Nordic Energy Technology Perspectives N ord

Nordic Energy Technology Perspectives N ord
Nordic Energy
Technology Perspectives
Pathways to a Carbon Neutral Energy Future
Nordic Energy Technology Perspectives at a glance
The five Nordic countries of Denmark, Finland, Iceland, Norway and Sweden have announced ambitious
goals towards decarbonising their energy systems by 2050. Based on the scenarios and analysis of Energy
Technology Perspectives 2012, the International Energy Agency (IEA) and leading Nordic research institutions
jointly assess how the Nordic region can achieve a carbon-neutral energy system by 2050.
Without doubt, the Nordic countries are front-runners in taking decisive action toward clear, long-term
energy targets. In examining their approach, this project aims to provide objective analysis that will
increase the Nordic region’s chances of success. A secondary – but ultimately more important – aim is to
prompt other countries and regions to follow their lead.
The report identifies five central challenges that the Nordic countries face in
achieving a carbon-neutral energy system. Other countries seeking to radically
transform their energy systems should take note.
■■ Energy
efficiency improvement remains a priority policy area. Policies to ensure rapid and sustained
energy efficiency improvements will be necessary in all scenarios, especially in buildings and industry.
■■ Infrastructure
development will be a critical policy challenge. The significant need for new
infrastructure in electricity grids and generation will not only pose technological and financing challenges,
but will also require social acceptance.
■■ Carbon
capture and storage (CCS) plays an important role, especially in industry. Progress in this
technology has been slow and uncoordinated between countries. Governments must scale-up policy action
for this technology to realise its full potential.
■■ Bioenergy
will be the single largest energy carrier in 2050, raising questions over its supply.
The Carbon Neutral Scenario projects a net import of bioenergy to the Nordic region, making sustainability
criteria all the more important.
■■ Nordic
co-operation is a prerequisite to reducing the cost in achieving the scenarios. Regional
co-operation in infrastructure development, RD&D and in strategies for transport and CCS would offer
significant benefits.
Visit our website for interactive tools and more extensive data coverage
www.iea.org/etp/nordic
ISBN: 978-82-92874-24-0
Copyright © 2013 Nordic Energy Technology Perspectives
OECD/IEA, 9 rue de la Fédération, 75739 Paris Cedex 15, France
Nordic Energy Research, Stensberggata 25, NO-0170 Oslo, Norway,
Risø DTU, EA Energianalyse A/S, VTT Technical Research Centre of Finland, University of
Iceland, National Energy Authority of Iceland, Icelandic Meteorological Institute, Landsvirkjun,
Institute for Energy Technology, SINTEF Energy Research, IVL Swedish Environmental
Research Institute, Chalmers University of Technology, KTH Royal Institute of Technology,
Luleå University of Technology.
No reproduction, translation or other use of this publication, or any portion thereof, may be
made without prior written permission. Applications should be sent to: [email protected]
This Nordic ETP technology paper is the result of a collaborative effort between the
International Energy Agency (IEA), Nordic Energy Research (NER), Risø DTU, Ea Energianalyse
A/S, (EAEA), VTT Technical Research Centre of Finland (VTT), University of Iceland (UI),
National Energy Authority of Iceland (NEA), Icelandic Meteorological Institute (IMI),
Landsvirkjun, Institute For Energy Technology (IFE), SINTEF Energy Research (SINTEF),
Profu Ab (Profu), IVL Swedish Environmental Research Institute (IVL), Chalmers University
of Technology (Chalmers), KTH Royal Institute of Technology (KTH) and Luleå University
of Technology (LTU). This Nordic ETP technology paper reflects the views of the IEA
Secretariat, NER, Risø DTU, EAEA, VTT, UI, NEA, IMI, Landsvirkjun, IFE, SINTEF, Profu, IVL,
Chalmers, KTH and LTU, but does not necessarily reflect those of their respective individual
Member countries or funders. The Nordic ETP technology paper does not constitute
professional advice on any specific issue or situation. NER, the IEA, Risø DTU, EAEA,
VTT, UI, NEA, IMI, Landsvirkjun, IFE, SINTEF, Profu, IVL, Chalmers, KTH and LTU make no
representation or warranty, express or implied, in respect of the contents of the Nordic ETP
technology paper (including its completeness or accuracy) and shall not be responsible for any
use of, or reliance on, the roadmap. For further information, please contact: [email protected]
Nordic Energy
Technology Perspectives
Pathways to a Carbon Neutral Energy Future
Explore the data behind NETP www.iea.org/etp/nordic
The IEA is making available the data used to create the Nordic Energy Technology Perspectives publication.
Interactive data visualisations and extensive additional data are available on the IEA website for free.
INTERNATIONAL ENERGY AGENCY
The International Energy Agency (IEA), an autonomous agency, was established in November 1974.
Its primary mandate was – and is – two-fold: to promote energy security amongst its member
countries through collective response to physical disruptions in oil supply, and provide authoritative
research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member
countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among
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The Agency’s aims include the following objectives:
n Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular,
through maintaining effective emergency response capabilities in case of oil supply disruptions.
n Promote sustainable energy policies that spur economic growth and environmental protection
in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute
to climate change.
n Improve transparency of international markets through collection and analysis of
energy data.
n Support global collaboration on energy technology to secure future energy supplies
and mitigate their environmental impact, including through improved energy
efficiency and development and deployment of low-carbon technologies.
n Find solutions to global energy challenges through engagement and
dialogue with non-member countries, industry, international
organisations and other stakeholders.
© OECD/IEA, 2012
International Energy Agency
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IEA member countries:
Australia
Austria
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Denmark
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Ireland
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Nordic Energy Technology Perspectives
Table of Contents
3
Table of Contents
Introduction
7
Foreword7
Executive Summary
8
Acknowledgements13
Contact15
Chapter 1
Chapter 2
Chapter 3
© OECD/IEA, 2013.
Choosing the Future Nordic Energy System
17
Nordic ETP: regional choices in a global context
18
The Nordic energy system at a glance
21
Looking ahead: changes in Nordic energy flows
31
Nordic Policies and Targets
35
Long-term targets in the Nordic countries
36
RD&D in focus in the Nordic countries
38
Experience in the use of energy and carbon taxation 43
A market-driven approach
47
Power Generation and District Heating
53
Recent trends
54
Scenario results
60
Technology spotlights
72
Critical challenges 79
4
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Nordic Energy Technology Perspectives
Table of Contents
Industry81
Recent trends
82
Scenario assumptions
85
Scenario results for industrial energy use
88
Scenario results for industrial CO2 emissions
89
Investment needed to decarbonise Nordic industry
90
Technology spotlights
90
Critical challenges 96
Transport99
Recent trends
100
Transport sector scenario results
106
Important developments up to 2030 and beyond
117
CO2 emissions in transport
120
Cost of decarbonising the Nordic transport sector
121
Technology spotlights
122
Critical challenges
127
Buildings129
Recent trends 130
Scenario assumptions
136
Scenario results 137
Technology spotlights
141
Critical challenges 146
Conclusions149
Policy challenges
150
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Annexes
© OECD/IEA, 2013.
Table of Contents
5
156
A. Analytical Approach
157
B. Framework Assumptions
161
C. Central Assumptions for Sector Modelling
163
D. Notes on Electricity Prices
174
E. Notes on Primary Energy Conventions
183
F. Definitions
185
G. References
194
H. List of Figures, Boxes and Tables
200
Nordic Energy Technology Perspectives
Foreword
7
Foreword
If we are to realise a clean energy future globally, we cannot sit idle waiting for the lowest
common denominator. Some regions must lead the transition towards a cleaner future,
realising both the costs and benefits of being first. The Nordic countries have set ambitious
political targets towards 2050 and have the unique possibility of assuming this leadership role.
Achieving these political targets will not be easy. The Nordic energy system must undergo
dramatic changes under the 2°C Scenario (2DS), as outlined in the IEA Energy Technology
Perspectives 2012; however, further regional action is needed. Nordic Energy Technology
Perspectives introduces a new, more ambitious Carbon-Neutral Scenario (CNS) to assess how
Nordic policy action can lead the way to a cleaner energy system and serve as an example
for other countries and regions.
This study marks the first regional edition of the Energy Technology Perspectives series
since its inception in 2006. For the first time, Nordic governments can compare their
national climate goals with the contribution required of them in the 2°C world described in
Energy Technology Perspectives 2012. The analysis evaluates the region from an external
perspective and points to the important role of the Nordic energy system in facilitating the
decarbonisation of Europe.
By applying the IEA’s globally-recognised scenarios and analysis to the specific context of the
Nordic countries, this publication offers a unique tool to policy makers and regional energy
sector players. The analysis is tailored to the Nordic policy landscape and offers a level of
detail not feasible in a global study. It provides an assessment of the stated climate and
energy targets of the Nordic governments while maintaining direct compatibility with the
global scenarios underpinning international discussion of energy policy.
Co-operation is a key aspect of Nordic Energy Technology Perspectives. The project was
conducted in close collaboration between the IEA, 14 leading Nordic research institutions,
and the Nordic Council of Ministers through its energy research funding institution, Nordic
Energy Research. A reference group of ministries, energy agencies and industry guided the
analysis to ensure a high degree of relevance for Nordic policy-makers. We are very pleased
to see the synergies that have resulted from the tight integration of IEA and Nordic
perspectives and analysis.
A key benefit of these joint efforts is that decision makers in the Nordic region now have
a common point of reference to bridge current energy technologies and policies with the
political targets of tomorrow. Of equal importance, decision makers outside the Nordic
countries are provided with a leading example of the type of energy system transition
required if we are to ensure a sustainable energy future globally.
Maria van der Hoeven
Executive Director
© OECD/IEA, 2013.
Halldór Ásgrímsson
Secretary General of the Nordic Council of Ministers
8
Nordic Energy Technology Perspectives
Executive Summary
Executive Summary
The five Nordic countries of Denmark, Finland, Iceland, Norway and Sweden
have announced ambitious goals towards decarbonising their energy systems
by 2050. These aspirations are even more ambitious than the global 2°C
Scenario (2DS) outlined in Energy Technology Perspectives 2012 (ETP 2012),
the strategy put forth by the International Energy Agency (IEA) to limit
average global temperature increase to 2°C.
Using the modelling and analysis approaches of ETP 2012, Nordic Energy Technology Perspectives
(NETP), a joint project of the International Energy Agency (IEA) and leading Nordic research
institutions, probes the question: Can they do it?
With rich renewable energy resources, the Nordic countries are in a strong position to make
the transition from fossil fuels to low- or zero-carbon energy sources. Moreover, they are front
runners in decisive policy action towards clear, long-term energy targets – including the establishment of interconnected grids and a common liberalised power market.
In examining their approaches to date and plans for the future, NETP aims to provide objective
analysis that will increase the Nordic region’s chances of success. A secondary – but ultimately
more important – aim is to prompt other countries and regions to follow their lead.
In the global 2DS set out by ETP 2012, energy-related carbon dioxide (CO2) emissions in the
Nordic region must be reduced by almost 70% by 2050 compared to 1990. But the Nordic
countries have set their ambitions on a Carbon-Neutral Scenario (CNS) in which such emissions
are reduced by 85% and international carbon credits are used to offset the remaining 15%.
Within this strategy, some Nordic countries achieve a carbon-neutral energy system by 2050.
Scenarios
Nordic energy-related CO2 emissions
250
4°C Scenario
MtCO2
200
150
2°C Scenario
100
50
0
1990
Carbon-Neutral Scenario
2000
2010
2020
2030
2040
2050
Note: MtCO2 = million tonnes of carbon dioxide. Emissions include process CO2 emissions from industry. The 4°C Scenario (4DS) represents a future in
which strategic action limits global average temperature increase to 4°C. The 2°C Scenario reflects more aggressive approaches to limit the rise to 2°C.
The Carbon-Neutral Scenario depicts even greater emissions reductions within the Nordic region, with the rest of the world pursuing the 2°C Scenario.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Executive Summary
9
A near complete decarbonisation of the Nordic energy system is
possible – but very challenging.
Decarbonisation is vital in the areas of electricity generation and energy use in industry,
transport and buildings; it also requires deployment of carbon capture and storage (CCS) for
cost-effective reduction of greenhouse-gas (GHG) emissions. Four factors will play critical roles
in achieving the CNS; falling short in any one area will seriously undermine the overall aim.
Nordic electricity generation needs to be fully decarbonised by 2050. Wind generation, today some 3% of Nordic electricity generation, needs to grow particularly quickly and
alone accounts for some 25% of electricity generation in 2050. This will increase the need
for flexible generation capacity, grid interconnections, demand response and electricity storage.
Total investments required in the power sector are equal to some 0.7% of cumulative GDP
over the period.
To achieve the necessary 60% reduction in direct industry emissions (from 2010
levels), all sectors must contribute by taking up energy efficiency measures and
CCS technologies. At present, Nordic industry is characterised by a high share of energyintensive industries – all countries except Denmark use more energy per unit of GDP than the
OECD average. Collectively, industry will need to cut the share of fossil fuel in its energy use
in half, to below 20%. Even combined with very aggressive action to increase energy efficiency,
this is not enough to reduce emissons to the extent necessary. Consequently, 50% of cement
plants, and at least 30% of iron and steel and chemical industries, need to be equipped with
CCS in 2050. To make this scenario possible, current uncertainty over national positions on
CCS must be resolved.
Transport requires the most dramatic emissions slash, from 80 million tonnes
of carbon dioxide (MtCO2) in 2010 to just 10 MtCO2 in 2050. This will require
limiting growth in transport demand, substantial reductions in technology costs, securing a
sustainable biofuel supply and intelligent modal shifts. Improved fuel economy provides the
majority of transport emissions reduction through 2030, with biofuels and electric vehicles
becoming more important in the longer term. By 2050, average fuel consumption of new
cars must decrease to about 3 litres per 100 kilometres (L/100km), down from 7 L/100km
in 2010. Electric vehicles including plug-in hybrid, battery and fuel-cell electric vehicles must
reach 30% of total sales in 2030 and 90% in 2050. Long-haul road freight, aviation and
shipping remain dependent on high-energy-density liquid fuels even in 2050, resulting in an
increased demand for biofuels.
Direct CO2 emissions in the building sector are relatively low, but emissions
associated with the energy used in buildings must be reduced from 50 MtCO2 in
2010 to approximately 5 MtCO2 in 2050. In addition to decarbonising electricity supply,
several reduction options exist in the buildings sector itself. Widespread retrofits of older
building stock will be needed to achieve the necessary energy efficiency improvements. In the
short term, policies should focus on improving existing building shell performance and on
requiring best available technologies (BATs) for space heating. In the longer term, more
advanced building technologies, urban planning, and intelligent systems that empower
consumers and encourage behaviour change become the higher priority.
© OECD/IEA, 2013.
10
Nordic Energy Technology Perspectives
Executive Summary
A systems approach will make transforming the energy system
easier and less costly. Nordic countries have already taken
important steps in this direction.
Changes in energy demand and supply must be considered simultaneously across
multiple sectors. Complete decarbonisation of electricity is the most central, systemwide change and has large spill-over effects for end-users. A high share of variable electricity
generation requires extensive system integration. More broadly, synergies exist among systems
for district heating, power generation, electric transport, municipal waste management and
industrial energy use. These synergies must be tapped further.
Projections
Nordic total primary energy supply in the Carbon-Neutral Scenario
2010
2050
-1 000
Biomass and waste
0
1 000
Other renewables
2 000
Natural gas
3 000
PJ
Net electricity import
4 000
Hydro
5 000
Oil
Nuclear
6 000
Coal
A highly interconnected European energy system will facilitate
decarbonisation and could offer large economic opportunities for
the Nordic countries.
Decreasing costs for low-carbon electricity generation, coupled with a reinforcement of grid interconnections, could make the Nordic countries a major net exporter
of electricity. With the right infrastructure and pricing in place, the Nordic region could
achieve annual exports of 50 terawatt hours (TWh) to 100 TWh over the longer term.
The Nordic hydropower resource will be increasingly valuable for regulating the
North European power system. An increasingly efficient and flexible Nordic power grid
could enable a quicker decarbonisation of the European energy system. Transmission
capacity needs to be strengthened to facilitate this.
Supplying the region’s growing demand for biomass will rely on a well-functioning
international market. In the CNS, bioenergy use increases by two-thirds to become the
largest energy carrier at some 1 700 petajoules (PJ) annually. This highlights a need for
research in sustainable biofuels to increase domestic production.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Executive Summary
11
Five central policy challenges facing the Nordic countries.
NETP identifies five central challenges that the
Nordic countries face in achieving a carbonneutral energy system. Other countries seeking
to radically transform their energy systems
should take note.
■■
■■
Energy efficiency improvement offers the
greatest potential for energy saving and
emissions reduction in the short term.
Policies to ensure rapid and sustained energy
efficiency improvements in end-use sectors will
be necessary in all scenarios.
Infrastructure development will set the
stage for success – or be a stumbling block
for decades to come. The significant need for
new infrastructure in transport systems, electricity grids and power generation (particularly wind)
will pose technological and financing challenges,
and also require social acceptance.
■■
Carbon capture and storage (CCS) accounts
for more than 25% of industry emissions
reduction and is also applied in electricity
generation. Progress in this technology has been
slow and uncoordinated among countries.
Governments must scale up policy action for this
technology to realise its full potential.
■■
Bioenergy will be the single largest energy
carrier in 2050, raising questions over its
supply. The CNS projects a net import of bioenergy to the Nordic region, making sustainability criteria all the more important.
■■
Continued Nordic co-operation is vital to
reducing the cost of achieving these scenarios. Regional co-operation in infrastructure
development, in research, development and
demonstration (RD&D), and in strategies for
transport and CCS would offer critical benefits.
The IEA will continue to track progress of the Nordic region towards its aim of achieving a
carbon-neutral energy system, with the goal of providing objective analysis and promoting
information sharing and lessons learnt with the rest of the world. The Nordic countries are
well positioned to “export” both low-carbon energy and energy system know-how, along
with other products and services vital to a green growth strategy.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Acknowledgements
13
Acknowledgements
Nordic Energy Technology Perspectives is a collaborative project between the International
Energy Agency (IEA), leading Nordic research institutions and Nordic Energy Research –
an intergovernmental organisation under the Nordic Council of Ministers.
Markus Wråke, head of the Energy Supply Technology unit at the IEA was the project manager
and had overall responsibility for the design and implementation of the study.
Benjamin Donald Smith at Nordic Energy Research was the Nordic coordinator of the project.
Special thanks go to Bo Diczfalusy, former Director of the office of Sustainable Policy and
Technology at the IEA, and Anne Cathrine Gjærde, Director of Nordic Energy Research, who
were two of the driving forces behind the project.
IEA team
Authors and analysts: Davide D’Ambrosio, Antonia Gawel, Steve Heinen, Alex Koerner, Uwe
Remme, Nathalie Trudeau, Markus Wråke, Hirohisa Yamada and Luis Munuera (consultant).
Expert reviewers: Cédric Philibert, Anselm Eisentraut, Adam Brown.
Katerina Rus provided essential administrative support.
Marilyn Smith carried editorial responsibility with the support of Cheryl Haines and
external editor Tracey D’Afters. The IEA’s communication and information office led by
Rebecca Gaghen, and including Muriel Custodio, Greg Frost, Kathleen Sullivan and
Bertrand Sadin guided communication activities.
Nordic Energy Research team
Anne Cathrine Gjærde and Benjamin Donald Smith.
Danish team
Authors and analysts: Kenneth Bernard Karlsson, Marie Münster, Per Kaspersen and Jay
Sterling Gregg (DTU); Anders Kofoed-Wiuff, Lars Bregnbæk, Janos Hethey, Katja Frederik
Buhrkal and Edward James (EA Energy Analysis).
Finnish team
Authors and analysts: Tiina Koljonen, Antti Lehtilä and Göran Koreneff (VTT).
Expert reviewers: Bettina Lemström (Ministry of Employment and the Economy), Jukka Leskelä
(Finnish Energy Industries), Sebastian Johansson (Tekes), Mikael Ohlström and Kati Ruohomäki
(Confederation of Finnish Industries) and Harri Laurikka (Ministry of the Environment).
Finland’s contribution to the project was based on direct support from Tekes - the Finnish
Funding Agency for Technology and Innovation and VTT Technical Research Centre of Finland.
© OECD/IEA, 2013.
14
Nordic Energy Technology Perspectives
Acknowledgements
Icelandic team
Authors and analysts: Brynhildur Davíðsdóttir, Jónas Hallgrimsson and Önundur Páll Ragnarsson
(University of Iceland). Jonas Hallgrimsson was seconded to the IEA for a period under the
project.
Expert reviewers: Ragnheiður Þórarinsdóttir (University of Iceland), Úlfar Linnet (Landsvirkjun)
and Halldór Björnsson (Icelandic Met Office).
Norwegian team
Authors and analysts: Kari Aamodt Espegren, Pernille Seljom, Arne Lind and Eva Rosenberg
(IFE); Bjørn H. Bakken, Ingeborg Graabak and Leif Warland (SINTEF Energi AS) and Bjørn
Simonsen (Kunnskapsbyen Lillestrøm). Pernille Seljom was seconded to the IEA for a
period under the project.
Swedish team
Authors and analysts: Thomas Unger, Håkan Sköldberg and Bo Rydén (Profu); Jenny Gode,
Susanna Roth and Lars Zetterberg (IVL); Anna Krook-Riekkola (Luleå University of Technology);
Mikael Odenberger and Erik Ahlgren (Chalmers University); Tomas Ekvall, Peter Stigson (IVL),
Lennart Söder and Mikael Amelin (KTH). Anna Krook-Riekkola was seconded to the IEA
for a period under the project.
The work was guided by the Nordic Reference Group, consisting of:
Lars Georg Jensen (Danish Energy Agency), Peter Meibom (Danish Energy Association),
Jukka Leskelä (Finnish Energy Industries), Bettina Lemström (Finnish Ministry of Employment
and the Economy), Ragnheiður Þórarinsdóttir (National Energy Authority of Iceland),
Grete Coldevin (Research Council of Norway), Astrid Stavseng (Norwegian Ministry of
Petroleum and Energy), Klaus Hammes (Swedish Energy Agency), Maria Wärnberg (Swedenergy)
and Estathios Peteves (Institute for Energy, EC Joint Research Centre).
This project was made possible through funding from Nordic Energy Research and the
institutions representing its Board: The Danish Energy Agency, Tekes (the Finnish Funding
Agency for Technology and Innovation), the National Energy Authority of Iceland, the Research
Council of Norway and the Swedish Energy Agency. Special thanks go to then Board members
Nicolai Zarganis (Danish Energy Agency), Tuula Savola (Tekes), Ragnheiður Þórarinsdóttir
(National Energy Authority of Iceland), Hans Otto Haaland (Research Council of Norway)
and Lars Guldbrand (Swedish Energy Agency / Swedish Ministry of Enterprise, Energy and
Communications).
The individuals and organisations that contributed to this study are not responsible for any
opinions or judgements contained in this study. Any errors and omissions are solely the
responsibility of the IEA.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Contact
Contact
Comments and questions are welcome and should be addressed to:
Dr. Markus Wråke
International Energy Agency
9, Rue de la Fédération
75739 Paris Cedex 15
France
Email: [email protected]
© OECD/IEA, 2013.
15
Chapter 1
Chapter 1
Choosing the Future Nordic Energy System
Nordic Energy Technology Perspectives
17
Choosing the Future Nordic
Energy System
The Nordic countries have demonstrated themselves as leaders in the
development and implementation of clean energy policy. They are well
positioned to meet ambitious national climate targets and to play an important
role in the European energy system, but still face a number of challenges.
Advantages
■■
The Nordic countries are all listed among
the top 20 economies of the world.1 The economy of the region has remained relatively strong
despite recent economic difficulties in Europe.
■■
All Nordic countries have strong ambitions
for carbon dioxide (CO2) emissions reduction.
Energy-related CO2 emissions have remained
relatively stable for several decades, while GDP
has continued to grow.
■■
In a global scenario that aims to limit average
temperature rise to 2°C, energy-related CO2
emissions in the region will need to fall by
70% by 2050, compared with 2010. The Nordic
countries have chosen to set their targets even
higher, showing a strong political commitment to
energy efficiency and climate change mitigation.
■■
Several pathways can lead to a low-carbon
Nordic energy system. How other regions
develop and implications for energy prices will
influence which pathway would be most attractive
for the Nordic region.
■■
The Nordic region already has a high share
of renewable energy production. Current
renewable energy production in the region is
equal to almost 30% of that produced in the
EU-27 countries.
■■
The region has a common electricity market
and is well positioned to provide flexible
electricity to Central and Eastern Europe. Ambitious non-hydro renewable energy plans in Central
European countries may make the Nordic region –
with its vast hydropower resources – an increasingly important provider of flexible electricity.
■■
The region is sparsely populated and has
a cold climate. This drives up transport volumes
and creates high demand for heating services.
■■
Oil and gas production remains significant.
Driven by Norway’s production, Nordic oil and
gas corresponds to more than one-third of total
production in the EU-27.
Challenges
■■
Energy-intensive industry in the region is a
major contributor to the economy, but also
a large source of emissions. With the exception
of Denmark, all Nordic countries have large energyintensive industry, which at least in part explains
the high levels of energy consumption per capita.
1 Measured as gross domestic product (GDP) per capita. Together, the Nordic region had a combined real GDP of USD 1 trillion
in 2011 (equivalent to roughly 7% of the EU-27 GDP) and 25 million inhabitants. Annex B contains more detailed data.
© OECD/IEA, 2013.
18
Nordic Energy Technology Perspectives
Chapter 1
Choosing the Future Nordic Energy System
Nordic ETP: regional choices in a global context
Individually and collectively, the five Nordic countries have among the most ambitious
energy and climate policy agendas in the world, having set challenging targets and
milestones along a road to creating a truly sustainable energy system. This project
analyses these targets to assess the level of ambition required to achieve a carbon-neutral
energy system by 2050.
Perhaps as a result of the strong link between its natural resources and economic
progress, the Nordic region has developed an impressive track record in environmental
preservation. Social awareness is high in terms of the importance of sustainable resource
management.
At the same time, the Nordic economy relies heavily on energy, with more energy being
used per unit of GDP than in most other OECD member countries. To some extent, this
reflects the resource endowment that provides a favourable business environment for
energy-intensive industries. As a consequence, the structure of the economy has, for a long
time, been built upon access to relatively low-cost energy. Any transformation of the
energy system needs to take this into account.
A combination of respect for natural resource endowments, aggressive policy targets, the
implementation of innovative policy mechanisms, and strong economic development have
resulted in the region becoming an international forerunner in the deployment of clean
energy. Individually, the Nordic governments have stated clear visions towards decarbonising
their energy systems. This report interprets these visions as a carbon-neutral Nordic energy
system by 2050 and shows how it can be realised.
Nordic Energy Technology Perspectives (NETP) is, in many respects, an extension of the
analysis conducted in Energy Technology Perspectives 2012 (ETP 2012)2, a biennial publication
of the International Energy Agency (IEA) (IEA, 2012). At the core of the analysis is a study
of various scenarios of possible future energy systems. As the Nordic region is a relatively
small and very open economy, analysis of the regional energy system must be made in a
global context, while recognising that even global change is based on domestic and
regional action. Denmark, Sweden and Finland are members of the European Union, and
Iceland has applied for membership. While Norway is not an EU member, it maintains a very
high level of economic integration and political co-operation with the European Union and
its member states. Consequently, the analysis in NETP is tightly integrated with the
European and global perspective presented in ETP 2012.
2 See: www.iea.org/etp
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
19
Chapter 1
Choosing the Future Nordic Energy System
Nordic ETP scenarios
Box 1.1
While being future-oriented, this report is not a prediction. Rather, it is an exercise to use advanced modelling techniques as a means of comparing a variety of possible futures or scenarios, taking into account proven
technologies and current and/or planned policies. With 2050 as the “target date” in mind, the modelling
helps to identify the least-cost path toward achieving the stated goals.
The first two scenarios represent the Nordic contribution to the global scenarios set out in ETP 2012, which
chart the technologies and policies needed to reach specific energy and emissions targets by 2050. With
the aim of achieving an 80% chance of limiting the global temperature rise to 2°C, the 2°C Scenario (2DS)
is ambitious but possible. It requires cutting global energy-related CO2 emissions by more than half in
2050 (compared with 2009) and ensuring that they continue to fall thereafter. The 4°C Scenario (4DS) has
more moderate aims but also acknowledges that a temperature rise of 4°C will bring serious consequences.
It is important to note that strategic policy action is needed to achieve either of these goals. With no action,
current trajectories suggest a minimum global temperature increase of 6°C.
A third scenario – the Carbon-Neutral Scenario (CNS) – reflects the stated aims of the Nordic countries to have
in place, by 2050, an energy system that produces no net greenhouse-gas (GHG) emissions. In stretching beyond
the ETP 2012 aims, this scenario raises challenging questions that form the core of the Nordic ETP project:
Is reaching a carbon-neutral energy system in less than 40 years possible? What role can technology
play in achieving it? And what are the policies required to realise the transformation?
Figure 1.1
Reduction pathways for energy-related CO2 by scenario
300
45
Nordic
4DS
200
30
150
100
15
World emissions (GtCO2)
Nordic emissions (MtCO2)
250
50
0
1990
2DS
CNS
World
4DS
2DS
2000
2010
2020
2030
2040
0
2050
Note: : Figures and data that appear in this report can be downloaded from www.iea.org/etp/nordic
Key point
All scenarios lead to significant reductions in CO2 emissions by 2050.
The Nordic 4DS reflects concerted efforts to move away from current trends and technologies, with the goal
of reducing both energy demand and emissions. Serving as a reference scenario for the analysis, the 4DS
is less ambitious than the other NETP scenarios, but still requires strategic policy action by governments
to combat climate change and improve energy security. Total primary energy supply (TPES) increases by
less than 5% compared to 2010 (Figure 1.2), and energy-related CO2 emissions decrease by 29% compared
to 1990 levels. More than 75% of electricity is based on renewables, the industry and buildings sectors
become more efficient, and dependence on fossil fuels in the transport sector falls significantly.
The Nordic 2DS acknowledges that transforming the energy sector is vital, but not the sole solution: the
goal can be achieved only if GHG emissions in non-energy sectors are also reduced.
© OECD/IEA, 2013.
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Nordic total primary energy supply falls by 10% compared to 2010, a noteworthy contrast against global
projections in which TPES increases in all scenarios (including the 2DS). Also, the composition of the energy
supply sources changes, resulting in a 68% decrease in CO2 emissions compared with 1990 levels.
Electricity decarbonisation is very similar to that in the 4DS.
The Nordic CNS reflects the national climate targets in the Nordic countries for 2050; of note is the diversity
and ambition of approaches set out (see Chapter 2 for a discussion of national targets). Consequently, the
CNS sees Nordic CO2 emissions fall by 85% by 2050 compared to 1990 levels, with the remaining 15%
offset by international carbon credits. The 85% reduction is consistent with the decarbonisation scenarios
of the EU 2050 Energy Roadmap. TPES decreases by close to 15% compared to 2010. This requires, among
other efforts, rapid transformation of the transport system away from fossil fuels, accelerated energy
efficiency improvements coupled with increased deployment of carbon capture and storage (CCS) in industry,
and increased refurbishments to boost efficiency in the buildings sector.
Within the CNS, two variant scenarios were also developed to examine alternative pathways:
Nordic Carbon-Neutral high Bioenergy Scenario (CNBS) pushes for higher use of bioenergy,
with optimistic assumptions on the availability and import costs of biofuels. The use of oil in the
transport sector is completely phased out by 2050, and the use of biomass and waste in the buildings
sector is substantially higher than in CNS.
■■ The
Nordic Carbon-Neutral high Electricity Scenario (CNES) reflects increased electrification and
grid integration throughout the Nordic region, and between the Nordic and Central European grids.
It assumes an increase in net electricity generation of 45% compared to 2010 levels, and electricity
capacity at just over 50% higher than 2010 levels. To facilitate grid interconnections with Central
Europe and Russia, as well as among Nordic countries, an additional 11 transmission projects are
assumed to be built (double the number of transmission lines currently available).
■■ The
Primary energy supply by scenario
Figure 1.2
7
Coal
6
Nuclear
5
Oil
EJ
4
Hydro
3
Net electricity import
2
Natural gas
1
Other renewables
0
Biomass and waste
-1
4DS
2010
2DS
CNS
CNBS
CNES
2050
Note: EJ = Exajoules.
Key point
Nordic primary energy supply decreases in all scenarios except the 4DS. Net
electricity exports increase in all scenarios.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 1
Choosing the Future Nordic Energy System
21
The Nordic energy system at a glance
Primary energy supply
The Nordic region is well endowed with energy resources, including petroleum, hydropower,
wind, biomass and geothermal. While each country has different dominant energy resources,
the region as a whole is in a favourable position from an energy security perspective.
Norway’s substantial oil and gas reserves dominate the region’s primary energy supply,
representing about 68% in 2010 (Figure 1.3). In 2010, Norway’s total oil and gas exports
were third-largest in the world, after Russia and Saudi Arabia. Its gas exports, at 99 billion
cubic metres (bcm) per year, were the third-highest (after Russia and Qatar) and its net oil
exports, at 1.6 million barrels per day (mb/d), the ninth-largest (IEA data).
Mainly owing to Norway’s decrease in petroleum production since its peak in 2003, overall
Nordic energy production has declined by about 16% since its overall peak in 2002. Despite
this recent dip, primary energy production in the region has grown by 58% since 1990, and
is the equivalent of one-third of total EU production.
Primary energy production in Nordic countries;
share of production by fuel, 2011
Figure 1.3
10
11 391 PJ
Oil
38%
8
EJ
6
4
Hydro
7%
2
0
1990
Denmark
1995
Finland
2000
2005
Iceland
Norway
2011
Sweden
Natural gas
36%
Nuclear
8%
Coal and peat
1%
Biomass and waste
8%
Other renewables
2%
Note: : For definitions and accounting principles, see Annex D.
Key point
Primary energy production in the Nordic region corresponds to more than one-third
of the EU-27 total, mainly owing to Norway’s role as a major oil and gas producer.
Renewable energy (including hydropower) is another particularly important primary energy
resource for the region (Figure 1.3). At 1 905 petajoules (PJ) in 2011, Nordic renewable
energy supply was equal to almost 30% of total supply in EU-27. Sweden is the leading
producer of renewable energy among the Nordic countries, dominated by biomass and
hydropower (693 PJ in 2011); Norway is the largest producer of hydro power (432 PJ in 2011).
Bioenergy is the main source of renewable energy supply in Sweden, Finland and Denmark,
with sources ranging from biofuels, woodchips, pellets, firewood, straw and biogas. It is
primarily used in heating, for the combined supply of heat and electricity, and as a fuel in
the transport sector. Biomass in Sweden and Finland is mainly produced in the pulp and
paper industry, and used for industrial heat production. It is also used for district heating
© OECD/IEA, 2013.
22
Nordic Energy Technology Perspectives
Chapter 1
Choosing the Future Nordic Energy System
and co-generation. 3 Biomass in Denmark differs from the rest of the Nordic countries, as
straw is used in large heat plants.
Over the last decades, Denmark has undertaken a significant build-out of wind power; in
2011, 21% of Danish electricity production was from wind. Iceland is the only Nordic
country having geothermal as its main energy source, with a supply of 157 PJ in 2011.
Together, hydropower and geothermal account for 82% of total primary energy supply in
Iceland. The solar resource is relatively limited in the Nordic region compared to other
renewable sources.
Figure 1.4
Primary renewable energy production in the Nordic countries, 2011
700
Solar
600
500
Wind
PJ
400
Hydro
300
200
Geothermal
100
Biomass and waste
0
Denmark
Key point
Finland
Iceland
Norway
Sweden
The renewable production in the Nordic countries is dominated by biomass (heat)
and hydropower (electricity).
Energy intensity
The energy intensity of the Nordic economies (measured in terms of energy consumption
per unit of GDP) has remained above the OECD average since the mid-1980s (Figure 1.5).
This is largely owing to overall increases in industrial activity and to the high concentration
of energy-intensive industries (e.g. metals and pulp and paper) and the substantial petroleum
industry. Nevertheless, the Nordic countries have fared well in terms of stabilising CO2
emissions over the last 40 years.
Nordic energy intensity per capita (measured in energy consumption per person) is for the
most part above the OECD average, owing to the cold climate and industrial activity
(Figure 1.6). Electricity consumption is particularly high, with some Nordic countries (led by
Iceland and Norway) ranking among the top per capita consumers in the world. This is
linked to high rates of electricity use for space heating and in industry.
Major opportunities remain to reduce energy intensity, particularly in the transport sector
and through energy efficiency improvements.
3 Co-generation refers to the combined production of heat and power (CHP).
© OECD/IEA, 2013.
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Chapter 1
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Energy intensity in the Nordic region, and globally
Figure 1.5
12
World
GJ/USD thousand
10
8
6
OECD
4
2
Nordic
0
1971
1975
1980
1985
1990
1995
2000
2005
2010
Notes: GJ = Gigajoules. Energy intensity is estimated as TPES/GDP.
Unless otherwise stated, all costs and prices are in real 2010 USD, i.e. excluding inflation. Other currencies have been converted into USD using
purchasing power parity (PPP) exchange rates.
Key point
Energy intensity of the Nordic region has declined at rates similar to the OECD
average since the mid-1980s.
Final energy consumption per capita, Nordic countries and
OECD average
Figure 1.6
400
Denmark
Finland
GJ/capita
300
Iceland
200
Norway
100
Sweden
OECD
0
1971
Key point
© OECD/IEA, 2013.
1975
1980
1985
1990
1995
2000
2005
2010
With the exception of Denmark, energy consumption per capita in the Nordic region
is above OECD average but relatively stable. Iceland’s trajectory reflects a dramatic
rise in industrial activity.
24
Nordic Energy Technology Perspectives
Chapter 1
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Energy-related CO2 emissions
At present, the energy sector accounts for almost two-thirds of GHG emissions in the
Nordic region (Figure 1.7). Individually and collectively, Nordic governments have set
ambitious policies to support the decarbonisation of their energy systems (Chapter 2 gives
details on these policies and targets). While each Nordic country has a slightly different
approach to emissions management, their targets as a whole surpass those of most
countries around the world. In most cases, they are more ambitious than requirements set
out by the Kyoto Protocol and the EU Emissions Trading Scheme (EU ETS).
Figure 1.7
Nordic GHG emissions in 2010
Other 23%
Power generation 17%
Fugitive 1%
Waste 4%
Agriculture 6%
Industrial processes 4%
Energy CO2
57%
Other transformation 5%
Industry 9%
Transport 21%
Buildings 3%
Agriculture and other 2%
Energy non-CO2 5%
Notes: GHG emissions are calculated based on IEA sectoral approach for CO2 emissions from fuel combustion; the EDGAR 4 database is used for
other emissions. In general, estimates for emissions other than CO2 (CH4, N2O, HFCs, PFCs, SF6) from fuel combustion are subject to significantly larger
uncertainties.
Key point
In 2010, the energy sector accounted for 62% of GHG emissions in the Nordic region.
Total energy-related CO2 emissions from the Nordic countries have varied between 200
million tonnes (Mt) and 250 Mt over the last decades. Both Sweden and Denmark show
about a 5 Mt reduction in CO2 emissions since 1990. In Sweden, emissions reduction is linked
to the replacement of fossil fuels with renewable energy in district heating, and the
introduction of biofuels in the transport sector. Denmark’s decline can be attributed to a
shift in energy consumption by source, with an increase in renewable energy and natural
gas against a decrease in the use of oil and coal.
Norway’s emissions have increased by about 9 Mt since 1990 (Figure 1.9). Road transport
and offshore gas turbines (for electricity generation and pumping of natural gas in
pipelines) were the biggest emitters and also show the largest increase since this time.
© OECD/IEA, 2013.
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Chapter 1
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Nordic Energy Technology Perspectives
Development of energy-related CO2 emissions in the
Nordic region
Figure 1.8
250
Sweden
200
MtCO2
Norway
150
Iceland
100
Finland
50
Denmark
0
1971
1975
1980
1985
1990
1995
2000
2005
2010
Notes: Energy-related CO2 emissions, including direct emissions from fuel combustion, industrial process emissions (starting from 1990), and
international marine and aviation bunkers. International marine bunkers emissions for Iceland are not available from 1971 to 1982.
Key point
Energy-related CO2 emissions in the Nordic region have fluctuated around 200 Mt
since the 1970s.
Transport is the sector showing the largest increase in emissions in the Nordic region in
the past 20 years. As the increase in transport demand is expected to continue, more
efficient transport technologies and new transport fuels will be necessary to curtail increasing
emissions.
In Iceland, the share of emissions from industrial processes has increased substantially,
due to a new aluminium production plant and increased capacity in others. In relative
terms, this increase remains small: Iceland still accounts for only about 1% of total CO2
emissions in the Nordic region.
Nordic CO2 emissions by sector and country
Figure 1.9
70
Other
60
Buildings
MtCO2
50
Transport
40
30
Industry
20
Other transformation
10
0
Power generation
1990
2000
Denmark
Key point
© OECD/IEA, 2013.
2010
1990
2000
Finland
2010
1990
2000
Iceland
2010
1990
2000
Norway
2010
1990
2000
2010
Sweden
The share of emissions from transport and power generation increased from 1990 to 2010.
26
Chapter 1
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The Nordic region benefits from large renewable energy resources, including hydropower
and geothermal energy. Together with nuclear power, this puts the Nordic countries in a
favourableposition with a largely decarbonised electricity system. Beyond electricity, GHG
emissions have been reduced in other sectors (including district heating), owing to strong
policies to shift away from the use of fossil fuels. Since 1990, energy-related CO2 emissions
in the region have remained stable, even while GDP increased by almost 50% (Figure 1.10).
Nordic GDP (left) and energy-related CO2 emissions (right)
400
100
300
75
MtCO2
USD billion
Figure 1.10
200
100
0
1971
50
25
1980
Denmark
1990
2000
Finland
0
1971
2010
Iceland
1980
Norway
1990
2000
2010
Sweden
Notes: Energy-related CO2 emissions, including direct emissions from fuel combustion, industrial process emissions (starting in 1990), and international
marine and aviation bunkers. Emissions for international marine bunkers for Iceland are not available from 1971 to 1982.
Key point
The Nordic region shows a decoupling of economic growth and energy-related CO2
emissions.
Electricity generation and prices
Electricity generation is an important component of the Nordic energy system: in fact, it
has shaped the region’s economy through trade, and by attracting electricity-intensive
industry. Electricity production in the Nordic countries exceeded 400 terawatt hours (TWh)
in 2010, equal to approximately 12% of the electricity production in the EU-27 (Figure 1.11).
Hydropower represented about half of the Nordic electricity generation that year, with more
than 50% coming from Norway (118 TWh), followed by Sweden (66 TWh).
The share of non-hydropower renewables in the electricity mix has started to rise. In Denmark,
thermal power plants, mainly fired with fossil sources, continue to dominate electricity
production; however, there is a steady replacement of coal-fired power plants with biomass,
gas and wind. The share of electricity generation from wind, for example, rose from 12% in
2000 to 21% in 2011, bringing total net wind generation close to 10 TWh.
Electricity generation in Finland is dominated by coal-fired power plants and nuclear, each
providing some 20 TWh out of the total of almost 80 TWh. Natural gas, biomass and waste,
and hydro each account for annual generation of 10 TWh to 15 TWh.
Close to 100% of Iceland’s electricity in 2010 was produced from renewable energy, with
hydropower accounting for 74% and geothermal for 26%.
© OECD/IEA, 2013.
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Chapter 1
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Accounting for almost 95% of supply, hydropower continued to dominate Norway’s electricity
generation in 2010. Norway has one natural gas combined cycle (NGCC) plant that can
produce natural gas power under the right market conditions (dependent on price of natural
gas, CO2 and the price of electric power in Europe). Norway also has a small share of wind
power generation.
Sweden has the largest electricity generation in the Nordic countries (143 TWh in 2011),
withproduction from nuclear, hydropower and biomass-fired power plants. Over the last
decade, wind power has become an increasingly important source; generation reached
6 TWh in 2011, representing a sixfold increase since 2006, and 75% increase over 2010.
Figure 1.11
Electricity generation in the Nordic countries, 2010
Sweden
Norway
Iceland
Finland
Denmark
0
20
Biomass and waste
Key point
40
Wind
Natural Gas
60
TWh
Hydro
80
Geothermal
100
Oil
120
Solar
140
Nuclear
Coal
At present, 83% of the electricity production in the Nordic countries is carbon neutral,
of which 63% is renewable.
Electricity prices vary significantly among the Nordic countries; with the exception of Denmark,
they are well below OECD average for both industry and household consumers (Figure 1.12).
As the oldest international electricity market in Europe, and the largest in the world, the Nordic
wholesale power market (Nord Pool Spot) is dominated by a few large companies but is
generally considered both liquid and efficient. This, in combination with the region’s vast
electricity generation resources, has resulted in relatively low electricity prices.
Industry electricity prices in OECD Europe have increased in recent years, from an average
of about USD 38 per megawatt hour (MWh) in 1978 to USD 140/MWh in 2010. By contrast,
Nordic industry electricity prices currently range from USD 50/MWh to USD 82/MWh. These
low industrial prices have played a major role in attracting electricity-intensive industry to the
region – particularly to Norway and Iceland.
© OECD/IEA, 2013.
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Chapter 1
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Comparison of average electricity prices in Nordic countries
Figure 1.12
USD PPP/MWh
Industry
Households
250
250
200
200
150
150
100
100
50
50
0
1978
1985
1990
Denmark
1995
2000
2005
2011
Finland
0
1978
1985
Norway
1990
1995
Sweden
2000
2005
2011
OECD Europe
Notes: Electricity prices include ex-tax price, excise tax and value-added tax (VAT). VAT is not included in industry prices as it is refunded to the customer.
Industries often have long-term contracts with suppliers that are not public, so official price statistics should be interpreted with care. See Annex C and D
for more information on electricity prices.
Key point
Electricity prices in Finland, Norway and Sweden are lower than the OECD average.
Final energy consumption
Energy consumption in the Nordic region has increased by 17% since 1990, and was just
over 4 200 PJ in 2010, equal to about 8% of energy consumption in EU-27. The industry,
transport and buildings (including residential and commercial) sectors each accounted for
close to one-third of total energy consumption in the region (Figure 1.13). The largest
increases in final energy consumption were seen in the transport and commercial buildings
sectors, each with a 30% increase in energy consumption over the past 20 years.
Final energy consumption by sector in the Nordic countries
Figure 1.13
1 600
Other
PJ
1 200
Non-energy use
800
Buildings
400
Transport
0
Industry
1990
2000
2010
Denmark
Key point
1990
2000
Finland
2010
1990
2000
Iceland
2010
1990
2000
Norway
2010
1990
2000
2010
Sweden
The transport, industry and buildings sectors each represent close to one-third of
final energy consumption in the Nordic region.
© OECD/IEA, 2013.
29
Chapter 1
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Industry accounts for some 40% of electricity use in the Nordic countries on average.
Access to electricity, coupled with a rich endowment of raw materials such as wood and
minerals, has played an important role in the development of energy-intensive industry.
The forest-based industry is especially important in Finland and Sweden (in Sweden it
represents about 10% of industry value added). Metal manufacturing is of particular
importance in Iceland – where the aluminium industry alone contributed more than 6% of
GDP in 2010 – and Norway. Due to the high volume of electricity consumption by the
aluminium industry, Iceland and Norway have the world’s highest electricity consumption
per capita. In Iceland, which has a population of only 360 000, demand from industry
represented more than 84% of the total electricity demand in 2010.
The cold climate, combined with a history of low-cost and easy access to electricity, has
resulted in high rates of electricity consumption for heating, particularly in Norway, Sweden
and Finland. During the 1980s, many oil boilers in Sweden and Norway were replaced with
electric boilers, resulting in an increase in electricity consumption for heating. In Sweden,
decarbonisation of the district heating system has greatly contributed to emissions
reduction (see Chapter 3).
Energy trade
The Nordic region is a net exporter of energy. In 2011, primary energy production was
close to double the Nordic final energy demand. Norway’s role as an oil and gas producer
must not be overlooked: in 2011, its exports accounted for 82% of total Nordic exports.4 Yet
oil and gas also accounted for the largest share of imports to Nordic countries (led by
Sweden, Finland and Denmark), primarily to meet demand in the transport sector (Figure 1.14).
Figure 1.14
Nordic primary energy production: imports and exports, 2011
Biomass and waste
Natural gas
Imports
Electricity
Crude, NGL and
feedstocks
Exports
-10 000
Oil products
-8 000
-6 000
-4 000
-2 000
0
2 000
4 000
Coal
PJ
Note: NGL = Natural gas liquids
Key point
The Nordic region is a net exporter of primary energy, led by Norway’s oil and gas
exports.
4 Based on estimated energy supply balance in 2011 (IEA, 2012).
© OECD/IEA, 2013.
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Chapter 1
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In addition to electricity trade among its participating countries, Nord Pool Spot trades
with Central and Eastern Europe, and with Germany, Russia and the Netherlands (Figures
1.15, 1.16). The volume of trade has grown steadily since 2000.
Electricity trade outside the Nordic region
Figure 1.15
25
Russia
20
15
Poland
10
Netherlands
TWh
5
0
Germany
-5
Estonia
- 10
- 15
Net imports
- 20
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Note: Positive numbers represent imports, negative represent exports.
Key point
Germany and Russia are the two most important trading partners for Nordic electricity.
Within Nord Pool Spot, Norway, Finland, Denmark and Sweden are the largest electricity
trading partners. In 2010, a particularly dry year for hydropower, three Nord Pool Spot
countries were net importers of electricity: Denmark from Germany; Finland from Estonia
and Russia; and Norway from Russia. Sweden was a net exporter to Poland but required
imports from Germany (Figure 1.15). Increasingly, a number of European countries are
using the flexible generation from the Nordic region to complement the deployment of
variable renewable electricity capacity.
The region holds strong potential to become a provider of flexible and low-carbon electricity
as Central Europe seeks to further decarbonise its electricity system, but this potential
needs to be managed carefully. As grids and interconnections expand, the Nordic region
must ensure that domestic electricity demand is met while also putting in place sufficient
supply and infrastructure to meet the planned exports to other markets.
Electricity trade among the Nordic countries varies. Finland has been, for all years, a net
importer, purchasing electricity from Russia. Norway, Sweden and Denmark fluctuate,
being net importers in one year and net exporters in the next. The export/import question
depends highly on the climate (e.g. average temperature) and hydro inflow in Norway and
Sweden. Since 2000, the average export from Denmark was 1.75 TWh and from Norway
3.85 TWh. Over the same period, Finland imported 10.89 TWh and Sweden imported 1.66 TWh.
© OECD/IEA, 2013.
Electricity trade in the Nordic region, 2011
7
1.2
7
48
73
0.
9.
3.4
Figure 1.16
2.02
0
2.7
3.58
2.35
0.13
DEN
31
Chapter 1
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Nordic Energy Technology Perspectives
FIN
6.95
NOR
0.13
3.59
SWE
RUS
GER
EST
POL
NED
6.85
5.50
5.0
2
0.19
0.60
10.76
5.4
8
1.6
5
1.4
9
Notes: Flows are expressed in TWh. Flows below 0.1 TWh are not shown.
Source: Nord Pool Spot.
Key point
The Nordic electricity system has become more integrated with adjacent neighbouring markets
Looking ahead: changes in Nordic energy flows
It is clear that the Nordic energy system will need to undergo profound changes over the
coming 40 years in order to realise the vision of the Carbon-Neutral Scenario. The following
chapters will explore in detail how the different sectors need to develop. At a high level,
however, it may be useful to look at the overall energy flows in the Nordic system, and compare
the situation in 2010 with the one envisioned in the CNS in 2050 (Figures 1.17, 1.18).
Energy supply is shown to the left, energy use to the right. Arguably, the two most striking
differences between the two figures are the virtual elimination of oil use in transport, and
the disappearing fossil component in power generation.
© OECD/IEA, 2013.
32
Chapter 1
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Figure 1.17
Nordic energy flows in 2010
Industry
1 610 PJ
Renewables
and waste
2 002 PJ
Other enduse 161 PJ
Refineries and other
transformation
1 750 PJ
Fossil fuels
3 110 PJ
Transport
1 152 PJ
Non-energy
use 112 PJ
Buildings
1 527 PJ
Power plants
3 100 PJ
Nuclear
880 PJ
Net electricity
imports 68 PJ
Conversion and
distribution losses
1 500 PJ
Renewables and waste
Nuclear
Fossil fuels
Oil products
Electricity
Commercial heat
Key point
In 2010, fossil fuel plays an important role in all sectors, and is the dominant energy
carrier in transport.
Figure 1.18
Nordic energy flows in 2050
Fossil fuels
803 PJ
Industry
1 555 PJ
Non-energy
use 177 PJ
Transport
784 PJ
Refineries and other
transformation 458 PJ
Renewables
and waste
3 391 PJ
Other end-use
147 PJ
Buildings
1294 PJ
Power plants
3 491 PJ
Nuclear
1 298 PJ
Net electricity
exports 294 PJ
Conversion and
distribution losses
1 182 PJ
Renewables and waste
Key point
Fossil fuels
Nuclear
Oil products
Electricity
Commercial heat
Hydrogen
In 2050, fossil fuel use has decreased by 90% compared with 2010. Most of what
remains is used in industry.
© OECD/IEA, 2013.
Chapter 2
Chapter 2
Nordic Policies and Targets
Nordic Energy Technology Perspectives
35
Nordic Policies and Targets
By setting ambitious, long-term goals for reducing greenhouse-gas (GHG)
emissions and increasing the share of renewable energy, the Nordic countries
have demonstrated international leadership within the energy sector. Valuable
lessons can be drawn from their approach in the areas of regional co-operation,
market-based mechanisms, and emphasis on research, development and
demonstration (RD&D).
Key findings
■■
The Nordic governments have set ambitious, long-term domestic climate and
energy policy targets. In many cases, these
targets and visions (e.g. renewable energy targets)
exceed the EU average. Policies at national and
regional levels will be needed for these strategies
to be implemented successfully.
■■
Relatively stringent policies and regulations underpin long-term strategies for
technology development and deployment.
Nordic countries have often been frontrunners
in applying strict policies and regulations (e.g.
regarding implementation of a carbon dioxide
[CO2] tax1). This secure policy framework has
helped to accelerate clean energy investment
that supports these ambitious plans while
sustaining economic development.
■■
Each Nordic country has its own unique
approach to energy policy design and
implementation, but several common features
and examples of close co-operation exist. Common
elements include a market-driven approach, a
strong focus on RD&D, and carbon and energy
taxation. Close co-operation is most evident in
the common electricity market operating among
Sweden, Norway, Denmark and Finland.
1 Hereafter referred to as the carbon tax.
© OECD/IEA, 2013.
■■
A strong focus on energy technology
research, development and demonstration
(RD&D) exists through domestic programmes and
international collaboration. The Nordic countries
have been co-operating formally on RD&D more
than 25 years.
■■
Carbon and energy taxation have been one
of the most important policies behind the
decreased use of fossil fuels, especially in the
Nordic energy sector. Taxes on energy and CO2
emissions are applied in all Nordic countries.
■■
A market-driven approach is common across
the Nordic electricity market, and is effectively
complemented by targeted energy technology
policy. The competitive Nordic electricity market,
Nord Pool Spot, was the world’s first international
market for trading power and is currently the
largest market of its kind. It may serve as an
example for other countries and regions globally.
36
Nordic Energy Technology Perspectives
Chapter 2
Nordic Policies and Targets
Long-term targets in the Nordic countries
The EU Energy Roadmap 2050, a strategic plan adopted by the European Commission in
2011, presents an overall target for 2050 to reduce total domestic GHG emissions by at
least 80% compared to 1990, with intermediate targets of a 25% reduction by 2020 and
40% by 2030. Within this all-encompassing target (which includes transport), energyrelated emissions are to be reduced by 85%. All Nordic countries have presented long-term
strategies for CO2 emissions reduction to be achieved by 2050 (Table 2.1). Policies at the
national and regional level will be needed to implement successfully these strategies.
Sweden’s long-term vision is to release no net GHG emissions into the atmosphere. It is not
yet finally decided if this vision will include sinks and international trade of carbon credits.
In a commission to the government, the Swedish Environmental Protection Agency (EPA) has
analysed roadmaps both with and without sinks and trade. Norway’s target, which includes
international trade of credits, is to be carbon neutral in 2050. If an ambitious international
climate agreement is achieved in which other developed countries also take on extensive
obligations, Norway will undertake to achieve carbon neutrality by 20302. Denmark’s 2050
target is to have the entire energy supply covered by renewable energy. Calculations from
the Danish Commission on Climate Change Policy show that when domestic energy and
transport systems no longer use fossil fuels, GHG emissions will be reduced by approximately
85%. Finland aims to cut domestic GHG emissions by 80% by 2050 from the 1990 level.
Iceland’s long-term vision includes reductions of net GHG emissions by 50% to 75% by 2050,
with 1990 as reference year. All Nordic countries have targets for emissions reduction to
be achieved by 2020.
Each country has set related, but more specific, targets. The current Swedish government
has an ambition to make the vehicle fleet independent of fossil fuel by 2030. Finland has
applied the 20% by 2020 target to renewable energy supply for road transport. 3 Finland’s
Ministry of Trade and Industry recently launched a CleanTech programme, which sets very
ambitious targets for decreasing the use of oil, coal and natural gas by 2025 (e.g. phasing
out of condensing coal-fired power). Denmark’s long-term goal is supported by several
milestones: 50% of electricity supply from wind power in 2020; phasing out coal consumption at power plants by 2030; phasing out oil burners by 2030; and covering all electricity
and heat supply with renewables by 2035.
The European Union has set a number of climate and energy targets to be met by 2020,
known as the 20/20/20 targets. These targets include: reduction of EU GHG emissions of
at least 20% below 1990 levels; at least 20% of EU energy consumption from renewable
resources; and a 20% reduction in primary energy use compared to projected levels, to be
achieved by improving energy efficiency. On this basis, a national burden-sharing agreement
regarding renewable energy has been decided for each member state. Sweden has a target
of 49% renewable energy shares of total energy use (which it raised to 50%), while Finland’s
target is 38% and Denmark’s is 30%. In Norway, the target is to have a renewable energy
share of 67.5% by 2020. Similarly, the EU target of 20% increase in (primary) energy
efficiency is translated into national targets for all EU member states. Compared to projections, the targets to decrease energy consumption are 4.0 gigajoules (GJ) for Sweden,
11.8 GJ for Denmark and 1.3 GJ for Finland. Iceland, which is currently applying to join the
European Union, has a target of 64% renewable energy share of total energy use by 2020.
2 In fact, the European Union, Norway and Iceland have all explicitly stated that their ambition levels depend on the
commitment showed by other countries and regions.
3 Calculated according to the RES-directive’s (RES = Renewable Energy Sources) method for transport (i.e. double-counting
of second-generation biofuel, which means that there will actually be less than 20% renewable).
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 2
Nordic Policies and Targets
37
Climate- and energy-related targets for Nordic countries and the
European Union, 2012-50
Table 2.1
Renewable energy
GHG emission reduction targets (CO2 equivalents) targets, gross final
(reference: 1990)
energy consumption
2012
(Kyoto)
2020
2030
20502
Climate- and energy-related
constraints or targets, examples
Reference
2005
2020 (EU)
Denmark
-21%
-20%
(non-ETS)
-40%
(ETS and
non-ETS)
100%
renewable
energy
supply3
17.0%
30%
(35%
national
decision)
• 100% renewable energy system
(all sectors) in 2050
• All use of coal phased out by 2030
• 100% renewable electricity and
heating in 2035
• Phase out of oil for heating in
buildings by 2030
• Wind power covers 50% of power
production in 2020
Finland
0.0%
-16%
(non ETS)
-80%
(domestic)
28.5%
38%
(20%
renewables
in road
transport)
• Regulations on the use of water
resources (e.g. hydro power) by the
Water Act
• Decisions on licences for new nuclear
to be adopted by the Parliament
Iceland
+10%1
-15%
(-30% if
climate
agreement)
-50-70%
(net)
55.0%
64%
Norway
+1%
-30%
(net, - 40%
if climate
agreement)
-100 %
-100%
(net, if
(net)
climate
agreement)
58.2%
67.5%
• Protection Plan for Water-courses,
protection of water resources from
hydro power
• 2/3 of emission reductions in
2030 will be domestic (rest through
flexible mechanisms)
Sweden
+4%
-40%
(non ETS)
Fossil fuel -100%
indepen(net)
dent transport fleet
39.8%
49%
(50%
national
decision)
• Law to protect some rivers from
hydro power
• Limitation on new nuclear: e.g.
maximum 10 reactors, no effect
limit
8.5%
20%
(10%
renewables
in transport)
European Union -8%
-20%
(-30% if
climate
agreement)
EU roadmap
-25%
-40%
-80%
Notes: ETS= Emissions trading sheme. 1) Iceland is also subject to provision 14CP7, allowing an increase in emissions of 1 600 tonnes CO2 per year (tCO2/yr)
from energy-intensive industry. Combined with the 10% allowed increase in emissions over 1990 levels, 14CP7 translates to allow 57% increase in GHG emissions over 1990 emission levels. 2) Emission reduction targets for Norway (all), Sweden (2050) and Iceland (2050) may include offsets. Finland’s 2050 target
includes domestic reductions only. 3) Denmark does not have a 2050 target for GHG emissions only, but a target of 100% renewable energy in 2050.
The Climate Change Policy Commissions calculations showed that this target would lead to a reduction of approximately 85% of GHG.
Sources: General/EU: European Commission, 2009. Denmark, Finland, Sweden: EEA, 2012. Norway, Iceland: European Commission, 2011. Denmark: Ministry of
Climate, Energy and Building, 2012. Finland: Finnish Government, 2008. Iceland: Ministry for the Environment and Natural Resources, 2007. Norway: Norwegian
Government, 2008; Norges Offentlige Utredninger, 2012; Norwegian Parliament, 2012. Sweden: Swedish Government, 2009; Swedish Environmental Code, 1998.
Key point
© OECD/IEA, 2013.
All Nordic countries have long-term climate- and energy-related targets and visions
that are ambitious and often surpass EU strategies. Climate- and energy-related
constraints differ among the Nordic countries.
38
Nordic Energy Technology Perspectives
Chapter 2
Nordic Policies and Targets
RD&D in focus in the Nordic countries
The Nordic region has traditionally placed a strong emphasis on research and development
(R&D) in a broad range of areas. Among IEA member countries, the Nordic members are
leaders in terms of R&D funding support per unit of GDP. Total funding of research has been
increasing since 1990, and the Nordic countries have increased funding for R&D as a
percentage of GDP to reach levels of 1.7% to 3.9% of GDP in 2010 (Figure 2.1). Norway is
the exception, where funding has remained relatively stable (1.7%). In the Nordic countries,
a large share (66%) of the research is ultimately carried out in the private sector (Figure 2.2).
Nordic RD&D funding for clean energy technology has increased in recent years, owing to
the development of RD&D strategies and programmes that focus on achieving carbonneutral objectives. Between 2007 and 2010, for example, energy-related RD&D funding
rose dramatically in Sweden (70%) and Denmark (65%). In 2010, about 36% of the energyrelated public RD&D funding was used for research in energy efficiency, with the largest
shares in Sweden (33%) and Finland (60%). Renewable energy followed closely, receiving
about 31% of the total RD&D funding (Figure 2.4). Almost two-thirds of Norwegian energy
research funding in 2007 was directed towards fossil energy and carbon capture and
storage (CCS). In 2010, funding for fossil energy had reduced while support for CCS had
seen strong growth. The climate agreement in Norway from 2007 (Norwegian Government,
2008) led to a substantial increase in energy-related RD&D (total energy-related RD&D
budget was USD 145 million in 2010 compared to USD 102 million in 2007). Wind energy
has been an important research area in Denmark; however, in 2006 funding for wind research
was 17% while funding for hydrogen and fuel cells was more than 30%.
Sectors where R&D has been carried out and R&D as share of GDP
USD billion
Figure 2.1
14
7%
12
6%
10
5%
8
4%
6
3%
4
2%
2
1%
0
Universities
Public sector
Private sector
Share of GDP
0%
Denmark
Finland
Iceland
Norway
Sweden
Note: Unless otherwise stated, all costs and prices are in real 2010 USD, i.e. excluding inflation. Other currencies have been converted into USD using
purchasing power parity (PPP) exchange rates. R&D investments in sectors in which research has been carried out: public sector, private sector and universities.
Figures and data that appear in this report can be downloaded from www.iea.org/etp/nordic
Source: NIFU-STEP, 2012.
Key point
The Nordic countries have high funding support per unit of GDP and a large share of
R&D is carried out in the private sector.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
39
Chapter 2
Nordic Policies and Targets
R&D sources of finance
Figure 2.2
14
Foreign country
12
10
USD billion
Other national sources
8
6
Public funding
4
2
Private funding
0
Denmark
Finland
Iceland
Norway
Sweden
Source: NIFU-STEP, 2012.
Note: Denmark and Finland data from 2010.
Key point
A large share of research and development is made possible through private funding.
Box 2.1
Innovation theory and policy design
Innovation theory describes technological development as a process in which innovation evolves through
several phases: research, technology development, demonstration, deployment and diffusion. The process
from innovation to diffusion may roll out over a long time period, and may be held back by several market
failures (e.g. information failures and principal-agent problems) and behavioural barriers (e.g. credibility
of information sources, inertia, culture and values). Public acceptance can be another barrier, as is currently
the case for development of carbon capture and storage (CCS), for example. Hence, efforts and policies to
accelerate the innovation process are crucial. Moreover, not all technologies will be successful, implying
the need for – and wisdom of – supporting a broad range of portfolios.
Technological innovation is usually described through two models: the market-pull model and the
technology push model4. The market-pull model creates disincentives for emissions (e.g. carbon pricing
or market share requirement for renewable sources) while the technology-push model uses incentives (e.g.
RD&D investments) to push new technologies into the market.
The Nordic region provides an interesting example of countries with strong policies for both push and pull.
All Nordic countries have a market-based approach that uses the disincentives of energy and carbon taxes
to phase out the use of fossil fuel in the energy sector, counterbalanced by R&D programmes to stimulate
actions to develop alternative sources of energy.
Many experts argue that carbon pricing provides the most efficient incentives for technology development
and emissions reduction because it quickly stimulates least-cost abatement while engaging actors across
all parts of the value chain to innovate. By contrast, “command-and-control” approaches concentrate on
one specific technology and risk freezing the development of others.
4 See, for example, Fischer, 2009.
© OECD/IEA, 2013.
40
Nordic Energy Technology Perspectives
Chapter 2
Nordic Policies and Targets
Carbon pricing should be balanced with policies to unlock cost-effective energy efficiency improvements
and technology support policies to reduce costs for long-term decarbonisation investments. The latter may
involve public and private RD&D, green certificates and/or feed-in tariffs.
Innovations in new energy technologies are often very capital-intensive, requiring substantial funds to support
the necessary RD&D. Policies to support early actions are crucial, as are investments when technologies
are ready to advance to commercial markets. Iceland’s early experiments with geothermal heating and
the Danish subsidy system for deployment of wind turbines are two examples of successful early actions
to promote technology innovation. From a cost-effectiveness perspective, combining policies for energy
efficiency improvement with RD&D of new technologies and carbon pricing provides the least-cost policy
mix for transition over the long term (Hood, 2011) (Figure 2.3).
Policy mix with energy efficiency policies, carbon price and
technology policies
Figure 2.3
USD
Technology support policies
to reduce costs for long-term
decarbonisation
Reduced long-term
marginal abatement cost
MtCO2
Carbon price mediates
action economy-wide
Policies to unlock costeffective energy efficiency
potential that is blocked by
non-economic barriers
Note: CO2e = CO2 equivalent
Source: Hood, 2011.
Key point
An effective energy policy scheme involves a balanced mix of policies for carbon
pricing, technology support and energy efficiency improvement.
© OECD/IEA, 2013.
41
Chapter 2
Nordic Policies and Targets
Nordic Energy Technology Perspectives
Despite recent increases, the share of energy-related RD&D funding in overall RD&D budgets
in Nordic countries is lower than in the 1980s: in 1981, the average energy-related R&D
share for Denmark, Finland, Norway and Sweden was 7.5%. After a decline to 2.6% in 2005,
funding has been on the rise and currently stands just below 6% (Figure 2.5). This is well
above the IEA country average, but remains relatively low given the emphasis on achieving
a low-carbon society in the region. Finland has the highest energy share of total RD&D:
almost 11% (Figure 2.5). While strong public RD&D funding is important, several other critical
elements are also required to ensure the achievement of RD&D goals: coherent energy RD&D
strategy and priorities; adequate government and policy support; co-ordinated energy RD&D
governance including a strong collaborative approach that engages industry through publicprivate partnerships; effective RD&D monitoring and evaluation; and strategic international
collaboration (IEA, 2011a).
Distribution of public R&D spending by energy resource in
Nordic countries
800
6%
USD million
600
400
3%
200
0%
0
1990
1992
1994
Energy efficiency
Nuclear
Other cross-cutting technologies
Key point
1996
1998
2000
2002
Fossil fuels
Hydrogen and fuel cells
Share of energy RD&D in total R&D
2004
2006
2008
Share of energy RD&D in total R&D
Figure 2.4
2010
Renewable energy
Other power and storage technologies
In 2007, energy efficiency received the largest share of public RD&D funding in the
energy sector in the Nordic countries.
Strong collaboration is an important element of the Nordic RD&D approach. The Nordic
countries have a long tradition of co-operation in the areas of technology development
and policies to reduce environmental impacts. The process has been characterised by
openness and close co-operation among countries, and between government and industry
(a “co-operative state”), with both parties having incentive to co-operate and to be open.
Industry recognises that in the absence of transparency regarding environmental improvement
potentials, the state would apply costly charges. The government, in turn, understands that
by contributing research funding it can accelerate development (Bergquist and Söderholm,
2011). One example of co-ordinated co-operation in the region is RD&D financed through
Nordic Energy Research (Box 2.2).
© OECD/IEA, 2013.
42
Figure 2.5
EUR billion PPP 2011
Chapter 2
Nordic Policies and Targets
Nordic Energy Technology Perspectives
Total public energy RD&D and share of energy in total RD&D, 2011
3.5
12%
3.0
10%
2.5
8%
2.0
Other
Political and social
Industry
Health
Defense
6%
1.5
4%
1.0
General (university)
General (non-university)
Agriculture
0.5
2%
0.0
0%
Denmark
Finland
Norway
Sweden
Enviroment
Energy
Share of energy
Source: IEA, 2012; Eurostat, 2012; OECD, 2012.
Key point
To achieve its goals, public RD&D funding must be aligned with a coherent energy
strategy and supported by effective policy and governance, collaboration with
stakeholders, and monitoring and evaluation.
International and bilateral technology co-operation are also important features of the
common Nordic RD&D approach, including participation in: the IEA Implementing
Agreements (the Nordic countries collectively participate in 33 Implementing Agreements);
the EU 7th Framework Programmes for research, technological development and demonstration
activities for 2007-13; and important bilateral technology co-operation in strategic energy
technology areas (such as CCS).
Box 2.2
Nordic co-operation in R&D
In addition to bilateral and European co-operation, the Nordic countries have had a policy of regional
co-operation within energy R&D since 1985. The five national funding agencies contribute to a common
“pot” of funding administered by Nordic Energy Research, an institution with a mission to “fund and
promote Nordic co-operation within energy research and make a significant contribution to energy policy
making”. Funding for this common Nordic pot is sourced based on the GDP of the member country and
distributed based on project merit (Figure 2.6). It supports projects involving research partners from three
or more countries in the region.
Co-operation at the Nordic level is facilitated by the shared energy research priorities of the member countries,
and by the linguistic and cultural similarities.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Figure 2.6
43
Chapter 2
Nordic Policies and Targets
Nordic common R&D funding by contributing country, 2011;
Nordic PhDs by research country of origin 1985-2011
Denmark
21%
Sweden
32%
Baltic and others
12%
Denmark
20%
Sweden
25%
Finland
19%
Finland
18%
Norway
28%
Iceland
1%
Norway
17%
Iceland
7%
Source: Nordic Energy Research, 2012..
Key point
The common “pot” for Nordic-level R&D funding distributed EUR 8.9 million in
2011 and has financed 415 Nordic PhDs since 1985.
In 2010, the Nordic-level fund equalled 4% of total national public funding for low-carbon energy technologies
in the Nordic countries. Although relatively small, this budget aims to connect the national research
communities, and to develop a long-term regional research and innovation network. Consortia formed at
the Nordic level have gone on to receive support from national and European programmes.
Current Nordic funding programmes support research on sustainable energy systems, specifically within
the areas of renewable energy, electricity grids and low-carbon transport. All of these areas are of common
interest to the participating countries and support their work towards the ambitious emission reduction
targets for 2050 set by Nordic governments.
Experience in the use of energy and carbon
taxation
Taxes on energy and CO2 emissions are used in all Nordic countries and, in some cases, have
contributed to the increased share of renewable energy (see e.g. Swedish EPA, 2006; Swedish
Government, 2009; Box 2.3). Together with the EU ETS, carbon and energy taxation are important
elements of the current Nordic energy policy framework. They have, for instance, contributed
to reducing fossil fuel use in the Swedish district heating system (Box 2.3). In all of the Nordic
countries, carbon tax levels are substantially higher than the price of an EU ETS allowance.
Some exceptions in the carbon tax levels for industry exist; these are designed to protect specific
sectors against international competition and are a result of the introduction of EU ETS.
Comparing tax levels among the Nordic countries is complicated since the coverage,
definition and tax exceptions differ. All the Nordic countries have an energy tax in addition
to the carbon tax (Table 2.2); these energy taxes are typically excise taxes, often not
defined as environmental taxes but fiscal taxes. There is, however, a fine line between
© OECD/IEA, 2013.
44
Nordic Energy Technology Perspectives
Chapter 2
Nordic Policies and Targets
these two types of taxes since the energy tax has both fiscal and environmental purposes
for different fuels without exceptions. An overview of tax levels on motor gasoline in the
Nordic countries provides just one example of striking differences (Figure 2.7).
In Sweden, industries covered by the EU ETS are exempted completely from the carbon
tax. At present, Swedish industries outside the EU ETS are exempted a large share, but an
increase is planned such that, by 2015, the tax share they pay will range from 21% to 60%
of the overall level. A first step has already been taken with an increase to 30% in 2011. In
Denmark, sectors not covered by EU ETS are subject to carbon taxes. A high level of energy
tax is applied on fossil fuels for heating purposes and on electricity consumption in the
household and services sectors; these measures provide a significant incentive to save energy
and to convert to renewable energy.
Figure 2.7
Tax levels on motor gasoline in the Nordic countries
1.0
Carbon tax
USD/L
0.8
0.6
Energy tax
0.4
0.2
Excise tax
0.0
Denmark
Finland
Iceland
Norway
Sweden
Source: Denmark: Danish Energy Agency, 2011. Finland: Finnish Government, 2008. Iceland: Parliament of Iceland, 2004; 2009; 2011.
Norway: IEA, 2011b; Norsk Lovdata, 2011. Sweden: SPBI, 2012; Swedish Tax Agency, 2012.
Key point
Energy and carbon taxes for motor gasoline vary in the Nordic countries. The price
paid by customers at the pump is influenced by fuel price and VAT, which also vary
from country to country.
Fuel consumption within industry and fuel for electricity generation are, to a large extent,
exempted from Sweden’s energy taxes, because these sectors are subject to international
competition. In Iceland, policy instruments such as carbon taxes have only recently been
implemented. An energy tax is levied on all end-users and on industry for use of electricity
and hot water. Initially, this was a temporary measure to be applied 2009-12, but a recent
proposal now aims to make it a permanent law. Iceland is now a part of the EU ETS, and
the country’s energy-intensive industry will enter in 2013. In Norway and Finland, energy
and carbon taxes have been long-term policies to reduce energy demand and emissions in
the energy and industry sectors. Norway had a national trading scheme in 2005-07, under
which Norwegian installations had the possibility to use allowances from the EU ETS.
From 2008, Norway has participated in the EU ETS.
© OECD/IEA, 2013.
Box 2.3
45
Chapter 2
Nordic Policies and Targets
Nordic Energy Technology Perspectives
Production of district heat as an arena for effective policy
intervention: the Swedish case
The production mix of district heat in Sweden has undergone a dramatic change since the 1980s, when oil
was virtually the only fuel in use (Figure 2.8). The oil crises of 1973 and 1979 spurred Swedish energy policy
to aim at reducing oil dependence, which meant a certain revival of coal along with the introduction of peat,
biomass and electricity in electric boilers and heat pumps in district heating. Massive expansion of nuclear
power in the 1980s – again in order to reduce dependency – along with a general electrification of heating,
led to the use of electricity as a means for producing district heat. During the 1990s, energy and climate taxation
became the prime means of intervention in the production of district heat.
The use of energy in Sweden has been subject to taxation since the 1950s (Swedish EPA, 2004). At that
time, the purpose of energy taxation was primarily fiscal. In 1991, Sweden introduced a carbon tax with a
clear environmental objective. In 2001, the government agreed to a green tax reform that raised the carbon
tax. Today, the carbon tax corresponds to around USD 160/tCO2 – significantly above the USD 10/tCO2 of
the current allowance prices in the EUETS (12 September 2012, European Energy Exchange).
Since the taxation was introduced, CO2 emissions from production of district heat have declined by around 70%
when compared to the beginning of the 1980s. Significant variations exist among different local district-heating
systems, due to local conditions.
Fuel mix in the Swedish district-heating production
70
60
100%
120
80%
100
TWh
50
40
60%
30
40%
80
60
40
20
20%
10
0
1980
1985
Waste and solar heat
Electric boilers
Waste incineration
1990
1995
Biomass
Heat pumps
Coal
2000
2005
2010
Natural gas and LPG
Oil
0%
1980
EUR/t
Figure 2.8
20
1985
1990
1995
2000
2005
Renewables and peat
Fossil fuels
Other
Carbon tax
0
2010
Note: TWH = terawatt hours. 2010 was an extremely cold year, leading to very high use of district heating.
Source: Swedish Energy Agency, 2012.
Key point
Swedish carbon and energy taxation has promoted substantial fuel switching –
away from fossil fuels – in the production of district heat.
Design of the carbon tax has led to different impacts depending on the type of heat supply. Since 2004, the
carbon tax level has gradually been reduced, especially for co-generation5. In 2011, it amounted to 7% of
the nominal level (only fuel use for heat production is subject to taxation), which is around USD 160/tCO2.
This reflects an aim to avoid overlapping policies: since many co-generation plants are also covered by
the EU ETS, they were exempt from the carbon tax. In September 2012, the Swedish government proposed
eliminating the carbon tax for co-generation.
© OECD/IEA, 2013.
46
Chapter 2
Nordic Policies and Targets
Nordic Energy Technology Perspectives
Heat-only stations also included in the EU ETS have been subject to relief of carbon taxation, but not to the
same extent as many of these plants are too small to be covered by the EU ETS. In 2003, Sweden introduced
the “electricity certificate scheme” with the aim of significantly increasing production of renewable electricity.
Since biomass for electricity generation is used exclusively in co-generation stations (Sweden has no biomassfired condensing plants), this has also affected the production of district heat. Taxation has gradually driven
up costs of fossil fuels, despite some cost reductions in co-generation schemes. The use of biomass in electricity
production has been supported by the electricity certificate system and previously by other schemes.
Table 2.2
Taxation in Nordic countries, different fuels
Denmark
Finland
Iceland
Norway
Sweden
Motor gasoline, excise tax, USD/L
-
0.008
0.194
-
-
Motor gasoline, energy tax, USD/L
0.820
0.627
0.313
0.751
0.425
Motor gasoline, carbon tax, USD/L
0.078
0.174
0.040
0.142
0.339
Motor gasoline, total
0.898
0.809
0.546
0.893
0.764
Motor gasoline, VAT
25%
23%
25.5%
25%
25%
Heating oil, excise tax, USD/L
-
0.004
-
0.147
-
Heating oil, energy tax, USD/L
0.384
0.096
0.000
0.000
0.110
Heating oil, carbon tax, USD/L
0.080
0.100
0.056
0.096
0.418
Heating oil, total
0.464
0.200
0.056
0.243
0.528
Electricity , excise tax, USD/kWh
-
0.0002
-
0.018
0.040
Electricity, energy tax, USD/kWh
0.137
0.021
0.001
0.000
0.000
Electricity, carbon tax, USD/kWh
-
-
-
-
0.000
Electricity total
0.137
0.021
0.001
0.018
0.040
Electricity industry, excise tax, USD/kWh
-
0.0002
-
0.001
0.001
Electricity industry, energy tax, USD/kWh
0.007
0.009
-
-
-
Electricity industry, carbon tax, USD/kWh
0.011
-
-
-
-
Electricity industry, total
0.018
0.009
-
0.001
0.001
Sources: Denmark: Danish Energy Agency, 2011. Finland: Finnish Government, 2008. Iceland: Parliament of Iceland, 2004; 2009; 2011.
Norway: IEA, 2011b; Norsk Lovdata, 2011. Sweden: SPBI, 2012; Swedish Tax Agency, 2012.
Key point
Energy and carbon taxes are present in all Nordic countries, but levels and
exemptions vary.
5 Co-generation refers to the combined production of heat and power
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 2
Nordic Policies and Targets
47
A market-driven approach
A common Nordic power market for Denmark, Finland, Norway
and Sweden
The development of the common Nordic power market began with the deregulation of the
Norwegian power system in 1991. The liberalisation required a set of market rules including
establishment of an hourly power market, regulation of electricity networks and third-party
access to the transmission infrastructure. A power market exchange was formed including
financial, spot and intraday markets while the transmission system operator (TSO) was
made responsible for a short-term market known as the Balancing Power Market. In 1996,
the Swedish power market was liberalised and a joint Norwegian-Swedish power exchange
was established by the name of Nord Pool Spot. Finland joined Nord Pool Spot in 1998 and
Denmark in 2000.
Nord Pool Spot was the world’s first international market for trading power and is currently
the largest market of its kind. It includes both the day-ahead and intraday markets, with 370
companies from 20 countries trading. In 2011, the market had a total turnover of 316 TWh.
Box 2.4
Components of the Nord Pool Spot markets
Day-ahead market (Elspot)
Each Nordic country is divided into several bidding
areas, set by the national TSO, as follows: Denmark
- 2; Finland - 1; Norway - 5; and Sweden - 4. Every
day at noon, all actors send in spot bids, including
both supply and demand bids for each hour in the day
ahead. Based on the intersection of the aggregated
supply and demand bids, Nord Pool Spot sets a
Nordic system price. Before the regional market is
cleared, each TSO determines the transmission
capacity among the bidding areas and Nord Pool
Spot calculates an area price that balances production and demand in each area to avoid congestion.
Contracted volumes are set for the coming day.
Intraday market (Elbas)
Once the area price is set, the intraday market opens,
with trading around the clock and trading for a specific operation hour closing one hour before the
hour of operation. This market is similar to financial markets, with individual supply and demand
bids. However, the prices are set based on a
© OECD/IEA, 2013.
“first come, first served” principle in which the
lowest sell price and highest buy price come first,
regardless of when an order is placed.
Balancing Power Market
Based on the area price and their obligations in
the day-ahead market, actors send in bids to the
Balancing Power Market to increase or decrease
production. If an imbalance arises between supply
and demand within the actual operational hour,
the TSO uses the bids to balance the system. The
Balancing Power Market is also used for congestion
management. The last activated unit in the Balancing
Power Market sets the price for the imbalance for
that hour, and any actor(s) that cause the imbalance
pay for the regulations.
In 2009, the Norwegian TSO introduced a Balancing
Power Option Market, in which both producers and
consumers bid available capacity for the Balancing
Power Market on a weekly or seasonal basis. The
Danish TSO runs a similar scheme.
48
Nordic Energy Technology Perspectives
Chapter 2
Nordic Policies and Targets
In the current market design, the electricity price differs for each hour within pre-defined
geographical price zones (also termed “zonal pricing”). This provides incentives for the
end-user to reduce electricity demand in periods with high prices, while price differences
among zones provide incentives to build new transmission capacity. However, short periods
with limited capacity and very high electricity prices (e.g. caused by an unexpected shutdown
of a nuclear plant in the winter) often do not provide sufficient incentives to expand the
transmission capacity. Internal congestion within a price zone is either managed through the
capacity setting in the spot market and/or through the Balancing Power Market.
The available transmission capacity is set by the TSOs on a zone-by-zone basis and can
therefore differ from the physical available transmission capacity of the actual power grid.
This may lead to price differences among areas.
One way to assure that the capacity set by the TSO within a given market equals the physical
capacity is by introducing so-called “nodal pricing”. Each node in the electricity grid has a
different electricity price: this helps to establish optimal use of the grid and also indicates
more specifically where new investments are needed. Concerns exist regarding how nodal
pricing will affect the liquidity of markets in which it is used. Nodal pricing is currently not
discussed among the Nordic countries.
Strong targeted energy technology policies
Since 2012, Sweden and Norway have had a common green electricity certificate market
that aims to increase renewable electricity production by 26.4 TWh during the period
2012-20. Sweden previously operated a national system (since 2003) that resulted in an
increase of renewable electricity production of 12 TWh and still has a target of 25 TWh
new renewable electricity production in 2020 compared to 2002. The electricity certificate
system requires consumers to purchase a certain quota of certificates for every kilowatt
hour they use. Electricity production qualifying for electricity certificates originate from
wind power, certain forms of hydro power, certain biofuels, solar energy, geothermal energy,
wave energy and peat in co-generation. The current price of electricity certificates is
around USD 30/MWh, slightly lower than the average electricity certificate price of USD
33/MWh during the period 2003-10.
In Denmark, electricity generation from renewable resources is supported through price
premiums and fixed feed-in tariffs. Price premiums provide a fixed premium per kilowatt
hour of power production. In Finland, wind and biogas receive feed-in tariffs, which ensure
that those producers receive a fixed price for their electricity (i.e. the level of feed-in
depends on the electricity market price). In Finland, wind-, biogas- and woodchip-based
electricity generation receive a premium on top of the electricity market price to guarantee
a certain revenue level for the generation. For wind and biogas, the premiums vary
according to the electricity market price; for woodchips, price varies according to the value
of emissions allowance in EU ETS. Wide-scale deployment of wind power in Denmark is a
result of a portfolio of policies, such as efficient remuneration policy, simple grid connection
procedures, interconnection with hydro-dominated power systems and a strong local
industry.
In Iceland, the state allocates funding to the Geothermal Research Group, a research
cluster in the field of geothermal energy. The state partly funds the Icelandic Deep Drilling
Project, a consortium with the purpose to drill into a high-temperature hydrothermal
system to reach supercritical hot hydrous fluids. Finland has a long tradition of supporting
RD&D of bio-based energy across the entire value chain, from wood harvesting to energy
production (Box 2.5).
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 2
Nordic Policies and Targets
49
Technology policies increasingly focus greater attention on the transport sector with policy
regulations extending beyond energy and carbon taxes. All Nordic countries have differentiated tax on vehicles based on CO2 emissions per kilometre. Sweden has been the most
successful of the Nordic countries in introducing renewable transport fuels, with 7.7% share
in 2010 compared to 3.9% in Finland and Norway and 0.3% in Denmark (Eurostat, 2012
[Iceland missing]). One of the key factors behind the Swedish success is the low-blending
of biofuels with fossil fuels, which is now practice in all the Nordic countries (see Chapter 5,
Transport). In addition, Sweden has exempted biofuel cars from the energy and carbon tax
until 2013. In Norway, biodiesel is subject to only 50% of the tax of gasoline; ethanol blended
in gasoline is subject to the gasoline tax while ethanol for all other use is exempted
completely. Electric vehicles (battery electric and hydrogen fuel cell) in Norway are exempted
from road tax, can drive in bus lanes and can park for free in public parking areas (see also
Box 5.1 in Chapter 5, Transport). Private transport in Denmark is subject to a high vehicle
registration fee; the fee can be reduced through awards to energy efficient vehicles that
have low fuel consumption. Electric and hydrogen vehicles are currently totally exempted
from the registration fee and the ownership tax. Iceland imposes four taxes and excise
taxes on carbon-based fuel, but no such taxes are imposed on hydrogen methane or other
biofuels, and excise taxes on all methane-powered vehicles are reimbursed. Owners who modify
their petrol- or diesel-powered vehicles for methane use receive excise tax refunds.
Although policies have been tightened in Sweden, emissions from the transport sector
have increased since 1990, largely reflecting growth in the transport volume. Without these
policies, emissions probably would have been even higher. The estimated reduction in
emissions from the increased tax levels for the vehicle fleet since 1990 is 1.9 million tonnes
of CO2 (MtCO2) per year in 2010 and 2.4 MtCO2/yr in 2020 (Swedish Government, 2009).
Box 2.5
Bioenergy in Finland
The bioenergy sector in Finland has strong traditional competences mainly developed within the pulp and
paper industry. The knowledge and knowhow in bioenergy technologies is high and covers the whole bioenergy
value chain, e.g. biomass procurement, biofuel production and bioenergy production with various technologies
in all scales. The share of biomass fuel in electricity production is today, and has long been, the highest in the
world (13% in 2010). The largest user of bioenergy in Finland is the pulp and paper industry, where biomass
and spent liquors are used to cover the energy need in pulp and paper production. Biomass is also used in municipal
combined heat and power (CHP) production, where biomass is often co-fired with peat, the other main indigenous
energy source in Finland.
The success story of the Finnish bioenergy is largely based on intensive research, development & innovation (RD&I)
on various bioenergy technologies. Tekes – the Finnish Funding Agency for Technology and Innovation is the
major financier of bioenergy related technology development. Since 2005, the Tekes funding on bio-energy
RD&I has more than triplicated being about 37 M€ in 2011 (Figure 2.9). In addition, the Ministry of Employment
and Economy grants promoting the use of indigenous fuels.
© OECD/IEA, 2013.
50
Chapter 2
Nordic Policies and Targets
Nordic Energy Technology Perspectives
Tekes funding on bioenergy RD&I
Figure 2.9
40
EUR million
30
20
10
0
2005
2006
2007
2008
2009
2010
2011
Source: Data from Tekes – the Finnish Funding Agency for Technology and Innovation.
Key point
Finland has strong RD&I policy on bioenergy.
Finland has offered favourable demonstration environment on bioenergy technologies, which has led to several
success stories. A good example is Alholmen Kraft’s power plant, which is the world’s largest power plant using
biomass fuel with the world’s largest circulating fluidized boiler (CFB). As a result of long term R&D Finnish
boiler industries have grown to be the global market leader in fluidized boilers. In addition, Finland is also a
major supplier of biomass procurement machinery.
Since 1980’s bioenergy consumption in Finland has more than doubled mainly due to expansion of pulp and
paper industries (Figure 2.10). The expansion is still expected to continue but his time largely because of EU’s
renewable energy targets by 2020. According to Finland’s National Renewable Allocation Plan, a major part of
Finland’s renewable target will be fulfilled by increased use of bioenergy and biofuels.
Figure 2.10
Bioenergy consumption in Finland by biomass fuel
350
Small scale
combustion
300
PJ
250
Wood-fuels
200
150
100
Black liquor
50
0
1970
1980
1990
2000
2010
Source: Data: Energy Statistics. Yearbook 2011. Official statistics of Finland
Key point
Bioenergy consumption has doubled since 1980’s in Finland
© OECD/IEA, 2013.
Mapping of selected Nordic energy policies
Table 2.3
Sector
51
Chapter 2
Nordic Policies and Targets
Nordic Energy Technology Perspectives
Denmark
Finland
Iceland
Norway
Sweden
Cross-sectoral
Energy and carbon tax
✓
✓
✓
✓
✓
EU ETS
✓
✓
✓
✓
✓
Technology-specific
support policies for
power and heat
Renewable energy price Feed-in tariffs;
Electrical safety fee;
premiums; fixed feed- investment supports surveillance fee
in tariffs and tenders;
local energy planning
Renewable electricity Renewable
certificates; funding electricity certifischeme for renewable cates
heat and electricity
Industry energy efficiency
Energy management Energy-saving
protocols
obligations
Voluntary agreements
Support for energy
Support to energy
efficiency investments efficient renewable
energy solutions
Support for energy
efficiency investments; energy
analysis and energy
inspections
Grants for energy efficiency; programme
for energy efficiency
in pulp and paper;
grants to renewable
heat and district heat
PFE - programme
for improving energy
efficiency; energy
efficiency support
Buildings energy efficiency
Building codes (min. For new buildings
energy performance and deep renovarequirements)
tions
EU targets to be
fulfilled by 2020
Maximum allowed
U-values in new
buildings
Energy labelling
Mandatory energy
labelling
Energy labelling of Mandatory energy
household appliances labelling
Mandatory energy
labelling
Cost-differentiated
VAT on space heat
energy; subsidised
electricity for space
heating in sparsely populated areas; grants
for insulation improvements; grants for shifting to geothermal
heating; grants for
heat pump installation
Grants for energy
efficiency; energy
saving loans; grants
to renewable heat
production and
district heating
Support for
investments; support
reduced energy use;
technology
procurement; energy
efficiency support
Mandatory energy
labelling
Support schemes for Supports for
Energy saving
building energy
renovation of
obligations
efficiency
buildings to increase
energy efficiency;
investment support
for heat pumps
Low-emission transport
Biofuels support
schemes
Obligation on
Feed-in tariff for
certain share of
biogas
biofuels on vendors
of transport fuels
Special petrol tax;
excise tax and VAT
on fossil fuel; exceptions from tax
on H2 and biofuels;
free parking for ecofriendly cars; differentiated vehicle
excise tax
Gasoline and diesel Exceptions from tax
tax; funding of pilot for biofuels
and demonstration
projects
Preferential vehicle
purchase/ registration schemes
Ownership tax and Differentiated
registration fee de- vehicle tax based on
pend on CO2 emissions CO2 emissions per km
per km; exemption for
electric vehicles (EVs)
and hydrogen EVs
Excise tax reimbursement on
methane- and
hydrogen-powered
vehicles
Differentiated vehicle tax; labelling,
new passenger
vehicles; reward
scheme; increased
public transportation
Car premium
(2007-09);
differentiated
vehicle tax
Source: Various energy policy documents, information gathered by Nordic ETP Working Group.
Key point
© OECD/IEA, 2013.
The Nordic countries have a broad set of energy policies, some of which are common
for all countries (such as energy and carbon tax) and some that are nation-specific.
Chapter 3
Chapter 3
Power Generation and District Heating
Nordic Energy Technology Perspectives
53
Power Generation and
District Heating
The development of the power and district-heating systems is central to
the Nordic decarbonisation pathways. An almost fully decarbonised Nordic
power and district-heating sector could be achieved by 2040.
Key findings
■■
Nordic countries have already implemented
policies and drawn up long-term political
objectives that support the continued expansion
and development of both these sectors.
■■
The Nordic region’s technological strengths
have led to the greater use of various sources
of power including hydropower, wind power,
efficient biomass use, co-generation1, geothermal
and nuclear power.
■■
The region is endowed with substantial sources of renewable energy, and technological
advancement has meant that renewables can
expand significantly and strengthen their position
within the Nordic energy mix. Wind power competitiveness is strengthened in all scenarios, as
advanced technological learning world-wide reduces
the cost of investment. The scenarios also reveal an
increased use of nuclear power, mainly in Finland.
■■
■■
Traditional power consumption is stagnant,
but new demand from electrification could
drive overall power consumption especially
on the road to decarbonisation. Low-carbon
electricity via electrification is crucial for reducing
emissions in sectors such as transport and buildings.
The Nordic power markets and regulatory setup are well developed and integrated in the
region. This can facilitate efficient trading opportunities in power and balancing services, which
are particularly important for decarbonisation.
■■
The Nordic power grid, with the exception
of Iceland, is highly interconnected internally and with Continental Europe. In all
scenarios, the Nordic region becomes a major net
exporter of electricity to Continental Europe and
the United Kingdom. This export is driven by
higher electricity prices in surrounding regions.
However, in order to facilitate export, transmission
capacity needs to be strengthened.
■■
Increased volumes of variable power
generation (e.g. wind power) highlight the
regulating and capacity issues. Nordic hydropower will be increasingly valuable in the regulation of the North European power system.
■■
District heating will continue to play a
central role in transforming the Nordic
energy system away from fossil fuels and
towards lower carbon dioxide (CO2) emissions.
Future expansion will, however, be limited due to
a high market share and a decline in demand for
heating in buildings.
■■
The synergies among the district-heating
system, power generation, the municipal
waste management system and industrial
energy systems are significant. Efficient cogeneration, waste incineration with heat recovery
(and co-generation), and the use of industrial waste
heat will all facilitate these synergies and are
increasingly used.
1 Co-generation refers to the combined production of heat and power (CHP).
© OECD/IEA, 2013.
54
Nordic Energy Technology Perspectives
Chapter 3
Power Generation and District Heating
Recent trends
The Nordic electricity-supply system is characterised by a low share of fossil fuels and, thus,
low emissions of CO2 (Figures 3.1 and 3.2). Significant differences in production levels exist
among the five Nordic countries. While Denmark and Finland still rely rather heavily on fossil
fuels, electricity production in the other three countries is associated with very little or no
CO2 emissions (Figure 3.2). Hydropower is the largest supplier of capacity in the Nordic
countries with around half of the total installed capacity.
The most diversified electricity generation system is found in Finland, while Norway relies
almost exclusively on hydropower for its domestic production. Fossil fuels for electricity
generation are important in Denmark and Finland. No emissions taxes are levied on electricity
generation in the Nordic countries. Renewable electricity is, however, supported through
different schemes. In Denmark and Finland, such schemes are mainly feed-in tariffs, while
Sweden and Norway introduced a common market for electricity certificates at the
beginning of 2012.
Figure 3.1
Energy flows in the Nordic electricity and heat sector, 2010
Net electricity
imports
68 PJ
Hydro 754 PJ
Electricity plants
890 PJ
Electricity
1 520 PJ
Geothermal
117 PJ
Wind 45 PJ
Biomass and
waste 497 PJ
Natural gas
251 PJ
Co-generation and
heat plants 524 PJ
Co-generation and
heat plants 588 PJ
Heat
580 PJ
Coal 429 PJ
Electricity plants
1 033 PJ
Oil 60 PJ
Nuclear
880 PJ
Conversion and
distribution losses
1 002 PJ
Notes: PJ = petajoules. Figures and data that appear in this report can be downloaded from www.iea.org/etp/nordic
Source: Unless otherwise noted, all tables and figures in this report derive from IEA data and analysis..
Key point
Nordic electricity generation and district heating is dominated by low-carbon fuels,
with renewables and nuclear accounting for three-quarters of the fuel consumption
of this sector.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
55
Chapter 3
Power Generation and District Heating
Electricity generation capacity by fuel type, 2010
Figure 3.2
40
Fossil fuels
35
30
Nuclear
GW
25
20
Other renewables
15
10
Wind
5
Hydro
0
Denmark
Finland
Iceland
Norway
Sweden
Note: GW = gigawatt.
Key point
Nordic electricity generation is dominated by renewables. Significant differences
exist among the five Nordic countries.
Increased North European integration
The European Union (EU) is striving towards an integrated European electricity market. Above
all, this implies a market-orientated model that encourages the efficient trade of electricity
among market players and across EU member states, and creates a basis for managing
resources more efficiently. In addition, market integration could also generate incentives for
investments by bringing prices more in line with the market. In recent years, several largescale interconnector projects have already led to the increased integration of electricity
markets in Northern Europe. Such investment projects are generally significant in size and
have, in some cases, also been subject to public opposition.
During years of high precipitation, the Nordic countries have exported electricity to Continental
Europe, and when precipitation has been low they have acted as net importers. The co-variation
between the annual production of hydropower in Nordic countries and electricity trade with
Continental Europe is clearly visible in Figure 3.3.
Traditionally the abundant hydropower resources in Iceland, Norway and Sweden have implied
relatively low electricity prices. This has been beneficial for the electricity-intensive industry
and has also led to a high share of electric heating in the heating market. Since the beginning
of the 1990s, however, the Nordic electricity markets have been integrated into one single
market known as Nord Pool Spot (Chapter 2).
This single market has been further interlinked with other Northern European electricity
markets, which has meant that, although some differences in electricity prices still remain
in Northern Europe, the prices are gradually being brought in line. In general, power prices
are higher in Germany, for example, than in the Nord Pool Spot area (Figure 3.4).
© OECD/IEA, 2013.
56
Chapter 3
Power Generation and District Heating
Nordic Energy Technology Perspectives
Co-variation of hydropower in Denmark, Finland, Norway and
Sweden with net electricity exports to Continental Europe
Figure 3.3
20
240
15
180
10
120
5
60
0
0
TWh
Net export
-5
-10
1990
Hydropower
-60
1992
1994
1996
1998
2000
2002
2004
2006
2008
-120
2010
Notes: TWh = terawatt hour. Imports to Finland from Russia are not included in this chart.
Source: EUROSTAT, 2012.
Key point
There is a strong interrelationship between annual variations in Nordic hydropower
and annual variations in net exports to Continental Europe.
During certain periods, especially during winter, prices are (sometimes considerably) higher
in the Nordic countries. Hence, the increased integration with Continental Europe does,
generally, exert an upward pressure on electricity prices for Nordic consumers. For the
region’s electricity-intensive industry, this reduces their competitive advantage.
Monthly wholesale electricity price differences between the
German market (EEX) and the Nord Pool Spot system
Figure 3.4
40
EUR/MWh
20
0
-20
-40
-60
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Note: EUR/MWh = euros per megawatt hour (nominal prices). A positive number in the figure means that prices are higher in Germany than in the Nord
Pool Spot area.
Source: Energinet,2012; Nord Pool Spot, 2012.
Key point
Wholesale electricity prices are generally higher in the German market than in the
Nordic market. This price difference drives cross-border trading.
© OECD/IEA, 2013.
57
Chapter 3
Power Generation and District Heating
Nordic Energy Technology Perspectives
District heating in the Nordic countries
The market share for district heating is typically high in the Nordic region, but there are
differences among the countries. In 2009, the share of district heating in heat demand for
the residential, services and other sectors accounted for: 47% in Denmark; 49% in Finland;
92% in Iceland; 6% in Norway; and 55% in Sweden (Euroheat & Power, 2011).
A market share of 50% can be considered high, particularly because district heating is not
suitable for some parts of the heating demand. District heating is therefore a mature
business in all of the Nordic countries except Norway, which means potential for growth is
limited. The majority of buildings in energy-dense areas are already connected to district
heating and, therefore, conversion of existing buildings to district heating provides only
limited potential for expansion. In Norway, market penetration of district heating is much
lower as the country has traditionally relied on electric heating.
Development of district heating in the Nordic countries
and estimates for the coming decade
Figure 3.5
60
Denmark
50
Finland
TWh
40
30
Iceland
20
Norway
10
0
1925
Sweden
1935
1945
1955
1965
1975
1985
1995
2005
2015
2025
Note: TWh = terawatt hour.
Source: Nordic Energy Perspectives, 2010.
Key point
Most Nordic countries experience stagnating district-heating demand, but use in
Norway may continue to grow.
District-heating production systems vary significantly among the five Nordic countries, but
there are also certain similarities. Significant differences are also found within a given country.
The choice of energy resources depends largely on local conditions such as availability of
different energy sources and energy infrastructure. Biomass and/or municipal waste are
major sources of renewable energy in all Nordic countries, except Iceland where geothermal
energy dominates. The domination of these energy sources is not only the result of available
natural resources but can also be partly explained by policy measures. Some of these
countries have very diverse district-heating supply systems (Figure 3.6).
© OECD/IEA, 2013.
58
Nordic Energy Technology Perspectives
Chapter 3
Power Generation and District Heating
Energy supply composition for district heat produced in 2009
Figure 3.6
60
Other
50
TWh
Coal
40
Oil
30
Natural gas
20
Electricity and heat
pumps
10
Biomass and waste
0
Denmark
Finland
Iceland
Norway
Sweden
Note: “Other” includes industrial waste heat.
Source: Statistics Finland, 2012; Danish Energy Agency, 2012; Swedish Energy Agency, 2012; Statistics Norway, 2012; Euroheat & Power, 2011.
Key point
Production of district heat is diversified, with significant differences between countries.
Finland’s district-heating production is diverse and composed of a large share of fossil fuels.
The use of biomass and peat is, however, increasing. A highly diversified production with a
large share of fossil fuels is also found in Denmark although biomass and waste incineration
is also becoming increasingly present. Biomass and an increasing share of waste incineration
dominate Swedish district-heating production. Norwegian district heating relies heavily on
waste incineration with significant contributions also from electric heating (particularly
electric boilers and heat pumps). In Iceland, all district heat is produced from geothermal
sources.
Large shares of the heat are produced in co-generation plants. In Denmark and Finland,
75% of all district heating comes from co-generation. This is considered to be one of the
most important success factors of district heating, as the high overall efficiency leads to
the low cost of heat generation. In Sweden, the share is much lower at 40%. As mentioned
above, national policy measures have had a large impact on the development and can
explain the differences among countries.
These large shares of district heating in Nordic countries have been reached through
fundamentally different regulatory regimes. Denmark and Norway rely, to a large extent,
on detailed regulation. In Denmark, municipal energy planning is responsible for assigning
certain areas to district heating and other areas to natural gas heating, with a possibility
of making collective energy distribution systems mandatory. In Norway, a concession for
district heating (i.e. a company is given an exclusive permit to conduct district-heating
operations in a certain area) is mandatory for plants with more than 10 megawatts (MW)
of maximum heat loads. Municipalities may decide on mandatory connection to the districtheating system for new buildings provided there is a concession for the district-heating
system. In Finland and Sweden, the development of district heating is less dependent on
regulation and more directly related to its competitiveness on the heating market.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 3
Power Generation and District Heating
59
The future of district heating – saturation, increased competition
and possible growth markets
The use of district heating is still increasing, but there are signs that this is occurring at a
much slower pace. Factors that will influence the future use of district heating include:
Decreases in demand
Increases in demand
• Increased energy efficiency in buildings.
• District heating to new customers, both
through conversion of existing buildings
and for new buildings.
• Conversion to other heating alternatives,
e.g. heat pumps.
• Warmer climate due to increased green
house effect.
• Heating demand due to more efficient new
household appliances.
• New markets for district heating.
Business development tends to follow an S-shaped curve. In the context of district heating,
the volume of energy sold relates to the penetration rate. When, or if, the level at which all
customers have district heating is reached, the volume is bound to remain at the same level
or decline due to improved energy efficiency and substitution of local solutions (e.g. heat
pumps). The European Union has ambitious targets for energy efficiency improvements by
2020 and this will probably affect the demand for heat and, therefore, also district heating.
Such a development for district heating is schematically illustrated in Figure 3.5 above, where
the historical development of district heating is combined with a recent outlook. The market
share for district heating is expected to grow, but at a much slower pace than has previously
been the case.
District heating is often a competitive alternative for new buildings, assuming that the
heat sources are available close to the potential customer. However, volumes are limited in
the short term largely because of the construction rate of new buildings and because of
the often very small heating demand in these buildings. Passive houses (ultra-low-energy
buildings), energy-neutral buildings and low-energy buildings are concepts that are often
discussed, and increasingly being built. District heating is constantly competing with other
heating alternatives, with heat pumps, in both new and existing buildings, acting as the
main competitor.
In Denmark, with its tradition of municipal energy planning, the strong focus on CO2
emissions could spur greater use of district heating if areas previously designated for natural
gas heating are converted to district heating.
As the growth of district heating in its traditional markets starts slowing down, it is natural
to intensify efforts to identify and exploit new markets. Examples of new markets could
include: underground heating (e.g. streets and pavements), absorption cooling, household
appliances (e.g. washing machines, dryers and dishwashers), greenhouse heating, heating
for industrial processes, and heating for refining fuels (e.g. drying). Increased investment in
variable renewable energy production, such as wind power and small-scale run-of-river
hydropower plants, could also generate new opportunities for district-heating systems, which
could be used to balance fluctuating and unpredictable electricity production. Large-scale
electric boilers or heat pumps could use “excess” electricity to produce district heating.
Co-generation will continue to be important as a means to reduce CO2 emissions and
transform the energy system towards more renewables. Co-generation is further
discussed in the technology spotlight later in this chapter.
© OECD/IEA, 2013.
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Scenario results
The power and district-heating sectors have been analysed for the 4°C Scenario (4DS), 2°C
Scenario (2DS) and Nordic Carbon Neutral Scenario (CNS). For the latter scenario also two
variants have been considered: the Carbon Neutral high Bioenergy Scenario (CNBS) and the
Carbon Neutral high Electricity Scenario (CNES) (see Chapter 1 for scenario definitions).
Key scenario assumptions for the power sector are summarised in Annex C. The scenarios
for Denmark, Finland and Sweden incorporate the 2020 targets of the National Renewable
Energy Action Plans (NREAP) for renewable electricity generation. Electricity generation from
renewables in these three countries combined will be 162 TWh by 2020 (ECN, 2012).
All scenarios also include calculations based on the common electricity certificates currently
existing in Norway and Sweden, which aim to increase the electricity production from
renewables by 2020. Expansion of nuclear capacity is limited to 6.4 gigawatts (GW) of new
reactors in Finland. While in Sweden, maximum nuclear capacity has been limited to the
current capacity of 9.3 GW, which includes the replacement of existing reactors. New coal
plants, with and without carbon capture and storage (CCS), have only been included for
Finland. In addition, the scenarios also assume that Danish coal-fired power generation, even
with CCS, will be phased out by 2030.
The assumptions on existing and new transmission lines are summarised in Table C.4 in
Annex C. Compared with the 4DS, the 2DS, CNS and CNBS assume a 2 GW increase in
export capacity to Continental Europe. The CNES assumes additional options for expanding
transmission capacity within the Nordic region as well as to neighbouring countries.
Two variants of the ambitious CNS targets for reducing CO2 emissions are considered in
the power sector:
■■ Carbon
Neutral high Bioenergy Scenario: This scenario variant assumes lower import prices
for biofuels (bio-ethanol, biodiesel) compared to the CNS, 2DS and CNES. As the assumed
domestic biomass potential in the Nordic region of around 1 600 petajoules (PJ) by 2050 is
already almost fully utilised in the CNS, the option of cheaper biofuel imports provides the
possibility to free up some of the domestic biomass use for other purposes (e.g. electricity,
heat generation). In the long term, imports of solid biomass (e.g. as a product similar to coal)
could be another option. This option has not been considered in the analysis as a large part
of the biomass in this scenario is needed in liquid form for the transportation sector.
■■ Carbon
Neutral high Electricity Scenario: Compared to the other scenarios (4DS, 2DS, CNS,
CNBS), the constraints imposed on new capacity additions in cross-border capacity among
the Nordic countries and for trade with Europe have been further relaxed. In the CNES, no
constraints have been imposed on additional investment in transmission lines within the
Nordic region, whereas the capacity with neighbouring countries has been limited to 16.5 GW.
Electricity demand
In the 4DS, final electricity demand in the Nordic region increases by more than 20% over
the next four decades. This increase is mainly driven by industry, which is responsible for
half of the growth in electricity demand (Figure 3.7). Final electricity demand in the 2DS
and the CNS is characterised by two counteracting trends: more efficient use of electricity
in the industry and buildings sectors on one hand, and on the other the electrification in
the transport sector and to a lesser extent also increased electricity use for CCS in some
industrial sub-sectors. Overall, final electricity demand in these scenarios in 2050 is 8%
lower than in the 4DS.
© OECD/IEA, 2013.
Development of final electricity demand (left) and its breakdown
by sector in 2050 (right)
TWh
Figure 3.7
500
100%
400
80%
300
60%
200
40%
100
20%
0
2010
0%
2020
4DS
Key point
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Nordic Energy Technology Perspectives
2030
2DS
2040
2050
CNS
4DS
Industry
2DS
CNS
Buildings, agriculture
Transport
Final electricity demand grows in all three scenarios, but saving measures in industry
and buildings halve the growth in the 2DS and CNS compared to the 4DS.
In the two variants of the CNS, final electricity demand is slightly higher than in the CNS.
The increase is largest in the CNES, with demand in 2050 exceeding that of the CNS by
3%. This additional electricity demand is mainly driven by the buildings sector, and to a
lesser extent by the transportation sector. Options for further electrification in the
transportation sector, beyond the levels already reached in the CNS, are limited.
Figure 3.8
Final electricity demand by scenario
450
CNES
TWh
400
CNBS
350
CNS
300
2010
Key point
© OECD/IEA, 2013.
2020
2030
2040
2050
The CNES has a modest increase in electricity demand compared to the CNS.
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Electricity generation and trade
Wind power, hydropower and other renewable sources of power generation increase over
time in the 4DS, 2DS and CNS (Figure 3.9). Wind power accounts for the lion’s share of that
increase and generates around one-fifth of total generation in the 4DS by 2050. In the 2DS,
the overall share of renewables is much larger, increasing from around 60% in 2010 to
almost 80% by 2050 (Figure 3.10). Increased volumes of variable production from wind will
highlight issues related to capacity and regulating power. Nordic hydropower will, therefore,
become increasingly valuable to regulate the electricity systems in Northern Europe.
Nordic net electricity generation by scenario
Figure 3.9
TWh
CNS
2DS
4DS
600
600
500
500
500
400
400
400
300
300
300
200
200
200
100
100
100
600
0
2010
Hydro
Key point
2020
2030
Nuclear
2040
2050
Biomass and waste
0
2010
Wind
2020
2030
Solar
2040
2050
Geothermal, ocean
0
2010
2020
Fossil fuels
2030
2040
2050
Fossil fuels with CCS
Growth in electricity generation in all scenarios is covered by low-carbon electricity
sources, mainly renewables.
In all three scenarios, nuclear generation grows by more than 40% between 2010 and 2050,
reaching a level of 120 TWh in 2050 (the growth is partly explained by low availability in
Swedish nuclear power plants in 2010). This corresponds to 20% of the electricity generation.
The expansion of nuclear energy is based on a capacity increase in Finland from the current
level of 2.7 GW to 6.4 GW in 2050 as well as the capacity in Sweden, which remains the same
as current levels. Conventional power generation based on fossil fuels, particularly coal, is
reduced in all scenarios. In the 2DS, coal-fired power generation falls by 85%, gas-fired
power generation is also drastically reduced by more than 90%. The remaining generation
from coal-fired plants of 5 TWh in 2050 is entirely based on plants equipped with CCS.
In 2DS, biomass CCS schemes become profitable by 2035, albeit on a rather small scale.
© OECD/IEA, 2013.
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Electricity generation mix in 2050
Figure 3.10
100%
Other
Fossil fuels with CCS
80%
Fossil fuels
60%
Nuclear
Wind
40%
Hydro
20%
Biomass with CCS
Biomass
0%
2010
4DS
Key point
2DS
CNS
CNBS
CNES
Low-carbon electricity sources provide more than 90% of the electricity in 2050 in all
scenarios, compared to an already high level of 83% in 2010.
Electricity generation capacity in both the 4DS and the 2DS increases from around 100 GW
to 140 GW in 2050 (Figure 3.11). Wind capacity, reaching almost 40 GW by 2050, is the main
factor behind this capacity growth. This increasing share of variable electricity capacity in
the power sector, reaching one-third in 2050, raises the issue of the system’s flexibility to
integrate these variable sources. Around 35 GW of the almost 60 GW hydropower capacity
in the Nordic countries in 2050 can be considered as dispatchable. In addition, 8 GW of gas
capacity (fired by natural gas or biogas) is still operational in 2050, but used only with low
load, full hours to provide additional flexibility. The growing electricity trade within the Nordic
region as well as with Continental Europe is an additional factor increasing the flexibility of
the system and balancing variable wind generation. Demand-side management can be a
further flexibility option, but has not been included in the quantitative analysis here.
Nordic net electricity capacity by scenario
Figure 3.11
GW
CNS
2DS
4DS
160
160
160
140
140
140
120
120
120
100
100
100
80
80
80
60
60
60
40
40
40
20
20
20
0
2010
Hydro
Key point
© OECD/IEA, 2013.
2020
2030
Nuclear
2040
2050
Biomass and waste
0
2010
Wind
2020
2030
Solar
2040
2050
Geothermal, ocean
0
2010
2020
Fossil fuels
2030
2040
2050
Fossil fuels with CCS
Growth in overall installed capacity is largely driven by wind capacity and reaches
around 50 GW by 2050 in all three scenarios.
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In the CNBS, the level of overall electricity generation is on a similar level as in the CNS. In
the variant, a shift from wind to biomass in the electricity generation mix exists (Figure 3.12).
This shift is caused by increased biofuel imports from outside the Nordic region due to lower
import prices in this variant (a sensitivity analysis of import prices on biofuels is presented
in Annex C). Instead of being used for biofuel production, more domestic biomass is available
for the power sector. Due to this shift, the biomass use in the power sector in 2050 increases
by 160 PJ or almost 30% in the CNBS compared with the CNS.
Figure 3.12
TWh
30
Change in electricity generation in the CNBS and CNES relative
to the CNS in 2050
CNBS vs CNS
30
20
20
10
10
0
0
- 10
- 10
- 20
- 20
- 30
- 30
Biomass
Key point
Biomass with CCS
Wind
Hydro
CNES vs CNS
Fossil fuels
Fossil fuels with CCS
Other
More available biomass in the CNBS leads to a switch from wind to biomass-fired
generation, whereas increased transmission capacities for exports in the CNES drive
the increased electricity generation by wind.
In the CNES, overall electricity generation increases by 7% in 2050 compared with the CNS.
The increased generation is mainly covered by wind and to a lesser extent by natural gas
plants with CCS (Figure 3.12).
In all scenarios, growth in electricity generation outpaces electricity demand, which implies
net exports from the Nordic region will rise to a level of roughly 80 TWh by 2050 in the CNS
(Figure 3.13). Exports to Continental Europe represent a considerable amount of this rise.
Historically, however, the Nordic region has often been a net importer of electricity, particularly
from Russia. If imports from Russia are excluded in the trade balance, the remaining net
exports of the region to Continental Europe have generally been less than 10 TWh. The
trend seen in the scenarios is driven by two factors: the comparative cost advantage of the
Nordic region in providing low-carbon electricity to Continental Europe; and the increased
transmission capacity, which takes into account lines currently under construction as well as
proposed future transmissions projects (Figure 3.13). Wholesale electricity prices are, therefore,
generally lower in the Nordic market than in Continental Europe (see Annex C for information
on electricity prices).
© OECD/IEA, 2013.
Figure 3.13
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Net electricity exports of the Nordic region (including imports
from Russia)
100
4DS
80
2DS
TWh
60
40
CNS
20
CNBS
0
-20
2000
Key point
CNES
2010
2020
2030
2040
2050
Net electricity exports have a large growth potential.
The increase in export flows between the 4DS and 2DS are due to a 10% increase in export
prices in the 2DS as well as the assumption that there will be an increase of 2 GW in transmission line capacity for exports.
In the CNES, overall net exports of the Nordic regions in 2050 at roughly 100 TWh are
one-quarter higher than in the CNS (Figure 3.13). Net exports vary significantly among the
countries in 2050, from 5 TWh in Denmark to 50 TWh in Sweden. Additional export transmission line capacity to Continental Europe, assumed in this scenario variant, drives the
increased exports (Table C.4 in Annex C) and stresses the cost advantage of the Nordic
region in producing low-carbon electricity. The exports are the main factor behind the
increased electricity generation in the CNES compared with the CNS (Figure 3.12), whereas
the potential for the electrification of the industry and buildings sectors have already largely
been exploited in the CNS.
A further discussion on Nordic electricity exports is found in a sensitivity analysis for the
CNES reported in Annex C. It illustrates that the perspectives for exporting electricity from
the Nordic region also depend on the cross-border transmission capacity and on the broader
electricity market conditions. In other words, exports depend on the electricity price in
Continental Europe as well as the potential for generating low-carbon electricity in the
Nordic region. Lower electricity prices in Continental Europe result in a decrease in electricity
exports, e.g. for a price level of USD 100/MWh2 instead of USD 150/MWh in 2050, exports fall
from 100 TWh to 60 TWh in 2050. Reducing the deployment potential of low-carbon
electricity, for example limiting the nuclear deployment to 3.2 GW instead of 16 GW in 2050,
results in a further reduction of exports to 20 TWh at an export price level of USD 100/MWh.
2 Unless otherwise stated, all costs and prices are in real 2010 USD, i.e. excluding inflation. Other currencies have been converted into USD using purchasing power parity (PPP) exchange rates.
© OECD/IEA, 2013.
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CO2 emissions from electricity generation
The current Nordic electricity generation is characterised by its relatively low CO2 emissions of
approximately 100 grams of CO2 per kilowatt hour (gCO2/kWh) of electricity.23 This is considerably
lower than the global average of around 550 g/kWh and the EU average of approximately 430
g/kWh. Large annual variations exist, however, due to certain variations in hydropower. The
majority of the 67 million tonnes of CO2 (MtCO2) emissions from the Nordic power sector in
2010 were generated by Denmark (33%) and Finland (46%). In both of these countries coal,
peat and natural gas still feature heavily in the power sector (Figure 3.14). The other countries
contribute fewer emissions in absolute terms due to the presence of renewables and nuclear
power.
In the 4DS and 2DS, CO2 emissions from electricity generation decrease significantly. In
the 4DS, emissions are reduced by 80% by 2030 compared with 2010. The decline continues
further, and by 2050 emissions from Nordic electricity generation reach 7 Mt or 10% of the
2010 level. The CO2 emissions reduction in the 4DS is mainly due to a reduced reliance on
fossil fuels and an increasing share of renewables in the Nordic electricity mix from around
60% in 2010 to almost 80% by 2050.
Figure 3.14
MtCO2
70
CO2 emissions from electricity generation by scenario
4DS
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
- 10
- 10
2010 2015 2020 2025 2030 2035 2040 2045 2050
Denmark
Key point
Finland
Iceland
2DS
2010 2015 2020 2025 2030 2035 2040 2045 2050
Norway
Sweden
Denmark and Finland are the main emitters of CO2 in the Nordic electricity sector
today, but emissions are substantially reduced in the 4DS and 2DS by 2050.
The emissions reductions are even greater in the 2DS. Carbon dioxide emissions from Nordic
electricity generation even fall slightly below zero by 2050 due to the CO2 being captured
at biomass-fired power plants, which results in a net removal of CO2 from the atmosphere.
To illustrate the CO2 savings in the 2DS, one can compare emissions in the 2DS with those
in a scenario with the same electricity generation as in the 2DS but with the electricity mix and
fossil efficiencies frozen at 2010 levels (Figure 3.15). Compared to such a frozen development
(referred to as “frozen 2010”), wind power is the main option to reduce emissions in the 2DS
relative to the frozen 2010 mix. Furthermore, biomass, nuclear, fossil-fuel switching and
CCS contribute to this reduction. As with any decomposition analysis, the resulting
3 The indicator is defined as CO2 emissions from electricity generation divided by electricity generation. For co-generation
plants, CO2 emissions from electricity have been calculated by assuming that the heat would have been generated in a
heat boiler with an efficiency of 90%. CO2 emissions allocated to electricity are the total CO2 emissions of the co-generation plant minus the thus derived emissions linked to the heat output (IEA, 2012).
© OECD/IEA, 2013.
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decomposition depends on the developments in the reference scenario, in this case on the
mix in 2010. As the share of hydropower declines in the 4DS and 2DS relative to the mix in
2010 (Figure 3.10), the technology does not feature in Figure 3.15. Hydropower, however, is
still an important option to meet a low-carbon electricity system that requires additional
capacity and investment, as discussed in the section on investment requirements.
CO2 reductions in the power sector in the 4DS and the 2DS
relative to the 2010 fuel mix, by technology area
Figure 3.15
MtCO2
100
4DS
100
80
80
60
60
40
40
20
20
0
0
- 20
2010 2015 2020 2025 2030 2035 2040 2045 2050
Biomass
Wind
Geothermal
Eff improvements
- 20
2DS
2010 2015 2020 2025 2030 2035 2040 2045 2050
Fossil-fuel-switching
CCS
Nuclear
Frozen 2010
4DS
2DS
Note: Eff improvements = efficiency improvements.
Key point
Wind, CCS and switching from coal to gas are the main contributors in reducing CO2
reductions in the 2DS relative to a frozen 2010 fuel mix.
In the CNS, about 8 Mt CO2 are captured annually in the power sector, which contains around
1 GW of coal capacity with CO2 capture in Finland and around 200 MW from biomass-fired plants
with CCS in both Denmark and Sweden. Taking into account CCS in fuel transformation
and industry, altogether around 20 Mt of CO2 are captured annually in the Nordic region by
2050. Denmark, Finland and Sweden (the latter two via transport to Norway for storage)
are the main countries deploying CO2 capture in the scenarios. Denmark and Norway have
available offshore storage capacity in the North Sea, which means that a transportation system
to storage locations could be constructed with some benefits from economies of scale. In
comparison with large-scale CCS infrastructure (capture as well as transportation and storage)
probable in Continental Europe, the Nordic dependency on CCS in the power sector is low.
As in the CNS, CO2 emissions from electricity generation in the CNBS and CNES approach zero
by 2050 (Figure 3.16). The lowest CO2 emissions are obtained with negative emissions of -5 MtCO2
in 2050 in the CNBS compared with around 0 Mt in the CNS and CNES. This additional reduction
in the CNBS is due to an increased use of bioenergy with CCS (BECCS) in the power sector,
which results in negative net CO2 emissions. In the CNBS, 7 Mt of CO2 are captured at
BECCS plants in the power sector compared with 3 Mt in the CNS. When considering the
entire energy sector and the ambition to meet the overall 85% reduction target in the Nordic
countries, the electricity system plays a significant role by completely decarbonising electricity
generation. This reflects the assumptions on the cost of technology in the different sectors,
with industry requiring the most expensive options to cut emissions significantly.
© OECD/IEA, 2013.
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Figure 3.16
CO2 emissions from the power sector (including heating plants)
90
80
4DS
70
Mt CO2
60
2DS
50
40
CNS
30
20
CNBS
10
0
-10
1970
CNES
1975
Key point
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
The power sector becomes completely decarbonised in all scenarios, except the 4DS.
District heating
As mentioned above, district heating has enjoyed a steady increase for decades in the
majority of the Nordic countries and has now reached a high market share in the heating
of buildings. This means that the possibilities for further growth are limited, a fact that is also
confirmed by the results from the IEA scenario calculations. Final use of district heat in
residential and commercial buildings has been analysed in both the 4DS and 2DS (Figure 3.17).
Development of district heating use in the Nordic region (left)
and its breakdown by sector (right)
Figure 3.17
150
100%
TWh
80%
100
60%
40%
50
20%
0
2010
0%
2020
4DS
2030
2DS
2040
2050
CNS
4DS
Residential
2DS
Services
CNS
Agriculture, non-specified
Note: These diagrams also include the end-use sector “Agriculture, fishing, non-specified other”, but here the use of district heating is comparatively small..
Key point
District heating use increases only slightly in the 4DS but stagnates and even falls
slightly in the 2DS and CNS.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
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69
The 4DS with moderate climate ambitions shows a very slow increase in the use of district
heating in the Nordic countries. The significant drop in district heating use between 2010
and 2015 is an effect of the very cold 2010, whereas the future model years are calculated
with average climate data.
In the more climate-ambitious 2DS and CNS, the use of district heating decreases slightly
between 2015 and 2050. This does not indicate that district heating loses large market
share. Instead the total heating market decreases due to increased energy efficiency efforts
for space and water heating in buildings. The share of district heating in the final energy use
for space and water heating maintains its level in the residential and service sector, with
around 40% (space) and between 50% and 60% (water).
District-heating production shows the same general trend as electricity generation, with
decreasing use of fossil fuels and increasing use of renewable energy. Especially in the 2DS
and CNS, carbon capture and storage at coal- and biomass-fired co-generation plants are
used to reduce emissions even further. In addition, electricity is increasingly used in boilers
or heat pumps for district heat generation. Combined with heat storage, this can be an
option to store surplus electricity from wind generation during times of low electricity demand.
In the CNBS and CNES, the use of district heat in the buildings sector develops along
similar lines to the 2DS (Figure 3.18). The structure of its supply changes, however. Biomass
plays a more important role in the scenarios in 2050. It reaches its highest share in the CNBS
in 2050 with almost 85% (defined as the share of district heating from biomass-fired
co-generation and heat plants in the total district heat generation), whereas the share of
electricity increases in the CNES compared with the CNS. Co-generation in district-heating
supply increases in all scenarios compared with the current level. The largest share is again
reached in the CNBS compared with over 80% in 2050.
The development of co-generation in the generation of electricity differs. Electricity from
co-generation, for example, initially declines over time in the CNBS until 2030 and increases
thereafter by 2050 to a level similar in absolute terms to today. Its share in total electricity
generation, however, continuously declines from the current level of 19% to 15%, as
generation from other sources, notably wind, increases at a much faster rate. In addition to
changes in the relative cost of technology (wind becoming cheaper as a result of global
learning), changes in the final demand structure also affect the development of co-generation.
© OECD/IEA, 2013.
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Figure 3.18
Development of final use of district heating in the buildings
sector (left) and its supply mix in 2050, by fuel (right)
100%
150
80%
100
TWh
60%
40%
50
20%
0
2010
0%
2020
4DS
Key point
2030
2DS
CNS
2040
CNBS
4DS
2050
2010
Biomass and waste
Electricity
Coal w/ CCS
CNES
2DS
CNS
CNBS
2050
Biomass and waste w/ CCS
Geothermal
Co-generation share
CNES
Natural gas
Coal
Demand for district heating does not alter in the CNS and its variants, but the fuel mix
of its supply changes.
Investment needs and fuel cost savings
Despite the current low-carbon intensity of the Nordic electricity system, further decarbonisation of the power sector in the 2DS and CNS requires a significant acceleration in
the use of low-carbon technologies. Wind power, for example, in the 2DS requires the annual
construction rate to increase from the 0.3 GW/yr over the past five years to 1.0 GW/yr in
the next decade and then still further to 1.4 GW/yr between 2020 and 2050 (Figure 3.19).
Figure 3.19
Annual new capacity additions of low-carbon power technologies
in the Nordic region in the 2DS
Coal with CCS
2020-50
Nuclear
Hydro
Geothermal
2010-20
Solar PV
Wind offshore
Wind onshore
2006-10
Biomass
0
200
400
600
800
1000
1200
MW
Key point
Deployment of low-carbon technologies has to be accelerated in the 2DS compared with
current rates, notably for wind, biomass, nuclear and CCS.
© OECD/IEA, 2013.
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Cumulative investment requirements in the power sector over the next four decades in the
4DS, 2DS and CNS are in the range of USD 400 billion (4DS) to USD 450 billion (CNS)
(Figure 3.20). Absolute investment may appear huge, and mobilising it can be challenging.
The absolute cumulative investment required in the power sector, however, represents no
more than 0.5% in the 4DS and 0.7% in the CNS of the cumulative gross domestic product
(GDP) created in the Nordic region over the next 40 years. Around 60% of the investments
are needed for power generation, whereas the remaining 40% are linked to the electricity
transmission and distribution network.
Figure 3.20
Investment requirement in the power sector by scenario
120
100
Transmission and
distribution
USD billion
80
60
40
Generation
20
0
4DS
2DS
CNS
2010-20
4DS
2DS
2020-30
CNS
4DS
2DS
2030-40
CNS
4DS
2DS
CNS
2040-50
Note: This figure includes power generation and transmission.
Key point
Investments of around USD 400-450 billion are required over the next four decades for
the power sector in the Nordic region.
Compared with the 4DS, the 2DS requires additional cumulative investments of some 15
billion (4%), and of some 40 billion (10%) in the CNS. The additional investment in the 2DS
and CNS can be offset by savings in fuel costs. In the 2DS, cumulative savings in fuel costs
between 2010 and 2050 amount to more than USD 70 billion (including revenues from
increased electricity net imports). In sum, overall net savings in the 2DS could amount to
USD 55 billion. For the CNS, the cumulative savings in fuel costs are around USD 90 billion
(or higher) due to increased net exports of electricity. Net savings are therefore around
USD 50 billion.
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Technology spotlights
Co-generation – an efficient technology linking several energy
markets
In the Nordic Energy Technology Perspectives (NETP) scenarios, power generation from
non-nuclear thermal electricity is characterised by a switch in fuel use from fossil fuels to
renewable and waste fuels, and by an increase in overall efficiency. This means that
co-generation, which is widely used in the Nordic countries, is likely to continue to play a
key role in the future development towards ambitious climate targets.
The prime benefit of co-generation is that it combines the production of electricity and
heat into one single and efficient process. Since the heat rejected in the production of
electricity is used for district heating or process heat, the overall efficiency is significantly
higher than in conventional condensing power-plant units. Thus, co-generation plants tend
to combine and integrate several energy markets. Besides electricity, district heating and
industrial steam, also waste management through waste incineration and, possibly in the
future, transportation fuels (poly-generation) may be linked in co-generation schemes.
Co-generation in district-heating systems accounts for about 70% of total electricity
generation in Denmark and 25% in Finland (Figure 3.21).34 Iceland, Norway and Sweden have
smaller shares of co-generation, primarily due to their abundant resources of hydropower,
which historically has implied fewer incentives for co-generation.
Figure 3.21
Gross electricity production from co-generation in district-heating
systems by fuel and in relation to total electricity generation, 2009
30
80%
60%
20
TWh
Other
70%
25
50%
15
Coal
Oil products
40%
30%
10
20%
5
10%
Natural gas
Biomass and waste
Share of total
0%
0
Denmark
Finland
Iceland
Norway
Sweden
Source: EUROSTAT, 2012. We assume that the EUROSTAT “Main activity CHP plant” definition refers to co-generation in primarily district heating. This
has also been verified by Nordic statistics.
Key point
Significant shares of co-generation in district-heating systems already exist, especially
in Denmark and Finland.
4 The definition of co-generation includes, however, a rather large variety of power and heat plant configurations. In
Denmark, for instance, large centralised co-generation schemes, which are primarily used for electricity production and
often operated in condensing mode, account for a large share of the electricity and district-heating supply. Such units
generally have a relatively low overall efficiency, but are still higher than in a condensing power plant.
© OECD/IEA, 2013.
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In the NETP model runs (85% reduction cases), the share of co-generation (of total
electricity production) is reduced somewhat over time (Figure 3.22). This is a consequence
of both stagnating demand for district heating and switching from fossil fuels to waste
fuels (which is a result of bans on landfills) and biomass (which is a result of renewable
support schemes). Such plants are, generally, characterised by lower power-to-heat ratios
than fossil-fuelled schemes, especially natural gas (biomass integrated gasification
combined cycles could potentially reach a similar power-to-heat ratio as natural gascombined cycles). These circumstances reduce the potential for producing electricity
linked to the district-heating market. Furthermore, other means of new electricity supply in
the Nordic market are also efficient from a climate-policy perspective and may compete with
co-generation investments. These include hydropower, wind power and nuclear power.
If co-generation relies on policy instruments favouring low CO2-technologies and/or
renewables, there is, thus, competition from other sources of renewable electricity production.
The CBNS assumes a decrease in biomass prices, which therefore increases the competitive
advantage of biomass-based co-generation (Figure 3.22 [right panel]). In such a case,
competing sources of renewable electricity generation, such as wind power, will generate a
somewhat smaller contribution.
Co-generation becomes almost entirely decarbonised in the CNS by 2050 (Figure 3.22).
Figure 3.22
TWh
80
Electricity production from co-generation in district heating and
industry in the Nordic countries
Electricity production
20%
60
15%
40
10%
20
5%
0
2010
Biomass and waste
2020
2030
Natural gas
2040
Oil
Coal
2050
Other
Share of co-generation
0%
2010
2020
CNS
2030
CNBS
Note: Represented in nominal figures (left, from the CNS) and in relation to total electricity production (right).
Key point
© OECD/IEA, 2013.
Biomass rapidly becomes the most important fuel in co-generation.
2040
2050
CNES
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Synergies between district heating and the electricity system
Balancing variable electricity production is set to be a key issue in the future energy
system. Improved demand response to price signals is an important measure to achieve
this. Synergies between district heating and the electricity system can also be an important
measure to efficiently help the balancing issue. Even though heat consumption, the same
as electricity consumption, fluctuates from one hour to the next, storing heat is an option
that could decouple consumption time and production time. Decoupling would therefore
make it possible to use electricity for heat production when electricity prices are low. When
there is less wind power in the system, electricity prices are generally higher and co-generation
plants generate more heat. The different heat generation technologies are activated on
the basis of their marginal generation costs. Such costs are linked to the electricity price,
which is determined on the basis of the marginal generation costs in the system. When
there is a great deal of wind power in the system, especially in the CNES, a downward
pressure is exerted on electricity prices. Price signals in the electricity market function as a
control parameter for cost-effective operation in both the district-heating and the electricity
systems. Large-scale heat pumps in district-heating systems could reduce generation when
the electricity price increases, while co-generation plants and heat storage could increase
their generation during such times. Low electricity prices would lead to the opposite
response. For optimal results, it is important that co-generation systems are operated in
relation to the price signals of the electricity market. In that way, district-heating systems
will be used efficiently to balance fluctuating electricity generation. In this case, districtheating systems and thermal storage can be used for the efficient integration of variable
power generation.
The role of nuclear power in the Nordic countries –
other modelling experiences
The analysed NETP scenarios all share the same rather optimistic view that nuclear power
will expand in the Nordic countries. The expansion amounts to roughly 40 TWh by 2050,
which is significant given that around 80 TWh has been produced in recent years. This also
means that the existing share of nuclear power in the Nordic generation of around 20% will
remain until 2050. A fifth nuclear reactor in Finland (Olkiluoto 3) is currently under construction,
adding 1.6 GW of capacity. Two additional reactors proposed by utilities Teollisuuden Voima
Oy (TVO) and Fennovoima45 are also under consideration, but no investment decisions have
been taken as yet. In Sweden, parliament removed the ban on new nuclear power plants in
2010, opening the way for new investment. In recent years, repowering investments
(capacity increases) have been made and are expected to continue. In the NETP model runs,
it is assumed that the maximum additional capacity in Finland will be less than 4 GW by 2050.
The assumptions for Sweden are that the existing capacity is maintained.
Even though such a considerable expansion of nuclear power may be feasible and in line
with current climate policy, the future of nuclear power is controversial. A development with
a less optimistic view on the future of nuclear power is likely to affect several of the findings
presented in NETP.
Whether new nuclear power plants will be built or not is, of course, a matter of cost versus
income gained in the wholesale electricity market (further considerations such as public
acceptance and risk assessment are, of course, also important if economical feasibility exits).
Model calculations in an interdisciplinary research project titled “North European Power
Perspectives” (NEPP, 2012) report a significant interval in the future development of whole
sale electricity prices in the Nordic market in different climate-policy-orientated scenarios.
5 Fennovoima is a joint venture among several energy and industry companies.
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In several cases, these price projections end up below the assumed costs of new nuclear
power plants. This is especially true for scenarios assuming a high degree of end-use
efficiency measures and significant support for renewable electricity supplementing carbon
trading in order to reach ambitious climate-policy goals. These scenarios differ from the
reported NETP scenarios in that they assume a more offensive end-use efficiency strategy. On
the other hand, they share the ambitious climate targets for the Nordic countries. Wholesale
electricity prices are generally lower in the NEPP study than in the NETP scenarios in which
demand is higher. Cost estimates for new nuclear power plants differ widely among the various
sources. The NEPP project assumes that investment costs will be around USD 4 400 per
kilowatt (kW). This is in line with the assumptions of the ETP 2012, which assumes roughly
USD 4 000 per kW.
The impact of a nuclear phase-out in Finland and Sweden has been investigated in more
detail in the NEPP project. The report is somewhat in contrast with NETP in which the
prospect for investment in new nuclear plants is the same across the scenarios. In the NEPP
project, a specific scenario, which assumed the Nordic region’s existing nuclear capacity
(including the fifth reactor in Finland) would be maintained until 2050, was compared with
another scenario in which the lifespan for nuclear energy was limited to 60 years.
Figure 3.23
TWh
500
Nordic electricity generation in a climate-policy-orientated scenario
Phasing-out nuclear
500
400
400
300
300
200
200
100
100
0
1990
Hydro
2000
Nuclear
2010
2025
Biomass and waste
2035
2050
Wind
Maintaining nuclear
0
Other renew.
1990
2000
Gas
2010
Oil
2025
CCS
Coal
2035
2050
Gross demand
Source: NEPP, 2012.
Key point
A phase-out of nuclear power in the Nordic countries is likely to be handled by reduced
electricity demand induced by higher electricity prices, less electricity export to
Continental Europe, and more investments in renewable and fossil electricity generation.
The two modelling cases with and without existing nuclear capacity post-2030 produced a
handful of important findings regarding the long-term development of the Nordic energy
markets. As a consequence of the nuclear phase-out, total Nordic electricity generation
would be significantly lower post-2030 than if nuclear power had not have been phased out
(Figure 3.23). On the other hand, the production of renewable electricity is higher if nuclear
power is phased out. However, in both cases power generation from renewables increases
considerably due to substantial investment support, climate policies and higher fossil-fuel
prices. Investment in the Nordic region’s renewable electricity generates excess capacity that
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could be exported to Continental Europe. This is also a clear result of the reported NETP
scenarios. In both investigated NEPP scenarios, the net export is of significant size post-2020.
In the case in which nuclear power is phased out, net export declines significantly post-2030
when the phasing out is initiated.
In Finland and Sweden, where nuclear power is currently used, the impact of the analysed
nuclear phase-out on the electricity balance is of a significant magnitude. This is due to the
relative importance that nuclear power has today in these two countries.
In the NEPP study it is also shown that Nordic electricity demand is lower when nuclear
power is phased out because electricity prices are higher as a consequence of the phaseout. Maintaining the existing production capacity throughout the modelling period by
extending the lifespan of nuclear plants will keep wholesale electricity prices lower than
would otherwise be the case. This is due to the fact that costs for extending the lifespan
are assumed to be low in relation to the calculated electricity prices. Electricity demand in
the Nordic market is, therefore, higher when nuclear power capacity remains constant,
according to the scenario definition. A larger overall Nordic production is accompanied by a
larger domestic demand. Since production exceeds demand, electricity is net exported, which
is also the case when nuclear power is phased out but at a lower level.
Finally, CO2 emissions are also affected but only to a minor extent. If nuclear power is phased
out, emissions from the Nordic stationary energy system (i.e. excluding transportation) are
around 5% higher (still far lower than today) than if nuclear power is maintained at the
same level throughout the modelling period. The impact on emissions from phasing out
nuclear power is comparatively low because nuclear power is largely replaced by greater
investment in renewable electricity and a slight reduction in demand. However, in a less climateconscious context with lower carbon prices and less support for renewables, the emissions
impact of phasing out nuclear is likely to be more significant.
To conclude, sensitivity analyses of the prospects of nuclear power in the Nordic electricity
market, as reported here, are important in order to further complete the picture. The
findings discussed here may, therefore, be used as additional reflections on the reported
NETP model runs where such a sensitivity analysis has been excluded from the scope. The
status of nuclear power in Nordic countries in 2050 will significantly affect the entire electricity
market, including electricity generation, demand, prices and cross-border electricity trade.
© OECD/IEA, 2013.
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77
Can the electricity system handle an electrified transport
system? – the Icelandic case
In the CNS, CNBS and CNES, which all assume an 85% emissions-reduction target for the
Nordic region, the use of electricity in transportation in all five Nordic countries increases
significantly from the current total of 4 TWh (mainly railroads) to typically around 40 TWh in
2050. A large share of this amount is assigned to electric vehicles (EVs). Such a development
will, of course, present new challenges to the electricity-supply system.
In many respects, a shift towards electric-powered transportation is especially desirable and
technically feasible in Iceland. Abundant clean energy, low electricity prices, and particularly
reliable nationwide transmission and distribution systems make Iceland a promising place
for EVs (World Economic Forum, 2011).
An analysis of the effect of EV usage on Reykjavik’s power and heat company, Reykjavik
Energy (RE), shows that 50 000 EVs could be charged within RE’s distribution area by 2030
(Kristmundsson and Einarsdóttir, 2010). That amounts to more than 15% of the forecast
nationwide car fleet at that time and may seem unrealistic. It is, however, a scenario, not a
forecast, that is set to demonstrate how the power system could cope with a major shift to
EVs. The authors deem RE’s distribution system, for the most part, able to cope with such
a shift. It would need some reinforcements, they conclude, but in some areas it could meet
the additional distribution needs of a 100% EV car stock.
The power capacity required to service the fleet of 50 000 would be around 70 MW, assuming
a 2.9 kW average charging power per car and at most 35% of the fleet being charged
simultaneously, according to the authors. The scenario comes down to 112 gigawatt hours
per year (GWh/yr), some 9.8% of RE’s production in 2010, and a mere 0.56% of the forecast
total Icelandic production for 2030 (National Energy Authority, 2011).
If the cars were charged cyclically, 60 MW of additional power capacity would be needed
within RE’s system. However, if the charging took place in off-peak hours, no further power
plants would be needed. Whether such excess capacity is already contained in the existing
system is not disclosed. In 2010, the installed capacity in the Icelandic electricity system
was around 2 580 MW, and the 60 MW increase is a relatively insignificant addition to the
generating capacity.
In the most extreme scenario, a 2030 aggregate car stock comprising EVs only yields an
annual demand of approximately 750 GWh, which is almost 4% of production forecast for
2030. Unharnessed resources currently deemed fit for use according to government plans
for hydropower and geothermal energy resources amount to 8 289 GWh. According to the
national transmission system operator Landsnet, a car stock fully comprising EVs would not
require any changes on their part. Electrification of the car fleet is, therefore, technically
possible.
The conditions in Iceland to increase sharply the share of EVs are good and little additional
investment is needed. Even a car fleet consisting solely of EVs is technically feasible and,
consequently, free of CO2 emissions. The assumptions behind all the scenarios in this report
rely on the introduction of EVs to a varying degree. The situation in Iceland shows that these
assumptions are quite realistic and no significant changes are required, either for infrastructure
or generating capacity. This creates the possibility to electrify the transport sector relatively
quickly, which is in accordance with the scenarios in this report.
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(Far) offshore wind power
The contribution from wind power is increasing rapidly in all Nordic ETP scenarios. In the
CNES, the scenario with the largest volume of wind power, the total generation in Nordic
countries amounts to around 150 TWh by 2050. Almost 40% of that amount is generated
in offshore installations. Wind conditions are typically better offshore than onshore, partly
compensating for the added costs associated with offshore installations. In many countries,
financial support mechanisms exist to encourage offshore wind development. These factors
coupled with reduced visual and environmental impact make offshore wind power attractive,
and current projections indicate a rapid increase in installed offshore wind capacity over the
next decade, at least in Northern Europe.
Based on the Nordic ETP model runs it is, however, clear that a significant increase in offshore investment is required to support the ambitious climate policies. While onshore wind
investments amount to almost 80 TWh by 2050 in the 4DS, which is the least climate-policyambitious scenario, offshore investments correspond to merely around 25 TWh. This contribution
more than doubles in the CNES.
According to statistics from the European Wind Energy Association, the Nordic region had
486 offshore wind turbines with a total installed capacity of 1 052 MW at the end of 2011.
Of this capacity, 860 MW was in Denmark, 164 MW in Sweden, 26 MW in Finland and 2.3 MW
in Norway. The turbine in Norway is a floating prototype, while all the others are wind
turbines mounted on a bottom-fixed substructure. The current offshore wind power plant is
typically deployed in fixed (to the seabed) configurations at water depths of less than 30 metres.
The offshore wind industry in Europe is set to experience a general move towards larger
installations in deeper waters and farther from shore, as available shallow-water near-shore
sites are becoming scarce. This brings technical and financial challenges that have to be
overcome.
The largest offshore wind farm in the Nordic region is Horns Rev 2 in Denmark, which has
a capacity of 209 MW. The Nordic IEA model runs indicate that prospects for offshore wind
farms are more favourable in Denmark than in the other Nordic countries. Offshore wind
power is not an option considered in Iceland. In the CNES, around 13 GW is installed in
Denmark by 2050, while the corresponding investments in Norway, Sweden and Finland do
not exceed 3 GW.
Compared to onshore wind power, the installation and maintenance costs of offshore wind
farms are significantly higher. Emphasis is therefore placed on investing in technology that
simplifies installation while increasing reliability. A clear manifestation of this is the trend
towards permanent magnet generators in either gearless or simplified gearbox turbines.
Floating turbines, which will enable offshore wind installations to be set in deeper waters,
are currently being researched and developed but are not yet commercially competitive.
The typical grid connection of offshore wind farms currently consists of turbines connected
along a number of radial feeders that are brought together at an offshore substation,
followed by offshore and onshore voltage transformation. For large and far offshore wind
farms, this solution is no longer suitable due to excessive power loss and need for expensive
reactive power compensating equipment. It is generally agreed that beyond certain power
and distance, high-voltage direct current technology is the preferred choice. The offshore
wind industry is developing at a rapid pace and no standard design has yet emerged that
provides the best solution for grid connection. In addition to transmission capacity from the
offshore wind farm to land, there is also a need for sufficient grid capacity onshore to transport
the power to demand centres.
© OECD/IEA, 2013.
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79
Critical challenges
Developing the power and district-heating markets is central to the Nordic policy of decarbonisation. By replacing fossil fuels in power generation and district-heating production
with energy sources without CO2 emissions, power and district heating can also be used
for the decarbonisation of other sectors. Nordic power can, in addition, be exported and
contribute to decarbonisation in other European countries.
Although the Nordic power and district-heating systems already have low CO2 emissions, our scenarios show that the development towards a CO2-free situation leads to a number of challenges:
■■ Wind
power is expanded considerably in all scenarios. It is challenging to implement this
with local acceptance of all the wind turbines, both land- and sea-based, needed for this
expansion. The variable and partly intermittent generation from wind leads to challenges
for the power system and power market related to maintaining generation capacity.
■■ Nuclear
capacity increases in the scenarios. Nuclear power decisions (mainly in Sweden,
but also in Finland) are always challenging, both politically and from a public acceptance
perspective. The reason for this is the well-known nature of nuclear power (e.g. safety in
operation, and handling and storage of nuclear waste). Furthermore, utilities may refrain
from such investment due to significant uncertainties concerning final construction costs.
■■ An
expansion of the electricity-transmission grid is required in order to facilitate an effective
use of the power system. Expansion is required both within the Nordic region and for export
from the region. This expansion also leads to a number of challenges:
• Building cables to the continent and to the United Kingdom (technical, financial and
acceptance challenges).
• Strengthening the transmission grid within and among the Nordic countries, as well as within countries that exchange power with the Nordic region (technical, financial and acceptance challenges).
• Increased export from the Nordic region is beneficial in a European context but also leads
to increased electricity prices in regions with traditionally low prices (typically the Nordic
region). This may lead to negative reactions among Nordic consumers.
■■ Even
though the model runs indicate that the future contribution from CCS is small in the
Nordic countries, the development of CCS is a key factor in a European context according
to the presented scenarios. This is a major technical challenge, but may also be challenging
from a public acceptance point of view.
■■ It
is important to maintain and strengthen the competitiveness of district heating on the
heating market in order to take advantage of important synergies. Synergies among the
district-heating system, power generation, the municipal waste management system and
industrial energy systems are important for meeting the decarbonisation policy.
■■ When
goals and strategies for improving energy efficiency are established, it is important that
they are based on a goal of minimising the use of primary energy, while taking advantage of
district heating.
■■ The
high market share of district heating in most Nordic countries makes it difficult to
expand further. Although challenging, new markets for district heating will be increasingly
important to identify and develop. Examples of such use could include absorption cooling,
household appliances (e.g. washing machines and dishwashers), greenhouse heating, and
heat for industrial processes.
■■
© OECD/IEA, 2013.
In addition to the challenges discussed above, implementing policies that create driving forces and
incentives large enough to achieve the necessary decarbonisation will be a great political challenge.
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81
Industry
Energy-intensive industries provide the backbone of the Nordic economy.
Decarbonising industrial processes and reducing carbon dioxide (CO2)
emissions is proving more challenging and more costly in industry than in
other sectors. NETP analysis indicates that significant investment has already
gone into making these industries more energy efficient, but further action is
needed to achieve the desired results.
Key findings
■■
■■
■■
Industry used approximately 35% of the
total Nordic final energy consumption in
2010,1 which is relatively high compared with other
European countries. Both the 2°C Scenario (2DS) and
the Nordic Carbon Neutral Scenario (CNS) place great
importance on improving energy efficiency and further reducing CO2 emissions in Nordic industry.
Significant reduction in CO2 emissions in
Nordic industry will be possible only if all
industrial sectors reduce their emissions.
Reductions could be gained by improving the
efficiency of processes, investing in new production technologies, switching fuels, implementing
carbon capture and storage (CCS), and using more
recycled and waste materials.
Less than one-quarter of energy demand in
industry is met by fossil fuels in 2050 in the 2DS.
The major fuel in industrial co-generation
is biomass and according to the scenarios its
share must be even higher in the future.
■■
In the 2DS, energy demand in industry peaks
before 2020 and by 2050 it decreases to
close to 2010 levels.
■■
In the CNS it is assumed that new technologies will be available earlier than expected
in the 4°C Scenario (4DS) and 2DS, and further
improvement will be achieved by using best available technologies (BAT). In order to achieve this,
investment in industrial research, development and
demonstration (RD&D) needs to increase.
■■
Carbon capture and storage (CCS) represents
the most important option among new
technologies for reducing industrial CO2
emissions after 2030. Currently, great uncertainties exist as to how to deploy CCS, and
therefore both CCS demonstrations and closer
Nordic collaboration would be needed to overcome the barriers.
1 Industrial energy consumption includes fuels used as feedstocks (non-energy use) in the chemical and petrochemical sector,
as well as energy consumption in coke ovens and blast furnaces. Other fuel-processing sectors, such as refining, are not
included in the industry sector analysis.
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Industry
Recent trends
The Nordic economies have long been largely dependent on energy-intensive industries, such
as pulp and paper production, iron and steel, chemicals and petrochemicals, aluminium, and
cement. In recent years, Nordic industry has undergone some structural changes as the
emerging economies in Asia and South America have increased their own production of
industrial goods, thus changing global industrial markets. Nordic countries benefit from rich
natural mineral and forest resources and have the possibility to produce low-cost and
carbon-free energy, which would increase the competitiveness of energy-intensive industries
in a future carbon-constrained economy.
For the purposes of this study, industry comprises manufacturing, construction and mining.
Total final energy demand of the Nordic industrial sector was 1 606 petajoules (PJ) in 2010,
which represented 35% of total final energy use in the Nordic countries. Approximately 70%
of Nordic industrial energy was consumed in Sweden (612 PJ) and Finland (518 PJ) in 2010,
which produce pulp and paper as well steel, iron and other metals. In Iceland and Norway, the
aluminium industry is a major consumer of energy and is responsible for over 60% of greenhousegas emissions from the Icelandic industrial sector. Nordic countries also produce cement,
petrochemicals and chemicals, which also consume large quantities of energy and are thereby
responsible for significant CO2 emissions in the region.
Fossil fuel use in Nordic industry is already low, representing about 36% of the total energy
used in industry (Figure 4.1). Nordic industry, therefore, accounts for only about 20% of total
CO2 emissions. The largest Nordic industry sector, pulp and paper, mainly uses biomass for
energy production, i.e. wood side products (such as bark, branches and chips) and spent
liquors (black liquor). Aluminium production requires electricity, which is largely produced from
renewable energy sources in both Iceland and Norway. Part of electricity and heat is, however,
produced from fossil-fuel sources, which should be kept in mind when analysing the greenhousegas balance of the whole energy system. Globally, industrial energy use comprises 70% of
fossil fuels. In the Nordic region, the majority of oil used in industry is used in the petrochemical
sector, while coal is mainly used in the iron and steel industries (Figure 4.1). Both industries are
large emitters of CO2 in the region.
The analysis included in this chapter centres on the five major energy-intensive industrial
sectors, which are also responsible for the highest quantities of industrial CO2 emissions:
iron and steel, chemicals and petrochemicals, aluminium, pulp and paper, and cement. In
2010, the energy consumption of “other industry” sector was 25%, but due to the low share
of fossil-fuel consumption, its impact on the region’s greenhouse-gas emissions is low and
therefore the focus has been placed on the five major industrial CO2 emitters.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Figure 4.1
83
Chapter 4
Industry
Energy flows in Nordic industry, 2010
Coal
161 PJ
Iron and steel
185 PJ
Oil
300 PJ
Chemical and
petrochemicals
300 PJ
Natural gas
117 PJ
Aluminium
173 PJ
Biomass, waste
and other
renewables
346 PJ
Pulp and paper
512 PJ
Cement
29 PJ
Electricity
and heat
682 PJ
Other industry
407 PJ
Source: Unless otherwise noted, all tables and figures in this report derive from IEA data and analysis.
Notes: Includes energy use as petrochemical feedstock and energy use in coke ovens and blast furnaces. “Other industry” includes non-ferrous metals
(excluding aluminium), non-metallic minerals (excluding cement), transport equipment, machinery, mining and quarrying, food and tobacco, printing, wood
and wood products, construction, and textile and leather. Figures and data that appear in this report can be downloaded from www.iea.org/etp/nordic
Key point
The share of fossil fuels is less than 40% of total energy used by Nordic industry, while
globally, fossil fuels account for more than 70% of industrial energy use.
Nordic industry, particularly in Finland and Iceland, is significantly more energy intensive than
the OECD average because of a high share of pulp and paper as well as iron and steel
industries in Finland, and aluminium industry in Iceland (Figure 4.2). Only in Denmark is the
energy intensity far below the OECD average. Industrial energy intensity in Denmark, Norway
and Sweden has gradually decreased since the 1970s as energy efficiency has improved.
In Finland, the energy intensity started to decline in the 1990s. In Iceland, however, the
trend has been very different: energy intensity has been increasing since the 1990s due to
structural shifts in the economy towards energy-intensive industries, and now most
recently due to economic turmoil affecting the banking sector. In addition, Iceland has
increased its aluminium production, which has, in turn, increased its industrial energy
consumption. The impact of the financial crisis in 2008 is shown in the figure as a slight
increase in energy intensity due to a decrease in gross domestic product (GDP), which was
partly caused by a decrease in exports. The increase is, however, insignificant in Denmark,
Finland, Norway and Sweden because production of industrial products decreased and
a number of the most outdated, inefficient industrial facilities closed permanently. Even
though energy intensity is high, energy efficiency of the region’s industry is also high
compared with the OECD average. In Finland and Sweden this is largely due to a high
share of industrial co-generation.12 In Iceland and Norway, the energy efficiency of the
aluminium industry is among the best in the world.
2 Co-generation refers to the combined production of heat and power.
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Evolution of aggregate industrial energy intensity
Figure 4.2
6
OECD
5
GJ/2005 USD PPP
Denmark
4
Finland
3
Iceland
2
Norway
1
0
1971
Sweden
1975
1980
1985
1990
1995
2000
2005
2010
Notes: GJ = gigajoules, PPP = purchasing power parity.
Unless otherwise stated, all costs and prices are in real 2010 USD, i.e. excluding inflation. Other currencies have been converted into USD using
purchasing power parity (PPP) exchange rates.
Key point
Nordic economies, especially Finland and Iceland, are largely dependent on energy-intensive
industries, which results in high energy intensity compared with the OECD average.
Saving energy and reducing CO2 emissions with BATs
Significant savings in energy use and reductions in CO2 emissions in industry are possible
if the best available technologies (BATs) are used. Table 4.1 shows the results for the five
most energy intensive sectors in the Nordic region specifically analysed in this section. In
summary, it is estimated that using BATs could reduce final energy use by between 8% and
27% in different sectors in the Nordic region. Total estimated savings for the five sectors
analysed amount to 172 PJ per year, which is equivalent to 11% of industrial energy use in
2010 and 3.7% of total Nordic energy consumption in the same year. Potential direct CO2
savings vary from 2% to 38%, a total equivalent to 8.1 million tonnes of CO2 (MtCO2), which
amounts to a reduction of 18% of total CO2 emissions from industry and 4% of total energy
related Nordic emissions in 2010. In the 2DS and CNS, some improvements in BATs are assumed
from the existing level shown in Table 4.1.
In the cement industry, most of the energy savings (approximately 60%) can be achieved
by improving the thermal energy efficiency of kilns.23 For example, energy efficiency can be
improved by using waste heat for the drying of raw material and energy production. CO2
emissions from cement production can also be reduced by substituting the clinker34 in the
clinker-to-cement ratio with materials such as blast furnace slag, fly ash, natural pozzolans45
or limestone. The increase of clinker substitute is an important option, particularly in Sweden.
For iron and steel, almost 65% of the savings could be achieved by making blast furnaces more
efficient. Improving efficiency in producing and using heat needed in the iron and steel process, and
increasing energy recovery in the chemicals sector, would account for more than 55% of savings.
3 Expressed as dissipated energy related to energy input for cement clinker manufacturing.
4 Clinker is lumps or nodules, usually 3–25 mm in diameter, produced by sintering limestone and alumino-silicate (clay) during
the cement kiln stage.
5 A pozzolan is a siliceous or siliceous and aluminous material that will react chemically with calcium hydroxide in the presence
of water to form compounds possessing cementitious properties.
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For pulp and paper, the efficient use of electricity and increased use of recycled paper also
account for 60% of savings.
Such savings cannot be achieved immediately. The rate at which current BATs are implemented
in practice depends on various factors including capital stock turnover, relative energy costs,
availability of raw materials, rates of return on investment, and regulation.
Table 4.1
Estimated potential savings from adoption of BATs in Nordic
industry
Energy savings
potential (PJ/year)
Share of 2010
industrial energy use
CO2 savings potential
(MtCO2/year)
Share of 2010
industrial emissions
Cement
7.9
27%
2.1
38%
Iron and steel
27.1
15%
3.4
22%
Chemicals and petrochemicals 69.1
23%
2.2
53%
Pulp and paper
54.8
11%
0.1
2%
Aluminium
13.5
8%
0.3
11%
Total
172.4
11%
8.1
18%
Notes: Savings for the chemicals and petrochemicals sectors are based on the average product mix of OECD Europe countries. The data are based on the IEA
analysis, which is reviewed by industry partners.
Applying BAT is not the only means to reduce CO2 emissions in industry. All five industries
produce energy-related CO2 emissions but some industries, such as the aluminium and steel
industries, use carbon as a reductant in the production process and therefore produce “process
emissions”. Industrial CO2 emissions could be reduced by improving energy efficiency, switching
to biomass or electricity instead of fossil fuels, and eliminating the use of carbon in production
processes to cut process-related CO2 emissions. For example, electric arc furnaces are a
common method of reprocessing scrap metal to create new steel but they use a lot of
electricity. CO2 emissions could be reduced if the process was less dependent on fossil
fuels, such as coal and coke. The aluminium industry is looking for carbon-neutral electrodes
to radically decrease CO2 emissions.
Scenario assumptions
An important assumption in the scenario analysis is that the industrial sector in the Nordic
region will remain relatively stable. Long-term scenario assessments for the industrial sector
can often be challenging because of possible changes in industrial structures and production
volumes. The introduction of new products can also add to the challenge as they often require
different processes and balance of energy compared with existing ones. In the technology
spotlights, presented at the end of this chapter, an example of the renewal of the pulp and
paper industry reveals its impact on Nordic energy systems. The pulp and paper industry
has recently undergone structural changes as some of the region’s production has moved
to Latin America and Asia.
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For the purposes of this study, the scenarios are based on assumptions about the future
materials production. Given the maturity of the Nordic economy, production volumes are
primarily expected to be driven by population growth and, to a lesser extent, by GDP development, resulting in moderate increases (Figure 4.3). In addition, assumptions on production
volumes were justified according to country-specific information on the future industrial
structure. Despite the different processes and raw materials used, the various scenarios all
assume the same level of production to ensure that accurate comparisons can be made
across scenarios. For example, the 2DS and the CNS both assume that a higher share of
recycled materials will be used in all industries studied.
Figure 4.3
Materials production in the Nordic countries
30
2010
Mt
25
20
2030
15
2050
10
5
0
Cement
Steel
Paper
Feedstock
Aluminium
Notes: Feedstock = chemicals and petrochemicals feedstock. Aluminium includes the production of aluminium that is not transferable in final product,
but reused by the industry as “new scrap”.
Key point
Given the economic and industrial maturity of Nordic countries, a very moderate
increase in production volumes is expected.
Developments in the 4DS reflect a future scenario that includes climate policies that
governments have pledged to implement worldwide. According to current national policies,
the use of biomass and alternative energy sources increases largely due to the European
Union’s 2020 energy and climate policies (Chapter 2). All of the energy-intensive industries
in the Nordic region, except those in Iceland, are included in the EU Emissions Trading
Scheme (ETS) meaning that industries need to either reduce their CO2 emissions or buy
the emissions allowance from the EU market. Until now, industries have received a large
share of the required emissions allowances for free but the share of free allowances
decreases by 2020. The cap for the EU ETS as a whole decreases by 21% in the period
2013-20.
In the 2DS, the global CO2 emissions are halved in 2050 compared with existing emissions
levels. According to Energy Technology Perspectives 2012 (ETP 2012), global industrial emissions
would be approximately 20% lower than current levels. This reflects that, on average, deep
emissions reductions in industry are more challenging and costly than reducing CO2 emissions
in other sectors covered in this analysis, except for the transport sector. It also highlights
the limitations of the industry to switch to using electricity in industrial processes. For example,
there are currently no options to introduce electrification in the cement-sector, and such
options for blast furnaces are still decades away. Biomass is hardly used in the region’s
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industrial sectors except in the pulp and paper industry due to limitations on the amount of
low-cost biomass resources needed. Nordic industry should also increase its share of recycled
materials (e.g. steel, aluminium, plastics) to reduce the emissions of industrial production.
However, the slight increase in material consumption in the region means that the availability
of waste material is not expected to increase dramatically and, as such, recycled materials
would need to be imported. In the scenarios, the amount of recycled materials available
and used are model inputs.
In the more ambitious CNS, total Nordic CO2 emissions are reduced by 85% compared with 1990.
For industry, this scenario requires that new technologies will be available earlier than expected
in either 4DS or the 2DS, and further improvement will be achieved by using BATs (Table 4.2).
The CNS sets out very ambitious goals for reducing emissions in the industry and assumes a
shift to carbon-neutral sources of energy for the different processes where this option exists.
Table 4.2
Status of technology and key indicators for the industrial sector
under the different scenarios
Sector
4DS status in 2050
2DS status in 2050
CNS status in 2050
Cement
New kilns built in 2050 perform at
3.0 GJ/t clinker and 95 kWh/t
cement (3.7 GJ/t clinker and 122
kWh/t cement in 2010). Alternative
fuels reach 20% (17% in 2010) and
clinker-to-cement ratio declines to
0.77 (0.81 in 2010). CCS is installed in 6% of plants by 2050.
Alternative fuel use represents 38%
of total energy consumption and
clinker-to-cement ratio declines to
0.75. CCS is installed in 35% of
plants by 2050.
New kilns built in 2050 perform at
2.5 GJ/t clinker. Alternative fuels
reach about 50% and clinker-to-cement ratio declines to 0.66. CCS is
installed in about 50% of plants by
2050.
Iron and steel
Average intensity of crude steel
production is 21.3 GJ/t crude steel
(19.71 GJ/t in 2010). Electric arc
furnaces account for 58% of production by 2050 (51% in 2010).
CCS is equipped in less than 15%
of the plants by 2050.
Average intensity of crude steel
production decreases to 15.8 GJ/t
crude steel. CCS is equipped in
about 30% of the plants by 2050.
Electrolysis and hydrogen reach
only marginal levels by 2050.
Smelting reduction to account for
about 15% of production by 2050.
Average intensity reaches 11.1 GJ/t
in 2050. CCS is equipped in over
30% of the plants by 2050.
Electrolysis and hydrogen reach
only marginal levels by 2050.
Chemicals and
petrochemicals
Catalysis and process intensification
reduces energy intensity by 7%. CCS
deployed in 25% of ammonia plants
and over 15% of ethylene plants.
Catalysis and process intensification
reduces energy intensity by about
10% and facilitates the use of biobased feedstock, which reaches 6%
of total feedstock use. Energy recovery helps prevent about 10% of
CO2 emissions in 2050. CCS deployed in 50% of ammonia plants
and over 30% of ethylene plants.
No major differences between the
2DS and the CNS.
Pulp and paper
Improvement of BAT by 10% from
current levels. Biomass accounts for
55% of total energy consumption
(same level as in 2010, despite
increase in production). Average
energy intensity reaches 18.7 GJ/t
paper and paperboard (20.4 Gt in
2010). CCS deployed in 3% of
chemical pulp plants.
Biomass accounts for 60% of
No major differences between the
total energy consumption. Average 2DS and the CNS.
energy intensity reaches 17.1 GJ/t
paper and paperboard and emissions
intensity reaches 1.5 MtCO2/t paper
and board. CCS deployed in 10% of
chemical pulp plants.
Aluminium
Electricity intensity of primary aluminium production decreases to
12 617 kWh/t aluminium
(15 027 kWh/t in 2010).
Electricity intensity of primary
Electricity intensity of primary
aluminium production decreases to aluminium production decreases to
11 674 kWh/t aluminium.
11 276 kWh/t aluminium.
Notes: GJ/t = gigajoules per tonne. kWh/t = kilowatt hour per tonne.
© OECD/IEA, 2013.
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Scenario results for industrial energy use
The increase in production of materials, most noticeably of crude steel and cement, will drive
the 20% increase in energy use in Nordic industry between 2010 and 2050 in 4DS. However,
the share of fossil fuels used decreases from 36% in 2010 to 27% in 2050, which is driven
by improving energy efficiency in industrial processes, as well as increasing the use of
alternative fuels in the cement industry and by increasing the use of biomass in the pulp
and paper industry (Table 4.2)
By contrast, in the 2DS the industrial energy demand peaks before 2020 and declines close
to 2010 levels by 2050 (Figure 4.4). Less than one-quarter of industrial energy demand is met
by fossil fuels in the 2DS. Further use of recycled materials, quicker turnover of equipment,
and the adoption of BATs for all new and refurbished plants explain, in part, this decrease in
energy consumption. In 2050, the energy consumption is nearly 15% lower in the 2DS than
in the 4DS.
In the CNS, energy consumption is further reduced and reaches 1 600 PJ in 2050, which is
a reduction of 18% compared with the 4DS. The use of fossil fuels is substantially reduced
and accounts for only 17% of total industrial energy consumption in 2050.
Figure 4.4
Final energy consumption, by industry
2.0
Coal
Oil
1.5
EJ
Heat
1.0
Electricity
0.5
Natural gas
0.0
4DS
2010
Key point
2DS
CNS
Biomass, waste and
other renewables
2050
The share of fossil fuel use in Nordic industry decreases in all scenarios and reaches
17% in CNS in 2050.
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Scenario results for industrial CO2 emissions
Direct CO2 emissions reveal a downward trend compared with the existing levels in all
scenarios analysed (Figure 4.5). A significant reduction in CO2 emissions in industry by 2050
compared with 2010 emissions levels can be achieved only if all industries reduce emissions
by improving efficiency in processes; investing in new production technologies (e.g. smelting
reduction in the iron and steel industry or black liquor gasification in the pulp and paper
industry); switching fuels; implementing CCS; and using more recycled and waste materials.
In the 4DS, the CO2 emissions are reduced by approximately 10 MtCO2 by 2050 compared
with 2010 levels. In the 2DS, reductions amount to 22 MtCO2 (49% lower than 2010) and in
the CNS reductions reach 30 MtCO2 (68% lower than 2010) (Figure 4.5). Between 20% and
30% of reductions will be achieved by using CCS in the iron and steel, pulp and paper,
chemicals, and cement sectors. Further reductions could be achieved by improving efficiency
in processes; investing in new production technologies; fuel switching; and using more
recycled and waste materials. This scenario assumes that the chemicals industry will move
towards bio-based raw materials. From the technical point of view, almost all industrial
materials (e.g. plastics, composites and organic chemicals) made from fossil fuels could be
derived from biomass.
Achieving the targets for reducing emissions in the 2DS and CNS requires that all industries
in the region reduce emissions and that all the necessary technological options will be available.
Particular challenges face industry in the CNS. It is assumed that several new technologies
will be commercially available and feasible earlier in CNS than expected in the 2DS (Table
4.2). On the other hand, near-term actions for RD&D of these technologies is required.
Figure 4.5
Direct CO2 emissions reduction in the 4DS, 2DS and CNS scenarios,
by industry
50
40
MtCO2
4DS: 31.7 MtCO2
30
2DS: 23.0 MtCO2
20
CNS: 14.2 MtCO2
10
0
2010
Carbon neutral
2020
Cement
Iron and steel
2030
Pulp and paper
2040
Aluminium
Chemicals and petrochemicals
2050
Other industries
Notes: Aluminium includes combustion-related emissions only. Other industries include non-ferrous metals (excluding aluminium), non-metallic minerals
(excluding cement), transport equipment, machinery, mining and quarrying, food and tobacco, printing, wood and wood products, construction, and textile
and leather.
Key point
© OECD/IEA, 2013.
A 50% to 70% reduction in CO2 emissions could be achieved by 2050 compared with
current levels.
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Investment needed to decarbonise
Nordic industry
In the 2DS, investment needed by 2050 is estimated to be between USD 30 billion and USD
36 billion higher than in the 4DS. Most of that investment will be needed in the pulp and paper
industry as the scenario assumes the complete integration of chemical pulp and paper
production in the 2DS and CNS (Table 4.3). Investment in new technologies would yield
significant savings in fossil-fuel consumption but would lead to increased costs for biofuel and
feedstock. Many of the energy efficiency investments are already competitive based on life cycle,
meaning that energy savings over the assumed life cycle of an industrial plant can offset the
investment costs to improve energy efficiency.
Table 4.3
Additional investment required by industry between 2010 and
2050 (USD billion)
Investment required
4DS
2DS
CNS
Cement
1.3 to 1.6
2.6 to 2.8
2.4 to 2.9
Iron and steel
5.3 to 5.8
5.6 to 6.3
6.9 to 7.5
Chemicals and petrochemicals
17 to 18
18 to 19
18 to 19
Pulp and paper
45 to 56
71 to 89
71 to 89
Aluminium
15 to 17
17 to 18
17 to 19
Total
83 to 98
113 to 135
115 to 137
Notes: The investment analysis covers only major energy-consuming equipment and devices. The relative increase or decrease in required investment among
the different scenarios is therefore less uncertain than the overall level of required investment.
Key point
The pulp and paper industry requires the most investment.
Technology spotlights
Renewal of Nordic pulp and paper industry with new products
The 4DS and 2DS assume that there is a stable industrial structure in which industries produce
about the same type of products as today. This technology spotlight highlights the impact that
structural changes in the pulp and paper industry could have on Nordic energy systems.
The pulp and paper industry is the largest consumer of the Nordic region’s industrial energy in
the 4DS, 2DS and CNS until 2050. This sector is also where the most investment is needed in
both the 4DS and the 2DS. The scenarios for the case study have been run with the TIMES-VTT
model56 and the data behind the scenarios have been modified using the study by the VTT
Technical Research Centre of Finland titled “Low Carbon Finland 2050” (Koljonen, T., et al., 2012).
6 TIMES-VTT model is a global energy system model based on the TIMES energy system modeling framework (The
Integrated MARKAL-EFOM System) developed under the IEA Energy Technology Systems Analysis Programme (ETSAP),
and the global ETSAP-TIAM model (The TIMES Integrated Assessment Model). TIMES-VTT includes a detailed description
of the Nordic energy system, excluding Iceland. As is the case in energy system modelling, the economic structure is assumed to be constant throughout the scenario period.
© OECD/IEA, 2013.
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91
This case study considers three different scenarios: Baseline (comparable with the 4DS), Tonni
(comparable with the 2DS) and Inno (comparable with the CNS). In the Baseline and Tonni
scenarios, the production mix and volumes of pulp and paper products are similar to those in
4DS and 2DS. The Inno Scenario foresees new innovative pulp and paper products and lower
production volumes. In addition, this scenario assumes that there is increased investment in
bio-refinery concepts to produce biodiesel for transport. In this example, special focus has
been placed on biodiesel because decarbonising heavy road and air transport would require
biodiesel. For light road transport, there are more options to be considered, such as bio-ethanol,
electric and fuel cell vehicles, etc. (Chapter 5).
Globalisation has proved a particular challenge for the Nordic pulp and paper industry, which
tends to move the production of bulk products closer to end-users in Asia and South America.
In these regions, cheaper raw materials are also usually available for pulp and paper production.
On the other hand, the pulp and paper industry is the largest producer of bioenergy in the
Nordic region, and significant opportunities exist to increase the synergies between the pulp
and paper industry and the energy industry. In fact, this is already happening as the pulp and
paper industry is steering its strategies more towards energy business. Currently, the focus of
RD&D in biofuel production is on developing and demonstrating production technologies for
so-called “second-generation” or “advanced” biofuels. For example, the integration of biofuel
production in pulp and paper mills is typical of some of the new concepts currently under
development.
This case study includes some hypothetical assumptions for the production of new, high-value
pulp and paper products, as well as deployment of advanced (i.e. second-generation) biofuel
plants that are integrated in pulp and paper mills in Finland and Sweden. In addition, it assumes
that with added value of products the industrial energy intensity is reduced, as the same income
could be achieved with much lower production volumes and energy consumption. Unlike in the
2DS and CNS, the assumed production of pulp and paper materials gradually decreases throughout the whole scenario period so that by 2050, Finland and Sweden produce 50% less pulp and
paper materials than today.
In the Inno Scenario, the final energy use is about 10% lower than in the Tonni Scenario
(Figure 4.6) but the co-generation is reduced by nearly 20% (Figure 4.7). The assumed new
products in the pulp and paper industry consume more electricity per product tonne and,
therefore, the Nordic energy balance is not affected to any great extent. In the Inno Scenario heat
demand decreases with the assumed product portfolio, which results in lower co-generation
potential. According to Inno Scenario results, however, fuels used for co-generation are 100%
renewable.
The Inno Scenario results indicate that significant opportunities exist to fully decarbonise the
pulp and paper sector by introducing electrification and increasing the use of biomass in
industrial co-generation. At the same time, the value added of new products could enhance
the competitiveness of the region’s pulp and paper industry.
© OECD/IEA, 2013.
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Industrial final energy use in the Baseline, Tonni and Inno scenarios
Figure 4.6
2.0
Coal
Other
1.5
Other biofuels
EJ
Heat
Oil products
1.0
Electricity
Natural gas
0.5
Black liquor
Wood
0.0
Base
Tonni
Inno
Base
2010
Tonni
Inno
Base
2020
Tonni
Inno
Base
2030
Tonni
Inno
Base
2040
Tonni
Inno
2050
Notes: Includes all Nordic industries in Denmark, Finland, Norway and Sweden and also Nordic oil refining. “Other biofuel” includes liquid and gaseous biofuels.
Source: VTT Scenario calculations with the TIMES-VTT model.
Key point
Production of new higher-value products may result in higher energy consumption
per product tonne.
Figure 4.7
Industrial co-generation in the Baseline, Tonni and Inno scenarios
35
Coal
30
TWh
25
Oil products
20
Natural gas
15
10
Other biofuels
5
Black liquor
0
Base
Tonni
2010
Inno
Base
Tonni
2020
Inno
Base
Tonni
2030
Inno
Base
Tonni
Inno
2040
Base
Tonni
Inno
2050
Note: Includes all Nordic industries in Denmark, Finland, Norway and Sweden and also Nordic oil refining.
Source: VTT Scenario calculations with the TIMES-VTT model.
Key point
Transformation of industrial co-generation to 100% biofuels can be achieved if
RD&D in the forestry sector is accelerated.
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Scenario results indicate that biofuel production will increase in all scenarios but in this case
there is a huge difference between the Tonni and Inno scenarios due to accelerated RD&D in
the Inno Scenario. In addition to biodiesel production from wood raw materials, there is also a
remarkable bio-ethanol production especially in the Inno Scenario. Here, bio-ethanol is mainly
produced from indigenous agro-biomasses and bio-wastes. Especially in Denmark and Sweden,
there is noticeable potential to produce bio-ethanol from agricultural side products, side streams
and bio-wastes, from the food-processing industry, agriculture and municipal waste. It should
be noted that, especially for agro-biomasses, great uncertainty exists as to the potential sustainability in the long term. For example, in the Nordic countries, the largest field crop residue
potential is in Denmark. A major constraint in adopting usage of straw material for bioenergy
is the maintenance and productivity of organic soil matter. In addition, production of field
biomass for non-food purposes should not have a negative impact on the development of
food production for the increasing global population.
The Inno Scenario reveals the huge potential in Nordic biofuel production but also highlights
the extensive investment in technology that would be required. However, even in the Inno
Scenario, about 60% of Nordic biofuel demand in transportation is covered by domestic sources
in all the scenarios and throughout the whole period studied in 2050. The high share of biodiesel
in the Tonni Scenario is explained by the higher demand for low-carbon fuels for heavy road
transport than in the Inno Scenario, and on the other hand, the lower competitiveness of advanced (i.e. second generation) bio-ethanol concepts.
Biofuel production in the Baseline, Tonni and Inno scenarios
Figure 4.8
250
200
Bio-ethanol
PJ
150
Jet biofuel
100
50
Biodiesel
0
Base
Tonni
2010
Inno
Base
Tonni
2020
Inno
Base
Tonni
2030
Inno
Base
Tonni
2040
Inno
Base
Tonni
Inno
2050
Notes: Includes all Nordic industries in Denmark, Finland, Norway and Sweden and also Nordic oil refining. “Other biofuel” includes liquid and gaseous biofuels.
Source: VTT Scenario calculations with the TIMES-VTT model.
Key point
© OECD/IEA, 2013.
The potential of Nordic biofuel production is significant but extensive investment in
technology would be required for deployment.
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Biofuel consumption in transport in the Baseline,
Tonni and Inno scenarios
Figure 4.9
400
Bio-ethanol
PJ
300
200
Jet biofuel
100
Biodiesel
0
Base
Tonni
2010
Inno
Base
Tonni
2020
Inno
Base
Tonni
2030
Inno
Base
Tonni
2040
Inno
Base
Tonni
Inno
2050
Note: Includes biofuel consumption in Denmark, Finland, Norway and Sweden.
Source: VTT Scenario calculations with the TIMES-VTT model.
Key point
Even with increased investment in technology in Nordic biofuel production, about
40% of biofuel would still need to be imported.
The role of CCS in reducing industrial CO2 emissions
In the 2DS and CNS scenarios, between 20% and 30% of the reduction in industrial CO2 is
achieved by using CCS in the iron and steel, pulp and paper, chemicals, and cement sectors by
2050. In the 2DS, some 7 MtCO2 is captured by Nordic industry by 2050. In the CNS, the captured
volumes are lower (6 MtCO2), which may be surprising at first glance. However, the CNS assumes
greater electrification and use of biomass to reduce industrial CO2 emissions compared with
the 2DS. Carbon capture and storage also plays a less significant role, thus indicating that it
could be particularly important in industries that are not radically decarbonised by electrification
or by increased use of recycled materials and renewables.
In the 2DS and CNS, most of the investment in industrial CCS is concentrated in Sweden and
Finland, which are the biggest producers of iron and steel as well as pulp and paper in the
Nordic region. However, neither Finland nor Sweden has suitable storage sites for CO2, which
means that captured CO2 must be transported by tankers or by offshore pipelines to the North
Sea or to some other storage site. In Finland, CO2 is already captured in hydrogen production
from natural gas by steam reforming, in which hydrogen is produced for oil refining processes.
Since the flue gas is relatively pure CO2,capture is less costly in this case than in most other
processes. In addition, the pulp and paper industry captures CO2 from flue gases to produce
precipitated calcium carbonate, which is used as a filling agent in paper production. Food (e.g.
the beverage industry) and chemical industries (e.g. the calcium chloride industry) also already
use CO2 capture. In these examples, CO2 is either used directly as a feedstock on site or used
as a process gas in other industries. In these cases CO2 is released back into the atmosphere
after a short lead time and, therefore, it doesn’t have an impact on greenhouse-gas mitigation.
The above examples indicate, however, that capturing CO2 is already a mature technology in
the Nordic region and, therefore, the challenge would be in transporting and storing CO2
underground. An interesting option for Nordic countries is bioenergy with CCS (BECCS), which
could be implemented in the pulp and paper industry and in biodiesel production using the
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Fischer-Tropsch synthesis (i.e. second-generation biodiesel production).67 Assuming that the
calculation takes into account the existing rules by the United Nations Framework Convention
on Climate Change (UNFCCC) for calculating greenhouse-gas emissions, the net CO2 emissions
with BECCS are negative. Usually biomass is used for energy production at relatively small scale,
but the pulp and paper industry produces large quantities of CO2 that benefit from the
economy of scale. In other words, the cost of one tonne of captured and stored CO2 is lower
the larger the CO2 capture plant and CO2 infrastructure is. In biodiesel production, the gaseous
emission is nearly pure CO2 and therefore there is no need to invest in a costly and energyintensive capture process. The amount of captured CO2 in the Nordic region in both the Tonni
and Inno scenarios is significant largely because of BECCS.
Both the Tonni and Inno scenarios represent a more optimistic view on CCS compared with the
NETP scenarios (Figure 4.10). The difference is largely due to BECCS, which is mainly applied in
biodiesel plants in this example. Instead, CCS integrated into steel plants and other fossil-fuelbased industrial CO2 emissions is well in line with the NETP scenarios. Even in the most optimistic
case for example, in the Inno Scenario, the fossil-fuel-based industrial CCS is only 3 MtCO2
higher in 2050 than indicated in the NETP 2DS.
Industrial CCS in the Nordic countries in the Tonni and Inno
scenarios
Figure 4.10
35
30
MtCO2
25
BECCS
20
Other fossil
15
10
Steel plants
5
0
Tonni
Inno
2030
Tonni
Inno
2040
Tonni
Inno
2050
Notes: Tg = teragrams = 1012 g = 106 tonnes. Includes CCS in Denmark, Finland, Norway and Sweden.
Source: VTT Scenario calculations with the TIMES-VTT model. Includes CCS in Denmark, Finland, Norway and Sweden.
Key point
BECCS and CCS in steel plants could become particularly important in mitigation
scenarios in which industries produce basic products.
7 Fischer-Tropsch synthesis is a widely used industrial application to produce syngas from fossil fuels and biomass. Syngas
can be used to produce power or can be converted into lower alcohols, diesel and other chemical products.
© OECD/IEA, 2013.
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Chapter 4
Industry
Critical challenges
The Nordic economies are largely dependent on energy-intensive industries that would face
significant challenges if the region, along with other European countries, implemented strong
mitigation policies such as those outlined in the 2DS and CNS. Some industries, such as the
aluminium industry, also produce process-related emissions that cannot be reduced without
radically changing the production processes. The competitiveness of Nordic energy-intensive
industries is also dependent on the energy prices, which tend to increase with more ambitious
climate policies. However, long term competitiveness also hinges on how other regions develop.
In a global low carbon scenario Nordic industry can have comparative advantages due to their
relatively efficient processes.
To achieve significant reductions in CO2 emissions in Nordic industry by 2050, all the industrial
sectors need to contribute and all the emissions reduction measures should be utilised. More
RD&D in technology would be essential as well as intelligent national energy and climate policies
that take account of local circumstances, such as the availability of raw and recycled materials
or the possibility to produce carbon-free energy for industrial energy use.
The scenario results indicate that, despite the Nordic region’s relatively high level of energy
efficiency (particularly in e.g. the pulp and paper and steel industries due to high share of
co-generation) compared with other OECD countries, there is significant potential for improving
energy efficiency in industrial processes still further. The high efficiency is largely due to industrial
co-generation, which is exceptionally high in Finland and Sweden. The potential for cogeneration could be reduced in the future due to the electrification of the industrial processes
and decreased production volumes of industrial products.
Energy-intensive industries are currently included in the EU ETS, which would steer investment
if the CO2 price level were high enough. Today, the low emissions-allowance price levels do not
steer investment but in the 2DS, and especially in the CNS, the marginal costs of emissions
abatement increases indicating high levels of CO2 allowance prices by 2050. Nordic countries
could also draft voluntary agreements among industries and authorities in which industrial
operators commit to making certain improvements. In Finland, such voluntary agreements have
already been implemented with positive results. However, in the case of deep emissionsreduction targets, such as in the 2DS and the CNS, early actions are needed to avoid lock-in in
carbon-intensive industrial processes. In such cases, voluntary agreements might not result in
the required level of emissions reduction within the necessary time frame.
The CNS assumes that new technologies will be available earlier than expected in the 4DS and
2DS, and that further improvement will be achieved by using BATs. The CNS would be especially
challenging for the aluminium, cement, and iron and steel industries, which would require an
overhaul of industrial processes. Also, greater implementation of CCS would be needed to
achieve the required CO2 emissions reduction. To prevent unsustainable high costs of reducing
emissions, energy-intensive industries should have the opportunity to use flexible mechanisms,
such as the Clean Development Mechanism defined in the UN Kyoto Protocol, to buy emissions
allowances from the global emissions market.
The Nordic countries have significant potential to produce biodiesel and bio-ethanol from
indigenous raw materials, but extensive investment in technology would be required for full
deployment. The capital expenditures of the first plants are very high, and before full demonstration of second-generation biodiesel and bio-ethanol plants, the costs of biofuel production
are too high compared with the market prices of mineral oil. Also, the market for biofuels is
largely set by policies to increase the share of renewables in transportation. The European Union
has defined its renewable policy until 2020, but it is not clear how the policy will develop after
that. To overcome the risk of investing in the first biodiesel and bio-ethanol plants, more support
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 4
Industry
97
for investment is needed as well as long-term energy and climate policies that would also ensure
the demand for biofuels in the future.
In the long term, CCS seems to be the most important single technology to reduce industrial
CO2 emissions. It would become particularly important if future policies were to include BECCS
as an option to reduce greenhouse gases. However, full-scale CCS deployment in the metal, pulp
and paper, and cement industries requires demonstration projects and operation experience.
On the other hand, industrial CCS including BECCS would become particularly important in 2DS
for Sweden and Finland, two countries that do not have their own CO2 storage sites. The
possible legal barriers for transporting and storing CO2 abroad should, therefore, be removed
to encourage CCS investment in these countries. From the Nordic region, Norway is the one
of the global leaders in RD&D of CCS and also has the greatest storage potential in Europe.
Although there is significant capacity to store CO2 underground in the North Sea, the greatest
challenge seems to be in developing the infrastructure for transporting CO2. Developing
offshore pipeline infrastructure across country borders remains a challenge and requires
intensive collaboration in the region.
In the 2DS, the required investment by 2050 is estimated to be between USD 30 billion and
USD 36 billion higher than in the 4DS. The majority of this investment would be needed in the
pulp and paper, chemicals, and aluminium industries. Much of the investment in energy
efficiency is already competitive if we take into account cumulative undiscounted fuel savings
throughout the life cycle of the plant. There is a need to facilitate investment through policies or
voluntary agreements in order to encourage enough investment to make the necessary changes
to industry in the near future.
© OECD/IEA, 2013.
Chapter 5
Chapter 5
Transport
Nordic Energy Technology Perspectives
99
Transport
The transport sector contributes to more than one-third of energy-related
carbon dioxide (CO2) emissions in the Nordic countries. Enabling a reduced
growth in travel demand, the electrification of passenger transport, a move
to biofuels for long-haul and freight transport, and a higher share of rail
transport for freight are the primary building blocks in a low-carbon Nordic
transport system
Key findings
within individual passenger transport in the
longer term. To support this development, timely
introduction is imperative. Beyond 2040, fuelcell electric vehicles (FCEV) might offer some of
the same advantages and even better options
within long-haul transport.
■■
The transport sector remains dependent
on high-energy-dense liquid fuels such as
gasoline, diesel and biofuels. Certain modes of
transport (e.g. long-haul road freight, aviation
and shipping) require breakthroughs in technology before large-scale decarbonisation can be
achieved.
■■
■■
Biofuels will play a significant role in the
future transport sector in all the Nordic countries. The share of biofuels of total fuels used
for transport by 2050 varies from some 25%
in the 2°C Scenario (2DS) to 70% in the CarbonNeutral high Bioenergy Scenario (CNBS).
Compressed natural gas (CNG) and biogas can
reduce emissions in long-distance transport.
Sweden is currently testing biogas for transport;
in the 2DS and in the Carbon-Neutral Scenario
(CNS) variants, biogas and CNG cover up to 7%
of total fuels used for transport.
■■
Modal shift to bus and rail within passenger
transport and rail within freight transport
offers potential to increase transport efficiency
and provides some hedging against the uncertainty of when and how alternative technologies
(such as electric and hydrogen-fuelled vehicles)
will have a breakthrough.
■■
Critical challenges to achieving long-term CO2
emissions reduction include enabling a lower
future growth of transport demand, achieving
technology breakthrough (economic competitiveness) of alternative technologies (such as
electric vehicles), securing the sustainability of
biofuels and ensuring the effectiveness of modal
shifts.
■■
All Nordic countries have ambitious long-term
targets to reduce CO2 emissions from transport.
However, current policies and pathways to back
up the long-term target are insufficient and need
to be improved.
■■
Internal combustion engine (ICE) vehicles provide great potential to reduce fuel consumption
by using cost-effective technologies. In the period
from 2010 until 2050, the average fuel consumption for new cars is expected to decrease from 7
litres per 100 kilometres (L/100km) to 3 L/100km.
■■
Electric cars play a key role in reducing CO2
emissions and dependency on liquid fuels
© OECD/IEA, 2013.
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Chapter 5
Transport
Recent trends
An effective transport infrastructure is essential to a modern society. The transport back
and forth from work, leisure activities and holidays is a natural part of daily life. The Nordic
countries are relatively rich, which enables travelling abroad and substantial international
trade of food products and other commodities. The use of energy for transport in the Nordic
countries is almost equally divided between passenger and freight transport (Figure 5.1);
compared to a global average, the shares of international travel and freight transport are
relatively high.
This chapter examines the historic development in activity and energy use for transport in
the Nordic countries, then discusses transport policies in place and the future Nordic Energy
Technology Perspective (NETP) scenarios.
Figure 5.1
Energy flows in the Nordic transport sector in 2010
Gaseous
2 PJ
Heavy
road
208 PJ
Diesel
415 PJ
Sea
194 PJ
Gasoline
428 PJ
Light
road
587 PJ
Other
liquids
281 PJ
Air
134 PJ
Electricity
17 PJ
Rail
20 PJ
Mechanical
energy 367 PJ
Freight
474 PJ
Passenger
670 PJ
Losses
777 PJ
Notes: PJ = petajoules. Figures and data that appear in this report can be downloaded from www.iea.org/etp/nordic
Source: Unless otherwise noted, all tables and figures in this report derive from IEA data and analysis.
Key point
The transport system in the Nordic countries relies mainly on fossil fuels. Shipping and
aviation combined are responsible for 29% of the energy used for transport, while road
transport accounts for 70%.
The transport sector1 was responsible for 36% of total energy-related CO2 emissions in
the Nordic countries in 2010. The corresponding figure in Sweden was 50% while the other
countries showed somewhat lower shares: Iceland (44%), Norway (38%), Denmark (33%)
and Finland (23%).
1 In this context transport include all land transport, 50% of emissions from all international aviation and shipping departing
or arriving at Nordic ports, but not fishery
© OECD/IEA, 2013.
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Total energy use for transport in the Nordic countries has increased by 260% since 1960,
an average yearly growth of 2.6% (Figure 5.2). Temporary declines in demand for transport
energy coincide with the high oil prices of 1974, 1979, 1990 and 2001. In 2009, the financial
crisis caused an additional dip in the use of energy for transport, especially in international
transport.
The total amount of energy used for transport among the Nordic countries differs greatly
due to population and export industries. Sweden, the country with the highest population,
represented approximately 40% of the total energy use for transport in the region in 2010
(including international transport). Denmark, Finland and Norway each accounted for 20%
of total energy consumption in transport while Iceland used the least amount at 1.5%.
Nordic transport energy consumption
PJ
Figure 5.2
1 200
1 200
1 000
1 000
800
800
600
600
400
400
200
200
0
1960
1970
1980
Transport excl. bunkers
1990
2000
Transport incl. bunkers
0
1960
2010
Road
1970
Rail
1980
Sea
1990
Air
2000
2010
Non-specified
Notes: The graph to the left includes international aviation and shipping in the upper line. On the right graph, international aviation and shipping are
included in the respective categories.
Key point
Energy use within the transport sector grew an average 2.6% per year from 1960 to
2010, but only around 1% for the past 20 years. Since the 1980s, road transport has
accounted for around 70% of total energy use (up from 55% in 1960).
Since 1960, the share of energy use for international aviation and shipping has increased
from 15% to 25% of the total energy use for transport (Figure 5.2). This reflects the energy
efficiency of shipping (marine transport), as it covers more than 50% of the freight transport
as measured in tonne-kilometre (t-km).
Sales of passenger cars and commercial vehicles are sensitive to economic development.
The decrease (in Sweden) in sales reflects the economic downturn in the early 1990s, in
2001 and again during the financial crisis of 2008 (Figure 5.3). Despite the steady increase
in the stock of cars, since 2007 signs of saturation in the demand for transport (vehicle
kilometres or v-km) by passenger cars are visible, as is a downward trend in sales of
commercial vehicles.
© OECD/IEA, 2013.
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Nordic Energy Technology Perspectives
Figure 5.3
Chapter 5
Transport
Overview of stock, sales, travel and energy use for passenger
cars and commercial vehicles
Index 1990=1
Passenger cars
Commercial vehicles
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
1990
1995
Stock
Key point
2000
2005
Sales
2010
0.0
1990
Travel
1995
2000
2005
2010
Energy use
Vehicle sales fluctuate with economic circumstances, while trends in stock, travel (v-km)
and energy use develop more smoothly.
The share of the various modes of transport differs in the Nordic countries but cars remain
the most popular mode of passenger transport in all countries except Iceland. Aviation is in
second place (Figure 5.4). Iceland has no connecting roads to other parts of Europe and, thus,
relies totally on shipping for international freight transport and aviation for international
passenger transport. Iceland also has a high share of aviation due to its role as transit for
international aviation (fuel use for all departing flights is counted as Icelandic). In the other
Nordic countries, cars cover around 60% of the passenger transport; this is significantly
higher than the global average of 40% but quite close to the OECD average.
Apart from shipping, trucks dominate freight transport in the Nordic countries. This is in
contrast to the global average, in which rail transport plays a greater role. A rough estimate
suggests that shipping accounts for about the same transport volume as all other means
of freight transport combined.
In Denmark and Norway, around 90% of all freight transport is by truck; rail plays a major
role in Sweden (55%) and Finland (25%) (when excluding shipping). On a global level, rail
covers more than 50% of all land-based freight transport. As Iceland does not have a rail
infrastructure, all land-based freight transport is by truck; as the distances are shorter,
the volume of medium trucks and light commercial vehicles (LCV) is higher than in other
Nordic countries (Figure 5.4).
© OECD/IEA, 2013.
Motorised passenger and tonne-km in 2010 by mode of transport
Figure 5.4
100%
Passenger
100%
80%
80%
60%
60%
40%
40%
20%
20%
0%
Denmark Finland
2-wheelers
103
Chapter 5
Transport
Nordic Energy Technology Perspectives
Iceland
3-wheelers
Norway Sweden
Cars
Nordic
Light trucks
World
Mini-buses
0%
Freight
Denmark Finland
Buses
Rail
Iceland
Air
Norway Sweden
Medium trucks
Nordic
World
Heavy trucks
Notes: Shares are based on estimated total passenger- and tonne-kilometres. Shipping are not included in these graphs..
Key point
The share of passenger-kilometres travelled by car and plane in the Nordic countries
is, on average, almost twice as high as the global average.
Current policies and goals
The Nordic countries are characterised by ambitious long-term targets to reduce GHG
emissions across all sectors including transport. As the most prominent example, the
Swedish government aims to have a vehicle stock that is independent of fossil fuels by
2030. However, the government still needs to put into concrete terms what such a vehicle
fleet actually entails. In Denmark, Norway and Sweden, the target is to reduce emissions
across all sectors by 100% by 2050. In the case of Denmark, this target should be met
by using only renewable energy. In Norway, this goal should be achieved by 2030 if an
international climate agreement is reached.
The goals of these three Scandinavian countries imply that the transport sector should
become independent of fossil-fuel consumption by 2050 at the latest. The goals of Iceland
(50% to 70% emissions reduction) and Finland (80% emissions reduction) may still leave
room for a substantial share of fossil fuels in the transport sector, depending on the how
goals are distributed among the sectors.
In the short-term perspective towards 2020, all Nordic countries must comply with the EU
target of 10% renewable energy in the transport sector. Iceland and Norway are subject to
the same regulation as the Directive on the Promotion of the Use of Renewable Energy
Sources has been incorporated into the European Economic Area (EEA) agreement. Finland
and Sweden aim to surpass the minimum 10% EU target. Finland has set the biofuel
distribution obligation as high as 20% in 2020 (Finnish Government, 2010). The Swedish
government has set the share of renewable energy consumption in the transport sector at
a minimum of 14% by 2020 (Swedish Government, 2010).
© OECD/IEA, 2013.
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Table 5.1
Nordic Energy Technology Perspectives
Chapter 5
Transport
Existing goals and policies related to the transport sector in each
of the five Nordic countries
Denmark
Finland
10% RE
20% RE
Iceland
Norway
Sweden
10% RE
14% RE
-100%
(if global climate
agreement)
A vehicle stock
that is independent
of fossil fuels
Goals
Before 2020
Before 2030
Before 2050
Energy and
transport:
100% RE
Energy and
transport:
-80% GHG
Energy and
Energy and
transport:
transport:
-50 to -70% GHG 100% GHG
Energy and
transport:
-100% GHG (net)
Energy fuel tax
Yes
Yes
Yes
Yes
Yes
Carbon fuel tax
Yes
Yes
Yes
Yes
Yes
“Green” ownership tax (annual) Yes
Yes
No
Yes
Yes
“Green” registration fee
Yes
Yes
Yes
Yes
No registration fee
(super-green car
rebate to cars
with very low
CO2-emission)
Other important policies
EVs and
hydrogen vehicles
exempted from
registration fee
until 2015.
Reykjavík city
offers free
parking for
environmentally
friendly vehicles.
Electric vehicles
(BEV and FCEV)
are exempted
from registration
taxes, VAT and
road tax;2 can drive
in the bus lane;
have free parking
in public parking
area; may use toll
roads for free. Subsidies for the purchase of certain
EV or HEV.
Super-green car
rebate to cars
with very low
CO2-emissions
(<50 g/km).
Large filling
stations required
to offer RE fuels.
Policies
Notes: RE = renewable energy. BEV= battery electric vehicle. FCEV = fuel cell electric vehicle. HEV = hybrid electric vehicle.
2 Norwegian tax reductions are valid until 2017, or until the number of zero-emissions vehicles reaches 50 000.
© OECD/IEA, 2013.
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Chapter 5
Transport
105
The above percentages have been calculated according to the special methodology specified
in the EU renewable energy directive, in which second-generation biofuels produced from
wastes, residues, non-food cellulosic material and lignocellulosic material (such as wood
and straw) count double towards the target. In Finland, around 30% of renewables in the
transport sector are expected to be produced from second-generation biofuels.32The Swedish
projection shows the share of second-generation biofuels (primarily biogas) to be around 9%.
According to the renewable energy action plans, EVs are not expected to play an important
role by 2020 in Denmark, Finland or Sweden. In Norway, EVs play some part in achieving the
2020 target.
EU regulation also endeavours to bring more efficient vehicles to the market. The so-called
“Cars Regulation” imposed on car manufacturers limits emissions to 130 grams of CO2 per
kilometre (gCO2/km) as an average of all new passenger cars in the European Union by 2015.
By 2020, this level is to be reduced to 95 gCO2/km. Details of how the 2020 target will be
reached have to be defined in a review, which should be completed by 2013 at the latest.
Looking beyond 2020, the European Parliament suggests a target of 70 gCO2 /km to be
reached by 2025. All Nordic countries have backed the EU regulation with fiscal measures
to support energy-efficient vehicles. In addition to the energy and CO2 taxes that all Nordic
countries impose on diesel and gasoline, they have also adopted either a CO2-differentiated
vehicle ownership tax or a CO2-differentiated registration fee.
The specific methodologies used to benefit fuel-efficient vehicles differ among the countries:
discrepancies mainly relate to the very diverse rates of car taxation. While Denmark and
Norway have the highest registration fees in Europe, cars are not subject to any registration
fee at all in Sweden. Rebates on registration fees provide a powerful incentive to promote
efficient cars. For example, in Denmark a passenger diesel car that emits 130 gCO2/km gets
a discount of about USD 1 03034 on the registration fee compared with a similar car emitting
140 gCO2/km. In Norway, the discount is slightly higher at USD 1 260; in Finland, it is only
about USD 190. In Norway and Denmark, EVs are totally exempt from registration fees.
CO2-differentiated taxation is shown to have a significant impact on consumer choice.
After changing tax systems to reflect CO2 emissions, both Finland and Denmark achieved
an 8% reduction in average emissions from new cars between 2007 and 2008. According
to one Nordic research study, A comparative analysis of taxes and CO2 emissions from
passenger cars in the Nordic countries, this reduction was unmatched by any other European
country and can probably be ascribed, at least to some degree, to the tax reforms (Duer, 2011).
A similarly strong consumer response was observed in 2009 when the Norwegian differentiation concept was further developed such that vehicles emitting less than 120 gCO2/km
became entitled to a tax deduction. Sales of cars emitting less than 120 g/km doubled
(15% rising to 30%) in the first six months of 2010, compared with the same period in 2009.
Sweden does not impose a registration fee on new cars but uses other measures to
promote green cars. A “super-green car rebate” was introduced in 2012, which rewards
cars that meet the latest EU exhaust requirements and emit a maximum of 50 gCO2/km.
For a private passenger car, the premium amounts to USD 5 970.
3 Around 180 thousand tonnes of oil equivalent (ktoe) out of 600 ktoe.
4 Unless otherwise stated, all costs and prices are in real 2010 USD, i.e. excluding inflation. Other currencies have been
converted into USD using purchasing power parity (PPP) exchange rates.
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Strong policies have also been put in place to promote bioenergy in Sweden’s transport sector.
All large filling stations, for example, are required to offer at least one renewable fuel, and
special subsidies are provided to filling stations offering fuels such as biogas, which has
higher investment costs.
Swedish regulation does not, however, support efficient conventional cars at the point of
purchase as in the other Nordic countries. This is likely to be one explanation of why new
cars in Sweden, on average, demonstrate higher relative CO2 emissions than in Denmark,
Finland or Norway. Registration fees that are calculated as a percentage of the purchase
price before taxes provide an incentive for more efficient cars because lower-cost cars are
often smaller and therefore likely to be more efficient.
Figure 5.5
Development in average CO2 emissions per kilometre for new cars
200
Denmark
150
gCO2/km
Finland
100
Norway
50
0
2000
Sweden
2002
2004
2006
2008
2010
Notes: Average CO2 emissions from new cars in gCO2/km. No data were found for Iceland.
Sources: Duer, 2011; EA Energy Analysis, 2011.
Key point
CO2 emissions from new cars have decreased substantially since 2004. Denmark and
Norway, which provide the largest support to efficient cars, exhibit the lowest relative
CO2 emissions of new cars.
Transport sector scenario results
The transport scenarios are modelled with the IEA transport model (MoMo). The basic
drivers in the model are population and gross domestic product (GDP) projections. Demand
for passenger and freight transport are projected and divided among the various modes of
transport. The calculations also comprise each country’s share of international transport.
For air transport, all departures to other countries are included in the country’s share of
international air transport, which also comprises 50% of the passenger kilometres and fuel
use. For international shipping, all bunkering in the countries is regarded as domestic
consumption.
© OECD/IEA, 2013.
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Chapter 5
Transport
107
Such projections have a drawback for transit airports such as Copenhagen, Helsinki and
Keflavik, as a relatively high share of global air transport is assigned to domestic energy
consumption. For a small country such as Iceland, which hosts Keflavik International Airport,
this problem becomes clear (Figure 5.4). There is no perfect way to allot international
transport to single countries but this method is consistent with the guidelines on the use
of emissions trading in aviation, published by the Intergovernmental Panel on Climate
Change (IPCC), the International Civil Aviation Organization (ICAO), and in the IEA Energy
Technology Perspectives 2012 (IEA, 2012).
For all other passenger transport, demand and fuel use relates to the country in which the
car, bus, train, etc. is registered.
Scenario assumptions
Measures to increase efficiency and reduce CO2 emissions within the transport sector can
be grouped in five main categories: avoid, improve, switch technology, switch fuel and shift
modes.
■■ Avoid:
avoidance of using all modes of transport will directly affect the projections for
transport demand, which is the main driver for energy use and CO2 emissions. Using remote
communication instead of travelling to meetings is one way of avoiding transport. Another
way would be to improve infrastructure planning to reduce distances between destinations
and reduce the demand for transport. This measure will also address the energy usage of
existing technologies.
■■ Efficiency
improvements: improving existing technologies (such as ICEs) will lead to
more efficient transport. However, as such improvements will mainly address new vehicles,
vessels and aeroplanes, the efficiency effect is limited to the turnover of vehicle stock.
■■ Technology
switch: switching technologies within a mode of transport can lead to greater
efficiency or a reduction in CO2 emissions, such as using electric passenger light-duty
vehicles (EV PLDVs) instead of gasoline PLDVs. This effect is also limited by the vehicle
stock turnover.
■■ Fuel
switch: switching to low-carbon fuels such as natural gas or biofuels can reduce CO2
emissions while using conventional technology and, in the case of biofuels, while relying on
an existing fuel distribution infrastructure.
■■ Modal
shifts: aim to shift transport from less efficient to more efficient modes, e.g. from
individual passenger transport to bus or train.
Improvements in technology are the easiest way to improve energy efficiency in transport.
However, developments in technologies depend mainly on EU requirements for energy
efficient technology. Such requirements are already in place for PLDVs and LCVs: across
their product line, manufacturers of these vehicles must meet an average level of energy
efficiency. In recent years, some countries have achieved a higher level of energy efficiency
for new PLDVs. Denmark and Norway, for example, are among the countries with the highest
energy efficiency (i.e. best fuel economy) for new PLDVs.
Increased use of biofuels could be implemented more extensively within a short time horizon.
Fuel switching is not, however, the most effective means of improving energy efficiency in
transport. The effect on GHG emissions from first-generation biofuels (e.g. biofuels made
from sugar, starch or vegetable oil) is subject to debate.
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The five measures mentioned to reduce CO2 emissions in transport are implemented to
different degrees in the scenarios. In the 4°C Scenario (4DS), measures mainly focus on
improving the efficiency of existing technologies; there is no effort to avoid transport or to
encourage modal shifts. In the 2DS, CNS, Carbon-Neutral high Electricity Scenario (CNES)
and CNBS, approximately 4% of transport is avoided by 2050 while 20% of passenger
transport shifts from individual transport to bus and train. Over the same period, 50% of
freight transport shifts from road to rail, and efforts on efficiency improvement increases.
The technology switch towards EVs is also stronger in the 2DS and especially in the CNS and
CNES. The CNBS shows a higher introduction of biofuels in all means of transport (Table 5.2).
Saturation in car ownership per capita is not yet seen in the Nordic countries. By contrast,
other OECD countries such as France, Japan, the United Kingdom and the United States
have experienced saturation in vkm per capita since 2002 (IEA, 2012). The IEA transport
model uses Gompertz curves to simulate saturation in car ownership based on historic
data.45 In the 4DS, this means that car ownership in Iceland, for example, ends up at 700
cars per 1 000 capita, while other Nordic countries stabilise at around 600 (Figure 5.6).
One reason for the higher car ownership in Iceland is the lack of public transportation such
as railways. In the 2DS, the car ownership will remain at the level of 2010 throughout the
modelled period.
Figure 5.6
Projection of PLDV stock in the 4DS
700
Projection
Denmark
Vehicles per 1 000 capita
600
Finland
500
Iceland
Norway
400
Sweden
300
Historic
200
Denmark
100
Iceland
Finland
Norway
0
0
10
20
30
40
50
60
70
80
Sweden
GDP per capita in thousand USD
Note: PLDV stock projection is based on projections for GDP and population, and is assumed to follow a Gompertz curve.
Key point
In the 4DS, based on income growth, Nordic car ownership reaches around 600 PLDVs
per 1 000 capita by 2050 (from 500 today) except for Iceland, which shows more than
700 PLDVs per 1 000 capita.
5 A Gompertz curve is a function in which growth is slowest at the beginning and the end. It is used to describe time series
with a slow initial growth, high growth in the middle and then saturation in the end period.
© OECD/IEA, 2013.
Table 5.2
109
Chapter 5
Transport
Nordic Energy Technology Perspectives
Measures and means in the NETP transport scenarios by 2050
Measures/means 4DS
2DS
Avoid
No avoidance
strategy.
4% reduction in
4% reduction in
Same as CNS.
passenger transport. passenger transport.
Same as CNS.
Efficiency
improvements
40% reduction of
average tested new
PLDV fleet fuel consumption.
55% reduction of average tested new PLDV
fleet fuel consumption
(excluding the effect
of electrification).
60% reduction of aver- Same as CNS.
age tested new PLDV
fleet fuel consumption
(excluding the effect
of electrification).
Same as CNS.
15% reduction of
average tested new
CV fleet fuel consumption.
30% reduction of
average tested new
CV fleet fuel consumption.
45% reduction of
average tested new
CV fleet fuel consumption.
Same as CNS.
Same as CNS. The substitution of FCEVs by
hybrids and conventional ICE vehicles somewhat lowers overall
fleet efficiency in the
road transport sector.
1% annual reduction on energy
intensity per pkm in
air transport.
1.5% annual reduction on energy
intensity per pkm in
air transport.
1.5% annual reduction on energy
intensity per pkm in
air transport.
Same as CNS.
Same as CNS.
0.4% annual reduction 1% annual reduction 1% annual reduction Same as CNS.
on energy intensity per on energy intensity per on energy intensity per
pkm in rail transport. pkm in rail transport pkm in rail transport
Same as CNS.
Stock of PLDVs by
2050: 15% EVs
(PHEV and BEV),
30% conventional
hybrids, 50%
conventional ICE.
45% stock share of
EVs (PHEV and BEV),
15% stock share of
FCEVs, 15% stock
share of conventional
hybrids on PLDVs.
55% stock share of
EVs (PHEV and BEV),
15% stock share of
FCEVs, 15% stock
share of conventional
hybrids on PLDVs.
Like CNS for PLDVs,
FCEVs are substituted by PHEVs.
Minor penetration
of CNG trucks.
10% sales share of
CNG trucks, progressive hybridisation
of short- and mediumhaul trucks, 10% sales
share of FC trucks.
65% stock share of
EVs (PHEV and BEV),
the share of BEVs on
stock is 50% higher
than in the CNS (reducing the share of
conventional hybrid
vehicles).
No conventional ICE
LCV (<3.5t) sold, 75%
sales share of alter- Same as CNS for all
native power-train
other transport modes. Same as CNS for all
configuration (hybridother transport modes.
isation, CNG, FC) of
medium- and longhaul trucks.
Same as CNS.
100% share of
biofuels in
petroleum blends.
Technology
switch
Full electrification
of rail.
CNS
CNES
Fuel switch
10% share of
biofuels in
petroleum blends.
35% share of
biofuels in
petroleum blends.
75% share of
biofuels in
petroleum blends.
Modal shift
No shift strategy.
20% reduction in
individual pkm, shifted equally to bus and
rail. 50% of road
freight transport
growth is shifted
to rail.
20% reduction in
Same as CNS.
individual pkm, shifted equally to bus and
rail. 50% of road
freight transport
growth is shifted
to rail.
CNBS
Like CNS for road
freight, FC trucks
are substituted by
hybrids and conventional ICE trucks.
Same as CNS.
Notes: The measures mentioned are general descriptions across all the Nordic countries. In the detailed scenarios on country level, the level of the measures
varies. Pkm = passenger kilometres. CV = commercial vehicle. BEV = battery-electric vehicle. FCEV = fuel-cell electric vehicle. HEV = hybrid electric vehicle.
ICE = internal combustion engine. CNG = compressed natural gas. PLDV = passenger light-duty vehicles. FC = fuel cells. LCV = light commercial vehicles. PHEV
= plug-in hybrid electric vehicle
© OECD/IEA, 2013.
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Table 5.3
Average annual increase of transport activity for different modes
between 2010 and 2050
Transport mode (%/yr.)
4DS
2DS
CNS
Total
0.98
0.87
0.87
Individual
0.58
0.08
0.08
Rail
1.36
3.61
3.61
Bus
-0.04
2.27
2.27
Air
1.82
1.09
1.09
Total
0.77
0.71
0.71
Road
0.80
0.52
-0.51
Rail
0.70
1.16
2.51
Shipping (energy use)
0.93
0.07
0.07
Passenger
Freight
Notes: The activity is measured in passenger-kilometres for passenger transport and in tonne-kilometres for freight transport. For shipping, however, the
projection is in energy units.
The 4DS assumes no special measures to reduce transport demand, yet signs of saturation
for passenger transport are expected to materialise, limiting growth compared with previous
decades. Growth rate for passenger travel with PLDVs would, therefore, be around 0.6%
per year. The growth rate is higher for passenger transport by air (1.8%/yr) and by rail (1.4%/yr)
between 2010 and 2050, reflecting a modal shift from PLDV to air and rail (Table 5.3).
Figure 5.7
Passenger transport in the 4DS compared with the 2DS
600
4DS
500
Air
Billion pkm
Rail
400
Bus
300
Individual
200
2DS
Total
100
0
2000
Individual
2010
2020
2030
2040
2050
Note: The full coloured areas represent 4DS values and the lines show the comparable values in 2DS, which has the same development as the CNS variants.
Key point
Differences between levels of individual transport in 4DS and 2DS (and the CNS
variants) is larger in 2050 than for total transport, reflecting a modal shift (starting
from 2015) from individual transport towards air, bus and mainly rail.
© OECD/IEA, 2013.
111
Chapter 5
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In 4DS technology switching is limited until 2030. The only new technology within PLDVs to
have penetrated the market significantly by then will be PHEVs. These vehicles account for 3%
of sales by 2020 and 7% by 2030. By 2050, almost 70% of all new sales are still conventional
ICEs (including hybrids) and these technologies still account for more than 80% of the total stock.
Overall growth in passenger transport is only slightly lower in the 2DS and CNS compared
with the 4DS. The big difference is the shift in modes of transport from car to rail, which
stabilises individual passenger road transport at a level only a few percentage points higher
than today (Figure 5.7).
Freight transport in the 4DS shows a steady increase between 2010 and 2050, ending up
36% higher in 2050. Road transport accounts for the main part of the growth. When compared
with the development in CNS and its variants, the modal shift needed from the 4DS to the
CNS is substantial. All future growth in freight transport is here taken up by rail (Figure 5.8).
Figure 5.8
Freight transport in the 4DS compared with the 2DS and CNS
200
4DS
Billion tkm
150
Rail
Road
2DS
100
Total
Road
50
CNS
0
2000
2010
2020
2030
2040
Road
2050
Note: The full coloured areas represent 4DS values and the lines show the comparable values in the 2DS and CNS. Shipping is not included in this graph.
Key point
The large difference between the levels of road transport in the 4DS and CNS reflects
a modal shift from road to rail (starting from 2015).
The total increase in freight transport between 2010 and 2050 is almost equal in the CNS
and the 4DS, but the shift from road transport to rail increases the total efficiency. Electrification of highways for hybrid trucks can also decarbonise freight transport and reduce the
need for new railways. This solution is not taken into account in the modelling.
© OECD/IEA, 2013.
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Chapter 5
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The modal shift for both individual passenger and freight transport takes off in 2015. To
achieve this, relevant policies must be in place to support the increasing volumes of passengers
and freight transported by rail. Plans in rail infrastructure would need to be improved, as
would the use of pricing mechanisms to make rail transport less costly than road transport.
In the 4DS, efficiency improvements limit growth in energy use until around 2035, at which
point total energy use has declined to match the level seen for 2010, despite population
and economic growth. After 2035, the continued rise in transport demand and the slower
development of efficiency improvements result in rising energy consumption. By 2050,
low-emission fuels (such as electricity and biofuels) still have a very limited share; thus, the
development of CO2 emissions from the transport sector increases, following the trend of
energy consumption (Figure 5.9).
Energy use for transport in 4DS divided by mode and fuel type
Figure 5.9
Fuels
EJ
Modes
1.2
1.2
1.0
1.0
0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
0.0
2010
2020
PLDVs
Freight trucks
2030
2040
2- and 3- wheelers
Rail
Buses
Air
2050
0.0
2010
Gasoline
GTL, CTL
2020
Diesel
CNG, LPG
2030
2040
Jet fuel
Electricity
2050
Residual fuel
Biofuels
Notes: EJ = Exajoules. PLDVs = passenger light-duty vehicles. CNG = compressed natural gas. CTL = coal-to-liquid. GTL = gas-to-liquid. LPG = liquefied
petroleum gas.
Key point
Total energy use for transport in the 4DS remains constant until 2050. After 2030,
CNG, CTL and electricity increase market share, but the main development is conventional diesel replacing conventional gasoline.
In order to achieve the significant reduction in energy consumption in the 2DS, modal shifts
in transport must be supplemented by switching technologies. This is especially true for
individual passenger transport, in which new technologies (BEV, PHEV, FCEV) account for
8% of sales by 2020 and more than 80% by 2050. The higher introduction rate is assumed
to result in a more rapid technological development and thus PHEVs have a higher share of
electricity-based driving. The introduction of fuel-cell technology starts around 2020 (CNS)
to 2025 (2DS) and reaches significant shares on PLDV stock by the end of the first half of
the century. By that time, the share of ICE-driven PLDVs (conventional and hybrids) of the
total stock has been reduced to 36%, almost half of which is hybrid vehicles (Figure 5.10).
© OECD/IEA, 2013.
Figure 5.10
Million vehicles
15
15
10
10
5
5
15
Million vehicles
PLDV stock by technology
2DS
0
2010
2020
2030
2040
CNES
2050
15
10
5
5
2020
Gasoline HEV
2030
Gasoline PHEV
2040
Diesel ICE
CNS
0
2010
10
0
2010
Gasoline ICE
113
Chapter 5
Transport
Nordic Energy Technology Perspectives
2020
2030
2040
2050
CNBS
0
2050
2010
2020
2030
2040
2050
Diesel HEV
Diesel PHEV
CNG/LPG
Electricity
Hydrogen FCEV
Notes: ICE = internal combustion engine. HEV = hybrid electric vehicle. FCEV = fuel-cell electric vehicle. The figures refer to technologies and not directly
to the type of fuel used. Therefore, a conventional gasoline car can have more or less biofuels blended into the gasoline. In the CNBS, all fossil gasoline
and diesel are fully replaced by biofuels in 2050; the CNS and CNES have a 75% blend of biofuels in gasoline and diesel ICE.
Key point
Market share for conventional diesel and gasoline cars declines more and faster in
the CNS and CNES than in the 2DS. In CNBS, hydrogen fuel-cell vehicles do not enter
the market at all because of availability of cheaper biofuels.
The average fuel consumption of new PLDVs reaches 3.2 L/100km in 2DS by 2050 (without
the effect of electrification). This represents more than a 50% reduction compared to current
consumption per vehicle-kilometre. By 2020, the EU target of 95 gCO2/km will be reached.
The long-haul road freight sector is particularly difficult to decarbonise as hybridisation does
not deliver a high enough level of fuel savings over constant, long-distance driving to warrant
the associated costs. Moreover, electrification is limited by the size, weight and recharge
time for batteries. Therefore, even in a low-carbon future, high-energy-dense liquid fuels will
remain important. To reach emissions targets, increased effort must be made to replace fossil
fuels with sustainable low-carbon biofuels. In the 2DS, liquid petroleum fuels are blended in
quantities of up to 35% with biofuels by 2050. Second-generation lignocellulosic ethanol is
used to blend gasoline, and biomass-to-liquids (BTL) from wood and straw is used to blend diesel.
© OECD/IEA, 2013.
114
Figure 5.11
1.2
EJ
Chapter 5
Transport
Nordic Energy Technology Perspectives
Energy use for transport by fuel in the 2DS and CNS
2DS
1.2
1.0
1.0
0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
0.0
2010
Gasoline
2020
Diesel
2030
Jet fuel
2040
Residual fuel
2050
CNS
0.0
2010
CNG/LPG
2020
Electricity
2030
Biofuels
2040
2050
Hydrogen
Note: CTL and GTL are not used in the scenario.
Key point
Total energy use drops slightly from 2010 to 2050 – mainly due to less energy use in
PLDVs. Biofuels account for one-third of the transport energy in the 2DS and more
than half in the CNS. In both cases, conventional gasoline is almost phased out by 2050.
The CNS variants (CNES and CNBS) reveal two additional ways to reach a low-carbon future,
although they do not deliver the same level of CO2 emissions reduction. Focus is on different
technology and fuel choices. The CNES shows a pathway with increased electrification,
while the CNBS focuses on the increased use of biofuels. However, both scenarios depend
on the same policies to achieve modal shifts and strategies to limit growth in demand for
transport. The scenarios merely explore different technology pathways owing to the uncertain
future of technological development in the transport sector. The CNBS is more optimistic
about the potential for biofuels to replace totally gasoline and diesel by 2050, whereas the
CNS and CNES have a maximum blending of biofuels in gasoline and diesel at 75%.
Envisaged penetration of improved technologies is at the upper margin of what is possible
with regard to the pace of market introduction, taking into account the average vehicle
retirement age of around 15 years.
In all carbon-neutral scenarios (CNS, CNES, CNBS), conventional ICE vehicles are almost
phased out by 2050, which adds even more pressure to the pace at which vehicles with
alternative technologies enter the market. For example, sales of EVs (PHEVs and BEVs) need
to double every year between now and 2020, and then maintain significant two-digit
annual growth rates at least until 2030. These rates of change are unprecedented and
definitely challenge the feasibility of the CNS variants.
In the CNS, the average tested new PLDV fuel economy decreases to 2.8 L/100km, which
represents more than 60% improvement of fuel economy. Achieving this target requires
aggressive use of fuel economy measures such as downsizing, hybridisation, light weighting
and decoupling of auxiliary aggregates from the engine, as well as rolling and air resistance reductions. Further improvements in technology are assumed within PHEV for which around 80%
of driving is based on electricity; this will require larger batteries, thus driving up the vehicle price.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 5
Transport
115
Freight transport requires major attention in the CNS variants as a significant modal shift to
rail transport is assumed. By 2050, around 50% of the tonne-kilometres projected in the 4DS
are shifted to rail transport in the CNS. This ambitious target requires a smart intermodal
transport system.
In the CNS, penetration of alternative technologies follows an aggressive scheme. By 2050,
conventional diesel and gasoline LCVs are no longer sold. More than half of the LCVs sold
by that time are diesel hybrids, more than two-thirds of which are plug-in hybrids. The rest
of the LCVs sold are either battery electric or fuel-cell vehicles (20%).
Heavy-duty vehicles (HDVs) still have a considerable share of ICE-powered new vehicles in the
CNS. For example, about half of all new sales of HDVs are powered by either diesel or natural
gas ICE. Approximately 20% are hybrids (for urban delivery) and around 30% of new sales of
HDVs are FCEVs. Conventional diesel ICE HDVs are estimated to have a nearly 30% better fuel
economy by 2030 compared with 2010, reaching around 20 L/100km without hybridisation.
In the CNS by 2050, gasoline and diesel are blended with 75% second-generation biofuels
for all modes of transport, including air and shipping. This raises questions regarding the
supply of biomass as both the power and transport sectors compete for raw biomass for
energy consumption. Transportation of raw biomass is limited by economics due to its
lower energy density and may prompt the need for import of secondary products.
The generation of electricity for electric vehicles and hydrogen for FCEVs is almost entirely
decarbonised by 2050 and the batteries for electric vehicles, as well hydrogen used for transport,
might serve as energy storage to capture excess electricity from renewable sources of energy.
A more systemic approach is needed to estimate co-benefits of such an integrated system.
The CNS requires more effort to promote fuel shift in air transport, which is difficult to
achieve for the Nordic countries, especially considering international air travel. In the CNS,
CNES and CNBS, around 25% of total air travel is shifted to rail (e.g. domestic air travel) or
avoided (international air travel), while fuel economy improves by 1.5% per year between
2010 and 2050. This improvement would be roughly in line with abatement costs of around
USD 150 per tonne of carbon dioxide (tCO2), leading to approximately 30% fuel economy
improvement by 2030.56 Further decarbonisation of air transport is difficult to achieve without
breakthrough technologies such as hydrogen-fuelled aircrafts. Without technology options
like this, aviation is likely to remain dependent on high-energy-dense liquid fuels. Low-carbon
air travel is only possible with an aggressive uptake of low-carbon, sustainable biofuels.
The 2DS results in a 24% reduction in energy consumption for transport in 2050 compared
with 2010. The greatest contribution to reduction comes from PLDVs (-50%) and road freight
(-15%). To reach the targets for CNES and CNBS, more effort is needed to reduce significantly
energy demand from transport technologies other than PLDVs (Figure 5.12).
Fuel use for road transport changes dramatically between the 4DS and the 2DS, and again
between 2DS and the CNS variants. Road transport sees a switch to low-carbon fuels, and
electrification gains a significant share in the in PLDV sector. Air and shipping still depend
on fossil fuels to some extent in the CNS and the CNES; in the CNBS, biofuels completely
replace fossil fuels (Figure 5.13).
6 Internal study.
© OECD/IEA, 2013.
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Chapter 5
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Energy use for transport by fuel in the CNES and CNBS
Figure 5.12
EJ
1.2
CNES
CNBS
1.2
1.0
1.0
0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
0.0
2010
2020
Gasoline
Diesel
2030
2040
Jet fuel
0.0
2010
2050
Residual fuel
CNG/LPG
2020
2030
Electricity
2040
Biofuels
2050
Hydrogen
Key point
Lower energy use by PLDVs helps to halve total energy use in transport by 2050. Biofuels
cover around half of fuel supply in the CNES and more than 70% in the CNBS; electricity
covers around one-quarter in both scenarios. In the CNBS, all fossil fuels are phased out
by 2050, while some conventional diesel remains in the CNES.
Figure 5.13
Fuel use by mode and fuel type in 2050
PJ
2DS
250
250
200
200
150
150
100
100
50
50
0
0
PLDVs
PJ
250
CNS
Buses
Freight
trucks
Rail
Air
PLDVs
Sea
CNES
250
200
200
150
150
100
100
50
50
0
Buses
Freight
trucks
Rail
Air
Sea
Freight
Rail
Air
trucks
1st gen biofuels
2nd gen biofuels
Sea
CNBS
0
PLDVs
Gasoline
Key point
Buses
Diesel
Freight
trucks
Jet fuel
Rail
Air
Residual fuel
Sea
CNG/LPG
PLDVs
Electricity
Buses
Hydrogen
When compared with the 2DS, the CNS and CNES more than halve the use of fossil
fuels for transport in 2050, while the CNBS totally replaces fossil fuels with non-fossils.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 5
Transport
117
Important developments up to 2030 and beyond
Some measures, such as avoidance of transport (through city planning, for example), will need
to be introduced in the short term despite the fact that their impact will not be significant until
after maybe 2030. Important developments should be achieved in all scenarios to enable the
stabilisation of fuel use and CO2 emissions up to 2030. Developments include:
■■ Efficiency
improvement of conventional technologies. For the coming years,
conventional technologies will continue to have the major share of new vehicles. Therefore,
efficiency improvements of both passenger and commercial vehicles are important
measures, regardless of the longer-term development and future technology breakthroughs.
■■ Saturation
of the development of transport demand. In the short term, efforts to
reduce transport demand will lead to lower fuel use and GHG emissions. In the longer term
when transport is mainly delivered by low-carbon technologies, energy demand in transport
is less a question of emissions and more a question of resources (e.g. biomass for biofuel
production).
If the 2DS and CNS paths are to be followed, further policy measures need to be introduced in
the short term. As conventional technologies also play an important role in the low carbon
scenarios, efficiency improvements are of high importance and need to be accelerated compared
with the 4DS.
Modal shift leads to a significant increase in passenger and freight transport by bus and rail,
also in the short term. While a modal shift within passenger transport might not be imperative
to achieve reductions in CO2 emissions in the long term, it provides some hedging against the
uncertainty of when and how alternative technologies, such as electric and hydrogen-fuelled
vehicles, will make a breakthrough. Other advantages include a reduction of traffic congestion
and lower local emissions.
Diversification of PLDV stock has to take off before 2025. The timing will, however, depend on
the possible market penetration rates, development of technology costs, consumer acceptance
and infrastructure development (e.g. charging infrastructure).
Avoid measures and modal shifts
In the short term until 2030, measures to limit growth within passenger transport do not have
an important impact in the 2DS compared with the 4DS. In contrast, infrastructure investments
and planning have a long time horizon and, therefore, avoidance policies influencing infrastructure have to be discussed before 2030. All 2DS variants require significant modal shifts,
with important changes compared with the 4DS also in the short term. In order to be able to
reduce individual passenger transport, both rail and bus transport must increase. Already by
2015, passenger transport in rail and bus has to be 25% to 30% higher compared with the 4DS.
By 2030, these figures increase and bus transport is almost 80% higher, while rail transport
has to double. The share of rail and bus of total passenger transport increases from around
12% in 2010 to 20% in 2030. Part of this increase is due to a shift away from air transport,
which decreases 12% by 2030 compared with the 4DS.
Within freight transport, modal shift is also essential. Until 2020, the 2DS and CNS variants
show an increase in rail transport of around 20% compared with 2010, increasing rail transport
to 30% of total rail and road transport. After 2020, rail transport has to increase significantly
in the CNS, accounting for more than 40% of total rail and road transport by 2030 (increasing
tkm by more than 50%) (Figure 5.14).
© OECD/IEA, 2013.
118
Figure 5.14
60%
Chapter 5
Transport
Nordic Energy Technology Perspectives
Rail transport share of total road and rail transport,
and developement in rail transportation work
Rail transport work share
120
50%
Rail transport work
Billion tkm
100
40%
30%
80
60
20%
40
10%
20
0%
2000
2010
2020
2030
2040
0
2000
2050
4DS
2010
2020
2DS
2030
2040
2050
CNS
Note: Share of total rail transport (left graph) and development of rail transport in terms of billion tkm (right graph).
Key point
Strong measures are needed to prompt the significant modal shift from road to rail
shown in the CNS and its variants, in which the share of rail transport more than
doubles in 2050 compared with 2010.
Important technology developments
All scenarios assume significant improvements in the energy efficiency of new PLDVs (Figure 5.15).
Following the path of 2DS or CNS, however, requires improving efficiency from 12% to 20%
compared with 4DS. One of the most important drivers behind PLDV efficiency is likely to be
the EU requirements, which calls for emissions targets of 95 gCO2/km by 2020. More stringent
requirements must be implemented for the years after 2020 if the 2DS path is to be followed.
Figure 5.15
Development in PLDV fuel economy
200
4DS
gCO2/km
150
2DS
100
50
CNS
0
1975
Key point
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
All scenarios depend on significant improvement of PLDV fuel economy, driven largely
by international regulations. In the long term, improvements of ICE or ICE hybrids will
be limited; emissions are expected to stabilise at around 65 gCO2 /km.
© OECD/IEA, 2013.
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Stock developments (PLDV)
All scenarios assume a more diversified PLDV stock by 2050, including new and more efficient
technologies. Within the 4DS, introduction of new technologies is limited until 2020: conventional
and hybrid ICEs still account for 99% of total stock and more than 96% of total sales. Otherwise,
only PHEVs gain some significance. Following the 2DS and CNS paths requires a share of around
10% PHEV and BEVs in total sales by 2020. Following the 2DS path requires that sales of PHEVs,
BEVs and FCEVs reach around 75 000 in 2020, with stock increasing from 22 000 in 2015 to
230 000 in 2020 (Tables 5.4 and 5.5).
Table 5.4
Sales of PLDVs with electric trains (BEV, PHEV and FCEV)
in 4DS and 2DS
4DS
2011
2DS
2015
2020
2015
2020
Norway
3 600
1.6%
2 174
12 301
2 376
19 454
Denmark
450
0.3%
1 476
8 808
1 573
13 696
Sweden
180
0.0%
1 039
2 373
3 747
26 908
Finland
34
0.0%
1 221
7 901
1 126
11 793
Iceland
68
0.0%
185
1 356
202
2 172
4 332
0.0%
6 094
32 739
9 024
74 023
OECD Nordic
Note: These are approximate numbers calculated on total sales and the shares of each technology.
Sources: The 2011 data are from: Opplysningsrådet for Veitrafikken AS, 2012; Trafikanalys, 2012; Danmarks Statistik, 2012; TraFi, 2012.
Table 5.5
Stock of PLDVs with electric trains (BEV, PHEV and FCEV)
in 4DS and 2DS
4DS
2011
2DS
2015
2020
2015
2020
Norway
4 000
0.3%
4 749
18 953
5 940
60 516
Denmark
750
0.0%
3 225
13 220
3 933
42 106
Sweden
370
0.0%
2 139
10 081
9 367
86 005
Finland
200
0.0%
2 667
11 407
2 814
35 110
Iceland
647
0.0%
405
1 851
506
6 442
5 967
0.0%
13 184
55 511
22 560
230 178
OECD Nordic
Source: The 2011 data are from: Opplysningsrådet for Veitrafikken AS, 2012; Trafikanalys, 2012; Danmarks Statistik, 2012; TraFi, 2012.
© OECD/IEA, 2013.
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CO2 emissions in transport
Figure 5.16
CO2 emissions by transport mode
80
International aviation
International navigation
MtCO2
60
Domestic aviation
40
Domestic navigation
20
0
1960
Key point
Rail
Road
1970
1980
1990
2000
2009
CO2 emissions from transport in the Nordic countries have increased 3.5 times since 1960.
Road transport is the main contributor to total transport CO2 emissions in the Nordic countries,
having risen from a share of 53% in 1960 to almost 70% in 2009. Total CO2 emissions from
transport has increased 3.5 times, with the main part of this growth taken up by road transport
(Figure 5.16).
As road transport is the main emitter, this sector also offers the biggest potential for achieving
emissions reductions. The deep cuts needed in the CNS also require serious reductions within
shipping and aviation, which are the most difficult sectors to decarbonise. Aside from efficiency
gains and the use of biofuels, breakthrough technologies are needed to overcome the barriers
that limit the share of biofuels: namely, cost, availability or concerns about sustainability.
In the 2DS, overall emissions from the transport sector are reduced more than 50%, from around
80 MtCO2 in the 4DS to nearly 37 MtCO2 in the 2DS by 2050. In the CNS, emissions are reduced
by nearly 80%, down to 12 MtCO2 (Figure 5.17).
© OECD/IEA, 2013.
MtCO2
Figure 5.17
121
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Nordic Energy Technology Perspectives
CO2 emissions from transport in the Nordic countries for all scenarios
80
4DS
60
2DS
40
CNS
20
CNES
0
2010
Key point
CNBS
2020
2030
2040
2050
While the 2DS halves the emissions compared with the 4DS, the CNS and variants almost
totally decarbonise the transport sector in the Nordic countries.
Cost of decarbonising the Nordic transport sector
A striking outcome of analysis of the NETP transport scenarios relates to the associated costs.
In fact, the differences are minimal: in all scenarios, around USD 4 000 billion is needed to develop,
run and maintain the transport sector between 2010 and 2050 (Figure 5.18). Pursuing the
carbon-neutral scenarios is actually slightly less costly than the 4DS.
The 2DS and carbon-neutral scenarios reflect a switch towards more efficient – but more
expensive – technologies compared with the 4DS, which diverts costs from fuels to investments
in technology. The total costs in the 2DS are reduced because of lower spending on fuels (as a
result of higher efficiency), lower individual travel and lower fuel prices. Higher specific investment
costs (e.g. for PLDVs) are offset due to lower stock that results from the “avoid and shift” strategy.
Between the 2DS and the CNS (and its variants), the vehicle stock is about constant; hence,
there is less variation in investment costs. But by the time of large-scale vehicle technology
deployment, the total costs of ownership (e.g. purchase costs, fuel costs, and operations and
maintenance) among different vehicle types (PHEV, FCEV, BEV) are comparable, reflecting
improved competitiveness as a result of economies of scale.
Infrastructure costs for roads, rail tracks, battery charging infrastructure etc. have not been
included in this analysis, which means the full picture of total costs is not seen. But looking at
the difference in cost of investing in and maintaining roads compared to rail tracks, or the cost
of a charging infrastructure compared to a gasoline/diesel infrastructure, these differences will
play a minor role relative to the costs of vehicles. Similar conclusions were presented in a recent
Danish study on total costs for a fossil-fuel-free transport sector in Denmark by 2050
(Teknologirådet, 2012).
© OECD/IEA, 2013.
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Undiscounted, cumulative costs for vehicles, fuels and O&M from
2010 to 2050
Figure 5.18
Total
4
Hydrogen
Electricity
Trillion USD
3
Biofuels
Petroleum fuels
2
O&M
Rail
1
Sea
0
Air
Vehicles Fuels
Total Vehicles Fuels
Total Vehicles Fuels
Total Vehicles Fuels
Total Vehicles Fuels
4DS
2DS
CNS
CNBS
CNES
Total
CV and buses
PLDV
Note: PLDV = passenger light-duty vehicle. CV = commercial vehicle. O&M = operating and maintenance.
Key point
In the 2DS and the carbon-neutral scenarios (CNS, CNBS, CNES) cumulative spending on
fuels is reduced compared to 4DS, while investments in vehicles are about equal.
Technology spotlights
As seen from the scenarios, EVs and biofuels are expected to be the main – and most immediate –
contributors in decarbonising the Nordic transport sector. In the longer term, other technologies
such as hydrogen fuel-cell vehicles can become feasible solutions (see box 5.1). These technologies
are likely to offer longer range and demand response possibilities, primarily by running
electrolysers for production of hydrogen when wind power production is high. In the CNS and
CNES, hydrogen accounts for 6.5% of the energy used for transport in 2050.
The following section on electric vehicles describes their advantages, possibilities, and existing
policies and targets to support development of EVs already in place in the Nordic countries.
Electric vehicles
Achieving a long-term emissions reduction requires measures to improve fuel efficiency and
alternative fuels, as well as new types of vehicles that can reach very low CO2 emissions per
kilometre including electric vehicles, hydrogen vehicles and plug-in hybrid electric vehicles.
Electric vehicles (EVs) are likely to become a cornerstone technology in transport systems. In
addition to being independent of fossil fuels, EVs provide a number of advantages over
conventional cars using combustion technologies, such as:
■■ Significantly
reduced CO2 emissions, especially when the car is charged using renewable
energy. The amount by which CO2 emissions are reduced depends on the marginal production
(the last unit of electricity produced) of electricity at the time of charging, which depends
on the flexibility of the charging and the surrounding energy system. For the next 10 to 15
years, marginal electricity production is likely to be supplied mainly by fossil fuels in Northern
Europe. This will gradually change as the power sector is transformed into a purely renewable
energy system.
© OECD/IEA, 2013.
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■■ EVs
reduce oil demand, thus improving the security of fuel supply and reducing the
vulnerability to increasing or fluctuating crude oil prices.
■■
EVs improve the local environment significantly through less noise and no harmful atmospheric
emissions (e.g. nitrogen oxides and particles), which is important especially in urban areas.
■■ EVs
enable a high level of energy efficiency, depending on the source of power generation.
■■ EVs
may contribute to the overall flexibility of the electricity system by providing a flexible
electricity demand and EV batteries as storage. In practice, the amount to which EVs could
contribute depends largely on the flexibility of the EV owners, the impact of smart metering
schemes and the attrition on battery capacity.
In the next few years, it will be vital to build markets and promote customer acceptance of
innovative technology, especially in regions that are heavily car-dependent (IEA, 2012). Even
though battery costs have recently dropped, the cost of EVs on a “life-cycle” basis is still
significantly higher than those of diesel or gasoline-based cars. The IEA expects that further
reduction in the cost of batteries will allow EVs to become more competitive than conventional
cars by 2020.
Considering the cost implication coupled with the limited driving range of existing EVs, it is
apparent that dedicated policy measures are required in the short term to build markets for EVs.
The EU regulation concerning mandatory emissions-reduction targets for new cars provides
additional incentives for manufacturers to produce vehicles with extremely low emissions (i.e.
below 50 g/km) (EC, 2009). Each low-emitting car will be counted as: 3.5 vehicles in 2012 and
2013; 2.5 in 2014; 1.5 in 2015; and then one vehicle from 2016 onwards. These so-called “super
credits” enable manufacturers to further reduce the average emissions of their new car fleet.
Apart from that regulation, the European Union has not provided a policy framework to create a
demand for EVs among European consumers.
The Nordic countries have all implemented various policy measures to promote electric vehicles,
involving fiscal measures as well as funds to demonstrate and test various EV technologies.
Existing instruments to promote EVs in the five Nordic countries
Table 5.6
Denmark
EVs are exempt from registration tax and annual circulation tax; the exemption runs through 2015. It does not
apply to hybrid vehicles. Free parking is available in some municipalities. Funds provided to support investments in
recharging stations for EVs and to promote the infrastructure for hydrogen cars.
Norway
EVs are exempt from VAT, import duty and registration fees, and non-recurring tax for vehicles. They also have free
parking and charging in public parking places, free drive-in lanes for public transport, and exemption from road tolls.
Finland
Car registration tax is based on CO2 emissions: rates vary from 5% to 50%. EVs pay the minimum rate (5%) of the
CO2-based registration tax. As of 1 January 2013, EVs are exempt from the annual circulation tax, which is also
based on CO2 emissions. Rates for normal cars vary from USD 26 to USD 772.
Sweden
EVs with an energy consumption of 37 kilowatt hours (kWh) per 100 km or less and hybrid vehicles with CO2
emissions of 120 g/km or less are exempt from the annual circulation tax (ownership tax) for a period of five years
from the date of their first registration. For electric and plug-in hybrid vehicles, the taxable value (in Swedish
“förmånsvärde”) of a company car under personal income tax is reduced by 40%, compared with the corresponding
or comparable gasoline or diesel car. On 1 January 2012, the “super-green car premium” (Supermiljöbilspremie) of
USD 5 970 was introduced for the purchase of all new cars with CO2 emissions of maximum 50 g/km.
Iceland
EVs are exempt from VAT up to USD 12 870 while hydrogen cars and hybrids are exempt up to nearly USD 9 007.
This is a temporary measure, set to expire at the end of 2013.
Note: These are measures taken at the national level in each country; local measures taken by municipalities may also exist, but have not been included here.
© OECD/IEA, 2013.
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The sales figures for EVs have so far been rather moderate in all Nordic countries except Norway.
At the end of 2011, some 370 EVs were in operation in Sweden, 750 in Denmark and just more
than 200 in Finland. In Norway, the figure was about 3 900 and during the first nine months of
2012 close to 3 000 cars had been sold. In September 2012, EVs made up 5% of the total sales
of passenger cars in Norway.
The possibility to avoid traffic congestion and easy access to parking and charging are likely to
have had a significant impact on the willingness of consumers to buy an EV in Norway. Many
Norwegian households have two cars and the share is even increasing slightly. Families with two
cars have the opportunity to use an EV for daily driving for activities such as going to and from
work, shopping, leisure, etc. The larger, fossil-fuelled cars can be used for longer distance travel.
There is strong political support for EVs in Norway. All political parties in the Norwegian Parliament,
with the exception of one, recently signed a new climate agreement that implies a continuation
to 2017 of tax advantages related to the purchase and use of zero-emission vehicles, up to a
cap of 50 000 vehicles. This agreement provides a stable environment for consumers and car
dealers. It also provides a framework that will enable the construction of the necessary
recharging infrastructure. In addition, the goal of the climate agreement is that average emissions
from new, privately owned cars will be 85 gCO2/km by 2020, compared with around 135 gCO2/km
in May 2012. Parts of the vehicle stock must be zero-emissions vehicles such as EVs or
conventional cars with significantly improved levels of energy efficiency.
In addition, the now-closed Norwegian car manufacturer Think Global fervently supported the
development of policies to promote the deployment of EVs. As a result, such policies were in
place when the larger international car manufacturers introduced their vehicles into the market.
Despite much lower EV sales than in Norway (between 260 and 320 cars per month in the first
five months of 2012), several prominent EV concepts are being tested in Denmark, which may
change the market in the years to come.
Several major private players developing EV technology have chosen Denmark as a test country
for their concepts. The country provides favourable framework conditions for the early market
introduction of factory-built EVs. Better Place, an electric vehicle firm active in Denmark, states
that Denmark is a suitable test market due to its manageable size,67 and topography that makes
the infrastructure less complicated. Denmark is also considered a front runner in implementing
renewable energy. Expertise in integrating wind power into the electricity system also makes
Denmark a natural home to several major research and pilot projects for EVs and smart grids.
The future potential for accessing smart grids and making use of excess wind power during low
periods of consumption (e.g. during the night) is an advantage for investors of private EV
technology concepts. Several competing charging systems are currently being installed and
tested in Denmark.
Better Place works in partnership with the French car manufacturer Renault to provide the
vehicles and the Japanese manufacturer Nissan to produce the lithium-ion batteries. Together
with the national energy company, Dong Energy, Better Place has already installed eight
battery-switching stations throughout the country and a national distribution of charging
points. By January 2013, the expected number of functional battery-switching stations will
be 15 and Better Place will establish an additional five during that year. In 2009, Dong Energy
and Better Place initially envisioned that 500 000 electric vehicles would be driving on the
Danish streets by 2020, a number that has since been revised downwards. Better Place
currently has approximately 100 private customers and 300 business customers.
A competitor of Better Place is the Danish electric mobility operator (EMO) Clever, owned by
energy companies Sydenergi and SEAS-NVE. Clever leases different EVs and provides charging
7www.denmark.betterplace.com
© OECD/IEA, 2013.
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125
stations, financial services, operational advice and environmental optimisation in relation to EVs
and infrastructure. The company has also put in place 58 quick-charge and normal-charge stations.
Clever uses the prevailing standard for quick-charging in Denmark, which was developed by
Asian car manufacturers. This particular charging station can charge up to 80% capacity
within 20 to 40 minutes, depending on the EV model and battery capacity. In addition, Clever
has initiated a large EV testing project among private car drivers (“Test-an-EV”) and is involved
in the national demonstration project EDISON.78 In total, 2 400 Danish citizens will test an
electric vehicle for a period of three months. The project will run for two years, during which
time Clever will collect data from the cars about battery technology, driving patterns, intelligent
charging and the impact of EVs on the energy system.89
BYD, the Chinese car manufacturer, is yet another player on the Danish EV market. In March
2011, BYD Europe BV and Movia, the largest public transport company in Denmark, signed
an agreement under which BYD is to provide two K9 pure electric buses for test run by Movia.
The two electric buses will operate on a two-year trial run in Copenhagen on different
passenger-carrying routes with different loads.910
In Finland, electric cars will be tested in a pilot scheme set up in Helsinki Metropolitan Area.
According to plans, around 400 EVs will be in operation and the charging network will be expanded
in the coming years. Employees of the municipality and private companies will drive the vehicles.
Fortum, the Finnish power company, has a charging concept for electric cars that provides
charging services to companies and municipalities. The concept caters for different types
of charging requirements, from overnight home charging to ultra-fast charging stations.
Icelandic law has exempted EVs from VAT: however, this is a temporary measure, set to expire
at the end of 2013. Meanwhile, gains from the shift to EVs are large. Energy consumption of
EVs already on the streets in 2010 was around 150 watt hours per kilometre (Wh/km) on
average (Kristmundsson and Einarsdóttir, 2010). If, as a precaution, usage increases by 30%
due to weather conditions, it would stand at 195 Wh/km. Based on general electricity prices
in 2012, energy cost for using an EV in Iceland is USD 0.0183/km. With the current fuel price
of around USD 1.93/L, owners of fossil-fuel-powered vehicles using only 5 L/100 km have an
energy cost of USD 0.0966/km. Although their cars are energy efficient, they could still cut
their fuel cost by more than 80% by switching to EVs.
Sigurðsson (2010) compares EVs and competing combustion engine cars with regard to Icelandic
circumstances. Assuming a 6.36% interest rate, similar maintenance costs and fixed energy
prices, this study concludes that a consumer driving an average distance per year would
have to own and operate an EV for six to seven years before lower energy costs completely
offset the initial price difference. The average age of cars in Iceland has been about nine
years for the last two decades. With this relatively long period of ownership, rising fossilfuel prices and declining EV prices could yield an outcome that is more favourable for EVs.
In the carbon-neutral scenarios investigated by NETP, electricity use for transport increases
significantly in 2050 in all five Nordic countries combined – from the current 5 terawatt hour
(TWh) (mainly railroads) up to around 40 TWh (some 7% of total net generation). A large
share of that is assigned to EVs. Such a development will, of course, present new challenges
to the electricity-supply system.
In many respects, a shift towards electric-powered transport is especially desirable and
technically feasible in Iceland. The potential effects of a large expansion of electric vehicles
on the Icelandic electricity system are discussed in Chapter 3.
8www.edison-net.dk
9www.clever.dk
10 www.byd-auto.net
© OECD/IEA, 2013.
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Box 5.1
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Hydrogen highway HyNor project
In 2003, interested parties from industry, government,
environmental organisations and academia joined
forces and initiated the HyNor project, which identified hydrogen as the energy that could provide
clean transport for the future. Hydrogen was also
highlighted as a key potential for Norway, a nation
with a long history of exporting oil and gas, to play
an important part in the use and production of
future fuels. To demonstrate that technology for
hydrogen stations is a viable alternative to the
existing fossil-fuel-based infrastructure, participants
decided to build a “hydrogen highway” from Stavanger
in the west of Norway, along the southern coast,
ending in Oslo in the east.
Along this road, which is 580 km, the project
identified a certain number of sites (or nodes) as
being important to enable driving a hydrogen
vehicle comfortably without running out of access
to fuel. Cities along the highway are home to more
than half the population of Norway.
Separate private-public project groups were established for all the nodes, along with a steering
committee for the project leaders who would coordinate efforts.
Phase I of the project (2003 to 2009) aimed to
demonstrate the technology by enabling hydrogen
vehicles to drive and refuel along this road.
The main points of focus for Phase II (2010 to
2012) were increasing the density of refuelling
stations in the capital region and acquiring more
vehicles. Other projects are worthy of note:
H2-Moves Scandinavia has led to the introduction
of 17 FCEVs on the road in Oslo, and CHIC (HyNor
Oslo Bus) has resulted in five FC buses in Oslo.
Phase III (2013 to 2015) will focus on preparing for
the introduction of FCEVs into the market. The
project will work more closely with government
agencies to ensure that the right codes and standards
are in place. In addition, collaboration with neighbouring countries will be further strengthened,
particularly through the Scandinavian Hydrogen
Highway Partnership (SHHP). Potential pioneer
customers will also be engaged to ensure a gradual
build-up of the vehicle fleet in Norway, thereby
giving car dealerships and maintenance crew some
time to increase the practical experience related to
FCEVs before the commercial introduction begins.
The focus on the infrastructure side will be to
strengthen the station network in the Oslo region,
making it permanent, with emphasis on the possibility to expand the capacity of the stations and
to mobilise the adjoining corridors. The main priority
will be the inter-city infrastructure, but some smaller,
satellite stations will be important to release the
full potential of the hydrogen vehicles.
© OECD/IEA, 2013.
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127
Critical challenges
The technical potential to reduce GHG emissions in the transport sector are considerable and
the Nordic countries have set out ambitious goals to reduce emissions to a minimum in the long
term. Whether these targets can be met will depend on several factors, of which the following
are likely to be the most important.
■■ Growth
in demand for transport must be slowed. Recent statistics indicate that
transport growth will be more moderate in the future, but there is a level of uncertainty
about how demand will evolve in the long term.
■■ The
economics and performance of EVs need to be improved in order to make
them competitive and attractive to consumers in the medium term. In modelling
exercises, EVs become a cornerstone technology due to their high efficiency and use of
renewable energy sources that are not based on biomass. If they do not become more
competitive in the real world, it will prove to be a big challenge for the long-term transformation
of transport systems.
■■ Modal
shifts must be accelerated. The 2DS assumes that a significant share of
transport from cars and trucks will switch to train, bus and other modes of public transport.
This transformation will require large investment in new infrastructure and may also
necessitate strong policies, which may not be popular among consumers and companies.
Current policies of the Nordic countries are ambitious in the long term, but it is difficult to see
that the policies now being implemented will enable development along the lines of either the
2DS or the CNS. A step forward would be to identify – within each of the generic measures of
avoid, shift and improve – specific milestones and related policies with goals to be achieved by
2020 or 2025.
© OECD/IEA, 2013.
Chapter 6
Chapter 6
Buildings
Nordic Energy Technology Perspectives
129
Buildings
Direct carbon dioxide (CO2) emissions per capita associated with the
residential sector have fallen significantly and much faster in the Nordic
countries than in other regions around the world. Greater energy efficiency
and decarbonisation of the sector, however, could still lead to significant
CO2 emissions reductions.
Key findings
■■
■■
The Nordic countries have progressively
reduced the role of fossil fuels in the buildings sector as well as increased the energy
efficiency of buildings. This has been achieved
by financial incentives, awareness campaigns,
energy certificate systems, a system for certifying
qualified experts and gradually introducing more
stringent building codes.
Building codes are important policy devices
for transitions to less energy intensive and
low-carbon economies. The Nordic countries
have used this policy device progressively.
■■
Direct emissions of CO2 per capita in the buildings sector are now close to the world average,
despite a much greater energy use per household.
■■
Electricity and commercial heat will dominate
heating in both the residential and services
sectors. There is no great difference in terms of
energy use shares between the two variants of
the Carbon-Neutral Scenario (CNS) – the CarbonNeutral high Bioenergy Scenario (CNBS) and the
Carbon-Neutral high Electricity Scenario (CNES).
■■
The similarities in energy use among the
scenarios can be attributed to historical efforts
in the Nordic countries to phase out the use of
fossil fuels and promote other energy sources.
■■
Carbon emissions associated with the buildings sector need to be reduced from 50 million
tonnes of CO2 (MtCO2) in 2010 to less than 5
MtCO2 in the 2°C Scenario (2DS) and be even
lower in the variants of the CNS.
■■
Policies should focus on requiring retrofitted
buildings to use best available technologies
(BATs) for space heating. Since building stock
turnover is low (on the order of 1% per year), retrofits of the relatively old building stock will be more
important for overall energy efficiency than new
construction in the short term.
■■
Some USD 100 billion1 in additional investments
will be required, primarily for building shell
and appliances. These are investment needs in the
2DS over and above those in the 4°C Scenario (4DS).
■■
Low return on energy efficiency investments
and, in some cases, social acceptance are
primary barriers to energy and CO2 savings.
1 Unless otherwise stated, all costs and prices are in real 2010 USD, i.e. excluding inflation. Other currencies have been
converted into USD using purchasing power parity (PPP) exchange rates.
© OECD/IEA, 2013.
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Buildings
Nordic Energy Technology Perspectives
Recent trends
Buildings, both residential and service, use a variety of technologies and materials to provide the
modern-day Nordic comforts. Energy is used for space heating and cooling, water heating,
lighting, and various appliances, as well as business equipment in the service sector. The main
factors influencing energy demand include population, income growth, number of people per
household, appliance ownership, energy efficiency, existing technologies, efficiency of building
shell (roofs, walls, windows), and climate. A complex interaction, therefore, exists among energy,
material, economic, climate and demographic factors.
Most buildings last for decades, and some even for centuries. In the Nordic countries, buildings
are more often refurbished than replaced, as they are rarely torn down and rebuilt. In order to
save energy and reduce CO2 emissions, taking into account the longevity of the building stock, it
is important that best available technologies (BATs) are chosen when buildings are refurbished
or built.
According to IEA estimates, 73% of existing building stock will still be in use in 2050 in Finland,
Norway and Sweden. Energy efficiency measures during refurbishments, therefore, need to be
addressed to a much greater extent than energy efficiency in new buildings in order to curb the
overall energy demand in the buildings sector. However, the existing housing stock in the Nordic
countries varies considerably among countries. Housing stock in Norway and Finland, for
example, is relatively new and, therefore, refurbishment is more likely to take place to a greater
extent than new construction. In Sweden, however, around one million apartments built in the
1960s will soon need to be refurbished, which provides a great opportunity but also a significant
challenge to improve energy efficiency in the existing Swedish housing stock.
In Denmark, the housing stock is relatively old, with 79% of the buildings built before 1979 when
tighter building codes were put in place. Furthermore, building turnover rate in Denmark has in
the past been relatively slow and this further slows the rate of energy efficiency improvements.
Old buildings are, therefore, more likely to be replaced by new energy efficient buildings rather
than refurbished to a much greater extent in Denmark and Sweden than in Finland and Norway.
As a result, it is likely that the average energy efficiency of buildings in Denmark and Sweden
may increase faster in the near future when compared with Finland or Norway (Table 6.1).
Share of residential building stock by age
Table 6.1
Denmark
Finland
Norway
Sweden
1919 and before 1920-45
19.7%
16.1%
1918 and before 1919-45
1.5%
8.1%
1946-69
1970-79
1980-90
1991-2000
2001-09
26.4%
16.6%
9.1%
5.4%
6.7%
1946-70
1971-80
1981-90
1991-2000
2001-09
27.6%
21.5%
18.5%
11.5%
9.8%
1921 and before 1921-40
1941-70
1971-80
1981-90
1991-2000
2001-10
9.0%
28.2%
17.1%
15.0%
10.6%
13.3%
6.8%
1918 and before 1919-45
1946-70
1971-80
1981-90
1991-2000
2001-08
12.1%
37.0%
16.8%
9.4%
5.5%
4.6%
14.7%
Note: Residential buildings stock by age is not available for Iceland.
Source: Unless otherwise noted, all tables and figures in this report derive from IEA data and analysis.
© OECD/IEA, 2013.
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131
Chapter 6
Buildings
The number of households and the number of people per household significantly affect energy
consumption in the buildings sector. A population that is characterised by fewer people per
household, but a larger total number of households, leads to a higher demand for energy. The
average number of people per household in the European Union was 2.4 in 2010, while it was
2.0 in Denmark, Finland and Sweden, 2.1 in Norway, and 2.4 in Iceland. More households exist in
the Nordic countries relative to the size of population. Types of residential dwellings also influence
energy demand in the sector, as apartment buildings tend to have smaller residential dwellings
per household compared with, for example, detached houses. Over half of building types in the
Nordic countries are detached and semi-detached houses (Table 6.2). The lowest share of
apartment buildings is in Norway at 23%, while it is around 40% to 50% for Denmark, Finland
and Iceland.
Table 6.2
Share of dwelling type in the residential sector
2010
Denmark
Detached (one dwelling) houses, farmhouses
Semi-detached (two dwelling) houses
44%
Finland
Iceland
41%
Norway
52%
50%
9%
Sweden
56%
14%
14%
Multi-dwelling buildings (apartment buildings)
39%
44%
49%
23%
Other dwellings
3%
2%
1%
4%
N/A
100%
100%
100%
100%
100%
Row (attached, linked, terraced) houses
Total
12%
44%
Sources: Statistics Sweden, 2012; Statistics Norway, 2012; Statistics Denmark, 2012; Statistics Finland, 2012; Sigurdardottir, 2012.
Energy use in the Nordic buildings sector
The buildings sector used 1 527 petajoules (PJ) of energy in 2010, or about 33% of total
energy use in the Nordic countries. The share of energy used in the Nordic buildings sector
is similar to the worldwide share of energy use. About two-thirds of all energy used in the
buildings sector, amounting to 965 PJ in 2010, was used in the residential sector. The
remaining energy, 562 PJ, was used in the service sector in 2010.
Electricity is the most used source of energy in the Nordic countries, followed by commercial
heat. Renewables account for about 12% of total energy use, while fossil-fuel use is 10%.
The greatest share of the energy is used for space heating, followed by appliances and
miscellaneous equipment (Figure 6.1).
© OECD/IEA, 2013.
132
Figure 6.1
Nordic Energy Technology Perspectives
Chapter 6
Buildings
Nordic energy flows in the buildings sector, 2010
Commercial heat
390 PJ
Space heang
781 PJ
Oil products
98 PJ
Water heang
162 PJ
Natural gas
46 PJ
Lighng
104 PJ
Renewables
181 PJ
Appliances and
miscellaneous
equipment 352 PJ
Coal products
6 PJ
Space cooling
30 PJ
Electricity
728 PJ
Cooking
20 PJ
Notes: Figures and data that appear in this report can be downloaded from www.iea.org/etp/nordic.
The numbers for energy use in this figure have been heating degree-days corrected.
Key point
Electricity and commercial heat are the most used energy sources.
Nearly 60% of all energy used in Nordic households is used for space heating and 13% is used
for water heating (Figure 6.2). The relatively cold climate, as well as prosperity in the Nordic
countries characterised by the high number of smaller households compared with other regions,
most likely contributes to the greater total energy use compared with other groups of countries.
The Nordic countries are relatively prosperous, as they have the highest gross domestic
product (GDP) per capita of all the groups of countries. The energy use per household is also
high, 73 gigajoules (GJ) per household, and only OECD Americas has greater use of energy
per household (Figure 6.3). The ratio of GDP per capita and energy use per household is an
indication of the energy efficiency of household prosperity and is 0.44 (GDP per capita/GJ
per household) for the Nordic countries and second only to OECD Asia-Oceania, which has
a ratio of 0.62. Nordic countries have a slightly higher ratio than OECD Europe of 0.41 but
much higher than, for example, Latin America, 0.32 ; China, 0.25; and India, 0.13 (GDP per
capita/GJ per household).
© OECD/IEA, 2013.
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Nordic share of energy use by type, residential and services, 2010
Figure 6.2
Services: 562 PJ
Residential: 888 PJ
2%
17%
35%
43%
5%
2%
61%
13%
10%
9%
3%
Space heating
Water heating
Cooling and ventilation
Lighting
Appliances
Cooking
Other
Note: The numbers for energy use in this figure have been heating degree-days corrected.
Key point
Space and water heating require the most energy in Nordic households.
Figure 6.3
GDP per capita and GJ per household in the residential sector, 2009
35
Nordic
USD thousand/capita
30
OECD Asia Oceania
25
OECD Americas
OECD Europe
20
15
10
Latin America
China
5
Other non-OECD
India
Africa and
Middle East
0
0
10
20
30
40
50
GJ/household
60
70
80
90
100
Notes: GDP = gross domestic product. GJ = gigajoule.
Key point
© OECD/IEA, 2013.
The Nordic countries are prosperous and use more energy per household than other
world regions.
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Use of different energy sources
In this analysis, buildings are divided into two categories: residential and services. The use
of energy sources differs the most for Iceland and Norway compared with other Nordic
countries (Figure 6.4). Geothermal energy is used in Iceland for space heating while electricity
is used in Norway. Geothermal energy in Iceland is a relatively cheap energy source and
became the dominant source for space heating soon after the oil crisis mainly due to
government policies. Currently, approximately 90% of all Icelandic households use geothermal
energy for space heating. Moreover, the Icelandic government has implemented policies to
increase even further the use of geothermal energy.
Energy use by type in the building sector in 2010
Figure 6.4
100%
Residential
100%
80%
80%
60%
60%
40%
40%
20%
20%
0%
Denmark
Finland
Biomass and waste
Key point
Iceland
Norway
Other renewables
Sweden
Natural gas
0%
Services
Denmark
Electricity
Finland
Iceland
Commercial heat
Norway
Sweden
Oil
Coal
Energy sources in the Nordic countries differ significantly among countries.
Norway´s use of electricity in the residential sector is much greater than in the other Nordic
countries as electricity is commonly used for space heating. The abundance of hydropower
for electricity production and low electricity prices has led to this trend. Consequently, the
share of electricity used in the buildings sector is much greater in Norway compared to the
other Nordic countries. The Norwegian government implemented a policy in 2007 where 40%
of energy for space and water heating in new and refurbished houses must come from
energy sources other than electricity or fossil fuels.
District heating has been increasing in all Nordic countries for decades and has reached
maturity in all countries except Norway. The growth potential in district heating is, therefore,
limited in the other four Nordic countries while growth opportunities still exist in Norway
(Nordic Energy Perspectives, 2009).
All the Nordic countries use relatively few fossil fuels in the residential sector. Therefore the
starting point for fossil-fuel use is low when it comes to analysing different scenarios. Oil
is close to 10% of energy use in both Denmark and Finland, while it is around 5% in Norway
and only 1% in Sweden. The share of oil usage in the residential sector in Iceland is
negligible, as is the use of coal in all Nordic countries. Denmark is the only country that
uses a significant amount of gas in the residential sector, accounting for 14% of total
buildings energyuse. All Nordic countries, except Iceland, use between 9% and 24% of
biomass and waste as an energy source in the residential sector.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
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Generally, the service sector uses more electricity than the residential sector due to lighting,
air conditioning and business equipment, and this is no different in the Nordic region. The
lowest share of electricity in the service sector is found in Iceland at 42%. (Figure 6.4).
Again, Iceland is the only country using significant quantities of geothermal energy. Finland
uses the greatest share at 80%.
In general, more fossil fuels are used in the service sector compared with the residential
sector. However, the share is still relatively low. Denmark uses the greatest share of fossil
fuels at 16% and is the only country to use a significant amount of gas, which accounts for
13% of total energy in the country’s service sector. The share of fossil fuels used stands at
12% in Finland, 10% in Sweden and 8% in Norway, and in all of these countries oil is the
main fossil fuel used. Iceland uses the least amount of fossil fuels at 1%, with oil being the
only fossil fuel used.
The share of biomass and waste is much lower in the service sector compared with the
residential sector. The share of biomass is only between 0% and 3% in the service sector
compared with between 9% and 24% in the residential sector. These figures do not include
Iceland because the country does not use biomass and waste as a source of energy.
CO2 emissions from the buildings sector
Given their level of energy use, Nordic countries emit significantly less CO2 per capita in
the residential sector compared with other groups of OECD countries. Direct emissions in
2009 amounted to 0.24 tonnes of CO2 (tCO2) per capita in the Nordic countries, while OECD
countries in the Americas and Europe revealed a level of direct emissions greater than
0.8 tCO2 per capita (Figure 6.5).
Energy use per household and direct CO2 emissions per capita in
the residential sector, 2009
100
1.0
80
0.8
60
0.6
40
0.4
20
0.2
0
Energy use per
household
tCO2/capita
GJ/household
Figure 6.5
CO2 emissions
per capita
0.0
OECD
OECD Asia
Americas Oceania
Key point
OECD
Europe
China
India
Other
Latin
Africa and
Other
developing America Middle East non-OECD
Asia
Nordic
Direct CO2 emissions per capita are much lower in the Nordic countries compared
with other groups of countries.
Direct carbon dioxide emissions per capita have been decreasing ever since they reached a
peak in 1970 at 2.92 tCO2 (Figure 6.6). Nordic countries placed particular emphasis on
phasing out the direct use of fossil fuels in the residential sector (see Technology Spotlight),
which has helped to significantly reduce the direct emissions per capita.
© OECD/IEA, 2013.
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Direct CO2 emissions per capita in the residential sector
Figure 6.6
3.0
World
tCO2/capita
2.5
OECD Americas
2.0
1.5
OECD Asia Oceania
1.0
OECD Europe
0.5
0.0
1971
Nordic
1975
Key point
1980
1985
1990
1995
2000
2005
2009
Direct CO2 emissions per capita have fallen much faster in the Nordic countries
compared with other regions.
Scenario assumptions
Energy consumption in the buildings sector is driven by a number of factors including
population, income, number and size of households, geographic region, climatic conditions,
energy prices, services sector value added, and floor area of service sector. These factors
have an impact on the heating and cooling load, the number and types of appliances owned,
and their patterns of use. Those key parameters are used in all the scenarios analysed in
this section.
Table 6.3
Key activity in the buildings sector
2010
2030
2050
Average annual
growth rate
2010–50
Population (thousands)
25 498
27 848
28 941
0.3%
GDP (million, 2010 USD at PPP)
1 009
1 645
2 349
2.1%
GDP/capita (thousand, 2010 USD at PPP)
39 586
59 058
81 175
1.8%
Total households (thousands)
10 379
10 712
11 005
0.1%
Residential floor area (million m2)
1 176
1 325
1 493
0.6%
Household occupancy (people per house)
2.5
2.6
2.6
0.2%
Average floor area per household (m )
113
124
136
0.4%
Services floor area (million m2)
486
550
589
0.5%
2
Note: PPP = purchasing power parity.
The different scenarios and variants use different assumptions for technology penetration,
fuel shares, adoption of BATs and implementation of energy efficiency measures. The specific
assumptions can be found in Annex C.
© OECD/IEA, 2013.
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Chapter 6
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Scenario results
Energy consumption
The total amount of energy used in residential buildings increases from 965 PJ in 2010 to
1 031 PJ in 2050 in the 4DS, or about 7%. The increased energy use will come from electricity,
biofuels and waste, while the use of fossil fuels will decrease significantly.
In the 2DS, total energy consumption decreases 8%, from 965 PJ in 2010 to 846 PJ in 2050
in the residential sector. The energy use in the CNS and its two variants is, in general, similar
to the 2DS. The use of fossil fuels has decreased further compared to the 4DS, and the main
difference is the increased use of biofuels and waste in the CNBS.
Energy use in service buildings is expected to increase from 562 PJ in 2010 to 645 PJ in 2050
in the 4DS, or 15%. Energy use is lower in the four other scenarios. Moreover, the use of
fossil fuels has decreased whereas the use of biofuels and waste has increased. Electricity
and commercial heat continue to be the dominant energy sources in the service sector
through to 2050.
Overall, the differences in energy shares among the scenarios are not significant. In all
scenarios, for both the residential and service sector, electricity and commercial heat will
continue to be the main sources of energy (Figure 6.7). The use of biofuels and waste will
also be significant and will increase substantially. The use of fossil fuels will decrease, and
in some scenarios will be negligible, while the use of renewables will increase but not by
significant amounts.
Energy consumption in the buildings sector
Figure 6.7
Services
Residential
1 000
800
800
600
600
400
400
200
200
PJ
1 000
0
4DS
2010
2DS
CNS
CNBS
CNES
2050
Biomass and waste
Other renewables
0
4DS
2DS
2010
Natural gas
Electricity
CNS
CNBS
CNES
2050
Commercial heat
Oil
Coal
Notes: Other renewables include solar and geothermal. The numbers for energy use in 2010 in this figure have been heating degree-days corrected.
Key point
© OECD/IEA, 2013.
Energy use in the residential sector increases by 7% in the 4DS.
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The similarities in energy use among the scenarios can be attributed to the historical efforts
in the Nordic countries to phase out the use of fossil fuels and promote other energy sources.
The outcomes from the two variants of the CNS (the CNBS and CNES) are not drastically
different from the CNS although special emphasis has been placed on either biofuels and
waste, or electricity and its infrastructure. Energy use per household is only greater in the
4DS compared with current levels while it is lower in the other four scenarios (Figure 6.8).
The lower energy intensity levels include improvements such as in space heating, lighting
and appliances as described in Annex C. Space and water heating continue to be the main
uses of energy in the Nordic households in 2050. Space heating, appliances and lighting will
also continue to be the main use of energy in the service sector.
Energy consumption and intensity in the buildings sector
PJ
1 000
1 200
100
1 000
1.0
800
0.8
600
0.6
400
0.4
200
0.2
800
80
600
60
400
40
200
20
0
4DS
2DS
2010
Space heating
CNS
CNBS
CNES
0
Lighting
0
1.2
4DS
2DS
2010
2050
Water heating
Services
120
Space cooling
Appliances and miscellaneous equipment
CNS
CNBS
CNES
GJ/m2
Residential
PJ
1 200
GJ/household
Figure 6.8
0.0
2050
Cooking
Energy intensity
Notes: GJ/m2 = gigajoules per square metre. The numbers for energy use in 2010 in this figure have been heating degree-days corrected.
Key point
Demand for water and space heating remains dominant in 2050.
Overall, the scenarios in the buildings sector portray electricity and commercial heat as
the main future energy sources regardless of whether it is the 4DS, 2DS, CNS or its variants.
The main uses of energy will continue to be space and water heating. The main growth in
all scenarios is projected to be in other renewables, and biofuels and waste. Although the share
of renewables increases fast, their use does not alter future energy shares significantly.
The use of fossil fuels in all scenarios is reduced from 12% in the service sector and 10%
in the residential sector in 2010 to 8% in the 4DS and between 3% and 6% in the 2DS and
its variants. This inevitably leads to a reduction in CO2 emissions.
© OECD/IEA, 2013.
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Emissions from the buildings sector
By 2050, direct CO2 emissions in the buildings sector need to decrease about 20% compared
with 2010 levels in the 4DS and nearly 60% in the 2DS. The greatest emissions savings
will come from increased energy efficiency, fuel switching as well as decarbonization of
electricity (Figure 6.9).
The share of emissions directly from the buildings sector in 2050 will be 6% of total
emissions in the 4DS and 7% in the 2DS, compared with 5% in 2010 and 12% in 1990.
The reason for the increased share of emissions from this sector, compared with total
emissions, can be attributed to the fact that a great reduction in direct emissions has
already taken place. The reduction was achieved by the introduction of various policies
that had the goal of phasing out fossil fuels. These past efforts have, therefore, already
greatly reduced the amount of emissions within the buildings sector.
Given the projected population of 28.9 million in the Nordic countries in 2050, the direct
emissions of CO2 per capita in the residential sector are expected to be around 0.08 tCO2
in the 4DS and 0.06 tCO2 in the 2DS. Both of these amounts are considerably lower than
the 2010 levels of 0.24 tCO2. The share of fossil fuels in the energy mix decreases
considerably in all scenarios and accounts for a mere 3% to 6% in the 2DS, CNS and its
variants. Given the low share of fossil fuels, it is quite possible that the buildings sector will
be CO2-neutral in the future as remaining fossil fuels are replaced by other energy sources.
Figure 6.9
MtCO2
30
CO2 emissions and reductions in the buildings sector
Residential
30
25
25
20
20
15
15
10
10
5
5
0
0
Emissions
2010
Key point
Emissions
Reductions
2050
Resulting
CNS
emissions
Services
Emissions
4DS
CNS
Emissions reductions
Fuel switching
Energy efficiency
Emissions
2010
Emissions Reductions
Resulting
CNS
emissions
Electricity
decarbonisation
2050
Emissions in the buildings sector will continue to decrease in both the 4DS and the 2DS.
From now until 2020, emissions savings will mainly be due to greater energy efficiency.
After 2020, however, decarbonisation must take place and then provide the greatest share
of indirect emissions savings until 2050 (Figure 6.10).
© OECD/IEA, 2013.
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Options contributing to CO2 emissions reduction in the 2DS and CNS
compared to the 4DS
Figure 6.10
MtCO2
50
Fuel switching
40
Space heating and cooling
and water heating
30
Appliances
20
Lighting
10
Cooking and appliances
Electricity decarbonisation
0
2010
2020
Key point
2030
2040
2050
Decarbonising electricity will be necessary in the long term to avoid CO2 emissions.
Additional investments required in the buildings sector
The total additional investment in end-use technology needed to achieve the 2DS, CNS, CNBS
and CNES compared to the 4DS is estimated to be between USD 96 billion and USD 124 billion
(2012 USD). Most of the additional investment is needed in the residential sector, which will
require between USD 64 billion and USD 84 billion in investment (Figure 6.11).
Additional investment needs in the buildings sector 2010 to 2050
(2012 USD)
Figure 6.11
USD billion
90
Residential
90
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
2DS
Water heating
Key point
CNS
Space heating
CNBS
CNES
Space cooling
Services
0
Lighting
2DS
CNS
Building shell
CNBS
Cooking
CNES
Other
Additional investments need to take place in the building shell and appliances.
The greatest share of additional investment is in the building shell and appliances (other), which
accounts for about 60% to 70% of all additional investment in the residential sector and around
80% in the service sector. This additional investment is needed to ensure that the buildings sector
adopts the more stringent assumptions as laid out in Annex C.
© OECD/IEA, 2013.
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141
Technology spotlights
Current policies for phasing out fossil fuels in the buildings sector
Nordic countries are implementing various measures to phase out fossil fuels as sources
of energy for space heating. The European Performance of Buildings Directive (EPBD),12
with its energy performance certificate system; the Boiler Efficiency Directive;23 and the
directive on the energy labelling of household appliances have all been implemented.34 Out
of the three directives though, Iceland has implemented only the one on energy labelling
of household appliances.
Although measures adopted differ widely among the Nordic countries, they fall into three
distinct categories. Categories include: measures aimed at reducing the use of fossil fuels
by increasing energy efficiency; those aimed at preventing use completely by switching to
renewables; and others used to raise awareness about efficient technologies.
All Nordic countries address the high initial investment costs associated with switching to
renewables through a number of different measures. For example, all countries financially
endorse the scrapping of oil-fired boilers and electrical heating. In Norway, as a general
rule, 40% of heat demand in new buildings has to be supplied by sources other than grid
electricity or fossil fuels (exemptions are possible). A ban on electrical and oil heating in new
buildings also exists. Grants are awarded to those who install heat pumps or wood-pellet
stoves and in February 2009, around 31 000 people applied for such grants. Grants can be
up to 20% of the investment cost, with a maximum of USD 1 700 granted for heat pumps.
Denmark subsidises the scrapping of oil-fired boilers only to replace them with district
heating when possible, but elsewhere with heat pumps and solar energy. In 2010, USD 68
million was earmarked for this purpose. A ban on electric heating also exists and conversion
to electric heating is encouraged in existing buildings in areas where district heating or
natural gas networks are available.
Sweden has given tax refunds amounting to 30% of costs when converting from oil boilers
to renewables. The state covers the material and labour costs of accessing district heating
and provides investment grants for photovoltaic (PV) installations. By 2010, USD 9.6 million
had been granted in solar heating investments. The Central Finland Energy Agency promotes
wood-pellet heating and since 2011 a subsidy has covered 20% of costs incurred when
residential buildings switch from oil or electric heating to either wood-pellet heating or
heat pumps. In 2010 alone, 112 000 tonnes of wood pellets were used for heating in Finland,
avoiding an estimated 85 000 tCO2 emissions. The Icelandic Energy Authority subsidises a
switch from fossil-fuel or electrical heating to heat pumps when geothermal district
heating is not available by providing lump-sum grants according to the cost and estimated
energy savings. The authority also subsidises connections to district-heating systems
when available as well as the construction of new district-heating systems.
Lack of awareness about efficient technologies also inhibits market solutions. The Nordic
countries have addressed that by campaigning for energy efficiency and renewable energy,
and by implementing energy labels and certificates. The Nordic environment label, The
Swan, takes energy efficiency and greenhouse-gas (GHG) emissions into account. More
than 6 000 trademarks in over 70 categories of products and services currently carry the
label. Each country has its own measures as well. The Norwegian Research Council,
Enova, runs an energy information helpline and energy guidance label. There have been
2 Directive 2002/91/EC of the European Parliament and of the Council of 16 December 2002 on the energy performance of buildings
3 Directive 92/42/EEC of 21 May 1992 on efficiency requirements for new hot-water boilers fired with liquids or gaseous fuels.
4 Directive 2010/30/EU of 19 May 2010 on the indication by labelling and standard product information of the consumption
of energy and other resources by energy-related products.
© OECD/IEA, 2013.
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information campaigns and regional energy efficiency centres run by utilities, providing
information to consumers. The Danish Energy Fund has campaigned with printed guides,
TV programmes and advertisements, for instance informing people on the savings from
low-energy products despite their higher initial costs. The Electricity Savings Trust provides
consumers with updated information on their energy consumption and has campaigned
for the use of electricity-saving sockets. In Finland, there have been campaigns promoting
heat pumps and energy conservation in oil-heated buildings. Consumers can also obtain
co-ordinated energy advice and information on energy conservation on the web, by e-mail
and via a telephone helpline. The Icelandic Energy Agency also provides information on
energy, creates educational materials for schools and consumers, and helps small and
medium-sized companies and municipalities to plan strategies to improve energy efficiency.
Online calculators are also available for homeowners to calculate their possible energy
savings, energy costs and payback time for the investment. Reykjavik Energy also offers
information and education on energy use and ways to reduce it.
Building codes stipulate minimum requirements for housing insulation to limit energy demand,
which have gradually been tightened (see Technology Spotlight on building codes). Nordic
countries also help homeowners to meet, and even exceed, these requirements. Norway
defines two levels of energy efficient residential buildings (low energy buildings, LEBs) and
one level of passive houses. The government provides financial support to those wanting
to meet these standards, as well as others who just want to improve energy efficiency.
The city of Oslo also has a local energy efficiency fund, which allocates grants of at least
USD 260 or 20% to 50% of the project costs for improving energy efficiency in all
permanent residences. However, the fund has only led to 1 TWh of saved energy since
1982. According to Enova’s 2011 annual report, the company’s various research and
development (R&D) or building and energy improvement grants and projects have amounted
to USD 2 billion in the past decade, and yielded total energy savings of 16.56 TWh.
Denmark also defines classes of LEBs, although definitions are not the same in all Nordic
countries. For such houses, the ban on electric heating and obligations to connect to district
heating or natural gas networks do not apply. Thus, although radically reducing the usage,
LEBs don’t necessarily mean the abolition of fossil fuels for space heating. Denmark, for
example, has a grant scheme supporting the development, production and marketing of
energy-saving products. Thereby it encourages technicians and innovators on the market
to turn their focus to energy efficiency. Annual maintenance and supervision of heating
equipment has also helped to reduce use.
Sweden offered subsidies to households in LEBs and tax concessions to those renovating
houses with regard to energy efficiency. Current policies are not directly aiming for energy
efficiency measures as households get tax deductions for general building improvements.
In Finland, subsidies and grants are also awarded for improving insulation, and buying more
efficient boilers and electrical appliances. Tax deductions of up to USD 3 800 per person
also apply for those employing technicians for energy efficiency improvements. A policy also
exists to have energy meters fitted in all homes and individual apartments in apartment
buildings. Regular energy audits have also helped to reduce energy consumption. The Icelandic
Energy Agency provides insulation grants to those living in areas without geothermal
district heating.
© OECD/IEA, 2013.
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143
Building codes in the Nordic countries
Being the northernmost region in Europe, the Nordic countries are exposed to some of the
coldest and most extreme winter temperatures. Good insulation in buildings has, therefore,
long been a matter of interest for their inhabitants. Climate is quite variable though, both
among and within these countries. The Scandinavian peninsula reaches far north and is
dominated by a mainland climate where temperatures can plummet to extremely low levels
or rise to extremely high ones as well, for extended periods. Iceland, with its more tempered
but windier oceanic climate, is somewhat an outlier in this respect.
Building codes are important policy devices for transitions to a less energy-intensive and
low-carbon economy. Such codes are also a central factor in reducing CO2 emissions to levels
outlined in the NETP scenarios as well as help to advance energy efficiency in the region’s
building stock. Building codes are also important for sustainable development, technical
advances and innovation, as well as protecting public health, property and the environment.
According to Laustsen (2008), the first real building codes emerged in Scandinavia around
1960. National requirements have existed in Sweden since the early 1950s and in Denmark
since 1961. By stating requirements such as U-values (a coefficient for thermal transmittance)
of insulation, air tightness, energy use for airing and total energy requirements, the codes
encourage and require the buildings sector to plan for the long term.45 Lower U-values
indicate less thermal transmittance in the building shell. Nordic policy considers the initial
building cost and the total lifetime cost of owning and running buildings, while also weighing
the impact of reducing dependency on fossil fuels and increasing energy security on the
environment and society as a whole. The codes are tailored to different climates, usage,
energy sources and size of buildings.
The European Energy Performance of Buildings Directive (EPBD) has been implemented in
all Nordic countries except Iceland. Abundant renewable energy at very low prices makes
energy efficiency in buildings a less pressing issue in Iceland. Icelandic authorities have,
therefore, considered that the EPBD is not beneficial enough for either consumers or the
environment to warrant its adoption. However, energy efficiency requirements for both
new buildings and the renovation of older ones in the Icelandic building code, last revised in
2012, have been tightened considerably in the past two decades. Despite being less stringent
than elsewhere, the code is believed by Icelandic specialists to require more energy efficiency
than cost-minimisation would determine optimal, and profitability is low because of low
energy prices. This is unusual, since according to Laustsen (2008), efficiency standards
appearing in building codes are rarely stringent enough to prove economical.
In all Nordic countries, allowed U-values have contracted dramatically since around 1990,
by which time all their building codes defined U-values (Figure 6.12). In 2008, a comparison
of building codes from the Nordic counties, excluding Iceland, with those of other IEA member
countries revealed the four highest-ranking countries to be Nordic (IEA, 2008). The overall
value has more than halved in both Finland and Sweden in the past twenty years, dropping
53% to 0.62 watt per degree
5 The U-value is a thermal transmittance coefficient, i.e. how much energy passes through one square metre of a material by
a difference of one degree in temperature. It is measured in watt (W) per degree Kelvin (K) per m2.
© OECD/IEA, 2013.
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Table 6.4
Chapter 6
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Nordic Energy Technology Perspectives
Maximum allowed U-values in the Nordic countries
Wall
Roof
Window
Door
Floor
Overall
Denmark
0.30
0.20
1.80
1.80
0.20
1.06
Finland
0.17
0.09
1.00
1.00
0.16
0.62
Iceland
0.25
0.15
1.70
1.70
0.20
0.94
Norway
0.18
0.15
1.20
1.60
0.15
0.70
Sweden
0.18
0.13
1.20
1.20
0.15
0.50
Note: Overall value is defined as Uwall + Uroof + Ufloor + 0.2*Uwindow.
Sources: Danish Energy Agency, 2012; Ministry of Local Government and Regional Development, 2012; National Board of Housing, Building and Planning,
2012; Ministry of the Environment, 2012; Iceland Construction Authority, 2012.
Kelvin (K) per square metre (W/m2K) in Finland and dropping 58% to 0.50 W/m2K in Sweden.
From 1992 to 2012, maximum allowed overall U-value for houses in Iceland has gone from
1.00 W/m2K to 0.94 W/m2K despite a hike in window value, which was previously very low
and not economically optimum. Maximum values for walls, roofs and floors have all been
lowered significantly instead. The average for walls, windows and doors has stayed
unchanged. The change in building-component U-values has not only been a matter of
tightening requirements but can also be attributed to increasing freedom of choice for
building owners to insulate in a way they believe reduces the costs. Since 1987, the overall
U-value has dropped around 30% in Norway, to 0.90 W/m2K.
Figure 6.12
Maximum allowed overall U-values in the Nordic countries
2.5
Denmark
2.0
W/K/m2
Finland
1.5
Iceland
1.0
Norway
0.5
Sweden
0.0
1975
1980
1985
1990
1995
2000
2005
2012
Note: For calculation methodology of overall U-values, please see Annex D.
Source: Nordic building regulations.
Key point
Thermal insulation requirements have been tightened considerably.
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Recently, Nordic building codes have also started to restrict total energy demand per
residence in kilowatt hours per square metre of heated living space per year. In Denmark
and Norway, this value is defined by a simple formula involving the size of each residence.
In Finland, four different formulas of similar form pertain to different categories for the
size of residences (Anet in Table 6.5). Builders choose to meet either the maximum
component U-values or a comprehensive building shell standard. In Sweden, a single
amount depending on the energy source and climate zone defines maximum allowed
energy demand. The allowance is greater if heating is supplied by energy sources other
than electricity and if the zone is more northerly. In 2006, the total energy demand
restriction replaced the maximum U-values on specific building components as the main
requirement. No maximum total energy need is defined in the Icelandic building code, as
reliable information on residence size is lacking and gathering it is not believed to yield
large enough savings.
Table 6.5
Denmark
Maximum total energy needs per m2 of heated living space per year
(52.5 + 1650/(m2 warmed living space)) kWh
Warm living space (Anet) size in sq.m.
Finland
Anet < 120
120 < Anet < 150
150 < Anet < 600
600 < Anet
204 kWh
372 – 1.4*Anet kWh
173 – 0.07*Anet kWh
130 kWh
Iceland
No defined maximum per sq.m.
Norway
(120 + 1600/(m2 warmed living space)) kWh
Sweden
Electrical heating
Heating other than electric
Climate zone I
Climate zone II
Climate zone III
Climate zone I
Climate zone II
Climate zone III
95 kWh
75 kWh
55 kWh
130 kWh
110 kWh
90 kWh
Note: Overall value is defined as Uwall + Uroof + Ufloor + 0.2*Uwindow.
Sources: Danish Energy Agency, 2012; Ministry of Local Government and Regional Development, 2012; National Board of Housing, Building and Planning,
2012; Ministry of the Environment, 2012; Iceland Construction Authority, 2012.
Buildings account for a large part of energy usage in Nordic societies, due to both a high
living standard and a cold climate. According to the Norwegian Directorate for Building
Quality, around 40% of energy consumption in Norway takes place in buildings. The Nordic
authorities are aiming to update their building codes to a passive house standard by 2015
and a nearly zero-energy standard by 2020, in compliance with the EPBD policy. Work on
defining concepts and writing national standards is ongoing in Scandinavia and Finland.
Construction of passive houses is becoming more common, most noticeably in Norway and
Sweden, as the building industry prepares to meet those standards for all buildings. At the
same time, passive and nearly zero-energy buildings are almost unheard of in Iceland, and
open window ventilation is still common in new buildings, with no restrictions on design.
Many Icelanders even prefer to open windows when the inside temperature is too high
instead of turning down the heat. Novelty provisions in the Icelandic 2012 building code,
however, introduce energy efficiency policies on ventilation and air tightness in line with
those of the other Nordic building codes.
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Critical challenges
Emissions associated with the buildings sector need to be reduced from 50 MtCO2 to below
5 MtCO2 in the 2DS in 2050, and be even lower in the CNS. The main emissions reduction needs
to come from both decarbonisation and greater energy efficiency of the sector. The energy
efficiency improvements are required to take place throughout the time period, while
decarbonisation needs to start contributing to emissions reduction after 2020. The shares
of different energy sources will not be altered significantly in the different scenarios, and
electricity and commercial heat continue to dominate and the role of fossil fuels will be
minor In order to achieve the emissions reduction; additional investments are required
mainly in building shells and appliances.
In order to reach the potential energy savings, it is important to overcome investment
barriers in the buildings sector, and action by the governments in the Nordic countries have
already begun to guide developments in the right direction. Successful policies have been
implemented in the past and are also important for future development.
Decarbonising electricity is vital in order to achieve long-term CO2 emissions savings in the
Nordic buildings sector. Firm action is required as well as continued support for phasing
out fossil fuels. Within the Nordic countries the main barrier to continued improvement in
energy efficiency is the slow rate of turnover of the building stock, as well as the difficulty
in improving energy efficiency (space heating and cooling) of older buildings. For example,
the turnover rate of building stock has been slow in Denmark, which has, in turn, slowed
down the improvements in energy efficiency. Because new buildings are in general much
more energy efficient than older buildings, more emphasis should be given to retrofitting
older buildings.
The Swedish Million Programme offers a summary of the possible difficulties in improving
the energy efficiency of buildings. Initially, the programme was set up by the Swedish
Parliament with the goal of building 100 000 dwellings per year between 1965 and 1974.
These buildings need to be retrofitted due to their age and could provide an opportunity for
further energy savings. However, various barriers exist preventing this from happening.
Energy efficiency improvements do not reduce the operating costs of these buildings and,
therefore, rents must be raised. These apartments are in low-income areas and the
residents might not be able to pay the higher rent. It is, therefore, very hard for the housing
companies to reduce the energy consumption in their buildings, while at the same time
maintain the bottom line (Swedish Association of Public Housing Companies, 2011).
Therefore both financial and social factors can sometimes prevent energy savings.
Another barrier is the lack of awareness about efficient technologies. Homeowners and firms
may simply not be aware of energy efficient technologies nor the financial or environmental
benefits they can bring. Governments can increase awareness through campaigns and by
publishing reliable information.
Nordic countries are similar in many ways, but differ particularly in terms of access to energy
sources. Iceland, for example, has access to geothermal energy and Norway has historically
used a higher share of electricity than other countries in the region due to its abundant
hydropower resources and low electricity prices. The buildings stock is also quite different
among the five countries. Consequently, critical challenges differ depending on the
different resources available and characteristics of the building stock.
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Conclusions
The Nordic Energy Technology Perspectives (NETP) describes three possible
scenarios for the Nordic energy system in 2050, each of which is greatly
decarbonised, more efficient and has a high share of renewable sources.
All three scenarios describe a region that is a significant electricity exporter
and carbon capture and storage (CCS) practitioner, and has a completely
revolutionised transport sector.
Key Findings
■■
■■
■■
The NETP scenarios provide a valuable
context to assess the potential of current
national targets. The Carbon-Neutral Scenario
(CNS) offers a cost-effective pathway to an energy
system with no net emissions; the 2°C Scenario (2DS)
and 4°C Scenario (4DS) describe how the Nordic countries contribute in least-cost global scenarios that
limit global average temperature rise to 2°C or 4°C.
The results are not bound by specific national
targets, such as a completely renewable energy
supply or a transport system independent of
fossil fuels. Rather, the scenarios aim to give in
sight into the range and possible mix of additional
efforts needed to reach such targets.
Challenge 1: Energy efficiency is the firstorder priority for policy makers. In the short
term, energy efficiency must deliver most of the
emissions reduction. Governments must act to
unlock the potential and ensure long-term duration of energy efficiency improvement, especially
in buildings and industry.
Challenge 2: Infrastructure that enables
technology change and integration will be
critical to a “system” approach. The pace of
infrastructure construction needs to be stepped
up in many areas. In transport, new systems to
supply and distribute fuels are needed, as is higher
rail capacity. In electricity, new wind capacity
and a stronger and smarter grid are key priorities that need investment in infrastructure.
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■■
Challenge 3: Carbon capture and storage is
a key technology by which to achieve deep
cuts in greenhouse-gas (GHG) emissions,
particularly in industry. Since progress in this
technology has been slow, governments must
scale up policy action to support its further
development and deployment.
■■
Challenge 4: Biomass use will increase,
primarily to support greater production of
biofuels; development of advanced biofuels is a priority. Bioenergy will be the single
largest energy source in 2050, particularly important in transport. Public support for research,
development and demonstration (RD&D) is needed to meet the challenge of reaching the supply
volumes required sustainably and to efficiently
use the resources.
■■
Challenge 5: Strong co-operation among
Nordic countries can reduce the cost of
reaching the scenarios. Co-ordination of policies, RD&D and infrastructure development could
accelerate technology development and penetration towards a low-carbon energy system.
■■
Challenge 6: A set of “no-regret” options
can deliver co-benefits. Policy makers should
prioritise action in the areas of energy savings
and measures that deliver co-benefits in relation to other environmental, economic and social
objectives.
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Policy challenges
The NETP describes three different visions for the Nordic energy system in 2050. An ambitious
CNS that achieves national emissions reduction targets; a scenario in which the Nordic
countries play their part in a global 2DS; and a less-ambitious scenario describing pathways
to limit temperature rise to 4°C (4DS). None of these scenarios are “business as usual”: all
imply significant changes in the production, distribution and use of energy in the region.
The Nordic countries have demonstrated international leadership by taking targeted actions
to reduce GHG emissions. Their targets for reductions towards 2050 are among the most
ambitious in the world. While ETP 2012 assesses the possibility of a carbon-neutral world
in 2075, the Nordic region presents an opportunity to achieve the same objective 25 years
earlier. The obstacles identified along the way are not entirely specific to the Nordic countries,
and may serve as examples of those that will confront other countries. Governments outside
the region are encouraged to use the experience of the Nordic region as a reference in their
own transitions to low-carbon energy systems.
Decarbonised electricity is at the core of a transformed energy system, with spillover effects
into end-use sectors. As with other regions with an old building stock, average efficiency is
low and curbing overall energy demand will be a substantial challenge. While the cold climate
exacerbates these difficulties, access to fossil-free electricity and renewable district heating
provide possibilities. Since the Nordic countries are sparsely populated, decarbonising road
transport is a major future challenge. The Nordic countries will, like all countries, face
challenges from increased emissions in the aviation and shipping sectors. A very low carbon
industry sector will be particularly difficult to achieve in the Nordic countries, due to the
predominance of heavy industries with significant process emissions.
Overall, the absolute additional investments needed to realise the CNS compared to the 4DS
seem manageable; they are estimated to some USD 180 billion1 between 2010 and 2050,
roughly equal to 0.3 % of cumulative Nordic GDP over the period. More than half of this is
required in the buildings sector. However, there are technical challenges, distributional effects and
issues related to public acceptance that will be equally – if not more – important than the
absolute cost of realising the scenarios. The following section lays out some key characteristics
of a future low-carbon Nordic energy system leading to six critical policy challenges.
Challenge 1. Energy efficiency in demand sectors
The future system is more energy efficient. All scenarios except the 4DS show reductions in
total primary energy supply, driven by extensive energy efficiency improvements, especially
in the end-use sectors.
Unlocking potential energy efficiency requires action across all sectors. Improvements in the
industry and buildings sectors have been implemented, but large potential for improvements
remain. Existing and new EU directives, e.g. European Commission (2009) and European
Commission (2012), are important policy steppingstones, but complementary national and
regional policies are needed to cover all demand sectors.
Integrated minimum energy performance codes and standards for new and existing buildings
are central to increasing energy efficiency. The implementation of the EU Energy Performance
of Buildings Directive includes a requirement that by 2020 all new buildings must be “near
zero” in energy consumption. Additional policies are needed to facilitate the renovation of
old buildings. One general barrier for energy efficiency improvement is the lack of
1 Unless otherwise stated, all costs and prices are in real 2010 USD, i.e. excluding inflation. Other currencies have been
converted into USD using purchasing power parity (PPP) exchange rates.
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understanding of potential and long-term effectiveness from energy efficiency improvements
in buildings. Stronger financial incentives and de-risking of investment are needed. Today,
few investors or financing agencies adequately take into account that energy efficient
buildings yield lower operation costs.
Policies to support energy efficiency improvement in industry must also maintain global
competitiveness. Adoption of new technologies can unlock energy and economic savings.
Energy-saving potential in industry can further be addressed by energy management policies;
minimum energy performance standards for industrial equipment, electric motors and systems;
energy efficiency services for small- and medium-size enterprises; and economic and financial
policy packages that support investments in energy efficiency. Many of these measures
are already present in the Nordic countries, but have the potential to be further increased.
Key policy priorities to improve fuel economy in the transport sector should focus on
implementing stringent fuel economy standards and encouraging consumers to choose
more efficient vehicles. The IEA has developed 25 energy efficiency recommendations across
sectors with high energy use to help governments achieve the full potential of energy
efficiency improvements (IEA, 2011).
To stimulate a resource-efficient energy system, policies for energy efficiency improvement
should be based on minimal primary energy use (not final energy consumption). Considering
only final energy consumption may be misleading since it does not take into account losses
during energy conversion in other parts of the energy value chain, such as electricity or fuel
production.
Challenge 2. Infrastructure in electricity and transport
The scenarios presented in this report will require upgrades and investments in new energy
infrastructure, particularly in electricity and transport.
A decarbonised electricity and heat sector is central to the transition. Access to low-carbon
electricity substantially reduces emissions in other sectors (e.g. transport and buildings).
The Nordic electricity system is already 84% decarbonised, but NETP analysis confirms the
need to bring emissions from the power generation sector to near zero in all scenarios.
Current national and European policies and pledges towards 2020 are expected to provide
an early start to the further decarbonisation of the electricity sector. The share of renewable
sources in electricity develops very similarly in all scenarios (including the 4DS), increasing
from 63% to some 75% between 2010 and 2050.
In the 2DS and CNS, carbon dioxide (CO2) emissions from electricity are even slightly negative
by 2050: capture of CO2 at biomass-fired power plants results in a net removal of CO2 from
the atmosphere. Wind (both onshore and offshore) will increase, making up around 15% of
total electricity generation in 2030 and up to 25% in 2050 in the 2DS and CNS. This
implies building up to 10 000 new turbines onshore, and another 2 500 offshore. Managing
the variability inherent in wind generation would be greatly facilitated by investment in
more intelligent grid and demand-side control systems. Electricity generation derived from
biomass and hydro will increase in both scenarios, while electricity generation from nuclear
will be steady around 20%. The use of coal and gas for electricity generation will be reduced
dramatically in all scenarios. In the 2DS and CNS, the only coal-fired electricity generation
remaining after 2030 will be equipped with CCS.
The Nordic energy system is a net exporter of renewable electricity in 2050. A low-carbon
and flexible Nordic electricity system is essential for reaching a resource-efficient energy
system in the Nordic region. It could also benefit other European regions by providing
balancing capacity across a broader context. The region’s significant natural resources and
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efficient regional grid provide a basis for a large expansion in renewable electricity generation
at lower cost than in surrounding regions. Consequently, the region will be a net exporter of
electricity to Continental Europe in all scenarios, with exports accounting for over 15% of
total production in the high electricity variant of the CNS. The level of export possible depends
largely on how much new transmission capacity is built among the Nordic countries and
Continental Europe and the United Kingdom. Price developments in the rest of Europe will
determine the economic case for trade. The NETP analysis indicates that export could range
from 20 terawatt hours (TWh) to up to 100 TWh per year depending on the framework
assumptions. Realising these volumes will not be easy or smooth: some actions will face
public acceptance issues. The export potential represents significant economic value and
will drive a significant proportion of the investments in the power sector, but it can only be
realised if several new large interconnectors are built between the Nordic countries and
Continental Europe. Experience shows that this will not be easy.
Transport in the Nordic region must undergo dramatic changes. In the short term, better
fuel economy in conventional vehicles provides the highest impact. In the mid- to long term,
transport needs to shift from fossil fuels to biofuels or electric vehicles, and be combined
with modal shifts. Electric- and hydrogen-driven vehicles are two important technology areas.
Electric vehicles save both primary energy use and emissions since they are much more energy
efficient than conventional vehicles. Energy use from electric cars will make up some 10%
of the vehicle stock energy use in the 2DS in 2050 and more than 20% in the CNS. In the
most extreme scenario, the Carbon-Neutral high Electricity Scenario (CNES), transport uses
some 7% of total Nordic electricity generation in 2050. Biofuels are expected to contribute
the greatest share of emissions reduction, but the large volumes used raise supply and
sustainability issues.
Half of the emissions from international shipping and aviation activities associated with the
Nordic countries are attributed to the Nordic CO2 balance in this analysis. Meeting emissionsreduction targets in this sector is more challenging than for domestic transport. Technically,
there are fewer options; politically, the issue is more complex since collaboration with other
countries and regions will be necessary, for example to build infrastructure for refuelling.
The NETP scenarios rely on near complete transition from fossil fuels to biofuels and electricity
in road transport, which will require a well-developed infrastructure for different fuels. The
large increase of railway transport – practically all growth in freight transport must be
done on rail – will also require upgrading existing rail systems and investments in new rail
infrastructure.
Challenge 3. Carbon capture and storage
CCS is a central technology to meet the emissions reduction envisioned in the 2DS and the
CNS, particularly in industry. Under the assumptions for future industry production, CCS is
expected to deliver between 20% and 30% of the emissions reduction. This implies that, in
2050 in the CNS, 50% of all cement and ammonia plants are equipped with CCS, and CCS
is used in 30% of all ethylene and iron and steel plants. Moreover, in the 2DS and CNS, CO2
capture technology reduces emissions at coal- and biomass-fired co-generation12 plants,
resulting in negative CO2 emissions from this sector.
Depending on the scenario, the Nordic countries capture between 7 million tonnes of
CO2 (MtCO2) (4DS) and 40 MtCO2 (CNS) by 2050.23 Deploying CCS at this level requires broad
policies to address technological development, infrastructure, public acceptance and risk
governance. Few commercial CCS projects currently exist.
2 Co-generation refers to the combined production of heat and power (CHP).
3 This may be compared e.g. to 1990 year’s Nordic CO2 emissions of 206 Mt.
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The actual implementation of the whole CCS value chain from capture to storage, including
transport and other infrastructure, is complicated and time consuming, especially when
considering the associated legal and contractual issues, and the need for continuous
monitoring and surveillance.
In the NETP scenarios CCS is introduced from 2025, a development that requires decisive
and immediate policy action. Although two large-scale CO2 storage projects are already
under way in Norway (the Sleipner and Snøhvit projects), public funding for demonstration
projects needs to increase.
Policies need to cover the whole technology value chain, providing incentives from capture
through transport and storage. Policies are needed to encourage and identify storage sites,
to develop the infrastructure around the technology, and for the continuous monitoring and
responsibilities during the storage.
Challenge 4. Bioenergy supply
Bioenergy will be the single most important energy source in the Nordic region. In the 2DS
and CNS, the share of biomass and waste in total primary energy supply doubles to 2050,
reaching about 1 700 petajoules (PJ) (or one-third). Overall oil, coal and gas use fall from
over 50% of total energy demand in 2010 to 23% by 2050 in the 2DS. In the CNS, this figure
decreases to 16% due to new technologies being available earlier. Biomass usage for transport
must be doubled already by 2015 and multiplied twelvefold by 2050 in the CNS. Over the same
period, oil use for transport will decrease by 90% in 2050. The scenarios also assume a
shift to carbon-neutral sources of energy for different industry processes where possible.
The Nordic region becomes a net importer of bioenergy, importing 9% of its supply in the
2DS and 13% in the CNS. These numbers assume increasing international trade in bioenergy
and price forecasts for imported biomass. This is consistent with the analysis of global
availability of biomass for energy purposes conducted in ETP 2012, which indicates that by
2050 bioenergy is the world’s largest energy carrier, accounting for some 30% of the total
global supply. The NETP analysis is cost-optimised and allows for import to the Nordic region,
when economically efficient. Ensuring that this bioenergy is produced in a sustainable way
will be a central challenge for policy makers across the world. International co-operation and
standards are therefore very important, e.g. the sustainability criteria laid out in the EU
Renewable Energy Directive (European Commission, 2009) as well as the ISO standardisation
work on sustainability of biofuels (Guerriero, C. and Kerckow, B., 2011).
Policies to support development of advanced biofuels – solid, liquid and gaseous – will be
important to provide different sectors with biofuels. Continued policy support is needed to
bring down costs to competitive levels and while several new bioenergy technologies are
approaching market competitiveness, their development must be accelerated through
public RD&D. Governments should act to reduce risks associated with large investments
when technologies are immature.
Economic instruments, such as the common Norwegian-Swedish electricity certificate
system, feed-in tariffs and premiums for biofuels, can also address the currently high
production costs of new biofuels for electricity production. These instruments are important
for development of other renewable electricity production as well, such as wind power.
Blending obligations for retail suppliers of road transport fuel have also proven effective.
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Challenge 5. Leveraging Nordic collaboration
Nordic countries have demonstrated initiative and willingness to go beyond international
agreements. Ambitious, long-term targets clearly show that the Nordic countries are
motivated to go even further in the future. The NETP CNS shows pathways towards a Nordic
energy system with very low CO2 emissions. For these scenarios to be realised, powerful
and predictable policies are required. Co-ordinating such policies would offer substantial
benefits and cost reductions.
Energy prices that reflect the true cost of energy must be at the heart of Nordic energy
policy. Without efficient price signals to consumers, policy targets will be more expensive to
reach. The Nordic countries all have pricing mechanisms in place and are also all part of the
EU Emissions Trading Scheme (ETS). However, the price levels for carbon emissions will need
to increase substantially in order to realise the 2DS and CNS. Harmonising the carbon price
across all Nordic countries and expanding the scope of the carbon price to cover more sectors
is likely to lower total mitigation costs to reach common climate objectives. Policy harmonisation may be difficult in practice; it typically implies conceding some degree of control of
national priorities. It may also shift costs significantly between countries and sectors. However,
a balanced level of policy convergence may render benefits with limited distributional effects.
The NETP scenarios involve technologies that are currently immature, such as advanced
biofuels, offshore wind and CCS. Significant RD&D efforts in the near term are required to
advance these technologies. Nordic governments should consider where comparative
advantages in the region exist and focus their efforts accordingly. Some technology areas
may be better to leave to other regions to pursue, so prioritisation will be important.
Cost-effective infrastructure development will also require close Nordic policy co-ordination.
At present, national strategies for sustainable transport put focus on different technology
priorities. Choosing very different strategies for transport infrastructure solutions may come
at very high costs in a sector that is already expensive to decarbonise.
Charting a common approach to CCS may also deliver substantial benefits. Sweden and
Finland have the highest need for CO2 capture but lack significant storage potential,
meaning co-operation in CO2 transport and storage infrastructure is central to technology
implementation.
Challenge 6. Deploying no-regrets options
A number of no-regrets options are available, with the largest potential in the transport,
building and industry sectors. In addition to climate change mitigation, no-regret options
can deliver economic, environmental or social co-benefits, while also lowering costs;
reducing local air pollution, traffic congestion and waste; and increasing energy security. The
most obvious category is energy efficiency improvements. These options include improved
fuel economy and increased transport efficiency through modal shifts to bus and rail within
passenger transport, and from road to rail within freight transport. Improved logistics,
shortened routes and optimised aviation traffic control will reduce transport volumes. In the
buildings sector, improved insulation and optimised energy operation is likely to increase
energy efficiency substantially. In industry, energy efficiency can be increased through for
instance process optimisation and more efficient burners. Increased recycling of materials,
notably metals and plastics, will also reduce overall energy use.
Uncertainties in technology deployment rates may require that several different technology
pathways are supported in parallel. Different modal alternatives in the transport sector will
hedge against the uncertainty of when and how alternative technologies (such as electric
and hydrogen fuel vehicles) will have a break through.
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Do the NETP results see countries reaching their specific national
energy targets?
The 2DS and CNS by definition meet the goals set up in the modelling exercises: the costoptimised Nordic contribution to the world envisioned in the global ETP 2012 2DS and a
carbon-neutral Nordic energy system. But do these scenarios also deliver the Nordic national
visions and targets summarised in Table 2.1? All Nordic countries have targets of reduced
emissions of GHGs, without allocation among different gases by 2050; in addition, Denmark
has a target of 100% renewable energy supply. Since the NETP results show CO2 emissions,
exact comparisons among the national targets and the NETP results are not possible. By
definition the analysis of the CNS shows aggregate energy related Nordic CO2 emissions
falling by 85%. But it is not possible to conclude if these results hold for all GHG emissions.
Moreover, Denmark’s target of 100% renewables will not be reached in either scenario. In
the 2DS, only Iceland will reach its emissions-reduction target (i.e. to decrease emissions 50%
to 70%) by 2050. It is important to note that the NETP findings do not consider emissions
reduction from carbon offsets; thus, there is a chance that national GHG emission targets can
still be met through the purchase of international emissions-reduction credits.
Intermediate targets or more narrow national targets exist within many Nordic countries.
For example, Sweden plans to have a fossil-fuel-independent transport fleet by 2030. The
definition of fossil-fuel-independent is not yet clarified. If “independent” means “no use”, this
ambition is far from being reached in the NETP scenarios. In 2030, oil remains the most
important fuel in the transport sector within all scenarios and makes up more than one-half
of the energy use in Sweden. Denmark’s target of phasing out coal use by 2030 is within
reach in all of the NETP scenarios through early conversion to renewable energy sources.
However, some coal still remains in the industry sector in Denmark.
The scenarios do not align perfectly with the political targets in each Nordic country, but
instead provide least-cost pathways for the Nordic region as a whole. The NETP findings
therefore provide a valuable context for comparison of national targets.
© OECD/IEA, 2013.
Annexes
Nordic Energy Technology Perspectives
Annex A
Analytical Approach
157
A. Analytical Approach
The Nordic Energy Technology Perspectives (NETP) follows the same analytical approach as
Energy Technology Perspectives 2012 (ETP 2012) (www.iea.org/etp). It applies a combination
of backcasting and forecasting. Backcasting lays out plausible pathways to a desired end
state. It makes it easier to identify milestones that need to be reached, or trends that need
to change promptly, in order for the end goal to be achieved. The advantage of forecasting,
where the end state is a result of the analysis, is that it allows greater considerations of
short-term constraints.
Achieving the NETP scenarios does not depend on the appearance of breakthrough technologies. All technology options introduced in the analysis are already commercially available
or at a stage of development that makes commercial-scale deployment possible within the
scenario period. Costs for many of these technologies are expected to fall over time, making
a low-carbon future financially viable.
The analysis and modelling aim to identify the most economic way for society to reach the
desired outcome, but for a variety of reasons the scenario results do not necessarily reflect
the least-cost ideal. Many subtleties are difficult to capture in a cost optimisation framework,
such as political preferences, feasible ramp-up rates, capital constraints and public
acceptance. For the end-use sectors (buildings, transport and industry), carrying out leastcost analysis is difficult and not always suitable. Long-term projections inevitably contain
significant uncertainties and many of the assumptions underlying the analysis will likely
turn out to be inaccurate. Another important caveat to the analysis is that it does not
account for secondary effects resulting from climate change, such as adaptation costs.
The NETP analysis acknowledges those policies that are already implemented or committed.
In the short term, this means that deployment pathways may differ from what would be
most cost-effective. In the longer term, the analysis emphasises a normative approach and
fewer constraints governed by current political objectives apply in the modelling. The objective
of this methodology is to provide a model for a cost-effective transition to a sustainable
energy system.
To make the results more robust, the analysis pursues a portfolio of technologies within a
framework of cost minimisation. This offers a hedge against the real risks associated with
the pathways: if one technology or fuel fails to fulfil its expected potential, it can more easily
be compensated by another if its share in the overall energy mix is low. The tendency of
the energy system to comprise a portfolio of technologies becomes more pronounced as
carbon emissions are reduced. This has implications for energy security as well as for the
uncertainties embodied in the scenarios.
© OECD/IEA, 2013.
158
Annex A
Analytical Approach
Nordic Energy Technology Perspectives
The ETP model
The ETP model, which is the primary analytical tool used in NETP, combines analysis of
energy supply and demand. The model supports the integration and manipulation of data
from four soft-linked models:
■■ energy
conversion;
■■ industry;
■■ transport;
■■ buildings
and
(residential and commercial/services).
Using the energy conversion model, it is possible to explore outcomes that reflect variables
in energy supply in the three sectors with the largest demand, and hence the largest emissions
(models for industry, transport and buildings [residential and commercial]). The following
schematic illustrates the interplay of these elements in the processes by which primary
energy is converted into the final energy that is useful to these demand-side sectors (Figure A.1).
Figure A.1
Primary energy
The ETP model
Conversion sectors
Final energy
End-use sectors
Electricity
generaon
Industry
Fossil
Refineries
Electricity
Synfuel plants
Diesel
Buildings
Heat
Nuclear
Heat generaon
Material
demands
Heang
Gasoline
Renewables
End-use
service demands
etc.
Cooling
Mobility
Transport
(MoMo model)
etc.
etc.
ETP - TIMES model
The energy conversion module is a least-cost optimisation model. The demand-side
modules are stock accounting simulation models. Consistency of supply, demand and price
is ensured through an iterative process, as there is no hard link between the sector models.
The ETP model works in five-year time steps.
The conversion sector (i.e. transformation of power and fuel) in NETP 2013 is analysed
using the ETP-TIMES1 model, which covers the five Nordic countries (Denmark, Finland,
Iceland, Norway and Sweden) and depicts, in a technology-rich fashion, the supply side of
the Nordic energy system. The model spans the spectrum from primary energy supply and
conversion to final energy demand up to 2050. Starting from the current situation in the
conversion sectors (e.g. existing capacity stock, operating costs and conversion efficiencies),
the model integrates the technical and economic characteristics of existing technologies
1 The ETP model is based on The Integrated MARKAL-EFOM system (TIMES) model generator, which has been developed and
is continuously enhanced by the Energy Technology Systems Analysis Programme (ETSAP), one of the IEA Implementing
Agreements (Loulou et al., 2005).
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Annex A
Analytical Approach
159
that can be added to the energy system. The model can then determine the least-cost
technology mix needed to meet the final energy demand calculated in the ETP end-use
sector models for industry, transport and buildings. Technologies are described by their
technical and economic parameters, such as conversion efficiencies or specific investment
costs. Learning curves are used for new technologies to link future cost developments with
cumulative capacity deployment.
To capture the impact of variations in electricity and heat demand, as well as in the generation
from some renewable technologies on investment decisions, a year is divided into four
seasons, with each season represented by a typical day with 12 daily load segments. The
ETP-TIMES model also takes into account additional constraints in the energy system (e.g.
fossil-fuel resource constraints or emissions reduction goals) and provides detailed information
on future energy flows, as well as their related emissions impacts, required technology
additions and the overall costs of the supply-side sector.
Industry is modelled using a stock accounting spreadsheet that covers (in detail) five energyintensive sectors: iron and steel, cement, chemicals and petrochemicals, pulp and paper, and
aluminium. Demand is estimated based on country- or regional-level data for gross
domestic product (GDP), disposable income, short-term industry capacity, current materials
consumption, demand saturation rates and resource endowments. Total production is
simulated by factors such as process, age structure (vintage) of plants and stock turnover
rates. Overall production is similar across scenarios, but means of production differ considerably.
For example, the same level of crude steel production is expected in both the 4°C Scenario
(4DS) and 2°C Scenario (2DS), but the 2DS reflects a much higher use of scrap, which is less
energy-intensive than production from raw materials. Each industry sub-model is designed
to account for sector-specific production routes.
Changes in the technology mix and efficiency improvements are driven by exogenous
assumptions on penetration of best available technologies (BATs) at each given time. The
analysis incorporates the projected relative cost of those technologies, as well as how
marginal abatement costs in industry compare to those in other sectors at the given time
period. Thus, the results are sensitive to assumptions on how quickly physical capital is
turned over and how effective incentives are for using BATs in new construction.
Transport is modelled with a Nordic variant of the mobility model (MoMo), a global transport
spreadsheet model that allows projections and policy analysis to 2050, with considerable
regional and technological detail. The mobility model encompasses most vehicle and
technology types (e.g. 2- and 3-wheelers, passenger cars, light trucks, medium and heavy
freight trucks, buses) and all modes of transport (e.g. non-road modes such as rail, air and
shipping). Since the model integrates assumptions on the availability of technology and cost
at different points in the future, it reveals, for example, how costs could drop if technologies
were deployed at a commercial rate. The model also comprises fairly detailed bottom-up
“what-if” modelling, especially for passenger light-duty vehicles (PLDVs) and trucks (Fulton, et al., 2009).
Energy use is estimated based on stocks, use (travel per vehicle), consumption (energy use
per vehicle, i.e. fuel economy) and emissions (via fuel emission factors for carbon dioxide [CO2]
and pollutants on a vehicle and well-to-wheel basis). For each scenario, this model supports
a comparison of marginal costs of technologies and aggregates to total cost across all
modes and regions.
The primary drivers of technological change in transport are assumptions on the cost
evolution of the technology and the policy framework providing the incentives to adopt the
technology. Oil prices and the set of policies assumed can significantly alter technology
penetration patterns.
© OECD/IEA, 2013.
160
Nordic Energy Technology Perspectives
Annex A
Analytical Approach
The buildings sector is modelled using a simulation stock accounting model, split into
residential and commercial sub-sectors for the countries in the Nordic region. For both
subsectors, the model uses income, population, urbanisation data and services value
added to project floor space per capita as well as activity levels such as cooking, appliance
ownership and energy efficiency. Based on this set of drivers, demand for individual energy
services and the share of each energy technology needed to meet this demand are
projected to 2050. Space heating demand is calculated using detailed data on building
stock (including energy efficiency of different periods). For lighting and appliances, the
model recognises that equipment penetration is driven by income per capita and historical
regressions. Space cooling is projected using regional climatic conditions and income per
capita. Simulating (from the bottom up) all energy uses traditionally associated with
buildings, the buildings model is suited to analyse scenarios for energy efficiency in
buildings and end-use technology penetration.
© OECD/IEA, 2013.
161
Annex B
Framework assumptions
Nordic Energy Technology Perspectives
B. Framework Assumptions
Economic activity (Table B.1) and population (Table B.2) are the two fundamental drivers of
demand for energy services in the NETP scenarios. These two drivers are kept constant
across all scenarios as a means of providing a starting point for the analysis and facilitating
the interpretation of the results. Under the NETP assumptions, gross domestic product
(GDP) of the five Nordic countries combined will nearly quadruple by 2050. Uncertainty
around GDP growth across the scenarios is, however, significant. The climate change rate,
even in the 4DS, is likely to have a negative impact on the potential for economic growth.
This impact is not captured by the NETP analysis. Moreover, the structure of the economy
is likely to have non-marginal differences across scenarios, suggesting that GDP growth is
unlikely to be identical even without considering impacts of climate change. The redistribution of financial, human and physical capital will affect the growth potential, both
globally and on a regional scale. While the NETP analysis provides important insights into
the cost of CO2 reductions for consumers and for the global economy, the analysis does not
assess the full impact on GDP. Other studies have attempted to do this by analysing, for
example, the impact on GDP from climate change mitigation.
Table B.1
GDP assumptions
2009
2020
2030
2040
2050
CAAGR (%)
2009-2050
Denmark
198
251
315
384
451
2.0%
Finland
180
236
297
362
425
2.1%
[USD 2010]
Iceland
12
16
20
24
28
2.0%
Norway
254
329
415
503
591
2.1%
Sweden
336
475
598
727
855
2.3%
Nordic 5
980
1 307
1 645
1 998
2 350
2.2%
Note: CAAGR = compounded average annual growth rate.
Integrating a high level of technological detail in a macroeconomic model could, in theory,
resolve some of the discrepancies among the findings based on different modelling
approaches. Because such integration is extremely challenging, however, different modelling
approaches should be used instead to highlight different perspectives of a problem. Energy
prices, including those of fossil fuels, are a central variable in the ETP analysis (Table B.3).
The continuous increase in global energy demand is translated into higher prices on energy
and fuels. Unless current demand trends are broken, rising prices are a likely consequence.
However, the technologies and policies to reduce CO2 emissions in the NETP scenarios will
have a considerable impact on energy demand, particularly for fossil fuels. Lower demand
for oil in the 4DS and the 2DS means there is less need to produce oil from costly fields
higher up the supply curve, particularly in non-OPEC countries. As a result, the oil price is
projected to stay under USD 100 (US dollars) per barrel throughout the projection period
and could even to drop during the last decades before 2050.
© OECD/IEA, 2013.
162
Annex B
Framework assumptions
Nordic Energy Technology Perspectives
Prices for natural gas will also be affected as demand decreases and indirectly through the
link to oil prices that often exists in long-term gas supply contracts. Finally, coal prices are
also substantially lower owing to the large shift away from coal in the low-carbon scenarios.
Table B.2
Population projection
[Million]
2010
2020
2030
2040
2050
Denmark
5.55
5.74
5.89
5.94
5.92
Finland
5.37
5.53
5.62
5.62
5.61
Iceland
0.32
0.36
0.39
0.41
0.43
Norway
4.88
5.23
5.57
5.84
6.06
Sweden
9.38
9.92
10.38
10.66
10.92
Nordic 5
25.50
26.77
27.85
28.47
28.94
Source: UN, 2011.
Table B.3
Energy prices for external imports and exports
[USD 2010/GJ]
4DS
2009
2020
2030
2040
2050
Hard coal
3.4
3.6
3.7
3.7
3.7
Natural gas
7.1
9.8
11.1
11.4
11.3
Crude oil
13.8
19.2
20.7
21.0
20.9
Electricity
18.1
22.0
30.9
35.5
37.8
23-30
23-30
23-31
24-32
24-34
Hard coal
3.4
3.2
2.5
2.2
2.1
Natural gas
7.1
9.3
9.2
8.5
8.0
Crude oil
13.8
17.1
17.1
16.3
15.3
Electricity
18.1
24.9
35.1
39.2
41.4
Liquid biofuels
2DS, CNS
2DS, CNS, CNES
Liquid biofuels
23-30
23-30
21-28
22-28
22-29
CNBS
Liquid biofuels
23-30
23-30
20-26
20-25
20-23
Notes: GJ = gigajoules. CNS = Carbon-Neutral Scenario. CNBS = Carbon-Neutral high Bioenergy Scenario. CNES = Carbon-Neutral high Electricity Scenario.
© OECD/IEA, 2013.
163
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
C. Central Assumptions for
Sector Modelling
Power and district heating
Marginal abatement costs in the electricity sector in the 4DS and 2DS
Table C.1
2020
2030
2040
2050
4DS
[2010 USD/tCO2]
30
40
50
65
2DS
40
90
120
160
Note: tCO2 = tonnes of CO2.
Table C.2
Main scenario assumptions in the electricity sector
4DS
Renewables
NREAP targets in 2020 for
Denmark, Finland Sweden;
2DS
CNS
CNBS
CNES
as in 4DS
as in 4DS
as in 4DS
as in 4DS
+26.4 TWh for Norway and
Sweden in common electricity
certificate market by 2020;
Denmark: min. target of 17.8 TWh
wind generation in 2020;
Hydropower expansion limited to
+5 TWh in Sweden and +30 TWh
in Norway.
Nuclear
Finland: max. 6.4 GW of new reactors possible; Sweden: replacement of existing reactors possible,
but no expansion beyond current
capacity levels.
as in 4DS
as in 4DS
as in 4DS
as in 4DS
Coal
Norway: No coal use in Norway;
Denmark: Phase-out of coal plants
without CCS by 2030; Denmark,
Sweden: No new coal-fired power
plants, neither with nor without CCS.
as in 4DS
as in 4DS
as in 4DS
as in 4DS
Electricity export
Increase from USD 65/MWh in
prices to Continental 2009 to USD/MWh 136 in 2050.
Europe
USD 150/MWh
in 2050
USD 150/MWh
in 2050
USD 150/MWh
in 2050
USD 150/MWh
in 2050
Carbon price
USD 160/tCO2
in 2050
USD 160/tCO2
in 2050
USD 160/tCO2
in 2050
USD 160/tCO2
in 2050
USD 65/tCO2 in 2050
Notes: NREAP = National Renewable Energy Action Plan. TWh = terawatt hours. GW = gigawatts. CCS = carbon capture and storage. MWh = megawatt hours.
USD 65/tCO2 = United States dollar per tonne of carbon dioxide.
© OECD/IEA, 2013.
164
Technical and economic assumptions for selected power technologies
Table C.3
Overnight investment
costs (2010 USD/kW)
Fixed operating and
maintenance costs
(2010 USD per kW/yr)
Net conversion efficiency
(lower heating value) %
Technical
lifetime
(years)
2050
2010
2030
2050
2010
2030
2050
2 300
2 300
2 300
46
46
46
47
50
52
35
USC +
oxy-fuel
n.a.
3 450
2 950
n.a.
104
89
n.a.
42
44
Gas turbine
500
500
500
10
10
10
38
40
1 000
1 000
1 000
20
20
20
57
n.a.
1 600
1 500
n.a.
48
45
Wind,
onshore
16322266
14151966
13181919
33-45
28-39
Wind,
offshore
32004200
25763209
24112988
99-126
PV, utility
scale
4 000
1 440
1 050
PV, rooftop
4 900
1 750
Biomass, CHP
(50 MW)
4 025
Biomass, CHP
(10 MW)
LCOE (2010 USD/MWh)
2010
2030
2050
2010
2030
2050
4
85
85
85
64
118
151
35
4
n.a.
85
85
n.a.
91
82
42
30
1
15
15
15
133
194
207
61
63
30
3
60
60
60
63
100
109
n.a.
54
56
30
3
n.a.
85
85
n.a.
87
78
28-38
100
100
100
25
1
30-22
33-25
35-26
77-96
72-90
100
100
100
25
2
45-41
47-42
47-42
113162
40
14
11
100
100
100
25
1
11
12
13
430
142
98
1 300
49
18
13
100
100
100
25
0
9
11
12
644
190
130
4 025
4 025
81
81
81
30 (85)
32 (91)
32 (91)
35
3
60
60
60
69
71
71
5 700
5 700
5 700
200
200
200
28 (83)
30 (89)
30 (89)
35
2
60
60
60
118
120
120
Hydro, large
(300 MW)
2 500
2 500
2 500
50
50
50
100
100
100
80
4
46
46
46
72
72
72
Hydro, small
(10 MW)
5 200
5 200
5 200
104
104
104
100
100
100
80
3
46
46
46
146
146
146
Nuclear,
LWR
4 000
4 000
4 000
80
80
80
36
37
37
50
5
90
90
90
69
69
69
USC
NGCC
NGCC +
postcomb.
71-134 56-104
51-95
85-118 79-110
© OECD/IEA, 2013.
Notes: LCOE = Levelised cost of electricity. kW = kilowatt. USC = ultra-super-critical. NGCC = natural gas combined cycle. Postcomb. = postcombustion. PV = photovoltaic. CHP = combined heat and power.
LWR = light water reactors. LCOE are based on fuel and CO2 prices of the 2DS (see Table B.3 and Table C.1). For biomass CHP plants, first efficiency numbers refer to the electric efficiency, whereas the number in
brackets represents the overall efficiency. LCOE of biomass CHP plants are based on fuel costs of USD 5/GJ and a heat credit of USD 45/MWheat
Annex C
Central assumptions for sector modelling
2030
Capacity factor (%)
Nordic Energy Technology Perspectives
2010
Construction
time
(years)
Table C.4
165
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
Cross-border transmission capacities (GW)
Existing capacities and under construction
All scenarios
Options for additional new capacity
4DS, 2DS, CNS, CNBS
CNES
2010
2020
2020 or later
2020 or later
2.3
2.3
0.7
2.3
Denmark <-> Sweden
2.4
2.4
unbounded
Finland<-> EU
0.35
1.0
0.3
Finland <-> Sweden
1.85
2.65
unbounded
Norway <-> Denmark
1.0
1.7
unbounded
Norway <-> EU
0.7
1.4
Norway <-> Finland
0.1
0.1
Norway <-> Sweden
3.7
3.7
Sweden <-> EU
1.2
1.9
2.0
Russia -> Finland
1.56
1.56
unbounded
Russia -> Norway
0.05
0.05
unbounded
[GW]
Denmark <-> EU
4.0
6.0
1.4
unbounded
unbounded
Transport
For transport, NETP considers a range of efficiency and technology options. Costs are
estimated for improving gasoline vehicle fuel economy, shifts to advanced diesel vehicles,
hybrid vehicles, plug-in hybrids, battery electric vehicles and fuel-cell vehicles.
Figure C.1 shows how the total tonnes of reduction (horizontal axis) can be achieved at a given
abatement cost per tonne (vertical axis) and how this changes over time. The potential
reductions rise over time mainly because it takes time to roll out the improvements and
increase the use of specific technologies over the entire stock of vehicles. Reductions related
to fuel-cell vehicles, for example, only begin to show up in 2040.
The other important effect of time is abatement cost reduction. The base 2DS results show
fairly strong cost reductions for key technologies such as batteries and fuel-cell systems.
Abatement cost reductions also result from rising fuel prices, such that fuel savings become
more valuable over time. The net effects reflect the fact that the cost per tonne of avoided
CO2 is highly sensitive to relatively modest changes in technology and fuel costs.
Overall, most of the cost reductions in 2020 (mainly fuel economy improvements) can be
achieved at less than USD 0 per tonne. Above zero, the costs quickly become very high but
the amount of CO2 reduction achieved is quite low. This reflects the period required to reduce
the costs of electric vehicles and plug-in hybrids through policy support. Such support
would not be of interest (from a societal perspective) were it not for the fact that the costs
will decrease over time as cumulative production provides learning effects. Since these are
societal cost calculations, even costs below zero might not be taken up by the market. This
could be the case if, for example, personal discount rates are much higher than societal ones
and the payback time for investments is longer than people are willing to tolerate.
© OECD/IEA, 2013.
166
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
Figure C.1
Transport PLDV marginal abatement cost curves by projection year
1 000
2020
USD/tCO2
800
600
2030
400
2040
200
0
2050
- 200
0
2
4
6
MtCO2
8
10
12
14
Notes: MtCO2 = million tonnes of CO2. PLDV = passenger light-duty vehicle
Key point
Marginal abatement costs evolve over time, and in transport there is a clear lowering of
these costs as a result of learning outpacing the move up the cost curve.
Buildings sector
Table C.5
Energy Efficiency
Key assumptions for space heating in the residential sector
New Build
Retrofit
4DS
Drop in average kWh/m to Passivhaus standard in 2075
1% annual retrofit rate to 65-80 MJ/m2
2DS
Drop in average kWh/m2 to Passivhaus standard in 2050
1% annual retrofit rate to Passivhaus
(54 MJ/m2 for space heating)
CNS
Drop in average kWh/m2 to Passivhaus standard in 2025
1.25% annual retrofit rate to Passivhaus
CNES
Drop in average kWh/m to Passivhaus standard in 2025
1.25% annual retrofit rate to Passivhaus
CNBS
Drop in average kWh/m to Passivhaus standard in 2025
1.25% annual retrofit rate to Passivhaus
2
2
2
Fuel Mix
4DS
Broadly constant fuel shares, slight increase in biomass and heat pumps for space and water heating
2DS
Heat pump penetration increases to between 20% and 25% by 2050;
growth in DH share (10% growth in DK, SE, IS all geothermal).
CNS
Heat pump penetration increases to between 30% and 35% by 2050;
DH 15% growth in DK, SE, FI. IS all geothermal.
CNES
Heat pump penetration higher than in CNS (varies by country)
CNBS
Increase in biomass boiler fuel share compared to CNS (varies by country); Increase in the DH demand
Note: DK = Denmark. FI = Finland. IS = Iceland. SE = Sweden.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Table C.6
Annex C
Central assumptions for sector modelling
167
Key assumptions for appliances and lighting in the residential sector
All scenarios
Same appliance growth for all scenarios, based on saturation curves for ownership and number of households
4DS
4% appliance replacement rate, with 60% of new and replaced BPT; between 34% and 38% CFL
2DS
4% appliance replacement rate, with 70% BPT (BPT is 5% more efficient in this scenario);
between 34% and 38% CFL or LED by 2050
CNS
4% appliance replacement rate, with 70% BPT (BPT is 10% more efficient in this scenario);
between 55% and 58% CFL or LED by 2050
CNES
4% appliance replacement rate, with 70% BPT (BPT is 10% more efficient in this scenario);
between 55% and 58% CFL or LED by 2050
CNBS
4% appliance replacement rate, with 70% BPT (BPT is 10% more efficient in this scenario);
between 55% and 58% CFL or LED by 2050
Notes: BPT = best practice technology. CFL = compact fluorescent lamp. LED = light emitting diode
Table C.7
Key assumptions for cooking and water heating in the residential
sector
4DS
No intensity improvement. Broadly constant fuel shares, with complete phase-out of fossil fuels by 2050.
2DS
Small intensity improvement in water heating (0.2% annual). Strong increases in biomass use and electricity,
e.g. 80% increase by 2050 in biomass share in SE; 50% in FI. Biomass water heating and cooking in NO
grows to 6% from near-zero today.
CNS
Small intensity improvement in water heating (0.2% annual). Small increase in solar water heating
(between 8% and 9% of the mix in 2050). Increased HP penetration, reaching 14% HP penetration in SE;
17% in FI; 17% in NO; 12% in DK by 2050. Geothermal only in IS in 2050.
CNES
Small intensity improvement in water heating (0.2% annual). Higher penetration of heat pumps than in
the 85% scenario (between 80% and 100% increase compared to standard 85% by 2050, except for IS
where all geothermal).
CNBS
Small intensity improvement in water heating (0.2% annual). Strong increase in local biomass boilers and
heat exchangers (share of water heating met by DH).
Notes: CNBS and CNES share all assumptions with CNS except where highlighted. HP= heat pump, DH= district heating. NO = Norway.
© OECD/IEA, 2013.
168
Table C.8
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
Key assumptions for the services sector
End use
4DS status in 2050 2DS status in 2050 CNS status in 2050 CNBS status in 2050 CNES status in 2050
Space heating
Most fuels are not
changed from
2010. Heat pumps
share increases.
Phasing out of
fossil fuels,
especially oil and
coal.
Phasing out of all
fossil-fuel-fired
heating equipment
with more biomass,
district heating and
heat pumps.
Strong increase in
local biomass
boilers and heat
exchangers compared with CNS in
2050.
Higher penetration
of heat pumps
compared to CNS
in 2050.
Water heating
Most fuels are not
changed from
2010. Heat pumps
share increases.
Increase of solar,
heat pumps and
district heating.
Phasing out of all
fossil-fuel-fired
heating equipment
with more biomass,
district heating and
heat pumps.
Strong increase in
local biomass
boilers and heat
exchangers compared with CNS in
2050.
Higher penetration
of heat pumps
compared to CNS
in 2050.
Lighting
50% of existing
light bulbs are
replaced by
efficient ones.
All existing light
bulbs are replaced
by efficient ones.
All existing light
Same as the CNS
bulbs are replaced
by efficient ones,
and 10% lower intensity than the 2DS.
Same as the CNS
Cooling
Slight improvement Average UEC is
Average UEC is
Same as the CNS
of average UEC in 10% lower than the 10% lower than the
2050.
4DS in 2050.
2DS in 2050.
Same as the CNS
Appliances and
miscellaneous
equipment
0.3% increase of
Intensity is 10%
Intensity is 10%
Same as the CNS
intensity per year
lower than the 4DS lower than the 2DS
from 2010 to 2050. in 2050.
in 2050.
Same as the CNS
Building envelope
25-35% improvement
of energy intensity
compared with 2010
(varies by country).
Same as the CNS
25-35% improvement
of energy intensity
compared with 2010
(varies by country).
Around 10% lower
energy intensity
than the 2DS in
2050.
Same as the CNS
Note: UEC = unit energy consumption.
Industry
The Tables C.9–C.21 summarise the material production assumptions for the Nordic
region in the scenarios.
Table C.9
Nordic aluminium production in the 4DS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Primary Aluminium
2.4
2.3
2.3
2.3
2.3
2.3
2.3
2.3
2.3
Recycled Aluminium
3.6
3.8
4.1
4.3
4.5
4.6
4.7
4.7
4.7
Note: Recycled aluminium includes recovered and recycled aluminium within the industry
Table C.10
Nordic aluminium production in the 2DS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Primary aluminium
2.4
2.4
2.3
2.3
2.4
2.4
2.4
2.4
2.4
Recycled aluminium
3.6
4.1
4.3
4.5
4.7
4.8
4.8
4.8
4.8
Note: Recycled aluminium includes recovered and recycled aluminium within the industry.
© OECD/IEA, 2013.
Table C.11
169
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
Nordic aluminium production in the CNS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Primary aluminium
2.4
2.2
2.2
2.2
2.2
2.2
2.2
2.2
2.2
Recycled aluminium
3.6
3.8
4.1
4.3
4.5
4.7
4.7
4.8
4.8
Note: Recycled aluminium includes recovered and recycled aluminium within the industry.
Table C.12
Nordic cement and clinker production in the 4DS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Cement
8.4
8.6
8.8
9.0
9.2
9.2
9.3
9.3
9.3
Clinker production
6.8
7.0
7.1
7.2
7.3
7.3
7.3
7.3
7.2
Clinker to cement ratio
0.81
0.81
0.81
0.80
0.80
0.79
0.79
0.78
0.77
Table C.13
Nordic cement and clinker production in the 2DS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Cement
8.4
8.6
8.8
9.0
9.2
9.2
9.3
9.3
9.3
Clinker production
6.8
7.0
7.1
7.2
7.2
7.1
7.0
6.9
6.8
Clinker to cement ratio
0.81
0.81
0.80
0.79
0.78
0.77
0.76
0.74
0.73
Table C.14
Nordic cement and clinker production in the CNS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Cement
8.4
8.6
8.8
9.0
9.2
9.2
9.3
9.3
9.3
Clinker production
6.8
7.0
7.0
7.0
6.9
6.7
6.4
6.1
5.9
Clinker to cement ratio
0.81
0.81
0.80
0.78
0.75
0.72
0.69
0.66
0.63
Table C.15
Nordic chemicals and petrochemicals production in the 4DS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Ethylene
1.23
1.26
1.28
1.30
1.31
1.33
1.33
1.33
1.33
Propylene
0.42
0.44
0.46
0.47
0.48
0.50
0.51
0.51
0.52
BTX
0.11
0.14
0.16
0.18
0.20
0.24
0.26
0.27
0.29
Ammonia
0.50
0.48
0.50
0.53
0.55
0.58
0.60
0.62
0.64
MeOH
0.91
0.94
0.97
1.01
1.04
1.07
1.09
1.11
1.13
Notes: BTX = benzene, toluene and mixed-xylene. MeOH = methanol.
© OECD/IEA, 2013.
170
Table C.16
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
Nordic chemicals and petrochemicals production in the 2DS and CNS
(megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Ethylene
1.23
1.25
1.26
1.26
1.26
1.27
1.25
1.24
1.22
Propylene
0.44
0.44
0.45
0.46
0.46
0.47
0.47
0.47
0.47
BTX
0.11
0.14
0.16
0.18
0.20
0.23
0.25
0.26
0.27
Ammonia
0.50
0.48
0.50
0.53
0.55
0.58
0.60
0.62
0.64
MeOH
0.91
0.94
0.97
1.01
1.04
1.07
1.09
1.11
1.13
Notes: BTX = benzene, toluene and mixed-xylene. MeOH = methanol.
Table C.17
Nordic iron and steel production in the 4DS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
EF steel
4.8
3.9
4.5
4.9
5.3
5.7
6.1
6.4
6.7
BF/BOF steel
4.6
6.1
6.1
5.9
5.6
5.4
5.2
5.0
4.8
Total crude steel
production
9.4
10.0
10.6
10.8
10.9
11.1
11.3
11.4
11.5
Notes: EF= electric furnace. BF = blast furnace. BOF = basic oxygen furnace.
Table C.18
Nordic iron and steel production in the 2DS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
EF steel
4.8
3.9
4.5
4.9
5.3
5.6
5.9
6.1
6.4
BF/BOF steel
4.6
6.1
6.1
5.9
5.7
5.5
5.4
5.3
5.2
Total crude steel
production
9.4
10.0
10.6
10.8
10.9
11.1
11.3
11.4
11.5
Notes: EF= electric furnace. BF = blast furnace. BOF = basic oxygen furnace.
Table C.19
Nordic iron and steel production in the CNS (megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
EF steel
4.8
4.2
5.1
5.8
6.4
7.0
7.5
8.0
8.6
BF/BOF steel
4.6
5.8
5.5
5.0
4.6
4.1
3.7
3.3
2.9
Total crude steel
production
9.4
10.0
10.6
10.8
10.9
11.1
11.3
11.4
11.5
Notes: EF= electric furnace. BF = blast furnace. BOF = basic oxygen furnace.
© OECD/IEA, 2013.
Table C.20
171
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
Nordic pulp, paper and paperboard production in the 4DS
(megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Chemical wood pulp
15.5
16.3
16.9
17.4
17.8
18.2
18.6
18.9
19.2
Mechanical wood pulp
8.8
8.7
8.7
8.4
8.5
8.6
8.6
8.6
8.6
Other fiber pulp
0.6
0.6
0.6
0.6
0.7
0.7
0.7
0.7
0.7
Household and
sanitary paper
0.5
0.6
0.6
0.6
0.7
0.7
0.7
0.7
0.7
Newsprint
2.9
2.9
2.9
2.8
2.8
2.7
2.7
2.6
2.6
Paper and paperboard
0.5
0.5
0.6
0.6
0.7
0.7
0.7
0.7
0.8
Printing and
writing paper
11.5
11.1
11.1
10.9
10.8
10.8
10.8
10.8
10.7
Wrapping, packaging
paper and board
9.6
9.9
10.1
10.4
10.6
10.8
10.9
11.0
11.1
Recovered paper
3.0
3.4
3.7
3.9
4.2
4.4
4.5
4.7
4.9
Table C.21
Nordic pulp, paper and paperboard production in the 2DS and CNS
(megatonnes)
2010
2015
2020
2025
2030
2035
2040
2045
2050
Chemical wood pulp
15.5
16.4
17.0
17.6
18.1
18.7
19.1
19.5
19.8
Mechanical wood pulp
8.8
8.9
9.0
8.5
8.5
8.4
8.4
8.3
8.1
Other fiber pulp
0.6
0.5
0.4
0.1
0.0
0.0
0.0
0.0
0.1
Household and
sanitary paper
0.5
0.6
0.6
0.6
0.7
0.7
0.7
0.7
0.7
Newsprint
2.9
2.9
2.9
2.6
2.6
2.5
2.5
2.4
2.4
Paper and paperboard
0.5
0.5
0.6
0.6
0.7
0.7
0.7
0.7
0.8
Printing and
writing paper
11.5
11.1
11.1
10.9
10.8
10.8
10.8
10.8
10.7
Wrapping, packaging
paper and board
9.6
9.9
10.1
10.4
10.6
10.8
10.9
11.0
11.1
Recovered paper
3.0
3.5
3.7
4.0
4.3
4.5
4.7
4.9
5.1
Price Sensitivity Analyses
The scenario analyses in NETP depend on various input assumptions, ranging from the technoeconomic characterisation of future technologies in the energy system over energy prices
to GDP and population projections (influencing the useful energy service demand or material
demand of the industry sector). Although great care has been spent deriving these input
assumptions, e.g. price assumptions in the 4DS and 2DS are based on analysis in ETP 2012
(IEA, 2012), it is clear that considerable uncertainty exists in the actual development of these
factors, especially over a time horizon reaching out to 2050. Prices for energy carriers being
imported into or exported out of the Nordic region are critical input factors in this context.
For the NETP scenarios, this is in particular true for the export prices for electricity,
influencing the electricity exports from the Nordic region to Continental Europe and thereby
also the capacity development in the Nordic power sector, as well as for the biofuel import
© OECD/IEA, 2013.
172
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
prices, influencing the extent to which biofuel imports are used to reach the ambitious
reduction targets in the CNS and its variants. To illustrate the impact of these prices, two
sensitivity analyses have been considered: one for the electricity price in the CNES, and
one for the biofuel import price in the CNS.
Electricity export prices in the CNES
In the CNES (and also the CNS), the electricity export prices have been assumed to be the
same as in the 2DS. The impacts of different export price pathways in the CNES on the net
electricity exports of the Nordic region have been analysed. Besides electricity prices,
sufficient generation capacity for low-cost electricity is a further factor. Therefore, also a
variant of the CNES has been considered, which assumes a lower nuclear deployment (LowNuc
variant) with no build of new nuclear plants in Sweden as well as a slower deployment of
nuclear in Finland (resulting in 3.2 GW in 2050 in Finland compared to 6.4 GW in the CNES).
Figure C.2 shows the resulting relationship between the electricity export price in 2050 and
the exports. Starting from the export price level in the CNES of USD 150/MWh, exports start to
decline for prices below USD 135/MWh in both variants. Lower nuclear capacity in the LowNuc
variant results, however, in a more rapid decline in exports, as the reduced availability of
nuclear as low-cost generation option in this variant results in higher electricity prices.
In the CNES, the expansion of export transmission capacities stops when reaching an
export price level below USD 100/MWh. A further decline of the export price in 2050
results in a reduced utilisation of the existing transmission capacities built before 2015.
On the generation side, the decline in exports is largely accompanied by reduced on- and
offshore wind generation in the Nordic region.
In the LowNuc variant, the drop in electricity exports relative to the CNES is initially significantly lower than the difference in nuclear generation of 90 TWh in 2050 may suggest, since
part of the reduced nuclear generation is offset by increased generation from wind. But the
difference between the LowNuc variant and the CNES increases with declining electricity
export prices. At a price slightly above USD 90/MWh in the variant, the Nordic region switches
from a net exporter to a net importer of electricity.
Figure C.2
Impact of electricity export prices on net exports in 2050 in the CNES
and its low nuclear variant
120
100
CNES
80
TWh
60
40
LowNuc variant
20
0
-20
-40
Original CNES
export price
-60
80
90
100
110
120
130
140
150
USD/MWh
Key point
Electricity export prices are a critical factor influencing the net exports and generation
capacity in the Nordic region.
© OECD/IEA, 2013.
173
Annex C
Central assumptions for sector modelling
Nordic Energy Technology Perspectives
Biofuel Import Prices in the CNS
Increasing the import prices for liquid biofuels in the CNS results in reduced imports (Figure C.3).
Since liquid biofuels are crucial to decarbonise the transport sector, especially for shipping
and aviation, the reduced biofuel imports are compensated mainly by a reduced biomass
use in other sectors, largely power and heat generation, where alternative generation options
exist, so that the saved biomass can be used for biofuels production for the transport sector.
The potential for saving or substituting biomass in the power, buildings and industry sectors
is, however, limited, so that with increasing prices the impact on biofuel imports diminishes.
Even assuming extremely huge biofuel import prices of more than USD 50/GJ (USD 280
per barrel [bbl]) imports of more than 100 petajoules (PJ) remain in 2050. In other words,
biofuel imports are essential to decarbonise the transport sector and reach the overall 85%
reduction target in 2050, since domestic biomass resources of around 1 600 PJ are not
sufficient to cover the required demand for biomass-based energy carriers.
Impact of biofuel import prices on biofuel imports in the CNS in 2050
Figure C.3
250
200
Biofuel
imports
PJ
150
100
50
CNS Original
import price
0
20
30
40
50
60
70
80
90
100
USD/GJ
Key point
© OECD/IEA, 2013.
Biofuel imports initially decline with increasing import prices, but domestic resources
within the Nordic region are not sufficient, so that even under extremely high biofuel
import prices imports are required, mainly for the transport sector, to reach the 85%
reduction target in 2050.
174
Annex D
Notes on electricity prices
Nordic Energy Technology Perspectives
D. Notes on Electricity Prices
Denmark
Table D.1
General Tax (VAT)
From
To
%
01.01.78
01.10.78
18
02.10.78
30.06.80
20
01.07.80
31.12.91
22
01.01.92
now
25
Notes: VAT = value added tax. VAT is not included in prices and taxes shown for industry, because it is refunded.
Special taxes
Labour market tax: From 1 February 1989 to 31 December 1991, this compulsory labour market
tax, fixed at 2.5% of the basis of calculation of VAT, was imposed upon enterprises.
CO2 tax: From January 2008 onwards, a CO2 tax of Danish Krones (DKK) 150/tonne CO2 is
levied on VAT-registered enterprises. From January 1996 to December 2007, the CO2 tax was
DKK 90/tonne. From January 1993 to December 1995, the tax was DKK 50/tonne.
Energy tax: The energy tax is differentiated even more than the CO2 tax, different tax rates
applying both for different energy products and for different uses of the same product. Fuels
for electricity generation are exempt from the tax, as it applies as an output tax on electricity.
Sulphur tax: From 1996 to 2000, in an effort to encourage a further shift from sulphur-rich
to sulphur-poor fuels in combustion processes, e.g. from high-sulphur to low-sulphur coal or
to natural gas, a sulphur tax of DKK 10/kg SO2 was phased in. The tax is differentiated
only according to the sulphur content of fuels (not on energy use). Prior to the end of 1999,
fuels used for electricity generation were exempt from the tax, but the tax rate for electricity
was calculated according to individual power plants’ sulphur quotas. As a special concession,
the 1996 rate will apply to coal used in certain high energy-consuming boilers and furnaces
for a maximum transition period of 20 years.
© OECD/IEA, 2013.
175
Annex D
Notes on electricity prices
Nordic Energy Technology Perspectives
Excise tax
Table D.2
From
To
DKK/MWh
15.05.92
31.12.93
270
01.01.94
31.12.94
300
01.01.95
31.12.95
330
01.01.96
31.12.96
360
01.01.97
31.12.97
400
01.01.98
31.12.98
466
01.01.99
31.12.99
481
01.01.00
31.12.00
490
01.01.01
31.12.01
505
01.01.02
31.12.04
520
01.01.05
31.12.07
530
01.01.08
31.12.08
541
01.01.09
31.12.09
550
01.01.10
now
613
Note: This tax is not included in the prices for industry, because it is refunded.
Special taxes
Payments to energy savings
Table D.3
From
To
DKK/MWh
01.01.00
now
6
Table D.4
Distribution tariff (DKK/MWh)
From
To
Tariff
Refunded to industry
01.01.00
now
40
30
© OECD/IEA, 2013.
176
Annex D
Notes on electricity prices
Nordic Energy Technology Perspectives
Environment tax (and portion refunded to industry)
Table D.5
From
To
DKK/MWh
% Refunded to industry
15.05.92
31.12.92
100
100
01.01.93
31.12.96
100
50
01.01.97
31.12.97
100
40
01.01.98
31.12.98
100
30
01.01.99
31.12.99
100
20
01.01.00
31.12.02
100
10
01.01.03
31.12.04
100
40
01.01.05
31.12.07
90
26
01.01.08
31.12.08
88
25
01.01.09
31.12.09
89
25
01.01.10
now
62
25
Table D.6
Sulphur tax
From
To
DKK/MWh
01.01.96
31.12.98
9
01.01.99
31.12.99
13
01.01.00
now
0
Note: The price and tax shown are those actually paid (after rebates).
Industry
From the first quarter of 2005 (1Q05) onwards, prices refer to the industrial consumers with
the average consumption 50 GWh/year. Prior to 1Q05, prices shown are the national
average price for consumption equivalent to 1 000 MWh/year, including standing charges,
and represent the average electricity price to all industrial sectors.
Sources: From 1Q05 onwards, Energitilsynet. Prior to 1Q07, Statistics Denmark.
Households
Prices correspond to consumption of 3 MWh/year, including standing charges.
Source: Statistics Denmark.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
177
Annex D
Notes on electricity prices
Finland
Table D.7
General Tax (VAT)
From
To
% Applied
% Total price
01.08.86
31.05.89
19.05
16.00
01.06.89
30.11.89
19.76
16.50
01.12.89
31.12.90
20.48
17.00
01.01.91
30.09.91
21.21
17.50
01.10.91
30.06.10
22.00
18.03
01.07.10
now
23.00
18.70
Note: VAT is not included in prices and taxes shown for industry because it is refunded.
Special taxes: From 1 January 1997 onwards, the energy/CO2 tax is 100% carbon tax. In
addition, fuels used in producing electricity are free of the energy/CO2 tax and precautionary
stock fee. Prior to 31 December 1996, the energy/CO2 tax was approximately 75% carbon tax
and 25% energy tax.
The peat tax and the tax subsidies on electricity produced in peat-fired power plants have
been abolished. Earlier, small power plants (under 40 MVA) had been receiving tax subsidies.
The decree to amend the law concerning the excise tax on electricity and certain fuels
became effective on 1 July 2005.
Source: Ministry of Trade and Industry, Energy Statistics
Table D.8
Excise tax
From
To
Prior to
31.12.96
01.01.97
31.03.97
4.0
24.0
01.04.97
31.12.97
2.4
14.5
01.01.98
31.08.98
3.4
20.2
01.09.98
31.12.02
4.2
25.0
01.01.03
31.12.06
4.4
01.01.07
31.12.07
2.2
01.01.08
31.12.10
2.5
01.01.11
Now
6.9
Note: FIM = Finnish Marks.
© OECD/IEA, 2013.
EUR/MWh
FIM/MWh
see tax column
178
Nordic Energy Technology Perspectives
Annex D
Notes on electricity prices
Industry
Table D.9
Precautionary stock fee
From
To
EUR/MWh
FIM/MWh
01.01.97
Now
0.1
0.75
Fiscal charges and fees
From January 2007 onwards, prices refer to the national average for a consumption of 2 000
to 19 999 MWh/year in a medium-scale industry; data collection for industrial electricity
prices now follows the new methodology of Eurostat. Prices prior to September 2006 refer
to the national average for a consumption of 2 000 MWh/year of high voltage over at least
4 000 hours/year in a medium-scale industry.
Table D.10
Excise tax
From
To
EUR/MWh
FIM/MWh
Prior to
31.12.96
See tax column
01.01.97
31.03.97
4.0
24
01.04.97
31.08.98
5.6
33
01.09.98
31.12.02
6.9
41
01.01.03
31.12.07
7.3
01.01.08
31.12.10
8.7
01.01.11
now
16.9
Households
Table D.11
Precautionary stock fee
From
To
EUR/MWh
FIM/MWh
01.01.97
Now
0.1
0.75
Fiscal charges and fees
Price shown refers to electricity used for non-heating purposes in a single house (120 m2)
at a rate of 5.0 MWh/year with 3x25A.
© OECD/IEA, 2013.
179
Annex D
Notes on electricity prices
Nordic Energy Technology Perspectives
Norway
Table D.12
General tax (VAT)
From
To
%
01.01.70
31.12.92
20
01.01.93
31.12.94
22
01.01.95
31.12.00
23
01.01.01
31.12.04
24
01.01.05
now
25
Note: VAT is not included in prices and taxes shown for industry because it is refunded.
Special taxes
Table D.13
© OECD/IEA, 2013.
Consumption Tax
From
To
NOK/MWh
01.05.74
30.06.78
10.0
01.07.78
31.12.80
20.0
01.01.81
31.12.82
22.0
01.01.83
31.12.83
25.0
01.01.84
31.12.84
27.0
01.01.85
31.12.85
29.0
01.01.86
30.06.86
31.0
01.07.86
31.12.86
32.0
01.01.87
31.12.87
34.0
01.01.88
31.12.88
36.0
01.01.89
31.12.89
37.0
01.01.90
31.12.90
38.5
01.01.91
31.12.91
40.0
01.01.92
31.12.92
41.5
01.01.93
31.12.93
46.0
01.01.94
31.12.94
51.0
01.01.95
31.12.95
52.0
01.01.96
31.12.96
53.0
01.01.97
31.12.97
56.2
01.01.98
31.12.98
57.5
01.01.99
31.12.99
59.4
01.01.00
31.12.00
85.6
01.01.01
31.12.01
113.0
180
Annex D
Notes on electricity prices
Nordic Energy Technology Perspectives
01.01.02
31.12.02
93.0
01.01.03
31.12.03
95.0
01.01.04
31.12.04
96.7
01.01.05
31.12.05
98.8
01.01.06
31.12.06
100.5
01.01.07
31.12.07
102.3
01.01.08
31.12.08
105.0
01.01.09
31.12.09
108.2
01.01.10
31.12.10
110.1
01.01.11
31.12.11
112.1
01.01.12
now
113.9
Note: NOK = Norwegian Krone.
Taxes refer to average annual revenues per MWh that utilities receive from industry and
households. They are converted to quarterly tax rates using the electricity sub-indices from
the monthly Consumer Price Index (for households) and in the monthly Wholesale Price Index
(for industry).
Source: Ministry of Industry and Energy; questionnaire survey of all power plants including
those owned by industry.
Industry
Table D.14
Excise tax (applies to power-intensive industry and paper and
pulp industry)
From
To
NOK/MWh
01.01.87
31.12.87
31
01.01.88
31.12.88
34
01.01.89
31.12.89
37
From 1 January 1990 onwards, the power-intensive and paper and pulp industries are paying
the same tax as the other sectors. Prices refer to the average of the prices for the energyintensive sectors such as manufacturing, paper and products, mining, quarrying, other
manufacturing, transport, construction site power, private and public services. Prices for
industry do not include grid rent.
Households
Note: From 2008 onwards, prices represent average spot contract prices; before 2008,
average variable price contacts.
General taxes (VAT): Rates vary between regions and over time. The national average
rate is close to 20%.
Prices shown also include agriculture.
© OECD/IEA, 2013.
181
Annex D
Notes on electricity prices
Nordic Energy Technology Perspectives
Sweden
Table D.15
General tax (VAT)
From
To
%
01.03.90
30.06.90
23.46
01.07.90
now
25.00
Note: VAT is not included in prices and taxes shown for industry because it is refunded.
Special tax
NOx Levy: From 1 January 1992 onwards, a levy of Swedish Krona (SEK) 40/kg of nitrogen
oxide emissions from certain combustion plants is applied. The tax is levied on plants liable
to pay it according to the amount of energy produced. The levy is not included in estimated
tax component shown in this context.
From 2007, prices refer to the Eurostat consumption band DD for households and ID for industry
(see specifications). No information was available from 1998 to 2006. Prior to 1998, prices
refer to annual average ex-tax revenues per MWh received by all public utilities from total
deliveries to manufacturing industry, mining, and quarrying (industry), and from low-voltage
deliveries to households and commerce (households). Latest data are derived from the most
actual annual statistics on revenues by using producer price index on electricity (industry)
and consumer price index on electricity (households).
Special taxes
Energy tax (SEK/MWh): The lower value under category “Household and Commercial” is valid
for some municipalities in the north of Sweden, while the higher tax is valid for the rest of
the country. Approximately 9% of the households are subject to the lower tax while the rest,
91%, are subject to the higher rate.
© OECD/IEA, 2013.
182
Annex D
Notes on electricity prices
Nordic Energy Technology Perspectives
Table D.16
From
Energy tax (SEK/MWh)
To
Industry
< 40 MWh/year
Add. consumption
Household and
Commercial
20.03.77
20.12.79
30
20
30
21.12.79
30.06.81
40
30
40
01.07.81
31.12.83
40
30
30-40
01.01.84
30.11.84
52
30
42-52
01.12.84
31.12.86
72
50
62-72
01.01.87
30.06.89
50
50
62-72
01.07.89
28.02.90
70
70
82-92
01.03.90
31.12.92
50
50
22-72
01.01.93
31.12.93
0
0
35-85
01.01.94
31.12.94
0
0
36-88
01.01.95
31.12.95
0
0
37-90
01.01.96
31.08.96
0
0
43-97
01.09.96
30.06.97
0
0
58-113
01.07.97
31.12.97
0
0
82-138
01.01.98
31.12.98
0
0
96-152
01.01.99
31.12.99
0
0
95-151
01.01.00
31.12.00
0
0
106-162
01.01.01
31.12.01
0
0
125-181
01.01.02
31.12.02
0
0
140-198
01.01.03
31.12.03
0
0
168-227
01.01.04
31.12.04
5
5
181-241
01.01.05
31.12.05
5
5
194-254
01.01.06
31.12.06
5
5
201-261
01.01.07
31.12.07
5
5
204-265
01.01.08
31.12.08
5
5
178-270
01.01.09
31.12.09
5
5
186-282
01.01.10
now
5
5
185-280
Specifications
Consumption band DD: annual consumption of 5 000 to 15 000 kWh.
Consumption band ID: annual consumption of 2 000 to 20 000 MWh.
Source: From 2007, Eurostat, Energy Statistics: gas and electricity prices - new methodology
from 2007 onwards. Prior to 1998, Statistics Sweden.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Annex E
Notes on primary energy conventions
183
E. Notes on Primary Energy
Conventions
When constructing an energy balance, it is necessary to adopt conventions for primary energy
from several sources, such as nuclear, geothermal, solar, hydro, wind, etc. The two types of
assumptions that have to be made are described below.
Choice of the primary energy form
For each of these sources, there is a need to define the form of primary energy to be
considered; for instance, in the case of hydro energy, a choice must be made between the
kinetic energy of falling water and the electricity produced. For nuclear energy, the choice
is between the energy content of the nuclear fuel, the heat generated in the reactors and
the electricity produced. For photovoltaic (PV) electricity, the choice is between the solar
radiation received and the electricity produced.
The principle adopted by the IEA is that the primary energy form should be the first energy
form downstream in the production process for which multiple energy uses are practical.
The application of this principle leads to the choice of the following primary energy forms:
■■ Heat
for nuclear, geothermal and solar thermal;
■■ Electricity
for hydro, wind, tide/wave/ocean and solar photovoltaic.
Calculation of the primary energy equivalent
There are essentially two methods that can be used to calculate the primary energy equivalent
of the above energy sources: the partial substitution method and the physical energy content
method.
The partial substitution method: In this method, the primary energy equivalent of the above
sources of electricity generation represents the amount of energy that would be necessary
to generate an identical amount of electricity in conventional thermal power plants. The
primary energy equivalent is calculated using an average generating efficiency of these plants.
This method has several shortcomings, including the difficulty of choosing an appropriate
generating efficiency and the fact that the partial substitution method is not relevant
for countries with a high share of hydro electricity. For these reasons, the IEA, as most
international organisations, has now stopped using this method and adopted the physical
energy content method.
The physical energy content method: This method uses the physical energy content of the
primary energy source as the primary energy equivalent. As a consequence, there is an
obvious link between the principles adopted in defining the primary energy forms of energy
sources and the primary energy equivalent of these sources.
For instance, in the case of nuclear electricity production, as heat is the primary energy form
selected by the IEA, the primary energy equivalent is the quantity of heat generated in the
reactors. However, as the amount of heat produced is not always known, the IEA estimates
the primary energy equivalent from the electricity generation by assuming an efficiency of
33%, which is the average of nuclear power plants in Europe.
© OECD/IEA, 2013.
184
Nordic Energy Technology Perspectives
Annex E
Notes on primary energy conventions
In the case of hydro, wind and solar PV, as electricity is the primary energy form selected,
the primary energy equivalent is the physical energy content of the electricity generated in
the plant, which amounts to assuming an efficiency of 100%. For geothermal, if no countryspecific information is reported, the primary energy equivalent is calculated as follows:
■■ 10%
for geothermal electricity;
■■ 50%
for geothermal heat.
Since these two types of energy balances differ significantly in the treatment of electricity
from solar, hydro, wind, etc., the share of renewables in total energy supply will appear to be
very different depending on the method used. As a result, when looking at the percentages
of various energy sources in total supply, it is important to understand the underlying
conventions that were used to calculate the primary energy balances.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Annex F
Definitions
185
F. Definitions
This annex provides definitions and units used throughout this publication.
Definitions
A
B
© OECD/IEA, 2013.
2-, 3- and 4-wheelers
This vehicle category includes motorised vehicles having two, three or
four wheels. 4-wheelers are not homologated to drive on motorways,
such as all terrain vehicles.
Advanced biofuels
Advanced biofuels comprise different emerging and novel conversion
technologies that are currently in the research and development, pilot
or demonstration phase. This definition differs from the one used for
“Advanced Biofuels” in United States legislation, which is based on a
minimum 50% lifecycle greenhouse-gas (GHG) reduction and which,
therefore, includes sugar cane ethanol.
Aquifer
A porous, water saturated body of rock or unconsolidated sediments, the
permeability of which allows water to be produced (or fluids injected).
If the water contains a high concentration of salts, it is a saline aquifer.
Bayer process
Process for the production of alumina from bauxite ore.
Biodiesel
Biodiesel is a diesel-equivalent, processed fuel made from the
transesterification (a chemical process that removes the glycerine
from the oil) of both vegetable oils and animal fats.
Biofuels
Biofuels are fuels derived from biomass or waste feedstocks and
include ethanol and biodiesel. They can be classified as conventional
and advanced biofuels according to the technologies used to produce
them and their respective maturity.
Biogas
Biogas is a mixture of methane and CO2 produced by bacterial
degradation of organic matter and used as a fuel.
Biomass
Biomass is a biological material that can be used as fuel or for
industrial production. Includes solid biomass such as wood, plant and
animal products, gases and liquids derived from biomass, industrial
waste and municipal waste.
Biomass and waste
Biomass and waste includes solid biomass, gas and liquids derived
from biomass, industrial waste and the renewable part of municipal
waste. Includes both traditional and modern biomass.
186
C
Nordic Energy Technology Perspectives
Annex F
Definitions
Biomass-to-liquids
Biomass-to-liquids (BTL) refers to a process that features biomass
gasification into syngas (a mixture of hydrogen and carbon monoxide)
followed by synthesis, of liquid products (such as diesel, naphtha or
gasoline) from the syngas, using Fischer-Tropsch catalytic synthesis or
a methanol-to-gasoline reaction path. The process is similar to those
used in coal-to-liquids or gas-to-liquids.
Bio-SNG
Bio-synthetic natural gas (BIO-SNG) is biomethane derived from
biomass via thermal processes.
Black liquor
A by-product from chemical pulping processes, which consists of
lignin residue combined with water and the chemicals used for the
extraction of the lignin.
Buses and minibuses
Passenger motorised vehicles with more than nine seats.
Capacity credit
Capacity credit refers to the proportion of capacity that can be reliably
expected to generate electricity during times of peak demand in the
grid to which it is connected.
Capacity (electricity)
Measured in megawatts (MW) capacity (electricity), is the instantaneous
amount of power produced, transmitted, distributed or used at a given instant.
Carbon Capture and
Storage (CCS)
An integrated process in which CO2 is separated from a mixture of gases
(e.g. the flue gases from a power station or a stream of CO2-rich natural
gas), compressed to a liquid or liquid-like state, then transported to a
suitable storage site and injected into a deep geologic formation.
Clean coal technologies
(CCTs)
CCTs are designed to enhance the efficiency and the environmental
acceptability of coal extraction, preparation and use.
Clinker
Clinker is a core component of cement made by heating ground
limestone and clay at a temperature of about 1 400°C to 1 500°C.
Coal
Coal includes both primary coal (including hard coal and brown coal)
and derived fuels (including patent fuel, brown-coal briquettes, cokeoven coke, gas coke, gas-works gas, coke-oven gas, blast-furnace
gas and oxygen steel furnace gas). Peat is also included.
Coefficient of performance
Coefficient of performance is the ratio of heat output to work supplied,
generally applied to heat pumps as a measure of their efficiency.
Co-generation
Co-generation refers to the combined production of heat and power.
Coal-to-liquids
Coal-to-liquids (CTL) refers to the transformation of coal into liquid
hydrocarbons. It can be achieved through either coal gasification
into syngas (a mixture of hydrogen and carbon monoxide), combined
with Fischer-Tropsch or methanol-to-gasoline synthesis o produce
liquid fuels, or through the less developed direct-coal liquefaction
technologies in which coal is directly reacted with hydrogen.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
D
E
F
© OECD/IEA, 2013.
Annex F
Definitions
187
Conventional biofuels
Conventional biofuels include well-established technologies that are
producing biofuels on a commercial scale today. These biofuels are
commonly referred to as first-generation and include sugar cane
ethanol, starch-based ethanol, biodiesel, Fatty Acid Methyl Esther
(FAME) and Straight Vegetable Oil (SVO). Typical feedstocks used in
these mature processes include sugar cane and sugar beet, starch
bearing grains, like corn and wheat, and oil crops, like canola and palm,
and in some cases animal fats.
Corex
A smelting-reduction process developed by Siemens VAI for
manufacture of hot metal from iron ore and coal in which the iron
ore is pre-reduced in a reduction shaft using offgas from the meltergasifier before being introduced into the melter-gasifier.
Demand response
Demand response is a mechanism by which the demand side of the
electricity system shifts electricity demand over given time periods
in response to price changes or other incentives, but does not
necessarily reduce overall electrical energy consumption. This can be
used to reduce peak demand and provide electricity system flexibility.
Distribution
Electricity distribution systems transport electricity from the
transmission system to end users.
Electrical energy
Measured in megawatt hours (MWh) or kilowatt hours (kWh), indicates
the net amount of electricity generated, transmitted, distributed or
used over a given time period.
Electricity generation
Electricity generation is defined as the total amount of electricity
generated by power only, or combined heat and power plants, including
generation required for own use. This is also referred to as gross
generation.
Energy intensity
A measure where energy is divided by a physical or economic
denominator, e.g. energy use per unit value added or energy use per
tonne of cement.
Enhanced oil recovery (EOR)
EOR is a process that modifies the properties of oil in a reservoir
to increase recovery of oil, examples of which include: surfactant
injection, steam injection, hydrocarbon injection, and CO2 flooding.
These processes are typically used following primary recovery (oil
produced by the natural pressure in the reservoir) and secondary
recovery (using water injection), but can be used at other times during
the life of an oilfield.
Ethanol
Although ethanol can be produced from a variety of fuels, in this book,
ethanol refers to bio-ethanol only. Ethanol is produced from fermenting
any biomass high in carbohydrates. Today, ethanol is made from
starches and sugars, but second generation technologies will allow it
to be made from cellulose and hemicellulose, the fibrous material that
makes up the bulk of most plant matter.
FINEX
A smelting-reduction process developed by Pohang Iron and Steel
Company (POSCO) in collaboration with Siemens VAI, where iron ore
fines are pre-reduced in a series of fluidised bed reactors before being
introduced to the melter-gasifier.
Fischer-Tropsch (FT) synthesis
Catalytic production process for the production of synthetic fuels.
Natural gas, coal and biomass feedstocks can be used.
188
G
H
Nordic Energy Technology Perspectives
Annex F
Definitions
Flexibility
Power system flexibility expresses the extent to which a power
system can modify electricity production or consumption in response
to variability, expected or otherwise. In other words, it expresses the
capability of a power system to maintain reliable supply in the face
of rapid and large imbalances, whatever the cause. It is measured in
terms of the MW available for ramping up and down, over time (±MW/
time).
Fuel cell
A device that can be used to convert hydrogen or natural gas into
electricity. Various types exist that can be operated at temperatures
ranging from 80°C to 1 000°C. Their efficiency ranges from 40% to
60%. For the time being, their application is limited to niche markets
and demonstration projects due to their high cost and the immature
status of the technology, but their use is growing fast.
Gas
Gas includes natural gas, both associated and non-associated with
petroleum deposits, but excludes natural gas liquids.
Gas-to-liquids (GTL)
GTL refers to a process featuring reaction of methane with oxygen or
steam to produce syngas (a mixture of hydrogen and carbon monoxide)
followed by synthesis of liquid products (such as diesel and naphtha)
from the syngas using Fischer-Tropsch catalytic synthesis. The process
is similar to those used in coal-to-liquids or biomass-to-liquids.
Heat
Heat is obtained from the combustion of fuels, nuclear reactors,
geothermal reservoirs, capture of sunlight, exothermic chemical
processes and heat pumps which can extract it from ambient air
and liquids. It may be used for domestic hot water, space heating or
cooling, or industrial process heat. In IEA statistics, heat refers to heat
produced for sale only. Most heat included in this category comes from
the combustion of fuels in co-generation installations, although some
small amounts are produced from geothermal sources, electrically
powered heat pumps and boilers. Heat produced for own use, for
example in buildings and industry processes, is not included in IEA
statistics, although frequently discussed in this book.
HIsmelt
A direct smelting process, licensed by HIsmelt Corporation, where iron
ore is reduced in a molten metal bath.
HIsarna
A smelting reduction process being developed by the European
Ultra-Low Carbon Dioxide Steelmaking (ULCOS) programme, which
combines the HIsmelt process with an advanced Corus cyclone
converter furnace. All process steps are directly hot-coupled, avoiding
energy losses from intermediate treatment of materials and process
gases.
Hydropower
Hydropower refers the energy content of the electricity produced in
hydropower plants, assuming 100% efficiency. It excludes output from
pumped storage and marine (tide and wave) plants.
Integrated gasification
combined cycle
Integrated gasification combined-cycle (IGCC) is a technology in which
a solid or liquid fuel (coal, heavy oil or biomass) is gasified, followed
by use for electricity generation in a combined-cycle power plant. It is
considered a promising electricity generation technology, due to its
potential to achieve high efficiencies and low emissions.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Annex F
Definitions
189
I
Isarna
The former name for the HIsarna process, which is a smelting
reduction process being developed by the European Ultra-Low Carbon
Dioxide Steelmaking (ULCOS) programme, which combines the
HIsmelt process with an advanced Corus cyclone converter furnace.
All process steps are directly hot-coupled, avoiding energy losses from
intermediate treatment of materials and process gases.
L
Low-carbon energy
technologies
Lower CO2 emissions, higher-efficiency energy technologies from
all sectors (buildings, industry, power and transport) that are being
pursued in an effort to mitigate climate change.
M
Markets
Markets are structures which allow buyers and sellers to exchange any
type of goods, services and information.
Middle distillates
Middle distillates include jet fuel, diesel and heating oil.
Modern biomass
Modern biomass includes all biomass with the exception of traditional
biomass.
Non-energy use
Non-energy use refers to fuels used for chemical feedstocks and nonenergy products. Examples of non-energy products include lubricants,
paraffin waxes, coal tars and oils as timber preservatives.
Nuclear
Nuclear refers to the primary heat equivalent of the electricity produced
by a nuclear plant with an average thermal efficiency of 33%.
O
Oil
Oil includes crude oil, condensates, natural gas liquids, refinery feedstocks
and additives, other hydrocarbons (including emulsified oils, synthetic
crude oil, mineral oils extracted from bituminous minerals such as oil
shale, bituminous sand and oils from coal liquefaction) and petroleum
products (refinery gas, ethane, LPG, aviation gasoline, motor gasoline,
jet fuels, kerosene, gas/diesel oil, heavy fuel oil, naphtha, white spirit,
lubricants, bitumen, paraffin waxes and petroleum coke).
P
Passenger light duty
vehicles
This vehicle category includes all four-wheels vehicle aimed at the
mobility of persons on all types of roads, up to nine persons per vehicle
and 3.5t of gross vehicle weight.
Purchasing power parity
(PPP)
PPP is the rate of currency conversion that equalises the purchasing
power of different currencies. It makes allowance for the differences
in price levels and spending patterns between different countries.
Renewables
Renewable includes biomass and waste, geothermal, hydropower,
solar photovoltaic, concentrating solar power, wind and marine (tide
and wave) energy for electricity and heat generation.
Road mass transport
See buses and minibuses.
Smart grids
A smart grid is an electricity network that uses digital and other
advanced technologies to monitor and manage the transport
of electricity from all generation sources to meet the varying
electricity demands of end-users. Smart grids co-ordinate the needs
and capabilities of all generators, grid operators, end-users and
electricity market stakeholders to operate all parts of the system
as efficiently as possible, minimising costs and environmental
impacts while maximising system reliability, resilience and stability.
N
R
S
© OECD/IEA, 2013.
190
T
Nordic Energy Technology Perspectives
Annex F
Definitions
Steam coal
All other hard coal that is not classified as coking coal. Also included
are recovered slurries, middlings and other low-grade coal products not
further classified by type. Coal of this quality is also commonly known
as thermal coal.
Synthetic fuels
Synthetic fuel or synfuel is any liquid fuel obtained from coal, natural
gas or biomass. The best known process is the Fischer-Tropsch
synthesis. An intermediate step in the production of synthetic fuel is
often syngas, a mixture of carbon monoxide and hydrogen produced
from coal which is sometimes directly used as an industrial fuel.
Total final consumption
(TFC)
TFC is the sum of consumption by the different end-use sectors, it
excludes conversion losses from the transformation sector (power
plants, oil refineries, etc.), energy industry own energy use and other
losses. TFC is broken down into energy demand in the following sectors:
industry (including manufacturing and mining), transport, buildings
(including residential and services) and other (including agriculture and
nonenergy use). The final consumption of the transport sector includes
international marine and aviation bunkers..
Total primary energy
demand (TPED)
TPED represents domestic demand only and is broken down into
power generation, other energy sector and total final consumption.
Total primary energy supply
(TPES)
TPES is the total amount of energy supplied to the energy system,
at the domestic level it is equivalent to total primary energy demand.
Total primary energy supply is made up of primary energy production +
imports - exports ± stock changes. Stock changes reflect the difference
between opening stock levels on the first day of the year and closing
levels on the last day of the year of stocks on national territory. A stock
build is a negative number, a stock draw a positive number.
Traditional biomass
Traditional biomass refers to the use of fuel wood, charcoal, animal
dung and agricultural residues in stoves with very low efficiencies.
Transmission
Electricity transmission systems transfer electricity from generation
(from all types, such as variable and large-scale centralised generation,
and large-scale hydro with storage) to distribution systems (including
small and large consumers) or to other electricity systems.
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Annex F
Definitions
191
Sector Definitions
Buildings
Buildings includes energy used in residential, commercial and
institutional buildings. Building energy use includes space heating and
cooling, water heating, lighting, appliances, cooking and miscellaneous
equipment (such as office equipments and other small plug loads in
the residential and service sectors).
Energy industry own use
Energy industry own use covers energy used in coal mines, in oil and
gas extraction and in electricity and heat production. Transfers and
statistical differences as well as pipeline transport are also included
in this category.
Fuel transformation
Fuel transformation covers the use of energy by transformation
industries and the energy losses in converting primary energy into a
form that can be used in the final consuming sectors. It includes losses
by gas works, petroleum refineries, coal and gas transformation and
liquefaction as well as biofuel production. Energy use in blast furnaces,
coke ovens and petrochemical plants is not included, but accounted
for in Industry.
Industry
Industry includes fuel used within the manufacturing and construction
industries. Fuel used as petrochemical feedstock and in coke ovens
and blast furnaces is also included. Key industry sectors include iron
and steel, chemical and petrochemical, non-metallic minerals, and
pulp and paper. Use by industries for the transformation of energy
into another form or for the production of fuels is excluded and
reported separately under fuel transformation. Consumption of fuels
for the transport of goods is reported as part of the transport sector.
Other end-uses
Other end-uses refer to final energy used in agriculture, forestry and
fishing as well as other non-specified consumption.
Power generation
Power generation refers to fuel use in electricity plants, heat plants
and co-generation plants. Both main activity producer plants and small
plants that produce fuel for their own use (autoproducers) are included.
Energy use and emissions for pipeline transport are also included.
Transport
Transport includes all the energy used once transformed (tank to wheel);
international marine and aviation bunkers is shared among countries
based on the statistics available. Energy use and emissions related to
pipeline transport are accounted for under Energy industry own use.
© OECD/IEA, 2013.
192
Nordic Energy Technology Perspectives
Annex F
Definitions
Units
Unit prefix
Area
Emissions
Energy
Mass
Monetary
Pressure
Temperature
E
exa (1018, quintillion)
P
peta (1015, quadrillion)
T
tera (1012, trillion)
G
giga (109, billion)
M
mega (106, million)
k
kilo (103, thousand)
c
centi (10−2, hundredth)
m
milli (10−3, thousandth)
μ
micro (10−6, millionth)
Ha
hectare
m2
square metre
CO2-eq
carbon-dioxide equivalent
g CO2/km
gramme of carbon dioxide per kilometre
g CO2/kWh
gramme of carbon dioxide per kilowatt-hour
g CO2-eq
gramme of carbon-dioxide equivalent (using 100-year global warming
potentials for different greenhouse gases)
g/Nm3
gramme per normal cubic metre
ppm
parts per million (by volume)
t CO2-eq
tonne of carbon-dioxide equivalent (using 100-year global warming
potentials for different greenhouse gases)
bbl
barrel
J
joule
tce
tonne of coal equivalent (equals 0.7 toe)
toe
tonne of oil equivalent
Wh
watt-hour
g
gramme
kg
kilogramme
t
tonne
USD million
1 US dollar x 106
USD billion
1 US dollar x 109
USD trillion
1 US dollar x 1012
bar
bar
Pa
pascal
°C
degree Celsius
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Annex F
Definitions
Volume
m3
cubic metre
Sector-specific units
bcm
billion cubic metres
Gas
tcm
trillion cubic metres
bbl
barrel
Oil
mb/d
million barrels per day
Power
g CO2/kWh
gramme of carbon dioxide per kilowatt-hour
W
watt (1 joule per second)
We
watt electrical
Wh
watt-hour
Wth
watt thermal
g CO2/km
gramme of carbon dioxide per kilometre
km
kilometre
km/hr
kilometre per hour
lge
litre gasoline equivalent
pkm
passenger kilometre
tkm
tonne kilometre
vkm
vehicle kilometre
Transport
© OECD/IEA, 2013.
193
194
Nordic Energy Technology Perspectives
Annex G
References
G. References
Chapter 1
Choosing the Future Nordic Energy System 17
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Chapter 2
Nordic Policies and Targets 35
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Chapter 4
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Chapter 5
Transport 99
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Chapter 6
Buildings 131
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Chapter 7
Conclusions 151
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200
Nordic Energy Technology Perspectives
Annex H
List of Figures, Boxes and Tables
List of Figures
Chapter 1
Chapter 2
Choosing the Future Nordic Energy System 17
Figure 1.1 Reduction pathways for energy-related CO2 by scenario
19
Figure 1.2 Primary energy supply by scenario
20
Figure 1.3 Primary energy production in Nordic countries; share of production by fuel, 2011
21
Figure 1.4 Primary renewable energy production in the Nordic countries, 2011
22
Figure 1.5 Energy intensity in the Nordic region, and globally
23
Figure 1.6 Final energy consumption per capita, Nordic countries and OECD average
23
Figure 1.7 Nordic GHG emissions in 2010
24
Figure 1.8 Development of energy-related CO2 emissions in the Nordic region
25
Figure 1.9 Nordic CO2 emissions by sector and country
25
Figure 1.10 Nordic GDP (left) and energy-related CO2 emissions (right)
26
Figure 1.11 Electricity generation in the Nordic countries, 2010
27
Figure 1.12 Comparison of average electricity prices in Nordic countries
28
Figure 1.13 Final energy consumption by sector in the Nordic countries
28
Figure 1.14 Nordic primary energy production: imports and exports, 2011
29
Figure 1.15 Electricity trade outside the Nordic region
30
Figure 1.16 Electricity trade in the Nordic region, 2011
31
Figure 1.17 Nordic energy flows in 2010 32
Figure 1.18 Nordic energy flows in 2050
32
Nordic Policies and Targets 35
Figure 2.1 Sectors where R&D has been carried out and R&D as share of GDP
38
Figure 2.2
R&D sources of finance
39
Figure 2.3 Policy mix with energy efficiency policies, carbon price and technology policies
40
Figure 2.4
Distribution of public R&D spending by energy resource in Nordic countries
41
Figure 2.5 Total public energy RD&D and share of energy in total RD&D, 2011
42
Figure 2.6 Nordic common R&D funding by contributing country, 2011; Nordic PhDs by
research country of origin 1985-2011
43
Figure 2.7 Tax levels on motor gasoline in the Nordic countries
44
Figure 2.8 Fuel mix in the Swedish district-heating production 45
Figure 2.9
Tekes funding on bioenergy RD&I
50
Figure 2.10
Bioenergy consumption in Finland by biomass fuel
50
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 3
© OECD/IEA, 2013.
Annex H
List of Figures, Boxes and Tables
201
Power Generation and District Heating 53
Figure 3.1 Energy flows in the Nordic electricity and heat sector, 2010
54
Figure 3.2
Electricity generation capacity by fuel type, 2010
55
Figure 3.3
Co-variation of hydropower in Denmark, Finland, Norway and Sweden with net electricity exports to Continental Europe
56
Figure 3.4 Monthly wholesale electricity price differences between the German market (EEX)
and the Nord Pool Spot system
56
Figure 3.5 Development of district heating in the Nordic countries and estimates for the
coming decade
57
Figure 3.6 Energy supply composition for district heat produced in 2009
58
Figure 3.7 Development of final electricity demand (left) and its breakdown by sector in
2050 (right)
61
Figure 3.8 Final electricity demand by scenario
61
Figure 3.9 Nordic net electricity generation by scenario
62
Figure 3.10 Electricity generation mix in 2050
63
Figure 3.11 Nordic net electricity capacity by scenario
63
Figure 3.12 Change in electricity generation in the CNBS and CNES relative to the CNS in 2050
64
Figure 3.13 Net electricity exports of the Nordic region (including imports from Russia)
65
Figure 3.14 CO2 emissions from electricity generation by scenario
66
Figure 3.15 CO2 reductions in the power sector in the 4DS and the 2DS relative to the 2010
fuel mix, by technology area
67
Figure 3.16 CO2 emissions from the power sector (including heating plants)
68
Figure 3.17 Development of district heating use in the Nordic region (left) and its breakdown
by sector (right)
68
Figure 3.18 Development of final use of district heating in the buildings sector (left) and its
supply mix in 2050, by fuel (right)
70
Figure 3.19 Annual new capacity additions of low-carbon power technologies in the Nordic
region in the 2DS
70
Figure 3.20 Investment requirement in the power sector by scenario
71
Figure 3.21 Gross electricity production from co-generation in district-heating systems by
fuel and in relation to total electricity generation, 2009
72
Figure 3.22 Electricity production from co-generation in district heating and industry in the
Nordic countries
73
Figure 3.23 Nordic electricity generation in a climate-policy orientated scenario
75
202
Chapter 4
Chapter 5
Nordic Energy Technology Perspectives
Annex H
List of Figures, Boxes and Tables
Industry 81
Figure 4.1 Energy flows in Nordic industry, 2010
83
Figure 4.2 Evolution of aggregate industrial energy intensity 84
Figure 4.3 Materials production in the Nordic countries
86
Figure 4.4 Final energy consumption, by industry
88
Figure 4.5 Direct CO2 emissions reduction in the 4DS, 2DS and CNS scenarios, by industry
89
Figure 4.6 Industrial final energy use in the Baseline, Tonni and Inno scenarios
92
Figure 4.7 Industrial co-generation in the Baseline, Tonni and Inno scenarios
92
Figure 4.8 Biofuel production in the Baseline, Tonni and Inno scenarios
93
Figure 4.9 Biofuel consumption in transport in the Baseline, Tonni and Inno scenarios
94
Figure 4.10 Industrial CCS in the Nordic countries in the Tonni and Inno scenarios
95
Transport 99
Figure 5.1 Energy flows in the Nordic transport sector in 2010
100
Figure 5.2 Nordic transport energy consumption
101
Figure 5.3 Overview of stock, sales, travel and energy use for passenger cars and commercial vehicles
102
Figure 5.4 Motorised passenger and tonne-km in 2010 by mode of transport
103
Figure 5.5 Development in average CO2 emissions per kilometre for new cars
106
Figure 5.6 Projection of PLDV stock in the 4DS
108
Figure 5.7 Passenger transport in the 4DS compared with the 2DS
110
Figure 5.8 Freight transport in the 4DS compared with the 2DS and CNS
111
Figure 5.9 Energy use for transport in 4DS divided by mode and fuel type
112
Figure 5.10 PLDV stock by technology
113
Figure 5.11 Energy use for transport by fuel in the 2DS and CNS
114
Figure 5.12 Energy use for transport by fuel in the CNES and CNBS
116
Figure 5.13 Fuel use by mode and fuel type in 2050
116
Figure 5.14 Rail transport share of total road and rail transport and development in rail
transport work
118
Figure 5.15 Development in PLDV fuel economy
118
Figure 5.16 CO2 emissions by transport mode
120
Figure 5.17 CO2 emissions from transport in the Nordic countries for all scenarios
121
Figure 5.18 Undiscounted, cumulative costs for vehicles, fuels and O&M from 2010 to 2050
122
© OECD/IEA, 2013.
Nordic Energy Technology Perspectives
Chapter 6
Annex H
List of Figures, Boxes and Tables
Buildings 203
129
Figure 6.1
Nordic energy flows in the buildings sector, 2010
132
Figure 6.2
Nordic share of energy use by type, residential and services, 2010
133
Figure 6.3
GDP per capita and GJ per household in the residential sector, 2009
133
Figure 6.4
Energy use by type in the building sector in 2010
134
Figure 6.5
Energy use per household and direct CO2 emissions per capita in the residential
sector, 2009
135
Figure 6.6
Direct CO2 emissions per capita in the residential sector
136
Figure 6.7
Energy consumption in the buildings sector
137
Figure 6.8
Energy consumption and intensity in the buildings sector
138
Figure 6.9
CO2 emissions and reductions in the buildings sector
139
Figure 6.10
Options contributing to CO2 emissions reduction in the 2DS and CNS compared
to the 4DS
140
Figure 6.11
Additional investment needs in the buildings sector 2010 to 2050 (2012 USD)
140
Figure 6.12
Maximum allowed overall U-values in the Nordic countries
144
List of Boxes
Chapter 1
Choosing the Future Nordic Energy System
Box 1.1 Chapter 2
Chapter 5
Nordic Policies and Targets 19
35
Box 2.1 Innovation theory and policy design
39
Box 2.2 Nordic co-operation in R&D
42
Box 2.3 Production of district heat as an arena for effective policy intervention:
the Swedish case
45
Box 2.4 Components of the Nord Pool Spot markets
47
Box 2.5 Bioenergy in Finland
49
Transport Box 5.1 © OECD/IEA, 2013.
Nordic ETP scenarios
17
Hydrogen highway HyNor project
99
126
204
Nordic Energy Technology Perspectives
Annex H
List of Figures, Boxes and Tables
List of Tables
Chapter 2
Chapter 4
Chapter 5
Chapter 6
Nordic Policies and Targets 35
Table 2.1 Climate- and energy-related targets for Nordic countries and the
European Union, 2012-50
37
Table 2.2 Taxation in Nordic countries, different fuels
46
Table 2.3 Mapping of selected Nordic energy policies
51
Industry 81
Table 4.1 Estimated potential savings from adoption of BATs in Nordic industry
85
Table 4.2 Status of technology and key indicators for the industrial sector under
the different scenarios
87
Table 4.3 Additional investment required by industry between 2010 and 2050, (USD billion)
90
Transport 99
Table 5.1 Existing goals and policies related to the transport sector in each
of the five Nordic countries
104
Table 5.2 Measures and means in the NETP transport scenarios by 2050
109
Table 5.3 Average annual increase of transport activity for different modes
between 2010 and 2050
110
Table 5.4 Sales of PLDVs with electric trains (BEV, PHEV and FCEV) in 4DS and 2DS
119
Table 5.5 Stock of PLDVs with electric trains (BEV, PHEV and FCEV) in 4DS and 2DS
119
Table 5.6 Existing instruments to promote EVs in the five Nordic countries
123
Buildings 129
Table 6.1
Share of residential building stock by age
130
Table 6.2
Share of dwelling type in the residential sector
131
Table 6.3
Key activity in the buildings sector
136
Table 6.4
Maximum allowed U-values in the Nordic countries
144
Table 6.5
Maximum total energy needs per m2 of heated living space per year
145
© OECD/IEA, 2013.
Explore the data behind NETP
www.iea.org/etp/nordic
The IEA is making available the data used to create the Nordic Energy Technology Perspectives publication.
Interactive data visualisations and extensive additional data are available on the IEA website for free.
Also in the ETP series
Other ETP publications available in the IEA bookshop
Energy Technology Perspectives, is the International Energy
Agency’s most ambitious publication on new developments in energy
technology. It demonstrates how technologies – from electric vehicles
to smart grids – can make a decisive difference in achieving the
objective of limiting the global temperature rise to 2°C and enhancing
energy security. The analysis and scenarios in Energy Technology
Perspectives also support other publications in the ETP series.
Forthcoming publications to look out for include:
To be released in 2013
Tracking Clean Energy Progress, is the IEA’s annual update on global progress in
development and deployment of clean energy technologies. It gives a comprehensive
overview of technology performance, policy development and market creation across the
energy sector. Progress is compared against rates required in the ETP 2°C scenario (2DS).
The next edition will be released in April 2013.
Energy Technology Perspectives for buildings, to be released in 2013, addresses
building energy trends and technologies in both the residential and services sectors and
necessary technology pathways to achieve objectives identified in Energy Technology
Perspectives 2012.
The Technology Roadmaps identify priority actions for governments, industry, financial
partners and civil society that could advance technology developments described in the
ETP 2DS. As of January 2013, 17 global roadmaps have been published, covering a wide
range of energy demand and supply technologies including solar photovoltaic energy,
electric vehicles, carbon capture and storage, hydropower and energy efficient buildings:
heating and cooling equipment. More will follow in 2013.
For more information, please visit www.iea.org/etp
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