Achieving 20% renewables in Europe in 2020

Figure 4.1 shows the development of the share of renewable energy in Europe for the three models that have evaluated the overall target. It should be noted that the three models cover dif-ferent regions, ranging from Western Europe (MARKAL) through EU-25 (PRIMES) to a region encompassing 30 countries in Europe (POLES), but not entirely overlapping the EU-25, be-cause the Baltic states are not included. The 20% target appears to be ambitious, as only POLES achieves it in 2020, and does so by including Norway with a large hydropower share. The rea-sons for the apparent ambition level of the target differ by model, but are related to the possibili-ties within different sectors to switch to renewables, and the time required for such shifts.

20 EU-25, excluding Baltic states, but including Norway, Switzerland, Turkey, Romania, Bulgaria, Ex-Yugoslavia, Iceland and Albania.

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Figure 4.1 Contribution of RES to primary consumption (Eurostat convention)

In MARKAL, the overall share of renewables in primary consumption does only reach 18.6% in 2020. This share, applicable to Western Europe, is based on contributions of different sectors as follows.

• In the power sector, a 33% contribution of electricity from renewable sources is achieved in 2020, excluding the contribution of Norwegian hydropower. This requires a subsidy of 4.1 €ct/kWh²¹. Although the model would be capable of achieving a higher RES-E share in 2020, it is questionable whether this would be realistic, given the current expectations that in 2010, only some 19% RES-E might be reached instead of the 22% target (European Com-mission, 2004). Moreover, a higher share of RES-E might require advanced technical solu-tions to problems related to the intermittent character of many renewable sources.

• In the transport sector, the targets of the Biofuels Directive are more than achieved in 2010, and in 2020 an almost complete shift from diesel to biodiesel is established by imposing a tax on regular diesel and gasoline. This leads to a 32% share of biofuels in the final energy demand in the transport sector in 2020. Towards 2030, this share can increase further due to a replacement of gasoline with bio-ethanol, and a further growth in diesel driven cars. This is the main reason for the further growth of the overall RES share to 23% in 2030, as shown in Figure 4.1.

• Imposing a carbon cap on the emissions of the industry sector has shown that this sector does not have much room for a more renewable energy supply. The use of biomass in the industry would be possible, but suffers from competition with applications in the transport sector. The present and expected technological options show other ways of reducing emis-sions, namely a shift from solid and gaseous (fossil) fuels to electricity, steam and heat, and hydrogen rather than increasing the contribution of renewable energy.

These results show that substantially higher contributions from the power sector, the transport sector and the industry seem unlikely. Therefore, to achieve the 20% target, applications in other end-use sectors should be explored, such as renewable heating in buildings (solar thermal water heaters or biomass-based district heating).

21 In the model this is the shadow price of the constraint related to the 33% target.

The results of PRIMES for the EU-25 show a share of 18.3% in Europe’s primary energy con-sumption in 2020, comparable to MARKAL, but reached in a different way.

• In the power sector, again the 33% subtarget for renewable electricity is achieved, and re-quires a subsidy of 4 €ct/kWh, comparable to what was found by MARKAL. However, the composition of the renewable technology mix for electricity generation differs in that far more biomass is deployed (40% versus 10% in MARKAL, see the next section).

• Related to this, the transport sector deploys a relatively smaller amount of biomass for bio-fuels. PRIMES achieves a 14% share of biofuels in total final energy demand of the trans-port sector in 2020 (or a 17% share of biofuels in gasoline and 17% share in gasoline and in diesel oil).

• Further penetration of renewables on the demand side is achieved through promotional poli-cies for the use of biomass and waste in industry and the use of solar thermal panels for wa-ter heating purposes in services and households. In 2020, the options on the demand side are highly exploited.

Finally, POLES shows a completely different distribution of the overall 20% target over the dif-ferent sectors. In the POLES model this distribution is endogenously determined, whereas the other models have taken the 33% RES-E subtarget as a starting point. The renewable electricity share reaches 44% in 2020, although this is somewhat easier because it includes the contribution of Norwegian hydropower. It is remarkable that POLES projects a far lower share of biofuels than the other two models. Given the endogenous allocation over the sectors, this indicates that biomass applications in the power sector are cheaper than in the transport sector. On the other hand, the fact that in POLES geothermal energy is not included, and heat production from re-newable sources is only partially modelled, suggests that more could be achieved in the heat sector.²²

4.2.1 A crucial role for biomass

The three models that have evaluated the overall target give some insights into the competition of different biomass applications. Figure 4.2 presents the contribution of renewables to the pri-mary energy consumption; showing that over 40% of the pripri-mary renewable supply is based on biomass, and 20-25% comes from wind. Furthermore it is noteworthy that in PRIMES a signifi-cant contribution of solar power is projected, mainly due to the implementation of promotional policies for solar thermal water heaters. On the other hand, PRIMES shows a lower penetration of wind energy, presumably due to lower potentials, or higher costs than in the other models.

The POLES and MARKAL models show a larger share of hydropower than PRIMES. This dif-ference is already visible in the year 2000, and mainly due to the inclusion of Norway, and, for POLES, Turkey. The potential for growth in hydropower is limited to small installations. The role of wind and other renewable electricity generation technologies will be further discussed in comparison with other models that have focused on the power sector.

22 E.g. according to the FORRES (2002) study, the contribution of geothermal and the heat ration could reach 2%

of RES by 2020. [5]

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Figure 4.2 Composition of the primary mix of renewables in the high target case; year 2020 The amount of biomass deployed in 2020 ranges from 7.9 EJ (MARKAL) to 10.2 EJ (PRIMES) to 12.6 EJ in POLES. These differences are larger than can be explained from differences in re-gional coverage, taking into account that according to PRIMES, the EU-15 uses 9 EJ biomass, so only 1.2 EJ can be attributed to New Member States. Figure 4.3 shows the sectoral distribu-tion of the biomass usage in different models. The differences among the models can be ex-plained from a combination of how the policies were designed (see Table 4.1) and relative costs differences among renewable technologies. MARKAL shows by far the largest biomass de-ployment in the transport sector, due to a high tax on regular fuels. PRIMES allocates more biomass to the power sector, some 50%. POLES expects only a very modest contribution of bio-fuels in 2020, indicating that application in the power sector is less expensive. By 2020 the inte-grated biomass gasification and combined cycle technology becomes leading for biomass.

POLES is the only model that expects a large growth in biomass heating applications in industry (Conventional burning for heat) in the years 2000-2020, whereas the more modest shares in MARKAL and PRIMES are comparable, albeit increasing with 70% in MARKAL due to the carbon cap in industry, and decreasing with 40% according to PRIMES. The category ‘other’

encompasses the residential, services, agricultural and district heating sectors, but is not com-pletely comparable among models.

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PRIMES (EU-25) POLES (EU-30) MARKAL (Western Europe) Power generation Transport Industry Other Figure 4.3 Biomass deployment by sector in 2020; high target case

Note: For reasons of comparability, the POLES data excludes Turkey in this graph.

According to MARKAL, not all of the biomass used is produced in Western Europe. In 2020, 30% of the biomass consumption is imported, consisting mainly of residual wood (60%) and forestry thinning (40%). The biomass from within Europe consists of fiber chips (50%), straw (27%), landfill gas (16%), and some cellulosic products. Both domestic production and imports continue to grow beyond 2020. On the other hand, PRIMES and POLES assume that all bio-mass is domestically produced in each country. Given the fact that PRIMES shows a larger amount of biomass usage than MARKAL, these potentials are to a large extent deployed. Here it should be noted that domestic biomass is constrained in MARKAL due to competition over land use with agricultural products. If the EU would change its agricultural subsidising policy, domestic biomass production could increase considerably.

4.2.2 The share of fossil fuels in Europe is reduced from 75% to 65%

Figure 4.4 illustrates a clear impact of the 20% target on fuel mix for the primary consumption in Europe. All three models show that a larger penetration of renewables is at the expense of fossil fuels and nuclear power. However, the distribution of these effects shows a mixed picture, due to the differing policies applied to different sectors (see Table 4.1), the different regional coverage, and the already different fuel mixes in the baseline. The PRIMES model shows the largest reduction in nuclear power (11%), while oil and gas reduce both some 8%. PRIMES had already a relatively large share of RES in the baseline and therefore shows a smaller difference than the other two models. For MARKAL, due to the strong policies in the transport sector, the contribution of oil is strongly reduced by 26%, while the use of coal for electricity production decreases significantly by 24%. Finally, POLES also shows a large reduction of solids for power production (28%) and natural gas (14%).

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Figure 4.4 Primary energy mix in baseline compared to the High renewables target

Note: Primary consumption of renewables in this graph has been calculated according to the substitution principle.

However, if the Eurostat convention was used, the only difference would be a lower amount of RES.