11.3.1.3 Synthesizing the potentials from Chapters 4 to 10 involving electricity
When aggregating the sectoral mitigation potentials, the links between sectors need to be considered (Figure 11.2). For example, the options in electricity supply interact with those for electricity demand in the buildings and industry sectors. On the supply side, fossil-fuel electricity can be substituted by low-CO2 or CO2-free technologies such as renewable sources, nuclear energy, bioenergy or fossil fuel in combination with carbon capture and storage. On the demand side, the buildings and the industrial sectors have options for electricity savings. The emission reductions from these two sets of options cannot be aggregated since emission reductions in demand reduce the potential for those in supply and vice-versa.
To overcome this problem, the following approach was adopted: The World Energy Outlook (IEA, 2004) for the year 2030 was used as the baseline. The potentials from electricity savings in the buildings and the industry sectors were estimated first. Electricity savings then reduce demand for electricity. This sequence was followed because electricity savings can be achieved at relatively low cost and their implementation can therefore be expected first. Electricity savings were converted to emission reductions using the average carbon intensity of the electricity supply in the baseline for the year 2030. In reality, it can be expected that electricity savings would result in a relatively larger reduction in fossil-fuel electricity generation than electricity generation involving low marginal costs such as renewables and nuclear. This is because, in the operating system, low-cost generation is normally called on before high-cost generation. However, this response depends on local conditions and it is not appropriate to consider it here. However, it does imply that the emission reductions for electricity savings reported here are an under-estimate. This under-estimate becomes more pronounced with higher carbon prices, and higher marginal costs for fossil fuels.
The detailed sequence is as follows:
1. Electricity savings from the measures in the buildings and industry sector were subtracted from the baseline supply estimates to obtain the corrected electricity supply for 2030.
2. No early withdrawal of plant or stranded assets is assumed. Low-carbon options can therefore only be applied to new electricity supply.
3. The new electricity supply required to 2030 was calculated from 1) additional new capacity between 2010 and 2030 and 2) capacity replaced in the period 2010–2030 after an assumed average plant lifetime of 50 years (see Chapter 4.4.3).
4. The new electricity supply required was divided between available low-carbon supply options. As the cost estimates were lowest for a fuel switch from coal to natural gas supply, it was assumed that this would take place first. In accordance with Chapter 4 it was assumed that 20% of the new coal plants required would be substituted by gas technologies.
5. An assessment was made of the prevented emissions from the other low-carbon substitution options after the fuel switch. The following technologies were taken into account: renewables (wind and geothermal), bioenergy, hydro, nuclear and CCS. It was assumed that the fossil fuel requirement in the baseline (after adjustments for the previous step) was met by these low-carbon intensive technologies. The substitution was made on the basis of relative maximum technical potential. The same breakdown as in Section 4.4.3 was used for the low-carbon options.
6. It was then possible to estimate the resulting mitigation potential for the energy sector, after savings in the end-use sectors buildings and industry.
7. For the buildings and industry sectors, the mitigation potential was broken down into emission savings resulting from less electricity use and the remainder.
8. For sectors other than energy, buildings and industry, the data given in the chapters were used for the overall aggregation.
When evaluating mitigation potential in the energy supply sector, the calculations in Chapter 4 did not subtract the electricity savings from the buildings and industry sectors (see Chapter 4, Table 4.19). Adopting this order (which is not the preferred order, as explained above) implies first taking all the mitigation measures in the energy sector and then applying the electricity savings from buildings and industry sectors. This would result in different mitigation potentials for each of the sectors and mitigation measures, although the total will not change. See Appendix 11.1 for a further discussion of the methodology and details of the calculation.
In the case of the other sectors, the data given in the chapters were used for the overall aggregation. The mitigation potential for the buildings and industry sectors was broken down into emission savings for lower electricity use and the remainder, so that the potential could be re-allocated where necessary to the power sector.