1. Energy & Carbon Targets
Cost Effective Delivery
in a
Changing Market
Gerry Duggan
2. Background
• In 2007 we had
- Full employment
- General Government Debt (as %of GDP) of 25%
- Ready access to low cost finance
• In 2010 conditions are very different
- Unemployment is projected to reach 13.75%,
- General Government Debt (as % of GDP) of 80%
- Very restricted access to funding
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• The same policies cannot be correct for both
situations
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3. Background
• Under the terms agreed by EU member states in
response to the Kyoto Protocol
- Ireland
was required to limit total GHG emissions
to 113% of 1990 levels in the period 2008-2012
2008 2012
- Ireland was obliged to increase the contribution of
electricity produced from renewable sources to
13.3% by 2010
- All
EU member states were required to increase the
overall share of biofuels in the transport sector to
5.75% by 2010
5. Background
• Despite earlier concerns that Ireland would
considerably overshoot its Kyoto target it now
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appears that
- The GHG reduction target will be met, because of
the
th severity of the economic downturn
it f th i d t
- The renewable electricity target (RES-E) will be
significantly exceeded
- The biofuels target (RES-T) wil be missed by a very
large margin, but it had been discredited due to its
impact on food prices
6. Background
• Under the terms of EU’s 20/20/20 commitments in
relation to Copenhagen
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• The EU differentiated between large emitters, such as
power stations, larger industries and large commercial
sites and smaller users
• The emissions from large facilities are to be reduced
by 20% from 1990 levels under an EU wide Emissions
Trading Scheme (ETS)
• Emissions from smaller sources i.e. from the non-ETS
sector are to be controlled at national level to achieve
EU agreed target levels
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7. Background
• Under the terms of EU’s 20/20/20 Strategy
- Ireland
is required to reduce GHG emissions in the
non-ETS sector by 20%, from 2005 levels, by 2020.
- Irelandis obliged to increase the contribution of
renewable energy to Final Energy Demand from
4.2%
4 2% in 2008 to 16% in 2020 and
- Irelandis required to increase the overall share of
energy
energ from rene able so rces in Transport to
renewable sources
10% by 2020
• Meeting these targets requires a different strategy to
that adopted for meeting the Kyoto targets
8. Challenge to Comply with the EU’s
20/20/20 Strategy
St t
GHG Reduction Renewables
Target in RES-T
RES T
RES-E Target
Non-ETS Sector RES-H
9. Baseline Projections
2005 2020 %Change
GNP Index 100 124.3 24.3%
Final Energy Consumption Mtoe 12.5 14.6 17.1%
Non ETS Energy Emissions Mt 24.2
24 2 26.8
26 8 11.1%
11 1%
Non ETS Energy Emissions Target
80% of 2005 values in 2020 Mt 19.3
q
Emission Reduction Required Mt 7.5 27.9%
10. Non-ETS Baseline Energy Emission
Projections 2020
P j ti
Industrial
Agricultural
Energy
Commercial
Residential
Surface
Transport
p
11. Road Transport Fuel Consumption in RoI
4500
4000
3500
3000
2500 Road Freight
ktoe
2000 Private Car
1500
1000
500
0
1990 2007
13. Achieving the additional non-ETS emissions
non ETS
• A strategy to achieve reductions required in the private
gy q p
motoring sector is in place
• Targets have been developed in the Residential &
Commercial sectors but the financial and engineering
C i l t b t th fi i l d i i
resources to deliver these targets have not been
committed to date
• No serious consideration has been given to the critical
need to reduce emissions from the road freight sector
in Ireland A much higher level of investment in supply
Ireland.
chain management is an essential starting point to
developing a strategy for the sector
14. Cost of Failure to Meet Non-ETS
Emissions T
E i i Targett
Mt CO2
Conservation Effort Required by 2020 5.4
Cost of Emission Permits to Reach Target €m p.a.
@ Current CO2 Permit Prices of €13.6/t 73
@ Eirgrid’s Projected Cost of €41.6 in 225
2020
But the penalty for failure to meet target is in fact
much higher
15. Renewable Energy Target in 2020
Baseline If Non-ETS
Targets Met
Mtoe Mtoe
Final Energy Consumption 14.6 11.7
Renewable Target 16% of FEC 2.34 1.87
Less
Existing Biofuels 0.51 0.51
Additional RES-H 0.22 0.22
Additional RES T
RES-T 0.45
0 45 0.45
0 45
1.18 1.18
RES-E Requirement 1.16 0.69
TWh 13.50 8.03
16. Renewable Energy Target in 2020
Baseline If Non-ETS
Targets Met
TWh TWh
RES-E Requirement 13.50 8.03
Less 2010 RES-E (Est)
Hydro 0.72 0.72
Wind
Wi d 3.38
3 38 3.38
3 38
LFG 0.11 0.11
4.21 4.21
Additional RES-E Requirement 9.29 3.82
Additional Generation Required MW MW
if All Wind @ 31.2% LF 3400 1400
17. Are There Alternatives to this Amount of
Wind
Wi d
• One option is to use Short Rotation Forestry (
p y (SRF)
)
Biomass in Existing Peat Stations
• Stations were designed for 50% biomass firing, this
could possibly be raised to 100%
ld ibl b i dt
• This would require an investment in the agricultural
sector of
- €175m for 50% biomass firing
- €350m for 100%biomass firing
• This would increase RES-E output by 1.2 or 2.4 TWh
@ 80% Load Factor
18. Comparison with Wind Powered Generation
• Wind powered generation will cost €2.25m/MW,
when grid reinforcement and interconnection costs
h id i f t di t ti t
are included
• Wind powered generation makes almost no
contribution to meeting peak demand
• Onshore wind operates at about 31 2% load factor
31.2%
• To produce 1.2 TWh p.a. from wind requires
- the installation of 440MW of generation capacity
- an investment of €1.0bn
• Th wind power requires almost six times the
Thus i d i l t i ti th
investment in SRF to produce the same amount of
renewable energy
19. Comparison with Wind Powered Generation
• Almost all the hardware required for wind turbines,
network connection, grid reinforcement &
interconnectors is imported.
• Th the expenditure of €1 0b on wind power
Thus th dit f €1.0bn i d
development would create
- very little employment in Ireland, in relation to the
amount invested
- virtually no employment in the midlands, which
has particular unemployment problems
20. Comparison with Wind Powered Generation
• Replacing 50% of peat with biomass would reduce
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CO2 emissions by 1.3 mt p.a.
• Installing 440MW of wind powered generation would
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reduce CO2 emissions by approx 0.5 mt p.a. in 2020
• Thus replacing peat by biomass would be 2.5 times
as beneficial as wind in reducing CO2 emissions
• SRF biomass, used in existing peat stations, is 15
times more effective, in capital cost terms, than wind
in reducing CO2 emissions in the Electricity Sector
21. Benefits of using SRF Biomass in Existing
Peat St ti
P t Stations
Baseline If Non-ETS
Targets Met
TWh TWh
Additional RES E Requirement
RES-E 9.29
9 29 3.82
3 82
RES-E output 346MW @80% LF
with
50% SRF Firing 1.21 1.21
100% SRF Firing 2.42 2.42
Wind Requirement
with MW MW
0% SRF Firing 3400 7.65 1400 3.15
50% SRF Firing 3060 6.89 1060 2.39
100% SRF Firing 2720 6.12 720 1.62
22. Electricity Sector Capital Investment
Requirement
R i t
Investment Requirement Baseline If Non-ETS
Targets Met
Wind Farms €1.5m/MW
Grid Reinforcement &
Interconnectors €0.75m/MW
Total Wind €2.25m/MW
€2 25m/MW
Wind Related Investment
with MW €bn MW €bn
0% SRF Firing 3400 7.65 1400 3.15
50% SRF Firing 3060 6.89 1060 2.39
100% SRF Firing 2720 6.12 720 1.62
23. Can the Costs of Wind Powered Generation
Be R d
B Reduced d
• Yes, by developing wind farms in locations with
significant spare transmission capacity
24.
25.
26.
27. Conclusions
• The key requirement of Irish Energy Policy has to be
• to focus on reducing
- Non-ETS sector emissions
- Final Energy Consumption
by 20 % by 2020
• Achieving these targets would
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- Reduce the cost of energy imports by €1335m p.a.
at current prices
- Eliminate the need to purchase CO2 emission
permits at a estimated cost of €225m p.a.
-R d
Reduce electricity sector capital investment
l t i it t it l i t t
requirements by almost €4.5bn
28. Conclusions
• Wind and Wave Power and Smart Metering will make
No
N contribution to meeting these targets
t ib ti t ti th t t
• We thus need to immediately focus investment and
engineering resources on
- Energy Conservation
- Supply Chain Management, to reduce road freight
fuel use
- Biomass production and biofuel development
29. Conclusions
• Capital investment in the electricity sector can be
reduced by a further €2 2b b using biomass
d db f th €2.2bn by i bi
instead of peat in the existing peat stations
• This would require an investment of €350m in the
agricultural sector but it would produce a very
significant employment boost in the midlands
• Capital investment in the electricity sector could be
even further reduced by prioritising the development
of wind farms located in areas where the required
transmission reinforcement can be cost effectively
p
provided
