A few thoughts about energy scenarios from an industrial perspective

Renaud Crassous, EdFEcole de Physique des Houches

02/03/2014

What do we need?1. A broad view of possible future states of the

world (growth, technologies, lifestyles, ressources, environment, institutions, etc.)

What do we need?

1. A broad view of possible future states of the world (growth, technologies, lifestyles, ressources, environment, institutions, etc.)

2. A robust assessment of public policies, to build optimal strategies and to build a sound dialog with other stakeholders

Several available methods…

• Narratives – anything that help us to « think out of the box - e.g. Shell storylines (Moutains / Oceans)

• External Quantitative pathways – SRES, World Energy Outlook, RCPs

• Consultants (Oxford economics, CERA, Enerdata, research centers, etc.)

• Models to play with at home• ‘Back of the envelope’ / ‘rule of thumb’

…overwhelming data…

... and puzzling uncertainties?

A ‘reader’s guide’for external scenarios (1/3)

• Three levels of information:(i) Storyline: Explicit/Implicit motivation of the

scenario builder(s)• Energy demand : behavioral change? new acceleration

of efficiency gains ? And/or further decline of industry?• Energy Supply: A new wave of technical revolution that

allow to fulfill growing needs on the long-run(backstop technologies) in spite of finite fossil resources.• Electricity: what role in the future energy mix?

A ‘reader’s guide’for external scenarios (2/3)

(ii) Concrete indicators of feasibility/likelyhoodQuantitative data for the reader to build his own assessment of the likelyhood of the trajectory• Lifestyles (per capita travel time, housing surface, • Resources (e.g. surface of energy crops/ industrial

biomass for energy)• Total costs, investment needs, energy prices

A ‘reader’s guide’for external scenarios (3/3)

(iii) Policies / Conditions of successWhat are the stumbling blocks? What changes and what policies are needed? • Price signals• Innovation strategies• Redistribution, transfers• Skills, human capital

Deep inside: what model?

• Advantages of using a model: – Complex calculation (simulation or optimization)– Consistency (between prices and quantities,

behaviors/technologies, energy/macro)

• Drawbacks:– Huge efforts do not guarantee sound results– Black box => low confidence and strategic use

Models

Two frequent Flaws

• Data: too often neglected– Ready-to-use database (e.g. GTAP for GE models)– Double check : ‘Check-in’ / ‘Check-out’

• Model: misuses ‘out of the definition domain’– e.g. Macroeconometric models = short-run only

An illustration of the necessary check-out of model results:

future energy demand in France

‘Marker Scenarios’ from the national debate (DNTE)

A look behind: sustained efficiency gains in the OECD during the last 40 years

0

50

100

150

200

250

300

350

400

450

1960 1970 1980 1990 2000 2010

PIB

Energie

Electricité

Energie avec élasticité pré-73

Electricité avec élasticité pré-73

Past efficiency gains in buildings

0

50

100

150

200

250

1980 1985 1990 1995 2000 2005 2010 2015

Consommations observées de chauffage des bâtiments (kWh par m2 et par an)

France

Allemagne

source : Enerdata

For the last 10 years: an apparent stability that hides opposite dynamics

Demand evolution 00-10 (TWh) Total energy Power

Total 0 +40

Transport +10 ~ 0

Industry -70 (-60 due to the economic crisis)

-15 (-10 due to the economic crisis)

Buildings +60 +55 (+40 due to specific uses)

Further efficiency gains: Continuity or disruption?

60-73 73-10 73-85 85-97 97-07

Real GDP growth (per year) 5,7% 2,1% 2,4% 2,1% 2,4%

Total energy demand growth rate (per year)

7,1% 0,4% -0,3% 1,2% 0,5%

Electricity demand growth (per year)

7,2% 3,0% 4,4% 3,0% 1,8%

Elasticity of Energy demand over GDP

1,25 0,18 -0,14 0,54 0,22

Elasticity of Electricity Demand over GDP

1,26 1,46 1,87 1,42 0,77

Power demand: a broad interval of scenarios that is not ‘pure unertainty’

Low scenario: behavioral change, 100% technical potential, strong substitution toward biomass = negative GDP elasticity

Median scenario: close to a « business-as-usual», with current trends going on (decreasing industrial activity, decrease use of electricity in heating, few innovation in new uses) = elasticity tends to 0,2 - 0,4

High scenario: where CO2 reduction comes more from substitutions to low CO2 electricity uses, alongwith ambitious EE gains= elasticity remains around its pre-crisis level, around 0,8

RTE

- Technical change with ‘realistic’ learning curves (asymptotic)- Inequalities, redistributive effects of energy policies -- Intermittency-- New electric uses in buildings-- Debt constraints and investment-- macroeconomic impact of energy prices-- Global treatment of uncertainties

Unsolved issues/ Further needs