energy transition
New kid on the block
36
ledger back in 2005, but security concerns surrounding the inherent all-user access to the data hindered uptake. Since then the advent of cryptocurrencies, virtual or digital currencies has been “proof of concept,” he says, with blockchain suddenly receiving a significant boost in popularity. The most often discussed cryptocurrency is Bitcoin, not to be confused with blockchain—not least when talking about energy. Bitcoin is a currency, while blockchain is an enabler of secure and multiple trades of a product across the internet. According to a note published by Morgan Stanley in January 2018, the creation of digital Bitcoin tokens—a process known as mining—could, this year, use more energy globally than the entire country of Argentina and use more energy than that required by electric vehicles by 2025. Blockchain, by association, receives similar negative press on its energy use. “There’s a bit of a myth that needs to be dispelled around the energy use of blockchain,” says Katherine Foster from the Blockchain Labs for Open Collaboration (BLOC) in Copenhagen and a blockchain specialist at the World Bank. How much energy blockchain FORESIGHT
Three Google searches are equivalent to a 60 watt bulb being switched on for a minute
TEXT Katie Kouchakji
T
he rise of renewables is changing the energy system and it is also bringing electricity to areas which previously had none. This shift to a growing number of smaller-scale generators embedded at the far reaches of the power system is driving a technological revolution in how electricity is brought to the market. One massive innovation is that of socalled blockchain-powered platforms that can link generators and consumers directly. These trading platforms have the potential to transform the electricity business, moving it away from the traditional model of vertically integrated utility firms serving a specific geographic area. Blockchain literally links, or chains together, blocks of data, such as information regarding a specific power generator and a specific consumer. All users have access to the blocks. “The biggest change is the elimination of third-party intermediaries,” says Michael Mainelli, London-based director of consultancy Z/Yen Group. He describes blockchain as, “Multi-organisational databases with a super clear auditing trail.” They are also referred to as smart or distributed ledgers, which are essentially shared data sets. Mainelli built his first distributed
Science
Joining the dots
Blockchain could lead to decentralised energy transaction and supply systems
TRADITIONAL PROCESSES
Network and network operator
PROCESSES IN A BLOCKCHAIN-BASED SYSTEM
Wind
Energy company
Storage
Photovoltaics (RES in general)
Bank payment service provider
$ Conventional generation Conventional generation
Meter operator
€
Residential user
Network and network operator
Traders
SOURCE PwC global power & utilities
TRADING PLATFORM Industrial user
Electricity Payment / fee Data / blockchain
Storage
Photovoltaics (RES in general)
does use, though, is difficult to determine as it depends on various details, not least how big the chain is and where the data is stored. Foster sees great potential for blockchain and the energy transition.
ENERGY TRADING In a 2016 report, consultancy PwC laid out the potential myriad applications of blockchain for the energy market, including the decentralised trading of FORESIGHT
Industrial user
Residential user
energy, proof of origin, emissions trading, renewable energy certification, and metering and billing. For the moment, however, experts are doubtful the technology is ready to manage energy trading, questioning its ability to keep up with the throughput. “We see millions of transactions per minute to run the energy system,” says Stu Innes, CEO of emhTrade in Auckland, New Zealand. “There are not many, if any, blockchain systems that can do that.” 37
Science
Stefan Fastesson, founder of Faston Commodity, a consultancy in Stockholm, Sweden, agrees that the throughput of existing blockchain engines is not up to handling high volumes, but highlights that third generation engines are seeing higher levels of around 1000 transactions per second. Enerchain, the platform Fastesson is involved with, handles around 50 to 60 transitions a second in current load tests, but work is being carried out to increase speed as the underlying technology allows for a much higher rate. “The appeal is in the promise of what it can do in the future,” Fastesson says, adding that he thinks 2018 and 2019 will likely be a breakthrough period for the technology. Another key challenge for blockchain in the energy sector is the variety of platforms on offer and the lack of any link between them, says Foster. It is an issue which Fastesson agrees needs to be tackled for the technology to deliver on its potential. Peer-topeer transacting is the way of the future, he argues, and so the aim is to gain experience and understanding of blockchain now, so that it can be scaled up in the future, via consolidation of the various protocols to a common platform. “Blockchain could be a good supplement to the large exchanges,” says Petter Marthinsen of Construo Consulting in Oslo, Norway, who is working with Fastesson on the Nordic Enerchain platform. It could bring in new parties that are too small to trade on exchanges by being quicker and lowering costs of trading, he says. These smaller parties tend to represent small-scale renewable energy generators, such as community-owned projects. In 2016, a record 138.5 gigawatt of renewable energy came online globally, amid improved cost competitiveness with other generation types. Of the total renewables investment of $241.6 billion that year, $39.8 billion was channelled to small-scale renewable energy systems.
CLEAN ENERGY SPENDING James Eggleston, an analyst at Power Ledger in Perth, Australia, says renewables is the energy sector globally receiving most investment. “The most savvy investment you can make is renewable energy. The capex [capital expenditure for the infrastructure] is probably on a par with a carbon-heavy one, but you don’t have to buy fuel,” he says, meaning that the overall lifetime costs are much lower. He adds, “We’re seeing a widespread proliferation of distributed generation,” which challenges the status quo of a large centralised system. Advanced electricity meters are being held up as integral to the use of blockchain in the energy market for their ability to capture generation and consump-
38
tion data and feed that information into the system. But that makes Innes question the overall value of blockchain. Intelligent meters generally need to be certified by a central body. “The man is still in the middle, certifying that meter, diminishing the value of having a decentralised trusted ledger,” he asserts. Nonetheless, he agrees there are advantages to being able to trade on a granular level, using the information provided by the meters and digital contracts. In Australia, which leads the world in the density of its rooftop solar, Power Ledger has created distributed ledger software that uses the data from intelligent meters to send invoices to consumers, helping distributed generators access the market. “In energy markets around the world, it takes around 90 days for value to flow from the people paying the bill to the generator,” explains Eggleston. “We ditch the intermediary and democratise [the market] … this kind of software really benefits the energy market.”
“The appeal is in the promise of what it can do in the future. 2018 and 2019 will likely be a breakthrough period for the technology” The approach also allows smaller players to access the market in a way they were not able to before. “At the moment, people with solar photovoltaic don’t get the same payment as large generators,” says Eggleston. “We say a kilowatt hour is a kilowatt hour … we’re not changing physics, we’re just facilitating an evolution in the market.”
WORKING TOGETHER Innes at emhTrade believes the technology needs to evolve further if is to really help the changing energy industry. “At this stage, we can do everything we need to do using a centralised database,” he states. “[Blockchain] is not solving the biggest challenges we’re facing.” He identifies these as getting peer-topeer transactions into existing frameworks. Foster says this is a key requirement for the technology to facilitate the management of distributed generation. “We need [blockchain] systems that can interact with existing systems,” adds Foster. She is bullish about the technology’s future, suggesting the possibilities for blockchain could be endless. “We’re just at the beginning. The end may never come,” she says. •
FORESIGHT
is now Wood Mackenzie
Cities
Despite an increase in sales in recent years, electric cars remain a novelty in many countries. One street in Norway, however, is miles ahead. Out of the 150 families living on Søndre Vei, an upper middle class street outside Oslo, nearly 90% of them drive electric cars
S
øndre Vei, a road on the Nesøya peninsula just 15 kilometres southwest of Oslo, is one of the world’s most electric car intensive sites. Almost all the residents have an electric car, or two. Take Dagfinn Ringås, country manager for Schneider Electric, who owns a Nissan Leaf and a Tesla. His employer is one of the companies leading the installation of charging infrastructure in Norwegian homes, housing blocks and car parks. “No petrol or diesel, 100% electric,” says Ringås proudly. “Both cars run well, even when we drive up into the mountains. The Tesla is a four-wheel drive and can manage 400 kilometres on a single charge.” He adds that the power on which the cars run is also, “Nearly 100% free from carbon dioxide because it comes from hydropower.” Can the electricity network take it? “Sure, with peak shaving, whereby the cars don’t all charge at the same time,” says Ringås. To make this possible, the charging points are sensitive to the power available in the electricity network, hence a vehicle could receive one to two kilowatts of charge one time and five to six kilowatts another time to avoid overloading the network.
TECHNOLOGICAL ISSUES This is fairly easy to manage in a single street, but if the situation in Nesøya is going to become the norm all over Europe, there are still plenty of technological issues to solve before electric vehicles can both charge from and feed the grid. The EU-funded INVADE project, (a smart system of renewable energy storage based on INtegrated EVs and bAtteries to empower mobile, Distributed and centralised Energy storage in the distribution grid), 40
is aimed at finding solutions for some of these challenges. In Norway, the project is helping Schneider Electric and the energy companies Lyse and Smart Innovation Norway carry out large-scale tests in which they control electric cars, batteries, solar cells and hot water tanks in different combinations. The idea is that ultimately, if the owner of an electric vehicle comes home at six in the evening, he or she can tell the system that the car should be fully charged by six in the morning. An algorithm will then find the optimal hours to do the charging, which could include delivering power to the grid during the night. If a vehicle needs power immediately, the system will provide it and, if needed, reduce the supply of energy to heat pumps or other flexible appliances. In this way, intelligent ways of charging will benefit the energy system, avoiding new grid investments and helping to integrate renewables. Car manufacturers around the world are offering electric cars with ever larger battery packs, increasing the pressure for more and smarter charging infrastructure that can cope with these new challenges. The current generation of electric cars has batteries with capacities of up to 40 kilowatt hours, but wellknown electric car manufacturers and new players such as Audi, Mercedes and Jaguar are launching battery packs with 40 to 100 kilowatt hours of capacity. “We need to use the grid’s capacity better, so that we can avoid building new networks,” says Ringås.
COLLECTIVE TRANSPORT Trond Thorbjørnsen, senior project developer at Lyse, points out that in the Stavanger area, where the INVADE project is being carried out, in addition to many electric cars, there is a focus on developing FORESIGHT
TEXT Jesper Tornbjerg
ELECTRIC AVENUE
Reaching 2020 Energy Efficiency Goals in Public and Commercial Buildings In the EU and the US buildings account for 40% of the total energy consumption, and the CO2 emissions from buildings amount to 36% of the total emission in the EU and 39% in the US.
COORDICY is a strategic DK-US interdisciplinary research project for advancing Information and Communications Technology-driven (ICT) research and innovation in energy efficiency of public and commercial buildings.
The project contribute to the Danish goals of achieving a 75% reduction in energy consumption in new buildings by 2020 and a 50% reduction in existing buildings by 2050, and the United States’ goal of doubling its energy productivity by 2030.
Center for Energy Informatics University of Southern Denmark Campusvej 55, DK-5230 Odense M
COORDICY will do so by considering relevant factors such as occupant behavior, weather conditions, construction typologies, thermal properties, building systems and controls, and their complex interactions.
The developed approach will enable public and commercial buildings to play a central role in a future sustainable energy system.
The COORDICY project links universities, technological service institutes, public bodies, municipalities and industrial partners in a joint international effort on research and innovation of ICT-centered building operation technology of commercial interest to a fast growing global market.
Contact: Phone: 65 50 35 48 E-mail: bnj@mmmi.sdu.dk
Funded by:
Cities
Electric avenue
A bird‘s eye view of Søndre Vei
Nissan LEAF Tesla eGolf BMW
SOURCE Schneider Electric Norway
n/a
collective transport that runs on electricity, namely ferries and even planes. “In the long run, it will be a challenge for the grid,” he says. The project is therefore looking at, “Developing protocols and software so that electric vehicles can return power to the grid,” says Ringås. Currently, the batteries in many electric cars are unable to supply electricity to the grid, buildings or a home. INVADE will fund the testing of different technologies to create interactions between electric vehicles and grids, between electric vehicles and buildings, and between electric vehicles and homes. These will, “Provide completely new opportunities to use electric cars and stand-alone batteries as back-ups for the electric system or for individual buildings,” says Per Gjerløw, project coordinator at Schneider Electric. Such solutions, “Will increase the quality, comfort and safety of the power supply, while reducing the customer’s electricity bill. This will be a very important feature when electricity companies start introducing power tariffs.” Indeed, the Norwegian Energy Agency, NVE, is 42
developing a new tariff model that assumes that customers will soon pay for their use of grid capacity rather than for consumption. “Performance-based tariffs are spot-on compared with what we are going to test,” says Thorbjørnsen. “We need the INVADE platform to provide customers with the lowest electricity bills possible.” •
CHARGING ISSUES The Norwegian Directorate for Civil Protection, a government agency, has issued guidance advising electric vehicle (EV) owners to install dedicated charging systems for their cars rather than using normal sockets and extension cords. This results in quicker charging and reduces the risk of overloading, overheating and fire, says the agency. A nationwide survey by YouGov revealed that more than 80% of Norwegians are not aware of these recommendations. E.ON recently announced plans to shake up the EV charging market in Norway. “Norwegians are in the driving seat when it comes to the global roll-out of electric vehicles, but we see plenty of potential for improving their charging infrastructure,” says Tore Harritshøj, executive director of E.ON Denmark and Nordic head of e-mobility. FORESIGHT
Safety
Contact F. Engel K/S · Norgesvej 12 · DK-6100 Haderslev Tel.: +45 7422 3510 · Fax: +45 7422 3519 · www.fe.dk
WindEnergy Hamburg The global on & offshore expo Hamburg, 25 – 28 September 2018
Over 1,400 exhibitors from more than 34 countries and some 35,000 trade visitors from 48 countries – that is WindEnergy Hamburg. Be a part of the world’s leading expo for wind energy, and find everything that the global wind industry onshore and offshore has to offer.
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05.04.18 15:17
SHARED WARMTH
District heating, where heat from a central generator is distributed underground to warm a network of homes or businesses, is commonplace in Nordic countries, but until now it has remained a rarity elsewhere in Europe
Europe heads for low carbon heating the Danish way
44
able electricity is expected to become a major input for district heating, accounting for as much as onethird of heat by 2050.
NORTH SOUTH DIVIDE While district heating is dominant in Denmark and other Nordic and Baltic countries, with the highest market penetration in Iceland (92%), Latvia (65%), Denmark (64.4%), Estonia (62%) and Lithuania (57%), across Europe as a whole only 12% of homes benefit from the system and barely 2% of countries in the Mediterranean are heated this way. But times are changing. Encouraged by climate policies aimed at reducing greenhouse gas emissions and the growing need to reduce air pollution, cities around Europe are turning to district heating. Paris already has the world’s eleventh biggest district heating network, supplying one-third of the city’s households using a combination of fuel switching and network expansion to help meet its target of powering 25% of its energy consumption by renewable or recovered sources by 2020. In 2016, Paris halved the use of coal in its heating network, with FORESIGHT
In 2015 the UK government allocated £320 million in funding to grow the UK heat networks sector to 2021
TEXT Clare Taylor
D
enmark has a long history of district heating. The country’s first combined heat and power (CHP) plant was built in 1903 and by the 1970s around 30% of homes were connected to a centralised heating network. The real push for change, however, was driven by the 1972 oil supply crisis and subsequent energy price spikes in the late 1970s. The crisis was a wake-up call for Denmark, says Birger Lauersen from the Danish District Heating Association. “At that stage we were one hundred per cent dependent on imported oil,” he adds. Danish policymakers decided to switch fuels and expand district heating networks. “There was a push to use the waste heat from oil-fired power generation in the bigger city networks, while the smaller networks switched to coal,” says Lauersen. Today, 98% of all buildings in Denmark’s capital city, Copenhagen, are connected to district heating. Across the country, renewable energy in district heating has grown significantly, reaching a share of 49.1% in 2014. The government’s aim is to totally eliminate fossil fuel use from heat production by 2035. Widespread deployment of heat pumps driven by renew-
Cities
Residental heating in Denmark, 1981-2016 District heating wins the race to warm Danish homes Central heating refers to heat supplied by a centrally located source of heat generation in each separate building. When not oil or gas, this can be from other sources such as wood. District heating in Denmark is mainly from large biomass-fuelled combined heat and power plant, which can also supply electricity when required
3.000.000 2.500.000 2.000.000 1.500.000 1.000.000 500.000 0
SOURCE Statistics Denmark
1981
1986
1991
1996
2001
2006
2011
2016
Heat pumps
Central heating without oil or natural gas
Unknown
Central heating with natural gas
Stoves, other
Central heating with oil
Direct electricity
District heating
50% of it now powered by renewable and recovered energy sources. The new energy mix comprises 1% geothermal, 2% biofuel, 10% biomass, and 41% heat generated from waste incineration. In the Netherlands, 80% of buildings in Rotterdam are currently heated by domestic gas boilers, but the city hopes that its Heat Transition Programme will allow it to achieve a 40% district heating target by 2020 and 50% by 2035. That is a tall order. It requires changing the heating of 8000 buildings and replacing 40 kilometres of gas grid every year, starting now. “This is a huge and very complex challenge,” says Astrid Madsen, the city’s energy transition programme manager. “District heating is regarded as one of the alternatives to gas boilers, but the business case is difficult because gas is still very cheap.”
HOLISTIC THINKING Despite the challenges, Madsen insists that district heating is the most cost-efficient solution for areas with high population density. Lauersen agrees. The FORESIGHT
time is right for cities to put in new networks with a longer-term view to decarbonising heat supply, he says. “You cannot have a sustainable city without considering heating and cooling, this is 50% of energy consumption. In Denmark, it took us 20 years to get from 30% to 60% market penetration. For cities that want to speed up their energy transition, heat is an area where you can really effect change.” Most specifically, this is by using surplus heat. Indeed, studies show that there is more heat wasted during electricity production in Europe than is required to heat all buildings in the continent. As Lauersen puts it, “Surplus heat will finance the infrastructure of the future.” He is sees it as unlikely, if not impossible, for cities to otherwise simultaneously develop district heating networks and renewable heat sources without public subsidies. “In Denmark, we are now able to invest in deep renewables, such as solar and heat pumps, because we already have the networks in place and paid for,” he says. Lauersen believes that such change can be 45
Cities
POLICY FOR CHANGE Supportive policies can also help speed up this change. The first EU heating and cooling strategy was launched in February 2016. It was hugely important and long overdue, says Paul Voss, managing director of industry association Euroheat and Power. “As a principal steward of the energy transition, the EU must have a vision that encompasses the entire energy system, including the heating and cooling sector. Anything less leaves Europe with a serious credibility problem.” A major legislative package entitled Clean Energy for All Europeans is being negotiated in Brussels. “It looks likely that this will encourage the development of district heating and cooling networks in cities around Europe while also ensuring that these networks are increasingly efficient and low carbon,” says Voss. Lauersen believes the package will give the European Commission a basis from which to push for more district heating, using industrial service heat, waste heat and renewable heat, particularly in developing markets. These include Germany, where around 12% to 15% of households are using district heating, and in the UK, Norway and the Netherlands. A second grouping of “refurbishment” countries, mostly in south-eastern Europe where they were formerly part of the Soviet bloc presents a different challenge. “Here there are extensive networks that need to be upgraded, but the business case is challenged by fixed energy prices for consumers,” says Voss. He underlines that investment in general still remains an issue for district heating at local scale. In addition, low fossil fuel prices can make it difficult to raise the money needed to develop networks. “Investors who won’t get out bed for less than €100 million will inevitably struggle to get excited about a network for a small community or district,” he states. “One solution being discussed is to aggregate various pro46
Keeping warm in Denmark
Renewables have taken over district heating
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0
1990
2000
2005
2010
2014
2015
2016
Renewable energy
Heat pumps and electric boilers
Coal
Waste, non-renewable
Natural gas
Oil
jects to increase the scale, but this can be challenging due to the unique nature of each individual local investment.” The situation is even more complicated in south-eastern Europe, “Where prices are maintained at an artificially low level, making it difficult or impossible for utilities to make the necessary investments in the renovation and improvement of their networks,” says Voss. Encouraging progress requires a delicate balancing act, he stresses. “That is best achieved through a process of open dialogue among key stakeholders, particularly policymakers, consumer groups and energy providers,” he says. CELSIUS, an EU-funded project, is taking this approach by sharing knowledge with actors at all stages of the energy value chain across Europe, says project coordinator Katrina Folland. CELSIUS is led by the Swedish city Gothenburg and its Johanneberg Science Park together with the RISE Research Institutes of Sweden, and Euroheat and Power. The aim is to, “Spur the development of low carbon, innovative heat sources to the benefit of both consumers and the environment,” says Folland. • FORESIGHT
SOURCE Danish Energy Agency
achieved quicker with a shift in thinking from individual to collective solutions and a more holistic approach to heat supply. “Instead of thinking of energy policy always in terms of supply, first we need to ask: what do we need the energy for?” he says. “Often it is not necessary to burn fossil fuels to provide adequate heating for our houses,” he continues, citing the EU-funded Heat Roadmap Europe project, which combines local thermal mapping and energy system analysis as an example of the type of thinking that is necessary to inform strategic planning for heat. “The heat maps show the areas suitable for district heating,” he says. “We need to support this kind of thinking at the local level.” The key is to encourage the use of existing heat sources, he points out.
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The pathway towards
100 PER CENT RENEWABLE ENERGY More than 70 per cent of Denmark’s electricity today is produced from renewable energy sources, 44 per cent of which is wind power. The final goal is a complete energy system running on 100 per cent renewable energy. The integrated energy system is a position of strength in Denmark. We are pioneering the international energy sector: “because we are one of the first countries in the world to hit a record high share of renewable energy. Denmark is also one of the first countries to face the challenge of integrating and digitalising the energy system. But if other countries do not face it today, they will tomorrow, and this means that we are building significant expertise within an area that has great potential both on a national and international level”, says Preben Birr-Pedersen, Cluster Manager in House of Energy. We have a unique strength in Denmark, because companies, utilities and the research landscape are already working closely together to make new innovative solutions and large-scale demonstration projects. Several key players in the Danish energy sector agree that it is a necessity to integrate the energy system: “An efficient and successful integration of large-scale intermittent energy sources like wind and solar energy calls for a rethinking of the design and operation of energy systems and their interaction with other sectors of a modern society. Current energy systems where production is following the demand will change to a system where the demand must follow production. Obviously, this calls for a focus on how to describe and materialize the energy flexibility at all levels of the energy system. It also calls for a paradigm shift towards integrated energy systems powered by digitalisation and data intelligence”, says Henrik Madsen, Professor at the Technical University of Denmark (DTU). Professor, Brian Vad Mathiesen, Aalborg University adds: “Going towards 100% renewable energy is not a challenge as such – the challenge is to do this in a way which is cost-effective and sustainable in regards to the use of bio-energy. A two-dimensional approach is needed in which countries are connected with energy infrastructure to a certain level and in which the Smart Energy System is developed. This approach is used in the Heat Roadmap Europe and in the RE-INVEST research projects, where the sectors are integrated with thermal, gas and to electricity storages and infrastructures in an interconnected Europe.”
Preben Birr-Pedersen, Foto: Peter Halskov
The infrastructure owners are also working together across sectors. Knud Pedersen, Chairman of Radius (large Danish electricity grid owner) and Chairman of iEnergi (trade organisation for an integrated energy system) says: “Our electricity grid benefits from sector coupling, also with the transport sector and water utilities, and by collaborating with the industry and academia.” If you want to take part in the journey towards 100 per cent renewable energy, and are looking for Danish partners for an innovative energy project of yours, or would like to join a consortium to participate in Horizon 2020-projects, then both Danish and international partners are always welcome to contact House of Energy. We act as a one stop-shop on the way to your next energy project. This is one of House of Energy’s main tasks and we make sure that the suppliers of various energy technologies meet in order to identify how they can enter into an agreement, create new projects and raise external co-funding,” concludes Preben Birr-Pedersen. Read more at house-of-energy.dk
House of Energy • House of Energy is the Danish energy cluster and works with companies, researchers and government institutions within the areas of wind energy, gas, heating and integrated and efficient energy solutions. • House of Energy is Horizon2020NET supported by the Danish Agency for Science and Higher Education. • House of Energy and a list of strong partners will be hosting the side event Sustainable Future Energy Systems – Smarter, Integrated and CO2-negative during the Nordic Clean Energy Week in Copenhagen May 24, 2018.
Cities
Denmark’s “sunshine island” is taking its efforts to become carbon neutral beyond wind energy. Experiments with solar technologies are directed towards achieving heating, cooling and electricity generation from a single source of clean energy
Strangely marked "spider stones" unearthed on Bornholm have led scientists to suggest a Neolithic sun-worshipping religion may have been based there some 5000 years ago
B
ornholm, a Danish island due south of Sweden in the Baltic Sea, is making itself into a “Bright Green Island” by pursuing a goal of carbon neutrality by 2025. To get there, Bornholm has become a laboratory for new technologies and strategies to cut emissions. “Our little island is very well-suited for experiments,” says Torben Jørgensen, head of research and development at the island’s government-owned energy utility. The indication is that what works for Bornholm can be scaled up for the mainland. The small size of the island, with a population of just 40,000, also reduces the number of people involved and bureaucratic barriers. “We are down to earth and easy to connect with,” he says. Bornholm’s residents have been model guinea pigs so far. “This is a small community and people trust each other,” says Jørgensen. “If we say it is interesting, people want to participate.” Some locals, however, have started to complain about the increasing number of wind turbines on the island. Wind is the main power source for Bornholm, supplying 39% of electricity last year. The island is home to 35 turbines, many of which are small machines dating back to the 1990s, though the three newest are 3 MW giants. A few years ago, the city council voted against adding more wind turbines to protect the “unique nature” of the island. A small number of protesters raised enough noise to make elected officials timid. According to Jørgensen wind turbines became “a political issue.”
SUNSHINE ISLAND The bubble of opposition to wind turbines prompted the utility to investigate other ways of powering the island. “We are now seeing how far we can get without 48
FORESIGHT
PRIVATE CARS While progress on emission-free energy supply is moving in the right direction, Bornholm is struggling, like many other places, with the problem of decarbonising private cars. There are 17,000 of them on the island. “The transport sector is the most difficult part” says Jørgensen. “Danish policy for electric vehicles is not so favourable.” He thinks, however, this will change as the move to phase out fossil fuel cars increases across Europe. In preparation for this expected upturn, Bornholm is working with the Technical University of Denmark to test the integration of electric vehicles into grid operations and their ability to help balance supply and demand through flexibly charging and discharging at appropriate times of the day and night. “EV sales will grow exponentially and we need to be prepared to cope with their impact on electrical systems,” says Jørgensen.
TEXT Jesper Tornbjerg and Bentham Paulos PHOTO Scott Webb
Here comes the sun
more wind power,” says Rasmus Christensen, director of the utility. “We found that there is room for far more solar energy than we thought and that solar power plants fit better into the energy system than expected.” Bornholm is known as “sunshine island” because of its relatively sunny weather, at least by Danish standards. Developers are building two 10 MW solar plants on the island, with power expected to start flowing in May 2018. There are also about 1000 residential solar systems on the island, says Jørgensen, the highest concentration in Denmark. Overall, the utility gets 65% of its power from renewable energy produced on the island, with the rest imported by undersea cables from the Swedish grid. The increase in solar power will help the island meet its goal for all electricity to come from renewables by 2025. It is also experimenting to see whether the sun can help with heating. Most energy for urban heating on Bornholm is already 100% renewable. The island’s district heating systems were converted from coal to biomass in 2016. It is now testing a hybrid design for solar panels, where photovoltaic panels are coupled with a heat transfer system that warms water while improving PV performance. Jørgensen would like to incorporate hybrid solar parks into district heating to cut the use of biomass fuels in summer. “Less than 20% of energy in sunshine is converted to electricity,” he says. “More than 80% is lost in heat.” While a hybrid solar panel is not a new idea, it has never been successfully commercialised and the island is working with the Danish company Racell and its “triple energy” solar product that produces power, heat and cooling from a single building unit, to see what is possible.
Cities
HEATING AND HEAT PUMPS HELP BALANCE THE GRID Over 800 households on Bornholm are participating in the EcoGrid 2.0 project, testing the ability of heat pumps and electric radiators to provide grid flexibility. The project partners, IBM and Insero, take control of domestic heating appliances, turning them down to cut demand or up to absorb electricity generation in excess of immediate need. They have made over 200 such “load response actions” over the past two heating seasons, which are tracked in real time at ElectricityBaseline.com. The output of wind turbines and solar panels meets around 50% of Denmark’s electricity demand. Forecasts of this output, which varies in intensity as the wind blows and the sun shines, are used to manage a balance with fluctuations in demand. One of the tools available for
balancing the grid is demand management: the shifting of electricity consumption away from critical times. The EcoGrid 2.0 project, led by the Danish Energy Association, is experimenting with advanced ways of shifting large volumes of demand as needed. Running from January 2016 to June 2019, the project is investigating how the control and management of electric heating and heat pumps can help balance national and local grids. As part of the project, researchers have taken control of the heat pumps and electric radiators in homes on Bornholm. In one of the many demonstrations, the heating was turned off in all households for an hour in the morning and then again for an hour in the evening during the peak consumption period. Householders were allowed to set certain indoor temperature limits before the project began. The electricity consumpFORESIGHT
tion from these houses was reduced by over a third in both periods. This initial phase of the project shows that it is possible to aggregate and control heating devices to reduce consumption when supply runs short, a process referred to as demand response. “The number of heat pumps is expected to grow from 80,000 to over 110,000 in the coming ten years in Denmark, so the potential for large volumes of demand response is significant,” says Emil Maher Larsen from the Danish Energy Association. The large volumes of data collected from devices and homes on Bornholm are being stored on a central platform, which will feed into efforts to develop a set of tools that can be used by the power system operator and distribution companies to run an efficient and stable power system with fluctuating supplies of wind and solar energy. 49
PHOTO ESSAY
CITY OF
PEOPLE AND
LIGHT People have always come first with Jan Gehl, an 81-year-old Danish architect. Throughout his career his aim has been to improve the quality of life in cities by focusing on the needs and desires of pedestrians and cyclists. He wants cities to be liveable, easy to get around in, and with plenty of green space and light. They should stimulate rather than smother people’s senses. Today these goals have a double mission: to improve the well-being of citizens and to reduce polluting emissions. FORESIGHT has taken a walk through the streets of Copenhagen and looked at how the city's space and light accommodate people and increasingly facilitate the generation and use of clean energy. The building occupied by the Copenhagen International School, in the Nordhavn dock redevelopment complex, is an inspiring example of energy-efficient architecture that employs space and light in a harmonious design that promotes well-being and represents a blueprint for future sunlit projects PHOTO Lars Just
CLIMATE RISK
As investors around the world gear up to adopt recommendations related to the financial risks posed by climate change, pressure on companies to deal with the issue is steadily mounting. Just 4% of nearly 5000 of the world’s biggest companies have put a valuation on the risk to their business of climate change
Companies under pressure
60
issue for senior management,” says Rory Sullivan, a sustainable investment consultant and a member of the Transition Pathway Initiative, a group set up by investors to assess how companies are preparing for the transition to a low-carbon economy. “It also provides an agreed framework within which companies and investors can articulate how they are responding to climate change,” he adds. The TCFD published its final recommendations in June, 2017. It calls for investors and companies to disclose climate information across four themes: governance, strategy, risk management, and metrics and targets. It suggests they use scenario analyses to deal with the uncertainties around climate change, the effects of future climate policies, the emergence of low-carbon technologies, and changing consumer preferences. And, crucially, it suggests these disclosures are presented in an organisation’s main report and accounts, rather than relegated to a separate sustainability report.
The London School of Economics has estimated the value of global financial assets at risk from climate change at $2.5 trillion
INVESTOR COMMUNITY SUPPORT The TCFD’s work has received strong endorsement from the investor community. Norges Bank Investment Management (NBIM), which manages Norway’s giant sovereign wealth fund, has incorporated the TFCD’s recommendations into its climate change strategy document, which sets out its expectations for companies on climate change. “We are investing for FORESIGHT
TEXT Mark Nicholls
N
ine institutional investors, managing some $3 trillion in assets, recently announced plans to develop climate risk disclosure tools. The pledge, made in March 2018, is seen by many as proof that discussions about climate change and the transition to a clean energy economy are being elevated to the top of the corporate agenda. The tools are being developed in line with the Task Force on Climate-related Financial Disclosure (TCFD), an initiative set up in 2015 by the Financial Stability Board (FSB), a body of the G20 group of the world’s largest economies led by Bank of England governor Mark Carney. TCFD is a direct response to Carney’s concerns about the “systemic risk” climate change poses to the financial sector. Chaired by Michael Bloomberg, US businessman and former mayor of New York, its mandate includes developing voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers and other stakeholders. The latest news follows the announcement in December 2017 that 237 companies, with a combined value of more than $6.3 trillion, had committed to support the TCFD. Among others, they include financial services groups such as Citigroup, DNB, HSBC and Nordea, energy giants such as EDF, Royal Dutch Shell and Statoil, transport firm Maersk, and consumer goods firms such as Coca Cola and Unilever. “The TCFD has legitimised climate change as an
Business
Climate-related financial disclosures The four essential ingredients
STR
AT E G Y
MA
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M
T
SOURCE TCFD Knowledge Hub
GOVERNANCE The organisation‘s governance around climate-related risks and opportunities STRATEGY The actual and potential impacts of climate-related risks and opportunities on the organisation‘s businesses, strategy and financial planning
E
RI
K
VERNANCE
N
S
GO
METRICS AND TARGETS
RISK MANAGEMENT The processes used by the organisation to identify, assess and manage climate-related risks METRICS AND TARGETS The metrics and targets used to assess and manage relevant climate-related risks and opportunities
future generations and would like companies to move from words to numbers in assessing climate risk in their investments, risk management, and reporting,” said Yngve Slyngstad, CEO of NBIM at the launch of the $3 trillion investor initiative on climate risk disclosure, organised by UN Environment. The majority of companies, however, have not yet committed words to the subject, let alone numbers. A survey in October 2017 by KPMG, one of the bigfour accounting firms, of 4900 of the world’s largest companies found that only 28% acknowledged in their annual financial reports the risk posed by climate change and that just 4% provided analysis of the potential business value at risk. “Our survey shows that, even among the world’s largest companies, very few are providing investors with adequate indications of value at risk from climate change,” said José Luis Blasco, KPMG’s global head of sustainability services.
NOT ENOUGH ACTION Even among those companies that are actively disclosing information on environmental issues, there is a gulf between acknowledging climate risk and taking action to manage it. The CDP—formerly the Carbon Disclosure Project, which collects environmental daFORESIGHT
ta on behalf of investors—looked at how companies are disclosing information on the four themes identified by the TFCD. An analysis of climate information disclosed by 1681 companies to the CDP platform found that 83% recognised the physical risks posed by climate change. Only one in ten companies, however, reported that they provided incentives for board members to manage climate-related risks and opportunities. “This shows a gap between disclosure and action,” says Jane Stevensen, task force engagement director at CDP. “Companies have had, for a while, very well-informed sustainability departments. It is now time for this information to make the leap from there to the board.” She adds, “TCFD offers a very simple diagram of how companies should approach the issue. It’s like an onion, with governance wrapped around the whole thing. The headline is: this should be a board responsibility.”
HUGE CHALLENGE Still, there is a mountain to climb. In a latest assessment of bank financing of “extreme” fossil fuels, such as tar sands, coal mining and ultra-deepwater oil, a coalition of environmental groups found that lending 61
Business
to the sector had risen between 2016 and 2017, from $104 billion to $115 billion, after declining in the prior year. This was largely due to a substantial increase in the financing of tar sands projects and pipelines in Canada. “There’s a lot of TCFD rhetoric currently,” says Grieg Aitken, climate campaigner at Banktrack, one of the groups behind the 2018 Banking on Climate Change report. “We weren’t exactly holding our breath in the first year of the TCFD … but the report shows the scale of the challenge.” Investors are, however, confident that disclosure will encourage action among companies. “Reporting can be a tool for change, and investors are becoming more knowledgeable about it,” says Christina Olivecrona, senior sustainability analyst at AP2, one of Sweden’s national pension funds. “Investors will read the reports with a more critical eye … and the rating agencies and other service providers will also scrutinise them more.” Jan Erik Saugestad, CEO of Storebrand, the largest private asset manager in Norway, agrees. “Disclosure will contribute to the right kind of discussions at the levels that take decisions. The recommendation is that this has to be incorporated into governance structure, strategy work, risk management and, in the end, it recommends that metrics and targets are established.” He admits there are differences between companies, but insists that he sees, “An increasing willingness to understand the complexity and the risks associated with different scenarios.” He gives the example of the oil and gas sector where a number of companies are explicitly talking about peak oil demand and the implications for their businesses of regulatory changes associated with climate change.
Emma Sjöström from the Stockholm School of Economics in Sweden agrees that because the recommendations apply to investors and companies, efforts by investors to understand their future exposure to climate risk and opportunities will see them apply pressure to companies to provide the necessary disclosures. As investors set targets and metrics to reduce their climate exposures, that will encourage companies to act, she adds. “TCFD will be helpful for engagement processes because it will generate more consistent data, more reliable data and you will be able to follow progress over time,” says Sjöström. It will also allow investors to more easily compare companies against their peers. “It will illuminate who are the stars and who are the laggards,” she says.
CORPORATE BEHAVIOUR Sullivan of the pathway initiative says that it is difficult to attribute changes within companies directly to the process begun by the TCFD, but he points to disclosure from oil major Shell as an important marker of how it could encourage firms to explain how they might adapt their strategies to prosper in the low-carbon transition. In November 2017, Shell announced a target of reducing the carbon footprint of its ener-
“TCFD is like an onion, with governance wrapped around the whole thing. The headline is: this should be a board responsibility”
COAL INVESTMENT DROP “The response in the utility sector is another good example,” says Saugestad. “Corporates are clearly changing their strategies, divesting or avoiding investing in coal and rather investing in solar and wind capacity. That’s one sector where you’ve seen some pretty dramatic shifts.” He points to data from CoalSwarm, a campaigning group opposing investments in coal. “New investments in coal plants have dropped more than 70% in the last two years—that’s an example of things actually happening on the ground.” Saugestad also argues that the TCFD looks at climate risk from a different perspective to socially responsible investors in the past. They tended to look at the impact that companies have on the climate, while the TCFD instead looks at the impact of different climate risk scenarios on companies and on their performance as investments. “In that respect, the TCFD framework is taking a more corporate/investment perspective,” he says. 62
gy products by 20% by 2035 and by around half by 2050. Shell’s commitment is, “Not just about setting out scenarios, but it’s about setting out where you want to be in the future. It gives investors and others a framework to evaluate how far the company has progressed,” says Sullivan. The ultimate goal for the climate disclosure process is to encourage investors to shift from high-carbon assets to low-carbon investments. Olivecrona at AP2 is confident this process will take place. “TCFD promotes forward-looking disclosure and as companies report we will have information on how companies are contributing to the low-carbon economy. That will help us.” For CDP’s Stevensen, TCFD is also about arming a wide variety of parties with the knowledge they need to push for change. “What the TCFD does is provide information to a very broad range of stakeholders, such as investors, who have the clout to change behaviour.” • FORESIGHT
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Policy
GOVERNMENT IN NEUTRAL AS BUSINESS DRIVES SHIFT TO ELECTRIC CARS IN DENMARK While Denmark is leading many aspects of the energy transition, the move away from fossil fuels to electric vehicles is not one of them. Only 1.5% of new cars bought in Denmark in 2017 were electric or plugin hybrids compared to around 40% in Norway. The reason for this is simply politics, according to Jeppe Juul, senior transport policy officer at the Danish NGO the Ecological Council. Recently appointed president of the board of Transport & Environment (T&E), the Brussels-based organisation that helped break the dieselgate scandal, Juul is pushing for all EU countries to follow Norway’s example and decarbonise their cars and trucks. In conversation with FORESIGHT, he explains his hopes and frustrations Q: First, congratulations on your new appointment. Denmark is steaming ahead with the decarbonisation of its energy sector and so why are so few Danes buying electric cars? A: Six years ago, Denmark was a frontrunner on electric vehicles (EVs), but due to bad judgement and bad will in the government we are now lagging behind. In 2015, the Danish government decided to phase out tax breaks for EVs, making them more expensive and dissuading people from buying them. This was a purely political decision and totally out of line with what other countries are doing. The high market penetration of EVs in Norway shows that with the right policies people will buy electric cars, even if the choice of models remains limited. In Norway, 13,000 people pre-ordered the new Nissan Leaf. This is because Norwegians know that the writing is on the wall for fossil fuel cars. The country plans to outlaw them by 2025 and is on track to achieve this target in practice. The Danish government, though, is reluctant to follow its neighbour’s example and to encourage people to buy EVs by offering incentives such as free parking for them, allowing them to travel for free on ferries or be exempt from bridge tolls. Transport is a sensitive subject and national ministers in Denmark seem reluctant to tackle it, but this is short-sighted and hampering the efforts of local authorities in Copenhagen that want to do more. 64
Danish companies, however, remain world leaders in terms of technology. Danfoss, for instance, is leading the development of equipment for EVs, while Clever and E.ON are working together to create, over the next few years, a network of fast charging stations for EVs across Europe. Q: What now needs to happen to speed up transport behaviour change and the electrification of the transport fleet? A: We need car producers to divert their investments from diesel to electrification. In the EU, countries need to agree strong targets for zero emissions vehicles in 2025 and more money needs to be directed towards infrastructure projects that facilitate the change. We need an EU ambition level for EVs of at least 20% by 2025 to ensure that the transport sector’s climate targets are met. The European car industry has been lagging behind competitors in other countries for many years by keeping their focus on diesel. Governments now need to help the European car industry by setting firm targets for electrification and setting a clear direction for investments and the future.
“Cars last for a long time. Each new internal combustion engine car sold locks us into future CO2 emissions. A ban on sales of these cars has to be in effect by 2035 at the latest”
Cars have a relatively long lifespan and those sold today will still be on the roads in 2030, while some cars bought in 2030 will be running in 2050. We need this to be taken into consideration when agreeing policies that govern the cars sold in the EU in the coming years. We need regulations now that plan for the end of the internal combustion engine (ICE) in cars. Biofuels are not the answer and so electrification is the only way forward. By 2035, 100% of cars in the EU need to be zero emissions vehicles. Q: Do you think this will happen? A: Yes. I believe that this change will happen even sooner as the technology is already there and so FORESIGHT
TEXT Philippa Nuttall Jones
INTERVIEW: JEPPE JUUL
Policy
Cleaner roads
Cumulative sales of electric vehicles in Europe
700,000
600,000
500,000
400,000
SOURCE Transport & Environment based on ACEA and EEA
300,000
200,000
100,000
0 2010
2011
2012
2013
2014
EFTA (Iceland, Liechtenstein, Norway, Switzerland)
things can move quite quickly. New electric cars have a range above 300 kilometre and soon it will be possible to charge around 80% of their battery within a few minutes. For most people there are therefore no practical issues stopping them having an electric car. In Denmark, for instance, 95% of all car journeys are less than 50 km. The judgement in Germany earlier this year [the Federal Administrative Court in Leipzig ruled that cities can impose diesel driving bans to combat air pollution] shows that we are reaching a tipping point. And lots of companies have already said they will stop producing cars that run on diesel—Fiat Chrysler was the latest company to announce at the end of February that it will end the production of diesel cars. FORESIGHT
2015
2016
Q1 & 2
2016
Q3 & 4
EU
Q: The shift to electric mobility risks bankrupting one of the biggest global industries and putting millions of people out of work. True or false? A: False. Electric cars are simpler to produce and have half the running costs of a fossil fuel powered car. For consumers, therefore, the EV industry is closing in on having the same overall cost as a traditional car. For industry, it means that you need fewer people to assemble a car and of course this causes fears about job losses. But studies show that shifting to EVs will create new jobs. Recent research by Cambridge Econometrics for the European Climate Foundation reveals that moving away from oil-powered vehicles to ones driven by renewable energy will create over 65
Policy
200,000 net additional jobs by 2030. It also forecasts an increase in gross domestic product (GDP) of 0.2% a year as European oil imports are slashed by €49 billion in 2030. Q: Some experts have suggested that electric cars should only be considered as low emissions vehicles if they are powered by renewable sources of energy, meaning that hybrid cars are “cleaner” in most countries. True or False? A: False. When calculating emissions, the main aspects to take into consideration are the volume of renewable energy in the grid, where the battery is produced and where it is charged. You can therefore suggest that in certain areas of the world, electric vehicles don’t deliver much given current grid-mixes. But we need to take into account that the grid will transi-
tion everywhere in the coming years away from fossil fuels. Already today you save CO2 by going electric in a country like Poland, which still relies heavily on coal. It is clearly not good if the electricity to power cars is being produced, for example, by burning coal in the US, but all countries are moving away from fossil fuels and things will not be perfect from the start. Q: How can policy makers speed up this transition? A: Cars last for a long time. Each new ICE car sold locks us into future CO2 emissions. We know that if we are to meet international commitments to tackle climate change, we need to be close to zero emissions in 2050. This means that we need now to advance the debate on when to ban sales of ICE cars. This ban has to be in effect by 2035 at the latest. We will need strong political will to guide industry and consumers. •
NUTS AND BOLTS Electric vehicles account for just 1.7% of new vehicles sold in Europe. At present, the European Union imports 89% of its crude oil, the vast majority of which is used for transport fuel. Moving away from vehicles powered by oil to those driven by renewable energy will create 206,000 net additional jobs by 2030. (Source: T&E) In autumn 2015, the Danish government announced the progressive phasing out of tax breaks on electric cars. Sales in Denmark of electrically chargeable vehicles subsequently plunged 60.5% in the first quarter of 2017, compared with the first three months of 2016.
66
Copenhagen Mayor Frank Jensen said in October 2017 that he plans to propose legislation to ban new diesel cars from the city by the beginning of 2019, but cars bought and registered by the end of 2018 and diesel vans and trucks would be exempt. (Source: European Automobile Manufacturers Association/Bloomberg) In 2017 there were more electric car charging docks across Denmark than petrol stations with 2030 electric charging stations compared to 2028 petrol stations. (Source: Dansk Energi). Norway said in 2017 that it would prohibit domestic sales of new diesel and gasoline-powered cars as of 2025 —the earliest date for any such ban in the world.
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