Carbon neutral Nordics not business as usual
The Nordic countries have set ambitious targets to cut carbon emissions by as much as 85% by 2050. Is this possible? A recent study on climate change mitigation assesses the targets as challenging but feasible, and gives a detailed account of what needs to be done for the dream to come true.
The recently published study Nordic Energy Technology Perspectives was carried out by the International Energy Agency (IEA) and 14 Nordic research institutions. It was supported by Nordic Energy Research, a research institution founded by the Nordic governments. The project team has recently toured the Nordic capitals to present the findings of the study.
The study measures the ambitions against the recognised scenario of limiting the global temperature increase by 2°C, and a carbon-neutral scenario (CNS), which reflects the more rigorous targets of the Nordic countries. The CNS requires the reduction of greenhouse-gas emissions by as much as 85% in the Nordic region by 2050, compared to 1990, and the use of international carbon credits to compensate for the remaining 15%.
Five important areas to focus upon
The analysis identifies five major areas key to building a carbon-neutral energy system in the Nordics: improvement of energy efficiency, infrastructure development, carbon capture and storage, development of bioenergy into the single largest energy carrier, and regional cooperation within these areas.
“A decarbonised electricity and heat sector is central to the transition. The Nordic electricity system is already 84% decarbonised, and we believe the emissions from power generation can be virtually eliminated,” explains Dr Markus Wråke, Head of the Energy Supply Technology Unit at the IEA and project lead for the study.
The decarbonised energy system will require that the share of renewable sources in electricity increase from the current 63% to some 75% by 2050. To slash by two thirds the use of coal, oil and gas for electricity generation from the current level as required in the carbon-neutral scenario, the Nordic countries will need up to 10,000 turbines onshore and 2,500 offshore, and also double power generation from biomass and hike from hydro. The share of nuclear generation is expected to stay unchanged.
The low energy efficiency of the ageing building stock, if not taken care of, will continue to push up overall energy demand. The cold climate of the Nordic region is of course a challenge, but access to fossil-free electricity and renewable district heating provide possibilities.
“In dense urban areas district heating can be expanded. Combined energy efficiency measures and more use of heat pumps, particularly for new efficient buildings, could deliver the CO2 emissions reduction. Logically, it needs to be a top priority for policy makers,” says Dr Wråke.
The study admits that the decarbonisation of road transport is particularly difficult to achieve in the sparsely populated Nordic countries. The region will face challenges from increased emissions in the aviation and shipping sectors.
“The answer is an intelligent technology shift, and a key to it is the development of modern infrastructure. The pace of upgrading infrastructure needs to be stepped up in many areas,” Dr Wråke continues.
Infrastructure investments in the transport sector will target the shift from road to rail and from fossil-fuel dependent modes to electric- and biofuel-driven vehicles. In power production and distribution, the priorities are new wind capacity and smarter grids.
Heavy industries with significant process emissions are also in need of low-carbon solutions—carbon capture and storage technology.
“This technology is essential to cutting CO2 emissions in industries like cement and steel. The technology needs policy action to support its further development,” says Dr Wråke.
The study stresses the need for investments in the development of advanced biofuels as the principle energy source in 2050, particularly in transport. The target of crowding out oil in the transport sector by a staggering 90% implies that the use of biofuels in transport is increased 15 times compared to today.
Broad Nordic cooperation needed
While commenting on the need for strong cooperation between the Nordic countries, Dr Wråke says cooperation can substantially reduce the costs of decarbonisation. Harmonising the carbon price, infrastructure development, strategies for sustainable transport, a common approach to carbon capture and storage will all require close Nordic policy coordination.
The study assesses the amount of cumulative investments in the power sector over the next four decades to reach USD 350 billion in the carbon neutral scenario. Huge in absolute figures, it accounts for 0.7% of the cumulative GDP created in the Nordic region by 2050. Around 60% of this amount will be needed for power generation, and 40% for upgrading the transmission and distribution network.
“These costs are unevenly distributed within the society and between generations. Those making the investments will not necessarily receive all of the benefits. Politicians have a tricky job of evening this out, so that necessary investments become profitable business decisions,” says Dr Wråke.
Increased competitiveness
Besides the actual cut in greenhouse-gas emissions, the benefits of the decarbonisation may change the face of the Nordic economy. Electric cars, modern energy-efficient buildings and new windmill parks are only part of the story. By 2050, the study envisions that the Nordic energy system will become a net exporter of renewable electricity. Exports will account for over 15% of total production.
“Nordic companies stand to gain ground in the growing international market for clean energy solutions. Energy efficiency will boost the competitiveness of the Nordic industrial sector in the global market. Or take the modal shifts in transport: from cars to sustainable urban planning. This will contribute to a greater quality of life,” Dr Wråke continues.
“For the carbon-neutral scenario to be realised, political action is key. None of these efforts is business as usual. They imply significant changes in the production, distribution and use of energy in the region.”
Dr Wråke believes that international financial institutions have an important role in providing targeted investments to facilitate the transition to a clean energy system.
“Long implementation times require long-term planning and long-term, forward-looking financing, which is the international financial institutions’ strength.”
While the IEA’s boldest predictions put the closest target for the global carbon neutrality at 2075, the Nordic region may achieve its own 25 years earlier.
“We believe governments around the world will realise that being ambitious to create a sustainable and secure energy system does not have to cost the world. That would make broader commitment and transition to low-carbon energy systems easier,” concludes Dr Wråke.