UK Energy Demand and Emissions Prospects to 2020:

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UK Energy Demand and Emissions Prospects to 2020

• A presentation to the Energy Insight Conference,
  National Motor Cycle Museum, Birmingham

Sudhir Junankar, Associate Director Cambridge
Econometrics (http//www.camecon.com/)
10 September 2009
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Outline

• Energy and UK policy assumptions
• Economic background
• Energy prospects
• Total final energy demand
• The power generation sector
• Environmental emissions
• Risks/uncertainties

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Assumptions UK Fuel Prices Coal, Crude Oil,
Natural Gas
2003100
Crude oil
Coal
Natural Gas
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Energy-Environment Policy (1)

• 10 of UK electricity sales target for renewables
  by 2010 set to be missed, while 13.5 forecast by
  2020, is also below the Renewables Obligation
  aspiration of 20 RTFO at 3.5 in 2008/09, up to
  5 by 2012
• EU-set 2020 target of 15 renewables share in
  final energy use also missed by wide margin,
  unless the July 2009 Renewable Energy Strategy
  leads to substantial new policy measures
• CERT and CRC assumed to have some effect in
  improving energy efficiency by households and
  commerce
• The July 2009 UK Low Carbon Transition Plan
  aspirations not included in our forecasts, as not
  yet reflected in firm policy measures

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Energy-Environment Policy (2)

• No nuclear plants assumed to be built to offset
  the expected decommissioning, as the 2008 nuclear
  power White Paper has yet to lead to concrete
  policy measures
• Target of 10GWe of CHP capacity by 2010 looks
  unattainable even by 2020 without new policy
  measures
• EU ETS allowance price at 10-15 euros per tonne
  of CO2 over 2009-10, up to 21 euros by 2012 26
  euros by 2020

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Economic Background

GDP
CPI
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Activity Indicators by Fuel User
average pa
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Total Final Energy Demand by Fuel User Key Trends

• After a 0.5 drop in 2008, steeper falls of
  -2.8 in 2009, -1.5 in 2010 due to the impact of
  the recession then broadly flat
• Households short-term decline, then flat
• Industry sharp drop over 2009-10 still declines
  to 2020 despite rising output
• Commerce decline over 2009-10, modest growth in
  longer term due to output growth in key service
  sectors
• Air transport rapid rise after 2010
• Road use stable in longer term

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Total Final Energy Demand by Fuel User
average pa
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Electricity Demand by Fuel User
mtoe
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Electricity Generating Capacity Key Trends

• Total capacity rises from 85 GW in 2005 to 92 GW
  in 2010 more renewables and CCGT, but less
  nuclear and non-FGD coal
• After 2010 capacity averages around 92 GW, with
  more renewables, CCGT, and CHP, offset by much
  less nuclear and no non-FGD coal by 2020
• Investment in FGD coal capacity higher in our
  forecast, responding to the LCPD Gas 41 of
  generation by 2020

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Electricity Generation
TWh

Note(s) 'Other' includes generation from oil-
and mixed-fired plant.Source(s) Cambridge
Econometrics.
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Coal Demand by Fuel User
mtoe
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Gas Demand by Fuel User
mtoe
15
Oil Demand by Fuel User
mtoe
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Total CO2 by Fuel User Key Trends

• Power generation a sharp decline over 2009-10 as
  lower electricity demand reduces coal use, modest
  fall over 2010-15 slight acceleration after 2015
• Industry decline over forecast period
• Road transport levels after 2010
• Households moderate decline to 2015, but slower
  thereafter to 2020
• Commerce decline over short term slight pick up
  over 2010-20

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Compliance with Policy Goals
mtC
mtC
Kyoto target
Projected CO2 emissions
Projected GHG emissions
20 reduction goal
Note(s) GHG emissions have been scaled over
1990-2007 period to Defra figures to allow
for Land Use, Land-Use Change and Forestry
sector (LULUCF) net emissions. CE projected
growth rates are then applied to the 2008 figure,
assuming that the LULUCF net contribution is
constant over 2008-20.
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Conclusions

• Carbon emissions from power generation are set to
  fall markedly to 2010, due to recession fall
  more slowly to 2020, as non-FGD coal is phased
  out and gas-fired (CCGT) generation continues to
  rise
• CCGT and FGD coal are set to remain important in
  UKs power generation mix, despite the sharp rise
  in renewables over the period to 2020
• Overall carbon emissions are expected to fall
  markedly to over 2005-10, but modest decline to
  2020
• The UK will easily meet its Kyoto GHG target
• Carbon budget (2018-22) set to be missed, as no
  new nuclear and smaller renewable share in power
  generation need to buy permits to meet ETS caps
• Key risks double-dip (W) economic cycle
• or a sluggish upturn impacts on energy use

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UK Energy Demand and Emissions Prospects to 2020

• A presentation to the Energy Insight Conference,
  National Motor Cycle Museum, Birmingham

Sudhir Junankar Cambridge Econometrics
(http//www.camecon.com/)
10 September 2009