Headline analysis

Detail taken from draft impact assessment

Talking point

The scenarios fail to reveal the point at which costs start to outweigh benefits because any options that deliver over 45% emissions reductions were discarded without clear reasoning and despite many stakeholders calling for higher levels of ambition.

·      The impact assessment uses two economic models, both of which show greater economic benefits (jobs and GDP growth) from decarbonisation scenarios than from the reference case. 

·      The impact assessment scenario that uses targets of 45% emissions reductions, 35% renewable energy, and energy efficiency measures delivers more GDP growth than the scenario with lower targets, and almost the same GDP growth as a greenhouse gas target only scenario.

·      More ambitious scenarios in the impact assessment deliver more jobs, higher health benefits, and lower fossil fuel import bills.

The Commission’s latest scenarios clearly show that higher ambition produces greater benefits. However, the scenarios fail to clearly identify the ambition level at which costs outweigh benefits. Given the technical benefits of greater ambition, it is not clear why the Commission seems to be limiting its policy choices by only looking at scenarios achieving between 35%-45% emissions reductions.

The impact assessment makes clear that a positive political context and the enabling policies that go with it are essential for decarbonisation scenarios to deliver the required emissions reductions up to 2050.

·      Enabling policies identified in the impact assessment include infrastructure development, R&D/innovation, and public acceptance of technologies. More detail is expected in final impact assessment annex.

·      Decarbonisation scenarios in the impact assessment depend on a positive political context to provide enabling policies in order to achieve a low carbon economy in 2050.

·      None of the impact assessment scenarios model 95% emissions reductions by 2050.

The long-term success of the Commission’s decarbonisation scenarios depends on a positive policy context.  However, it is not clear how the Commission’s technical proposals support the development of ambitious political positions.

By focusing on the 2030 horizon, the European Commission has produced impact assessment scenarios that deliver less renewable energy and emissions reductions by 2050 than earlier scenarios from the Energy Roadmap 2050.

·      The 2030 impact assessment scenario that includes a target of 35% RES only delivers 45% RES (and 80% emissions reductions) in 2050, whereas the Commission’s earlier high renewable energy scenario (Energy Raodmap 2050) delivers 60% renewable energy (83% emissions reductions) in 2050. 

·      In the impact assessment scenarios, lower levels of renewables and/or high efficiency increases the dependence on CCS and nuclear power to achieve decarbonisation.

The Commission’s proposals for 2030 should support long term decarbonisation.  Instead, they appear, for political reasons to lower long-term decarbonisation ambition and thereby increase the technical risks of relying on unproven CCS and unpopular nuclear.  

The draft impact assessment fails to provide information on assumptions regarding technology capital costs, levelised cost of electricity, or discount rates used – unlike previously published scenarios

·         The scenarios prepared for the Energy Roadmap 2050 were based on underlying capital cost assumptions for renewable energy that many believed were unnecessarily pessimistic. 

·         In particular, current and future solar PV cost assumptions were clearly too high.

·         In contrast, assumptions about future cost improvements for nuclear and CCS were comparatively optimistic.

It is impossible to tell whether the current impact assessment scenarios correct earlier Commission pessimism about the falling cost of renewable energy –thereby providing a more accurate assessment of the costs and benefits of energy sector decarbonisation.