Transitioning to a low carbon energy system

Kim McClenaghan, Director PwC, looks at the role the Irish energy system could play in the transition to a low carbon economy.

Ireland is committed to meeting ambitious targets for reducing greenhouse gas emissions in both the short (2020) and medium term (2030). In the longer term both the European Union and Ireland are committed to reducing their greenhouse gas emissions by at least 80 per cent compared to 1990s levels and transitioning to a low carbon economy by 2050. Such ambitious targets will only be realised if Ireland’s energy system, and eventually all economic sectors, are significantly decarbonised. Ireland will need to increase the pace of decarbonisation in order to meet existing and future EU targets whilst simultaneously sustaining a strong and growing economy. In our recent ‘Transitioning to a low carbon energy system’ report, we investigated how this could be achieved. The report contains a roadmap which outlines an achievable transition path to a low carbon energy system by 2050. The building blocks we outline would also allow Ireland to progress to a carbon neutral energy system shortly thereafter.

Ireland must reduce its CO2 emissions to at least 80 per cent of 1990 levels by 2050 if it is to successfully implement the National Policy Position on Low Carbon Development. In our roadmap we calculate a 92 per cent reduction in emissions from the electricity sector, an 80 per cent reduction from the heat sector, and a 94 per cent reduction from the transport sector. Currently agriculture makes up one third of total emissions. Any shortfall in the agriculture and land use sectors in meeting their reduction targets would need to be made up by the heat and transport sectors.
To achieve this Ireland’s policy makers should:

  1. establish a system of continually reducing carbon budgets;
  2. focus on achieving one common goal of emissions reductions across sectors and recognise that this can only be realised via a suite of complementary and not competing policy objectives;
  3. seek to identify the range of measures that deliver the most cost-effective abatement return for consumers; and
  4. ensure the alignment and integration of energy policy, infrastructure planning, capital investment frameworks and energy regulation.

The electricity sector can help both the heat and transport sectors in meeting their targets through, for example, the mass adoption of electric vehicles and the widespread adoption of heat pumps. PwC’s roadmap predicts a 25 per cent growth in electricity demand by 2030 and 50 per cent increase by 2050. In parallel, the production of electricity will be decarbonised further by the wider adoption of renewable energy sources. Our location, geography and climate result in onshore wind being our most cost competitive renewable technology and onshore wind therefore, forms the foundation of our proposed energy system in 2050.

We envisage a power system built on a base of onshore wind supplemented with solar parks which can extend the range of conditions that produce renewable energy.

“Ireland has the opportunity to address the challenge of climate change in way that is cost effective while also offering significant societal benefits.”

However, physical limits exist on the number of viable sites for onshore wind. As these limits are reached and as technology and connection costs fall from 2040 on, we envisage that offshore wind will become more prevalent.

In order to ensure that demand is met when weather conditions do not support intermittent renewable generation, we envisage development of further interconnection and the deployment of gas fired power generation in combination with carbon capture and storage. Our model assumes a threefold increase in interconnection with consideration to be given to resilience and wholesale trading regimes when selecting which country/market to connect with. We also assume that fast responding gas-fired generation plant continues to be deployed when required, and that by 2050 all generation stations that burn gas for power production will have carbon capture and storage.

In order to make best use of the available carbon budget while meeting our greenhouse gas targets it will be necessary to dramatically reduce the volume of coal and peat used for power production. Post 2025 our model assumes that the vast majority of peat and coal power production ceases.

Ireland has the opportunity to address the challenge of climate change in way that is cost effective while also offering significant societal benefits. We encourage all stakeholders; industry, government and the general public to consider our roadmap as an aid in selecting an economically viable pathway towards meeting Ireland’s emissions reductions targets.

Kim McClenaghan is responsible for the Energy, Utilities and Sustainability group within the Advisory practice in PwC Ireland.


T: 01 702 6912

E: kim.a.mcclenaghan@ie.pwc.com

W: www.pwc.ie/industries/energy-utilities.html

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