Background

The EU’s strategic priorities for the energy system

In 2011, the European Commission (EC) published the Energy Roadmap 2050 [1]. The Roadmap sets the path to decarbonisation of the European energy system, with the objective to keep climate change below 2°C. It features several decarbonisation pathways, all compatible with an 80% greenhouse gas (GHG) reduction target (and 85% energy-related emissions), relative to 1990 levels. A model-based analysis of these pathways established the following key conclusions: firstly, such level of decarbonisation is possible. The highest decarbonisation is expected to occur in the power sector (nearly 100% in 2050) and in industry (83-87% compared to 1990); the most difficult sectors to decarbonise are expected to be agriculture (42-49% in 2050, compared to 1990; those emissions come from livestock) and transportation (54-67%). Secondly, decarbonisation is expected to rely on increased electrification and penetration of variable renewables. The share of electricity in the final energy consumption will double to 36-39% by 2050. The share of renewables in the gross, final energy consumption will rise to 55% in 2050. This, in turn, is expected to impact the energy generation mix (which will likely require diversification of supply options), on the structure of energy generation costs (which will shift from fuel costs to capital expenditures) and on the energy prices (with an expected increase of electricity prices until 2030 and consequent increase of household expenditure on energy).

It becomes clear that such a process of deep decarbonisation entails the restructuring of economies in the European Union (EU) and is likely to deeply impact various sectors of its society. In view of this, the European Commission published the Energy Union package in 2015 [2]. This intended to establish that the roadmap to decarbonisation must put citizens at the core and focus on supplying secure, sustainable, competitive and affordable energy for all Europeans. Means to achieving such an objective also include the strengthening of the internal energy market, investment in energy efficiency, and investments in Research and Innovation. Moreover, the Energy Union package increases the decarbonisation ambition.

The Energy Union established a legally binding framework for all Member States (MS), within which 2030 targets have been updated. The Governance Framework included in the Energy Union [3] provided the basis for MS to elaborate their new National Energy and Climate Plans [4], to be submitted to the European Commission by end of 2019.

The Clean energy for all Europeans strategy, issued in 2016, [5] and the Clean Planet for all strategy, issued in 2018 [6], support the implementation of the Energy Union and further increase the ambition. The latter comes almost in parallel with the IPCC Special Report on the impacts of global warming of 1.5°C [7] and confirms Europe’s commitment to lead in climate action and achieve net zero GHGs emissions by 2050. The strategy shows that, as the ambition increases, the scale of the problem and its complexity increase. It calls for radical transformation of the energy, agriculture, industry and transportation. It imposes changes from transnational, to national and local scale and it affects several dimensions of European societies. The analysis of the strategy unveils a number of key-issues which are described in the subsequent paragraphs.

As industry is expected to play a key role in decarbonisation, the strategy stresses that the impacts on competitiveness must be assessed. Heavy industry relies on fossil fuels and currently available low-carbon technologies are not able to supply energy with the needed intensity. Deep transformation of the whole value chains will be needed, implying among others electrification of the energy supply, sustainable supply of role materials and circular economy, energy efficiency and large-scale demonstration of breakthrough technologies. Consequently, job losses are expected in sectors which are due to decline (e.g. coal mining, extraction of oil and gas, related services), especially in regions currently more heavily relying on them (e.g. Eastern Europe). This is at the centre of debate among Member States, with mitigation options such as those supporting the creation of ‘green skills’ for vulnerable industries needing to be assessed. Completely new skills may also be needed in other sectors such as the building and mobility sectors.

Meeting energy efficiency and decarbonisation targets will also require strong action in the residential sector. Here, however, effective changes may rely more on consumers’ habits and choices. While awareness raising may help change behaviours, affordability of energy and of new technologies may be the strongest driver of consumers’ choices. Moreover, the civil society is ultimately expected to be impacted the most by changes in the energy sector, not only in terms of affordability – as already highlighted in previous strategies – but also in terms of climatic changes (and related energy demands) and health.

Changes may be facilitated by a number of enabling factors, residing in finance (private investments are expected to take on great share of the investment needs), research and innovation (which will have to focus on developing a wide portfolio of low-carbon alternatives, including zero-carbon power, circular economy, hydrogen technology, electrification of sectors and bioeconomy), transnational cooperation (including aspects of security of energy supply, raw and rare material supply, interconnections and infrastructure investment) and trade (while the EU aims at becoming leader in renewables, it faces competition from China, United States (US) and India, which also benefit from high economies of scale).

Challenges

Emerging from the above discussion, the Clean Planet for all strategy underlines the complexity of the changes entailed by a high decarbonisation ambition. Here we synthesise the challenges that in our view emerge from the strategy. Some of them may be identified as between scales, others as across scales (or pervasive).

The challenges between scales may be synthesized as:

  • Transnational: decisions at a European level or in specific EU countries in terms of climate and energy policy and in terms of infrastructure investments may affect others. Conflicts may arise where national priorities are not aligned between Member States and with the European Union as a whole. Member States may have different priorities. Economies relying on mining will have a set of skills and related labour force which make it difficult to transition quickly away from fossil fuels. Again, national strategies in favour of large penetration of renewables may neglect the potential benefits of regional cooperation in the management of primary energy sources and energy infrastructure. Furthermore, national strategies in favour of use of particular energy sources may not see local impacts, such as on ecosystem services.
  • Temporal: while the long-term vision is clear and the mid-term objectives are set, the potential investments pathways for infrastructure, technology and innovation on the way to 2050 are not fully shaped. Many mixes of energy resources and technologies to reach 2050-and-beyond decarbonisation targets are possible. They are specific to Member States and local constraints and they are bound by resource availability, structures of economies and societies, learning processes. In some cases, technological solutions may rely more on cooperation, in others more on independence; on centralised supply or local solutions. No solution fits all.
  • Sectoral: the Clean Planet for all strategy draws attention on the global and multi-faceted dimension of the challenges ahead. Sectors of the economy and ecosystems are interlinked. Actions in one will impact others, either positively, or negatively. For instance, investments in renewable generation to decarbonise economies may bear positive impacts on climate change, health and life in oceans. However, expansion of hydro power could affect life in rivers and use of fresh water for agriculture. Extensive use of biomass could affect land use, with rebound effects on climate in the long range. The trade-offs and synergies between systems need to be evaluated in the framework provided by the Sustainable Development Goals and policies need to be elaborated not in silos.

The pervasive challenges are expected to deeply affect the transition to low-carbon EU economies across all scales. Key ones emerging in our view from the Commission’s analyses are:

  • Technology innovation: it is clear that technology innovation is needed in all sectors and a large spectrum of innovative options will speed up the transition. However, there is large uncertainty on what the barriers and enablers of innovation in each sector are, how much innovation can and should be pursued in each sector and how big impact it may bear on the transition.
  • Behaviour: the transition is not a mechanical process. It relies heavily on the individual choices of large and small consumers and choices are often made under incomplete information and uncertainty. If consumers fail to engage, decarbonisation targets may not be reached or the pace of the transition may diverge considerably from what expected. Research findings on the challenges and opportunities of decarbonisation pathways need to be communicated at different levels of the energy decision chains; tools for formulating science-based evidence need to be transferred and expanded transparently.
  • Resource availability: the resource base for changing energy systems has not been assessed in a comprehensive way. For instance, the technically exploitable potentials of biomass need to be updated taking into account the effects of climate change, water uses in other sectors and potential effects on ecosystems. The same may be said about land resources. Furthermore, the life cycle impacts of resource use need to be estimated taking into account the global scale of trade. I.e. clear understanding is needed on where impacts are placed and what they are caused by. Finally, critical materials may be crucial in allowing the transition (e.g. Cobalt and Lithium for batteries for large storage options, rare earths for second generation solar panels, etc.). Global boundaries in the use of scarce materials and the impacts of circular economy need to be assessed.
  • Global economy: the transition needed of the EU is deep and is expected to bear impacts on GDP and job markets. Competition by other world regions is strong. The objectives of guaranteeing secure, competitive and affordable energy can be met only if distributional and competitiveness impacts are assessed jointly and along with environmental impacts.

In order to facilitate the transition to deeply decarbonised economies, a comprehensive analysis of the impact of decarbonisation pathways across all of these areas is needed.

Scenario analyses to inform decarbonisation strategies

The EU strategies for decarbonisation have been informed by impact assessments since the beginning. These assessments are based on scenario analysis practices widely consolidated globally, both in businesses (e.g. Shell [8]) and research institutions (e.g. the World Energy Council [9], the Intergovernmental Panel on Climate Change (IPCC) [7] and the Integrated Assessment Modelling Consortium [10]). There exist two key components to these scenario analyses: model-based assessments and stakeholder engagement.

Model-based assessments

The Commission’s strategies have been supported by model-based analyses carried out with a suite of tools including PRIMES, PROMETHEUS, GAINS, GLOBIOM and GEM-E3. In the Energy Roadmap 2050, for a number of decarbonisation scenarios, this suite of models was used to provide quantitative analysis on the evolution of the energy sector and its impacts on climate and air quality (in terms of CO2 and non-CO2 emissions), economy (impacts on GDP and job market), society (especially households expenditure) and resource use (land and water). In the Clean Planet for all strategy, a similar impact assessment was carried out for a set of scenarios with higher decarbonisation targets.

These analyses do address questions of economic and distributional impacts, changes in industrial production and overall resource balances. However, they fail to capture spatially-resolved dynamics related to the impacts of and on societies of the transition (such as consumers’ behaviour and health impacts), which the Clean Planet for all considers key in impacting the pace of the transition. They also fail to represent some of the dynamics happening between spatial and temporal scales (such as reliability of supply issues, local impacts on environment and ecosystems, technology diffusion etc.).

Funded actions within the Framework Programme 7 and Horizon 2020 have also provided model-based assessments of the impacts of decarbonisation pathways. CECILIA (Choosing Efficient Combinations of Policy Instruments for Low-carbon development and Innovation to Achieve Europe's 2050 climate targets) provided model-based insights on the potential success and impacts of decarbonisation policies [11]. It measures their effects on equity, competitiveness and innovation. The assessment complements and validates the one run for the Commission’s Energy Roadmap 2050, with a different set of modelling tools (including a European energy model based on TIMES, the environment-economy model GINFORS and the Input-Output model EXIOBASE). The main insights into the energy system transformation highlight that an 80% cut in emissions does not appear to be feasible without negative emissions from biomass carbon capture storage (CCS), given hard to decarbonise sectors such as industry. However, the analysis is limited to assessing policies and their socio-economic implications, but does not elaborate on the use of resources and behaviour, two issues listed in Section 1.2. Additionally, the scope is wide and the modelling presents challenges, as to what assumptions are made about future developments (e.g. gross domestic product (GDP), energy prices, population) across all modelling tools.

Another tool to explore decarbonisation pathways is the ongoing EU Calculator project (EU Calc), oriented to policy makers to provide an accessible and user-friendly platform to quantify and visualise impacts of distinctive pathways. The platform is based on a simulation model, which represents links between economy, energy and resource systems and dynamics of final consumption. The model is simple enough to allow users to modify a large number of decision levers related to lifestyle, technologies and biophysical systems and evaluate the impacts of these decisions. It fulfils the essential purpose of scrutinising the dynamics of the transition, but it does not necessarily embed the complexity of impacts between and across all scales.

Another group of projects initiated in 2016 and funded under the same Low-Carbon Energy call 21 (LCE21-2015) as REEEM include MEDEAS, REflex, and SET-Nav. These projects aim at modelling and analysing the energy system, its transformation and impacts, as per the call’s terms of reference. Their approaches are complementary. MEDEAS focuses on the construction of a new open source modelling framework to analyse transitions to a 100% renewable EU energy system, including Input-Output modules to account for environmental, social and economic impacts. REflex combines several modelling tools to study the role of flexibility options and technological progress in the transition to low-carbon systems. The models range from bottom-up tools to elaborate demand projections, to tools to specifically analyse flexibility options in electricity, heat and mobility, tools for modelling policy measures and, to some extent, tools to analyse impacts on environment and society (Life Cycle consumption of resources and health impacts). SET-Nav uses a modelling framework consisting of five models and sets of indicators to inform the Strategic Energy Technology Plan (SET Plan) on the potential role of technological innovations. The three actions deliver a wide array of insights on multi-sectoral impacts of the decarbonisation of the EU energy system. However, some of the dynamics occurring between scales are missing (e.g. different behavioural patterns in different EU regions and local impacts on environment and ecosystems) and the use of resources is assessed partially in each action (use of critical materials and land and water across different climate scenarios).

Besides the differences in the types of modelling tools and the specific focus of the different analyses, they have all contributed to a large body of knowledge on the potential impacts of decarbonisation. A range of potential pathways to achieve decarbonisation of the EU economy have been identified, as have some consistent trends e.g. the challenges in the industrial sector and segments of transportation, the need for electrification, the potential role of nuclear and CCS. Silo-thinking has been left behind, and multi-sectoral impact assessments have become established practice, in line with the spirit of the Clean Planet for all strategy. An increasing push for open data and their structuring into accessible databases has emerged, with the four LCE21-2015 projects marking a step change in tendencies. Yet, limitations emerge in the scenario practices:

● Analyses are often one dimensional. The set of models employed for the analyses is limited and mostly relying on one central modelling framework which takes inputs from others. The use of rigid modelling frameworks with specific tools interlinked with each other has shortcomings. It prevents the use of flexible impact assessment approaches, where the chosen modelling framework depends on the type of question and the scale that need to be addressed (and not vice versa). Such approaches may be unusable and cumbersome for certain type of sector-specific or region-specific analyses. They are also difficult to communicate to the broader community, which may perceive the efforts as not very transparent.

● In a few cases, specific sets of data are employed but not all the modelling assumptions are entirely traceable. This prevents scenarios being fully reproduced, by the numerous other tools now existing in Europe. As a result, modelling efforts are potentially duplicated, comparability is hindered and potential synergies between different analyses are not fully exploited.

Stakeholder engagement practice

All of the above actions have relied to a greater or lesser extent on stakeholder consultation, in different ways. For the Energy Roadmap 2050 and the Clean Planet for all strategy, stakeholder consultations mostly occurred before and after the scenario formulation. The former were aimed at collecting views on the needs for a strategy and the focus of the strategy. The latter were aimed at reviewing relevant scenario exercises and comparing them to the effort undertaken for the two strategies. The EU Calculator project engaged with stakeholders in a new way: it created a transparent and user-friendly online tool which stakeholders can access to facilitate understanding of the different pathways. This is in line with the increasing agreement on the need to bridge the gap between scientists, policy makers and the civil society, through open science and transparency.

The MEDEAS, REflex and SET-Nav projects have all invested a great part of their efforts on stakeholder engagement. Besides involving stakeholders in the co-design of scenarios, they aimed at making their tools accessible. Thereby the commitment to using open source tools, data and databases as far as feasible.

Yet, an approach combining all these aspects was missing, namely:

  • Co-designing scenarios covering several sectors, to be analysed through large and complex modelling frameworks;
  • Documenting research methodologies through open source tools and data structures;
  • Simplifying the picture into serious games accessible by non-experts;
  • Sharing findings with the research community and communicating them to policy-makers through international fora.

Role and objectives of REEEM

The REEEM project aims to address some of the challenges outlined in Section 1.2, and enhance the practice of decarbonisation modelling, providing new insights and complementing the analyses reported in Section 1.3.

Exploring possible deep decarbonisation pathways, the REEEM analysis gains and communicates a comprehensive understanding of the system-wide implications of energy strategies in support of transitions to a competitive low-carbon EU energy society. It does this by recognising the strength of energy systems modelling combined with wider economic analysis, but also the many impacts associated with a low-carbon transition, for the environment and wider society. This means the need to establish a modelling framework that is integrated around and linked to the core energy-economy components, shown in Figure 1.

In addition to the common elements of energy-economy-environment analyses pointed out in Section 1.3, it assesses economy-wide impacts along with distributional impacts within societies in the EU. It assesses the potential implications of behaviour and consumer’s choices on the pace of the decarbonisation. It devotes great effort to assessing the use of resources under different pathways and climate change scenarios. The expression ‘use of resources’ acquires in REEEM a more comprehensive meaning than in previous efforts and joins impacts on land use, water use, use of critical materials and life cycle assessments and interactions with the ecosystems. It looks at the role of technologies in the transition no longer through the lens of the Technology Readiness Level (TRL) metric, but through the lens of the Innovation Readiness Level (IRL): this combines 5 key dimensions affecting the diffusion of technologies, namely technology readiness (TRL), freedom to operate, market readiness, consumers behaviour and society readiness. In an attempt to shed light on local impacts of the energy transition, five sub-national case studies have been also considered. The messages which are derived from the latter can, to some extent, be transferred to other regions. Although the sub-national case studies are not part of the integrated framework to analyse impacts on a Pan-European level, they have been considered in the data harmonisation process. Between all the aforementioned activities there is exchange of data. The data exchange can fall under the following 4 categories:

  1. Two activities have some common input and thus, they align the relevant values.
  2. One activity takes some input data which is an output of another.
  3. One activity takes some input data which is an output of another, but the latter also takes some input data which is an output of the former.
  4. Same as in case 3, but for a number of iterations until the 2 activities reach convergence in certain values.

The following diagram depicts the exchange of data between all the aforementioned activities, while the exact data exchanges are described in the subsequent sub-sections.

REEEM modelling framework Figure 1. REEEM modelling framework

The modelling presented in this report cuts across scales and across sectors: it analyses medium- and long-term investment needs in Member States to comply with more and less ambitious decarbonisation targets under several scenarios of higher or lower cooperation; it estimates the costs and benefits of the transition across sectors and at a European, regional and local scale; it zooms into regional and local aspects of the transition, e.g. in terms of electricity dispatch, energy supply security, impact on ecosystems and use of resources, without losing connection with the European picture. In brief, the modelling scope is tailored to investigating those challenges outlined in the Clean Strategy for all not yet comprehensively analysed in previous efforts.

The modelling approach is flexible, to avoid lock in into a pre-defined modelling framework, not suitable for the scope of the analysis and for the questions brought up by stakeholders. The modelling framework has been gradually built during the project, starting from the large set of tools available to the Consortium. The data structures have been updated consequently, with the data collection process being transparent and documented.

This allows for input from stakeholders and experts to be incorporated during the modelling process (co-designing) and for all the steps of the analysis to be documented and version-controlled (documenting). The complex and deep models are then ‘translated’ using open and accessible tools, so that the insights may be effectively communicated and transferred (simplifying): the suite of open source tools and web platforms includes an open source stakeholder engagement model; a business game; and a pathway diagnostics tool. Finally, with inputs from the European Commission’s Directorate Generals Energy, Research and Innovation and Joint Research Centre, a European modelling platform has been established, where this modelling effort and others can be presented, with sharing of insights and experiences. This approach should ensure the longevity and continued development of this suite of tools, ensuring consolidation of knowledge and expertise (sharing).

The following sections explain how the modelling approach was developed and describe the resulting insights.