COST-EFFICIENT EMISSION REDUCTION PATHWAY TO 2030 FOR FINLAND - Opportunities in electrification and beyond - Sitra
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SI T R A S T U DIES 14 0
COST-EFFICIENT
EMISSION REDUCTION
PATHWAY TO 2030
FOR FINLAND
Opportunities in electrification and beyond© Sitra 2018 Sitra studies 140 Cost-efficient emission reduction pathway to 2030 for Finland Opportunities in electrification and beyond Authors: Anna Granskog, Chiara Gulli, Tapio Melgin, Tomas Naucler, Eveline Speelman, Laura Toivola, Daan Walter (McKinsey & Company) Sitra project team: Outi Haanperä, Tuuli Hietaniemi, Mariko Landström, Janne Peljo, Saara Tamminen ISBN 978-952-347-082-8 (paperback) ISBN 978-952-347-083-5 (PDF) www.sitra.fi ISSN 1796-7104 (paperback) ISSN 1796-7112 (PDF) www.sitra.fi Erweko, Helsinki, Finland 2018 SITRA STUDIES is a series of publications reporting the results of Sitra's future-oriented work and trials.
Sitra studies 140 Cost-efficient emission reduction pathway to 2030 for Finland Opportunities in electrification and beyond November 2018 Contents Foreword 2 Glossary 4 1. Executive summary 6 Executive summary in English 6 Tiivistelmä suomeksi 10 2. Greenhouse gas emissions in Finland today and the challenge ahead 15 3. The pathway for Finland to a 60 per cent reduction in emissions 18 Methodology 18 Opportunities in cost-efficient emissions reduction 19 Transport: strong shift to electric 22 Buildings: phasing out oil boilers 27 Industry: technology changes beyond energy efficiency efforts 30 Power and heat: wind adoption at scale, biomass in cogeneration plants 35 End point of the pathway: the Finnish greenhouse gas emissions landscape in 2030 42 Getting on with the pathway: decisions needed before 2020 42 4. Impacts on the energy system and the economy 45 Implications for the energy system 45 Implications for the Finnish economy 52 5. Charting a way forward 54 Framework for the change: national decarbonisation plan 54 Policies and support schemes to enable and drive the change 54 Changing the course 56 Appendix 58 Methodology 58 Abatement opportunities in agriculture and waste management 65 Background interviews 67 References 72
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Foreword
In the Paris Agreement the world's nations committed to keeping the global temperature rise
well below 2 degrees Celsius above pre-industrial levels, and to pursue efforts to limit the
temperature increase to 1.5 degrees Celsius. Many European countries have since updated or
are in the process of updating their long- and medium-term climate targets. In Finland, the
current government has stated a vision for Finland to become carbon neutral by 2045, but the
accompanying domestic emission reduction targets are yet to be discussed. To be in line with
the Paris commitments, based on separate assessments by the Finnish Climate Change Panel
and Climate Analytics, Sitra recommends Finland set a medium-term target of at least 60 per
cent reduction in emissions by 2030 compared to 1990.
To date, Finland has succeeded in reducing emissions by 21 per cent since 1990 to roughly
56 million tonnes of carbon dioxide equivalents (MtCO2e) per year, driven mainly by increased
biomass use in power and heat production, decreased use of oil in heating and decreased
landfill disposal of waste. At the same time, the carbon sink of Finnish land and forests has
nearly doubled in size since 1990 as the result of increasing forest biomass. Despite these
achievements, the current trajectory leaves Finland roughly 18 MtCO2e above the 60 per cent
emissions reduction ambition, which highlights the need for Finland to clearly alter its course.
Even with a strong shared understanding of the imperative to reduce greenhouse gas
emissions, there is uncertainty about the most impactful measures. To support Finland’s
decarbonisation journey and the charting of our national emission abatement path, we want to
provide an objective fact base of the most economical abatement technologies and fuels.
To that end, together with McKinsey & Company, we reviewed carbon dioxide abatement
technologies, their abatement potential and associated costs, and prioritised them into
a minimum-cost pathway for decarbonisation. A key result of our study is this pathway,
a consistent collection of measures, that would lead to the 60 per cent emission reduction
target by 2030 in a cost-efficient way. We believe that the pathway advances the discussion on
what the decarbonisation measures and costs could look like for Finland.
Although subject to some uncertainty, our analysis suggests that implementation of the
60 per cent abatement target is not only technically feasible but also economically viable, even
considering the restrictions put on the abatement measures in this report. Following our
analysis, Finland can achieve approximately 50 per cent abatement by leveraging technology
switches with negative or neutral abatement costs, most notably in the electrification of
transport and wind power generation. The remaining 10 percentage points to reach the 60 per
cent abatement target are more challenging, yet feasible, and may involve further industrial
decarbonisation or a combination of other measures. The keys to achieving the goal include
setting and following a national decarbonisation plan, transforming the power system to
support emission-free electricity and setting carefully formulated policies and incentives
consistent with the decarbonisation plan.
The report intentionally avoids directly assessing policies, political implementation
programmes and other governmental interventions. Instead, it is intended to serve as a fact
base for policymakers, academics and corporate leaders when setting concrete targets and
discussing how best to achieve the required emissions reductions.
The analytical base of the report is built on existing literature and a number of global and
local databases. We thank all the parties who contributed to this work; compiling this report3
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would not have been possible without the valuable knowledge and insights from private sector
experts, industry associations, research institutes and government entities.
The Intergovernmental Panel on Climate Change (IPCC), the United Nations expert body
for assessing the science related to climate change, recently warned that limiting global
warming to 1.5°C would require “rapid and far-reaching” transitions in all sectors to avoid the
most devastating impacts of climate change.
The time to act is now, and this report charts a pathway for Finland to cut emissions in a
cost-efficient way.
Helsinki, 19 November 2018
MARI PANTSAR JANNE PELJO
Director Project Director
Carbon-neutral Circular Economy Climate Solutions
Sitra Sitra4
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Glossary
A/C Small cars segment
BAU Business-as-usual scenario
BEV Battery electric vehicle
C/D Mid-sized cars segment
CH4 Methane
CHP plant Combined heat and power plant, i.e. cogeneration plant
CNG Compressed natural gas
CO2 Carbon dioxide
CO2e CO2 equivalent
DRI-EAF Direct reduced iron - electric arc furnace (a steel industry solution
combining hydrogen and electrification technology)
E85 Fuel containing 85 per cent ethanol fuel and 15 per cent gasoline
or similar fuel
E/F Large cars segment
EU ETS European Union Emissions Trading System (refers to price of
European emission allowances)
EV Electric vehicle
GHG Greenhouse gas
GW Gigawatt, 1,000 MW
GWh Gigawatt hour, 1,000 MWh
HDT Heavy-duty truck: >16 tonnes
HEV Hybrid electric vehicle
HFO Heavy fuel oil
HVO Hydrotreated vegetable oil, a renewable diesel fuel
ICE vehicle Internal combustion engine vehicle
IPCC Intergovernmental Panel on Climate Change
J Sport utility cars segment
LCOE Levelised cost of electricity
LDT Light-duty truck: 7,5
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System level System level indicates what the savings or costs for a certain
technology or fuel switch are from the perspective of Finland as a
whole, i.e. from the combined perspective of all the Finnish
residents, companies and governmental bodies. The owner of the solution
would typically incur the saving or the costs (e.g. in electric vehicles, the
owner of the vehicle typically collects the savings from using electricity
instead of gasoline or diesel). However, these savings and costs can be
redistributed by policies such as taxation or subsidies.
TCO Total cost of ownership
tCO2 Tonne of CO2
TEM Työ- ja elinkeinoministeriö (Ministry for Economic Affairs and
Employment of Finland)
TWh Terawatt hour, 1,000 GWh
WAM With Additional Measures scenario (from Finnish national climate reports)
WEM With Existing Measures scenario (from Finnish national climate reports)6
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1. Executive summary
In the Paris Agreement the world's nations are either cost neutral or result in net savings at
committed to keeping the global temperature the system level. However, to get onto this
rise well below 2 degrees Celsius above pre- abatement path, critical policy decisions will
industrial levels and to pursue efforts to limit have to be made during the 2019–2023
the temperature increase to 1.5 degrees Celsius. government term.
The need to strengthen the global response to The presented pathway contains a coherent
the climate crisis is further emphasised in the set of carbon dioxide emission abatement
2018 IPCC special report “Global warming of measures across the four sectors that emit the
1.5°C”, underlining the need for “rapid and most: industry, power and heat, transport and
far-reaching” transitions in all sectors. buildings. It has been built by assessing over
Since Paris, many European countries have 300 business cases for technology and fuel
updated or are in the process of updating their switches and selecting the sequence of switches
long- and medium-term climate targets. In that provides the most economical way to
Finland, the current government has stated a reach 60 per cent emissions reduction. It is
vision for Finland to become carbon neutral by important to highlight that the described
2045, but the accompanying domestic emission pathway is made up of a consistent set of
reduction targets are yet to be discussed. To be actions. Leaving one major lever out may make
in line with the Paris commitments, based on another more costly to execute.
separate assessments by the Finnish Climate
Change Panel and Climate Analytics, Sitra Substantial reductions in
recommends Finland set a medium-term emissions through electric
(2030) target of at least 60 per cent reduction in vehicles and wind power
emissions compared to 1990. Cost-neutral or cost-negative emission
reduction levers, i.e. measures that result in net
lifetime cost savings at the system level, have an
Sitra recommends Finland set a abatement potential of up to roughly 50 per
cent of 1990 emissions. Road transport
medium-term target of at least 60% electrification will become the single most
reduction in emissions by 2030. economical abatement lever as a result of the
rapidly decreasing cost of battery packs. Wind
power will be the most economical option for
This report aims to present an objective electricity production, including new capacity
and fact-based description of a pathway that needed to meet the increased power demand
would bring us to a 60 per cent reduction in from transport electrification. The measures
emissions by 2030 in a cost optimal way, as well for the remaining 10 percentage points of
as the sequence of decisions that needs to be abatement, however, tend to be more costly
initiated as of now to secure the desired and more uncertain. For these emissions, the
outcome. The analysis suggests that the pursuit pathway presents further industrial
of the 60 per cent abatement goal, or roughly decarbonisation as the most cost-efficient
27 MtCO2e abatement between 2015 and 2030, measure, but cost-efficient solutions may also
is not only technically feasible but also be found in other sectors such as agriculture or
economically viable, and that approximately in demand-side measures such as behavioural
50 per cent abatement compared to 1990 levels changes or increased materials recycling, which
could be achieved by deploying measures that are not covered by this analysis.7
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The pursuit of the 60% abatement Investments in infrastructure
and changes in power market
goal is not only technically feasible mechanisms needed
but also economically viable. The proposed measures will shift final power
and fuel consumption patterns in Finland.
Final energy demand will decrease by almost
The main abatement levers to reach the 10 per cent by 2030 in transport, industry and
60 per cent or 27 MtCO2e reduction in buildings driven by increased energy
emissions in a cost-efficient way (in order of efficiency and technology switches. At the
pathway abatement potential) are: same time, the energy mix will shift from
•• Wind power generation to replace fossil fossil fuels to electricity and renewable fuels.
fuel-based generation, and substitution of Electricity demand will increase by almost
fossil fuels with biomass in cogeneration 30 per cent to 102 TWh.
plants [8.7 MtCO2] There are several important prerequisites
•• Steel plant conversion to carbon-neutral that need to be in place to enable the
production with hydrogen and electrification-related abatement:
electrification technology (DRI-EAF) •• Securing land and building permits needed
[4.3 MtCO2] for new wind power plants along a timeline
•• Industrial plant conversions to electrify that matches the demand build-up. Roughly
heat production or biogas replacing other 24 TWh or 6.3 GW of new wind power
fuels, most notably in pulp and paper, needs to be online by 2030. Out of this,
refining, cement and ethylene [3.4 MtCO2] roughly 15 TWh or 4 GW should be
•• Switch from gasoline and diesel vans, offshore wind, coming online between 2024
trucks and buses to electric vehicles; and 2030, while the current offshore project
180,000 electric and 20,000 plug-in hybrid pipeline, also including idea-phase projects,
vans and trucks and almost 8,000 electric is only 2.5 GW. This requires permitting
buses [2.6 MtCO2] capacity and a fast ramp-up of the
•• Continued shift away from oil heating in construction supply chain. Since 2015,
residential, commercial and public 1.1 GW of onshore wind has already come
buildings to heat pumps and electricity online, and the strong pipeline should be
[2.1 MtCO2] able to fulfil the 1.2 GW additional capacity
•• Switch from gasoline and diesel passenger requirement defined in the pathway.
cars to electric vehicles with roughly •• Developing the national transmission grid
700,000 battery electric vehicles and to match the increasing volumes of wind
100,000 plug-in hybrids between power (onshore and offshore). Moderate
2022–2030 [2 MtCO2] grid investments to build up to five new
•• Transport biofuel blending rate increase to 400 kV lines at roughly 100 million euros
30 per cent by 2030 and internal each (in addition to currently planned
combustion engine car efficiency capital investments) will be needed, driven
improvements [1.5 MtCO2] by significant growth in electricity supply
•• Truck liquified and compressed natural gas and demand. Increased maintenance and
adoption in the early 2020s [0.2 MtCO2] capital costs may require up to a 10 per cent
•• Expected business-as-usual development increase in transmission fees. Also, the
for non-covered emissions such as F-gases storage capacity, the demand-side measures
and development in line with national and the interconnection capacity to balance
With Existing Measures (WEM/TEM) peak load have to offer up to 5–6 GW of
scenario for non-covered sectors such as flexibility to deal with the intermittent
waste [1.9 MtCO2e] nature of wind power production.8
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•• Reviewing the current price-setting generation will result in 17 TWh of additional
mechanisms in the power markets to electricity and heat generated from biomass.
ensure financing of power investments Combined with the planned industrial biomass
when wind power with near-zero marginal use, the additional biomass extraction from
costs starts pushing down hourly day- forests will become a challenge for the forest
ahead prices. So far, many countries have carbon sink, unless the biomass imports also
resolved this challenge through power increase significantly. One opportunity to limit
purchase agreement (PPA) auctions biomass use could be to reduce its demand in
specifically targeted at renewable capacity. power and heat generation by improving
•• Ensuring that the regulation of electricity energy efficiency in buildings, increasing waste
distribution grids enables distribution heat capture and heat pumps, reducing heat
companies to develop and use their peak demand through smart grids and
networks appropriately. The local leveraging solar collectors and seasonal heat
distribution grids need to be able to storages. Furthermore, the demand for biomass
accommodate large volumes of electric could be reduced if alternative cost-efficient
vehicles (EVs), including the ability to both technologies become available. Technical
charge and discharge EV batteries to developments could make new technologies
balance overall load. The EV charging such as deep geothermal heat competitive even
infrastructure needs to expand within the before 2030. However, fast technological
next five years, requiring the upgrade of the advancement is highly uncertain.
power grid and installing over a hundred
thousand public charging stations (in New financing solutions and a
addition to home chargers) with a redistribution of costs and
1.5 billion euro investment. savings required
Implementation of the abatement pathway
will require changes in the public finances.
In addition to increased electricity While assessing these impacts was not
included in the scope of this effort, some of
demand, alternative fuel demand will the implications can be outlined.
grow at the expense of fossil fuels. •• Many of the measures, such as electric
vehicles, power generation and grid
investments or industrial site
As indicated above, the pathway suggests that refurbishments, will require more capital
in addition to increased electricity demand, and new financing solutions. Upfront
alternative fuel demand will grow at the capital needs are significant even though
expense of fossil fuels. Biogas use will roughly the lifetime costs of most measures are
quadruple from today to 4.5 TWh, replacing lower than those of the current
other fuels in industrial use. It will require technologies and fuels.
cost-efficient production from, for instance, •• There will be significant room for the
manure or waste sludges, and efficient use of government to use levers such as taxation,
the current distribution network. Hydrogen investment incentives and other policies to
use will still remain limited to several industrial redistribute the costs and savings to make
applications until 2030, but with rapid the short-term switches happen and to
breakthroughs in production costs or fuel cell balance the government budget in the long
vehicles, it could have a larger role to play in term.
the energy system as early as the next decade. •• Clarity of the policy measures and
Replacing fossil fuels with biomass in regulatory framework needs to be created
cogeneration plant electricity and heat quickly. Economic actors need a9
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predictable environment and Policy incentives to drive
transparency on the future to be able to decarbonisation
plan their decarbonisation investments The main task for the government is to ensure
early enough to meet the 2030 timeline. that the necessary infrastructure for
decarbonisation is in place and that companies
National decarbonisation and individuals alike have the correct
plan, regulation and support incentives to choose low-emission alternatives.
measures to drive the change Similarly, the government should ensure that
policies and regulation do not present barriers
National decarbonisation plan that hinder or discourage investments in
A national plan laying out the path to low-emission alternatives. On the pathway,
decarbonisation in every sector is important government guidance in the form of policies
for creating clarity around climate targets will be critical in directing the investments of
and providing longer-term predictability both individuals and companies to low-
beyond electoral terms. It should create a emission alternatives.
broad commitment to the 60 per cent More broadly, economic instruments to
reduction target by 2030 as a milestone guide and support individuals and
towards decarbonisation and build a shared companies to adopt low-emission
understanding of the necessary abatement alternatives should be deployed to speed up
actions and their timings. As for the land the transition to a low-carbon pathway.
use, land use change and forestry (LULUCF) However, the policies need to be carefully
sector and sustainable biomass use, clear designed since measures such as heavier
targets should be in place alongside a joint taxation of emissions or setting emission
fact base, acknowledging both the caps could unequally affect certain
sustainability concerns related to the use and companies or groups of individuals. Through
availability of biomass and the importance of setting ambitious long-term climate targets,
carbon sinks in the pursuit of carbon removing regulatory and infrastructural
neutrality over time. Furthermore, a national bottlenecks and ensuring economic
plan should define some key guiding conditions and incentives that promote the
principles for pursuing the needed transition to low-emission technologies, the
reductions in emissions, such as how the government can provide long-term visibility
costs and benefits of decarbonisation actions for individuals and companies and ensure
should be distributed between all relevant that the transition takes place in an orderly
sectors and stakeholders. and economical manner.
Decisions that Finland now needs to take
to further reduce its greenhouse gas emissions
A national decarbonisation plan is are truly course-altering. The chosen path
must be cost-efficient and comprise a
crucial for providing predictability consistent set of actions. The time to make
beyond electoral terms. these decisions is now. Many of the measures
require lengthy periods of preparation,
co-ordination and implementation, and the
The plan should also identify priority medium-term milestone of 2030 is
areas for technology development and approaching fast. Taking these decisions is
cross-sector and cross-stakeholder critical to move Finland in the direction of the
collaboration, and identify possible trajectory mandated in the Paris Agreement.
opportunities to redirect public research and The sooner the shift is initiated, the less
development funding. dramatic and costly it will be.10
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Tiivistelmä
Pariisin ilmastosopimuksessa maailman maat teknologia- ja polttoainevaihdoksiin sekä
sitoutuivat rajaamaan maapallon valitsemalla sarja vaihdoksia, joka johtaa
keskilämpötilan nousun selvästi alle kahden mahdollisimman kustannustehokkaasti
asteen verrattuna esiteolliseen aikaan, 60 prosentin päästövähennykseen. On tärkeää
pyrkimyksenä rajata nousu 1,5 asteeseen. huomata, että polku koostuu eri toimien
Vuonna 2018 julkaistu hallitustenvälisen yhdistelmästä. Jos yhden toimen jättää pois, voi
ilmastonmuutospaneelin IPCC:n 1,5 asteen toisen hinta nousta.
erikoisraportti painottaa entisestään, miten
tärkeää on lisätä maailmanlaajuisia toimia Huomattavia
ilmastokriisin hillitsemiseksi. Raportti päästövähennyksiä
alleviivaa tarvetta ”nopeisiin ja kauaskantoisiin” sähköautoilla ja tuulivoimalla
muutoksiin kaikilla sektoreilla. Noin 50 prosentin päästövähennyksiin
Pariisin sopimuksen jälkeen monet verrattuna vuoden 1990 tasoon on
Euroopan maat ovat päivittäneet tai mahdollista päästä keinoilla, jotka ovat
päivittämässä keskipitkän ja pitkän aikavälin elinkaaritarkastelussa kustannusneutraaleja
ilmastotavoitteitaan. Suomi on ilmoittanut tai -negatiivisia verrattuna nykyvaihtoehdolla
pyrkivänsä hiilineutraaliksi vuoteen 2045 jatkamiseen. Tieliikenteen sähköistämisestä
mennessä, mutta varsinaisesta päästö tulee nopeasti halpenevien akustojen myötä
vähennystavoitteesta ei kuitenkaan ole käyty kaikkein kustannustehokkain yksittäinen
keskustelua. Sitran mukaan Suomen tulisi päästövähennyskeino. Tuulivoima tulee
vähentää päästöjään vähintään 60 prosenttia puolestaan olemaan kustannustehokkain
vuoden 1990 tasosta vuoteen 2030 tapa tuottaa sähköä, myös liikenteen
mennessä. Sekä Suomen Ilmastopaneelin sähköistämisen vaatiman kapasiteetin
että Climate Analytics -tutkimuslaitoksen kasvun osalta.
mukaan tämä olisi linjassa Pariisin Keinot, joilla katetaan viimeinen
ilmastosopimuksen tavoitteiden kanssa. 10 prosenttiyksikköä päästövähennyksistä,
Tämän selvityksen tavoitteena on esittää ovat sen sijaan kalliimpia ja epävarmempia.
puolueeton ja faktapohjainen kuvaus polusta, Selvityksessä käytetyn mallin mukaan
jolla Suomi voi kustannustehokkaasti vähentää kustannustehokkain ratkaisu on entistä
päästöjä 60 prosentilla vuoteen 2030 mennessä. vähähiilisempi teollisuus, mutta
Lisäksi selvitys esittelee sarjan toimia, joita kustannustehokkaita keinoja voi löytyä myös
polun toteuttaminen edellyttää. Analyysi tässä selvityksessä käsiteltyjen toimien
osoittaa, että 60 prosentin tavoite eli noin ulkopuolelta: muilta sektoreilta, kuten
27 miljoonan hiilidioksidiekvivalenttitonnin maataloudesta, sekä kysyntäpuolelta, kuten
päästövähennys vuosien 2015 ja 2030 välillä on käyttäytymisen muutoksista, tai
sekä teknisesti että taloudellisesti toteutettavissa. kiertotaloudesta ja materiaalikiertojen
Tälle polulle pääseminen kuitenkin vaatii, että tehostamisesta.
keskeisiä poliittisia päätöksiä tehdään jo Merkittävimmät päästövähennyskeinot,
hallituskaudella 2019–2023. joilla voidaan kustannustehokkaasti
Esitettävä päästövähennyspolku on saavuttaa 60 prosentin eli 27 MtCO2e
kokoelma päästövähennystoimia neljällä eniten päästövähennys, ovat:
päästöjä tuottavalla sektorilla: teollisuus, sähkö •• Fossiilisiin polttoaineisiin perustuvan
ja lämpö, liikenne sekä rakennukset. Polku on sähköntuotannon korvaaminen tuuli-
rakennettu arvioimalla yli 300 mahdollisuutta voimalla sekä fossiilisten polttoaineiden11
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korvaaminen biomassalla sähkön ja vaihdosten sekä energiatehokkuuden
lämmön yhteistuotannossa [8,7 MtCO2]. parantumisen johdosta. Samaan aikaan
•• Teräksen tuotannon muuntaminen energian loppukäytössä siirrytään fossiilisista
hiilettömäksi sähköistämällä masuunit polttoaineista sähkön ja uusiutuvien poltto
valokaariuuniksi ja korvaamalla koksi aineiden käyttöön. Sähkön kysyntä kasvaa
vedyllä [4,3 MtCO2]. lähes 30 prosenttia 102 terawattituntiin.
•• Teollisuudessa lämmöntuotannon Kuvattu sähköistyminen voidaan saavuttaa,
sähköistäminen tai fossiilisten poltto- mikäli seuraavat edellytykset toteutuvat:
aineiden korvaaminen biomassalla tai •• Tuulivoimalle on kaavoitettava riittävästi
biokaasulla, erityisesti metsäteollisuudessa, maa-alueita ja myönnettävä
öljynjalostuksessa sekä sementin ja rakennuslupia aikataululla, joka
etyleenin tuotannossa [3,4 MtCO2]. mahdollistaa riittävän kapasiteetin
•• Bensiini- ja dieselkäyttöisten rakentamisen. Verkkoon tulee saada
pakettiautojen, rekkojen ja bussien vuoteen 2030 mennessä noin 24 tera
sähköistäminen; 180 000 sähkö- ja 20 000 wattitunnin tai 6,3 gigawatin verran lisää
ladattavaa hybridipakettiautoa ja -rekkaa tuulivoimaa. Tästä mallin mukaisesti
sekä lähes 8 000 sähköbussia 2030 merituulivoimaa on noin 15 terawatti
mennessä [2,6 MtCO2]. tuntia tai neljä gigawattia. Tällä hetkellä
•• Öljylämmityksen vaihtaminen lämpö- merituulivoimaa on suunnitteilla
pumppuihin ja sähkölämmitykseen ainoastaan 2,5 gigawatin verran, ja
asuinrakennuksissa sekä kaupallisissa ja tavoitteen saavuttaminen vaatii riittävää
julkisissa kiinteistöissä [2,1 MtCO2]. kapasiteettia sekä lupaprosesseihin että
•• Siirtymä bensiini- ja dieselkäyttöisistä rakentamisen tuotantoketjuun. Vuoden
henkilöautoista sähköautoihin: 700 000 2015 jälkeen maalla sijaitsevaa tuuli
sähköautoa ja 100 000 ladattavaa hybridi- voimaa on tullut verkkoon jo 1,1 giga
autoa 2030 mennessä [2,0 MtCO2]. wattia lisää, ja suunnitteilla olevat
•• Liikenteen biopolttoaineiden sekoite- projektit toteuttanevat päästövähennys
velvoitteen nostaminen 30 prosenttiin polun vaatiman 1,2 gigawatin lisäyksen.
vuoteen 2030 mennessä ja poltto- •• Kansallista sähkönsiirtoverkkoa tulee
moottoriautojen energiatehokkuuden kehittää niin, että se pystyy vastaamaan
parantaminen [1,5 MtCO2]. maa- ja merituulivoiman kasvuun. Sähkön
•• Nesteytetyn ja paineistetun maakaasun tuotanto ja kulutus tulevat kasvamaan
käyttöönotto rekoissa 2020-luvun huomattavasti, minkä vuoksi sähköverkon
alkupuolella [0,2 MtCO2]. osalta tulee investoida nykysuunnitelmien
•• Business as usual -ennusteen tai kansallisen lisäksi noin viiteen uuteen 400 kilovoltin
perusskenaarion (WEM) mukainen kehitys siirtolinjaan, joiden yksikköhinta on noin
selvityksen ulkopuolelle rajattujen päästöjen 100 miljoonaa euroa. Nousevat huolto-,
ja sektorien osalta [1,9 MtCO2e]. ylläpito-, ja pääomakustannukset voivat
vaatia jopa 10 prosentin korotuksen
sähkönsiirtomaksuihin.
Investointeja infrastruktuuriin Tuulivoimatuotannon suuren vaihtelun
ja muutoksia sähkö vuoksi järjestelmään tarvitaan lisäksi
markkinoiden toimintaan 5-6 gigawattia joustokapasiteettia, kuten
Esitetyt toimenpiteet muuttavat sähkön ja varastointikapasiteettia, kysyntäjoustoa ja
polttoaineiden loppukulutusta Suomessa. sähkönsiirtoyhteyksiä naapurimaihin.
Energian loppukäyttö vähenee vuoteen 2030 •• Sähkömarkkinoiden nykyinen
mennessä lähes 10 prosenttia liikenteessä, hinnoittelumalli tulee arvioida uudelleen,
rakennuksissa ja teollisuudessa teknologia jotta tuotantoinvestoinnit taataan myös12
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silloin, kun tuulivoiman matala tuontia lisätä merkittävästi. Biomassan
marginaalituotantokustannus alkaa käyttöä sähkön ja lämmön tuotannossa on
painaa alas sähkön hintaa vuorokausi- kuitenkin mahdollista pienentää
markkinoilla. Monet muut maat ovat vähentämällä sähkön ja lämmön
vastanneet haasteeseen sähkön yhteistuotannon kysyntää. Tämä edellyttäisi
pitkäaikaisten ostosopimusten esimerkiksi rakennusten energia-
huutokaupoilla, jotka on kohdistettu tehokkuuden tehostettua parantamista,
erityisesti uusiutuvaan sähköntuotantoon. hukkalämpöjen laajaa hyödyntämistä,
•• On varmistettava, että jakeluverkon lämpöpumppujen käytön lisäämistä,
sääntely mahdollistaa tarkoituksen- lämmön huippukulutuksen pienentämistä
mukaisen verkkojen kehityksen ja käytön. älyverkkojen avulla sekä aurinkokeräimien ja
Paikallisten jakeluverkkojen on voitava lämmön kausivarastoinnin lisäämistä.
palvella suuria määriä sähköautoja. Lisäksi Lisäksi biomassan kysyntää lämmön-
on mahdollistettava sähköautojen akkujen tuotannossa voidaan vähentää, jos tarjolle
hyödyntäminen sähköverkon tulee vaihtoehtoisia, kustannustehokkaita
kuormituksen tasaamisessa. Sähköautojen lämmöntuotantoteknologioita. Nopean
latausinfrastruktuuria tulee laajentaa kehityksen myötä uusista teknologioista,
seuraavien viiden vuoden aikana: kuten syvästä geotermisestä lämmöstä, voi
yksityisten latauspisteiden lisäksi on tulla kilpailukykyisiä jo vuoteen 2030
asennettava yli 100 000 uutta julkista mennessä. Nopea tekninen kehitys on
latauspistettä. Vaaditun investoinnin arvo kuitenkin erittäin epävarmaa.
on karkeasti arvioiden 1,5 miljardia euroa.
Tarvitaan uudenlaisia
Sähkön kokonaiskysynnän kasvun lisäksi rahoitusratkaisuja sekä
vaihtoehtoisten polttoaineiden kysyntä säästöjen ja kustannusten
kasvaa fossiilisten polttoaineiden uudelleenjakoa
kustannuksella. Biokaasun käytön arvioidaan Päästövähennyspolun toimeenpano
nelinkertaistuvan nykytasolta 4,5 terawatti aiheuttaa muutostarpeita valtion budjettiin.
tuntiin ja korvaavan muita teollisuuden Vaikka näiden vaikutusten tarkastelu on
käyttämiä polttoaineita. Toteutuakseen tämä rajattu selvityksen ulkopuolelle, on
vaatii biokaasun tuottamista kustannus mahdollista hahmotella muutamia
tehokkaasti esimerkiksi lannasta ja jäte seurauksia:
lietteistä sekä nykyisen jakeluverkoston •• Monet toimet, kuten sähköautot,
tehokasta käyttöä. Vetyä käytetään vuoteen investoinnit sähköntuotantoon ja
2030 saakka vain muutamissa teollisissa sähköverkkoon sekä teollisuuslaitosten
sovelluksissa, ellei tuotantokustannuksissa korjausinvestoinnit vaativat pääomaa ja
tai polttokennoautojen kehityksessä tehdä uusia rahoitusratkaisuja. Alkuinvestointien
nopeita läpimurtoja. Tällöin vedyllä voi olla tarve nousee suureksi, vaikka valtaosalla
energiajärjestelmässä suurempi rooli jo keinoista elinkaarikustannukset jäävät
tulevalla vuosikymmenellä. nykyisiä teknologioita alhaisemmiksi.
Fossiilisten polttoaineiden korvaaminen •• Hallituksella on mahdollisuus käyttää
biomassalla sähkön ja lämmön lukuisia ohjauskeinoja, kuten verotusta,
yhteistuotantolaitoksissa nostaa biomassalla investointitukia ja muita keinoja
tuotetun sähkön määrää noin kuusi jakaakseen kustannukset ja säästöt siten,
terawattituntia. Yhdessä teollisuuden että lyhyellä aikavälillä tarvittavat
suunnitteleman biomassan käytön lisäyksen muutokset saadaan toteutumaan ja
kanssa kasvu muodostuu metsän hiilinielun toisaalta valtion budjetti pysyy pitkällä
kannalta ongelmalliseksi, ellei biomassan aikavälillä tasapainossa.13
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•• Keskeisistä politiikkatoimista ja infrastruktuuri on paikallaan ja että
sääntelystä on sovittava pikaisesti. yrityksillä ja yksilöillä on kannusteet valita
Ennustettava ja läpinäkyvä toiminta- vähäpäästöisiä ratkaisuja. Vastaavasti tulisi
ympäristö on tärkeää taloudellisille varmistaa, että olemassa oleva sääntely ja
toimijoille, jotta investoinnit vähähiilisiin kannusteet eivät estä tai vaikeuta
teknologioihin voidaan suunnitella investointeja vähäpäästöisiin ratkaisuihin.
riittävän ajoissa tarvittavien päästö- Päästövähennyspolun kannalta on kriittistä,
vähennysten toteuttamiseksi. että hallitus ohjaa toimillaan sekä yksityisen
sektorin että yksilöiden investointeja
Suomi tarvitsee kansallisen vähäpäästöisiin ratkaisuihin.
hiilineutraaliussuunnitelman Yleisesti ottaen taloudellisia ohjaus-
ja murrosta tukevan sääntelyn keinoja tulee käyttää vauhdittamaan
siirtymää vähähiiliseen talouteen.
Kansallinen Ohjauskeinot on kuitenkin suunniteltava
hiilineutraaliussuunnitelma huolellisesti, sillä päästöverojen noston
Kansallinen suunnitelma, joka hahmottelee kaltaiset toimet voivat vaikuttaa epätasaisesti
kaikille sektoreille polun kohti hiili eri yrityksiin tai ihmisryhmiin.
neutraaliutta, on tärkeä ilmastotavoitteiden Hallituksen tulee tarjota yksityiselle
selkiyttämiseksi ja yli vaalikausien ulottuvan sektorille ja yksilöille pitkän aikavälin
ennustettavuuden luomiseksi. Suunnitelman uskottava näkymä siirtymään kohti
tulisi sitouttaa Suomi vähintään 60 prosentin vähäpäästöisempää taloutta ja näin tukea
päästövähennystavoitteeseen vuoteen 2030 sitä, että murros tapahtuu sujuvasti ja
mennessä matkalla hiilineutraaliuteen. Sen taloudellisesti kestävällä tavalla. Tämän
tulisi myös lisätä jaettua ymmärrystä näkymän luomista tukevat
tarvittavista päästövähennystoimista ja kunnianhimoisten pitkän aikavälin
niiden ajoituksesta. Maankäyttösektorille ilmastotavoitteiden asettaminen, sääntelyn ja
(LULUCF) ja biomassan käytölle tulisi infrastruktuurin pullonkaulojen
asettaa selkeät tavoitteet sekä muodostaa korjaaminen sekä vähäpäästöisiä
yhteinen tietopohja, joka huomioi biomassan teknologioita edistävien taloudellisten
saatavuuden, kestävän käytön rajat ja olosuhteiden ja kannusteiden tarjoaminen.
hiilinielujen tärkeyden hiilineutraaliuden Suomen on tehtävä suuria päätöksiä
tavoittelussa. Lisäksi tulisi määritellä päästöjen vähentämiseksi nykysuunnitelmia
vaadittujen päästövähennysten tavoittelua enemmän ja nopeammin. Valitun päästö-
ohjaavat keskeiset periaatteet, kuten miten vähennyspolun tulee olla kustannustehokas
toimenpiteiden kustannukset ja hyödyt ja koostua laajasta kokoelmasta erilaisia,
jaetaan keskeisten sektoreiden ja toimijoiden mutta toisiaan tukevia toimia. Nyt on
kesken. päätösten aika. Monien toimien osalta
Suunnitelman tulisi myös tunnistaa valmistelu, koordinointi ja toimeenpano
tärkeimmät alueet teknologiselle kehitykselle vievät paljon aikaa, ja keskipitkän aikavälin
sekä sektoreiden ja toimijoiden väliselle tavoitevuosi 2030 lähestyy nopeasti. Ripeä
yhteistyölle. Lisäksi tulisi pohtia mahdol- päätösten teko on kriittistä, jotta voimme
lisuuksia kohdentaa voimakkaammin julkista ohjata Suomen Pariisin ilmastosopimuksen
tutkimus- ja kehitysrahoitusta näille alueille. mukaiselle polulle. Mitä nopeammin
toimimme, sitä kustannustehokkaampi ja
Päästövähennyksiä tukevat tasaisempi muutos tulee olemaan.
politiikkatoimet
Hallituksen keskeisin tehtävä on varmistaa,
että päästövähennysten edellyttämä14 S I T R A S T U D I E S 1 4 0 : C O S T- E F F I C I E N T E M I S S I O N R E D U C T I O N PAT H WAY T O 2 0 3 0 F O R F I N L A N D
15
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2. Greenhouse gas emissions
in Finland today and the
challenge ahead
The strong global will to avoid the most For 2030, the EU commission has set a
disastrous consequences of climate change target for Finland to reduce GHG emissions
was reinforced in the 2015 Paris Agreement in the effort sharing sector by 39% compared
when 195 countries entered into a legally to 2005. In addition, the government has set
binding global climate deal, agreeing to keep multiple other climate-related targets, most
the global temperature rise well below notably a 50% reduction in transport
2 degrees Celsius above pre-industrial levels emissions compared to 2005.
and to pursue efforts to limit the temperature Since the formulation of the Paris
increase to 1.5 degrees Celsius. The current Agreement, many European countries have
pledge of the EU is to reduce its greenhouse updated or are in the process of updating their
gas (GHG) emissions by a minimum of long- and medium-term climate targets. In
40 per cent by 2030, and by 80–95 per cent by Finland, the current government has stated a
2050 compared to 1990 emission levels. vision for Finland to become carbon neutral
Finland, along with a group of other member by 2045, but the accompanying domestic
states, has called for an increase in ambition, emission reduction targets are yet to be
as the current emission reduction targets are discussed. According to the Finnish Climate
not in line with the new commitments. By Change Panel, Finland needs to reduce
2020, the European Union needs to deliver a emissions by 85–100 per cent by 2050
long-term greenhouse gas reduction strategy compared to 1990 in order to meet the Paris
in accordance with the Paris Agreement. targets. By 2030, emissions need to be reduced
Finland has committed to the current EU by 44–66 per cent.1 Based on this and an
emission reduction objective of at least an assessment by Climate Analytics2, Sitra
80 per cent reduction in GHG emissions by recommends Finland set a medium-term
2050 in the national Climate Change Act target for 2030 of a 60 per cent reduction in
(609/2015). The climate policy is emissions compared to 1990. The 60 per cent
operationalised through the Energy and emission reduction ambition implies an
Climate Strategy and the Medium-term abatement need of 26.9 MtCO2e between
Climate Change Plan of each government, 2015 and 2030, while a 40 per cent target level
and the Long-term Climate Change Policy in line with the current EU target would entail
Plan, which is to be presented at least every abating 12.7 MtCO2e by 2030.
decade and is now due during the next In the period from 1990 to 2015, Finnish
government term. GHG emissions were reduced by 22 per cent
1
The Finnish Climate Change Panel: Ilmastopaneelin näkemykset pitkän aikavälin päästövähennystavoitteen
asettamisessa huomioon otettavista seikoista (2018). The Panel has since updated its calculations and tightened
the recommendations based on the new carbon budget presented by IPCC (2018), but the updated estimates
were not available for this study.
2
Climate Analytics and Sitra: What does the Paris climate agreement mean for Finland and
the European Union? (2016).16
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to 55.6 MtCO2e3 (Figure 1). Preliminary data improvements, lower production volumes,
from Statistics Finland shows that emissions particularly in the forest industry, technical
increased to 58.8 MtCO2e in 2016 and abatement measures implemented to reduce
dropped again to 56.1 MtCO2e in 2017.4 The N2O emissions in nitric acid production and
emissions peaked in 2003 at 85.5 MtCO2e, the use of black liquor as a fuel in the forest
after which they have annually declined by industry. Significant reductions have also
roughly 3.5 per cent or 2.5 MtCO2e on been achieved in emissions from buildings
average. Between 1990 and 2015, the split with a 3.2 MtCO2 or 60 per cent decline
between CO2 and non-CO2 of national driven by switching oil heating to district
emissions in CO2 equivalents has stayed heating or heat pumps. Today, the CO2
relatively constant with roughly 80 per cent emissions from the three largest sectors
CO2 and 20 per cent non-CO2 emissions.5 account for nearly three quarters of Finnish
Looking at CO2 emissions, all sectors are GHG emissions; industry CO2 emissions
below their 1990 emission levels. The largest cover 27 per cent, power and heat 26 per
decline since 1990 has taken place in the cent and transport 20 per cent of national
industrial sector, where emissions have been GHG emissions in CO2 equivalent.
reduced by almost 6 MtCO2, or nearly a Additionally, the carbon sink of the Finnish
third, due to energy efficiency land use, land use change and forestry
FIGURE 1: GREENHOUSE GAS EMISSIONS IN FINLAND HISTORICALLY AND IN 2030
BUSINESS -AS -USUAL SCENARIO, AND THEIR RELATION TO 40% AND 60% EMISSION
REDUCTION TARGETS
Please note that the numbers may not add up due to rounding.
Million tonnes of CO 2 e
71
16
56
47
14
21 43 2030 EU compliant target:
9 40% decrease vs 1990
15 2030 target in line with
16 29 Paris Agreement:
12
60% decrease vs 1990
5 11
9
2
2
16 13 11
1990 2015 2030
All non-CO 2 and agriculture and Transport CO 2
waste management Industry CO 2
Buildings CO 2 Power and heat CO 2
3
United Nations Climate Change National Inventory Report 2017.
4
This report will treat 2015 emissions figures as the emissions baseline, as these are the most recent and
comprehensive figures reported in the National Inventory Report submitted by Finland to the EU in 2017.
5
Statistics Finland.17
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(LULUCF) sector has nearly doubled in size come close to the 2030 EU emission
to 27.1 MtCO2e from 1990 as a result of reduction commitment of 40 per cent with a
sustainable forestry practices and changes in 4 MtCO2e gap. However, there would be a
climate conditions impacting the annual sizeable 18 MtCO2 emissions gap to reach the
growth. However, until 2020 LULUCF will be 60 per cent abatement in 2030. This
excluded from abatement goals under the highlights the need for a significant change in
EU’s international reporting of GHG the course of action.
inventories. With this in mind, this report focuses on
If Finland continues without employing exploring abatement measures needed to
further abatement measures (the “business- reach a more ambitious 60 per cent
as-usual” or “BAU” scenario), 6 it would abatement target compared to 1990 levels.
6
Assuming current trends continue at the same pace as historically and currently enacted policies to realise the
anticipated impacts (such as an increase in the biofuels blending rate of transport fuels of up to 20 per cent by
2030), in line with projections from sources such as International Energy Agency and Statistics Finland, and
conservative adoption of new technologies, Finnish GHG emissions would reduce by roughly 16 per cent to
46.8 MtCO2e in 2030. Further details in the Appendix.18
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3. The pathway for Finland to a
60 per cent reduction in emissions
To support the discussion on the best cement, ethylene, and pulp and paper.8
measures to reduce emissions and assess the Therefore, in total, the technology-specific
feasibility of emission targets, this chapter analysis covers 65 per cent of Finnish GHG
describes what measures could bring the emissions. For these, the actual technology
needed 60 per cent emissions reduction in mixes per sector (e.g. the share of residential
line with the Paris Agreement targets by 2030. heat provided by district heating, oil boilers,
The outlined pathway forms a coherent set of heat pumps, etc.) are modelled on a year-
plausible technology and fuel switches that by-year basis up to 2030, using full-system
would achieve the emissions reduction in a optimisation based on over 300 business cases
cost-efficient way. Exploiting the technology of deployable technologies and fuels. The
and market trends which are driving down analysis considers abatement opportunities in
costs, the report finds that a majority of the technology and fuel switches only and does
measures would come at a negative cost and not include potential abatement from
result in net savings at the system level. behavioural changes.
As with any analysis, the outcomes The selected abatement technologies and
depend on the underlying assumptions and fuels are visualised on an abatement cost
thus are subject to some uncertainty. To curve; a graph where each column represents
ensure like-for-like comparability, the one specific technology or fuel switch that
analysis assumes the same cost of capital for reduces emissions. The curve gives a view of
low-carbon and the business-as-usual how much abatement can be realised at what
technology investments when calculating the cost. The width of each column represents the
total cost of ownership (TCO). TCO realised reduction of annual CO2 emissions
includes costs associated with the initial associated with the measure by 2030 when
investment and the costs of operation for the compared to 2015, and the height of each
full lifetime of the measure. column the average cost of abating one tonne
of CO2. The columns are organised from the
Methodology most economical to the most expensive
The report focuses on abatements in measure, expressed in EUR/tCO2 abatement.
transport, buildings, industry, and power and The pathway considers the TCO, which
heat that cover about 80 per cent of total includes the costs of the initial investment
emissions in Finland. Within these sectors, and the costs of operation for the full lifetime
technology-specific abatement levers have not of the measure. The cost of abatement on the
been applied for: i) domestic aviation, marine cost curve is the difference in the TCOs
and rail transport; ii) heat-only plants7 and iii) between the low-emission technology or fuel
other industries excluding steel, refining, and the existing technology or fuel that is
7
Both district heating and industrial steam production. However, even though heat-only plants are in general
excluded from the analysis, some industry business cases include electrification of heat production.
8
Primarily: agriculture and forestry fuel combustion for machinery etc.; the food and tobacco industry; other
material and mineral production (outside chemicals, cement, iron and steel).19
S I T R A S T U D I E S 1 4 0 : C O S T- E F F I C I E N T E M I S S I O N R E D U C T I O N PAT H WAY T O 2 0 3 0 F O R F I N L A N D
replaced. The difference in the TCOs can be global trends in technological development
both positive (i.e. the measure leads to more and decreasing costs are projected to enable
costs over its lifetime) or negative (i.e. the cost-negative abatement. The average cost per
measure saves money over its lifetime tonne of CO2 compared to the conventional
compared to what it replaces). The TCOs are technologies for these measures would be
considered from a system perspective, i.e. approximately –100 euros, which signifies
what the costs or savings are from the cost savings from a system point of view.
perspective of Finland as a whole, and do not However, given our assumptions and
include taxation on consumers or companies scoping, a 60 per cent reduction in emissions
in order to have objective, quantitative is not possible unless industry as the sector
comparisons of different abatement options. with largest current emissions can make
Therefore, the presented costs or savings further substantial contributions and cover
differ from those that consumers and most or all of the remaining 10 percentage
companies would incur in practice. Finally, points or 7.7 MtCO2 abatement. These
the cost curve should not be considered as a include electrification, biomass and biogas
stand-alone representation of the pathway as use and hydrogen technology.
it does not include all the enablers needed to In summary, the key measures by sector
implement the measures. More details about for the 60 per cent pathway are as follows.
the methodology can be found in the •• Power and heat 8.7 MtCO2 abatement,
Appendix. 35% share of total targeted emissions
reduction: Most CHP generation shifts
Opportunities in cost- from fossil fuels to biomass abating 5.1 Mt,
efficient emissions reduction and onshore and offshore wind power
Given our assumptions and scoping, to generation increases to 26.5 TWh, partly
reduce emissions by 25 MtCO29 between replacing coal- and gas-based production
2015 and 2030 needs contributions across and partly covering the increased
all sectors (Figure 2). The analysis suggests electricity demand from electrification. In
that abatement of up to approximately total, wind power production increases
17 MtCO2 or to some 50 per cent compared elevenfold from today to cater for over a
to the 1990 level could be achieved with third of Finland’s electricity needs.
cost-negative or cost-neutral levers.10 The •• Industry 7.7 MtCO2 abatement, 31%
remaining 10 percentage points of share of total targeted emissions reduction:
abatement appear more costly.11 3.4 MtCO2 abatement is achieved through
The cost-negative abatement decarbonising heat production with
opportunities lie mainly in transport, power electrification, energy efficiency
and heat, and buildings. Particularly attractive improvements and replacing fossil fuels
opportunities can be found within the with biomass and biogas in pulp and
electrification of passenger vehicles and paper, refining, cement and ethylene
trucks and with wind power, where major production, with costs ranging from −185
9
In the sectors modelled in detail, the total abatement needed is ~27 MtCO2e, with the remaining ~2 MtCO2e
abatement gap covered by non-covered emissions such as F-gases and non-covered sectors such as waste
management. See Appendix for further details.
10
For industry and power and heat, the costs shown in the graph are on top of the ETS price (assumed to increase
from ~8 EUR/tCO2 in 2015 to 31 EUR/tCO2 in 2030). Therefore, measures with costs similar to ETS price are
close to the zero-cost line. See Appendix for further details.
11
Within the considered emission reduction opportunities in this report. Beyond the considered emissions, sectors
and measures, there may be more cost-effective measures available.You can also read
