1. A Low Carbon Future - Challenges for the Energy System Nick Eyre Lower Carbon Futures Programme Environmental Change Institute University of Oxford

2. Challenges for the Energy System Global challenges The role of carbon markets Decarbonising energy The role of energy demand

3. Challenges for the Energy System Global challenges The role of carbon markets Decarbonising energy The role of energy demand

4. 1. Climate change Source: IPCC, 2007 IPCC, 2007

5. 2. Rising World Energy Demand

6. 3. Energy Inequality Source: UNEP

7. 4. Carbon resources 4700 Gt 600 Gt Carbon in fossil fuel reserves Based on IPCC, 2007 Carbon as CO 2 in the pre- industrial atmosphere

8. A Summary of the Global Challenges Radical reductions in carbon emissions from fossil fuels are required, but –World energy use is rising –There is a development imperative to increase energy use in many countries –Energy use is dominated by fossil fuels –Fossil fuels are not about to run out A low carbon future requires systemic change in the energy sector and this will have to be a purposeful choice

9. Challenges for the Energy System Global challenges The role of carbon markets Decarbonising energy The role of energy demand

10. 1. Carbon prices Retail fuel costs

11. 1. Carbon prices Retail fuel costs and the EUETS price The big international challenge is the capacity of the atmosphere to absorb CO2, not the capacity of the Earth to supply carbon. Prices dont reflect this!

12. 2. EU ETS scope Only power generators and large energy users are covered by the cap – use of the atmosphere is free to other users. Small and medium energy users – light industry, commerce, public sector and transport - are not incentivised at all. Although electricity prices are affected, electricity users are not directly involved.

13. 3. Pricing carbon is insufficient - There are other energy market failures Based on UK Energy Review, 2002 and Stern, 2006 Market failureIntervention required Free use of atmospheric sink Price carbon through taxation or trading Benefits of innovation not captured Support new technologies with targeted mechanisms Cost effective technologies not fully used Regulation and incentives to change in energy user investment

14. Likely effects of existing carbon markets Will deliver incentives to –[Reductions in deforestation] –Transfer energy technology to developing countries –Switch from coal to gas in power generation –Adopt renewables that are nearly cost effective –Develop nuclear power (possibly) Will not (alone) deliver sufficient incentives for –Carbon capture and storage –Most renewable sources (e.g. offshore wind, marine, solar PV) –Energy efficiency (outside energy intensive industry) –Build new infrastructure Modest price changes do not deliver systemic change

15. Challenges for the Energy System Global challenges The role of carbon markets Decarbonising energy The role of energy demand

16. Zero carbon electricity – the potential and the problems Nuclear –well established –but with known problems: waste, security, cost and timescales Fossil fuels with CO 2 capture –Technically feasible –Not demonstrated at a commercial scale Renewables –Huge resource and some good UK potential –Scaling to significant contribution is non-trivial

17. An optimistic view of a renewable future Source: IIASA/WEC Ecologically driven scenario

18. Are we asking the right questions? The normal political and media discourse is around questions like: How fast can we substitute for coal in power generation? How much electricity can we get from low carbon sources – nuclear, renewables, carbon capture and storage? Which of these should we prefer? But…

19. An energy user perspective UK energy use by fuel

20. An energy user perspective UK carbon emissions How can energy policy that focuses on electricity supply deliver a 60% or 80% carbon emissions reduction?

21. A better set of questions might include How do we reduce oil use (in transport)? How do we reduce gas use (in heating)? …..and there are only two possible answers Reduce total demand Substitute fossil fuels with a low carbon fuel at the point of use, or Plausible low carbon scenarios indicate that both are needed Both involve thinking about energy from a user perspective

22. Carbon emissions reduction to 2020 Based on UK Climate Change Programme 2006

23. Changes required in global investment to deliver a low carbon economy Source: UNFCCC, 2007

24. Challenges for the Energy System Global challenges The role of carbon markets Decarbonising electricity Carbon realism The role of energy demand

25. Developed world energy consumption by sector

26. Back to first principles What is energy use for? Energy services (e.g. warmth, illumination, mobility) are the fundamental demand, not energy. Carbon emissions, C Σ (C/E) x (E/S) x S all S where C/E is the carbon intensity of energy E/S is energy intensity (inverse of energy efficiency) S is energy service demand. The demand side is about the first and second

27. Demand side carbon reduction Low carbon option e.g. car, boiler, lights and appliances Discretionary investment e.g. insulation, solar panels Good housekeeping e.g. switching off lights, turning down thermostats Lifestyle change e.g. cycling, not flying, vegetarianism Efficiency improvement investment behaviour Service demand reduction in use behaviour Minor changeMajor change

28. Energy efficiency investment – can reduce climate change profitably Source: UK Energy Review, 2002, excluding transport

29. Tackling the trio of market failures - by market transformation Research Early adoption Mass adoption Late adoption Support for innovation Incentives and good information Regulation

30. An example from the past – UK fridge/freezer sales Source: EST, 2008

31. An ongoing example - lighting energy use in UK homes

32. A possible future example – a scenario for energy use in UK homes Household energy supply moves to on site technology – demand side change catalyses supply side change Oil and solid fuel Mains gas for boilers and cooking Grid electricity Gas CHP Renewable heat Micro-CHP Renewable power

33. What about in use behaviour? Low carbon option e.g. car, boiler, lights and appliances purchase Discretionary investment e.g. insulation, solar panels Good housekeeping e.g. switching off lights, turning down thermostats Lifestyle change e.g. cycling, not flying, vegetarianism Efficiency improvement investment behaviour Service demand reduction in use behaviour Minor changeMajor change

34. Does behaviour make a difference? In use behaviour is a major determinant of energy use Behaviour does change! Timely provision of good information can reduce energy use by up to 15% Technology can help, in particular new metering and feedback technologies Engagement of people, at home and work, is crucial to delivering change

35. Lifestyle change Cycling to work Not flying to go on holiday Vegetarian diet What have they got in common Policy makers are reluctant to advocate them Lots of people already do them Can policy makers support behaviour change?

36. Encourage Taxation Incentives Exemplify Government leadership Action Enable Give information Provide capacity Engage Community support Personal contact Models of citizen engagement Based on Jackson, 2005

37. Energy use as a socio-technical system Technology shapes our behaviour and vice versa People are more than just consumers. Social, institutional and political change influence technology and individual behaviour –Social acceptability affects all technology –Small and medium scale technologies offer new potential for citizen engagement or