Long-term, Low-emission Pathways in Australia, … Gumilang Dewi, Center for Research on Energy Policy – Institut Teknologi Bandung, Indonesia Shinichiro Fujimori, National Institute

Long-term, Low-emission Pathways in Australia, Brazil, Canada, China, EU, India, Indonesia, Japan, Republic of Korea, Russia, and United States

February 2019

COMMIT Deliverable D2.2: Report on existing national scenarios in the context of NDCs and ratcheting up

process; National fact sheets for the 11 countries participating in the project

Coordinators: Dr Panagiotis Fragkos (E3-Modelling), Prof Roberto Schaeffer (COPPE)

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Suggested citation: COMMIT (2019) Deliverable 2.2: Long-term, Low-Emission Pathways in Australia, Brazil, Canada,

China, EU, India, Indonesia, Japan, Republic of Korea, Russia, and United States. The Hague: PBL Netherlands

Environmental Assessment Agency.

Authors:

Luke Reedman, Commonwealth Scientific and Industrial Research Organisation, Australia

Alexandre C. Köberle, COPPE, Universidade Federal do Rio de Janeiro, Brazil & Imperial College London, UK

Roberto Schaeffer, COPPE, Universidade Federal do Rio de Janeiro, Brazil

Nick Macaluso, Environment and Climate Change Canada, Canada

Jiang Kejun, National Development and Reform Commission Energy Research Institute, China

Fu Sha, National Center for Climate Change Strategy and International Cooperation, China

Chai Qimin, National Center for Climate Change Strategy and International Cooperation, China

Panagiotis Fragkos, E3 Modelling, Greece

Alessia De Vita, E3 Modelling, Greece

Swapnil Shekhar, The Energy and Resources Institute, India

Ritu Mathur, The Energy and Resources Institute, India

Rizaldi Boer, Bogor Agricultural University CCROM-SEAP, Indonesia

Retno Gumilang Dewi, Center for Research on Energy Policy – Institut Teknologi Bandung, Indonesia

Shinichiro Fujimori, National Institute for Environmental Studies, Japan & Kyoto University, Japan

Diego Silva Herran, Institute for Global Environmental Strategies, Japan

Junya Takakura, National Institute for Environmental Studies, Japan

Chan Park, University of Seoul Cooperation Foundation, Republic of Korea

George Safonov, National Research University Higher School of Economics, Russia

Gokul Iyer, Pacific Northwest National Laboratory, USA

Heleen van Soest, PBL Netherlands Environmental Assessment Agency, Netherlands

About COMMIT:

The COMMIT project (Climate pOlicy assessment and Mitigation Modeling to Integrate national and global

Transition pathways) aims to improve the modelling of national low-carbon emission pathways, and to improve

analysis of country contributions to the global ambition of the Paris Agreement. The consortium consists of 18

international research teams, including 14 national modelling teams in G20 countries, who regularly support

domestic policymaking, and global integrated assessment modelling teams with extensive experience on global-

scale modelling of climate change policies. The project is funded by the European Commission’s Directorate-General

for Climate Action (DG CLIMA).

For more information: https://themasites.pbl.nl/commit/

https://themasites.pbl.nl/commit/

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Contents Introduction ........................................................................................................................................................................... 5

Methodological approach..................................................................................................................................................... 7

Australia: Climate Policies, NDC and low-carbon pathways ............................................................................................... 9

Where are we? .................................................................................................................................................................. 9

Where do we want to go? .............................................................................................................................................. 11

How do we get there? .................................................................................................................................................... 12

Brazil: Opportunities from AFOLU and non-CO2 mitigation reduce pressure on productive sectors ............................ 15

Where are we? ................................................................................................................................................................ 15

Low Carbon scenarios for Brazil ................................................................................................................................. 16



Sustainable intensification of agriculture ...................................................................................................................... 20

Canada’s Low-carbon Pathway .......................................................................................................................................... 22

Where are we? ................................................................................................................................................................ 22



Oil sands in the low-carbon transition context ............................................................................................................. 27

China: Climate Policies, NDCs and Financial needs ........................................................................................................... 29

Where are we? ................................................................................................................................................................ 29



Financial Needs in Implementing China’s NDC ............................................................................................................. 34

European Union: Energy system restructuring towards a long-term low-emission pathway ....................................... 35

Where are we? ................................................................................................................................................................ 35



The role of electricity, hydrogen and clean gas towards deep decarbonisation......................................................... 39

India: Decarbonisation Pathways - Options & Implications .............................................................................................. 42

Where are we? ................................................................................................................................................................ 42



Indonesia: Climate Policies, NDC and low-carbon pathways ............................................................................................ 49

Where are we? ................................................................................................................................................................ 49

Submitted NDC for 2030 ............................................................................................................................................ 49

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Current climate policies being implemented ............................................................................................................ 50

Description of the models used: ................................................................................................................................ 53



Points of attention for Indonesia’s energy sector ......................................................................................................... 56

Decarbonisation pathway of Japan .................................................................................................................................... 57

Where are we? ................................................................................................................................................................ 57



The role of nuclear power in the Japanese low-carbon transition .............................................................................. 62

Republic of Korea: low-carbon economy pathway and climate proof society ................................................................ 63

Where are we? ................................................................................................................................................................ 63



The role of LNG and nuclear power in Korean low-carbon transition ......................................................................... 66

Russia: climate policy and decarbonisation options by 2050 ........................................................................................... 67

Where are we? ................................................................................................................................................................ 67



The Russian low-carbon transition in the international context .................................................................................. 73

United States: GHG Policies, Directions, and Opportunities ............................................................................................ 74

Where Are We? ............................................................................................................................................................... 74



The role of state-level climate policies and success stories towards decarbonisation ............................................... 78

Conclusions .......................................................................................................................................................................... 80

References ........................................................................................................................................................................... 82

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Introduction The Paris Agreement

The 21st Conference of Parties (COP21) in Paris is a major milestone in the global climate policy landscape, as

governments worldwide agreed to limit the increase in global average temperature to levels “well below 2 °C” relative

to the pre-industrial levels (UNFCCC, 2015) and to pursue efforts to limit the temperature increase even further to

1.5 °C, combined with an ambition to peak global emissions as soon as possible. In the run-up to COP21, a large

majority of countries, representing over 97% of global greenhouse gas (GHG) emissions, submitted national climate

action plans known as Intended Nationally Determined Contributions (INDCs), outlining the post-2020 climate actions

they intend to pursue for meeting the new international agreement objectives (Fragkos et al., 2018). When a country

officially ratifies the Paris Agreement, its INDC becomes an NDC. The Paris Agreement entered into force on 4

November 2016, after it had been ratified by more than 140 countries worldwide representing more than 80% of

global GHG emissions. To take stock of the joint efforts and monitor the progress achieved by countries regarding the

national and global mitigation targets, the Paris Agreement established a process that started in 2018 with the Talanoa

Dialogue and will be repeated every five years as the Global Stocktake.

At the moment, the national contributions do not add up to the emission reductions required for the global target to

limit global warming to well-below 2 °C or 1.5 °C (Rogelj et al., 2016). Apart from the NDCs that outline climate actions

until 2030, the Paris Agreement calls for all Parties to strive to formulate and communicate long-term low greenhouse

gas emission development strategies, mindful of Article 2: taking into account common but differentiated

responsibilities and respective capabilities, in the light of different national circumstances. These mid-century

strategies should be communicated to the UNFCCC by 20201 and so-far, only few countries have developed official

long-term low-carbon strategies. To develop these strategies, scientific input on emission reduction potentials is

needed – on the country level, but also globally to put national emissions pathways into the context of the global

climate goals.

Why do countries need long-term energy and climate strategies?

A long-term strategy outlines how a country could pursue its development trajectory while phasing out GHG emissions

over time. These strategies provide an opportunity for countries to think through what the Paris goals mean for their

long-term emissions trajectories, and in turn, what this implies for the implementation of their mitigation targets.

Long-term strategies set the direction and vision for economic and social development, may increase certainty for

private sector investment and help countries manage the transition process, avoid disruption of current systems and

safeguard their development targets from climate change risks. In addition, early climate movers can inspire and set

the example for other countries to increase their climate policy ambition, thus leading to accelerating mitigation effort

globally.

COMMIT scenarios to inform national long-term strategies

The key contribution of this study is to present model-based scenarios assessing national-level NDC and low-carbon

transition pathways developed using national integrated assessment and energy–economy models. These models

have sufficient quality and granularity in the form of policy, technology and sectoral details and country specificities

and are well linked with national policymakers and relevant stakeholders. Low-carbon development pathways were

modelled up to 2050 for 11 major economies (namely Australia, Brazil, Canada, China, EU-28, India, Indonesia,

Japan, Russia, Republic of Korea, USA) that jointly represented more than 87% of global CO2 emissions in 2015. The

study assesses the potential for, and progress in, national low greenhouse gas emission development strategies in

major G20 countries, and their implications for emissions, energy system restructuring and associated costs. The

country fact sheets were compiled by many national teams, who regularly support domestic climate policy-making

in their respective countries. To evaluate the consistency of national low-carbon transition pathways with the global

1 http://unfccc.int/focus/long-term_strategies/items/9971.php.

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ambition of the Paris Agreement, country-level cumulative emissions were compared to cumulative emissions of

global model pathways limiting global average temperature rise to 1.5 °C or 2 °C. In this way, the study contributes

directly to improved analysis and understanding of how action in major G-20 economies representing a large share

of global emissions relates to ambitious global climate change mitigation targets set by the Paris Agreement. It

should be noted that the low-carbon transition pathways included in the study are developed by research teams

and are not automatically endorsed by national governments.

Policy relevance

The current study enhances the policy realism and credibility of model-based analyses by considering country-level

projections and national specificities and policies, compared to globally harmonised scenarios based on simplistic

carbon pricing regimes. The analysis constitutes an important step forward towards bridging the gap between long-

term mitigation pathways and short- to medium-term national energy strategies and investment decisions. Based on

the comprehensive national-level low-carbon strategies, major inconsistencies and gaps between country-level

policies and aspirational global mitigation objectives (e.g. the 2 °C or 1.5 °C temperature target) can be evaluated. The

policy relevance of model-based analyses is enhanced by using national models that improve the representation of

national socio-economic policy priorities and structural heterogeneities of national economies. The study develops

integrated low-emission pathways for major economies, considering not only NDC targets and potential mid-century

strategies, but also a multitude of policy objectives that are key in the policy formulation of individual countries,

including: security of energy supply, air quality concerns, renewable energy potentials, and industrial innovation and

competitiveness.

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Methodological approach The study builds upon the COMMIT project2 (Climate pOlicy assessment and Mitigation Modeling to Integrate national

and global Transition pathways), including 14 national modelling teams in G20 countries, who regularly support

domestic policymaking in the energy and climate policy fields. The analysis includes national-level energy–economy

models both from developing and developed countries. These countries jointly represented more than 87% of global

CO2 emissions in 2015. Analysing the implemented and potential climate and low-carbon policies in those economies

is, therefore, particularly important for the achievement of the long-term temperature targets included in the Paris

Agreement.

All models used in the study are state-of-the-art and well-established models and have been used extensively in

previous applications in the field of energy system analysis and climate policy assessments (Table 1). They have been

used to provide model-based analysis in major policy-relevant impact assessments, including (IPCC, 2014), (European

Commission, 2011 and 2014). National-level models incorporate a detailed and disaggregated representation of the

energy demand and supply system and are rich in the representation of energy-related technologies. Country-level

energy and land-use models include a more accurate and realistic representation of the energy system processes and

land uses, capture elements that are difficult to model in global energy–economy models and have a more granular

modelling (e.g. load duration curves, technology vintages, engineering constraints). They can thus simulate the future

energy system evolution of a country under different policy assumptions with more realism than global models.

Table 1: Countries and energy–economy models used in the study

National

Team

Models Country Model type

CSIRO TIMES-AUS Australia Energy system

COPPE BLUES/COFFEE Brazil Integrated Assessment

ECCC GCAM-Canada, EC-MSMR Canada Energy system, Macro-economy

NCSC, ERI PECE China Integrated energy system

E3Modelling PRIMES EU-28 Energy system

TERI MARKAL India Energy system

BAU, CREP-

ITB

ExSS, AFOLU Dashboard Indonesia Energy system, AFOLU, waste

NIES AIM/Enduse [JPN] Japan Energy system

HSE TIMES-RUS, ROBUL/ CBS-CFS3 Russia Energy system, Forestry

UOS TIMES, AIM-Korea South Korea Energy system

PNNL GCAM USA Integrated Assessment

COMMIT aims to foster the continued interaction between the national and the global energy–economy modelling

teams. One important interaction between global and national teams, for instance, is the provision of insights on

national carbon budgets and greenhouse gas emissions projections that are globally consistent with respect to the

Paris Agreement and international energy prices. In the reverse direction, national modelling teams can provide

insights on local mitigation opportunities and potentials, which can then be used to enhance the country

representation in global integrated assessment models. Within this context, the current study ensures that all national

low-carbon scenarios are considered to be in line with the objective to limit global warming to well-below 2 °C, based

on the consistency of national cumulative CO2 emissions over 2010-2050 with the range projected by a number of

2 COMMIT project is funded by the European Commission’s Directorate-General for Climate Action (DG CLIMA).

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global models3 in the CD-LINKS project for cost-optimal scenarios assuming a global carbon budget of 1000 Gt CO2

considered equivalent to limit global warming to below 2 °C with an at least 66% probability. The national cumulative

carbon budgets have been defined through an iterative approach involving national and global modellers and

stakeholders in CD-LINKS. In addition to the low-carbon pathways, the national teams also developed Reference

(Business-As-Usual) scenarios based on current climate policies, system trends and incorporating a wide range of

exogenous assumptions and

scientific expertise. The Reference scenario represents the benchmark against which alternative low-carbon scenarios

can be compared to evaluate their energy system, emission and economic impacts.

The country fact sheets provide detailed information for the eleven major economies included in the study. The fact

sheets were produced by the respective national modelling teams based on a template developed by work package

2 leaders. This template includes four main sections, three of which are directly related to the Talanoa dialogue

questions (Where are we?, Where do we want to go?, How do we get there?) and one section focuses on a specific

key issue for each country. It should be noted that scenario results do not define where a country ought to be, but

where models expect them to be, i.e. reflecting realistic national low-carbon transition pathways. The focus of the

analysis is on the quantification of major trends in CO2 and GHG emissions by sector, energy system restructuring and

energy–economy indicators in Reference, NDC and low-carbon transition scenarios (compatible with the well-below

2 °C global target). In case that more teams from the same country participate in the project, they developed a joint

fact sheet. These fact sheets have been submitted as an input to the Talanoa Dialogue (October 2018) in preparation

for the UNFCCC COP24.

The analysis builds upon already existing scenarios, in most cases from the CD-LINKS database, which provide national

assessments for the largest carbon-emitting economies. Several national teams provided new, updated low-carbon

scenarios to capture recent developments. To facilitate the process of data gathering and analysis and ensure full

transparency, an online interactive database including national low-carbon scenarios (included in the country fact

sheets) has been established. The database has been populated with national model-based scenarios transferred from

recent projects (mainly from CD-LINKS) or with more recent scenarios including updated analyses on long-term targets

(e.g. for EU and Japan). The process also involved modelling teams that have not participated in similar international

multi-model assessments before (Australia, Canada, and Republic of Korea). These teams provided their latest

national low-carbon scenarios and engaged in capacity building activities of the wider modelling community (such as

registering their models, filling-in the specified data template and uploading their data to the COMMIT database). This

brings added value to the project by developing new insights on the low-carbon transition of specific countries that

are currently not well represented in global models. Data included in the databases and the fact sheets were double-

checked by the national modelling teams, E3-Modelling and PBL to ensure full consistency and comparability of

modelling results. Common figures for all countries were developed to the extent possible using the same format and

common units. The indicators presented in the fact sheets concern both Baseline and low-carbon transition scenarios

and include:

▪ Energy–economy indicators, i.e. energy and carbon intensity of GDP; ▪ GHG and CO2 emissions by major emitting sector; ▪ Indicators for energy system restructuring (i.e. electrification, expansion of renewable energy); ▪ Other national-relevant issues related to the low-carbon transition, i.e. the role of non-CO2 and land-use

emissions, financial requirements, the contribution of specific emission reduction options (such as electricity, hydrogen, LNG, nuclear, clean synthetic fuels).

3 McCollum DL, et al. (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.

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Australia: Climate Policies, NDC and low-carbon pathways

Where are we? Australia’s4 net energy use has historically been dominated by industry, electricity generation and transport,

together accounting for 83% in 2016, while residential and services sectors contribute a relatively small amount of

energy consumption. Just over a third of total primary energy is derived from oil (37%), with large shares also

coming from coal (32%) and natural gas (25%). Since 2005, total energy from coal has declined by 13%, while the

consumption of gas and renewables has increased by 51% and 30% respectively by 2016 (DoEE, 2017a).

There have been recent disruptions in the power sector, with a state-wide blackout in South Australia in late

September 2016, several occurrences of load shedding and gas shortages, and power reliability issues experienced

under severe climate situations in 2017-18 in Victoria and South Australia. To some extent the energy system

transformation is happening at a faster pace and scope than expected, driven by rapidly falling technology costs for

renewable energy, energy efficient appliances and batteries, and the closure of the oldest coal-fired power plants.

Coinciding with rising energy prices and limited energy retail choices, a growing number of consumers have opted

for electricity production at home (prosumers) and some have even gone off grid (IEA, 2018).

With regard to climate policy, Australia ratified the Paris Agreement on 10 November 2016. Its Nationally

Determined Contribution (NDC) includes a target of reducing GHG emissions, including land use, land use change

and forestry (LULUCF), by 26–28% below 2005 levels by 2030. The NDC translates into a total reduction from 597

MtCO2-eq. in 2005 to 430 or 442 MtCO2-eq in 2030. This is equivalent to a reduction of 50% of per-capita CO2

emissions and to a reduction of emissions intensity of GDP of 64%-65% during the period 2005-2030 (Australian

Government, 2015).

While there has been significant volatility in Australian climate policy in the past decade, current policy proposals at

the national level tend towards imposing an average emission intensity constraint on the electricity sector in the

period between 2020 and 2030 consistent with the NDC (Finkel et al., 2017; Energy Security Board, 2017). The

policy mechanism for other sectors (beyond electricity production) is less clear, although work towards a national

road transport GHG emission standard has proceeded as far as an impact statement and a consultation paper on

possible alternative designs. An Emission Reduction Fund (ERF) has been operating, which directly purchases

abatement using government funds from a wide variety of sectors via an auction process. Land regeneration

projects have been the most successful in receiving funds (bidding the lowest cost of emission abatement). There is

no long-term provision in the budget for future ERF auctions beyond 2020.

In parallel, several state and territory governments have legislated and implemented GHG emission reduction and

renewable energy targets. In regard to legislated net zero GHG emissions targets, the Australian Capital Territory

amended its Climate Change and Greenhouse Gas Reduction Act 20105, setting a net zero GHG emissions target by

30 June 2050. This is soon to be amended to 30 June 2045.6 In Victoria (Australia’s second most populated region),

the Climate Change Act 20177 came into effect on 1 November 2017 establishing a long-term reduction target to

4 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/ 5 http://www.legislation.act.gov.au/a/2010-41/current/pdf/2010-41.pdf

6 https://www.environment.act.gov.au/home/latest_news/nations-climate-action-capital-sets-world-leading-

environmental-targets

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http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/PubStatbook.nsf/f932b66241ecf1b7ca256e92000e23

be/05736C89E5B8C7C0CA2580D50006FF95/$FILE/17-005aa%20authorised.pdf


http://www.legislation.act.gov.au/a/2010-41/current/pdf/2010-41.pdf

https://www.environment.act.gov.au/home/latest_news/nations-climate-action-capital-sets-world-leading-environmental-targets

https://www.environment.act.gov.au/home/latest_news/nations-climate-action-capital-sets-world-leading-environmental-targets

http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/PubStatbook.nsf/f932b66241ecf1b7ca256e92000e23be/05736C89E5B8C7C0CA2580D50006FF95/$FILE/17-005aa%20authorised.pdf

http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/PubStatbook.nsf/f932b66241ecf1b7ca256e92000e23be/05736C89E5B8C7C0CA2580D50006FF95/$FILE/17-005aa%20authorised.pdf

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net zero GHG emissions by 2050 and the setting of five-yearly interim targets along similar lines to the UK Climate

Change Act8. Other states and territories in Australia have also responded setting aspirational goals for net zero GHG

emissions by 2050.

Australia’s GHG emissions in 2015 were 527 Mt CO2-eq (DoEE, 2016). Power generation was the largest source of

GHG emissions (189 Mt CO2-eq), followed by transport (95 Mt CO2-eq), other stationary energy, mainly direct

combustion (91 Mt CO2-eq), agriculture (70 Mt CO2-eq), fugitive emissions (45 Mt CO2-eq), industrial processes (32

Mt CO2-eq), waste (12 Mt CO2-eq) and land use, land use change and forestry (-8 Mt CO2-eq). An alternative

representation of current GHG emissions is shown in Figure 1.

Figure 1: Breakdown of Australia’s 2015 GHG emissions

The 2015 inventory represents a 12 per cent reduction from 2005 levels. This has been mainly driven by:

▪ reductions in electricity emissions, due to increased energy efficiency, expansion of renewable energy and

limited growth in electricity demand

▪ ongoing subdued economic conditions resulting in slower overall emissions growth

▪ lower deforestation rates than historical levels.

The model used for the analysis is an Australian version of the TIMES (The Integrated MARKAL-EFOM system) model,

a linear optimisation energy model generator developed by the Energy Technology Systems Analysis Programme

(ETSAP) of the International Energy Agency (IEA).

Under current national policy settings, GHG emissions in 2030 are projected to grow by 3.9 per cent above current

levels and 3.5 per cent above 2020 levels (Figure 2). Most of the projected growth in GHG emissions would be in the

transport sector, led by increased heavy vehicles activity for freight, and the agriculture sector, driven by increased

cattle numbers. GHG emissions in other sectors are projected to stabilise or grow slowly after 2020. Power sector

emissions are expected to be flat as demand growth is offset by the effect of policies and initiatives under the

National Energy Productivity Plan (NEPP). Long-term GHG emissions from industrial processes and product use are

expected to be lower following the legislated phase-down of HFCs from 2018 (DoEE, 2017b).

8 https://www.legislation.gov.uk/ukpga/2008/27/contents

https://www.legislation.gov.uk/ukpga/2008/27/contents

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Figure 2: Australia’s GHG emissions trends, 1990 to 2030 (Mt CO2e). Source: Australian Government

Where do we want to go? Under the Paris Agreement, parties have set a goal to limit the increase in global average temperature to well below

2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial

levels. The Paris Agreement also recognises that the world will need to achieve zero net emissions in the second half

of the century. To achieve this level of decarbonisation, Australia will need to adopt a multi-faceted approach

primarily comprising reductions in emissions associated with the land and energy sectors. The energy sector

currently accounts for 79% of Australia’s GHG emissions.

The Low Emission Technology Roadmap (Campey et al., 2017), while not recommending specific policy settings,

identified two main areas where policy could support low emissions technology uptake. First, achieving

improvement in energy productivity in buildings, industry and transport through increased uptake of lower

emissions technologies will require policy support to overcome market and firm-level failures such as split

incentives, competing priorities, lack of information and access to finance. This could take the form of energy and

emissions standards, targeted incentives and market reform (such as developing financial instruments to help

tenants and owners co-finance energy efficiency, or pricing externalities). This is likely to be incremental to the

existing measures in the National Energy Productivity Plan (NEPP).

The second main area in which policy measures are required to address market barriers is in the electricity sector,

where stable, long term policy is required to drive uptake of low-emissions electricity generation technology to 2030

and beyond. This will be required to enable investors in new, low emissions generation to achieve acceptable

returns on investment with sufficiently low market risk. Market reform may also be required to allow providers of

dispatchable supply to achieve sufficient returns in the electricity market. Market reform may also be necessary as

system optimisation becomes dependent on coordination of regulated electricity markets and contestable

wholesale markets, with tariff reform also playing an important role. Market reform or other policy drivers will also

be required to drive uptake of enabling technologies for variable renewable energy sources (VRE), by allowing these

enablers to capture the full value of services provided to the grid (e.g. fast frequency response, inertia and voltage

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control), and by enabling all technology owners to participate, including consumers with behind-the-meter

batteries.

Another area where policy measures may be required is in fugitive emissions from coal mining and oil & gas

production. Technologies to reduce these emissions (e.g. Ventilation Air Methane (VAM) abatement technologies in

underground coal mines) typically impose a net cost on operations, and hence require policy to drive their uptake.

The Emissions Reduction Fund (ERF) has recently been revised to include VAM abatement technologies, but it is not

yet clear whether this will drive uptake to the full extent of the cost-effective technical potential.

The Australia “low-carbon” scenario presented here is considered to be in line with the objective to limit global

warming to well-below 2 °C, as cumulative Australia’s CO2 emissions are 14 Gt CO2 in the 2010-2050 period; this is

consistent with the range projected by a number of global models9 for cost-optimal scenarios assuming a global

carbon budget of 1000 Gt CO2 considered equivalent to limit global warming to likely below 2 °C.

Figure 3: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario (NDC), emission reductions

between the reference and low-carbon scenarios by sector (energy supply, industry, residential and commercial

buildings, transport, non-energy CO2), and 2050 emissions in the low-carbon scenario. Non-energy CO2 includes

emissions from AFOLU and industrial processes. Model: AUS-TIMES.

How do we get there? Previous studies in the Australian context of low carbon scenarios have identified the key role of decarbonisation of

the power sector and the electrification of end-use sectors (industrial, commercial/services, residential, transport)

to achieve significant cuts in GHG emissions. Other decarbonisation opportunities include fuel switching from fossil

fuels to bioenergy and other renewable sources, and from coal and oil to gas (e.g., Denis et al., 2014).

In closing the gap between current emission trends and reduction pathways compatible with least cost trajectories

to limit warming to 2/1.5 °C above pre-industrial levels (Figure 3), the power sector has a crucial role due to its

current high emissions intensity. The main opportunities for least cost decarbonisation of the power sector are:

9 The range of Australia cumulative CO2 emissions over 2010-2050 from global models is [6-13] Gt in the 1000 Gt global carbon budget scenario, for additional information: McCollum DL, et al. (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.

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▪ The retirement of emissions-intensive (mainly coal-fired) power plants

▪ Deployment of variable renewable energy (VRE) power generation, mainly in the form of onshore wind

farms, utility-scale solar PV and distributed (rooftop) solar PV in the near-term, combined with

concentrating solar power (CSP) with thermal storage, pumped storage hydro and other forms of electricity

storage in the longer-term.

The main opportunities for electrification in the end-use sectors include (Campey et al., 2017):

▪ Industrial process heat through fuel switching from natural gas

▪ In some industrial sub-sectors (e.g., mining), significant increases in energy productivity may be achieved

through improved materials handling equipment (i.e. conveyors) and comminution processes (i.e. crushing

and grinding)

▪ Deployment of more efficient general equipment such as electric motors and variable speed and frequency

drives in industrial processes

▪ Space heating in commercial and residential buildings through the uptake of high efficiency air-conditioning

and other electric appliances displacing natural gas

▪ Hot water provision in commercial and residential buildings through the uptake of heat pumps or electric

boosted solar hot water systems

▪ Electric vehicles (EVs) particularly in the light vehicles segment (i.e., motorcycles, passenger and light

commercial vehicles) and some opportunities in the heavy vehicles segment (i.e., some bus routes, small

rigid trucks, potentially articulated vehicles)

▪ Fuel switching mainly away from diesel and towards biofuels in some non-road transport modes (i.e. rail

and shipping).

Other non-electrification opportunities for fuel switching from fossil fuels include:

▪ Bio-synthetic paraffinic kerosene substituting for crude-derived jet fuel

▪ Use of biodiesel or hydrogen in off-grid remote areas (e.g., remote communities, isolated mine sites)

▪ Fuel switching mainly from diesel to biodiesel or hydrogen in segments of road transport (e.g. heavy

vehicles) and non-road transport (i.e. rail and shipping).

▪ Fuel switching from natural gas to solar fuels for low-temperature industrial process heat.

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Figure 4: Illustration of energy system transformation towards decarbonisation. 2 °C consistent scenario from AUS-

TIMES. Numbers in graph indicate change between 2015 and 2050 (intensity indicators: %, share indicators:

percentage points, pp)

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Brazil: Opportunities from AFOLU and non-CO2 mitigation reduce pressure on productive sectors

Where are we? Brazil10 is a developing country with several challenges regarding poverty eradication, infrastructure development

and even, to some extent, energy access. Driven by reduced deforestation rates, greenhouse-gas (GHG) emissions in

the country in 2014 had declined by almost half since their peak in 2004 (MCTIC, 2016). Accounting for forest land-

use carbon sinks, net emissions in 2014 were 1.284 Gt CO2eq, already slightly below the 2025 NDC target but still

above the indicative 2030 target (MCTIC, 2016). However, emissions have been generally flat in 2009-2012, and

actually showing a slight growing trend since 2013. Emissions levels in all sectors except LULUCF have increased

between 2010 and 2014 (MCTIC, 2016), and are projected to continue doing so in the short- to medium-term. Brazil

has ratified the Paris Agreement, turning its INDC into an NDC, pledging to reduce total GHG emissions to 1.3 Gt

CO2eq by 2025, with an aspiration to reduce to 1.2 Gt CO2eq by 2030, corresponding to about 37% and 43%

reductions from the 2005 level, respectively (GofB, 2015a). Most of the proposed measures are in the Agriculture,

Forestry and Other Land Use (AFOLU) sectors, along with targets for increased use of bioenergy.

Agriculture is central to Brazil’s economy, land use and emissions. The agricultural production chain (including food

processing and retail) is responsible for about 18% of total economic output (OECD, 2015). Brazil is one of the

largest agricultural exporters with soybeans, sugar, coffee, beef and chicken making up a sizeable portion of the

country’s exports (CEPEA, 2017). Brazilian beef cattle production is one of the most competitive in the world, but

about half of the 200 million hectares of pasturelands are considered degraded, and their recuperation11 is a

cornerstone of the agricultural sector’s mitigation potential. The NDC pledges to recuperate 15 million hectares of

degraded pastures, and to implement 5 million hectares of integrated cropland-livestock-forestry systems (ICLFS) by

2030. These are projected to reduce emissions relative to current levels by some 83-104 Mt CO2eq and 18-22 Mt

CO2eq respectively, according to the country’s Low-Carbon Agriculture plan (Plano ABC) (MAPA, 2012), which should

meet its targets by 2025 (Köberle et al., 2017). The NDC also pledges to “restoring and reforesting 12 million

hectares of forests by 2030, for multiple purposes”.

Brazil’s efforts in the 2000s to protect the Amazon from deforestation were pivotal for the successful reduction of

its emissions since they peaked in 2004 (Cohn et al., 2014; Macedo et al., 2012; Nepstad et al., 2009). Maintaining

this protection and expanding it to other biomes can further reduce emissions from land use, land use change and

forestry (LULUCF), and protect rich biodiversity hotspots especially common in the central savannahs known as

Cerrado. Protecting forests would also bring benefits to water supply and climate regulation. Brazil has relatively

strong protective measure written into its laws, but these tend to be weakly implemented and, lately, have been

undermined by a weak former government struggling to remain in power and will continue to be under a new

government with anti-climate attitudes. In order to receive support from the powerful agricultural lobby,

environmental regulations are being offered as bargaining chips, threatening to a return to growing deforestation

rates. Brazil’s Forest Code was controversially overhauled in 2012, granting amnesty to illegal deforestation

occurring before 2008. Accounting for this amnesty, there is still a deficit of about 21 million hectares of mandatory

natural vegetation reserves in privately held land, which implies there should be a great deal of afforestation if the

Forest Code mandates are to be met (Soares-Filho, 2013). It is reasonable then to think that a scenario of net-zero

deforestation is possible in Brazil by 2030 (i.e. afforestation compensates for deforestation in some areas of Brazil).

10 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/ 11 Pasture recuperation is defined as the recovery of the carrying capacity of a given area of degraded pastureland that has low regrowth rate and, therefore, can only support a limited herd of low productivity (Dias-Filho, 2011; Strassburg et al., 2014).


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As for the country’s energy system, it already has high penetration of renewable sources, with hydropower

accounting for about 70% of annual electricity generation, and bioenergy for about 15% of annual primary energy

consumption (EPE, 2016). Still, the Brazilian NDC pledges to further increase the “share of sustainable biofuels in the

Brazilian energy mix to approximately 18% by 2030”, although it does not specify if this target refers to primary or

final energy. In 2018, the Renovabio policy was implemented into law (GofB, 2018), aiming to develop a market for

carbon credits related to the biofuels production chain, and allocating emission permits to fuel distribution

companies which will gradually be reduced in number. This is supposed to incentivise the biofuels sector and meant

to reverse the effects of the recent economic crisis on the Brazilian ethanol sector, which suffered drawbacks from

lack of investments in the sugarcane production phase and from reduced demand caused by low gasoline prices. In

fact, the recession of the last 5 years has led to reduced energy consumption, with significant drops across all

sectors, including industry, transportation, buildings, agriculture and the energy sector itself. In addition, there has

been a reduction in investments in low-carbon technologies. Nonetheless, renewables (hydro, biodiesel, bioethanol,

wood and charcoal, black liquor, wind and solar) account for almost half of the domestic primary energy supply.

There have been significant increases in wind and solar electricity generation recently, and the trend is of continuing

expansion of these sources. The country is making a fragile recovery to economic growth, and it remains to be seen

how energy consumption will develop once it recovers to pre-2012 levels.

Another important aspect of Brazil’s emissions profile is the high share of non-CO2 greenhouse gases, which

currently account for about 45% of total GHG emissions (Köberle, 2018). These come mostly in the form of methane

(CH4) from enteric fermentation and from nitrous oxide (N2O) emissions caused by animal waste left on pastures

and from synthetic nitrogen fertiliser application to crop fields (GofB, 2015b). A large share of the GHG emissions

reductions foreseen in the Brazilian NDC comes from non-CO2 gases.

Low Carbon scenarios for Brazil As this fact sheet will demonstrate, opportunities for GHG emissions mitigation in the AFOLU sectors are large and

low cost. Model results show that prioritising AFOLU mitigation efforts alleviates pressure on the productive sectors

of the economy to reduce their emissions, which is costlier in general. The model used here is the Brazilian Land Use

and Energy Systems model (BLUES), which includes detailed representations of energy supply, industry,

transportation, buildings, agriculture and land use sectors (Köberle, 2018; Rochedo et al., 2018). BLUES is a partial

equilibrium model that meets demand for energy services and key commodities (exogenous) by minimising total

system cost to 2050. For more information see

https://www.iamcdocumentation.eu/index.php/Model_Documentation_-_BLUES. This fact sheet examines two

scenarios for Brazil’s climate mitigation efforts: one consistent with the Brazilian NDC (used here as the reference

scenario), and another consistent with a global cost-optimal 2-degree target by 2100 (the Low-Carbon scenario).

The Reference scenario follows a pathway to the NDC in 2030 and keeps emissions frozen at the NDC target

thereafter, while the Low-Carbon scenario follows current policies to 2020 and thereafter follows a trajectory of

minimum cost towards a system in 2050 that is consistent with global well-below 2-degree scenarios12. In effect, this

means the Reference scenario is one of delayed climate action relative to the Low-Carbon scenario, which begins its

12 The Brazil Low-Carbon scenario presented here is considered to be in line with the objective to limit global warming to well-below 2°C, as cumulative CO2 emissions for Brazil are 23.6 Gt in the 2010-2050 period; this half-century CO2 budget for Brazil derives from a global model run with a 1000 Gt CO2 global budget to 2100. The global model used was COPPE’s integrated assessment model COFFEE (Rochedo, 2016). This budget is well within the range projected by a number of global models for cost-optimal scenarios assuming a global carbon budget of 1000 Gt CO2 considered equivalent to likely below 2°C. The range of Brazil cumulative CO2 emissions over 2010-2050 from global models is [15-35] Gt in the 1000 Gt global carbon budget scenario, for additional information: McCollum DL, et al. (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.

https://www.iamcdocumentation.eu/index.php/Model_Documentation_-_BLUES

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transition already in 2020. As will be shown, early action implies significant advantages to Brazil, which may be a

special case in the world.

Where do we want to go? Whether the country meets its NDC emissions target will depend in large part on the developments of deforestation

rates, because the emissions resulting from a return to former deforestation rates would more than negate any

possible reductions in energy-related emissions (Rochedo et al., 2018). Since 2014, there have been slight increases

in emissions from land use, which are largely dominated by deforestation emissions. Although reduced,

deforestation continues at around 5,000 km2 per year (INPE, 2017), but has shifted from large contiguous areas to a

pattern of small clearings and small-scale low-density forest loss, posing alarming new challenges to forest

conservation (Kalamandeen et al., 2018). Although Brazil is still on track to meet its NDC emissions targets by 2030

(UNEP, 2017), the recent weakening of environmental legislation may threaten to reverse the deforestation

reduction of the last decade, increasing emissions from land-use change. A return to growing emissions from the

LULUCF sector would imply additional burdens on other (energy) sectors, deviating from cost-optimal scenarios for

the country, as mitigation measures in AFOLU are seen as the lowest-cost options available (Rochedo et al., 2018). A

return to strong governance of Brazil’s forests and natural vegetation could help realise the economic opportunities

for Brazil in a global scenario consistent with the Paris Agreement.

As mentioned before, a net-zero deforestation pathway post-2030 is possible, and this is implemented into the

BLUES model in both scenarios (Reference and Low-Carbon). With the additional measures pledged in the NDC, the

AFOLU sectors could deliver negative emissions already by 2030 (Figure 1). On the other hand, the Low-Carbon

scenario implies high bioenergy deployment, which could place extra pressure on land, delaying the negative CO2

emissions from AFOLU from 2030 to 2050. Net afforestation, that is forest area increase, is only expected to happen

in the second half of the century13. Should the required afforestation be done with natural vegetation, this could

bring additional co-benefits to biodiversity conservation and contribute to meeting the Sustainable Development

Goals (SDGs) adopted in the United Nations’ Agenda 2030 (United Nations, 2015).

The trend is that, in a business-as-usual scenario, non-CO2 gases will continue to account for about half of the

country’s total GHG emissions, mainly from methane from enteric fermentation and nitrous oxide from manure left

on fields and nitrogen fertiliser application. The NDC scenario (Reference) developed with the BLUES model

indicates that CO2 from AFOLU sources and non-CO2 gases make up a significant portion of the low-cost mitigation

potential available in the country. Pasture recuperation is a particularly attractive option since it increases pasture

productivity (yield) and leads to lower enteric fermentation emissions through shorter time to slaughter. Although

this measure would allow for more production per hectare, rising demand both domestically and abroad cancels the

gains, and methane emissions from AFOLU show only a slight difference between the Reference and Low-Carbon

scenarios. Nitrous oxide emissions on the other hand are reduced by over 50% between these scenarios. The net

result is a decrease in total non-CO2 gases in 2050 in the Low-Carbon scenario versus the Reference (Figure 1).

13 In a scenario consistent with the global temperature target of 1.5 °C by 2100 over pre-industrial era (not explored here), the BLUES model indicates that net afforestation could happen earlier, starting in 2040 (Köberle et al., submitted).

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Figure 1: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario (NDC), emission reductions


buildings, transport, industrial processes, non-CO2, and AFOLU), and 2050 emissions in the low-carbon scenario

(consistent with 2°C). Non-CO2 emissions include emissions from AFOLU, energy use, waste treatment and industrial

processes.

As for energy-related emissions, coal is the lowest-cost option for power generation expansion once the

hydropower potential is saturated, and this is projected to happen around 2030 at current growth rates, especially if

the potential in the Amazon is not fully exploited. Much of the remaining hydropower potential is in the Amazon,

but environmental concerns as well as the long distances to electricity demand centres make it risky to develop new

projects in the region. There is a clear benefit to forest and biodiversity conservation of leaving the Amazon

hydropower potential untouched, in a clear synergy with Sustainable Development Goals (SDGs) 14 and 15 (Life on

Water, Life on Land), but implying additional costs to avoid trade-offs with SDG 13 (Climate Action) from the

deployment of coal-fired power plants. However, besides hydropower, Brazil has significant potential for wind and

solar electricity still to be developed, so there are several low-carbon options for meeting the expected increasing

energy demand in the country in future. In fact, without considering grid integration costs, wind power is generally

accepted to be the lowest-cost option in Brazil today, directly competing with natural gas plants on cost.

How do we get there? Brazil does not yet have an official mid-century low-emission strategy, but there are indications that public officials

are beginning to plan one. Figure 1 shows important opportunities if Brazil were to begin ratcheting up its NDC

before 2030. By implementing the low-cost measures in the AFOLU sectors earlier, Brazil’s energy emissions can

increase until mid-century while still following the least-cost pathway towards a global target of well-below 2oC. This

is an opportunity for the Brazilian productive sectors to avoid some of the costlier emissions abatement measures,

especially in industry, which sees an increase in final energy consumption.

The model-based analysis shows that the key options to further reduce GHG emissions in Brazil are:

▪ Sustainable intensification of livestock and agriculture production

▪ Decarbonisation and electrification of the transportation sector (mainly with expansion of biofuels)

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▪ Deployment of Bioenergy with Carbon Capture and Sequestration (BECCS) in liquid biofuels production, in

particular of 1st and 2nd generation ethanol and of Fischer-Tropsch biodiesel and biokerosene (bio-jet fuel)

▪ Deployment of wind and solar capacity in power generation

The AFOLU sectors are central for Brazil’s low-carbon future, and Section 4 explores this in more detail.

Leveraging the large bioenergy potential in a sustainable manner faces similar challenges as other activities in the

agricultural sector. Continuation of the past successes is a key option for Brazil to decarbonise its transport sector as

well as to seize an opportunity to increase exports of high-value added fuels such as biokerosene for aviation. In

fact, biofuels are key for the country´s low-carbon future. Improving public transportation infrastructure would be

another good option to reduce private vehicle use in urban centres, with potential co-benefits of reduced local air

pollution. On the other hand, electrification of the light-duty vehicle fleet (LDV) would leverage the low-carbon

electricity of the Brazilian grid to help reduce transportation sector emissions. Electrification would also reduce

demand for ethanol for LDVs, increasing the potential for biokerosene production through the alcohol-to-jet (ATJ)

route. Biodiesel availability is key to decarbonising freight transportation, which is currently dominated by diesel

trucks travelling on badly maintained roads, meaning low efficiency but also investments in expensive equipment

(such as electric or hydrogen trucks) are not likely to materialise in the short and medium-term. Second generation

biodiesel would become an important option for this sector post-2030.

The success of the Brazilian biofuels programme has found a counterpart in the recent rise of wind power in the

country. Spurred by capacity auctions dedicated exclusively to wind power plants (PROINFA programme starting in

mid-2000s), the contracted prices of wind power fell considerably so that today it competes directly with natural gas

in general auctions. This has led to a rapid rise in wind power capacity, surpassing 12 GW of installed capacity as of

today, with several more GWs under construction. This has added to the low-carbon power generation of hydro and

sugarcane bagasse combined heat and power (CHP) capacity, thus keeping the low emission factor of the Brazilian

grid. Recent dedicated solar power auctions had good results and attempt to repeat the success of wind power.

However, there has also been an increase in coal power generation, which remains the lowest-cost option for

capacity expansion in scenarios with no carbon emission constraints. Increased deployment of coal capacity post-

2030 is partially responsible for the rising emissions from the energy sector in the Reference scenario in 2050. This

capacity is replaced with low-carbon sources (mostly wind, solar, and bioenergy) in the Low-Carbon scenario.

Figure 2 shows the changes in the Brazilian energy and land use systems in the Low-Carbon scenario. Both the

carbon and final energy intensities of GDP improve considerably by 2050, while the growth in the share of electricity

in final energy leverages the low-carbon electricity of the Brazilian grid to deliver more energy services with less

emissions. The share of renewable energy sources in primary energy remains rather constant across scenarios at 35-

40% over 2015-2050, although there is a slight overall reduction in primary energy consumption (PEC) in the Low-

Carbon scenario compared to Reference.

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Figure 2: Illustration of energy system transformation towards decarbonisation. Numbers in the graph indicate

change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

Sustainable intensification of agriculture About two thirds of the country´s net GHG emissions come from AFOLU sectors, and almost 45% of total GHG

emissions are in the form of non-CO2 gases. Therefore, reducing emissions from agriculture and curbing

deforestation are key measures for Brazil’s low-carbon transition. Moreover, the two are inextricably linked since

most of the non-CO2 gases come from agricultural activity, especially methane emissions from enteric fermentation

in ruminants and nitrous oxide emissions from agricultural soils and animal excreta left on fields. The potential to

reduce AFOLU emissions is enormous, and the most concrete targets in the Brazilian NDC are in the AFOLU sector.

The cornerstone of the NDC is the Plano ABC, or Low Carbon Agriculture Plan, which calls for recuperation of 15

Mha of degraded pastures, introduction of 4 Mha of ICLF systems and planting of 3 Mha of forests. Although the

original 2020 target of the Plano ABC will be missed, it is expected that it should be completed by 2025, in line with

the NDC timeline.

Sustainable intensification of livestock production (especially beef) is seen as a negative-cost option, mainly through

the recuperation of degraded pastures and introduction of integrated crop-livestock-forestry (ICLF) systems that

increase yield and also improve soil organic carbon stocks (Assad et al., 2015; Strassburg et al., 2014). There are

challenges, however, to the implementation of these promising options. For livestock intensification, up-front

investment requirements, coupled with high interest rates due to increased country risks, often block landowners

from adopting intensification techniques in a classic example of market failure (Köberle et al., 2017). Targeted

policies to encourage adoption through low-interest credit lines and capacity building have been successful in

spurring uptake in recent years, and the country is on target to meet its pledge to deploy ICLF on 4 million hectares

of land (Embrapa, 2017), but there is no assessment on the target to recover 15 million hectares of degraded

pastures. The recuperation of degraded pastures is one way to increase the stocking rate of Brazilian livestock,

which currently for beef is slightly above 1 head per hectare (IBGE, 2017).

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Intensifying agriculture production increases yields, which means more production using the same amount of land.

This allows Brazil to continue growing its agricultural production but with a smaller increase in agricultural area

expansion, implying reduced deforestation. As mentioned before, the scenarios considered in the analysis assume

net-zero deforestation by 2030, in line with the full implementation of the Brazilian Forest Code. Further reducing,

or even eliminating, deforestation is central to Brazil meeting its NDC targets while allowing more room for

emissions from other sectors. This is vital for the concurrent achievement of economic development and climate

change mitigation, as well as the concurrent achievement of the SDGs in Brazil.

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Canada’s Low-carbon Pathway14

Where are we?

Canada has taken significant steps to address climate change. Federal, provincial and territorial policies and measures implemented in the last 20-years have contributed to a decoupling of greenhouse gas (GHG) emissions from economic growth with the carbon intensity of GDP declining by about 35 per cent in the 1990 to 2016 period. Actions taken to promote non-emitting electricity generation sources and the phase-out of coal-fired power generation have resulted in Canada having one of the cleanest electricity generating systems in the world with over three quarters of Canada’s electricity supply emitting no GHGs (mostly due to the large hydro-power capacity).

In 2016, Canada adopted a comprehensive plan on climate change, the Pan-Canadian Framework on Clean Growth and Climate Change (PCF). This is the first climate change plan in Canada’s history and includes joint and individual commitments by federal, provincial and territorial governments that have been developed with input from Indigenous Peoples, businesses, civil society, and Canadians. The PCF outlines over fifty joint and individual actions by federal, provincial and territorial governments to reduce carbon pollution, build resilience against climate impacts and generate clean growth and includes putting a price on carbon pollution. The plan sets Canada on a path towards meeting or exceeding its Paris Agreement NDC commitment to reduce GHG emissions by 30 percent below 2005 levels by 2030. Federal, provincial and territorial governments are making strong progress in implementing the Pan-Canadian Framework. Funding has been mobilised, greenhouse gas regulations are being put in place, and new policies and programs are being established and implemented.

In November 2016, Canada submitted its Mid-Century Long-term Low-Greenhouse Gas Development Strategy

(MCS) to the United Nations Framework Convention on Climate Change (UNFCCC) making it one of the first

countries to articulate such a strategy under the Paris Agreement. The MCS examined various pathways to achieve

an illustrative 80% reduction in greenhouse gas (GHG) emissions relative to 2005 levels, consistent with the Paris

Agreement’s temperature goal.

Many factors influence the future trends of Canada’s GHG emissions including a unique geographic and

demographic structure (e.g., population and household formation), economic growth, energy prices (e.g., world oil

price and the price of refined petroleum products, regional natural gas prices, and electricity prices), technological

change, and policy decisions. For example, while Canada has a relatively small population, it also has one of the

largest landmasses in the world, most of it located in the northern half of the northern hemisphere. These factors

contribute to heavier energy and transportation use and thus to higher emissions than in more densely populated

countries. The relatively high contribution of its manufacturing, construction, mining, oil and gas, and forestry

sectors (i.e., about 30 percent of the economy) is unique among industrialised countries. While Canada experienced

strong economic growth, including in its crude oil and natural gas extraction sector, it continues to make progress in

decoupling economic growth from GHG emissions. The emission intensity for the entire economy (GHG per unit of

GDP) has declined by 16.4 percent since 2005. This was also documented in the OECD’s 2017 Environmental

Performance Review of Canada that noted Canada’s progress in decoupling economic growth from GHG emissions.

14 This fact sheet was prepared on behalf of the COMMIT Consortium by Nick Macaluso, Director of Model Development and Quantitative Research at Environment and Climate Change Canada. The views expressed in this paper are those of the author and do not reflect those of Environment Canada or the Government of Canada. The COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/


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A suite of models is used to exploring how varying any of the assumptions above could have a material impact on

long-term energy and emissions trends in Canada (i.e., Global Change Assessment Model (GCAM) and EC-MSMR)

and its provinces and territories (EC-Pro). The models are briefly described below:

▪ Global Change Assessment Model (GCAM), a global recursive-dynamic integrated assessment model with

32 world geo-political regions (including Canada as a region) with technology-rich representations of the

economy, energy sector, land use and water linked to a climate model.

▪ EC-MSMR, an open-economy recursive-dynamic international multi-sector, multi-region computable

general equilibrium (CGE) model that captures characteristics of country-specific or regional production

and consumption patterns through detailed input-output tables and links countries/regions via endogenous

bilateral trade flows. The model has 16 countries/regions and 28 industrial sectors, and endogenously

simulates final consumption by households, the federal and provincial governments and investment.

▪ EC-Pro, a 10 province and 3 territory multi-sector, multi-region computable general equilibrium (CGE)

model with 25 industrial sectors, final consumption by households, the federal and provincial governments

and investment.

Where do we want to go? In its 7th National Communication and 3rd Biennial Report to the United Nations Framework Convention on Climate

Change, Canada presented projections under two scenarios. A reference scenario (‘with measures’), including

actions taken by governments, consumers and businesses put in place up to September 2017, and a ‘with additional

measures’ scenario, which accounts for a broader suite of policies under the Pan-Canadian Framework.

In 2017 GHG emissions reporting, Canada saw a significant decline in its GHG projections because of

measures/policies being implemented under the PCF. In 2030, the GHG emissions in the ‘with measures’ scenario in

Canada are projected at 722 Mt CO2eq, 92 Mt below what was presented in Canada’s 2nd Biennial Report (BR2), a

decline greater than 2015 emissions from Canada’s entire building sector. This reflects the future impacts of a

number of federal and provincial policies that had been put in place since September 2016 such as:

▪ Alberta’s Carbon levy, 2030 phase-out of coal-fired electricity, and 100 Mt CO2eq cap on oil sand emissions;

▪ Domestic reductions from Ontario joining Québec and California in the Western Climate Initiative (WCI)

cap-and-trade regime in 2017;

▪ Federal, provincial and territorial regulation for new commercial, institutional and residential high-rise

buildings and federal measures to increase efficiency of residential and commercial equipment and

appliances;

▪ Federal regulations to reduce releases of methane in the upstream oil and gas sector and to phase-out the

use of hydrofluorocarbons;

▪ Federal GHG emissions standards for heavy-duty vehicles and trailers in years 2021 to 2027;

▪ Increasing carbon tax in British Columbia to $50/tCO2eq by 2022 onwards.

The ‘with additional measures’ projections include additional policies and measures which are planned under the

Pan-Canadian Framework. Taking into consideration all these climate change mitigation policies and measures,

Canada’s emissions are projected to amount to 583 MtCO2eq in 2030, a 232 MtCO2eq decline from projections

included in the BR2. These additional measures include:

▪ Federal Carbon Pricing Backstop

▪ Accelerated Coal-Fired Electricity Phase-Out

▪ Clean Fuel Standard

▪ Strategic Interconnections, Smart Grid and Renewables

▪ Saskatchewan’s renewable target

▪ BC’s increase in Low Carbon Fuel Standard

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▪ Post-2025 Light Duty Vehicles Regulations

▪ Accelerating Industrial Management

▪ Large Scale Technology Demonstration

▪ Building Codes for new buildings

▪ Building Retrofits – labelling and codes

▪ Appliance Standards

▪ Increased use of wood in construction

▪ Reduced diesel use in remote communities

▪ Off-road Vehicles Regulations

Under the ‘Reference scenario’ (i.e., the 2015 GHG projection used to inform Canada’s NDC), emissions are

projected to increase from 722 MtCO2eq in 2015 to 815 MtCO2eq in 2030. Since announcing Canada’s NDC,

implemented and planned policies and measures are expected to achieve emissions levels of 583 Mt by 2030. Other

measures under consideration will help achieve Canada’s NDC target of 517 (Figure 1).

Figure 1: Evolution of GHG Emissions to Canada’s NDC target by 2030

The Government of Canada releases annual GHG emissions projections, which take into account evolving policy and

economic circumstances; for example, Ontario has recently announced its intention to repeal cap-and-trade

legislation. Canada’s 2018 emissions projections are expected to be released at the end of the year.

Canada’s Mid-Century low-carbon scenario presented here is considered to be in line with the objective to limit

global warming to well-below 2oC, as cumulative CO2 emissions are 15.8 Gt in the 2010-2050 period; this is well

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within the range projected by a number of global models15 for cost-optimal scenarios assuming a global carbon

budget of 1000 Gt CO2 considered equivalent to likely below 2oC. Under the Mid-Century low-carbon scenario,

emissions are projected to decrease from 722 MtCO2eq in 2015 to 517 MtCO2eq in 2030 (i.e., to meet Canada’s

Nationally Determined Contribution of 30% below 2005 levels) and further decreasing to 149 MtCO2eq by 2050 (i.e.,

80% below 2005 levels). Figure 2 below depicts how key sectors could help Canada achieve its mid-century low-

emission target. As depicted below, industry (i.e., manufacturing and production of crude oil and natural gas) is

projected to generate reductions in the range of 225 MtCO2eq relative to the reference case in 2050, followed by

non-CO2 GHG emissions with reductions of about 110 MtCO2eq. Energy supply (i.e., electricity generation and

refining/upgrading) and transportation are projected to generate reductions of about 95 MtCO2eq each. Overall, the

modelled mid-century low-emission scenario is expected to generate emissions reductions of some 590 MtCO2eq

relative to the reference case in 2050.

Figure 2: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario, emission reductions between the

reference and low-carbon scenarios by sector (energy supply, industry, residential and commercial buildings,

transport, non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with 1000 GtCO2, i.e. 2 °C).

A cross model comparison of the cost of achieving Canada’s NDC and MCS pathway suggests that with current

technologies a market clearing carbon charge in the range of $85 to $150 per ton (in real 2011 dollars Canadian) in

2030 increasing to $300 to $1,800 per ton by 2050 is needed for Canada to achieve its MCS pathway.

How do we get there? Canada’s Mid-Century Strategy (MCS) is consistent with work underway to implement the Pan-Canadian Framework

of policies and measures to help meet Canada’s 2030 NDC emissions reduction objective. The Mid-Century Strategy

will inform longer term planning and investment and sets the course towards a low-carbon economy.

15 The range of Canada’s cumulative CO2 emissions over 2010-2050 from global models is 13-21 Gt in the 1000 Gt global carbon budget scenario, for additional information: McCollum DL, et al. (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.”

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Canada’s MCS is not policy prescriptive and highlights the key role of the Pan-Canadian Framework on Clean Growth

and Climate Change in contributing to the Paris Agreement goal to hold the global average temperature to well

below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C. Canada’s

MCS presents a series of pathways aimed at achieving a net 80% reduction by 2050 relative to 2005. The pathways

explored include: i) electrification of service demands coupled with decarbonised electric generation (i.e., high

hydro, high nuclear and high renewables); ii) improving energy efficiency in buildings, vehicles and industry; iii)

moving to zero emission transport fuels; iv) decarbonise industrial processes; and v) introduction of advanced

technologies in energy supply and demand sectors.

For analytical purposes, the Mid-Century Scenario was based on a pathway that includes:

▪ Electrification of final energy uses in combination with non-emitting electricity generation (including high hydro contribution) to meeting energy demands in the transportation, building and some industrial sectors

▪ Accelerated Energy efficiency improvements in all demand sectors and demand side management ▪ Increased use of renewable fuels is prominent across decarbonisation scenarios ▪ Deployment of innovative and clean technology in industrial sectors, including oil sands production ▪ Sequestration technologies, such as bioenergy with carbon capture, use, and storage

From a federal perspective, in January 2018, Canada launched its Greening Government strategy, aimed at reducing

GHG emissions from federal government operations by 80% by 2050, relative to 2005 levels, a target selected based

on the illustrative one in Canada’s MCS.

The implementation of Canada’s NDC and the long-term low-carbon pathway (as envisaged by Canada’s Mid-

Century Strategy) implies significant changes in investment requirements for Canada’s energy system both in

demand and supply sectors. For example, under the modelled scenario, investment expenditures associated with

the expansion of Canada’s electricity system is projected to grow from $30 billion in 2015, to $45 billion in 2030 and

further increasing to $105 billion by 2050. The direct policy related cost would represent an additional investment of

$0.35 billion in 2020, increasing to $4.8 billion in 2030 and further increasing to more than $14.5 billion by 2050.

These investments associated with implementation of Canada’s NDC and Mid-Century pathway will help to

accelerate the transformation of Canada’s energy system towards low-carbon options.

Canada’s electricity generation has a low carbon intensity, albeit with significant regional differences. The least

carbon intensive electricity generation is in Quebec, Manitoba and British Columbia, while the most carbon

intensive is in Alberta, Saskatchewan and Nova Scotia. Ontario and New Brunswick have a modest carbon-intensive

electricity system. The current focus on North-South electricity flows presents a challenge to greater exchanges

between low and high carbon intensive electricity generating systems. In 2015, the carbon intensity of Canada’s

electricity generation system was 120 gCO2/kWh. By 2030, carbon intensity is projected to decrease to 60

gCO2/kWh and further decreasing to 3 gCO2/kWh by 2050.

Over the 2015 to 2050 period, Canada’s projected emissions suggest improvements in (Figure 3):

▪ Carbon intensity of GDP declining by 92.4 per cent.

▪ Final energy demand intensity declining by 55.7 per cent.

▪ Share of electricity in final energy demand is projected to increase by 58.1 percentage points.

▪ Renewable share in primary energy is projected to increase by 45.5 percentage points.

27

Figure 3: Energy system transformation towards decarbonisation (key transition indicators). Numbers in graph

indicate change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

Oil sands in the low-carbon transition context The oil sands industry is both an important source of GHG emissions in Canada, while being of vital importance to

the economic growth of Alberta’s, and Canada’s, economies. The deployment of innovative and more

environmentally sustainable oil sands production technologies could make an important contribution to mitigating

the growth in Canada’s GHG emissions, while promoting the competitiveness of Alberta’s oil sands industry and the

Canadian economy in general. The 100 MtCO2e emissions per year cap imposed on the oil sands industry is

projected to be reached by 2028. This means that the industry has about 10 years to act in order to continue oil

sands production growth by reducing its emissions intensity. On the other hand, high bitumen supply cost is another

important factor that reduces the competitiveness of oil sands production relative to other competing world crude

oil resources.

The technology configurations currently being explored which meet the minimum costs and emissions objective

criteria can achieve potential reductions of bitumen supply cost by 34-40 percent, and reduce fuel-derived

emissions from in situ oil sands production by more than 80 percent. There are also promising technologies for

upgrading bitumen, which could further reduce the life cycle emissions profile of refined petroleum products

produced from oil sands.

28

Realising the benefits from these innovative technologies will require further research and development work in

order to reduce the risks of these promising technologies and thereby ensuring their commercialisation and massive

market deployment that will contribute to reducing GHG emissions in line with the Canada Mid-Century low-carbon

pathway.

29

China: Climate Policies, NDCs and Financial needs

Where are we? China has put forward its Nationally Determined Contribution (NDC) on June 30, 2015. It promised to achieve a

peaking of carbon dioxide emissions by 2030, striving to peak as soon as possible. By 2030, the CO2 emissions per

unit of GDP should fall by 60% to 65% compared to 2005 levels. By 2030, non-fossil energy should account for about

20% of primary energy consumption, and the amount of forest reserves should be increased by about 4.5 billion

cubic meters by 2030 compared to 2005. In addition, it promised to continue to actively tackle climate change, form

mechanisms and capabilities for effectively resisting climate change risks in key sectors such as agriculture, forestry,

energy and water resources, as well as in fragile regions such as cities, coastal areas, and ecosystems; and gradually

improve forecasting and disaster prevention systems. To achieve the goals within its NDC, China has further

proposed to adopt policies and measures for strengthening implementation in 15 areas, including national

strategies, regional strategies, energy system, industrial system, construction & transportation, forest carbon sinks,

lifestyle, adaptability, development model, scientific and technological support, financial support, market

mechanisms, statistical accounting, social participation, and international cooperation. These policies and measures

have either direct or indirect impact on the implementation of China’s NDC.

The PECE model, which was co-developed by NCSC and the Renmin University of China (RUC), has been used in this

analysis. The PECE Model is an integrated energy system model and consists of three coupled sub-models: a

bottom-up technology sub-model of energy supply and consumption of an individual country (PECE-ES); a socio-

economic sub-model based on a production function approach (PECE-SE); and a quantitative energy service demand

sub-model (PECE-ESD). The model was developed using the General Algebraic Modelling System (GAMS) and was

designed for comprehensive, dynamic, nonlinear optimisation problems in the energy and climate policy fields.

According to our assessment, the expected results of the implementation of Chinese NDC by 2030 and contributions

of existing direct energy and climate policies are shown in Figure 1.

Figure 1: The latest assessment of the implementation of China's NDC. Source: PECE model. Note: CP here stands for

the current policies scenario, which considered all relevant policies until 2015; NAMA here stands for the National

Appropriate Mitigation Action (NAMA) plus scenario under which we considered all the targets and policies focusing

on year 2020 included in the 13th FYP; NDC here stands for a Nationally Determined Contribution (NDC) plus scenario,

30

which considers the maximum implementation of NDCs, including potential updating of ambitions. Unit here is 100

Mt CO2.

Policy implementation and goal completion before 2020 are better than expected.

▪ The CO2 emission intensity per GDP in 2017 dropped by more than 46% from 2005 levels (Figure 2), already

exceeding the Nationally Appropriate Mitigation Actions’ target of a 40% to 45% decrease by 2020, and the

reduction is expected to exceed 50% by 2020;

▪ The proportion of non-fossil energy in primary energy consumption has reached 13.8% in 2017;

▪ The installed capacity of renewable energy for power generation reached 635 million kilowatts (kW), and

the power generation reached 1.62 trillion kWh in 2017, accounting for 25.2% of the total power

generation;

▪ The forest stock volume has increased by more than 2.68 billion cubic meters compared with the volume in

2005, exceeding already the 2020 target;

▪ CO2 emission growth slowed down, even showing a slight decline in 2015 and 2016.

Figure 2: The KAYA identity of recent China’s CO2 emissions (decomposition of CO2 emissions into changes in

population, GDP per capita, energy intensity of GDP and carbon intensity of energy)

In the meantime, China has been carrying out preliminary studies and legislative drafting work and issued several

important planning and policy documents. For example, the National Measures for Climate Change (2014-2020), the

National Strategy to Tackle Climate Change, Measures for the Assessment of the Responsibility for Reduction of CO2

Emissions per Unit GDP, and the National Emission Trading Market Construction Plan Power Sector. The national,

local, and enterprise-level greenhouse gas emission statistical accounting system has been initially established. Low-

carbon provinces, cities, towns, districts, communities and other pilot demonstrations continue to be carried out:

the evaluation of the carbon emission intensity target responsibility assessment of the provincial people's

government was officially launched; every province in China (excluding Hong Kong, Macao, and Taiwan) has

completed the provincial climate change plan or low-carbon development plan; and industry, energy, construction,

transportation, forestry, public institutions and other sectors have issued their own plans, work programs or

implementation views.

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31

However, as assessed in Figure 1, most of the current policies are targeted for the year 2020 and are still not

enough to achieve China’s nationally determined contribution by 2030 (as indicated in the NAMA scenario). Around

1.5 Gt CO2 emission gap in 2030 still exists.

Where do we want to go? As the biggest developing country, China’s mitigation and development strategies should first of all be in line with the

global long-term climate and temperature goals set out in the Paris Agreement. Meanwhile, the 19th National

Congress of the Communist Party of China (CPC) clearly envisions the grand blueprint of China’s economy, society,

politics, culture and ecological civilisation construction by the middle of this century and makes a two-stage

development plan for the period from 2020 to the middle of this century. New ideas, new thinking and new strategies

were proposed, and the speeches delivered by President Xi Jinping on global climate governance set new

requirements for the formulation of China's mid- and long-term strategies to tackle climate change: (1) China’s

formulation of mid- and long-term strategies to address climate change needs to be adapted to the Reform of

Transition to a High-quality Development. New features and directions of the profound transformation of economic

development after China’s peaking should be incorporated. (2) China’s formulation of mid- and long-term strategies

to address climate change must be consistent with the Initiative to build a Beautiful China. Combating climate change

should not be limited to the single goal of controlling carbon dioxide emissions from energy consumption, but the

scope of coverage needs to be further expanded. China's mid- and long-term strategies could become the main

approach for coordinating and leading green development, solving serious environmental problems, and

strengthening the protection of ecosystems. Non-CO2, Land use and interlinkage with Sustainable Development Goals

(SDGs) shall be explicitly covered. (3) China’s formulation of mid- and long-term strategies to address climate change

needs to be in line with the Mission to build a Community with a Shared Future for Mankind. China’s mid- and long-

term strategies to address climate change shall make an important contribution in supporting international progress

towards the well-below 2 °C goal, and China’s experiences will likely offer a new option for other countries and nations

that want to speed up their development while protecting the environment.

Although China’s mid-century low-carbon strategy is still under development, one preliminary analysis shows that (as

indicated in Figure 3), if China wants to be consistent with carbon budget requirements of cost-optimal 2 °C scenarios

from IPCC AR5 for the period 2011-2050, which is around 280-400 Gt CO2 for China, China’s CO2 emissions need to

achieve a relatively low peaking around the year 2025, and achieve deep reductions after peaking, especially after

2030. The reduced cumulative CO2 emissions beyond the NDC scenario with limited reduction after peaking would

reach 85.5 Gt. The 2050 emission level would be around 25%–40% lower than the 2005 level. The China “low-carbon”

scenario is considered to be in line with the objective to limit global warming to well-below 2 °C, as cumulative Chinese

CO2 emissions are 332.6 Gt in the 2010-2050 period; this is well within the range projected by a number of global

models16 for cost-optimal scenarios assuming a global carbon budget of 1000 Gt CO2, considered equivalent to likely

below 2oC.

16 The range of China cumulative CO2 emissions in the 2010-2050 period from global models is [170-423] Gt in the

1000 Gt global carbon budget scenario McCollum et al., 2018 “Energy investment needs for fulfilling the Paris

Agreement and achieving the Sustainable Development Goals”, Nature Energy, doi: 10.1038/s41560-018-0179-z

[pure.iiasa.ac.at/15328].

32

However, for a likely chance to achieve the well below 2 °C target, i.e. limiting cumulative CO2 emissions to 300 Gt,

China’s CO2 emissions need to peak earlier, around 2020, or a little bit later than 2020, and be reduced by more than

65% by 2050 (relative to 2005 levels), based on the results from ERI’s IPAC model. As the 1.5 °C target is also included

in the Paris Agreement, more stringent emission reduction targets could also be considered as an option for China,

even though it will take some time to get politically feasible. ERI’s IPAC model results show that in the 1.5 °C scenario,

China’s CO2 emissions would be nearly zero by 2050, which is technically possible. IPAC modelling illustrated the

technical-economic feasibility of achieving near zero emissions, showing that China is currently still on the road toward

well-below 2 °C or 1.5 °C pathways.

Figure 3: CO2 emissions in alternative pathways

How do we get there? As mentioned before, well-implemented NDC targets with highest possible ambition are the basis for the country to

develop its long-term, mid-century low emission development strategy. In achieving so, as indicated in Figure 1,

enhanced policies relevant to both economic restructuring, development of low-carbon industry, transportation and

buildings, as well as decarbonisation of the energy supply system would be required. The contribution of major

decarbonisation pillars is shown in Figure 4. Energy intensity per GDP is required to be reduced from 0.92 tonnes of

coal equivalent (tce)/10000 Yuan in 2015 to 0.54 tce/10000 Yuan in 2030, a reduction of 41.3% due to efficiency

improvements and energy conservation on the demand side; further deep decarbonisation of electricity is projected

to result in emissions per kWh decreasing from 541gCO2/kWh in 2015 to 387 gCO2/kWh by 2030, and the share of

non-fossil fuels in total electricity generation is projected to reach 44.5% by 2030. Larger electrification of end-use

sectors is projected to lead to the share of electricity in final energy increasing from 21% in 2015 to 28% in 2030.

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Figure 4: Illustration of energy system transformation towards decarbonisation

The low-carbon transition in China not only means challenges, but also opportunities (Figure 5). The implementation

of policies will spawn the development of new clean energy technologies, new industries, and new paradigms. It will

also accelerate the cultivation of new growth points and new kinetic energy, and will effectively increase green

investment, green employment, resulting in economic, social, and environmental synergies, and forming a good

atmosphere for the implementation of China’s long-term low carbon strategy. According to our estimate, the new

green investment opportunities in China in mitigation would reach 32 trillion yuan from 2016 to 2030, 63 million

green jobs could be created during 2005-2030, and air pollutants would be reduced by around 80% compared to

2010 levels.

Figure 5: Benefits of China’s low-carbon transition17

The analysis shows that the most crucial move for China towards the low-carbon pathway is to decide as soon as

possible. If specific targets are imposed, the industry will respond and adapt accordingly, and R&D of clean energy

technologies will increase. In the last 10 years, several positive technology developments have happened in China,

such as solar PV, electric cars, power storage, LEDs etc. Based on IPAC’s results, additional investment needs in R&D

are not very high, but they should be directed to new mitigation technologies (such as CCS).

17 The calculation of green jobs here is based on the estimation of how many jobs may be needed per value-added of GDP or production for each sector according to the current statistical yearbook, and how much further value-added or production may be created or required under NDC scenarios. The calculation of co-benefits on air pollution is simply based on the emission factor per activity and activity levels under different scenarios.

A. Improvement in energy intensity per GDP— (tce/10000 Yuan)

B. Decarbonization of electricity—(gCO2/kWh)

C. Electrification in end use sector—Share of FE(%)

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Financial Needs in Implementing China’s NDC As estimated, in order to achieve the four mitigation targets and adaptation activities incorporated in China’s NDC

document submitted to the UNFCCC, between 2016 and 2030, China’s total financial needs will reach 55.95 trillion

yuan, an average of 3.73 trillion yuan per year, of which financial needs for mitigation and adaptation will reach an

average of 2.12 trillion yuan and 1.61 trillion yuan respectively (Figure 6). With the enhancement in mitigation

efforts and the increase in climate change risks, the average annual financial needs will increase accordingly, and will

increase from the annual average of 2.93 trillion in the “Thirteenth Five-Year Plan” to 3.76 trillion yuan in the

“Fourteenth five-year plan”, and to 4.45 trillion yuan for the "Fifteenth five-year plan". Compared with the existing

scale of financial investments, China will face a financial gap of 1.36 trillion yuan each year. For achieving the long-

term mitigation target as illustrated in the above “low carbon” scenario, the cumulative financial needs will further

increase to 139.24 trillion yuan between 2016 and 2050. It is necessary and urgent to increase and stimulate the

investment in climate change, not only to expand the scale of climate investments, but also to further adjust the

investment mode and structure of climate finance, with additional attention on areas such as non-hydropower

renewable energy, energy savings in the buildings and transportation sectors, smart grids and energy storage,

sustainable infrastructure, and disaster prevention and mitigation.

Figure 6: Financial needs flow in achieving China’s NDCs in trillion yuan (cumulative over 2016-2030)

35

European Union: Energy system restructuring towards a long-term low-emission pathway

Where are we? The EU18 has been an early mover in the global climate policy landscape and has ratified the Paris Agreement with its NDC target to reduce GHG emissions by at least 40% in 2030 from 1990 levels. The EU energy and climate policy framework has led to a rapid expansion of renewable energy sources (RES) in electricity generation and to a decline of CO2 emissions by about 20% from 1990 levels. In this context, the EU NDC implementation implies an acceleration of climate policy efforts in the period after 2020 and fits in a pathway to achieve the EU’s long-term objective of at least 80% reduction in domestic GHG emissions by 2050. The EU’s primary energy mix is still dominated by fossil fuels with oil accounting for 34%, gas for 23% and coal for 17%, while the share of RES has increased from 7% in 2000 to 14% in 2017. The main sources of emissions are energy-related CO2 emissions (which account for 77% of total GHG emissions) while non-CO2 emissions represent 18% and non-energy related CO2 emissions 5%. The power generation and transport sectors are the major emitting sectors accounting for 62% of EU CO2-energy emissions in 2015 mainly driven by high transport activity (which is still largely dominated by oil products) and the electrification of the EU economy and energy demand (buildings, industries).

Recently, the European Commission (EC) presented the “Clean Energy for all Europeans19”, a package of measures to keep the EU competitive in the context of clean energy transition. The proposed policies and legislation are aligned with the EU NDC commitments to the Paris Agreement and the 2030 policy objectives regarding GHG emissions reduction, renewable energy and energy efficiency. European climate policy can be broadly classified into two categories: (1) the EU Emission Trading System (ETS), the EU-wide cap-and-trade system covering power generation, energy-intensive industry and aviation, and (2) policies targeting non-ETS sectors (buildings, transport, agriculture) including Member State-specific targets for emission reduction (Effort Sharing Decision). The inclusion of all sectors in EU’s climate action sets a good practice GHG reduction policy. To reach the NDC target, both policy pillars need to be strengthened after 2020; more specifically, in March 2018 a revision of the EU ETS for the period from 2021 to 2030 was adopted encompassing three key elements: doubling the Market Stability Reserve (MSR) feeding rate in the 2019-2023 period to reduce surplus of allowances; increasing the ETS cap annual reduction rate to 2.2% from 2021 onwards; and invalidating allowances in the MSR exceeding the number of allowances auctioned in the previous year. These measures contribute to achieving the 2030 ETS emission reduction target of 43% below 200520. The Effort Sharing Decision21 on GHG emissions from sectors not covered by the EU ETS was adopted in May 2018 and would lead to an EU-wide emission reduction of 30% by 2030 relative to 2005; this will be achieved by binding emission limits for each EU Member State by 2030. The policy framework is also complemented with sector-specific measures including the adopted proposal for amending the Energy Efficiency Directive and the Energy Performance of Buildings Directive22, the regulation to integrate GHG emissions and removals from LULUCF23 into the 2030 Climate and Energy policy framework, and the EC proposal for setting CO2 performance standards in light- and heavy-duty vehicles24. In 2018, the Energy Union Governance Regulation was agreed, which sets out interim targets towards achieving the

18 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/ 19 https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/clean-energy-all-europeans 20 European Commission (2015) Impact Assessment: Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC. European Commission, Brussels, Belgium 21 https://ec.europa.eu/clima/policies/effort/proposal_en 22 Council of the European Union (2017a) Energy efficient buildings – Presidency secures provisional deal with European Parliament 23 Land Use, Land Use Change and Forestry 24 https://ec.europa.eu/transport/modes/road/news/2018-05-17-europe-on-the-move-3_en


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2030 goals of 32% renewable energy and 32.5% energy savings25. Recent analyses show that current actions and policy initiatives are not sufficient to meet the Paris Agreement long-term objectives26, so strengthening of climate ambition is needed towards acceleration of energy system transformation and clean technology uptake. On the other hand, several positive changes have already been observed in the EU, including the implementation of GHG reduction policies at the EU and national-level, the rapid reduction in RES costs (mainly solar PV and wind power), the reduced CO2 emissions and import dependence, the employment opportunities in RES activities (wind energy, bioenergy, PV installation27), and the significant progress made by several EU Member States towards clean energy transition.

This analysis is based on the PRIMES model describing in detail the European energy system and markets on a country-

by-country basis28. PRIMES simulates a multi-market equilibrium solution for energy supply and demand by explicitly

calculating prices which balance demand and supply in each sector, while the modelling of agents’ behaviour is

founded on micro-economics and considers technical and engineering constraints. Two scenarios are explored in the

current study, i.e. the Reference (including already implemented energy and climate policies) and the low-carbon

scenario assuming strong climate policy action by 2050. The analysis builds on recent modelling improvements

including enhanced representation of hydrogen, synthetic fuels, energy storage and innovative options towards deep

decarbonisation and on PRIMES model results from the ASSET project29.

Where do we want to go? The EU is on track to achieve its 2020 emission target and is currently legislating policies to reduce GHG emissions by

at least 40% in 2030. The policies, legislative instruments and support programmes are expected to put the EU on a

trajectory compatible with its NDC, but further measures are needed after 2030 to ensure consistency with the Paris

Agreement goal of carbon neutrality in the second half of the century (achieve a balance between emissions and

removals of GHGs by human activities). This transition will require deep transformational change to achieve full

decarbonisation of the energy system, i.e. going beyond the 80% emission reduction in 2050. In July 2018, the

European Commission (EC) launched a public consultation on a strategy for long-term GHG emissions reduction

reflecting on a vision for a modern low-carbon economy for all Europeans30. Recently, eleven EU Member States

pledged to meet the Paris Agreement’s goal of achieving carbon neutrality in the second half of the century through

the Carbon Neutrality Coalition31. On 28 November 2018, the EC presented its strategic long-term vision for a

prosperous, modern, competitive and climate-neutral economy by 2050. The strategy shows how Europe can lead

the way to climate neutrality by investing into realistic technological solutions, empowering citizens, and aligning

action in key areas such as industrial policy, finance, and research – while ensuring social fairness for a just transition.

Following the invitations by the European Parliament and the European Council, the Commission's vision for a climate-

neutral future covers nearly all EU policies and is in line with the Paris Agreement objective to limit the global

temperature increase to well below 2 °C and pursue efforts to limit it further to 1.5 °C32.The Commission’s strategic

vision is an invitation to all EU institutions, the national parliaments, business sector, non-governmental organisations,

cities and local communities, as well as to the citizens, to participate in ensuring that the EU can continue to show

leadership in low-carbon transition and encourage other international partners to do the same. This EU-wide informed

25 The EC anticipates that emission reductions would go beyond 40% below 1990 in 2030, if these new targets are met http://europa.eu/rapid/press-release_SPEECH-18-4236_en.htm. The current analysis does not consider these targets. 26 European Climate Foundation, Net Zero by 2050: from whether to how, zero emission pathways to the Europe we want, https://europeanclimate.org/wp-content/uploads/2018/09/NZ2050-from-whether-to-how.pdf 27 https://ec.europa.eu/energy/en/news/over-one-million-jobs-renewable-energy 28 The analysis does not include emissions from the Land Use, Land Use Change and Forestry sector. 29 ASSET project, https://ec.europa.eu/energy/en/studies/asset-study-sectorial-integration 30 https://ec.europa.eu/clima/news/public-consultation-strategy-long-term-eu-greenhouse-gas-emissions-reduction_en 31 https://www.euractiv.com/section/climate-environment/news/europes-2050-climate-strategy-takes-shape/ 32 2050 long-term strategy, Available at: https://ec.europa.eu/clima/policies/strategies/2050_en

https://ec.europa.eu/clima/policies/international/negotiations/paris_en

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debate should allow the EU to adopt and submit an ambitious strategy by early 2020 to the United Nations Framework

Convention on Climate Change (UNFCCC) as requested under the Paris Agreement.

Various options for decarbonisation and their implications for technology choices and socioeconomic factors are

worth to be examined, to ensure that climate policy creates multiple co-benefits (e.g., reducing air pollution and

improving health), but avoids generating adverse side-effects (e.g., deteriorating access to energy or raising

affordability concerns to the low-income classes). The setting of firm and clear policy directions is required to ensure

that near-term choices are aligned with long-term goals, i.e. to ensure sufficient investment in clean energy

technologies, and to avoid lock-in to carbon-intensive technologies, processes and infrastructure.

The low-carbon transition pathway requires a significant reduction in GHG emissions towards close to zero net

emissions by mid-century. The EU “low-carbon” scenario presented here is considered to be in line with the objective

to limit global warming to well-below 2 °C, as cumulative EU CO2 emissions are 93 Gt in the 2010-2050 period; this is

well within the range projected by a number of global models33 for cost-optimal scenarios assuming a global carbon

budget of 1000 Gt CO2 considered equivalent to likely below 2 °C and it is also in line with global models’ scenarios

assuming a global carbon budget of 400 Gt CO2 over 2010-2100 (equivalent to 66% probability to limit global warming

to 1.5 °C). The EU low-carbon scenario leads to a 95% reduction in CO2 emissions from 1990 levels implying a near

complete decarbonisation of the energy system by 2050. All sectors need to contribute to the low-carbon transition

according to their technological and economic potential, with an almost complete decarbonisation of both energy

supply and demand (Figure 1). The energy supply and transport sectors are the major contributors to emission

reductions, driven by extensive expansion of wind and solar PV in power production and large-scale deployment of

electric vehicles, hydrogen and advanced biofuels in transport modes. The industry and buildings sectors have high

CO2 abatement potential, through accelerated energy efficiency, electrification and reduced carbon intensity of

energy use (i.e. through low-emission energy forms such as hydrogen and clean synthetic fuels). Closing the gap

towards the long-term decarbonisation pathway can be achieved with a renewed and more ambitious NDC

(strengthening action in the medium term)34; suitable near- and long-term climate strategies targeting the key

emitting sectors; appropriate carbon pricing mechanisms and other policy measures at the EU, national and sub-

national level; and appropriate finance to facilitate the uptake of clean energy technologies by consumers and

businesses.

33 The range of EU cumulative CO2 emissions over 2010-2050 from global models is [91-111] Gt in the 1000 Gt global carbon budget scenario and [90-102] Gt in the 400 Gt global carbon budget scenario, for additional information: McCollum DL, et al. (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z. 34 http://europa.eu/rapid/press-release_SPEECH-18-4236_en.htm

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reference and low-carbon scenarios by sector (energy supply, industry, residential and commercial buildings, transport,

non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with 1000 GtCO2, i.e. well-below 2 °C).

Non-energy CO2 includes emissions from industrial processes.

How do we get there? Several studies35 have identified the key role of energy efficiency (in energy demand sectors), expansion of renewable

energy and fuel switching away from carbon-intensive options and towards electricity and bioenergy in end-use

sectors to achieve large cuts in GHG emissions. RES expansion is driven by significant cost reduction due to accelerated

technical progress (already visible in solar PV and wind power), while transport decarbonisation requires large-scale

deployment of electric cars and increased use of advanced biofuels in non-electrifiable transport modes. The role of

electricity is central in the low-carbon transition; electrification of final energy demand (both in stationary and

transport uses) complemented with decarbonised power supply plays a critical role for the cost-efficient low-carbon

transition (Figure 2). Power generation is projected to undergo a profound restructuring towards the dominance of

variable renewables, with the share of solar PV and wind increasing from 12% in 2015 to 58% in 2050. In parallel, gas-

fired capacities are required for balancing and reserve to complement expansion of intermittent RES. In the longer

term, the massive RES deployment in the electricity system is supported by development of batteries, hydro pumping

and chemical energy storage (through power-to-gas and hydrogen technologies). To achieve ambitious GHG emission

reduction targets, the low-carbon scenario includes several policy measures:

▪ Strengthening of the ETS cap in power generation and energy intensive industries ▪ Measures for accelerating energy efficiency in the buildings sector ▪ Regulatory emissions standards for Light Duty Vehicles aiming at low emissions mobility ▪ Promotion of Best Available Techniques in industry ▪ Facilitation of renewables’ deployment in energy supply and demand sectors. ▪ Facilitation of expansion of new innovative decarbonisation options (i.e. electricity storage, power-to-X,

Hydrogen, CCUS) The large-scale adoption of these mitigation options and policy measures would lead to GHG emissions reduction of

about 80% in 2050, leaving unabated emissions from the transport, industry and building sectors. To achieve further

35 EC Energy Roadmap 2050, Capros et al., 2014, European decarbonisation pathways under alternative technological and policy choices: A multi-model analysis, https://www.sciencedirect.com/science/article/pii/S2211467X13001053

https://www.sciencedirect.com/science/article/pii/S2211467X13001053


39

GHG reductions, it is necessary to further augment the intensity of sectoral measures and achieve a higher level of

sectoral integration mainly through the deployment of various electricity storage options, hydrogen and clean

synthetic fuels (next section).

Figure 2: Energy system transformation towards decarbonisation (key transition indicators). Numbers in graph indicate


The transition would entail several challenges to all sectors that need to decarbonise, i.e. energy-related costs for

households and firms shift to CAPEX, away from OPEX, posing challenges to low income classes facing financial

barriers. On the other hand, significant opportunities may also emerge as the energy transition would improve security

of energy supply, air quality and human health. The energy efficiency gains, together with the shift towards RES, would

reduce the need for imported fossil fuels and lead to a large decline in the EU energy import bill. The low-carbon

transition can bring a wide range of additional benefits for EU citizens (clean air, less traffic and city congestion,

avoided climate damages), better living environments, reduced energy import bill, and increased resilience of the EU

economy. The model-based analysis supports the feasibility, technically and economically, of the NDC targets for 2030

and the long-term low-carbon transition with opportunities for strengthened climate action through low-cost options,

like coal phase-out, energy efficiency measures and RES expansion in electricity production. The EU Climate and

Energy policy framework can facilitate the effective market coordination between consumers, policy makers,

technology and infrastructure developers towards the cost-efficient decarbonisation of the European economy.

The role of electricity, hydrogen and clean gas towards deep decarbonisation Major low-carbon roadmaps produced so far (EC, 2012, Capros et al., 2014, Capros et al., 2016) propose electrification

as a key pillar of decarbonisation. Power generation produced with near-zero carbon options allows electricity to

become a carrier that helps reducing emissions in the energy demand sectors, notably in heating energy uses and in

mobility. Three main options can reduce carbon emissions in power generation, namely renewables, nuclear power

and carbon dioxide capture from combustion plants for permanent storage (CCS). The experience so far suggests that

at least in Europe both nuclear and CCS have a limited potential due to licensing restrictions, limited social and political

acceptance, and high costs. Therefore, the carbon-free power system would be largely dominated by variable

renewables (VRES) in the long-term, as dispatchable renewables (hydro and biomass) have a limited potential in most

40

EU countries; this is a challenge if the system cannot store significant amounts of electricity. In this context, various

electricity storage options are included in the analysis, which use electricity to produce a means that can later produce

electricity again. Such means are chemical substances in batteries, air in compressed air storage, water in hydro-

pumping storage and hydrogen or hydrocarbons (or even heat) produced by the so-called power-to-X technologies.

The storage systems differ regarding the periodicity of charging and discharging, the power-to-X storage being the

most versatile as it can support from daily up to seasonal periodicity. Only the power-to-X technologies have the

feature of being able to produce a fuel that energy demand sectors can consume (i.e. synthetic gas), in addition to

the production of a fuel used as a means of electricity storage. As the fuels used in final demand are gaseous or liquid

and can be stored in conventional storage systems, the production of these fuels from RES-based electricity can take

place at times that are suitable for managing the fluctuations of the electricity system. Therefore, power-to-X can

provide electricity storage directly (the so-called chemical storage) and indirectly, to the extent that the distribution

systems can store final demand fuels produced from power-to-X.

Transport and heat decarbonisation are key ingredients towards the low-carbon transition, but are challenging

without structural innovations. Energy efficiency improvements and electrification of final energy uses would reduce

CO2 emissions, but the deployment of hydrogen and clean synthetic fuels would be required to enable full

decarbonisation complemented with innovative technologies providing flexibility and storage services. Assuming high

learning and increased social acceptance for these options in the long-term, the low-carbon scenario (presented

above) would have the following characteristics (Figure 3):

▪ Mix of hydrogen up to 15% in the gas distribution grids, together with bio-methane and clean synthetic

methane (produced from hydrogen and CO2 captured from the air); the share of each option (in the

demand of gaseous fuels) reaches 15-20% in 2050;

▪ Use of electrolysis-produced hydrogen to feed fuel-cell powertrains in large vehicles (trucks, buses,

etc.) and long distance travelling cars coupled with hydrogen refuelling infrastructure hubs;

▪ Use of hydrogen directly in high-temperature furnaces to decarbonise industrial processes which are

difficult to electrify, including in iron and steel, the chemical industry and other sectors;

Power-to-H2 technologies would need to be developed to provide electricity storage services at a large-scale, needed

to maximise the use of renewables, and produce hydrogen and clean methane used by consumers. The

decarbonisation of transport is achieved through a combination of mitigation options; electric vehicles are massively

deployed in the passenger car stock, battery-charged vehicles combined with fuel cell powertrains are used for heavy-

duty and high mileage travelling vehicles, while advanced biofuels are mainly used in aviation and maritime sectors.

Despite the significant increase in the volume of electricity required to produce hydrogen and clean synthetic fuels,

electricity prices would not increase owing to the market integration and the interconnected energy system allowing

access to remotely located renewables, flexibility provision, and an effective sharing of balancing resources across EU

countries. The hydrogen-based storage of electricity would contribute to smoothing the load curves, maximising RES

capacity factors, and to shifting RES-based electricity to time periods when renewable power production is in deficit.

Hydrogen, clean synthetic gas and bio-methane would cover almost half of total consumption of gaseous fuels by

2050, with natural gas (equipped with CCS) mainly used in power generation and industrial applications. Energy

security has long been a major concern in the EU as most Member States rely to a large extent on imported fossil

fuels. The low-carbon pathway reduces EU’s energy import dependence significantly, from 56% in 2015 to 27% in

2050, driven by the large-scale expansion of domestic renewable sources (including advanced biofuels) and the

domestic production of gaseous fuels from electricity and hydrogen.

41

Figure 3: Deployment of hydrogen and clean gas in EU deep decarbonisation scenario in 2050

42

India: Decarbonisation Pathways - Options & Implications36

Where are we? India37 is one of the fastest growing developing economies. Housing about 17.5% of the total world population, it

faces several developmental challenges such as poverty alleviation, low Human Development Index (HDI) and

standards of living, lack of access to basic necessities such as electricity and other clean and modern fuels, proper

housing, potable water etc. Furthermore, large areas of the country are exposed to natural disasters, which have been

increasing in frequency over the years. Given that much of India’s energy infrastructure is yet to be built, it is important

to plan the development meticulously to grow in a sustainable manner.

India ratified its Nationally Determined Contribution (NDC) targets for 2030 to the United Nations Framework

Convention on Climate Change (UNFCCC) with an aim to combat climate change while ensuring that the country is

able to meet development aspirations. In this context, India has pledged to reduce the GHG emission intensity of GDP

by 33-35% from 2005 levels, increase forest cover by 2.5-3 GtCO2e and increase the share of non-fossil power

generation capacity to 40% conditional on provision of international finance by 2030, among other qualitative targets

on developing mitigation and adaptation capacities. India is yet to submit its national mid-century strategy to the

UNFCCC process.

India is actively implementing policies and measures on multiple fronts to grow on a path aligned with the idea of

“economic development without destruction”. Some of these policies and measures include Perform Achieve Trade

(PAT), Unnat Jyoti by Affordable LEDs for All (UJALA), and Standards & Labelling, directed at improving energy

efficiency; ambitious renewable energy targets and clean coal technology adoption in the power sector; Bharat Stage-

VI (BS-VI), National Electric Mobility Mission (NEMM), and the National Policy on Biofuels in the transport sector38.

This analysis is based on TERI’s MARKAL-India energy system model which is a dynamic least cost optimisation model

with a detailed representation of the energy sector of India. The model follows a rational expectation hypothesis for

intertemporal optimisation.

Where do we want to go? Figure 1 shows the emissions trajectory of four energy scenarios for India, namely the Reference and NDC scenarios,

and the 2 °C compliant and 1.5 °C compliant scenarios39. The cumulative carbon budgets for India between 2010 and

36 Contributors: 1) Dr Ritu Mathur, Director of Centre for Integrated Assessment & Modelling, The Energy and Resources Institute (TERI), New Delhi, India and 2) Swapnil Shekhar, Research Associate with Centre for Integrated Assessment & Modelling, TERI, New Delhi, India. For any queries related to this brief, please reach out to Mr. Shekhar at [email protected]. 37 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/ 38 PAT is a policy directed at energy improvement in industries, UJALA is aimed at deeper penetration of LEDs to replace the conventional and inefficient lighting systems, Standards & Labelling programme deals with labelling of appliances on their energy efficiency potential, India has an ambitious renewable energy target of 175GW of renewables (100GW solar, 60GW wind, 10GW from biomass and 5GW from small hydro systems), policy on clean coal technology adoption aims at shifting from subcritical plants to super critical and ultra-supercritical coal based thermal power plants in India, BS-VI is aimed at emissions reduction from the vehicles, NEMM targets to increase the penetration of electric vehicles in India and the National Policy on Biofuels is aimed at enhancing domestic capacity of biofuel production in India. 39 These scenarios were developed as part of the CD-LINKS project funded under the H2020 programme. The 2 °C and 1.5 °C compliant scenarios assume that by 2030, India’s NDC targets are achieved and further mitigation actions are undertaken only beyond 2030. These two scenarios were an attempt to align India’s cumulative carbon budget between 2010 and 2050 with the cost-optimal budget range as provided by the global Integrated Assessment Models (IAM) of the consortium. The cumulative global budget used for 2 °C and 1.5 °C is 1000Gt and 400Gt respectively. It

mailto:[email protected]


http://www.cd-links.org/

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2050 are 277GtCO2, 251GtCO2, 226GtCO2 and 189GtCO2 under the four scenarios respectively. The budget for the 2

°C scenario is considerably higher than the range projected by the global Integrated Assessment Models based on

cost optimality, which is 88-117GtCO2 for the 2 °C scenario40. This difference arises primarily due to the assumption

of inter-temporal and interregional cost-optimisation of global models (i.e. a universal carbon tax is applied across all

countries and sectors). This leads to relatively larger allocation of mitigation efforts to the developing countries where

much of the infrastructure is yet to be built. Another reason for the disparity is that TERI’s MARKAL model assumes a

higher economic growth rate (based on India’s development aspirations41) relative to the global models that assume

a slightly lower growth rate for India (based on the SSP2 ‘Middle of the Road’ scenario). For brevity, however, the

scenarios presented here are still referred to as `2 °C` and `1.5 °C`.

Figure 1: CO2 Emissions Trajectory (GtCO2): Total (upper graph), Demand (bottom left) and Supply (bottom right)

Emissions (Source: TERI model-based analysis)

The total range of reductions in carbon dioxide emissions in 2050 between Reference and the 2 °C scenario is 4.3

GtCO2, of which 0.9 Gt come from the demand side transformations (industry, transport and buildings), whereas 3.4

is worth noting here that the budget range for India will change if different effort sharing principle is used instead of cost optimal carbon budget allocation or if the global carbon budget changes. 40 Similarly, the cumulative budget for the 1.5 °C scenario is also considerably higher than the range projected by the global IAMs based on cost optimality, which is 32-91 GtCO2. 41 This growth rate is in line with the target set by the Government of India in its NDC submission. The growth rate assumed here is 8.3% until 2030 and 7% thereafter.

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Gt come from the supply side low-carbon transition. Similarly, between the INDC and 2 °C scenario, the total emission

saving potential is 2.5 GtCO2 of which 2.0 Gt come from the supply side (Figure 2). While the largest potential comes

from the power generation sector, the highest emissions reduction potentials in the demand sectors are in the

industry and transport sectors. It is worth noting here that the emissions of the residential & commercial sector are

reflected in the power sector because energy consumption in buildings is largely based on electricity.

**“Buildings” stands for Residential and Commercial sector, which includes appliances and energy required for cooking in the

Residential sector and commercial buildings in the Commercial sector.

Figure 2: CO2 emissions in 2015 and by 2050 in the NDC scenario (NDC), emission reductions between the NDC and

low-carbon scenario (2 °C) by sector (energy supply, industry, residential and commercial buildings, transport, non-

energy CO2), and 2050 emissions in the low-carbon scenario (consistent with 1000 GtCO2, i.e. 2 °C, starting from the

2030 NDC emission levels). Non-energy CO2 includes emissions from Industrial Processes.

The emission trajectory of India depends on certain development needs and aspirations, which directly impact the

energy system. These include economic growth, urbanisation, uniform access to affordable and clean energy, uniform

access to mobility services and sustainable stimulation of Indian industries.

In the quest of providing uniform access to affordable and clean energy to all, the electricity demand in the country is

expected to increase rapidly, despite significant strides in energy efficiency. Figure 3 presents some of the

decarbonisation indicators for the 2 °C scenario. The significant fall in share of renewables in primary energy results

from increased replacement of traditional biomass (which is used as a fuel for cooking in residential sector) by

liquefied petroleum gas (LPG) and piped natural gas (PNG).

Figure 4 illustrates the capacity needed to generate electricity and the corresponding generation of electricity across

the four scenarios in 2030 and 2050. The high decarbonisation potential of the power generation sector comes from

the assumption that renewable electricity coupled with storage will be commercially viable at scale by 2030, thereby

overcoming the intermittency challenges (for wind and solar power). However, the adoption of renewables has to be

complemented with grid improvements to handle higher share of variable renewables in the electricity. The task

45

becomes more challenging because of the sheer scale of implementation that is required for India. Another important

issue here is the management of the existing fossil fleet. As is evident from panel (a) of figure 4, coal-fired electric

capacity is projected to decline by nearly 40% in the 2 °C compliant scenario relative to Reference in 2050. This implies

that even the relatively new and more efficient coal power plants will need to be pre-maturely retired in this scenario.

The analysis shows that around 40% of the more efficient coal based thermal power plants remain unused in the 2 °C

scenario. It is also clear from Figure 4 that investment in gas-based plants needs to be critically assessed because the

contribution of natural gas appears to decline as the level of mitigation actions deepens - as high as 65% of the gas

based thermal power plants remain unutilised in the 2 °C scenario.

Figure 3: Decarbonisation indicators for the 2 °C scenario (starting from NDC emission levels in 2030). Numbers in

graph indicate change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

The two sectors in the demand side that offer the largest mitigation potential are industry and transport. In the

industrial sector, the PAT-I cycle successfully realised the benefits of low hanging fruits in seven energy-intensive

industrial sub-sectors42. However, achieving higher levels of energy efficiency improvement will become increasingly

challenging and cost-intensive as well. In this regard, Micro, Small and Medium Enterprises (MSME) present a unique

case because apart from investment barriers, they also lack the advantage of scale which prohibits them from moving

to efficient processes and technologies. Thus, in the industrial sector, not only cost is likely to become a deterrent,

but implementation of disruptive processes like deep electrification might also require hand-holding and efforts

towards capacity building to reap the benefits of these changes.

The transport sector is one of the fastest growing sectors in terms of energy consumption, as incomes of households

increase. While on the one hand increasing income of households leads to large growth of private vehicles, on the

other hand inefficient public transportation system is failing to support the increasing demand for mobility. The Indian

transport system is locked into conventional fossil fuel-based vehicles, especially the road-based freight segment,

42 PAT-I covered seven industries viz. Iron & Steel, Cement, Aluminum, Fertiliser, Paper & Pulp, Textile & Chlor-Alkali in industrial sector and Thermal power plants in power sector

46

which has no commercially viable alternative to diesel. Electrification of vehicles can serve the purpose of tail-pipe

emission reduction (also given that the power system would be deeply decarbonised by 2050) but issues related to

associated battery recharging infrastructure and large-scale manufacturing are currently prohibiting the penetration

of electric vehicles (EVs). In the interim period, Compressed Natural Gas (CNG) can bridge the transition between

conventional fossil fuels (gasoline/ diesel) and electricity, with EVs projected to be massively deployed in the 2 °C

scenario after 2030. However, this can imply high risks for India locking itself into infructuous and carbon-intensive

infrastructure.

Figure 4: Electricity generation capacity (upper graph) & Electricity Generation (bottom graph)

How do we get there? As enumerated in the previous section, the three key strategies towards a 2 °C or 1.5 °C world are: increased

penetration of renewables in the energy supply sector, end-use electrification and energy efficiency in transport,

industries and buildings.

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**These costs do not reflect the additional investment required to develop the associated infrastructure like charging stations for

EVs, grid strengthening to handle increased share of variable renewable electricity etc.

Figure 5: Energy System (left graph) and (Undiscounted) Investment Costs (right graph) of the alternative scenarios

The total discounted energy system cost (at a discount rate of 10%) for the period 2010 to 2050 increases by 2.8%

between Reference and NDC and 3.3% between Reference and 2 °C compatible scenario43. A key point to note here

is that these strategies highly depend on the development of associated infrastructure whose cost is not reflected in

Figure 5 (i.e. charging stations for EVs, grid strengthening to handle increased share of variable renewable electricity,

etc.).

The investment requirements of each of the four scenarios are presented in Figure 5(b). The increase in investment

between Reference and NDC44 scenario in 2031 is only 6%. However, by 2051, the investment requirements increase

by 24% in the 2 °C scenario relative to the Reference scenario. The huge requirement in investment towards the 2 °C

scenario is considered a major challenge towards realisation of the low-carbon transition pathways. Furthermore, if

India’s dependence on imports of materials and technologies increases in the higher mitigation scenarios, the

uncertainty on costs may also increase as trade policies across countries/ regions change.

The mobilisation of funds for financial assistance is one of the conditions on which India’s NDC relies. The NDC target

no. 4 45 relies on technology transfer and Green Climate Fund (GCF) whereas target no. 7 46 seeks additional

international funds to successfully adopt and implement mitigation and adaptation strategies. While it is difficult to

assess whether the funds are going towards the development of clean technologies or towards the broader

development agenda, the available finance under current conditions is definitely lower than what is needed for the

low-carbon transition.

43 Interestingly, the overall discounted system cost for 2010-2050 is nearly the same for the Reference scenario and the 1.5 °C compatible scenario for India. This is because the 1.5 °C scenario heavily relies on renewables, which lead to reduced fuel purchase expenditure (relative to Reference). Even though the upfront cost of clean energy technologies is higher relative to fossil fuels, the fuel cost declines dramatically, which leads to only a 0.1% increase in the total energy system cost in the 1.5 °C scenario (relative to Reference). 44 By design of the scenarios (India’s NDC targets are achieved in all scenarios in 2030 and further mitigation actions are undertaken only beyond 2030), the investment cost in 2031 is (roughly) the same across the NDC, 2 °C and 1.5 °C scenarios. 45 “To achieve about 40% cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030 with help of transfer of technology and low cost international finance through Green Climate Fund (GCF)” 46 “To mobilise domestic and new & additional funds from developed countries to implement the above mitigation and adaptation actions in view of the resource required and the resource gap”

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When it comes to technology transfers, the issues associated with the Intellectual Property Rights and other legal

aspects need to be resolved. Consideration needs to be made on the mode of technology transfer that should be

adopted in India. Whether India should import a manufactured product, or import the capacity to produce the

technology within the country, or be involved in R&D activities jointly with other countries needs careful assessment

to determine the most appropriate mode for India. However, an issue that resonates within each of these modes is

the need for capacity building. Development of new and clean energy technologies needs to be associated with an

innovative supply chain mechanism especially given that changes in India need to be adopted at massive scale. While

some strategies and business models such as mass procurement of LEDs to reduce their unit cost and the PAT scheme

for energy efficiency in industrial sectors have been successful, similar innovations are needed in order to make clean

energy technologies affordable to the wider public.

The next step in this process is to ensure that entities are willing and able to adopt these technologies and reap the

associated benefits. The former calls for certain behavioural changes by energy consumers (for instance in case of

electric cooking) and elimination of markets for second hands products (to improve the energy efficiency of the stock

of technology) whereas the latter calls for capacity building, even handholding to equip the users with the appropriate

information to be able to use these advanced technologies.

This entire framework of new, clean and energy-efficient technologies has a direct bearing on the existing technology

and infrastructure and the bridging technologies (such as CNG). The biggest challenge that India faces right now is to

efficiently manage the existing fossil fleet and carbon-intensive infrastructure; the large-scale shift to renewables is

likely to generate stranded assets (of coal-based power plants), thereby increasing the social cost of renewable

electricity. The transition needs to be carefully planned to maximise the use of current assets and minimise further

lock-ins.

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Indonesia: Climate Policies, NDC and low-carbon pathways

Where are we?

Indonesia’s47 GHG emissions mainly come from the Land Use, Land Use Change and Forestry (LULUCF) and energy

sectors that respectively contribute 48% and 34% of national GHG emissions (TNC, 2017)48. In the energy sector,

currently, Indonesia has an ambitious target for construction of additional 56 GW power generation capacity by 2025

(RUPTL2010-2019, and update RUPTL 2018-2027)49, of which 56% is coal-based while renewable energy accounts for

only 23%. In the forestry sector, Indonesia implements a program called REDD+ (reducing emissions from

deforestation and forest degradation and the role of conservation, sustainable management of forests and

enhancement of forest carbon stocks in developing countries). In implementing the program, Indonesia is coping with

land use management and forest and peat fire problems that could jeopardise the success of the REDD+ program.

In the meantime, Indonesia is also committed to mitigate GHG emissions to achieve Indonesia’s Nationally

Determined Contribution (NDC) target, i.e. 29% below its baseline emissions in 2030 under the unconditional scenario

and a further reduction up to 41% under the conditional scenario. Currently, Indonesian economic growth is low,

although the country is not in recession; therefore, the mitigation programs would be difficult to be implemented,

especially for mitigation actions that need high investment. Indonesia’s challenge is to develop a strategy that will

lead to low-cost mitigation and at the same time will increase economic growth, which eventually helps to achieve

the Indonesian Sustainable Development Goals (SDGs). In addition to low economic growth issues, this situation is

aggravated by the fact that Indonesia is facing currency crises, while many mitigation actions require imported

technologies.

The above recent situations warrant the need to review the existing mitigation plans under Indonesia’s NDC and, if

necessary, to revise mitigation pathways while maintaining the committed GHG emissions reduction target of the

NDC. For example, the NDC target of GHG emissions from the energy sector was established using a relatively high

economic growth scenario of around 6% annually (up to 2030). With the recent annual economic growth of around

5%, the Government of Indonesia (GoI) may need to scale down its energy infrastructure development plan in

accordance with the lower than projected energy demand growth. Recent development shows the GoI has responded

to recent low energy demand growth and currency crisis by postponing some power plant projects. The low energy

demand will lead to GHG emissions in 2030 that would be lower than previously projected. As a consequence, the

national mitigation action plan has to be revised in line with the new development of the energy sector. The low

energy demand will result in lower GHG emissions from the energy sector under a baseline scenario. Therefore, the

GHG emissions of the energy sector under the mitigation scenario for achieving the specified GHG emission reduction

target of Indonesia’s NDC should be lower than previously projected. To achieve the lower GHG emission level under

the mitigation scenario, the energy sector needs to deploy technologies that lead to deeper carbon emission cuts

compared to previous selected technologies.

Submitted NDC for 2030

The GoI considers climate change mitigation and adaptation efforts as an integrated concept that is essential for

building resilience in safeguarding food, water and energy resources. Indonesia also views its development pathway

towards low-carbon and climate resilience as consistent with its commitment to contribute to the global effort for

47 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/ 48 MoEF, 2018. Third national Communication under the United National Framework Convention on Climate Change. Ministry of Environment and Forestry, Jakarta 49 PLN. National Plan on Electricity Power Generation for 2010-2019 & 2018-2027 (Rencana Umum Pembangkit Tenaga Listrik Nasional tahun 2010-2019 and 2018-2027). Electricity State Company, Jakarta.


50

achieving Sustainable Development Goals (SDGs). These global agendas will be contextualised given Indonesia’s

unique archipelagic geography, and its position within the global ocean conveyor belt (thermohaline circulation) and

its extensive tropical rainforests, with their high biodiversity and high carbon stock value. Indonesia is also a nascent

yet stable democracy and the fourth most populous country in the world, with the largest generation of young people

and the largest working-age population in its history.

Mitigation actions in Indonesia are carried out under the framework of the Paris Agreement, which was ratified in October 2016. Under the Paris Agreement, Indonesia’s Nationally Determined Contribution (NDC) was submitted, with a target for GHG emission reduction in 2030 of29% below the baseline as unconditional commitment and up to 41% below the baseline as conditional commitment. The GHG emission level under the baseline scenario is projected to be approximately 2.868 GtCO2e in 2030. The baseline (BaU) is a national development path that does not consider the mitigation actions and policies, while unconditional commitment (CM1) is a mitigation scenario that considers sectoral development targets, and conditional commitment (CM2) is an ambitious scenario that considers additional international support for finance, technology transfer and development and capacity building being available. The details of Indonesia’s NDC targets for each sector of GHG emission sources is shown in Table 1.

Table 1 GHG emission reduction target of Indonesia’s NDC by sector (in Mt CO2)

Indonesia’s NDC outlines the country’s transition towards a low-carbon and climate resilient future. It describes the

enhanced actions and necessary enabling environment during the 2015-2019 period that will lay the foundation for

more ambitious goals beyond 2020, contributing to the concerted international effort to prevent a 2 °C increase in

the global average temperature and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial

levels. For 2020 and beyond, Indonesia envisions achieving archipelagic climate resilience as a result of comprehensive

adaptation and mitigation programs and disaster risk reduction strategies. Indonesia has set ambitious goals for

sustainability related to the production and consumption of food, water, and energy. These goals will be achieved by

supporting empowerment and capacity building, improved provision of basic services in health and education,

technological innovation, and sustainable natural resource management, in compliance with the principles of good

governance.

Current climate policies being implemented Indonesia has a strong legal foundation in developing, issuing and implementing climate change mitigation policies

and programmes for each sector. GoI has issued several new policies and regulations for the enhancement of

mitigation actions that could directly and indirectly encourage the implementation of climate change mitigation

actions. One of the important policies in the energy sector that supports climate change mitigation and would

eventually put Indonesia on the path to decarbonisation is the Government Regulation No. 79/2014 on Indonesia

National Energy Policy. This regulation sets out the ambition targets to transform the primary energy supply mix, i.e.

(a) new and renewable energy should reach at least 23% by 2025 and 31% by 2050; (b) oil should reach less than 25%

by 2025 and less than 20% by 2050; (c) coal should have a minimum target of 30% by 2025 and 25% by 2050; and (d)

natural gas should reach a minimum target of 22% by 2025 and 24% by 2050.

In the forestry and land use sector, the development of Forest Management Unit (KPH) is one of the key policies to

improve the management of land and forest resources. Under this policy, none of the forests in Indonesia is easily

accessed, which normally leads to high risk of illegal activities causing uncontrolled deforestation and forest

degradation. The GoI has implemented this policy. About 531 KPHs have been established covering a total area of

2010

BAU BAU CM1 (Ggram) CM2 (Ggram) CM1, Ggram CM2, Ggram CM1 (%) CM2 (%)

1 Energy 453 1,669 1,355 1,271 314 398 11% 14%

2 Waste 88 296 285 270 11 26 0% 1%

3 IPPU 36 70 67 66 3 3 0% 0%

4 Agriculture 110.50 120 110.39 115.86 9 4 0% 0%

5 Forestry 647 714 217 64 497 650 17% 23%

1,335 2,868 2,034 1,787 834 1,081 29% 38%

Reduction in 2030Sektor

2030

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about 84 million hectares. Almost all forested areas are under the management of KPHs. Nevertheless, the

management capacity of KPHS still requires much strengthening. In addition, the GoI has also enacted several new

policies and regulations supporting the implementation of climate change mitigation actions (see Table 2).

Table 2. Major Indonesian acts and regulations related to climate change NO SECTOR MITIGATION POLICY LEGAL INSTRUMENT DESCRIPTION

1. Finance Fiscal Policy Presidential Regulation 47/2017 Regulate incentive, disincentive and financial support for environmental protection and management

2. Energy Renewable energy for transportation

Biofuel Blending (Minister Regulation No. 12/2015)

Regulate the provision, utilisation, and administration of biofuels.

3. Energy Renewable energy, energy efficiency and conservation

National Energy Policy (Government Regulation No.79/2014)

Regulate the national energy policy, including the renewable energy share target of 23% by 2025, and the energy elasticity target of <1.

4. Energy Electricity Electric Power Supply Plan (2017-2026), Minister Regulation No. 1415.k/20/MEM/2017)

Electric Power Supply Plan developed by the state-owned electricity company (PLN) features a plan for renewable share in power mix target of 22.4% in 2026

5. Energy Energy efficiency Minister Regulation No. 7/2015

Implementation of Minimum Energy Performance Standards and Inclusion of Energy Saving Label for Air Conditioning Devices

6. Energy Enhancement of renewable energy

MEMR Ministerial Regulation No.49/2018 - Rooftop Solar Cell.

Provisions that regulate the business of the utilisation of Rooftop Solar Cell

7. Energy

Enhancement of renewable energy

MEMR Ministerial Regulation No.41/2018 - Supply and Utilisation of Biodiesel and Palm Oil Plantation Fund.

Provisions that regulate the supply and utilisation of biodiesel under the framework of Palm Oil Plantation Fund.

8. Energy


Presidential Decree No.66/2018 – Second revision to Presidential Decree No.61/2015 - Collection and utilisation of Palm oil plantation fund.

Provision that regulates the collection and utilisation of palm oil plantation fund. Among others for enhancing biofuel development.

9. Energy


MEMR Ministerial Regulation No.39/2017 - The implementation of renewable energy utilisation and energy conservation.

Provisions that regulate the implementation of renewable energy utilisation and energy conservation, including the purchase of renewable electricity.

10. Energy


Presidential Decree No.22/2017 General Plan of National Energy

Provision concerning General Plan of National Energy (Targeting renewable energy share of 23% in 2025 and 31% in 2050)

11. Energy


MEMR Ministerial Regulation No.12/2018 - revision of ministerial regulation No 39/2017 - the implementation of renewable energy utilisation and energy conservation

Revised version of provisions that regulate the implementation of renewable energy utilisation and energy conservation, including the purchase of renewable electricity

12. Energy


MEMR Ministerial Regulation No.12/2018 - revision of the ministerial regulation No 33/2017 - The supply of solar lamp

Provisions that regulate the supply of solar lamps to communities that do not have access to electricity.

13. Energy

Enhancement of energy efficiency measures

MEMR Ministerial Regulation No.57/2017 - Energy performance standard and labelling of efficient air conditioners.

Provisions that regulate energy performance standard and labelling of efficient air conditioners

http://jdih.esdm.go.id/peraturan/Permen%20ESDM%2012%20Thn%202015.pdf

http://jdih.esdm.go.id/peraturan/Permen%20ESDM%2012%20Thn%202015.pdf

52

NO SECTOR MITIGATION POLICY LEGAL INSTRUMENT DESCRIPTION

14. Energy and Waste

PROPER

Minister Regulation No. 3/2014 regarding Programme on Corporate Performance Rating in Environmental Management

Performance rating policy for company in environmental management. The rating is based on assessment of the company’s performance in the category of waste management, energy efficiency, reduction of air pollution and GHG emissions, and planting (biodiversity)

15. Energy and IPPU

Green Industry

Minister Regulation No. 51/2015 regarding Guidelines for the Development of Green Industry Standards

Policies that define standards for raw materials, energy, auxiliary materials, waste management, and corporate management for green industry

16. Forestry Forest Management Unit

Minister Regulation No. 6/2010 regarding norm, standard, procedure, and criteria for managing forest in Protection and Production Forest Management Units

Policies that support the development of units mandated to improve management of forests in protection and production forests

17. Forestry Peat ecosystem management

Presidential Regulation No. 57/2016 as revision to Presidential Regulation No. 71/2014

Policies that apply more rigid rules in using peat land and mandating government at all levels, to develop protection and management of peat land in coordinated ways and to restore/rehabilitate the degraded peat land

18. Forestry Moratorium Presidential Instruction No. 8/2015

Regulate moratorium/suspension of new licenses and the improvement of primary natural forest governance and peatlands

19. Forestry Enhancement of Land and forest fire management

Presidential Instruction No. 11/2015

Policies that mandate all level of governments to develop land and forest fire management system at their jurisdiction and sanction for business players who do not implement the fire management in the area under their authority

20. Forestry Law enforcement in forestry sector

National Strategy for Forest Law Enforcement in Indonesia 2005

A comprehensive programme to combat illegal logging. Since 2000 GoI has undertaken a comprehensive programme to combat illegal logging under the National Strategy for Forest Law Enforcement (FLENS). Presidential Instruction No. 4/2005 directed 18 government agencies and local government officials to cooperate in combating illegal logging

21. Forestry Social Forestry Minister Regulation No. 83/2016

Policies on forest management system implemented by community for improving welfare and quality and potency of forest in the forest area.

22. Forestry

Guidance and Support/incentive on forest and land rehabilitation

Minister Regulation No. 39/2016 as revision to Minister Regulation No. 9/2013.

Policies that provide support and incentives for the rehabilitation of degraded land and forest and optimise the use of unproductive land with multi-purpose tree species (MPTS) under agroforestry system.

23. Forestry

Mandatory Certification for Sustainable Forest Management

Minister Regulation No. 30/2016 on evaluation of performance of forest management

Policies that mandate all forest concession holders to have forest sustainable management certification. To ensure all concessions holders apply sustainable management practices

53

Description of the models used: For developing scenarios for GHG emissions projections, different models are used for each sector, namely:

• AFOLU Sector: spreadsheet based ‘Dashboard Model for AFOLU’,

• Energy Sector: the 2030 projection uses Extended Snap Shot Model (ExSS) GAMs based, while the 2050

projection uses the spreadsheet-based ‘Dashboard Model for Energy’,

• IPPU Sector: Econometric model for GHG emissions from industrial process activities based on the Roadmap of

cement and other industries development plans,

• Waste sector: the waste load is estimated using a population model and the waste management plan, in which

the GHG emissions generated from the solid waste treatment is estimated using FOD (First Order Decay)

model of IPCC2006 while other wastes are estimated using IPCC2006 GLs.

Where do we want to go? Although in energy sector the GoI has developed a mid-century energy plan (RUEN) and policy (KEN), formally the GoI

has not established a mid-century strategy for the mitigation of total GHG emissions. Nevertheless, CREP ITB has

developed a model-based mid-century low-carbon scenario for the energy sector under the Deep Decarbonisation

Pathways Project (DDPP, organised by IDDRI and SDSN). Meanwhile, under the same project, CCROM IPB has

developed a model-based mid-century strategy for the AFOLU sector. The results of both models on mid-century

scenarios (that aim towards emissions of 1.25 tnCO2eq per capita) are combined and presented in Figure 1.

Figure 1 Mid-century scenarios of Energy and AFOLU sector in Indonesia

Referring to Figure 1, the mid-century GHG emissions target could be achieved by different pathways, mainly:

1. AFOLU and electrification of end-use sectors and deployment of RE (renewable energy) for power generation

and transport,

2. AFOLU and electrification of end-use sectors and deployment of RE for power and transport, in which the

power sector is also supported by Carbon Capture and Storage (CCS) technologies,

3. AFOLU and changes in economic structure towards the services sector (lower energy demand, electrification

of end uses and deployment of renewable energy).

-200

0

200

400

600

800

1000

1200

2010 2020 2030 2040 2050

Mt

CO

2 eq

AFOLU + REN

2010 2020 2030 2040 2050

AFOLU + REN + CCS

2010 2020 2030 2040 2050

AFOLU + Struct

Agriculture

Energy

Forestry

4.97

3.38

2.67

1.98

1.25

-

1

2

3

4

5

6

tCO

2 eq

per

Cap

ita

4.97

3.38

2.67

1.98

1.25

4.97

3.40

2.66

1.95

1.25

Emission Per Capita

54

How do we get there? In the AFOLU sectors, the target is achieved through the:

• Establishment of 600 Forest Management Units in all forest areas to improve the management of land and

forest resources

• Implementation of Sustainable Management Practices in production forests by introducing mandatory

certification systems (e.g. reduced impact logging practice with target of 10.5 Mha)

• Improvement of quality and potency of forest in forest area and community welfare through social forestry

program with target 12 Mha

• Increasing the establishment of timber plantation on community lands and state lands up to 10 million ha and

increasing the share of wood from agricultural plantations up to 10% to reduce dependency on natural forests

in meeting wood demands

• Increasing crop productivity by between 15%-40% (for annual crop) and even to more than 50% (for perennial

crops, i.e. palm oil) and cropping intensity by between 10% and 23% for reducing the demand for land for

agriculture

• Increasing rehabilitation of degraded land up to 14 million hectares with high survival rate

• Stopping the expansion of timber and agriculture plantations into peatland

• Improving water management of 0.6 million ha peatland and restoring 1.6 million ha, and

• Increasing the adoption of low emission farming practices.

For the energy sector, the decarbonisation pathway includes:

• Energy efficiency improvements would be deployed in all energy end-use sectors.

• The deployment of lower-carbon emitting energy sources (fuel switching from coal to gas, oil to gas, and a

switch from onsite fossil fuel combustion to the use of electricity). Large energy systems that burn fossil fuels

would be equipped with CCS technology in the longer term.

• Further fuel switching to renewable resources: solar, hydro, wind, and geothermal for power generation,

biofuels in transport, and biomass, biofuels and biogas in industry.

• Structural changes in the economy (i.e. diminishing role of industry in the formation of national GDP through

service sector substitution) are expected to contribute to the decarbonisation of the energy sector.

By implementing these strategies, the energy-related Indonesian CO2 emissions will change in a sustainable manner by realising deep decarbonisation by 2050 (see Figure 2).

Figure 2 Deep decarbonisation pathway of the energy sector

Indonesian CO2 emissions will increase in the medium term to 2030 (due to rapid economic development) and then decrease towards 2050 (as a result of decarbonisation measures in energy demand and supply sectors). Industry and power generation remain the major sources of carbon dioxide emissions in 2050. Significant emissions reduction will

55

occur in the electricity sector, from 210 MtCO2 in 2030 to 68 MtCO2 in 2050. Despite decarbonisation efforts, emissions from the industrial sector will continue to increase, from 155 MtCO2 in 2010 to 221 MtCO2 in 2050.

According to the DDPP study, the mid-century scenario could be achieved by implementing 3 key pillars:

• Pillar 1: Energy efficiency measures would drastically decrease energy intensity of GDP (Energy demand per unit

of GDP is projected to decline by 73% between 2010 and 2050)

• Pillar 2: Decarbonisation of electricity: The use of low-carbon emitting fuels and CCS would significantly improve

electricity emissions intensity by 92% between 2010 and 2050

• Pillar: 3 Electrification of end uses will reduce fossil fuel combustion and emissions (if the power generation is

deeply decarbonised).

The drivers of each decarbonisation pillars are presented in Figure 3. Investment requirements for deep

decarbonisation are presented in Figure 4.

Figure 3 The key pillars of Deep Decarbonisation Pathway in Indonesia energy sector

56

Figure 4 Investment requirement for the Deep Decarbonisation of Indonesia Energy Sector

Indonesia has not established policies leading to the implementation of the NDC as well as a long-term transition toward a low-carbon economy. The GoI is currently preparing a Roadmap and discussing policies needed to implement its NDC.

Points of attention for Indonesia’s energy sector Points of attention for Indonesia’s energy sector include: electricity demand growth and the associated low-carbon

power generation capacity mix (renewable energy, less carbon emitting fuels, efficient coal technology, CCS, etc.) and

grid stability, energy for transportation sector including choices of transport mode and technology (i.e. biofuels and

electric cars), economic structure transformation and the associated energy demand for industries and services

including technology for achieving low-carbon economy, energy infrastructure investment requirements for

decarbonisation (i.e. power plants, electricity grids, refineries, biofuel production plant, etc.), and the economic

impacts and co-benefits of decarbonisation.

Regarding renewable energy, specific attention will be given to the deployment of biofuels and its impacts on the

forestry sector, the development of BECCS after 2030 (bio-energy combined with CCS), and major deployment of solar

PV and the associated capacity development of solar PV manufacturing in Indonesia.

Indonesia also needs to study the link between the low-carbon economy and specific SDGs relevant to clean energy,

climate change, air pollution, poverty eradication, food security and the water sector.

Therefore, a study that covers the above issues related to a low-carbon economy in the energy and AFOLU sectors

and the link between a low-carbon economy and specific SDGs is needed. The study will produce outputs including

(a) the background and the objective of the study, (b) overview of Indonesia’s energy system, (c) selection of the

energy model, (d) stakeholder engagement on energy modelling through several FGDs, (e) capacity building on energy

modelling, (f) development of a comprehensive energy model for Indonesia, (g) projection of Indonesian energy

demand and supply by 2050 (including the application of the Indonesia energy model), (h) development of Indonesia

emissions mitigation scenarios, and (i) stakeholder engagement and dissemination of modelling results.

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

Ren

Ren

+CC

S

Stru

ct

Ren

Ren

+CC

S

Stru

ct

Ren

Ren

+CC

S

Stru

ct

Ren

Ren

+CC

S

Stru

ct

Ren

Ren

+CC

S

Stru

ct

2010 2020 2030 2040 2050

B$ EV & CNG

Biorefinery

Renewable + Nuclear

Fossil power plant

57

Decarbonisation pathway of Japan

Where are we? In 2016, Japanese50 GHG emissions were 1,307 Gt-CO2eq, most of which came from energy use (88.3%) and industrial

processes (7.3%). CO2 emissions made up 92.2% of the total GHG emissions. The submitted Japanese NDC pledges a

26% reduction in GHG emissions by 2030 compared to 2013 levels. In addition, the government expressed its intention

to pursue efforts for 80% GHG emission reduction by 2050. The former Japanese decarbonisation plan51 heavily relied

on nuclear energy. However, after the event of Fukushima-Daiichi nuclear power plant in 2011, all nuclear power

plants were shut down. To date, only a few plants have resumed operations and no new construction plan is running.

The population of Japan (127 million in 2016) is now decreasing after peaking in 2008 and is expected to be around

102 million by 2050. The economic activity (measured in terms of Gross Domestic Product) in 2016 was 4.8 trillion

USD, the GDP per capita was 37,960 USD, and the annual economic growth rate in the last decade fluctuated around

1-2% with very low and even negative values following the global financial crisis, the 2011 Great East Japan

Earthquake, and the rise of consumer taxes in 2014. Implemented decarbonisation policies are mainly based on

voluntary actions targeting energy efficiency in private sectors. The feed-in tariff for renewable energies introduced

in 2012 has led to a significant increase in the capacity of solar PV.

The AIM/Enduse [Japan] energy system model is mainly used in the analysis52. This is a partial equilibrium, dynamic

recursive energy system model with detailed descriptions of energy technologies in the end-use sectors as well as the

energy supply sectors in Japan. It describes the characteristics of energy supply and demand across 10 sub-regions in

Japan, broadly coinciding with the areas of power supply firms.

Where do we want to go? It is noted that the government claims Japan’s NDC for 2030 is consistent with the Paris Agreement target of well-

below 2 °C, but how to realise the ambitious 2050 goal (GHG reduction by 80%) remains an open question. The NDC

emission reduction target (GHG reduction by 26% in 2030 from 2013 levels)53 is regarded feasible by the extension

and strengthening of current policies and actions. On the other hand, the 2050 GHG reduction goal is seen as

challenging without structural innovations both in energy demand sectors (transport, industries, buildings) and energy

supply systems.

The AIM/Enduse [Japan] model is used to assess three scenarios: a scenario assuming only current policies in place

(Baseline); a scenario introducing a decarbonisation path towards 2050 that is in line with the NDC (2030) target

(NDC); and a low-carbon scenario assuming immediate decarbonisation towards an 80% emission reduction by 2050

(Immediate). The Japanese low-carbon scenario presented here is considered to be in line with the objective to limit

global warming to well-below 2 °C, as Japanese cumulative CO2 emissions are 28 Gt in the 2010-2050 period; this is

well within the range projected by a number of global models54 for cost-optimal scenarios assuming a global carbon

budget of 1000 Gt CO2 considered equivalent to likely below 2 °C.

50 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/ 51 METI. The Strategic Energy Plan of Japan. In: Meeting global challenges and securing energy futures—(Revision June 2010) [Summary], Ministry of Economy, Trade and Industry, Tokyo, Japan; 2010. 52 Oshiro, K., Kainuma, M., & Masui, T. (2017). Implications of Japan's 2030 target for long term low emission pathways. Energy Policy doi:10.1016/j.enpol.2017.09.003 53 Japan’s NDC includes targets for the share of RES technologies in power generation for 2030, but here we only analyse the NDC emission reduction target. 54 The range of Japan cumulative CO2 emissions over 2010-2050 from global models is [28-43] Gt in the 1000 Gt global carbon budget scenario, for additional information: McCollum DL, et al. (2018) “Energy investment needs for


58

According to the model-based analysis, keeping the same mitigation effort needed for the NDC target until mid-

century (2050) contributes to large emissions reductions compared to the Baseline scenario, but leaves a gap of

around 100 Mt CO2eq with the pathway that assumes immediate action to achieve the long-term 80% GHG emission

reduction target by 2050 (Figure 1).

Japan has not yet submitted a Mid Century low-carbon Strategy. Discussion on the long-term low-carbon strategy led

by the government has just begun in August 2018. ‘Simultaneous solution’ is the key notion forming the Japanese

decarbonisation strategy, e.g., low-carbon society and economic growth, energy security, sustaining local

communities, and resilience to climate disasters. They are also linked to Japanese national Sustainable Development

Goals (SDGs). A sense of urgency to be left behind from the global trend of decarbonisation is becoming common

particularly among large international companies.

fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.”

59

Figure 1a: CO2 emissions from energy supply and demand in alternative pathways (Baseline, NDC, and Immediate

pathway). 1b: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario (Baseline), emission reductions

between the reference and low-carbon (Immediate pathway) scenarios by sector (energy supply, industry, residential

and commercial buildings, transport, non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with

2 °C)55.

55 Non-energy CO2 emissions correspond to those from industrial processes; land use change emissions are excluded.

60

How do we get there? A drastic energy system transformation is required to achieve Japan’s NDC for 2030 and the more ambitious long-

term decarbonisation goal (immediate pathway). Extensive improvement of energy efficiency and decarbonisation of

energy sources in all demand and supply sectors are expected to play key roles in the mitigation effort (Figure 2).

Improvement in energy efficiency is achieved by both supply and demand sides. In the supply side, for example, by

means of deployment of high efficiency combined cycle and cogeneration systems. In the demand side, energy

efficient cars, appliances, and buildings with energy management systems utilising Internet of Things (IoT) and AI

technologies will reduce the final energy consumption, while maintaining the standards of living of Japanese citizens.

Decarbonisation of energy sources could be achieved via the large-scale expansion of wind power, solar PV, and

geothermal power generation as well as by the development of Carbon Capture and Storage (CCS) technologies (in

electricity production and in industrial applications). Nuclear energy may also contribute to decarbonisation in case it

overcomes safety issues and becomes accepted by the Japanese society. Required additional (from Baseline levels)

energy system investments in 2030 are projected to be 9.4 billion USD and 69 billion USD under NDC and immediate

low-carbon pathway, respectively. In 2050, the additional investment requirements increase to 62 billion USD and 86

billion USD, respectively. They would partly be offset by reduced energy import bills induced by a large-scale decline

in imports of oil and natural gas.

To lead to decarbonisation of society, economy-wide carbon pricing and support for innovative clean energy

technologies would be important as well as enhancement and strengthening of current policies. The integration of

nuclear-energy-related issues in the long-term decarbonisation pathway should also be discussed nationwide.

Introducing variable renewable energies (solar and wind) is a challenge for the Japanese energy system. Increasing

the connectivity of power grids among regions is important as well as developing energy storage technologies (e.g.,

batteries, fuel cells, or pumped-storage hydropower). Energy security has long been a major concern because Japan

relies almost entirely on imported fuels (oil and gas). Increasing the capacity of renewable energies can improve

energy security. While the present analysis focuses on Japanese domestic energy system transformation, Japan can

also contribute to the decarbonisation of other countries by transferring energy-related technologies, which can be a

business opportunity for many Japanese innovation-based companies (like battery manufacturers).

61

Figure 2a: Energy system transformation towards decarbonisation for each pathway (low-carbon energy includes

renewables, nuclear and CCS). 2b: Decarbonisation indicators for the Immediate pathway. Numbers in graph indicate


62

The role of nuclear power in the Japanese low-carbon transition The government’s basic energy plan and NDC still rely on nuclear energy, which is projected to maintain a share in the

primary energy supply of about 10-11% in 2030. However, after the events of Fukushima-Daiichi nuclear power plant

in 2011, all nuclear power plants ceased their operations temporarily (the share of nuclear energy in primary energy

supply dropped from 11.2% in 2010, to less than 1% in 2016), and the public opinion against nuclear energy has

become dominant. Therefore, it is quite uncertain whether deployment of nuclear energy in the future is possible or

not.

To quantify the effect of limited nuclear energy availability in energy system transition towards decarbonisation,

additional analysis is conducted under a scenario assuming gradual phase-out of nuclear energy (NDC limited nuclear,

Figure 3). Under the limited nuclear scenario, achieving Japan’s NDC can be more challenging. More intensive

deployment of renewables and additional investment for energy systems are necessary. On the other hand, it can

lead to more energy-efficient society, promote new business opportunities based on local and decentralised energy

supply, and reduction in nuclear wastes.

Figure 3: Effects of nuclear energy phase-out in the NDC scenarios. (a) Electricity generation by technology, (b)

Investment on energy supply, (c) Changes in final energy consumption from 2010 levels.

63

Republic of Korea: low-carbon economy pathway and climate proof society

Where are we? Korea56 is actively participating in international efforts to tackle climate change. Korea adopted an ambitious Green

Growth Strategy in 2009 and established the Framework Act on Low Carbon, Green Growth to promote the

development of the national economy by laying down the foundation necessary for low carbon society, green growth

and by utilising clean energy technology and green industries as new engines for growth. As such, Korea pursues the

harmonised development of the economy and the environment and aims to contribute to the improvement of the

quality of life of every citizen and the transition to a mature, top-class, advanced country that shall fulfil its

responsibility in international society through the realisation of a low-carbon economy and society.

With this act and strategy, Korea has officially employed the cap-and-trade system and the operation applies to major

companies that account for approximately 63% of the nation’s GHG emissions. To prove this activity, the Korean

government built a Monitoring, Reporting and Verification (MRV) system with the initiated Greenhouse Gas inventory

& Research Center. The GHG emission volume of each controlled entity is verified by the verification agency; it is then

submitted to the management agency for further verification, and finally confirmed by the Greenhouse Gas Inventory

& Research Center (GIR) for approval. To prevent current market failures, the government plays a key role in green

R&D, particularly for basic research, in fostering green finance and in developing renewable energy resources.

Despite wide climate efforts, Korea’s GHG emissions grew strongly from 1990, being 690.2 MtCO2e in 2015 due to the

growth in industry activity and building energy use. South Korea submitted its Intended Nationally Determined

Contribution (INDC) on 30 June 2015 and proposed an economy-wide target to reduce its greenhouse gas (GHG)

emissions by 37% below business-as-usual (BAU) levels of 850.6 MtCO2e by 2030. The target is equivalent to limiting

GHG emissions in 2030 to 536 MtCO2e, which is 81% above 1990 emission levels, excluding emissions from the land-

use, land- use change and forestry sector (LULUCF).

Under the Framework Act on Low Carbon Green Growth, the Korean government set a long-term renewable energy

plan with increasing Renewable Portfolio Standards (RPS) obligation. After NDC submission, the Korean government

changed the energy mix focus from nuclear to LNG and renewable energy in its long-term energy plan due to the

widespread nuclear security issue due to earthquakes and air-pollution concerns. The new government's energy policy

is likely to be challenging Korea's NDC due to the issue of the substitution of nuclear power plants.

The Korean government held a green growth committee on July 18, 2018 and deliberated and voted on ‘the

amendment and supplementation of the basic roadmap for 2030 national greenhouse gas reduction’. Korea will

maintain the NDC emissions target of 536 million tons corresponding to the target of 37% reduction compared to the

BAU projections in 2030. Korea will increase the amount of reductions in the domestic sector from 25.7% to 32.5%

and decrease the amount of overseas reductions from 11.3% to 4.5%. Various reduction measures such as utilisation

of forest sink, seeking cooperation between South and North Korea, and establishment of hydrogen economy

infrastructure are also discussed.

A technical analysis for setting the 2030 target was conducted by a Joint Working Group of national research

institutions, including the GIR and the Korea Energy Economics Institute (KEEI). The KEEI-EGM System model was used

to produce the BAU emission pathway. The TIMES and KEI-Linkages models were used to evaluate emission reduction

potentials in low-carbon scenarios and to calculate economic impacts respectively.

56 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/


64

Total Korean GHG emissions consisted of 87.1% from the energy sector, 7.6% from industrial processes, 2.9% from

agriculture, and 2.4% from wastes in 2015. Emissions from fuel combustion make up 99.3% of the energy sector

emissions, which is equivalent to 86.5% of total national emissions. In terms of the increase in emissions by sector,

the energy sector and wastes showed an increase of 0.6% and 6.4%, respectively, and industrial processes and the

agricultural sector showed a decrease of 5.5% and 0.7% relative to 2014.

Where do we want to go? The Korea government activated many policies and roadmap under the Act on Low Carbon as follows:

▪ 2030 National Greenhouse Gas Emissions Reduction Road map (amended in 2018)

▪ Climate change response plan (2016)

▪ 2050 Development of Mid-Century low-carbon Strategy (2018).

The 2030 National Greenhouse Gas Emissions Reduction Roadmap was amended to adopt public concerns and the

new power generation plan. It proposes policies to encourage companies to develop climate change response

technology and investment through the national roadmap to promote market-centred emission reduction measures.

In consideration of the Paris Agreement, Korea will prepare its Mid-term low-carbon development strategy with the

participation of major institutes. Korea Environmental Institute (KEI) and KEEI currently explore 2050 low-carbon

transition scenarios consistent with the Paris Agreement objectives. KEI suggests policies and measures for

transforming to the climate proof society by 2050 including options that need socioeconomic system transformation

with a dramatic increase of energy efficiency, low-carbon electricity expansion, economic structure reform, and land

use change in a climate-proof way. KEEI suggests the concept of a low-carbon economy responding to climate change

in the context of sustainable development. The concept has integrated various issues such as climate change, clean

energy, innovation, job creation and resilience of the economy. KEEI draw the Korea's vision for a 2050 low-carbon

economy, which is defined as "decarbonised and resilient economy promoting sustainable growth". The core ideology

of the vision includes sustainable growth, prosperity, decarbonisation, and resilience, which serve as a guide to the

thinking, attitude and behaviour change of the Korean society members. The envisioned future encompasses specific

targets for greenhouse gas reduction and transition targets for industry, transportation, and the energy system. In

addition, the application of end-of-pipe technologies to prevent air-pollution and the realisation of a low-carbon

economy can contribute to finding a long-term and fundamental solution for the problem of fine dust, which has

become a major social issue in recent years. Furthermore, it can be used for the government's long-term energy mix

planning. Korea government and civil society have launched a public consultation on a strategy for long-term Korea

GHG emissions reduction reflecting on a vision for a low-carbon, climate-proof economy. The low-carbon scenario

shows a steady decline of emissions to about 396 MtCO2e in 2050. This represents a 50% reduction from the 2050

BAU case and 39% relative to 2015 emissions. The Korea’s long-term strategy describes pathways with various options

for decarbonisation and their implications for technology choices and socioeconomic factors. The energy supply sector

is the major contributor to emission reductions combined with electrification of final energy uses, driven by extensive

expansion of wind, solar PV, and CCS in power production (Figure 1). Currently discussed Korea’s long-term strategy

with government power generation plan is beyond Paris Agreement targets (limit global warming to 2/1.5 °C above

pre-industrial levels). Current scenario’s cumulative emission is 21.8Gt in the 2010-2050 period. In the global model

estimation57, Korea’s carbon budget is 17Gt in the 2010-2050 period for cost-optimal scenarios assuming a global

carbon budget of 1000 Gt CO2, considered equivalent to likely below 2 °C. Korea’s “low carbon” scenario, therefore,

57 McCollum DL, Zhou W, Bertram C, de Boer H-S, Bosetti V, et al. (2018) “Energy investment needs for fulfilling the

Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-

0179-z [pure.iiasa.ac.at/15328].

65

needs more significant emissions reductions to be consistent with cost-optimal pathways to limit global warming to

below 2 °C and 1.5 °C.

Figure 1: Greenhouse gas emissions in 2015 and by 2050 in the reference scenario (BAU), emission reductions


buildings, transport, non-energy CO2), and 2050 emissions in the low-carbon scenario with renewable expansion and

CCS utilisation in energy supply side. Non-energy CO2 includes emissions from industrial processes and AFOLU.

How do we get there? The model-based analysis shows that the key options to decarbonise the energy system include (Figure 2):

▪ Decarbonisation of power generation mainly driven by nuclear, solar PV, and CCS;

▪ Rapid expansion of RES both in power generation and in final demand sectors;

▪ Electrification of final energy uses both in heating and mobility sectors;

▪ Fuel switching in final energy mix towards electricity and natural gas to cope with air-pollutants.

High RES expansion is driven by significant cost reduction due to accelerated technical progress by 2050. The role of

electricity is central in the Korea’s low-carbon transition; the electrification of final energy demand complemented

with decarbonised power supply has a critical role for the cost-efficient energy system decarbonisation by 2050.

Closing the current emissions gap with low-carbon pathways consistent with the Paris Agreement can be achieved

with substantially renewed, immediately more ambitious NDCs.

The power generation sector is projected to undergo a profound restructuring towards the dominance of variable

renewables, with the share of solar PV and wind power in power generation increasing from 4% in 2015 to 11% in

2030 and 38% in 2050. The restructuring of the energy system implies significant changes in the energy mix. The

energy-related costs for households will increase driven by the high costs of LNG and renewable energy. On the other

hand, the low-carbon transition has clear positive implications for security of energy supply, air quality and human

health. Emission trading will change industrial activity, while concrete sector-specific measures to trigger sufficient

clean energy investment in transport and buildings are required. In parallel, gas-fired capacities have a strategic role

for balancing and reserve to complement expansion of intermittent RES especially in case that Korea nuclear phase

out plan is implemented.

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Figure 2: Energy system transformation towards decarbonisation (50% reduction scenario from BaU in 2050).

Numbers in graph indicate change between 2015 and 2050 (intensity indicators: %, share indicators: percentage

points, pp)

The role of LNG and nuclear power in Korean low-carbon transition A key strategy of the Korea government is expanding the use of LNG to reduce carbon emissions as well as air-

pollutants. The imports of LNG have recently increased in many countries due to policy implementation to reduce

urban air pollution. This option holds a potential risk of import due to price surge. Second, the potential of renewable

energy, such as solar and wind, is limited in Korea. Technical potential of solar and wind calculated by Korea Institute

of Energy Research is 886 Mtoe per year, which can cover future energy demand fully. However, the economic and

market potential is quite low when considering environmental impacts, costs, political and social constraints. Although

installing solar panels on a small scale can be an option, large solar power plants are preferable, but they require a

relatively large area and would pose challengers to the forest and upland as 64% of the land is mountains area. This

situation could become even more serious if the development of solar PV plants proceeds around natural ecologically

sensitive areas. Third, nuclear power should keep its share in low-carbon transition pathways consistent with the Paris

Agreement targets. However, in reality, the government policy direction to phase-out nuclear energy is clear and

public acceptance of nuclear energy is not positive, which makes Korea face additional domestic challenges to

participate in global efforts to limit the global temperature increase to well-below 2 °C (and even 1.5 °C) above pre-

industrial levels. To reduce nuclear power generation, the use of fossil fuels has to be increased given the limited

renewable energy potential. For this purpose, the development of CCS technology is very important to achieve strong

GHG emission reductions in power supply by 2050. However, the deployment of CCS technologies may remain

relatively limited, as the analysis considers the current difficulties for licensing CO2 storage sites, acceptability issues

and scarcity of storage sites. So, Korea needs to consider keeping nuclear power generation until technology

innovation of CCS and social agreement on renewable energy expansion have materialised.

https://www.ft.com/content/e097eb10-c3c0-11e7-b2bb-322b2cb39656

https://www.ft.com/content/21cb4ed2-d7f9-11e7-a039-c64b1c09b482

https://www.ft.com/content/21cb4ed2-d7f9-11e7-a039-c64b1c09b482

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Russia: climate policy and decarbonisation options by 2050

Where are we? Russia has been an active Party to the UNFCCC58 and Kyoto Protocol, and is a signatory to the Paris Agreement

(ratification is expected in 2019). Russia is one of the leading major world economies in reducing greenhouse gas

emissions: during 1990-2000, national GHG emissions dropped to 46% of 1990 level including emissions from the

Land Use, Land Use Change and Forestry sector (LULUCF). Such a dramatic decarbonisation trend can be explained by

the deep restructuring of Russia’s economy after the collapse of USSR, an increase in low-carbon industries and

sectors of the economy, modernisation of the technological base, increasing energy efficiency in all sectors, and other

processes. A strong decoupling of Russia’s economic growth and GHG emissions was observed in 2001-2008, when

GDP was rising by up to 7-9% per year, and emissions increased by less than 1% on average. Since 2009, the national

economy is experiencing economic stagnation/recession with near-zero GDP growth (on average) and stable GHG

emissions around 51% of 1990 level (including LULUCF).

Russia’s national target for 2020 is set by the national legislation at the level of 25% below 1990. The country’s

Intended Nationally Determined Contribution (INDC) includes the GHG emission reduction target of 25-30% below

1990 by 2030, with the condition of full accounting of carbon sequestration by forests.

The climate change mitigation policies and measures are determined by numerous policy documents, including

among others the Russian Climate Doctrine and governmental plan of action, energy and industrial development

strategies, energy efficiency and renewable energy policy package, forestry and agriculture development programs,

and environmental regulations. However, there has been no comprehensive policy-making process and good

coordination of climate policy so far. The targets by 2030 are not ambitious, and can be reached without significant

efforts, as they allow for an increase of emissions by 40% compared to the current level. The targets beyond 2030

have not been defined yet. So, the pathway of development up to 2050 is still to be determined.

The main policy drivers aiming at reduction of carbon emissions in Russia include:

▪ Energy efficiency improvement: energy intensity of GDP to be reduced by 40% by 2020 compared to 2007

level, utilisation of associated petroleum gas to reach 95% within 5-7 years, enhancement of vehicle fuel

standards, energy standards for buildings, and more.

▪ Renewable energy: Russia has enormous potential of renewable energy sources (RES) in wind, solar,

geothermal, biofuel, tidal, and other areas; the policy target is to increase RES share in the energy mix from

the current 1% to 4% by 2025-2030.

▪ Forestry policy: among others better forest management, afforestation/reforestation activities, protection

from wildfires and forest diseases, sustainable timber cutting practices.

However, there are many drivers leading to continuing increase of carbon emissions, such as:

▪ Strengthening coal extraction for domestic use and exports (rising methane and CO2 emissions)

▪ Gasification (increase of domestic combustion of natural gas, leakage of methane, prevention of RES use in

sectors where RES competes with natural gas)

▪ Expansion of oil production to the highest historical levels (methane and CO2 emissions)

▪ Weak environmental regulation of energy-intensive industries such as metallurgy, chemical production, and

some others.

The weak mitigation target under the Paris Agreement supports such a controversial policy mix, while economic

development priorities are rather vague due to uncertainties in the sanction regimes (imposed on Russia), foreign

policy perspectives, and other factors.

58 United Nations Framework Convention of Climate Change

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The long-term energy–economy modelling is demanded by the relevant policy stakeholders, including Ministries of

energy, economic development, environment, and others. In the last decade, the analytical materials based on the

TIMES RUSSIA model are provided for consultations with the policy makers and expert community. TIMES RUSSIA is a

partial equilibrium energy system model covering in detail the Russian energy sector, heavy industries, commercial

and residential buildings, and transport (nearly 70% of national CO2 emissions), up to 2050. The forestry is analysed

using the ROBUL/ CBS-CFS3 model with the time horizon up to 2050. Other GHG sources are considered based on

expert estimates and official strategies and plans.

The major sources of GHG emissions in Russia (as of 2016) include: fuel combustion – 52%, methane emissions (energy

and agriculture) – 33%, other CO2 and F-gases – 15% of total GHG emissions (without net-sinks in forestry), while

forestry compensates 26% of GHG emissions (Figure 1).

Figure 1. Russia’s GHG emissions, 1990-2016 (MtCO2e per year). Source: National GHG emission inventory, 2018.

Where do we want to go? Russia’s INDC targets are consistent with the Reference scenario (business-as-usual) in our analysis (REF). In all

considered pathways, the target of 25-30% below 1990 level by 2030 will be reached without additional policy efforts.

In more ambitious scenarios, the emission reduction could reach 38% below 1990 level by 2030 (Figure 2). So, the

Russia’s INDC could be strengthened without any risk for reaching the target by 2030.

The emission reductions beyond 2030 will require more significant efforts, due to the expected economic growth (in

REF scenario – based on energy intensive industries, in BAU – accounting for slow technological improvements, in

more ambitious ones CAP60 and CAP5059 – active use of low-carbon technologies in energy sector) and possible

associated rise of carbon emissions, as well as reduction of sequestration capacity of Russian forests (in some

scenarios from 700 to below 100 MtCO2e/y by 2050).

59 CAP60 and CAP50 scenarios aim at 40% and 50% reduction of total CO2 emissions in energy sector by 2050 correspondingly (below 1990 level).

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The emission targets in the energy sector alone would not be enough to reduce overall GHG emissions in Russia by

2050, even if they are relatively strong (e.g. 50% below 1990 level). Additional efforts will be required in all other

sectors to pursue the deep decarbonisation goal by 205060.

The potential for further emission reductions and transformation of national economy towards deep decarbonisation

is largely available in Russia, which will lead to significant changes in the energy sector (Figures 3 and 4). More

ambitious scenarios would require utilisation of the huge potential of RES (comparable with 30% of the annual Total

Primary Energy Supply), energy efficiency improvement (up to 80%), and technological improvements in industries,

transport, buildings, construction, and many other sectors. The most ambitious scenario CAP50 implies a reduction of

coal combustion to nearly zero by 2050, some decline in natural gas and oil use, slight increase of nuclear and large

hydropower generation, and a significant increase of RES (Figures 5 and 6).

Figure 2. Russia’s GHG emissions (including LULUCF) in alternative pathways (Reference, BAU, CAP60 and CAP50

scenarios), 1990=100%.

60 By deep decarbonisation, we mean 50-90% reduction of total national GHG emissions below 1990 level. There is no political target for 2050 in Russia yet, but previous analysis showed that deep reductions of that scale are possible for Russia (DDPP 2014 and 2015 reports).

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Figure 3. Total primary energy supplies (TPES) in

Russia, PJ

Figure 4. Final energy consumption (FEC) in Russia, PJ

Figure 5. TPES in Russia by energy sources, PJ (Scenario

CAP50).

Figure 6. FEC in Russia by energy sources, PJ (Scenario

CAP50).

The methane emissions from the oil and gas industry are a large source of emissions (758 MtCO2e or 29% of total

GHG emissions without LULUCF in 2016), which can be mitigated via reduction of natural gas leakage and proper

utilisation of the associated petroleum gas. This would bring substantial additional reduction of emissions and

support decarbonisation measures both in the near and long-term future.

The forestry sector is also an important sector in Russia, contributing to sequestration of approx. 700 MtCO2e per

year; however, due to expected increase in timber logging and worsening impacts of climate change (wildfires,

diseases, etc.) the sequestration capacity of Russian forests will likely decline substantially by 2030 and 2050. The

measures on enhancing forest sinks via afforestation, reforestation, proper forest management, involvement of

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unmanaged forest into climate policy measures would help to maintain the forest capacity in sequestration and

support decarbonisation efforts in the longer-run.


reference and low-carbon scenarios by sector (energy supply, industry, residential and commercial buildings,

transport, non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with 1000 GtCO2, i.e. 2 °C).

Non-energy CO2 includes emissions from industrial processes.

How do we get there? The TIMES RUSSIA model for the energy sector and other sectors’ analysis provided strong evidence that GHG

emission reductions towards the “2°C target” are possible in Russia, and there are a few options of how to move

there, depending on the national priorities. In all scenarios of deep reduction of GHG emissions, the following

measures are foreseeable in Russia by 2050:

▪ Energy efficiency improvement in all sectors, especially the energy-intensive ones (power and heat, metallurgy,

chemical industry, cement production, transport, buildings);

▪ Expansion of RES at large scale and decarbonisation of power generation (priorities could be determined on a

regional basis, depending on availability of various RES like wind, solar, tidal, geothermal, biofuels, etc.);

▪ Enhanced electrification of energy end-use and transportation;

▪ Introduction of carbon capture and storage (CCS) technologies where possible (conditional on the costs and

economic competitiveness, especially after 2030);

▪ Switch from coal and, after 2030, from gas to non-carbon fuels or technologies for power and heat generation;

▪ Improvement of forest management and enhancing carbon sequestration by forests;

▪ Prevention of methane emissions, reduction of leakage in natural gas extraction, storage and transportation

systems, increased utilisation of associated petroleum gas (APG) in the oil sector, reduction of methane from

coal mining, storage and transportation;

▪ Improved incentives for technological changes in the industries (e.g. ferrous and non-ferrous metallurgy,

chemical industry – specifically production of fertilisers, cement production) in favour of low or zero-carbon

technologies.

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The pillars for decarbonisation of energy-related carbon emissions include substantial increase of the share of

renewables and other low carbon energy sources in the energy mix, reduction of carbon intensity of power

generation and expansion of electric power use (Figure 8).

The policy instruments for such measures can include domestic and international carbon emission trading schemes,

project-based subsidies and offsetting scheme, introduction of carbon tax, joint crediting mechanism (like Japan’s

Joint Crediting Mechanism) for international cooperation, stricter standards and requirements to production

processes and products (like relevant ISO standards), feed-in tariffs for clean energy technologies, and many others.

The challenge is, however, that the demand for Russian fossil fuels in the international markets is continuing to be

very high, so the incentives for restructuring the national energy supply sector towards carbon-free energy sources

are insufficient at the moment and are not expected to change significantly in the next decades. The price incentives

(e.g. pricing of the carbon footprint) for energy intensive products in the global markets are also weak so far, such as

for aluminium, steel, iron, fertilisers, and others.

Figure 8. Energy-related CO2 emission drivers and decarbonisation pillars for Russia, 2010-2050. Numbers in graph

indicate change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp)

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The potential air quality, human health, and environmental benefits of the climate change mitigation measures in

Russia are very substantial. Recent estimates of health benefits of switching from coal to low- and zero-carbon energy

sources showed the overall benefit of a reduction of 40,000 premature mortality risks in the country61, and significant

reduction of morbidity risks related to air and water pollution. However, these benefits are not well recognised in the

policy-making process so far.

The Russian low-carbon transition in the international context The deep decarbonisation of the Russian economy will require significant efforts from the government, businesses,

and the civil society. Rearrangement (or restructuring) of the national economy in favour of low-carbon activities and

clean production technologies, dramatic decrease of fossil fuel production, export and use, will require changes in the

strategic planning, energy and industrial policy, environmental regulation, technological innovations, new transport

standards, infrastructure development, behavioural changes, and more.

Russia has an enormous potential for deep decarbonisation: natural capital and territory, technological and scientific

potential, and large financial resources. In the current context, the large share of industrial capital assets has been

depreciated and require renovation and modernisation, and the low-carbon technologies can become a priority

“substitute” in the process of phasing-out the old carbon-intensive processes and infrastructure.

Russia can also play a significant role in the export of clean (carbon free) energy and fuels (biofuels from wood and

agricultural waste, liquid bio-fuels of second generation, hydrogen produced from electricity or Steam Methane

Reforming with CCS, etc.) on the regional and global scale. The regional mega-projects, such as the Asian Super-Grid

project, may provide opportunities for green energy supplies from the Russian Far East and Siberia, possessing huge

potential renewable energy resources (tidal, hydro, biomass, geothermal, and wind energy sources are vast, but no

domestic demand exists).

Obviously, the international “decarbonisation regime” would play an extremely important role in Russia’s mitigation

efforts. Involvement of Russia in the Paris Agreement and other international climate initiatives would be crucial in

promoting technological cooperation, emission trading and crediting schemes, global carbon pricing, forest carbon

sequestration support mechanisms, scientific research and knowledge sharing.

61 Climate change: the view from Russia, ed. V.Danilov-Danilian, Moscow, TEIS, 2003. [in Russian]

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United States: GHG Policies, Directions, and Opportunities

Where Are We? The United States of America62 is a party to the Paris Agreement of 2015. As part of this agreement, the United

States (U.S.) established a nationally determined contribution (NDC) to reduce economy-wide greenhouse gas (GHG)

emissions by 26 to 28 percent relative to 2005 emissions by the year 2025. Between 2005 and 2016, U.S. GHG

emissions declined by 12 percent from 6,589 MtCO2-e to 5,794 MtCO2-e in 2016. Increases in population and

economic growth have been more than offset by improvements in GHG emissions intensity.

However, on June 1, 2017, the President of the United States announced that the United States would withdraw

from the Paris Agreement. Article 28 of the Paris Agreement governs withdrawals by Parties. It prescribes a 4-year

withdrawal period. The United States would therefore be withdrawn from the Paris Agreement on November 4,

2020. In the period after June 1, 2017 climate measures that had been put in place at the federal government level,

such as the Clean Power Plan and fuel economy standards, have been or are in the process of being weakened. On

the other hand, the Bipartisan Budget Act of 2018 contains a provision that amends the federal tax code called, 45Q.

The new 45Q regulation provides for a $35/ton CO2 for CO2 employed of CO2 captured by large point-source

emitting facilities for enhanced oil recovery (EOR) and $50/ton CO2 for capture and saline storage. All large point-

source emitters are eligible to participate.

The recently released report, Fulfilling America’s Pledge: How States, Cities and Businesses Are Leading the United

States to a Low-Carbon Future (Bloomberg Philanthropies, 2018) describes continuing actions occurring at state and

local scales in the United States and within the private sector. Examples of such climate actions include: the

California Clean Energy Bill of 2018 (expected to pass), California Assembly Bill 32 (AB32)–California Cap and Trade

System, California Advanced Clean Cars Program (e.g. the Zero Emissions Vehicle program), California Global

Warming Solutions Act of 2006 (SB32), multiple state renewable portfolio standards, state land-use programs to

enhance soil and other terrestrial system carbon, Northeast Regional Greenhouse Gas Initiative (REGGI), and state

motor fuels taxes. The report found that while current policies and measures at the states, cities, and the private

sector will reduce U.S. GHG emissions from 2015 levels, current policy measures would need to be augmented to

achieve the U.S. NDC as originally registered (Figure 1).

62 We acknowledge funding from the COMMIT project, Climate pOlicy assessment and Mitigation Modeling to Integrate national and global Transition pathways. The project is financed by the European Commission’s Directorate-General for Climate Action (DG CLIMATE). More info on: https://themasites.pbl.nl/commit/


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Figure 1. Contributions of various state, city, and business actions toward the U.S. NDC. Source: Bloomberg

Philanthropies, 2018.

Where do we want to go? The present United States official federal government position is that it has no long-term goal for emissions

mitigation and favours policies that would increase the use of coal and other fossil fuels. However, the Bipartisan

Budget Act of 2018 contains a provision that amends the federal tax code called, 45Q, so as to encourage

deployment of CO2 capture and storage (CCS) technology. Prior to 2017, the United States developed a mid-century

strategy (MCS) to achieve 80 percent reduction in economy-wide GHG emissions relative to 2005 by 2050 (The

White House, 2016). This results in cumulative CO2 emissions of about 120 GtCO2 during the period from 2010 to

2050. This budget is consistent with the range projected by a number of global models for cost-optimal scenarios

assuming a global carbon budget of 1000 GtCO2 considered equivalent to likely below 2oC increase in global mean

temperature.63 We consider this as the benchmark low-carbon scenario for our analysis in this factsheet (Figure 2).

63 The range of U.S. cumulative CO2 emissions over 2010-2050 from global models is 120-195 Gt in the 1000 Gt global carbon budget scenario. For additional information, see: McCollum DL, et al. (2018) “Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals,” Nature Energy, doi: 10.1038/s41560-018-0179-z.”

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Figure 2: Energy system transformation towards decarbonisation (key transition indicators). Numbers in graph

indicate change between 2015 and 2050 (intensity indicators: %, share indicators: percentage points, pp). Source:

GCAM model, low-carbon scenario.

How do we get there? The mid-century low-carbon strategy articulated by the previous U.S. government engaged all sectors of the

economy in the process of deep decarbonisation. That strategy envisioned a wide range of technology development

pathways towards the target of 80% reduction in economy-wide GHG emissions.

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Figure 3. Greenhouse gas emissions in 2015 and by 2050 in the reference scenario (NDC), emission reductions


buildings, transport, non-energy CO2), and 2050 emissions in the low-carbon scenario (consistent with 2 °C). Non-

energy CO2 includes emissions from AFOLU and industrial processes. Source: GCAM model.

All pathways employed a six-part strategy:

1. Employ energy efficiency as much as economical: Energy efficiency improvements in all energy demand sectors

provide a means of continuing to deliver the energy services for a high quality of life, while reducing the need

for energy. That in turn means that emissions-producing capital investments that might otherwise have been

needed to provide energy services are never built, saving both near-term and long-term emissions.

2. Decarbonise power generation: The power sector has multiple options to serve the demand for electricity using

low- or zero- carbon technologies including fossil fuel with CCS, renewable power, nuclear power, bioenergy,

and bioenergy with CCS (BECCS). Emissions reductions in power generation can change rapidly at the margins,

that is, in new investment decisions. However, existing fossil fuel plants and equipment can continue to

operate as long as they can continue to cover their operating costs. BECCS is a particularly important

technology option as it provides a pathway to generate net negative emissions, offsetting hard to reduce

residual emissions by using renewable bioenergy and storing the carbon in permanent repositories. BECCS can

allow the power sector to produce net negative carbon emissions. As the power sector decarbonises, the

electricity use in end-use sectors (heating, cooking, mobility, industries) becomes an increasingly powerful

means to reduce overall emissions.

3. Electrify Buildings and Industry as much as economically feasible: Electrification has been a long-standing trend in

buildings and industry. This is particularly true in developed economies. Appliances, lighting, refrigeration, air

conditioning and other services are already provided primarily by electricity. Heating and cooking remain

sectors into which electricity has not become dominant. Electricity continues to make its way into industrial

applications. Motors and direct electric services such as in aluminium manufacture have already electrified.

Other major energy uses such as raising steam and direct process heat remain dominated by fossil fuels. They

offer potential new electricity markets, but would benefit from technology innovation that favoured electric

power. The refining sector can play an important role in an economy that uses significant bioenergy resources

for energy. Since end-use bioenergy typically needs a higher carbon-energy ratio than exists in the bioenergy

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feedstock, the capture of the residual carbon and sequestering it in a permanent repository offers the industrial

sector an important pathway to produce negative emissions through BECCS.

4. Decarbonise transport as much as economically feasible: The transport sector is one of the most difficult sectors

to decarbonise. The fossil fuel based internal combustion engine has proved a highly cost-effective method for

delivering mobility services. Carbon taxes have only a modest impact on the cost of delivering mobility due to

the high capital intensity of the sector. Three potential pathways for decarbonising transport are use of electric

passenger and freight vehicles, substitution of bio-derived fuels for fossil fuels, and the use of hydrogen derived

from non-emitting sources (especially in transport segments that cannot be easily electrified). Any or some

combination of these three fuels could be used to decarbonise the transport sector.

5. Halt deforestation, employ strategies that will reduce the need to deforest: Land-use change emissions are

frequently overlooked in discussions of deep decarbonisation. Yet, as the energy sector decarbonises, land-use

becomes increasingly important and can come to dominate residual emissions by 2050. Land-use policies can

limit and even reverse emissions. Afforestation is an important negative emission pathway. Other

opportunities include more efficient application of fertilisers, enhancing soil carbon, and increasing crop yields,

which reduce the demand for land and the need to deforest.

6. Reduce non-CO2 GHG emissions: There are abundant opportunities to reduce non-CO2 GHG emissions. For

example, methane emissions from pipeline losses can be reduced by better monitoring, land-fill emissions can

be harvested, nitrous oxide emissions can be reduced using targeted fertiliser application and lower GWP gases

can be substituted for high GWP gases.

Net negative emissions were an important component of most low-carbon pathways, though some pathways used

afforestation primarily, while others used CO2 removal technologies such as BECCS. The availability of CO2 removal

technologies was an important determinant of the pace of decarbonisation needed by the energy sector.

The role of state-level climate policies and success stories towards decarbonisation The United States is a complex economy. Its energy system and land use are governed by federal, state and local

governments. While the federal government has expressed its intention to leave the Paris Agreement by 2020,

many state and local governments have implemented policies and measures designed to improve energy efficiency,

encourage renewable energy supply, and reduce greenhouse gas (GHG) emissions.

California has one of the most aggressive GHG emissions limitation programs in the United States. The California

Clean Energy Bill of 2018 sets the goal of 100 percent clean energy by 2045. This is the latest in a series of California

laws that include the California Assembly Bill 32 (AB32) (which establishes the California Cap and Trade System), the

California Advanced Clean Cars Program (e.g. the zero-emissions vehicle program), and the California Global

Warming Solutions Act of 2006 (SB32).

Furthermore, the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey,

New York, Rhode Island, and Vermont in the northeast of the United States created the Regional Greenhouse Gas

Initiative (REGGI), which is a mandatory GHG emissions trading market designed to cap and reduce emissions from

power generation. The emissions cap declines from 2005 levels at 2.5 percent per year. Buttressed by renewable

portfolio standards in individual states and improved energy efficiency, power sector emissions have declined by

40% between 2005 and 2015.

In addition to assessing potential emission limitations fostered by the combined efforts of states, localities, and

cities, Fulfilling America’s Pledge: How States, Cities and Businesses Are Leading the United States to a Low-Carbon

Future (Bloomberg Philanthropies, 2018) provides examples of success stories in moving toward low-carbon

emissions. Here we highlight “Case Study 03: Energy Efficiency Resource Standards in Arkansas”:

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ENERGY EFFICIENCY RESOURCE STANDARDS IN ARKANSAS (SOURCE:

BLOOMBERG PHILANTHROPIES, 2018)

Arkansas is the only state in the Southeast with an energy efficiency resource standards (EERS), which was

first established in 2007, requiring electric and natural gas utilities to propose and administer energy

efficiency programs. Arkansas’s energy savings targets started out low, initially requiring utilities to reduce

annual electricity use by 0.25 percent with respect to sales, ramping up to 0.75 percent in 2013. Natural

gas reduction targets were set at 0.2 percent in 2011, increasing to 0.4 percent in 2013. The Arkansas

Public Service Commission has strengthened these goals with 1.0 percent reductions to take effect in 2019.

The gradual and deliberate approach to evolving utility programs has allowed Arkansas to achieve and build

upon early successes to garner increasing support for energy efficiency. For example, in 2008 the home

energy efficiency services market in the state did not yet exist. Utilities worked to improve their

understanding of the scope of recruiting and training resources needed and focused on building partnerships

with contractors. A significant factor in the success of many of the programs has been the ongoing classroom

and field training for contractors undertaken in coordination with trade allies and regional technical colleges.

Through careful monitoring of program results with the help of a third-party evaluator, utilities have been

able to make a variety of adjustments over time to improve the program effectiveness. These have included

the gradual addition of new measure offerings, such as incentives for heat pump water heaters, behavioural

benchmarking through home energy reports, and measures targeting multifamily properties. Other

refinements have included making programs easier for customers to access, studying new energy efficient

technologies, and making more concerted efforts to reach certain customer segments that might have more

difficulty accessing utility efficiency programs.

Taken together, Arkansas electric utilities have increased energy savings more than fivefold over the past

decade through these programs, raising savings from 60,000 megawatt-hours (MWh) in 2009 to more than

300,000 MWh in 2016, or enough to power more than 28,000 homes for a year. Through these efforts,

Arkansas has emerged as a Southeast energy efficiency leader, and an example to its neighbours of the

diverse benefits achievable when a state and its utilities come together to value and pursue efficiency as an

energy resource on the same level as other fuel sources.

According to the American Council for an Energy-Efficient Economy (ACEEE), if states were to continue to

meet savings targets and legislators and regulators were to extend expiring targets in the years leading up

to 2020, the combined annual electricity savings from the 26 states with EERS policies would be equivalent

to 6.2 percent of overall electricity sales in the United States in 2020. Existing policies and pledges are

expected to reduce annual electricity demand by as much as 200 TWh by 2025.

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Conclusions The objective of this study is to present national low-emission development strategies for major developing and

developed G-20 economies (namely Australia, Brazil, Canada, China, the EU, India, Indonesia, Japan, Russia, Republic

of Korea and USA). The study uses country-level energy–economy and integrated assessment models that incorporate

a detailed and disaggregated representation of the energy demand and supply systems, are rich in the representation

of energy-related technologies and capture elements that are difficult to be included in global models (e.g. load

duration curves, engineering constraints,). They can thus capture national policy priorities and structural

heterogeneities and simulate the future energy system evolution of a country under different policy assumptions.

National models were used to explore low-carbon pathways up to 2050, providing useful insights on their implications

for country emissions, energy system restructuring, energy–economy indicators and system costs.

National-level models capture country specificities and they show that different technological options can be used in

each country, based on policy priorities, domestic energy resources and broad socioeconomic considerations. The

eleven countries analysed exhibit different structures of current GHG emissions by sector and by gas; for example,

non-CO2 and land-use emissions represent a large share of total GHG emissions in Brazil, Russia and Indonesia. Country

specificities and policy priorities play a key role in designing nationally-relevant low-emission strategies and have to

be consistently integrated in the quantitative assessment of low-carbon transition pathways (e.g. air pollution in

China, energy security in the EU, nuclear power in Japan, energy exports in Russia). The different starting points and

divergent dynamics of economic growth and energy system evolution lead to differentiated low-carbon transition

pathways by country; however, generally, developed economies aim for a large reduction in their GHG emissions by

2050 (commonly by about 80%-85% from current levels), while pathways of developing countries depend on their

domestic planning and policy priorities. For example, Chinese emissions would peak by 2030 and then decline rapidly,

while a continuous increase (but at reduced rates relative to baseline trends) is projected for Indian emissions until

2050. This is consistent with the Paris Agreement that calls for all Parties to strive to formulate long-term low emission

development strategies, mindful of Article 2: taking into account common but differentiated responsibilities and

respective capabilities, in the light of different national circumstances. For several developing countries, the global

policy context is key to ensure sufficient progress towards low-carbon transition, as the latter depends on the

provision of adequate finance, cooperation with industrialised countries, technology progress and knowledge sharing.

The analysis shows that the low-carbon scenarios of all major economies are consistent with a pathway limiting

global warming to below 2 °C; in particular, the national-level cumulative CO2 emissions over 2010-2050 are

consistent with the range projected by a number of global models for cost-optimal scenarios assuming a global

carbon budget of 1000 GtCO2 considered equivalent to likely below 2 °C increase in global mean temperature. For

some countries, their low-carbon scenarios are even consistent with the global carbon budget of 400 GtCO2

considered equivalent to limiting the increase in global mean temperature to 1.5 °C. The only exception is India,

where the national-level model-based analysis shows larger cumulative emissions until 2050 compared to the global

cost-optimal mitigation scenarios to 2 °C. This difference arises mainly due to the higher economic growth rate

assumed in the national scenarios and the relatively larger allocation of mitigation efforts to the developing

countries by global inter-temporal models applying a universal carbon tax across all countries and sectors.

The national scenarios illustrate that in the low-carbon context, the eleven major economies are projected to: 1)

improve the carbon intensity of their economy, 2) diversify their energy and power generation mix towards low-

carbon sources, 3) improve their energy efficiency, and 4) use a diversity of mitigation options across countries

towards the low-carbon transition. These national model-based scenarios are not meant to instruct the

governments on what to do; their objective is to inform policy makers and other stakeholders on the challenges and

opportunities of potential mid-century low-carbon strategies. The key decarbonisation pillars that are common to all

countries examined (albeit at different rates) include:

1) Expansion of renewable energy sources both in power generation (mainly solar PV and wind power)

and in the transport and heating uses (biofuels, RES-based electricity, bioenergy). The share of

81

renewable sources in primary energy demand would increase from the current global average of 18%

to 20%-52% by 2050. The increase is larger in developed economies (EU, USA, Canada), where the

share of renewable sources in primary energy consumption is projected to amount to approximately

50% by 2050.

2) Accelerated energy efficiency improvements in all demand sectors (buildings, transport, industries). In

the low-carbon national scenarios, the final energy intensity of GDP is projected to decline by 35%-73%

across countries over 2015-2050.

3) Electrification of final energy demand, both in mobility and in heating end-uses. The share of electricity

in final energy demand would increase from the current global average of 20% (14%-25% across the

eleven major G-20 economies) to between 20% and 80% by 2050. The electrification strategy is more

prominent in developed economies aiming for large emission reductions from 2015 levels.

The national-level analyses illustrate that the deployment of other low-carbon options (i.e. CCS, nuclear power,

advanced biofuels, hydrogen, synthetic fuels) highly depends on national specificities, policy considerations and

priorities. The deep energy system decarbonisation of developed economies points to the need for decarbonisation

of end-uses, which is driven by deep electrification, advanced biofuels and deployment of new clean energy forms

(such as hydrogen and synthetic fuels). To accommodate high shares of variable renewables, various electricity

storage options are deployed. The technology mix is also based on specific national priorities, e.g. nuclear power in

Japan. In countries with high non-CO2 and land-use emissions (such as Brazil), the focus is on the elimination of these

GHG sources. Overall, the different low-carbon strategies require the development of policy designs tailored to meet

the needs of specific countries taking into account national priorities and broad socio-economic considerations (e.g.

the role of energy exports in Russia or the need to improve energy supply security in the EU and Japan).

By comparing the emission and energy system indicators presented in the national fact sheets (i.e. GHG emissions,

RES share, peak emission years, energy and carbon intensity of GDP), the mitigation effort across countries can be

evaluated to derive appropriate indicators to monitor mitigation effort and future pathways. However, the numbers

presented in the fact sheets are sensitive to exogenous assumptions (GDP growth, global energy prices, technology

learning), the interpretation of national policies in the Reference and low-carbon scenarios, the modelling

framework used and how policies and drivers are represented in each model. The country analysis has benefited

from the detailed representation of national policy choices, priorities and specificities and the in-depth analysis of

possible evolution of the energy–economy system by national teams. The establishment of links between national

and global modelling approaches enhances the policy relevance and realism of model-based assessments, which is

important for future climate negotiations in the post-Paris era. As a next step, these national and global models will

be used to jointly develop new scenarios to inform long-term low-carbon strategies, incorporating the most recent

national policies and long-term targets to bridge the gap between current NDC commitments for 2030 and Paris-

compatible long-term pathways.

The indicators presented in the study can help policymakers to identify most important areas and sectors for

increasing climate policy ambition in the next decades. Modelling results show that the national low-carbon mid-

century strategies provide a good starting point for global mitigation pathways required to achieve the Paris

Agreement long-term objectives. The process towards the signature of the Paris Agreement has established a

positive dynamic in the international climate policy landscape that is important for future policy and business

strategies. Despite the significant policy, social and financial challenges towards energy system restructuring (i.e.

redirection of investment towards clean energy technologies), the establishment of a clear, ambitious and well-

anticipated policy and investment framework in major emitting economies can lead the way towards the low-carbon

transition. Therefore, the Paris Agreement should establish a clear mechanism to facilitate strengthened climate

targets by all Parties and to allow for the regular and timely revision of national contributions; the design of national

low-emission development pathways for major carbon emitters is important to close the “gap” with the aspirational

2 °C and 1.5 °C mitigation targets, mitigate the risks for carbon lock-in and integrate national policy priorities in the

design of low-carbon transition pathways and mid-century strategies

82

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