Energy perspectives for 2035 Management Summary

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Energy perspectives for 2035 Management Summary

15 January 2007

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Swiss Federal Office of Energy (SFOE), 3003 Bern Phone 031 322 56 11, fax 031 323 25 00 contact@bfe.admin.ch

www.bfe.admin.ch,

www.energie-perspektiven.ch

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Switzerland faces a number of significant challenges in the area of energy policy. Aspects such as securing the supply of energy, the limited reserves of fossil fuels, global climate change, the approaching end of the service life of Switzerland’s existing nuclear power plants and the expiry of long-term electricity import agreements all mean that, sooner or later, changes in policy will have to be adopted. A number of pressing issues need to be addressed: How can we overcome the growing shortfall in domestic electricity supply?

How we can achieve the declared climate protection objectives, which targets will apply after 2012, and which objectives should SwissEnergy set itself over the long term?

The solutions adopted in the future will be judged on the basis of the principles of sustainability, supply security, competitiveness, and protection of the climate and the environment. The associated challenges primarily concern the federal and cantonal authorities, which in accordance with the Federal Constitution are obliged to take measures to ensure a sufficient, broad- based, secure, economical and environmentally com- patible energy supply, and to promote the economical and efficient use of energy. Four years ago, in its report concerning its strategy of sustainable development the Federal Council presented its vision of a ”2000-watt society” as a long-term objective.

Certain political decisions will have to be taken in the near future, since the federal government has to define its post-2012 policies relating to supply security and climate protection, including the required conditions for promoting energy efficiency and the increased utilisation of renewable forms of energy. Other decisions need to be prepared that will only have to be finalised at a later date. These include considering the

Pressing issues – need for action in the area of energy policy

deliberations on the part of the electricity sector concerning the construction of new nuclear power plants, and finding a suitable site for the safe storage of ra- dioactive waste. Such decisions require a great deal of time, especially in a direct democracy, and they also have long-term impacts on society, the environment and the economy.

In view of the situation outlined above, the Swiss Federal Office of Energy (SFOE) established a “2035 energy perspectives workgroup” three years ago for the purpose of examining the scope for manoeuvre for future energy policy. As the basis for discussion, a variety of energy scenarios were drawn up by external specialists who worked together with the SFOE and other federal authorities (State Secretariat for Economic Affairs, Federal Office for Statistics, Federal Office for Spatial Development, Federal Office for the Environment, Federal Office for Civil Aviation). The latest findings, facts and figures were collected and expanded, and the resulting data were used by the team of experts for the purpose of outlining the impacts of various decisions and presenting analyses of the identified scenarios. The workgroup comprising internal and external experts then assessed the impacts of these scenarios on the economy, society and the political sector. In its final report on the energy perspectives for 2035, the workgroup indicates under which conditions, with the aid of which measures and through which practical means future energy policy can be structured and influenced. It also presents an overview of the economic impacts of the various scenarios, and assesses conflicts that arise between the objectives of supply security, economic, social and environmental compatibility, and between short-term and long-term considerations.

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The basic assumptions

• Population growth: from 7.2 million in 2001 to 7.6 million in 2035 (source: Swiss Federal Office for Statistics).

• Economic growth: approx. 1% p.a. (source: State Secretariat for Economic Affairs). The impacts of a growth rate of 0.5% p.a. were also studied.

• Employment rate: more or less stable (source: State Secretariat for Economic Affairs).

• Traffic growth: approx. 1% p.a. for private motorised traffic, and 1.7% p.a. for goods traffic (source: Swiss Federal Office for Spatial Planning).

• Housing development: approx. 1% increase p.a. (source: Wüest & Partner).

• Climate: warming, 1.2 degrees by 2050, plus decline in precipitation.

• International CO2 targets: since no targets have been defined yet for the period after 2012 (= post-Kyoto), assumptions were made according to scenario.

• Oil prices: estimates were made for a price increase from 30 to 48 dollars per barrel by 2050

(source: international and national studies), and for a scenario with a sustained oil price of 50 dollars per barrel (real prices – basis, 2003).

The workgroup initially made a variety of basic assumptions concerning the development of energy prices, economic and population growth, traffic growth and climate development up to 2035. These assumptions were based on national and international studies and were adopted by the members of the workgroup after a series of in-depth discussions.

In the period during which the experts carried out their studies, many of the background conditions under- went considerable change, and these developments were reflected to the greatest possible extent in the workgroup’s report. Furthermore, the experts also sup- ported ongoing political debate on topics such as the introduction of the “climate cent”, the promotion of green power and the introduction of a CO2 fee, by carrying out detailed analyses.

In view of the sharp price increases on the oil markets, the workgroup estimated the consequences of high fuel prices. Based on the existing resources, the experts agreed that there are no grounds for sustained oil prices over 100 US dollars per barrel in the period up to 2035, but peak prices are conceivable as the result of speculation or for political reasons. High prices for fossil fuels result in major cash outflow to expor- ting countries, and this would have negative consequences in terms of welfare, not only in Switzerland, but also throughout the EU. On the other hand, market-related price increases can have a certain impact, but without support measures, any such impact would not be strong enough to permit the achievement of the medium-term and long-term climate objectives.

Assumptions, not predictions

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In scenarios I and II the workgroup examined the tech- nical, energy-related, economic, social and ecological consequences of various policy options.

In scenarios III and IV they examined what is required in order to reach certain objectives, for example the reduction of CO2 emissions by 34% or 48% by 2035 versus the level recorded in 2000 for CO2-free electricity production. Here both consumption and CO2 emis- sion targets were defined. And on top of this it would be necessary to enhance the level of overall awareness for the necessary change of course, industrialised countries would need to show a comparable level of commitment, for example by sharply increasing energy prices, and the development of technologies in the areas of energy efficiency and the use of renewable forms of energy would have to be accelerated on a world-wide scale.

Although it only meets approximately a quarter of the overall energy requirement, electricity has a spe- cial status. Unlike fossil fuels, electricity cannot be re- placed by another form of energy – and electricity is also playing an increasingly significant role in the area of technological development. The workgroup put forward several alternatives for each scenario regarding ways in which the widening discrepancy between electricity production and demand can be overcome.

Here the main focus is on nuclear power plants, gas and steam power plants, renewable energy, combined heat and power plants, and electricity imports from the European grid.

Four scenarios – four working

hypotheses for policy makers

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Basis: In this scenario, the current energy policy that defines thresholds for energy consumption in cantonal building regulations, the Clean-Air Ordinance and the distance-related HGV fee, remains applicable. Building standards are adapted in line with anticipated technological progress. The SwissEnergy programme, which has an annual budget of 45 million Swiss francs, is continued. In addition, global funding from the cantons amounting to approximately 40 million Swiss francs p.a. is used for the promotion of energy efficiency and the use of renewable forms of energy. These funds are managed by the cantons.

End-energy demand: This increases by 2% by 2035 versus the level recorded in 2000. Demand for fossil fuels falls by 11%, while electricity demand increases by 29%. The proportion of gas is also higher. The market shares of heating oil and related products decline, primarily as the result of falling consumption in buildings. On the other hand, motor fuel consumption continues to rise, though there is an increasing trend towards diesel.

Electricity: Thanks to increasingly efficient use, elec- tricity consumption only increases by 0.8% by 2035 instead of by around 1.8% p.a. as has been the case over the past ten years. From 2018 there is a supply shortfall in Switzerland, which reaches the level of around 22.3 terawatt hours (TWh) by 2035. This is not only due to increased demand, but is also attributable to the decommissioning of the country’s three older nuclear power plants and the expiry of long-term electricity supply agreements with French nuclear power plants.

On the production side the gas power plant in Chavalon commences operation. The remaining supply shortfall

can be bridged through imports and the commissioning of additional gas and steam power plants and/or nuclear power plants. Gas and steam power plants are required to utilise most of their waste heat and compen- sate their CO2 emissions. The use of renewable forms of energy is promoted within the scope of previous pro- grammes and measures. Four options are proposed for overcoming the shortfall in electricity supply.

Options for overcoming the electricity supply shortfall:

• 2 new-generation nuclear power plants (capacity, 1,600 MW each) from 2031. From 2020, high level of electricity imports until the new nuclear power plants commence production.

• 5 gas and steam power plants (1 x 357 MW and 4 x 550 MW) from 2020, and 1 nuclear power plant from 2031.

• 7 gas and steam power plants (1 x 357 MW and 6 x 550 MW) from 2020.

• Shortfall entirely overcome through imports.

CO2: The level of CO2 emissions from combustibles and motor fuels (excluding electricity production) falls by 12% between 2000 and 2035. The trend varies from sector to sector: in the area of private motorised transport, efficiency gains are more than cancelled out by more powerful engines and higher traffic volumes.

By contrast, heating requirements for buildings are reduced considerably thanks to a higher standard of construction. In the industrial sector, (waste) heat is used more efficiently. If 7 gas and steam power plants are used for overcoming the shortfall in supply, CO2 emissions increase by approx. 4% versus the level recorded in 2000. With 5 gas and steam power plants the level of reductions of CO2 emissions attained in the other sectors is neutralised by the resulting ad-

Scenario I – “Status quo”

(reference scenario)

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ditional emissions. If the supply shortfall is covered by the use of nuclear power plants, the level of CO2 emissions falls by 2%.

Evaluation: In scenario I, the per capita end-energy consumption falls by 3% by 2035 thanks to the more efficient use of energy in buildings, appliances, and in trade and industry. The trend that has been in place since the 1980s, i.e. that energy consumption grows at a slower pace than the economy, continues, but this does not apply to electricity. Here, consumption continues to grow in the future at the same pace as the economy, and gives rise to a supply shortfall that is equivalent to 36% of the present-day domestic requirement. The per capita requirement increases sharply. Furthermore, if the price of oil increases more rapidly, or GDP increases sharply, or the climate warms up more quickly than anticipated, the increase in electricity consumption will also be greater. In this scenario it is not possible to achieve the medium-term and long-term climate objectives, and the degree to which this applies depends on the method of electricity production.

+1.7%

+29.1% (annual increase, 0.8%) 22.3 TWh

+4% to -12%

-3.7%

Scenario I “Status quo“ (2000 to 2035) End-energy consumption

Electricity consumption Electricity supply shortfall CO2emissions (total) 1)

CO2emissions (motor fuels only) Renewable energy

Energy efficiency Climate

1) Depending on how the supply shortfall is overcome (cf. list of proposed options)

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Scenario II – “Closer co-operation between state and industry”

Basis: This scenario calls for closer co-operation be- tween government and industry in order to achieve a higher level of energy efficiency. Here the main instruments are a CO2 fee on fuels and a system of rewards and penalties for motor cars. Each year, the sum of 330 million Swiss francs is used for promoting green power, while a further 200 million obtained from the “climate cent” scheme, from the SwissEnergy programme and global funding, is used for the promotion of renewable energy. 30 million Swiss francs are invested in the purchase of foreign CO2 certificates in order to meet the applicable reduction requirements abroad. And thanks to voluntary measures and the more rapid modification of standards, technological potentials are more effectively utilised than in scenario I.

End-energy demand: This falls by 4% in 2035 versus the level recorded in 2000. After initially increasing until 2010, the trend reverses and overall demand begins to gradually slow down. Demand for fossil fuels decreases by 20%, and electricity demand falls by around 23%. The proportion of renewable energy increases.

Electricity: Electricity consumption increases slightly by around 0.6% p.a. up to 2035. While demand continues to grow in the transport sector, it declines in the services sector. A supply shortfall arises in 2018, and reaches 18.6 TWh by the end of the period in question.

Electricity production can be increased by 5.7 TWh by 2035 thanks to the more active promotion of renewable forms of energy (hydropower, biomass, wind, geothermal, solar), which is equivalent to three times the figure that is achievable in scenario I. The following options are proposed for overcoming the supply shortfall:

• 2 new-generation nuclear power plants (capacity, 1,600 MW each) from 2031, plus renewable energy (5.7 TWh). From 2020, high level of electricity imports until the new nuclear power plants commence production.

• 3 gas and steam power plants (1 x 357 MW and 2 x 550 MW) from 2020, 1 nuclear power plant from 2031, plus renewable energy.

• 5 gas and steam power plants (1 x 357 MW and 4 x 550 MW) from 2020, plus renewable energy.

• Remainder covered through imports and new forms of renewable energy.

CO2: In scenario II the consumption of motor fuels and combustibles (excluding electricity production) falls by 21% by 2035. However, the Kyoto target is still not met because the reduction only sets in after 2012. The reductions in consumption will also probably not suf- fice to meet the medium-term and long-term climate objectives. The picture varies depending on the way in which the supply shortfall is covered: if 2 nuclear power plants are constructed, the CO2 balance im- proves by 21%. But if 3 gas and steam power plants and 1 nuclear power plant are constructed, the level of emissions falls by 14%, and the reduction is only around 9% if 5 gas and steam power plants are put into commission. The CO2 emissions from a gas and steam power plant with an output of 550 MW are between 0.8 and 1.1 million tonnes p.a.

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-4.2%

-9% to -21%

-14.7%

Scenario II “Closer co-operation between state and industry“ (2000 to 2035) End-energy consumption

Evaluation: Scenario II shows the extent to which a

more active energy policy can contribute towards the utilisation of technically feasible and economically vi- able potentials. From 2010, both the total and per capita energy consumption fall thanks to constant ef- forts to promote energy efficiency. Use of renewable energy increases slowly but steadily. The increase in electricity consumption is slower than in scenario I, but the supply shortfall is still equivalent to 30% of today’s domestic demand. CO2 emissions are lower thanks to improved energy efficiency and the increasing use of renewable energy in buildings and for electricity production. Depending on the supply option, CO2 levels fall by between 9% and 21%. However, it is still not possible to meet the medium-term and long-term climate objectives without the purchase of CO2 certificates abroad.

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Basis: By contrast with scenarios I and II, targets are specified in scenarios III and IV in the same way as they are defined in the EU. These targets include a reduction of per capita energy consumption and CO2 emissions by 34% by 2035. As far as heating is concerned, the proportion of renewable energy increases to 24%, and that of combustibles to 10%. From 2012, a new energy steering fee with reimbursement of the proceeds gives rise to higher energy prices for consumers: fossil fuels are 100% higher, and electricity is 30% more expensive. In addition, regulations are introduced with the aim of ensuring that only the most efficient technologies are utilised. Prerequisites here are that energy prices increase globally, that vehicles and appliances, as well as buildings and heating systems, become more energy-efficient, that there is a widespread awareness of the change of course, that industrialised countries show a significantly stronger commitment than in the past, and that technological progress can thus be accelerated throughout the world.

End-energy demand: Here, end-energy demand falls by 14%. The consumption of fossil fuels (excluding electricity production) decreases by 34%, but electricity consumption still increases by 13%. From 2012, all sectors significantly reduce their energy consumption.

The reduction in the transport sector is especially no- table, and is attributable to the direct impacts of the proposed energy steering fee. In comparison with scenario I, the use of renewable forms of energy, both for combustibles and motor fuels, increases considerably.

Electricity: Demand increases significantly up to 2015, and by 2035 it is 14% higher than the level recorded in 2000. In this scenario too, it is not possible to prevent a supply shortfall from 2018, which increases to 13.5 TWh by 2035. The workgroup puts forward several op-

tions for discussion on ways in which the shortfall in domestic electricity supply can be overcome.

• 1 new-generation nuclear power plant (capacity, 1,600 MW) from 2031. From 2020, high level of electricity imports until the new nuclear power plant commences production.

• 4 gas and steam power plants (1 x 357 MW and 3 x wood/gas and steam power plants with 550 MW output) from 2020.

• Decentralised combined heat and power plants.

• Used of renewable energy and expansion of large- scale hydropower plants.

CO2: CO2 emissions fall by around 32% by 2035, thanks to measures to enhance efficiency and the increased use of renewable energy for room heating and motor fuels. In the option involving four gas and steam power plants, if each of these is operated with 20%

wood/gas combustion, CO2 emissions can be reduced by 32% versus the 2000 level.

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Scenario III –

“New priorities”

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Evaluation: Scenario III points to the opportunities that arise through the consistent utilisation of the best available technologies. While the positive trend is to some extent offset by the increasing demand for goods and services, it is nonetheless possible to meet the demanding climate objectives. If the electricity supply gap, which in this scenario is equivalent to 22%

of today’s national consumption, is to be entirely covered through the use of renewable energy, this means that the existing hydropower capacities will have to be expanded or a significant breakthrough in the use of geothermal energy for power production purposes will be required (though a great deal of progress still needs to be made here). This also calls for the implementa- tion of an ecological tax reform in which end energy prices have to be doubled. Domestic purchasing power remains intact since the proceeds are to be reimbursed to the economy and the population, in contrast to increases in oil prices, which result in the outflow of funds to players abroad. And neighbouring countries in Europe would also have to take similar steps, oth-

-14.4%

-26% to -36%

-30%

Scenario III “New priorities“ (2000 to 2035) End-energy consumption

11 erwise the system would be undermined (e.g. in the form of “tanking tourism”) and there would be negative impacts on the competitiveness of energy-intensive companies in Switzerland.

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Basis: The following objectives can be achieved with this scenario: CO2 emissions can be reduced by 48% by 2035, and per capita end-energy consumption can be cut by 31%. Furthermore, the proportion of renewable energy for meeting heating demand can be increased to 28%, and can be increased to 11% in the area of motor fuels. The energy steering fee is higher than in scenario III. Dependence on oil is generally reduced, and new energy-efficient technologies are brought onto the market. The distinction between home and work becomes less pronounced as the trend towards mobile, paperless workstations strengthens. Housing development becomes more dense and compact, and public transport plays a much more important role.

End-energy demand: Here, end-energy demand falls by 27% by 2035 versus the level recorded in 2000.

It continues to increase until around 2010, but then begins to fall continuously. Fossil fuels are substituted by renewable forms of energy to an increasing extent. The consumption of fossil fuels thus falls by 48%, while the use of wood and other solid forms of biomass, as well as solar heat, ambient heat and bio- fuels, is doubled.

Electricity: Demand falls by 2% by 2035. Thanks to a sharp increase in efficient electricity use, the supply shortfall is only 5 TWh, which can only be covered through the additional promotion of renewable energy. However, this calls for a breakthrough in the production of electricity from geothermal energy by 2025. Thanks to the use of highly-efficient appliances, per capita electricity consumption is reduced to the level recorded in 1990, without a noticeable loss of comfort.

The workgroup proposes four options for overcoming the electricity supply shortfall.

Options for overcoming the electricity supply shortfall

• 1 new-generation nuclear power plant (1,600 MW) from 2031. From 2020, electricity imports until the new power plant commences production.

• 3 gas and steam power plants (1 x 357 MW and 2 x 550 MW; possibly with extraction of CO2) from 2020.

• Decentralised combined heat and power plants.

• Use of renewable energy, moderate expansion of hydropower.

CO² emissions: The consumption of fossil fuels (ex- cluding electricity production) falls by 6%. Due to the low level of consumption of combustibles, dependence on imports continues to lessen. Heating requirement in buildings can be cut to 30% of the present-day level, and the same applies in the industrial sector. There is a significant reduction of energy consumption in the mobility sector thanks to a sharp improvement in the energy efficiency of motor vehicles and the increased use of public transport. The use of renewable motor fuels gains ground constantly. CO2 emissions fall by between 41% and 49%, depending on the chosen supply option.

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Scenario IV –

“Towards a 2000-watt society”

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Evaluation: Scenario IV shows that a change of course in the area of energy efficiency is achievable by prioritising the conservation of resources and increasingly utilising innovative technologies that are already foreseeable today. If technological development is accelerated, this will give rise to changes in behaviour in the areas of investment, consumption, employment and mobility. In addition, business activities shift from energy- and material-intensive production in the direc- tion of service- and know-how-oriented production. In the area of efficiency, a leap forward in terms of qual- ity takes place. Per capita end consumption falls by a third versus the 2000 level. The medium-term and long-term climate objectives are met, and CO2 emissions are cut by at least 40%. The electricity supply shortfall is equivalent to less than 10% of present-day national consumption, and is thus considerably lower than in the other scenarios. Production capacities only need to be expanded at a later date.

-27.4%

-2.1% (annual decrease, 0.06%) 5 TWh

-41% to -49%

-42%

Scenario IV “Towards a 2000-watt society“ (2000 to 2035) End-energy consumption

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The five-part report (synthesis, scenarios, economic impacts, digressions, electricity supply) is a comprehensive document for discussion on energy and climate policies. It also cites a variety of other technically feasible and economically attractive options (that are not included in this summary) for overcoming the electricity supply shortfall, along with deliberations concerning supply security and economic impacts. It is based on experts’ reports on the various consumption segments, energy technologies and overall economic impacts. The scenarios differ not only in terms of economic and demographic developments, but also through the intensity with which future energy policy is shaped by the political and economic sectors.

The workgroup examined and quantified the impacts of the various instruments and measures for influenc- ing energy consumption, studied concepts that extend beyond the scope of present-day legislation, and com- pared a variety of potential solutions for overcoming the domestic electricity supply shortfall that varies in extent by 2035, according to scenario.

In all its scenarios, the workgroup placed a great deal of value on economic aspects, and it comes to the conclusion that climate policy measures in scenarios III and IV by all means open up attractive opportunities for investors. By investing in energy efficiency and renewable forms of energy, over the long term the savings

Illustration: Energy and electricity demand according to scenario in petajoules (PJ), and general trend

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General assessment of the report – identification of risks and

opportunities

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in operating costs are greater than the arising capital costs for private consumers as well as players in the services and industry sectors. Depending on the scenario, the higher energy costs result in different, albeit relatively low (negative) impacts on unemployment, consumption and exports. And the structural shift towards less carbon-intensive sectors is also modest. In all scenarios, the influence on GDP is less than 1%, which shows that a sustainable energy policy is in no way in contradiction to economic development. How- ever, scenarios III and IV also call for an internationally co-ordinated energy policy.

Scenarios I and II are also conceivable options. Al- though the energy supply is not more expensive, it is more susceptible to supply crises and is also a greater burden on the environment.

With respect to supply security it should be recalled to mind that, in the case of electricity, the capacity has to be available immediately. By contrast, shortages in the supply of gas, oil and nuclear fuels are only felt after several hours/days, months and years respectively.

Incidents involving the European gas and electricity

supply networks have demonstrated that dependence on imports or the separation between production and consumption (electricity) over long distances can result in short-term supply problems and price hikes.

In the transport sector it is very difficult to influence the constantly increasing energy consumption. How- ever, the level of energy consumption in buildings is constantly falling, and with the exception of the renovation of existing buildings and heating systems, it is comparatively easy to utilise the existing efficiency potential. Since oil is being substituted by heat pumps to an increasing extent, and in view of the constantly growing range of appliances and their uses, electricity consumption will continue to increase unless strong incentives are introduced.

The trend towards decreasing demand for oil that set in a number of years ago continues, but in view of the medium-term and long-term climate objectives, its pace is too slow. It will not be possible for Switzerland to achieve the climate objectives to which it is commit- ted unless additional measures are taken. In addition, there is the problem of supply shortages that may arise

Scenario House-

holds

Services 1) Industry Transport 2) Total  2035/2000

in %

2000 12.1 4.9 5.8 17.1 39.9

I 2035 9.1 3.9 5.3 16.5 34.7 -13

II 2035 8.5 3.3 5.0 14.6 31.4 -21

III 2035 6.5 2.8 4.5 12.0 25.8 -35

IV 2035 5.1 2.1 3.7 9.9 20.8 -48

1) including small businesses, agriculture 2) excluding international air transport Source: Prognos AG Table: CO2 emissions from end-energy demand by scenario and sector in 2035, in million tonnes (total change in %)

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as the result of strategic conflicts. The table below de- picts the various sources of CO2 emissions. Depending on the scenario, the trend can be influenced to a considerable extent through energy policy.

The four scenarios show that the lessening of dependence on oil increases the importance of electricity to varying degrees. Thus an electricity supply shortfall arises in each scenario due to the ageing of the existing power plants and the expiry of supply agreements.

Regardless of which policy measures are chosen on the demand side, policy-makers still cannot avoid hav- ing to make fundamental decisions regarding future electricity supply. These decisions concern the degree of utilisation of renewable forms of energy, as well as nuclear power plants, fossil fuel power plants and imports. The most attractive options are those with a narrower supply gap that only arises at a later date.

Combined options that take account of the benefits and drawbacks, as well as the development of new technologies, are of particular interest.

The workgroup formulated various supply options for each scenario, the most important of which are depict- ed in the illustration below. Those options in which the electricity supply shortfall is solely overcome through imports – whether of conventional or green power – have not been included here.

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Illustration: Electricity supply options up to 2035 Source Prognos

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The workgroup examined the impacts of numerous combinations of measures and instruments in each scenario, but it was not asked to study the aspects of political desirability and feasibility. In view of this, the Swiss Federal Office of Energy has drawn the following energy policy conclusions from the report:

• The more efficient use of energy at all levels (production, distribution, consumption) is of the highest priority. Energy that is not consumed is the cheapest and the least harmful to the environment! Decisions have to be taken primarily when it comes to investments for new objects and for improving existing ones. In the housing sector, for example, the continued tightening of technology standards makes particularly good sense. If the renovation of buildings is not carried out in accordance with the highest possible standards, the opportunity to sustainably increase energy efficiency and save costs will be lost for decades. The priorities here are heat insulation, utilisation of ambient heat with the aid of heat pumps, and the use of solar energy to produce hot water, while in the area of appliances they concern a clear system of labelling, the formulation of market regulations, the conclusion of international agreements with manufacturers and the provision of incentives for developing and using innovative technologies.

In the transport sector the decisive factors are ac- celerating the changeover to more efficient motor vehicles, the more effective promotion of public transport and a housing policy that is carefully co- ordinated with an energy-efficient mobility infra- structure.

• The more widespread use of renewable forms of energy should be accelerated with the aid of in- centives and promotional measures. In Switzerland there is still a great deal of potential for the use

of renewable energy – including small-scale and large-scale hydropower plants. Here the biggest potentials concern biomass and wood (for heating, electricity production and as motor fuels), the production of electricity from waste incineration plants, and the utilisation of ambient and solar heat for the production of hot water in buildings.

In the medium term, geothermal energy and pho- tovoltaics also offer significant potentials. By taking appropriate measures it would be possible for renewable energy to make an increasingly significant contribution towards supply security over the long term. The main promotion instruments here are to offer efficiency-based remuneration for the feeding of green power into the grid, plus incentives and tax relief for heat production and motor fuels from renewable energy sources.

• Electricity supply security: For the period after 2012, Switzerland has to define a transitional strategy for securing the country’s electricity supply. Here the focus is on internationally co-ordinated agreements governing the operation of domestic gas power plants. The goal is to cover the impending supply shortfall in a manner that pro- tects the environment and thus is also in line with the defined climate policy. On the other hand, it is essential to secure the necessary investment ac- tivity until the use of renewable energy has gained a firm foothold or other suitable solutions have been found (e.g. new generations of power plants to replace the existing nuclear power plants) that are both safe and reconcilable with the defined climate policy. Investments in secure and sufficient network capacities are also of the greatest importance, and to secure these investments it is necessary to develop a licensing procedure that is consistent and clearly defined in terms of duration and ongoing development. However, the length of

Options for taking action

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time that is required for the processes associated with the system of direct democracy in Switzerland needs to be realistically estimated. Furthermore, in the interests of supply security (electricity imports, electricity exchange), Switzerland needs to place more value on the international side of its energy policy. This primarily concerns the European Un- ion, with which corresponding agreements have to be concluded, but co-operation also needs to be intensified with certain other countries in the form of bilateral agreements.

• Background conditions for the economy: The ongoing development of energy policy in the di- rection of increased energy efficiency and the promotion of renewable energy opens up opportunities for trade and industry to develop innovative products, as well as export them. However, it is also important to ensure that, in the short term, the economy is not burdened by suddenly rising costs, as a result of which companies may be ren- dered less competitive.

• Energy research in Switzerland has to be sup- ported and more effectively co-ordinated at the international level, and technology transfer also needs to be improved. Innovative Swiss energy technologies need to be more actively presented and promoted on international markets.

It is now up to the policy-makers to set the course and take the necessary measures. Adhering to the current energy policy would endanger the country’s supply security and make Switzerland even more dependent on energy imports. Furthermore, the current policy does not offer enough incentives for efficient energy use, the use of renewable forms of energy and the protection of the climate. The workgroup has paved the

way and provided comprehensive material for in-depth discussion on energy policy. In its report it has carefully examined opportunities in all areas of relevance to energy policy. The country’s political players have a means at their disposal to form a clear picture for themselves of the consequences that are associated with the various decisions. Their task now is to debate the central issues and define the framework of Swit- zerland’s future energy policy as soon as possible. The goal here must be to define a strategy for the coming decades that takes account of the major challenges in the areas of energy supply and climate protection, and is also acceptable to both the general public and the economy.

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Swiss Federal Office of Energy SFOE

Mühlestrasse 4, CH-3063 Ittigen, postal address: CH-3003 Bern Phone +41 31 322 56 11, fax +41 31 323 25 00

contact@bfe.admin.ch, www.bfe.admin.ch