How can Germany reach its 2050 climate goals - and under what conditions is that possible? Those are the questions addressed by a study for the Association of German Industry (BDI) drawn up by Prognos as an academic partner together with the Boston Consulting Group (BCG).
In an effort to do its part to protect the global climate, Germany has set itself the goal of reducing its greenhouse gas emissions by 80 to 95 percent by 2050 compared to 1990s levels. But debates have gone on for years about how and under which conditions this goal can be reached.
This “time corridor” is both ambitious and “broad” since a reduction of 95 percent would entail a further 75-percent cut versus an 80-percent reduction. Thus it is crucial to understand the “corridor” in detail.
The results of the study are as follows:
It is possible to reduce greenhouse gas emissions by 80 percent using today’s technology and without causing major economic burdens or requiring structural changes.
A reduction of greenhouse gas emissions by 95 percent is also possible, but would require far greater effort. One condition is that technologies that are today in the early-development stage would have to make far swifter progress. In addition, new social consensus and acceptance of changes would be needed. Such a path only makes sense in the context of global climate cooperation. On the other hand, this path would have positive economic effects and would encourage and preserve a technologically sophisticated, productive industrial and economic culture.
That is the conclusion of a study carried out by Prognos together with the BCG for the Association of German Industry (BDI). As the academic partner, Prognos was responsible for calculating the energy-system scenarios as well as calculating the economic ramifications. To this end, the study employed Prognos’ energy-system models (sectoral bottom-up models for the energy question as well as a European electricity-market model) and macro-economic modeling system. This combination allows for the calculation of detailed prognoses of the effects of technology development and technology use and of political strategies on the energy and economic system.
Prognos experts began by evaluating three political scenarios concerning energy and the climate, so-called climate paths: a “reference path,” an “80-percent path” and a “95-percent path.” In addition, the researchers placed the 80- and 95-percent paths in two different international contexts. One of them features autonomous national strategies, in which numerous industrialized and several developing countries pledge to protect the climate but don’t participate in any comprehensive international cooperation. The other context was global cooperation, in which the community of nations worked together on behalf of climate protection.
All scenarios assumed the same population expansion and the continuation of robust economic growth, so that by 2050 German GDP would have grown (in real terms) by 50 percent compared with today.
The Reference Path
The reference path assumes that the transition to renewable energy sources will proceed at the same pace it is today. This is the starting scenario from which the other two scenarios concerning energy and climate politics proceed.
The reference path assumes that by 2050 the following measures, among others, will have been taken.
- Energy: The proportion of renewable energy source in the net production of electricity will have risen to 76 percent, while coal-driven power still offers 18 gigawatts power in plants.
- Transportation: There will be 14 million electric cars.
- Buildings: From 2015 to 2050, the energy efficiency modernizing rate for buildings will have remained at a relatively low 1.1 percent.
In this scenario, Germany’s greenhouse gas emissions would sink by 61 percent by 2050 compared to their 1990 levels. That would mean that Germany would fall considerably short of its goals of its “Climate Protection Plan 2050.”
The 80-Percent Path
This path predicts which strategies and technological measures would be necessary to reduce Germany’s greenhouse gas emissions by 80 percent of their 1990 levels by 2050.
To do that, the following measures would have to be taken by 2050:
- Energy: The proportion of renewable energy sources in the net production of electricity will have to be raised to 90 percent. Coal-driven power will be phased out completely until 2050. Back-up capacities would be provided by a limited number of gas-fired power plants, and fluctuating energy production would be compensated for by stored power.
- Transportation: The number of electric cars would have to rise to 26 million. In addition, 4000 kilometers of electric overhead lines would have to be built for electric trucks.
- Buildings: From 2015 to 2050, the energy efficiency modernizing rate for buildings will have to be 1.7 percent, a significant rise from today’s levels and the levels assumed in the reference path. Moreover, a large number of heating systems would have to be replaced by the installation of 14 million hot-water pumps.
- Industry: German industry will increasingly have to utilize biomass for producing process heat at low and medium temperatures.
- Agriculture: German agriculture will use fertilizer and land more efficiently.
The temporally cumulative additional investments (in efficient technologies, infrastructure and renewable energy sources) for this climate path in comparison to the reference scenario amount to 1000 billion euros. Yet because these additional investments would largely be offset by savings in energy, the actual additional costs in an “autonomous national” context would be 240 billion euros more than the reference path. In the “global cooperation” context, in which the prices for fossil-fuel energy (oil, coal and gas) sink dramatically because of decreased demands, the German economy could even stand to save 500 billion euros.
The emphasis of the investment would be in construction and facilities and would be made to a large extent by German producers. The overall economic effect would be slightly positive. Gross domestic product would grow 0.6 percent more in the national-autonomous context and 0.9 percent more in the international-cooperation context than in the reference scenario.
Conclusion: The 80-percent path is possible with existing technologies and can be supported by the German economy.
The 95-percent Path
This path answers the question: how could Germany reduce its greenhouse emissions by 95 percent.
To reach this goal, the following measures, among others, would have to be put into place:
- Energy: Energy in Germany would have to be produced exclusively from renewable sources. In addition, 340 terawatt hours of synthetic fuel would have to be imported.
- Transportation: The number of electric cars would have to rise to 33 million. In addition, 8000 kilometers of electric overhead lines would have to be built for electric trucks.
- Buildings: From 2015 to 2050, the energy efficiency modernizing rate for buildings will have to be 1.9 percent, a significant rise from today’s levels, which were assumed in the reference path. Heating systems would have to be almost completely replaced by hot-water pumps.
- Industry: “CO2 Capture and Storage” technologies would necessarily have to be used in the steel, cement and refuse industries.
- Agriculture: The emissions produced by animal husbandry would have to be noticeably reduced, for example, by using the “methane pill” for cows.
The cumulative additional investments for this climate path compared to the reference scenario would be 1170 billion euros. Thanks to the energy saved, the actual additional costs would be 730 billion euros in the national-autonomous context. In the international-cooperation context the actual additional costs would be 150 billion euros thanks to the sinking costs of fossil fuels. The positive effect on GDP in the international-cooperation context would be 0.9 percent.
Conclusion: The 95-percent path requires the ambitious and stringent use of hyper-efficient new technologies and new processes to increase social acceptance for the necessary measures.
The study was put together with the comprehensive collaboration of the BDI member associations organized by Boston Consulting Group as the main contractor. Some 70 associations and companies and 200 industrial experts took part in it. The authors held around 40 workshops and 300 expert surveys. As BCG’s academic partner, Prognos provided technical input and was responsible for the calculations of the energy-market and economic models.
Dr. Almut Kirchner, Dr. Andreas Kemmler, Marco Wünsch, Alex Auf der Maur, Florian Ess, Sylvie Koziel, Sven Kreidelmeyer, Jan Limbers, Dr. Alexander Piégsa, Samuel Straßburg und Inka Ziegenhagen (Prognos AG), Projektpartner: The Boston Consulting Group
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