Appendix to Chapter 11

Figure 11.A1: Methodology for the assessment of the mitigation potential related to electricity consumption; electricity savings and the implementation of low-carbon supply technologies

Technical description of the assessment of aggregate mitigation potentials from the sectoral literature

1. Methodology for adding up sectoral emission reduction potential

Adding up all the emission reduction potentials at the sectoral level reported in the sectoral chapters will result in double counting for part of the potential. To avoid this, two interactions have been taken into account in the assessment of the total mitigation potential in Chapter 11 (Table 11.3):

• The interaction between the reduction potential from electricity savings in buildings and industry on the one hand and measures in the electricity supply sector on the other (substitution by low-carbon electricity supply). This topic is discussed in this appendix.
• The interaction between the estimated supply and demand of biomass for energy purposes. This topic is covered in Section 1.3.1.4.

1.1. The electricity sector

The two main reduction options for electricity use are:

1) electricity savings in the industry and buildings sector, and

2) substitution in the power sector tending towards low-carbon electricity technologies.

The overall CO₂ emission reduction from the electricity savings in industry and buildings therefore depends on the fuel mix of the power supply and the penetration of low-carbon technologies in that supply.

The methodology chosen to prevent double counting is presented in Figure 11.A1 and described below, step by step.

Step 1: Baseline electricity consumption and emissions

In step 1, 2000–2030 projections were compiled for final electricity consumption, primary energy consumption for electricity production and GHG emissions from the fuels used. The final electricity consumption at the regional basis was taken from the World Energy Outlook 2004 (IEA, 2004). To arrive at the primary fuel required for final electricity consumption, an intermediate step is needed. As the World Energy Outlook 2004 provides statistics on primary energy supply for electricity and heat combined, the implicit supplies required for heat were estimated and removed as follows. The primary energy consumption for electricity supply only was calculated on the basis of the efficiencies of combined heat and power, and a correction for the share of heat in total final energy consumption. The share of heat was calculated from the IEA Balances for the year 2002 and assumed to be constant over time. See also Section 4.4.3 for the efficiencies and the baseline in the year 2030.

Finally, using the data on primary fuel required, the GHG emissions were estimated on the basis of the primary fuel supply for power production using the emission factors for primary fuels (IEA, 2005) and the 1996 GWP numbers taken from UNFCCC.

Step 2: The electricity savings

The second step consists of reducing the baseline electricity by the savings from buildings and industry. Electricity savings are found at relatively low costs and they are therefore expected to be implemented first. The maximum electricity savings for the industry and buildings sector were taken from the sectoral chapters. These have been applied using the share of the electricity consumption of the sectors in total electricity consumption (WEO2004). In this step, it was assumed that the savings were equally distributed across the different power sources, including low-carbon sources.

The savings indicated in Table 11.A1 have been used.

In fact, it can be expected that electricity savings will result in higher levels of fossil-fuel electricity generation compared to generation at low marginal cost such as renewables and nuclear. This is because, in the usual operation of electricity systems, low-cost fuels are dispatched before high-cost fuels. But system operation depends on local conditions and it is not appropriate to consider these here. This consideration implies that the emission reductions for electricity savings reported here are underestimated. Higher carbon prices, and higher marginal costs of fossil fuels, exacerbate this effect.

Finally, the amount of primary fuels needed for power generation has been updated, resulting in lower emissions. The difference between the emissions from the updated baseline and the original baseline gives the avoided emissions; see Table 11.A2 (see also Section 11.3.3).

Step 3: The substitution of generating capacity with low-carbon capacity

The reduction in GHG emissions achieved through substitution towards low-carbon intensive technologies was assessed using the updated electricity demand from step 2.

First, an estimate of the new required generation capacity from 2010 to 2030 was made. It was assumed that low-carbon technologies are only implemented when new capacity is to be installed. The required new capacity to 2030 was calculated from 1) additional capacity between 2010 and 2030 to meet new demand and 2) capacity replaced in the period 2010–2030 after an assumed average plant lifetime of 50 years (see Chapter 4.4.3).

Secondly, the fuel switch from coal to natural gas was considered to be the option involving least cost, so it was assumed that it would be implemented first. Since new gas infrastructure is required, it was assumed in accordance with Chapter 4 that 20% at most of the new required coal plants (in the baseline) could be substituted by gas technologies.

Thirdly, after the fuel switch, emissions avoided from the other low-carbon substitution options were assessed. The following technologies were taken into account: renewables (such as wind, geothermal and solar), bioenergy, hydro, nuclear and CCS. It was assumed that the new fossil-fuel generation required according to the baseline was substituted by low-carbon generation (for each of the cost classes), proportional to the relative maximum technical potential of the technologies. The technologies were assumed to penetrate so as to achieve maximum shares in generation, as described in Table 4.20.

Finally, the new fossil fuel requirement was estimated and the GHG emissions assessed.

The avoided emissions in each of the steps were calculated using the same emission factors as in the baseline indicated above, and they are presented in Table 11.A2.

1.2. Cost distribution

The sector chapters assessed the distribution of the total emission potentials across cost categories. The same cost distribution has been used to present the results in Table 11.3.

2. Sensitivity analysis for potentials in the electricity sector

A sensitivity analysis was carried out to analyse the robustness of the mitigation potential for the electricity sector. The following assumptions were varied:

1) The order of the mitigation option. Instead of assuming that electricity savings occurs before substitution with low-carbon technologies, the potential was also assessed in the reverse order: first substitution, then savings.

2) The value of the ‘maximum’ shares of low-carbon technologies in the total electricity mix. In Section 4.3 and 4.4 the results are presented for the ‘maximum’ shares based on various literature sources. Shares differ depending on the different technologies. To assess the sensitivity of these shares, they were varied in the lowest range by 30%, which is consistent with the lowest range in Chapter 4.

The results of each of the sensitivity analyses are presented in Table 11.A3.

Based on the sensitivity analysis it can be concluded that, when assuming the reverse order by allocating emission reductions first to the power sector, followed by the electricity savings, the total emission reduction, i.e. the aggregate of the electricity savings and substitution, would be 1.2 GtCO₂-eq lower than the default. This is a consequence of allocating the savings over the total electricity generation mix. The potential is equally sensitive to the ‘maximum’ shares that are assumed. Reducing these maximum shares by 30% reduces the mitigation potential of the power sector by 50% compared to the default.