PATHWAYS TO DECARBONIZE THE CZECH REPUBLIC - CARBON-NEUTRAL CZECH REPUBLIC 2050 - MCKINSEY
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Pathways to
decarbonize the
Czech Republic
Carbon-neutral Czech Republic 2050
November 2020
About McKinsey & Company McKinsey & Company is a global management consulting firm committed to helping organizations create Change that Matters. In more than 130 cities and 65 countries, our teams help clients across the private, public, and social sectors shape bold strategies and transform the way they work, embed technology where it unlocks value, and build capabilities to sustain the change. Not just any change, but Change that Matters— for their organizations, their people, and society at large. Our Sustainability Practice helps businesses and governments reduce risk, manage disruption, and capture opportunities in the transition to a low-carbon, sustainable-growth economy. Clients benefit from our integrated, system-level perspective across industries from energy and transport to agriculture and consumer goods and across business functions from strategy and risk to operations and digital technology. Our proprietary research and tech-enabled tools provide the rigorous fact base that business leaders and government policy-makers need to act boldly and with confidence. The result: cutting-edge solutions that drive business-model advances and enable lasting performance improvements for new players and incumbents alike. www.mckinsey.com/sustainability A note on social responsibility and environmental sustainability Our purpose as a firm is to help create positive, enduring change in the world. Our approach to social responsibility includes empowering our people to give back to our communities, managing our Firm responsibly, and weaving social and environmental impact into our client service. As a participant in the United Nations Global Compact, we support and respect the Ten Principles on human rights, environment, labor, and anti-corruption, and we reflect these principles throughout our policies and practices. We bring this commitment to life through our values, our code of professional conduct, and our policies and practices related to the environment, our supply chain, our people, and our professional standards. McKinsey has been carbon neutral since 2018 (see our Social Responsibility Report). We have also committed to setting science-based targets, reducing our firm’s emissions by 2025 in line with the level of decarbonization required to limit the global temperature increase to 1.5-degrees above preindustrial levels. Through our own internal practices, our work with clients, and published research, McKinsey helps businesses and governments reduce risk, manage disruption, and capture opportunities in the transition to a low-carbon, sustainable-growth economy (see also our recent publication, Climate risk and response: Physical hazards and socioeconomic impacts). In writing this report we hope to provide a rigorous approach and a valuable fact base for decision makers across the public, private and nonprofit sectors to assess and potentially expand actions to achieve a lower carbon future. About McKinsey & Company in the Czech Republic Established in 1994, McKinsey’s Prague office has been working with leading international and local companies and institutions in the Czech Republic and Slovakia. With about 50 consultants and specialists, the Prague office taps into our global network of experts, both in our cross-border client engagements and in our internal research efforts. In addition to the consultancy office, Prague is also home to McKinsey Global Services, with its more than 400 specialists in technology, digitization, data science, and other areas. Increasingly, our projects are composed of hybrid teams that include consultants, data scientists, designers, and developers. In just the last few years, McKinsey’s Prague office has worked on more than 200 projects in the energy, manufacturing, telecommunications, and financial sectors. In addition, we regularly provide pro bono expertise in areas of critical importance to the future of the Czech Republic, including sustainability, education, and healthcare.
Pathways to decarbonize the Czech Republic Carbon-neutral Czech Republic 2050 By Viktor Hanzlík, Vít Javůrek, Bram Smeets, and Daniel Svoboda Copyright © McKinsey & Company, November 2020
Preface
At McKinsey, we see climate change as one of the defining issues of our age—an
issue that will have profound effects on people, governments, and industries,
as well as on individual companies. We believe that it is important for citizens,
government officials, and business leaders to understand the pathways and
actions required to limit climate change to what scientists deem to be acceptable
levels.
The intent of this report is to present a cost-effective pathway for the Czech
Republic to meet European Green Deal targets, outlining the actions and
investments required in each sector of the Czech economy. Our objective is not to
predict the future but to present our analysis of the costs and implications of the
decarbonization efforts currently being discussed. In so doing, we are attempting
to provide what appears today as the most optimal route to achieving the European
Green Deal’s carbon emission mitigation goals.
This analysis serves as a follow-up to our 2008 report, Costs and potential of
greenhouse gas emissions reduction in the Czech Republic, as well as a series
of internationally published papers. Over the past two years, we have analyzed
the optimal decarbonization pathways for several countries in Europe (the
Netherlands, Poland) and beyond.
This report presents the results of McKinsey & Company’s independent analysis
based on the sources listed in the Bibliography section. The preparation of
this report was led by consultants in McKinsey’s Prague office, working with
international experts from McKinsey Energy Insights and McKinsey Power
Solutions. The report was prepared on a pro bono basis.
4 Pathways to decarbonize the Czech Republic
Table of Contents
Executive Summary 6
Reducing emissions by 2030 9
Reducing emissions by 2050 11
Chapter 1
Motivation to reach a carbon-neutral economy 12
Why aim for net-zero GHG emissions by 2050? 14
The starting position of the Czech Republic 17
Chapter 2
The pathway to net-zero emissions in the Czech Republic 22
Summary of the pathway and costs to reduce emissions by 2030 25
Summary of the pathway and costs to reach the 2050 target 27
Chapter 3
Decarbonization pathways for the major sectors of the economy 30
Power and heat 32
Industry 41
Agriculture 44
Waste 46
LULUCF 46
Transport 48
Buildings 52
Conclusion
Actions to achieve net-zero 57
Appendix 58
Methodology of this report 60
Glossary and abbreviations 62
About the authors 63
Bibliography 64
Endnotes 66
Pathways to decarbonize the Czech Republic 5
Executive Summary 6 Pathways to decarbonize the Czech Republic
Pathways to decarbonize the Czech Republic 7
Scientific evidence shows that to avoid Reaching net-zero GHG emissions by and investments for each sector. Our
the most serious effects of climate 2050 would be a significant challenge. objective is neither to predict the
change, the Earth’s average rise in The good news is that many of the future nor set the country’s policy
temperature would need to be limited to green investments that would be objectives, but to present the costs
1.5°C above pre-industrial levels. To do required could come with economic and implications of the decarbonization
this, human-generated greenhouse gas and social benefits: reducing operating efforts currently being discussed and
(GHG) emissions would need to fall to costs for businesses, shifting the to describe what today appears to be
net-zero by the middle of this century.1 economy towards industries with an optimal route. There are multiple
Accordingly, in December 2019, the a promising and viable future, and possible pathways to reaching net-
European Commission announced the reducing damaging pollution. zero emissions—the one presented in
EU Green Deal, which, if approved by this report focuses on achieving this
However, to reap these benefits and
its 27 member states and the European objective with minimum total costs to
meet its obligations under the Green
Parliament, would require the EU to society and, hence, we’ll be referring to
Deal, the Czech Republic would need
reach net-zero emissions by 2050. it as the “cost-optimal pathway”.
to accelerate its GHG reduction efforts.
For the EU to reach this target, every It could significantly reduce emissions For our analysis, we used McKinsey’s
member country would have to by 2030 primarily by curtailing its Decarbonization Pathways Optimizer
contribute. Although GHG emissions dependence on coal. But to meet (DPO), a proprietary toolkit. The DPO
in the Czech Republic have fallen the 2050 targets, businesses in the uses over 500 business cases covering
since 1990, it remains the fourth- transportation, industry, and building every sector to find a cost-optimal
largest emitter per capita in the EU.2 sectors would already need to have way to meet the Green Deal’s targets
The Czech power sector is the largest made other significant changes by while accounting for resources, supply
contributor, accounting for 35 percent 2030. chains, technology adoption, and
of the republic’s total GHG emissions, various constraints. The report uses
This report presents a cost-effective
followed by industry, transport, 2017 emissions data, latest available at
pathway for the Czech Republic to
buildings, agriculture, and waste.3 the time of analysis.
reach its goals and outlines actions
Many of
the green
investments
could
come with
economic
and social
benefits.
8 Pathways to decarbonize the Czech Republic
Reducing emissions by 2030
1% of GDP
(CZK 500 billion) is the additional
investment needed over the next
decade to achieve 55% emissions
reduction by 2030
The existing target under the EU’s would require additional investments
2030 Climate and Energy Framework of CZK 500 billion (EUR 18 billion,
is to reduce greenhouse gas emissions corresponding to an estimated
by 40 percent compared to 1990 levels. 1 percent of GDP) over this decade.
The Czech Republic’s draft climate Most of these investments would pay
and energy plan defining the Czech for themselves (or generate a profit) as
portion of the commitment calls for new technologies that lower business
2030 emissions to fall to 104.54 million operating costs are adopted.
mega tons of carbon dioxide equivalent
Our analysis shows that a 55%
(MtCO2e).5
reduction in GHG emissions by 2030
The EU Green Deal, if approved by is achievable. The primary levers
member states and the European that could be used to meet the 2030
Parliament, would introduce a more target include further reductions in the
ambitious target. By 2030 the EU would country’s reliance on coal for power
reduce its GHG emissions by 55 percent and heat and reduced coal mining.
from 1990 levels.6 Assuming a matching On the cost-optimal pathway, this
effort by the Czech Republic (which also would account for 75 percent of the
would reduce its GHG emissions by 55 GHG emission reductions by 2030.
percent), our calculations show that This is already underway. Several coal
the country would need to intensify its power plants either have shut down
emission reduction efforts to 3.2Mt per or are scheduled to close in the next
year from 2018 to 2030 (or 2.5 percent few years. The EU Emissions Trading
of emissions from the beginning of the Scheme (ETS) raising permit prices
period), and 4.4Mt7 per year from 2031 further encourage a move away from
to 2050 (or 5 percent of emissions from coal, as do low natural gas prices. On
the beginning of the period). the cost-optimal pathway, the reduction
in coal power generation capacity
Our analysis shows that achieving
could be partly offset by a significant
the 55 percent reduction by 2030
Pathways to decarbonize the Czech Republic 9
increase in renewables capacity, adding to the 2030 reduction target might
3.2GW of new solar photovoltaics (PV) appear modest relative to coal-
and wind by 2030, and an increase in based power generation and heating,
natural gas generation capacity. businesses and government would still
need to make major changes in these
On the cost-optimal pathway,
areas by the end of the 2020s to ensure
three other sectors—industry,
that the country is on track to meet the
transportation, and buildings—would
2050 net-zero target.
contribute the remaining 25 percent
of the required gross GHG emissions A significant potential obstacle
reduction. This percentage reflects to achieving the 2030 target is a
the greater difficulty and higher costs bark beetle outbreak causing mass
of decarbonization in those sectors deforestation. It is turning Czech forests
relative to power. Decarbonization from carbon sinks into significant
activities in industry, transportation, sources of GHG emissions, up to
and buildings would include electrifying 10 Mt8 per year in the mid-2020s,
process heat production in industry, which corresponds to 8 percent of 2017
increasing the share of electric emissions. Managing the bark beetle
vehicles—cars, light trucks, and outbreak to ensure the total volume of
buses—improving the insulation and living biomass in these forests rises is
phasing out coal boilers in buildings. critical to achieving the 2030 target.
Even though these sectors’ contribution
An ongoing bark beetle outbreak
causing mass deforestation is turning
Czech forests from carbon sinks into
significant sources of GHG emissions.
10 Pathways to decarbonize the Czech RepublicReducing emissions by 2050
Reaching net-zero GHG emissions would be necessary for the large-scale
would be a major undertaking for the electrification of transport and heating
Czech Republic. Full decarbonization and cooling for technology changes
would require far-reaching in industry, scaling up renewable
technological changes in every sector power generation, completing the
and the deployment of both natural construction of two new nuclear units
and artificial carbon sinks to eliminate in line with the 2019 Czech National
emissions in hard-to-abate sectors Investment Plan,9 reducing energy
such as cement production and consumption of buildings throughout
agriculture. the country, and deploying the carbon
sinks necessary to offset residual
On our cost-optimal path, there would
GHG emissions. The majority of these
be residual emissions of 17Mt in 2050,
investments would be profitable or
offset by 9Mt of negative emissions
would at least fully pay for themselves
from the land use, land-use change,
through reducing operating costs for
and forestry (LULUCF) sector. And
businesses and would contribute to
while 8Mt of emissions would have to
reducing local pollution.
be abated through carbon capture,
use, and storage (CCS), it has not Although the costs of achieving net-
been proven yet at the required scale. zero by 2050 would be substantial,
However, even if CCS is not feasible the next 30 years offer significant
at the required scale by 2050, the opportunities for making capital
result would still be a GHG emissions upgrades as existing infrastructure and
reduction of more than 95 percent industrial equipment reach the end of
compared to the baseline year of 1990. their useful lives. However, many of the
Also, before 2050, new technologies changes would have to be underway
may emerge, or the economics of some by the end of the 2020s to remain on
technologies may improve faster than track for reaching net-zero by 2050.
expected, allowing the Czech Republic Specifically, efforts to switch from fossil
to decarbonize fully without CCS. fuels to electricity in transportation,
scale up renewable power sources
Based on our analysis, reaching net-
significantly, considerably increase
zero would likely require additional
the energy efficiency of buildings and
investments amounting to CZK
finding a long-term solution for heating
4 trillion (EUR 150 billion) from 2031
in the Czech Republic all need to be well
to 2050, or roughly 4 percent of GDP
underway by 2030.
over that period. This investment
Full decarbonization would
require far-reaching technological
changes in every sector.
Pathways to decarbonize the Czech Republic 11Chapter 1 Motivation to reach a carbon- neutral economy 12 Pathways to decarbonize the Czech Republic
Pathways to decarbonize the Czech Republic 13
Why aim for net-zero
GHG emissions by 2050?
The planet’s temperature has risen by To avoid the most severe effects of
about 1.1°C since the 1880s. As average a changing climate, average global
temperatures rise, acute hazards such temperatures need to be kept from rising
as heatwaves, extreme precipitation, more than 1.5°C by 2100, and man-made
and forest fires grow in frequency and GHG emissions would have to reduce to
severity, and chronic hazards such as net-zero by 2050.10 For this goal to have
droughts and rising sea levels intensify. a chance of being met, decarbonization
needs to accelerate now.
Exhibit 1
Earth has warmed by roughly 1.1 degrees Celsius since the late 1800s
Earth has warmed by roughly 1.1 degrees Celsius since the late 1800s
Anomaly relative to 1951–1980 average temperatures; °C
Anomaly relative to 1951–1980 average temperatures; °C
Observations Smoothed trend
1.2
1.0
0.8
0.6
0.4
0.2
0
1880 90 1900 10 20 30 40 50 60 70 80 90 2000 10 2020
-0.2
-0.4
-0.6
Source: NASA Goddard Institute for Space Studies (GISTEMP – 2019)
To avoid the most severe
effects of a changing climate,
average global temperatures
need to be kept from rising
more than 1.5°C by 2100.
14 Pathways to decarbonize the Czech RepublicExhibit 2
Exhibit 2
Declines
Declines in
in annual
annual CO
CO22 emissions
emissions are
are necessary
necessary to
to mitigate
mitigate
the
the most
Declines
mostinsevere effects
annual
severe of
of climate
CO2 emissions
effects change
climateare necessary to mitigate
change
the most severe effects of climate change
Rise in average global temperature
Rise in average global temperature
°C
°C in average global temperature; °C
Rise
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0
01950 60 70 80 90 2000 10 20 30 40 2050
1950 60 70 80 90 2000 10 20 30 40 2050
Annual global CO2 emissions
Annual global CO2 emissions
Annual
GtCO2 global CO2 emissions; GtCO2
GtCO2
Observations 60
Observations 60
1.5 °C Pathway
1.5 °C Pathway 50
2 °C Pathway 50
2 °C Pathway
No further action 40
No further action 40
30
30
20
20
10 ~1,000
10 ~1,000
~1,000 Gt CO2 ~1,000 Gt CO2 ~570 Gt CO2
0 ~1,000 Gt CO2 ~1,000 Gt CO2 ~570 Gt CO2
01950 60 70 80 90 2000 10 20 30 40 2050
1950 60 70 80 90 2000 10 20 30 40 2050
Source: CO2 emissions: Carbon Dioxide Information Analysis Centre, Oak Ridge National Laboratory.
Source: CO2 emissions:
Friedlingstien Carbon
et al. “Global Dioxide
Carbon Information
Budget Analysis
2019.” Earth Centre,
Systems Oak Ridge
Science Data. National Laboratory.
(2019). Forward projections are
Friedlingstien et al.on“Global
illustrative, based carbonCarbon
budgetsBudget 2019.”
estimated Earth
from Systems
Rogelj Science
et al (2019) andData.
the (2019).
IEA CP Forward
Scenario,projections
following are
illustrative, based on carbon budgets estimated from Rogelj et al (2019) and the IEA CP
Hausfather and Peters (2020). Temperature Record: NASA Goddard Institute for Space Studies (GISTEMPScenario, following –
Hausfather
2019). Warming and Peters
for "No(2020).
further Temperature
action" is the Record: NASA Goddard
range between RCP8.5 andInstitute for Space
RCP4.5 ranges,Studies (GISTEMP
as IEA CPS plus –
2019). Warming
estimates for "No further
for non-energy action"
emissions is the range
following between
Hausfather andRCP8.5
Petersand RCP4.5
(2020) puts ranges, as IEA
cumulative CPS plus
emissions roughly
estimates
3/4 forway
ths of the betweenemissions
non-energy RCP8.5 andfollowing
RCP4.5Hausfather and Peters (2020) puts cumulative emissions roughly
3/4 of the way between RCP8.5 and RCP4.5
ths
Pathways to decarbonize the Czech Republic 15In the Czech Republic, temperatures Nordic states, 89 percent of Czech and is part of the approval process of
are also rising, although the impact of respondents agree or tend to agree the Green Deal.
climate change has not been as severe that the EU economy should be made
At the time of writing, the Green Deal’s
as in other countries because of its carbon-neutral by 2050. Fifty-two
aspiration to create a climate-neutral
moderate climate and lack of coastline. percent of Czechs agree or tend to
Europe is one of the world’s most
In the last 60 years, the average agree that adapting to the adverse
ambitious decarbonization plans. Its
temperature, as measured by the impacts of climate change can have
goal of net-zero by 2050 is consistent
Czech Hydro-meteorological Institute positive outcomes for citizens of the
with the targets of the 2015 Paris
(CHMI), has risen by 2°C.11 The country EU.14
Agreement. The Green Deal aims
has experienced severe droughts in
to ensure that member states have
the past few years, and 2019–2020 The European response to the the financing they need to make the
was the second-warmest winter on threat of global warming transition towards green technologies
record.12
In December 2019, the European and infrastructure. The EU has a history
Public awareness of the dangers Commission (EC) announced of meeting its decarbonization targets.
of global warming has also grown. the European Green Deal, a new When it signed the Kyoto Protocol in
According to the STEM Institute, policy framework to accelerate 1997, it committed to reducing its GHG
84 percent of Czech citizens believe decarbonization in the European Union. emissions by 8 percent compared to
that climate change endangers the Among the policies under consideration 1990 levels by the end of the Kyoto
future. Nine out of ten people think that is a law that, if approved by the Protocol’s first commitment period in
unless climate change is addressed, European Union’s 27 member states 2012. It over-delivered, reducing them
the country will see more droughts, and the European Parliament, would by 19 percent instead.16 In 2010, the
deforestation, and other natural require the bloc to lower GHG emissions EU set another target: reducing the
disasters.13 While the Eurobarometer by at least 55 percent by 2030 versus continent’s emissions by 20 percent
shows that support for taking climate 1990 levels, and to net-zero by 2050.15 by 2020. By 2018, the EU had already
action is weaker in the Czech Republic As a member of the European Union, surpassed that.17
than in Western Europe and the the Czech Republic has been consulted
Exhibit 3
Over the
the past
past 60
60years,
years,the
theaverage
averagetemperature
temperatureininthe Czech
the Republic
Czech hashas
Republic risen by by
risen nearly two
nearly
degrees Celsius
two degrees Celsius
Average
Average annual
annual air
air temperature;
temperature; °C
°C
Observations Trend
10.0
9.5
9.0
8.5
8.0
7.5
7.0
6.5
6.0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Source: CHMI
16 Pathways to decarbonize the Czech RepublicThe starting position
of the Czech Republic
In 2017, the EU’s total GHG emissions its GHG emissions (excluding LULUCF)
were 3.9 GtCO2e,18 excluding to 129 MtCO2e in 2017,20 down from
0.2 GtCO2 of negative emissions and all 199 MtCO2e in 1990.21 Despite this drop,
emissions from international transport. the country was the fourth-largest
The equivalent number for the Czech GHG emitter in the EU on a per capita
Republic was 129 MtCO2e, excluding basis. Electricity and heat generation
2 Mt of negative emissions; that is, accounted for most Czech GHG
3.4 percent of the EU total.19 emissions, at 45.3 MtCO2e, followed by
industry (36.2 Mt), transport (18.7 Mt),
The Czech Republic has undergone
buildings (12.7 Mt), agriculture (9.7 Mt),
a significant transformation of its
waste, and others (6.8 Mt).22
economy in the last 30 years, reducing
Exhibit 4
Power and heat
heat generation
generationproduce
producea agreater
greaterpercentage
percentageofof
GHG emissions
GHG in in
emissions thethe
Czech
Czech
Republic than in the rest of the EU
Republic than in the rest of the EU
MtCO2e; excluding LULUCF, international aviation and transport; 2017
MtCO2e; excluding LULUCF, international aviation and transport; 2017
129 3,850
Czech
Republic EU
Waste & others 5% 3%
Agriculture 7% 12%
Buildings 10% 13%
Transport 14% 21%
Industry 28% 26%
Power & heat 35% 24%
Czech Republic EU1
1. Includes EU 27 countries
Source: Eurostat
Czech emissions have declined
from 199 MtCO2e in 1990
to 129 MtCO2e in 2017.
Pathways to decarbonize the Czech Republic 174 th
Czech Republic was 4th largest GHG
emitter in EU on per capita basis
Exhibit 5
In 2017,
2017,the
theCzech
CzechRepublic
Republichadhadone
oneofof
the highest
the per-capita
highest per-
greenhouse gas emissions in the EU
capita greenhouse gas emissions in the EU
Tons of CO2e per capita; 2017
Tons of CO2e per capita; 2017
Luxembourg 20.0
Estonia 16.0
Ireland 13.3
Czech Republic 12.4
Netherlands 12.0
Cyprus 11.6
Germany 11.2
Poland 11.0
Belgium 10.8
Finland 10.4
Austria 9.6
Greece 9.2
Denmark 8.9
European Union1 8.9
Bulgaria 8.8
Slovenia 8.4
Slovakia 8.0
Spain 7.7
Lithuania 7.4
Italy 7.3
France 7.2
Portugal 7.2
Hungary 6.6
Croatia 6.2
Latvia 6.0
Romania 6.0
Malta 5.5
Sweden 5.5
1. EU 27 countries
Source: Eurostat, European Environment Agency
18 Pathways to decarbonize the Czech RepublicThe initial drop in emissions after a year from 1990 to 2017. However,
1990 was primarily driven by the if the Czech Republic only continues
dismantling of the command economy on this trajectory, it will not meet the
in 1989, which decreased the country’s Green Deal’s targets. According to
heavy industrial exports to socialist our analysis, in order to meet them,
bloc countries. Since that drop, GHG emissions would need to drop by 3.2 Mt
emissions have declined slowly, a year over the next decade, then by
resulting in an average fall of 2.6 Mt 4.4 Mt every year from 2031 to 2050.23
Exhibit 6
The Czech Republic would need to accelerate its decarbonization to achieve a 55% reduction
The CzechtoRepublic
compared 1990 andwould need
achieve to accelerate
net-zero by 2050its decarbonization to achieve a 55%
reduction compared to 1990 and achieve net-zero by 2050
MtCO e
MtCO22e
200
149
150
129
Czech Climate
Protection Policy target
(-30% vs. 2005)
100
-55% vs. 1990
50
Carbon neutrality1
0
1990 2005 2017 2020 2030 2040 2050
Note: Excluding LULUCF
1. Emitted GHG are equal to absorbed GHG
Source: EEA, Vnitrostatni plan CR v oblasti energetiky a klimatu 2017; European commission; McKinsey analysis
In order to meet the Green Deal’s
targets, emissions would need
to drop by 3.2 Mt a year over
the next decade, then by 4.4 Mt
every year from 2031 to 2050.
Pathways to decarbonize the Czech Republic 19EU ETS and Effort Sharing schemes
There are two main mechanisms through which the European Union tracks and
enforces the achievement of GHG reduction targets, the Europe-wide Emissions
Trading System (ETS) and Effort Sharing Regulation, which sets a binding
greenhouse gas emission target for each EU member state.24
— The ETS is a Europe-wide ‘cap and trade’ system which covers GHG emissions
from over 11,000 heavy energy-using installations in the power and industry
sector as well as domestic air transport. Under the scheme, a cap on the
total amount of emissions is set for the sectors covered by the ETS, and a
corresponding amount of ETS allowance is allocated or sold to companies
in the relevant sectors, which need to surrender allowances to cover their
emissions or face fines. The permits are freely tradeable and incentivize
companies to reduce their emissions to be able to sell their excess allowances
or avoid having to buy additional ones. In theory, the scheme achieves the
target level of emissions with the lowest societal costs. The decisions to acquire
or sell allowances, reduce or cease production, or to reduce the GHG intensity
of production are made by companies, and there is no target for individual
member states. In 2017, emissions covered by the ETS accounted for about
45 percent of the EU total.
— For emissions not covered by the ETS (mostly from the transport, building,
and agricultural sectors), there are binding targets for each EU member state
defined by the decision on a joint effort. Failure to meet the targets may result
in an infringement procedure and penalties against a member state.
The European Commission is currently preparing a plan to increase targets for ETS
and Effort Sharing consistent with the more ambitious targets of the Green Deal.
20 Pathways to decarbonize the Czech RepublicPathways to decarbonize the Czech Republic 21
Chapter 2 The pathway to net-zero emissions in the Czech Republic 22 Pathways to decarbonize the Czech Republic
Pathways to decarbonize the Czech Republic 23
Following the cost-optimal pathway, Achieving full decarbonization by
for the Czech Republic to decrease the 2050 would require far-reaching
GHG emissions by 55 percent by 2030, technological changes in every
it would need to sharply reduce coal sector, as well as the deployment of
mining and the use of coal for power natural and artificial carbon sinks to
and heat generation, improve insulation offset emissions in hard-to-abate
and replace decentralized coal sectors such as cement production
heating boilers with lower-emission and agriculture. On the cost-optimal
alternatives, significantly increase the pathway, the final 5 percent of GHG
percentage of electric vehicles on the emissions would have to be abated
roads, continue electrifying industrial through carbon capture, use, and
processes and heat generation, and storage (CCS). However, in the years
bring the Czech bark beetle outbreak before 2050, it is possible that
under control by the second half of this new technologies or improvements
decade. in current technology economics
may allow the Czech Republic to
To achieve the 2030 goals, all
decarbonize fully without CCS.
these efforts would need to begin
immediately.
Exhibit 7
Cost-optimal decarbonization path for the Czech Republic
Cost-optimal decarbonization path for the Czech Republic
MtCO e
MtCO22e
160
160
Excluding LULUCF1
140
140 Including LULUCF1
120
120 Rela tiv e redu ction
% relative to 2017 2030 2050
100
100
Power & heat1 -54% -105%
80
80
Transport -6% -100%
60
60 Buildings -31% -97%
40
40 Industry -32% -90%
Agriculture -2% -48%
20
20
Waste & others -9% -66%
00
LULUCF2
-20
-20
2017 2020 2025 2030 2035 2040 2045 2050 Total -32% -100%
1. Reduction of more than 100% achieved by a combination of biomass and CCS technology
2. Land use, land use change, and forestry serves typically as a carbon sink thanks to carbon absorption in forests and land.
Due to the current bark beetle outbreak, LULUCF is expected to be a net emitter for the next ~10 years.
Source: McKinsey analysis
24 Pathways to decarbonize the Czech RepublicSummary of the pathway and costs
to reduce emissions by 2030
Our analysis shows that reducing In addition to reducing coal
emissions in the Czech Republic by dependence, four main actions would
55 percent by 2030 could be realistic. get the Czech Republic the rest of
It would require an additional the way to 55% emissions reduction
investment of CZK 500 billion or by 2030: electrifying transportation,
1 percent of the country’s GDP over increasing building insulation, switching
the next decade. The majority of these space and water heating methods, and
investments would generate a profit electrifying industry. These measures
or fully pay for themselves through need to be implemented immediately.
reduced operational costs achieved For example, our analysis shows that
through new technologies. at least 49 percent of cars newly
registered in the Czech Republic would
Just reducing the country’s dependence
have to be battery electric vehicles
on coal for power and heat generation
(BEV) or plug-in hybrid vehicles (PHEV)
would get the Czech Republic 75 percent
by 2030. Today, BEVs and PHEVs
of the way toward reducing emissions
constitute less than 1 percent of
by 55 percent by 2030. And the country
registered vehicles.
has already begun to move away from
coal mining and processing since the
baseline year of 2017.
Exhibit 8
The Czech Republic could lower GHG emissions by 55% with an additional investment of
The
CZKCzech Republic
500 billion overcould lowerdecade
the next GHG emissions by 55% with an additional investment
of CZK 500 billion over the next decade
MtCO2e; incl. LULUCF
MtCO2e; incl. LULUCF
2017 net emission baseline 127
Change in power and heat generation fleet1 23
Scale-down of coal mining and processing 7
Transportation efficiency and alternative fuels 1 3 43
Improvement in buildings sector 2 4
+CZK
Electrification of industry 3
Other decarbonization levers 4 +CZK 500
Increase in LULUCF due to bark beetle -2 500 billion
billion
2030 potential (-55% scenario) 87 -40 Total
Totaladditional investments
additional investments
1. Includes power generation and district heat generation (individual dwelling heating is included in buildings)
2. Switching heating methods away from coal; increased insulation levels
3. Scenario assumes an increase in emissions by 2030 by 3 Mt due to increased number of kilometers driven
Source: McKinsey analysis
Pathways to decarbonize the Czech Republic 25Most of the GHG reduction on the cost- increase the required investment by
optimal pathway comes from sources up to CZK 200 billion as more costly
operating under the ETS regime. In our decarbonization options would need to
decarbonization scenario, non-ETS be used.
emissions would drop to 50 MtCO2e,
As noted before, achieving the 2030
and the Czech Republic would meet
target would require the Czech
the overall 55 percent reduction
Republic to manage the current bark
target. However, the non-ETS target
beetle outbreak that is causing mass
for the Czech Republic could be more
deforestation throughout the country
demanding, requiring a drop to
and turning forests from carbon
42–48 MtCO2e by 2030.25 Our analysis
sinks into significant sources of GHG
shows that decreasing the Czech
emissions.
non-ETS emission to 45 MtCO2e (the
middle of the possible range) could
Exhibit 9
On the cost-optimal pathway, Czech emissions outside of EU ETS would decline to 50MtCO2e
On2030
by the cost-optimal pathway, Czech emissions outside of EU ETS would decline to
50MtCO
MtCO 2
e 2e by 2030
MtCO2e
62 - 12
+CZK
50
42–481
200 billion
Potential additional
investments
2017 2030 decarbonization pathway
1. AMO scenarios for increased commitments within the effort sharing regulation
Source: AMO; McKinsey analysis
To reach net-zero by 2050,
the Czech Republic would
need to change much of its
capital stock, and use carbon
sinks to capture the remaining
hard-to abate emissions.
26 Pathways to decarbonize the Czech RepublicSummary of the pathway and costs
to reach the 2050 target
For any country, reaching net-zero and use the carbon sinks it has to
emissions would require a significant capture the remaining hard-to-abate
overhaul of the economy. In some emissions. Our analysis shows the last
respects, the Czech Republic would 5 percent of emissions would need
face more challenges because of the to be offset via carbon capture and
relative size of hard-to-abate industries storage, a technology that is not yet
such as cement and lime production widely available at the required scale.
(4 MtCO2e combined) and agriculture Depending on technological progress,
(10 MtCO2e).26 The country also has speed of innovation, and societal
a relatively limited amount of natural acceptance, alternative technologies
carbon sinkage both because it is allowing the Czech Republic to achieve
relatively small compared with other net-zero could be small modular
EU members and because of the way reactors or hydrogen energy storage.
its land is used. Plus, it’s landlocked, If these technologies do not become
eliminating offshore wind as a possible available, the Czech Republic would
source of energy. need to reduce output from hard-to-
abate sectors.
To reach net-zero by 2050, the Czech
Republic would need to change much However, there will be many
of its capital stock, including its energy- opportunities in the coming years to
generation technology, industrial replace or upgrade aging assets with
equipment, vehicle fleet, and buildings, greener ones.
Exhibit 10
Full decarbonization of the Czech economy between 2030 and 2050 would require CZK 4
trillion
Full of additional of
decarbonization investments
the Czech economy between 2030 and 2050 would require
CZK 4 trillion of additional investments
MtCO2e incl. LULUCF
MtCO2e incl. LULUCF
2030 87
Transformation of power and heat 18
Electrification of transportation 17
Further decarbonization of industry 1 15
Improvements in buildings 8
Optimization in agriculture 4
Other 8
2050 without carbon sinks 17 -70
+CZK
+CZK
44 trillion
Adoption of CCS technology 8
Natural carbon sinks (LULUCF) 9 trillion
2050 carbon neutrality 0 -87 Total
Totaladditional investments
additional investments
1. Abatement in industry excludes CCS carbon sinks
Source: McKinsey analysis
Pathways to decarbonize the Czech Republic 27Achieving net-zero would require the by 2050. To achieve net-zero, it would
country to complete its shift from coal need to use natural carbon sinks to
to renewables, nuclear, and CCS- reduce those emissions by 9 MtCO2e,
equipped gas to generate heat and and to adopt CCS technology to
power. It would need to electrify the capture the remaining 8 MtCO2e. Even
transportation and industry sectors to if CCS turns out not to be feasible for
the greatest extent possible, increase the Czech Republic, the country still
the energy efficiency of buildings, will have succeeded in reducing its
switch heating to heat pumps, use emissions by 95 percent by 2050.
biomass as a heating fuel in industry,
According to our analysis, it would
and optimize animal feed and crop
require substantial additional
composition in agriculture.
investment for the Czech Republic to
Adopting these new technologies would reach net-zero from 2030 to 2050: CZK
enable the Czech Republic to reach 4 trillion at current prices, or 4 percent
17 MtCO2e of annual gross emissions of Czech 2019 GDP each year.
Achieving net-zero would require the
country to complete its shift from coal to
renewables, nuclear, and CCS-equipped
gas to generate heat and power.
28 Pathways to decarbonize the Czech RepublicPathways to decarbonize the Czech Republic 29
Chapter 3 Decarbonization pathways for the major sectors of the economy 30 Pathways to decarbonize the Czech Republic
Pathways to decarbonize the Czech Republic 31
Power and heat
European context transportation and industry, switch to
For the EU as a whole, the power and electric power from fossil fuels as per
heat sector accounts for 24 percent the cost-optimal pathway.
of total emissions, a lower share than
in the Czech Republic.27 Although Starting position of the Czech
the EU has been an early mover in Republic
decarbonizing power, with renewables
The power and heat sector accounts
accounting for 31 percent28 of its total
for 35 percent of the Czech Republic’s
power supply today, it still has a long
GHG emissions, the highest of any
way to go to reach net-zero. Many
sector. These emissions are primarily
countries—including Denmark, Greece,
generated by coal power and combined
France, Hungary, and Germany—have
heat and power generation (CHP)
already announced their intention to
plants.
phase out coal.29
In 2017, the Czech Republic had a
EU member states are all beginning
maximum power generation capacity
at different points in their efforts to
of ~22 GW, and its peak power demand
decarbonize their power sectors due to
in 2017 was 11.8 GW. Coal made up
the differences in the types of power
10.6 GW of the installed capacity,31
they currently use and the energy
which comes mostly from power
resources available to them. Along
plants commissioned in the 1970s and
with Poland, Slovenia, and Bulgaria,
1980s.32 The most important exception
the Czech Republic is among the EU
is the Ledvice VI plant, which was
member states that rely heavily on coal,
commissioned in 2017.33 The country’s
including lignite (a low grade of coal)
gas-fired power generation capacity
for power generation.30 Finding ways to
is 2.3 GW, which comes from the large
decarbonize the power sector is crucial
Počerady CCGT plant and many smaller
to supporting the expected increased
ones.
demand for electricity, which will nearly
double when other sectors, such as
35%
of the Czech Republic’s GHG
emissions come from the power and
heat sector
32 Pathways to decarbonize the Czech RepublicThe Czech Republic also has two was 81 TWh, of which 68 TWh was
nuclear power plants in Temelín and consumed domestically,37 and 13 TWh
Dukovany that can generate up to (or 16 percent) was exported. Coal
4.2 GW of electricity, providing the plants produced 38 TWh, nuclear
country’s most significant source of 27 TWh, and the rest came from other
emission-free energy.34 Hydropower generation technologies.38
provides an additional 2.3 GW of
Large centralized plants also play
zero-emission electric capacity.35
an essential role in supplying Czech
This hydropower comprises pumped
households and businesses with heat.
storage, run-of-river, and reservoir
In the Czech Republic, about 90 PJ
capacity that comes from several large
of heat was supplied from centralized
sites, such as Orlík and Lipno, and
plants in 2017, of which roughly 50
numerous smaller plants.
percent was consumed by
Although the Czech Republic’s 1.6 million39 Czech households
hydropower capacity has remained connected to a district heating
flat, the volume of electricity generated network. The remaining half was used
at these plants has decreased since by businesses and institutions such
2013 due to reduced rainfall and more as hospitals and offices as well as by
frequent droughts.36 The Solar PV industry. Approximately 60 percent of
installed capacity was 2.1 GW, and this heat is generated using coal, often
the country’s installed wind capacity in CHP plants.40
was 0.3 GW.
We cover district heating emissions in
In 2017, the total net electric power this chapter and decentralized heating
production in the Czech Republic in the Buildings chapter.
Exhibit 11
Coal accounts foraccount
and lignite nearly half
for of installed
nearly capacity
half of andcapacity
installed net electric
andpower production
net electric power
in the Czech Republic
production in the Czech Republic
2017
2017
Installed capacity structure Net power generation
GWe TWh
22.1 81.0
Net power
Installed generation
capacity profile
Wind onshore 0.3 0.6
Biomass & others 0.5 2.3
Solar 2.1 2.2
Hydro 2.3 3.0
Gas 2.3 8.5
Nuclear 4.2 26.8
Coal, incl. lignite 10.6 37.6
Installed capacity structure Power generation structure
Source: ERÚ; OTE
Pathways to decarbonize the Czech Republic 33Decarbonization options intermittent, although the availability of deployment toward the end of the
In Europe, there are currently two hydro depends on sufficient quantities 2020s, with possible rollouts in the
proven ways to generate power that of water in the rivers and reservoirs 2030s.
do not emit large amounts of GHGs: upon which the hydro plants are
nuclear and renewables, which includes located. Plausible pathway for the
hydro, biomass, onshore and offshore
Nuclear power is an essential part of
Czech Republic—2030
wind, solar PV, and concentrated solar.
the energy mix in several EU countries,
horizon
Worldwide, the fastest growing ways
including France, Sweden, and For the power and heat sector to meet
to deliver renewable electricity are
Slovakia. However, other countries, 2030 decarbonization targets, the most
via wind and solar power. Installation
such as Austria and Italy,42 have chosen significant opportunity is to sharply
costs for these technologies have fallen
not to make nuclear power part of their reduce coal burning, especially of
sharply in recent years. Consequently,
energy mix or have decided to phase lignite, which is among the most GHG-
solar and wind are the lowest-cost
out nuclear power due to a lack of public intensive energy sources. Because
sources of new power generation
support for the technology. Germany43 it has an excess power generation
capacity on a per MWh basis in many
is set to decommission its entire nuclear capacity of nearly 50 percent46, 47 over
countries today.41
reactor fleet by 2022. While several peak demand, the Czech Republic
However, wind and solar can only European countries are building or could retire a significant capacity of its
provide power intermittently. Storing considering new nuclear plants, no lignite-fueled plants. The situation is
enough renewable energy to satisfy plants of the latest (“third”) generation more complicated for co-generation
power demand throughout the year is have yet been commissioned in the EU, plants as heat from these is distributed
far beyond the capabilities of current and the two most advanced projects through district heating networks.
storage technologies; battery storage (in Finland44 and France45) are behind Those plants could either be switched
can cover a few days’ demand at most. schedule and over budget. from lignite to gas, biomass or waste, or
A plausible option for large-scale their heat distribution system could be
Several companies are working to
seasonal renewable energy storage is replaced by decentralizing the heating
develop so-called Small Modular
to convert excess wind and solar energy of buildings or blocks of buildings. Due
Reactors (SMRs). SMRs are designed
to hydrogen by electrolysis, store the to the importance of local conditions—
to be assembled on the site from
hydrogen in salt caverns (such as those for instance, topography and the
prefabricated modules, thus reducing
used today for gas), and later convert state of the distribution network—the
total cost and construction time. At the
it back to electricity. Nuclear power applicable solution will be specific to
time of writing, several SMR designs
and, to some extent, hydro are the only each district.
are under review by regulators. If
currently available large-scale GHG-
successful, this could result in their
free sources of electricity that are non-
For the power and heat
sector to meet 2030
decarbonization targets,
the most significant
opportunity is to
reduce coal burning.
34 Pathways to decarbonize the Czech RepublicOf the Czech Republic’s 10.6 GW 4.2 GW by 2030, with a reduction in
of coal and lignite power generation coal-related CO2e emissions from 42 to
capacity (which in 2017 emitted 16 Mt.
42 MtCO2e), about 3 GW have been
Maintaining a sufficient reserve margin,
decommissioned or slated for
and retaining the ability to meet Czech
retirement by 2030. A further
electric power and heat demand from
0.7 GW of generation capacity could
fully dispatchable sources at all times,
face feedstock supply constraints
would require an additional 1.2 GW
and would need to be retired in the
of gas CHP capacity. Also, it would
mid-2020s. The two most important
demand 2.5 GW of solar PV and
factors affecting the economics of coal
0.7 GW of wind capacity to be added to
and lignite power plants in the Czech
our 2030 cost-optimal path. There are
Republic are EU ETS permit prices,
two reasons for this: the economics of
which put coal at a cost disadvantage,
these technologies will keep improving,
and natural gas prices, which make coal
and the expansion of renewables would
uncompetitive when low. Our analysis
need to be significantly upscaled by
shows that for a wide range of plausible
2030 if the country is to meet its net-
scenarios combining these factors,
zero target for 2050. The renewable
coal-fueled power plants generating
generation capacities would constitute
at least 1.5 GW could not operate
less than 30 percent of the total
economically. And, at least
installed capacity. Our analysis shows
1.2 GW of coal-fueled CHP plants
that the additional transmission and
could be economically replaced with
distribution investments to integrate
a lower emission alternative.
this generation capacity into the Czech
Retiring all these plants would reduce power supply system would be CZK 50
the installed energy-generating coal to 100 billion.
capacity from 10.6 GW in 2017 to
Exhibit 12
On the cost-optimal pathway, coal capacity for power and heat production falls and is
partially replaced by increase in solar, gas, and wind capacity
On the cost-optimal pathway, coal capacity for power and heat production falls and is partially
replaced
GWe by increase in solar, gas, and wind capacity
GWe
45 GHG emission, MtCO2e 22
22.1
20.4 2017 2030
Wind onshore 0.3 1.0
Biomass & others 0.5 0.6
Solar 2.1 4.6
Hydro 2.3 2.3
Gas 2.3 3.5
Nuclear 4.2 4.2
Coal, incl. lignite 10.6 4.2
2017 2030
Source: ERÚ; OTE; IAEA PRIS; McKinsey analysis
Pathways to decarbonize the Czech Republic 35Given the expected growth of the opportunity to import cheaper
generation capacity in other countries, power for a part of the year, for
and assuming a plausible range of example, when North Sea offshore wind
commodity prices, the Czech Republic production is strong. This evolution
could go from being a net exporter of would not jeopardize Czech energy
electric power (to the tune of 13TWh in security as there is sufficient domestic
2017) to a net importer of about capacity to fully cover demand in every
6 TWh in 2030. This pathway reflects scenario.
Exhibit 13
On the cost-optimal pathway, Czech power generation would decline by nearly 25% by
2030
On the cost-optimal pathway, Czech power generation would decline by 20% by 2030
TWh
TWh
81.0
64.6
2017 2030
Wind onshore 0.6 2.1
Biomass & others 2.3 3.0
Solar 2.2 4.6
Hydro 3.0 3.1
Gas 8.5 9.0
Nuclear 26.8 26.8
Coal, incl. lignite 37.6 16.1
2017 2030
Source: ERÚ; McKinsey analysis
Exhibit 14
The Czech Republic would become a net power importer by 2030 on the cost-optimal
pathway, driven by low import costs at times of high renewable production abroad
The Czech Republic would become a net power importer by 2030 on the cost-optimal pathway,
driven
TWh by low import costs at times of high renewable production abroad
TWh
Export Import
6
-2
-13 -13
2017 20 25 2030
Source: ERÚ; McKinsey analysis
36 Pathways to decarbonize the Czech RepublicPlausible pathway for the In 2030, the Czech Republic would
Czech Republic—2050 still have 4.2 GW of coal-fueled
horizon generation capacity online, mostly in
On the cost-optimal pathway, CHPs connected to central heating
electrification would be an essential networks. Transitioning from coal would
lever for several sectors, including be crucial because of its deteriorating
transport, industry, and buildings. As economics, its diminishing availability,
a result, electric power demand would and the necessity to fully decarbonize
increase from 71 TWh in 2030 to the power sector. A key precondition
125 TWh in 2050. Meeting peak for discontinuing the use of coal for
demand without relying on energy power and heat generation is ensuring
imports will require significant an uninterrupted supply of heat to
additional generation capacities from households and enterprises connected
zero-emission technologies. It would to coal-powered centralized heating
also require more power from GHG- systems.
generating sources such as natural gas,
with emissions captured via CCS or
offset through carbon sinks in LULUCF.
Exhibit 15
On the cost-optimal pathway, the Czech Republic would add large capacities of solar, wind,
On
andthe cost-optimalgas
CCS-equipped pathway, the Czech Republic would add large capacities of solar, wind,
by 2050
and CCS-equipped gas by 2050
GWe
GWe
48.9
2030 2050
Battery - 2.0
Wind onshore 1.0 7.9
Biomass & others 0.6 2.2
20.4
Solar 4.6 20.3
Hydro 2.3 2.3
Gas 3.5 9.7
Nuclear 4.2 4.5
Coal, incl. lignite 4.2 -
2030 2050
Source: McKinsey analysis
Being an importer of electric power would
not jeopardize Czech energy security as
there is sufficient domestic capacity to fully
cover the local demand in every scenario.
Pathways to decarbonize the Czech Republic 37Depending on local conditions such as or the wind is not blowing, with the
housing density, topography, and the residual emissions from gas eliminated
percentage of buildings connected to through CCS. In this report, we are
district heating systems, there are two assuming that the Czech Republic
principal ways to decarbonize heating— succeeds in commissioning 1.2 GW of
either decarbonize the centralized CHP new nuclear capacity in the 2030s, and
sources through sustainable biomass a further 1.2 GW in the 2040s, which
and gas with CHP, or localize heating is broadly in line with the 2019 Czech
with alternative zero-emission sources national investment plan. Just as in our
such as direct electric heating, heat 2030 scenario, the Czech Republic
pumps, biomass, or solar thermal. A would be a net importer of power,
detailed city-level analysis would be with guaranteed energy security. The
required to determine where district resulting power generation mix would
heating systems should be dissolved or allow the country to accommodate
expanded. Our analysis assumes that more than 80 percent of an expected
the extent of district heating remains unregulated peak demand of 23 GW.
constant. That is without any contribution from
intermittent renewable sources and
Following the cost-optimal pathway to
with the largest power-producing block
net-zero emissions by 2050, the largest
offline. The 20 percent gap between
share of power generation capacity
the power generation mix and peak
would be solar, with 20.3 GW capacity
demand could be closed with only
installed, and onshore wind with 7.9
limited production from renewables
GW. This renewable capacity would be
(about 10 percent of their capacity) and
complemented by 2 GW of batteries
demand-side management or through a
and 9.7 GW of gas generation to provide
combination of both.
backup when the sun is not shining
20.3 GW
of solar capacity installed
38 Pathways to decarbonize the Czech RepublicOur analysis indicates a maximum power mix will exceed CZK 500 billion
feasible capacity for solar to be about between 2030 and 2050.48
26 GW and around 11 GW for wind
Given the physical constraints on
based on land availability. But while
renewables capacity, domestic green
there is enough suitable land available
hydrogen production is likely to be
for wind and solar, zoning changes and
relatively limited. Due to the large
a relaxing of regulations regarding the
energy losses in converting electric
minimum distance between dwellings
power to hydrogen, Czech renewable
and wind turbines could be considered
power production would most likely be
to allow the installation of the capacity
used directly as electricity. Moreover,
required. Power transmission and
due to capacity factors, as well as the
distribution networks also would need
load profile, hydrogen generation in
to be strengthened and equipped
the Czech Republic would most likely
with more sensors and other active
be more expensive than it would be
components to cope with a high
in some other European countries.
proportion of intermittent generation
Should hydrogen be deployed in the
and an almost doubling of expected
Czech Republic at a greater scale, it
peak demand between 2030 and
would most likely have to be imported
2050. Extrapolating from international
from countries more able to scale
studies, our analysis indicates that the
renewables, especially offshore wind.
cost of integrating this capacity into the
Exhibit 16
cost-optimal pathway,
On the cost-optimal pathway,Czech
Czechpower
powerimports
importswould
would increase
increase to to
2727 TWh
TWh perper year
year while
the country
while would would
the country retain the ability
retain the to covertopeak
ability demand
cover independently
peak demand independently
TWh
98.2
2030 2050
Import 6.2 26.5
64.6 Wind onshore 2.1 14.1
Biomass & others 3.0 9.0
Solar 4.6 24.0
Hydro 3.1 2.7
Gas 9.0 16.3
Nuclear 26.8 32.3
Coal, incl. lignite 16.1 -
2030 2050
Source: McKinsey analysis
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