SIXTH FRAMEWORK PROGRAMME - needs-project.org D5.3.doc · Web viewProject co-funded by the European Commission within the Sixth Framework Programme (2002-06) ... Full and detailed

SIXTH FRAMEWORK PROGRAMME

Project no: 502687

NEEDS

New Energy Externalities Developments for Sustainability

INTEGRATED PROJECTPriority 6.1: Sustainable Energy Systems and, more specifically,

Sub-priority 6.1.3.2.5: Socio-economic tools and concepts for energy strategy.

Deliverable n° 5.3 - RS In

Final integrated reportPolicy use of the NEEDS results

Due date of deliverable: M 54Actual submission date: M 54

Start date of project: 1 September 2004Duration: 54 months

Organisation name for this deliverable: ISIS – Institute of Studies for the Integration of Systems Author: Andrea Ricci, ISIS, with contributions from Carmelina Cosmi, Vincenzo Cuomo, Stefano Faberi, Rainer Friedrich, Rolf Frischknecht, Silvia Gaggi, Stefan Hirschberg, Sohbet Karbuz, Wolfram Krewitt, Richard Loulou, Stale Navrud, Philipp Preiss, Milan Scasny, Denise Van Regermorten

Project co-funded by the European Commission within the Sixth Framework Programme (2002-06)

Dissemination Level

PU Public PU

PP Restricted to other programme participants (including the Commission Services)

RERestricted to a group specified by the consortium (including the Commission

Services)

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COConfidential, only for members of the consortium (including the Commission

Services)

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TABLE OF CONTENTS

1 INTRODUCTION 4

1.1 Background and rationale 4

1.2 A Policy Oriented Integrated Project 4

2 TARGET USERS 6

3 POLICY ISSUES ADDRESSED 7

3.1 Technology assessment queries 8

3.2 Energy policy queries 32

3.3 Investment decision queries 47

4 THE NEEDS PRODUCTS: FORMAT, FUNCTIONALITIES AND ACCESSIBILITY 49

4.1 LCA database (RS1a) 49

4.2 EcoSense Web (RS1b) 50

4.3 Technology repository SubRES (RS2a). 51

4.4 Integrated modelling platform: the NEEDS Pan-European model (RS2a) 51

4.5 Stakeholders database (RS2b) 52

4.6 Database of electricity generation technology-specific sustainability indicators (RS2b) 52

4.7 Web based platform for the elicitation of stakeholder preferences (RS2b) 53

5 CONCLUSIONS AND WAY FORWARD 53

ANNEX - A SUMMARY ACCOUNT OF THE FINAL DEBATE 56

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1 Introduction

1.1 Background and rationaleNEEDS is a research project funded within the European Commission 6 th FP of RTD. As such, its primary objective is to develop innovative research, and accordingly generate original scientific knowledge. The scope and scale of the targeted scientific progress is clearly described in the project workplan and further illustrated in detail in the list and through the contents of the project Deliverables.

The ambition of NEEDS however extends beyond the purely scientific realm, as the project is intended to provide direct, usable inputs to the formulation and evaluation of energy policies in the overall framework of sustainability, therefore notably taking account of the economic, environmental and social dimensions of energy policies.

Policy formulation is an intrinsically multidisciplinary affair, and NEEDS is a highly multidisciplinary endeavour, both in terms of the sectorial competencies it can rely upon (energy technologies, environmental assessment, social assessments, economics) and for what concerns the methodological approaches and disciplines on which it draws (LCA, database development and mathematical modelling, quali-quantitative methods and tools such as multicriteria analysis, etc.)

Making the most of such multidisciplinary context requires a major integration effort. The various dimensions (managerial, technical, geographical, etc.) of such integration effort have been identified at the outset1, and the project has accordingly been structured and organised so as to maximise the benefits of multidisciplinarity, both for what concerns its effectiveness (actually achieving the expected results) and its efficiency (optimal use of the available resources, including funds, data, skills etc.).

NEEDS is an Integrated Project, and its integration dimension must be reflected not only in the implementation process but also, at least as importantly, in the nature and characteristics of its products, where the main challenge is to ensure their relevance and usability by a community of non-researchers (policy and decision makers, public and private, including civil society). This ambition has prompted the design of the Guidelines for the policy use of the NEEDS results2.

This third and Final Integrated Report illustrates the main results achieved by NEEDS in integrating a wide range of multidisciplinary competencies, analytical methods, tools and datasets, for the generation of outputs that, in addition to their scientific value, provide usable evidence for policy and decision making. Accordingly, this Report incorporates and supplements the basic contents of the above mentioned Guidelines.

The emphasis is therefore on the policy relevance of results, whereas the scientific value of the project achievements is presented in the long series of Deliverables and Technical Papers (more than 200 in total) produced by individual Workpackages within the 7 Research Streams featured by NEEDS.

1.2 A Policy Oriented Integrated ProjectWhen it comes to providing inputs that are directly useful to policy makers, a series of requirements must be considered.

Policy relevance

1 See in particular [Ricci 2006] 2 See [Ricci 2007]

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Despite the explicit reference to policies in the NEEDS objectives and workplan, research tends to be primarily driven by the desire to increase and improve scientific knowledge. Moreover, policy formulation requirements often evolve over time, reflecting shifts in priorities or/and the dynamics of the reference context (e.g. unexpected increase in energy prices, changes in the geopolitical context, technological breakthroughs, etc.). A realistic appraisal of the actual policy relevance of such knowledge increase therefore requires a dedicated and continuous effort, with the direct involvement of policy makers and, in general, of stakeholders outside the research community.

Ability to communicate with the policy community.An effective interaction with the policy community in turn requires the establishment of a common language or, better said, the adaptation of the RTD language to that of the policy makers. This is the well known challenge of finding the optimal trade off between simplification and scientific integrity.

Accessibility of project results.Immediate fruition of the project results is ensured by the abundant set of Deliverables, which provide an exhaustive account of all findings. However, use of results by policy makers - and, in general, beyond the strict framework of the project - require, in addition to language adaptation as mentioned above, that easy and direct access is provided not only to the results but also to the tools and methods to elaborate and interpret them.

Transferability and generalisation of project results.NEEDS has developed new methods and instruments, and applied them to a wide range of configurations (different countries, different scenarios, etc.). However, in particular for what concerns the monetary evaluation of externalities associated to the energy cycle, the numerical values provided by the project clearly cannot ensure full coverage of the (virtually infinite) configurations. Stakeholders and policy makers are, on the other hand, usually concerned with the formulation of policies and measures that must address the specific characteristics of a given sectorial, geographical and socio-economic context. A correct use of the NEEDS results by policy makers therefore requires an adaptation process to ensure that the evidence made available by the project is exploited within the limits of its scientific validity.

The NEEDS approachAll the above concerns have been explicitly addressed by NEEDS, notably through:

The establishment of a Policy Advisory Group, with the participation of a varied set of stakeholders. The PAG has met regularly to discuss policy relevance (e.g. the choice of scenarios) and provide feedback to the project advancements.

An ambitious communication and dissemination plan, which notably encompasses

- the organisation of a series of Fora, where large audiences of stakeholders have gathered to discuss in detail specific priority issues addressed by NEEDS, that are relevant to policy formulation and appraisal

- the publication of summaries of the project activities, designed to ensure a higher readability than the scientific Deliverables possibly do, and therefore facilitate the circulation, understanding and use of the project results beyond the specialised RTD community

- the maintenance and promotion of the project website, which has been designed and continuously upgraded so as to serve not only as a specialised platform but also as an open window to the outside world

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A clear open source policy, which commits the NEEDS partners, individually and collectively, to deploy their best efforts to ensure that access - not only to the results but also to the tools and methods developed within the project - is ensured at no cost and with the highest possible degree of user friendliness (e.g. on line databases), within the limits dictated by pre-existing proprietary knowledge protection and by cost coverage constraints

A dedicated research stream that has specifically dealt with the issues associated to generalisation and transferability of results, and the uncertainties thereof. Also, systematic use has been made within NEEDS of sensitivity analysis, precisely to ensure that the inevitable existence of uncertainties does not overly hinder the usability of results by policy makers.

Over and above such built-in features, NEEDS has devised an integrated approach to maximise the policy relevance and usability of its results. As described in more detail in [Ricci 2007], this approach was built to address the following basic aspects:

Who are the target users that might be interested in using the results of NEEDS?

Which are the questions that can be answered by NEEDS?

In which format and with what functionalities will the NEEDS results be provided to the users? And how will it practically be possible to access and exploit the NEEDS products?

What will happen in the future (i.e. once the NEEDS project is over)?

2 Target usersThe main distinction here is between science/research users on one hand, other stakeholders (including policy makers) on the other.

Accordingly, a basic classification of NEEDS target users is presented below.

Prevailing interest in NEEDS results

Science/research Policy making

Research institutions - Energy technologies XXX- Energy economics XXX X- General economics and social

sciences XXX X

- Environmental sciences XXXSpecialised consultancies (e.g. EMAS, emission trading) XXX X

Engineering XXIndustry active in energy research XXX XXIndustry other X XEnergy utilities XX XXXService providers (e.g. ESCO) XX XX

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European Commission - Research XXX- Policy XXX

EU National and local governments X XXXDeveloping countries (e.g. re. CDM) X XXXEnergy agencies XX XXInterest groups X XXXNGOs X XXXIndividual citizens X X

XXX: very high interest XX: high interest X: moderate interest

3 Policy issues addressedThe overall policy framework served by NEEDS is schematically illustrated in the diagram below.

Sustainable Energy Policies combine actions on the supply side with actions on the demand side.

On the supply side, decisions on technologies and products are supported by Life Cycle Assessments (LCA) and by the External Cost Valuation derived from LCA, while decisions on infrastructure and services require Social Cost Benefit Analyses (SCBA), which also receive inputs from LCA and External Cost Valuation

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On the demand side, the identification of policy instruments (whether economic, regulatory or information based) requires the knowledge of the full (internal+external) costs of energy options.

The perspective of stakeholders can influence the valuation of external costs (especially for those externalities, e.g. of a social nature, that are admittedly difficult to quantify), and ultimately contributes directly to policy decisions.

Green accounting (GA) practices, which allow to quantify the macroeconomic impacts of the structure and quality of energy systems, provide policy makers with aggregate monitoring tools

Finally, Integrated Energy Models (not represented in the diagram) allow to model the complex interactions between the various components

Accordingly, NEEDS allows to answer a wide range of policy queries that have a varied degree of complexity. A detailed classification of such queries can be found in [Ricci 2007]. At a more aggregated level, these queries can be classified in three main groups:

Assessment of Energy technologies (based on foresight techniques, LCA, externalities valuation, stakeholders’ perception and acceptance)

Formulation, optimisation and impact assessment of Energy policies (through e.g. scenario building, modelling, Multicriteria Analysis), and their monitoring and evaluation (based on e.g. sustainability indicators, Green Accounting)

Investment decisions, primarily based on Social Cost Benefit Analyses (SCBA)

The present document illustrates results for a wide selection of these queries. For each query addressed, it

presents the nature of the policy issue in focus (“the query”)

highlights the innovative contribution of NEEDS to addressing the issue (“improvements”)

exemplifies concrete answers provided by NEEDS (“selected results”)

points to the NEEDS report(s) where more detailed results and information can be found (“references”).

3.1 Technology assessment queries

3.1.1 What are the real, full costs of the different energy sources and technologies?The query

A good knowledge of the full cost values is obviously directly instrumental to providing basic input to policy formulation and investment decisions, and calculating the full (i.e. internal + external) costs of energy technologies is in fact the most explicit and fundamental goal of the entire NEEDS project.

At a more direct, primary level, cost values allow to answering policy questions such as “how do energy options compare?”, or “how important is it to include external costs in technology and policy assessments? (i.e. how far are we off the mark if external costs are not properly included?”.

Major improvements from NEEDS

Full and detailed coverage of the life cycle (including material supply, component manufacturing, construction, operation and dismantling) of a number of new and emerging electricity generation technologies that were previously not (or poorly) documented,

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Time- and scenario- dependent LCA based on energy foresight techniques, which allows to estimate the future dynamics of energy technologies performance at the time horizons required by long term energy modelling (e.g. 2030 – 2050)

Inclusion in the external costs accounting framework of new impacts (e.g. biodiversity) and improved accuracy in the valuation of most other impacts (with particular regard to mortality, which often dominates total external costs)

Selected results

Results shown hereafter are drawn from the NEEDS Research Stream RS1b (External costs valuation).

Figure 1 (respectively Figure 2) show the values of external costs (social costs) for selected Electricity Generation Technologies (EGT), at 2009. More and more detailed such results are available in the NEEDS deliverables (see below), particularly concerning the future expected dynamics of these cost values until 2050.

As explicitly stated in these two Figures, risk aversion and potential damages from terrorism are not included here, which has raised a heated debate within and outside the NEEDS community owing to the uneven underestimation of total costs that this omission entails across technologies. A full account of the debate that took place in the late stages of NEEDS - on this and other controversial issues - is presented in ANNEX.

Figure 1 – External costs (2009) for selected EGT

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Figure 2 – Social costs (2009) for selected EGT

Figure 3 presents the expected values of private costs at 2050 for a selection of EGT. It notably compares Nuclear (both PWR and EPR) with Biomass and a wide variety of Fossil Fuel technologies, with and without CCS.

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Figure 3 - Private costs (2050) for selected EGT

Main references

RS1a - D6.1 Quantification of technology specific external costs

RS1b - TP7.2 “Report on the application of the tools for innovative energy technologies”

3.1.2 How to put economic values on externalities that are difficult to quantify?The query

It often happens that the (real or apparent) incompleteness or/and the perceived inaccuracy of the available scientific knowledge generates a lack of trust on behalf of policy makers, and subsequently their reticence in using results that are otherwise robust and trustworthy. Completeness of the cost accounting framework is therefore of the essence (if only to convey the message to policy makers that sufficient data are available to feed into decision making processes). Despite the considerable research efforts over the past two decades, it is recognised that some gaps can still be found for what concerns externality valuation, owing to (i) the objective difficulty of quantifying and valuing specific externalities and to (ii) the emergence of impacts categories that were not known, or recognised as relevant, until recently.


NEEDS has made significant progress in this area, notably by

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P. Priess

pioneering the valuation of biodiversity, with the experimental development and application of what is considered to be the most promising approach, based on the valuation of the PDF (Potentially Disappearing Fraction)

increasing the robustness of the state-of-the-art knowledge for what concerns one of the most controversial and difficult topics in externality valuation, i.e. climate change

generating new knowledge and data for one of the critical external costs, i.e. human mortality: although datasets were already available before NEEDS, they were largely obsolete and their accuracy in need of improvement. NEEDS has produced new datasets based on original WTP surveys, based on improved questionnaires.

Further significant innovation was achieved in NEEDS for what concerns, among others, the soil pollution pathways and the detailed valuation of externalities arising from the extraction and transport of energy sources (including emerging energy sources such as hydrogen)

Selected results

Aggregated results incorporate, in fact, a wealth of detailed figures calculated in NEEDS, many of which have a policy support value in their own right. For instance

Biodiversity externalities have been estimated by NEEDS at 2.66 €/m2, corresponding to the costs that must be faced to restore the so-called PDF

The new surveys carried out in NEEDS have allowed to generate better and updated values of VOLY (Value Of Life Year), and to differentiate these values geographically, which are in the order of 40 k€ for EU(15) Member States and in the order of 33 k€ for NMS (New Member States)

Stream RS1c has produced disaggregated estimations of the externalities arising for the extraction and transport of energy sources, which were previously unavailable, and found that even including the probabilistic externalities associated to oil spills, the incidence of external costs on the total costs of bringing oil to Europe is relatively low, in the order of 2.5 € per ton of transported oil, representing less than 5% of direct (private) costs, and approximately 1% of current oil prices.

As for CO2 costs, they admittedly vary, even considerably, according to specific assumptions (e.g. discount rates), and depending on the nature of the long-term scenario considered. Although full consensus3 cannot be reached given the objective uncertainties characterising this issue, NEEDS has however produced robust ranges that are broadly accepted by the scientific community (Figure 4 below).

3 see also ANNEX

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Figure 4 – Ranges of CO2 values

Main references

Rs1b - D6.7 Final Report on the monetary valuation of mortality and morbidity risks from air pollution.

RS1b - D4.2 Assessment of Biodiversity Losses.

RS1b - D5.4 Report on marginal external damage costs of Greenhouse gas emissions.

3.1.3 Are external cost values equally available across different countries?The query

Extensive geographical coverage is obviously desirable to ensure that policy and decision making at the individual country level can draw upon reliable, country specific evidence. It is however even more important when considering that policy and investment decisions at the level of an individual country bear direct consequences on the sustainability of other countries, notably owing to the regional and global nature of the impacts associated to airborne pollutants, and more generally to the transborder nature of environmental phenomena.

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Thanks to the ExternE project series, abundant datasets were made available that primarily cover EU Member States, but many countries outside the EU must also be included in the perspective of a complete assessment of the impacts of energy systems and policies.

On the other hand, the generation of high quality datasets on additional countries is very demanding, in terms of (i) financial resources (bottom-up calculations are expensive) and of (ii) required data and technical skills, that might not be available at the outset.


NEEDS has contributed to the advancement in this area in two complementary directions: on the one hand, it has carried out a number of country specific studies, notably in Eastern and Mediterranean countries, to generate fresh datasets while at the same time building technical capacity in those countries; on the other hand, it has developed a robust methodology for value transfer, and experimented it within the project itself so as to pave the way for its generalised adoption, beyond NEEDS.

Selected results

Figures 5 and 6 below illustrate examples of results where critical values (e.g. damages from CO2 emissions and from Air Pollutants) are consistently shown across EU Member States.

Figure 5 – Air pollution damages from the power sector across the EU

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Figure 6 – Climate change damage from the power sector across the EU

Main references

RS1d - D5.1Progress report on energy externality estimatesRS1d - D6.2 National seminars and dissemination workshop on the results from energy externalities calculation and policy recommendationsRS1d - T 3.1 Datasets on reference environment, technology and monetary valuesRS1d - T 4.1 Report on the geographical extension of EcoSenseRS1d - T 4.3 Project workshop on EcoSense software use (Tunisia, April 2007)RS1d - T4.2 Progress report on transferability of monetary values and exposure-response relationshipRs3a - D1.1 Report on the procedure and data to generate averaged/aggregated dataRS3a - D2.1Report on value transfer techniques and expected uncertainties

3.1.4 How do Energy technologies compare along their full life cycle? And how will they evolve in terms of performances, costs, market share?

The query

Policy makers are usually fond of information that immediately allows them to rank alternative options, possibly according to a one-dimensional criterion. While such requests are legitimate and

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understandable, technology ranking is a very complex affair, and if treated unappropriately it can generate major misunderstandings and mislead important decisions.

Full costs analysis is certainly getting as close as possible to providing a robust input to the ranking of energy technologies, and is indeed at the core of the NEEDS achievements. A meaningful comparison between technologies must however consider several dimensions, which typically include (i) private and external costs, both individually and cumulatively, (ii) current performances of individual technologies (energy and economic efficiency, resource consumption etc.) and their expected evolution over time (particularly considering the different level of maturity of currently available technologies, and therefore the fact that their improvement rates in the medium/long term could be highly differentiated), and (iii) expected market shares (which are strongly related to costs and performances, but also to the existence of targeted policies).


NEEDS has produced a considerable amount of results that feed directly into the general issue of technology comparison. As previously highlighted, major innovations can be found in terms of the choice of technologies analysed (new and emerging electricity generation technologies that were previously under-documented), and of the time perspective of the LCA, for which NEEDS has pioneered a dynamic approach to LCA, based on the adoption of alternative scenarios that recognise the intrinsic uncertainty associated to technological foresight.

Selected results

Sample results shown below are drawn from Stream RS1a (LCA).

Figures 7, 8 and 9 illustrate how future developments of PV technologies are excepted to reflect on, respectively, the market share of the most relevant PV technology options, the dynamics of production costs, and the corresponding performances for what concerns total lifecycle CO2

emissions.

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Figure 7 - Market share of PV at the 2050 horizon

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Figure 8 – Future costs of PV at the 2050 horizon

Figure 9 – CO2 emissions of PV at the 2050 horizon

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Figure 10 shows the expected progress of major EGT between now and 2050 for what concerns CO2 lifecycle emissions.

Figure 10 – Expected reduction of lifecycle CO2 emissions for selected EGT at 2050

Figure 11 shows the influence of different scenarios on the future CO2 performance of selected RES (Renewable Energy Sources). Scenarios are differentiated both

at the technology level4 (BAU = Business as Usual, PE = Pessimistic, RO = Realistic-Optimistic, VO = Very Optimistic)

at the policy level5 (440 ppm Vs Renewables)

4 for a full description of the approach to technology scenarios, see for instance Deliverable RS1a D2.25 for a full description of the policy scenarios, see Section 3.2.1 below

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Figure 11 – CO2 lifecycle emissions for selected renewables in different scenarios

Similarly, Figures 12 and 13 illustrate the expected progress of, respectively, Offshore wind and Wave energy for what concerns CO2, PM10, Carbon-14 and Landtake

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Figure 12 – Off shore wind at the 2050 horizon

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Figure 13 – Wave energy at the 2050 horizon

Main references

RS1a - D2.1 Final report on technology foresight methodsRS1a - D3.3 Cost development – an analysis based on experience curvesRS1a - D4.1 Space and time dependencies in LCARS1a - D5.2 Online LCA database providing access to system (i.e. cumulated) LCI data in html-Ecospold formatRS1a - D7.2 Technical data, costs, and life cycle inventories of fossil fired power plantsRS1a - D8.2 Technical data, costs, and life cycle inventories of hydrogen applicationsRS1a - D9.2 Technical data, costs, and life cycle inventories of fuel cellsRS1a - D10.2 Technical data, costs, and life cycle inventories of offshore windRS1a - D11.2 Technical data, costs, and life cycle inventories of PV applicationsRS1a - D12.2 Technical data, costs, and life cycle inventories of concentrating solar thermal power plantsRS1a - D13.2 Technical data, costs, and life cycle inventories of biomass power plantsRS1a - D14.2 Technical data, costs, and life cycle inventories of nuclear power plantsRS1a - D15.2 LCA of background processesRS1a - D16.1 technical specification of reference technologies (wave and tidal power plant)

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Rs1b, WP7, TP7.2 “Report on the application of the tools for innovative energy technologies”.

3.1.5 Is the principle of monetary valuation of energy externalities accepted by citizens and by policy makers? What can be done to improve acceptability and therefore foster a more extensive use of externality valuation?

The query

Policy use of externalities data materialises through instruments (e.g. taxation, pricing and incentives, etc.) that bear immediate consequences on citizens and economic players. In turn, policy makers responsible for the design and enforcement of such instruments are (and/or should be) directly concerned about their acceptability. Although the concept of externalities is gaining increasing visibility, even in public debates, much remains to be done to ensure that it is properly understood and accepted.


NEEDS has conducted various surveys and country specific case studies to elicit novel information from a wide audience of stakeholders and representatives of the civil society to ascertain their awareness of the concept of energy externalities and its implications, the related levels of acceptability and the areas where understanding of the concept seems inadequate.

Selected resultsAs illustrated in Figures 14 and 15 below, the responses to the survey expressed a very strong acceptance of the concept of externalities, of the internalisation of external costs as well as of the policy use of the results (with the exception of supporting subsidies and penalties for which the acceptance rate was less pronounced). As for the Impact Pathway Approach (IPA), the responses reflected a mixed level of awareness, despite the typically high education level of the respondents. In spite of awareness about the limitations of the approach the results obtained within the ExternE projects for specific energy technologies are mostly accepted. There are, however, large differences what concerns the views on the estimates for nuclear energy.

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Figure 14 – Are externalities perceived as useful information?

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Figure 15 – General acceptance of externalities results

Main references

RS2b – D11.1 Report on the use of external costs in energy policy decisionsRS2b – D12.2 Evaluation and reporting on the survey on the “externality concept”

3.1.6 Is it possible to differentiate Energy technologies based on their sustainability performance? How sustainable are the various technologies when performance indicators are combined with stakeholders preferences? Which technologies exhibit the most robust behaviour in an overall sustainability perspective?

The query

Energy technologies, as previously highlighted, can be compared by recurring to a variety of criteria. Although the concept of generalised cost is commonly accepted as sound and providing inputs that are directly policy relevant, the question arises of whether it fully succeeds in capturing the many facets of sustainability appraisal. Policy makers (as well as representatives of the civil society) at times contend that a purely monetary quantification of all costs and benefits fails to reliably capture selected specific phenomena and their real significance. This may be due to the nature of these phenomena that intrinsically do not lend themselves to quantification/monetisation, or/and to the objective difficulty in calculating the corresponding values.

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Complementary approaches, notably based on well thought systems of sustainability indicators, can be included in the sustainability assessment framework, to generate a more comprehensive (and acceptable) picture of the overall compared performance of individual technologies.


This is another area where NEEDS has decisively pioneered, notably through:

The establishment of an original set of energy-specific sustainability indicators, developed in consultation with stakeholders and representatives of the civil society, and equally covering the three dimensions of sustainability

Using these indicators (and the relative value that stakeholders assign them within a MCDA) in combination with full cost accounting to identify discrepancies between “objective” measurements and the “subjective” valuation of stakeholders.

The interpretation of results is not always straightforward, but it certainly allows to identify critical issues and suggest future actions to reduce the gaps.

Selected resultsIn general, the proposed sustainability criteria found wide acceptance both in terms of content as well as hierarchical structure.

Criterion

ENVI

RO

NM

ENTA

L D

IMEN

SIO

N RESOURCESEnergy ResourcesMineral Resources (Ores)

CLIMATE CHANGEIMPACT ON ECOSYSTEMS

Impacts from Normal OperationImpacts from Severe Accidents

WASTESSpecial Chemical Wastes stored in Underground DepositoriesMedium and High Level Radioactive Wastes to be stored in Geological Repositories

ECO

NOM

IC D

IMEN

SIO

N IMPACTS ON CUSTOMERSPrice of Electricity

IMPACTS ON OVERALL ECONOMYEmploymentAutonomy of Electricity Generation

IMPACTS ON UTILITYFinancial RisksOperation

SOC

IAL

DIM

ENSI

ON

SECURITY/RELIABILITY OF ENERGY PROVISIONPolitical Threats to Continuity of Energy ServiceFlexibility and Adaptation

POLITICAL STABILITY AND LEGITIMACYPotential of Conflicts induced by Energy Systems. Necessity of Participative Decision-making Processes

SOCIAL AND INDIVIDUAL RISKSExpert-based Risk Estimates for Normal OperationExpert-based Risk Estimates for Accidents

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CriterionPerceived RisksTerrorist Threat

QUALITY OF RESIDENTIAL ENVIRONMENTEffects on the Quality of LandscapeNoise Exposure

Figure 16 below provides an aggregated summary picture of the results of the MCDA.

Figure 16 – Consistency between total costs and MCDA ranking

While within the external cost estimation framework applied in NEEDS nuclear energy exhibits the lowest total costs, its ranking in the MCDA-framework tends to be lower, mainly due to consideration of a variety of social aspects not reflected in external costs. Thus, nuclear energy ranks mostly lower than renewables, which benefit from much improved economic performance. Renewables show the most robust behaviour, i.e. in comparison to fossil and nuclear options a lower dependence of ranking on the differences in preference profiles; this applies especially to solar technologies. Coal technologies perform worse than centralized natural gas options; the latter are in the midfield and have thus ranking comparable to nuclear. The performance of CCS is mixed, i.e. fossil technologies with CCS may rank better or worse than the corresponding technologies without CCS, depending on which specific CCS option is used.

Main references

RS2b D3.1 Final set of criteria and indicators to be quantified to the extent possible for the use in NEEDS

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RS2b D3.2 Sustainability criteria and indicators for assessment of electricity supply options RS2b D5.2 Final report on quantification of economic indicatorsRS2b D6.1 Final report on quantification of environmental indicatorsRS2b D7.1 Final report on quantification of risk indicatorsRS2b D8.1 Final report on quantification of social indicatorsRS2b D10.1 Final indicator database (Month 42)RS2b D12.2 Evaluation and reporting on the survey on the “externality concept” RS2b D14.2 Analytical overview of the technical and scientific production of the stream 2b

3.1.7 How do citizens and stakeholders perceive various types of risks associated with Energy systems? Do they trust official agencies concerning risk management?

The query

Although technically risk can be calculated by multiplying probability by damage value, the most common perception of risk is much softer and subjective. This is particularly true when probability is low and damage value is high (as for nuclear energy, but also e.g. hydro power). On the other hand, whatever the perception that stakeholders have, this will influence behaviour, decision making and ultimately policy effectiveness. It is therefore important to understand at best what is the actual perception of risk and possibly the factors that drive it. This will help decision makers in both assessing the acceptability of specific decisions and in deploying adequate information efforts.


The above mentioned surveys, combined with the detailed MCDA carried out in NEEDS are probably the first highly structured attempt to gauge risk perception for a wide array of energy options. Accordingly, the results – despite their experimental nature and their less than obvious interpretation - shed novel light on the issue of risk perception, not the least as they include and explicit representation of social concerns.

Selected resultsEvaluation and perception of accident risks are known to be a highly sensitive and problematic issue. Based on the outcome of the surveys and of the MCDA carried out in RS2b (see Figure 17 below), estimated expected accident risks are by far lowest for nuclear and solar technologies while fossil fuel chains exhibit the highest risks. On the other hand the maximum credible consequences of severe accidents, which can be viewed as a measure of risk aversion, are by far highest for nuclear, very small for solar and wind, and in the middle range for fossil chains. The perceived accident risks based on interviews with experts are considered to be highest for nuclear followed by fossil chains, with solar and wind again perceived as having small risks.

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Figure 17 – Risk perception

An explicit comparison between “objective” and “perceived” risks can therefore be summarised as follows:

Figure 18 – Objective Vs Perceived risks

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Main references

RS2b D7.1 Final report on quantification of risk indicators

3.1.8 How to treat uncertainty and how to present it to policy and decision makers?The query

Although it is unavoidable in any serious scientific debate, uncertainty is both the nightmare of policy makers and often used as an alibi to skirt difficult decisions. On the other hand, it is also obvious that decision risks can become unacceptable when uncertainty is too high. It is therefore the duty of serious scientists to appraise ranges of uncertainty and, even more importantly, to present them in a way that will hopefully demonstrate that “being approximately right is better than being exactly wrong”.


NEEDS has devoted a dedicated workpackage to uncertainty, and has produced a detailed, scientifically sound framework for its treatment, which, for the first time, systematically and consistently examines all steps of the Impact Pathway Approach from the uncertainty perspective.

It has also directly experimented and validated such framework in the context of the generalisation and transferability of external cost values across countries and sites.

Selected results

NEEDS results are systematically presented including the estimated range of uncertainty that characterises them. This was made possible by a systematic recourse to alternative sets of assumptions and scenarios (as shown in previous Figures) that have notably been used for sensitivity analysis, and by the development and adoption of a structured and detailed methodology to ensure the consistent treatment of uncertainty across cost categories and countries.

Ultimately, a “rule of thumb” can be enunciated, whereby uncertainty ranges for energy externalities are roughly in the order of a factor 0.3 3.

For additional considerations on the consequences of uncertainty on the interpretation of the NEEDS results, see also ANNEX

Main references

Rs1b, Deliverable D7.2 “Report on the methodology for the consideration of uncertainties”. As a rule of thumb the range of possible results is estimated as to be one third to 3 times the average values of damage costs.Rs3a. TP3.1: “Report on uncertainty treatment methodology”

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3.1.9 Does external cost valuation take due account of the differences in preferences and purchasing power across countries?

The query

This is another issue where heated debates have been on-going for a long time: is it fair to assign different monetary values to e.g. human life in different countries? On the other hand, if the energy system in Country A inflicts damages also to Country B that has a lower purchasing power, PPP adjustment will reduce the burden of responsibility placed on the “damager”.


NEEDS has strived to systematically account for the possible effect of using purchasing power adjustments, by presenting results that allow to assess the sensitivity to PPP.

Selected results

As an example, Figures 19 and 20 below illustrate how PPP influences the values of externalities generated by the power sector (as a % of GDP), and how country rankings can accordingly vary.

Figure 19: External costs of the power sector without PPP

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Figure 20: External costs of the power sector with PPP

Main references

RS3a - D5.1 Report on the application of Green AccountingRS3a - D1.1 Report on the procedure and data to generate averaged/aggregated dataRS1d - T 3.1 Datasets on reference environment, technology and monetary values

3.2 Energy policy queries

3.2.1 What will be the role and relative weight of the different Energy sources in the future?

The query

Anticipating the future structure of the energy systems, and notably the share of each energy source (including those that are currently emerging), is of paramount importance to policy makers in that it provides direct insights on critical issues such as the level of security of supply, the role and relevance of domestic capacity, energy trade patterns and their budgetary implications, the environmental performance of the energy systems and the achievement of targets, and many others.

The issue is intrinsically complex, when one considers that the future structure of energy systems will result from the combined effects of (i) spontaneous technological progress, (ii) exogenous

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factors (economic growth, geopolitical dynamics, etc.), and (iii) the nature and effectiveness of sectorial policies and targets (energy, environment, climate change).


To deal with the above mentioned complexity, NEEDS has devoted considerable efforts to the development and subsequent application of an integrated energy modelling platform, built upon well proven and widely used modelling tools of the MARKALL-TIMES family.

Major innovative features of these developments include:

the availability of 30, fully consistent, country models, that can be used autonomously as needed

their full integration in a Pan European model that allows for the explicit representation of e.g. energy trade flows

the direct link with the LCA and the External cost valuation carried out in NEEDS (i.e. the models capability to accept inputs from those)

the potential for integration/interaction with the work carried out by NEEDS in the area of stakeholders’ perception and MCDA

Selected results

Four main Policy Scenarios have been devised in NEEDS through direct and iterative interaction with stakeholders. The consistent adoption of these scenarios and of variants thereof across the project, and in particular within all modelling activities, ensures the robustness of results.

Scenario Main assumptions

BAU Business as UsualNo limits on CO2 emissionsMinimum use of renewable energies in line with national policiesNuclear phase out in the corresponding countries

450ppmClimate protection scenario

Reduction of the emissions of CO2 by 71% (compared to Kyoto base year) until 2050 in order to achieve the European 450ppm target

Nuclear phase out in the corresponding countries

OLGAClimate protection + security

of supply

Reduction of the emissions of CO2 by 71% (compared to Kyoto base year) until 2050 plus reduction of import dependency from oil and gas

Reduction of the net imports of oil by 30% and gas by 40% until 2050 compared to the net imports in 2010

Nuclear phase out in the corresponding countries

OLGA_NUCClimate protection + security

of supply + enhanced utilization of nuclear energy

Reduction of the emissions of CO2 by 71% (compared to Kyoto base year) until 2050 plus reduction of import dependency from oil and gas

Reduction of the net imports of oil by 30% and gas by 40% until 2050 compared to the net imports in 2010

Options for enhanced utilization of nuclear energy

Examples of results (drawn from RS2a) illustrating the scenarios outcomes, and their comparison, for what concerns the expected role of different energy sources in the future EU energy systems are shown in Figures 22, 23 and 24 below.

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Figure 22 – Primary energy consumption in selected scenarios

Figure 23 – Net electricity production for selected scenarios

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Figure 24 – Final energy consumption for selected scenarios

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Among others, these results demonstrate the extent that policy can concretely influence technology penetration, when one considers e.g. that under a strong CO2 constraint, coal would almost be phased out in 2050, while under the assumption that security of supply constraint dominates the policy context, the coal share would remain double that of gas at the same time horizon of 2050.

Main references

RS2a T 3.18 Summary report of Pan European model results – BAU scenarioRS2a T 4.19 Summary report of Pan European model results – Policy scenariosRS2a T 5.20 Report on the Integrated Pan European model

3.2.2 What is likely to be the impact of internalisation on Energy prices, on the level of pollutants and of GHG emissions?

The query

As previously stressed, the ultimate use of scientific knowledge on the full costs of energy systems is to feed into policy decisions that are directed – among others – to correcting the market distortions associated to externalities, and to reducing those externalities in the first place. Internalisation of external costs is therefore central to the debate, and the evaluation of the possible impacts of policies that are explicitly based upon internalisation measures (taxation, subsidies, but also ETS and other economic instruments) is a fundamental information feeding into the policy making process. From the policy maker perspective, it is particularly important to assess both the extent of the desired effects of such policies (i.e. by how much will externalities be reduced) and other effects that might be perceived as negative from the community of users and operators (e.g. energy price increases)


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The scenarios adopted and subsequently modelled by NEEDS (see previous section) have been selected in close cooperation with a targeted group of stakeholders (the NEEDS Policy Advisory Group) which ensures their credibility for the community of policy users.

The results of model runs for each scenario provide an explicit representation of all major outcomes, including emission levels and energy prices

The variety of the scenarios adopted further allows to compare the relative merits of alternative policy packages, and in particular to quantify the contribution of internalisation instruments within integrated energy policies.

Selected results

Here again, examples below illustrate some results drawn from RS2a

Figure 26 - Electricity prices for selected NEEDS scenarios

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Figure 27 – Contribution of internalization to the reduction of CO2 emissions

Main references


3.2.3 What is the likely impact of targeted air quality European policies (emission standards, taxation) on emissions, costs and climate change? Are current policy targets realistic? And at what cost can they be met?

The query

Policy instruments other than those explicitly geared to the internalisation of externalities are also central to recent EU and national strategies, notably those that are driven by the need to improve air quality and combat climate change. Setting realistic and effective targets is known to be difficult, and is usually the result of political negotiation (more than straightforward techno-economic thinking). Informing policy makers about the possible impacts of specific targets and about the associated constraints (acceptability, technical achievability, costs) is therefore of primary importance to ensure that target-based policies are ultimately both realistic and effective.


The NEEDS modelling framework (see previous sections) provides abundant new evidence on policy impacts and the achievability of targets (including those included in recent EU policies) while allowing to compare the effects of alternative and/or combined policy options.

Selected results

Again based on the model runs carried out in RS2a, the Figures below illustrate sample results.

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Figure 28 – Expected reduction of CO2 emissions in the Local Pollution driven scenario

Figure 29: Expected contributions to the achievement of CO2 targets for selected scenarios

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NEEDS, RS2a

Figure 30 – The possible contribution of ETS to reducing CO2 emissions

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Figure 31: CO2 reduction costs for selected NEEDS scenarios

As can be seen, the BAU scenario is only likely to achieve a share of 8% of RES by 2020, increasing to 14% by 2050, but altogether largely failing to achieve current policy targets.

On the other hand, selected policy scenarios can lead to much higher shares of renewables (20-24% in 2020, and 26-31% in 2050), thus demonstrating that current targets can be achieved under specific conditions.

CO2 targets can also be considered realistic under specific conditions, at a cost that might however presently be considered as excessive: thus, a 71% reduction in CO2 emissions is achievable in 2050, at a cost exceeding 500 €/t.

Main references


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NEEDS, RS2a

3.2.4 How can we deal with the social dimension of sustainable Energy policies? Which kind of social effects must be considered for the implementation of new Energy technologies?

The query

It is a well known fact that the “social pillar” of sustainability frameworks is the weakest in terms of both methodological developments and subsequently of the robustness of the corresponding appraisals. While the economic and environmental dimensions have been thoroughly analysed, and their quantitative measurement is generally considered to be rather advanced, the social dimension still poses significant conceptual and methodological problems.

The specific issue of appraising the sustainability of energy policies is no exception, and in urgent need of novel developments.


Here is another area where NEEDS has clearly and decisively pioneered, notably through:

The establishment of a comprehensive and internally consistent set of indicators that cover all three dimensions of sustainability, and therefore, in particular, the “social pillar”

The careful selection and validation of social indicators through the direct involvement (surveys and questionnaires) of stakeholders

The sectoral specificity of the selected indicators, which are not “generic”, but explicitly related to energy technologies and policies

The direct use of the framework of indicators within a dedicated MCDA, which has produced a wealth of original results

The highly innovative contents of this work, and its experimental nature, clearly call from some measure of caution in the validation and interpretation of results, while allowing for the identification of improvement opportunities within further research endeavours.

Selected results

The social sustainability criteria were designed, along those addressing the economic and the environmental dimension of the NEEDS framework, to generate a set of indicators for the MCDA. A specific set of indicators was then derived and validated, as illustrated below.

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Figure 32 – From social sustainability criteria to indicators

Main references

RS2b -D2.2 Revised set of social indicators that are comprehensive, operational and compatible with the ecological and economic indicatorsRS2b - D8.1 Final report on quantification of social indicators

3.2.5 How do economic sectors compare in terms of their environmental performance?

The query

The sectorial dimension of energy policies is extremely important, whereby different sectors (e.g. household, industry, transport, services) exhibit highly differentiated energy profiles, notably in terms of:

Their current energy performance/maturity

The mix of energy sources and the opportunities for substitution

The ranges of technologies that are specifically relevant

Their overall weight and relevance in the overall picture of national economies, including trade etc.

On the other hand, the effectiveness of sectorial policies ultimately contributes to the achievement of overall objectives at the national (or regional) level. For instance, the contribution that each individual sector (and possibly sub-sector) can provide to the achievement of energy efficiency, environmental protection and CO2 reduction targets is a well known “hot topic”, one that is currently very high on most political agendas worldwide.

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The NEEDS modelling platform relies on a highly structured and detailed representation of energy systems at the sectorial and subsectorial level, which is fed and supplemented by an original database of energy technologies (including their sectorial relevance).

This in turn allows for the generation of modelling outputs at levels of disaggregation that illustrate sectorial and subsectorial differentiation.

Here again, it should be stressed that one of the most original and valuable features of the NEEDS results is their full consistency across countries, ensuring the robustness of cross country comparisons and aggregations.

Selected results

Figure 32 below, which illustrates the relative contribution of the main economic sectors to CO2 emissions for selected scenarios, exemplarily shows the considerable potential role of CCS under specific policy circumstances

Figure 33 – Contribution of economic sectors to CO2 emissions for selected scenarios, and the potential role of CCS

Main references


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NEEDS, RS2a

3.2.6 Is it possible to estimate the extent to which the total external costs of the Energy system “weigh” in the overall economy of a country?

The query

External costs (at least until they are totally or partially internalised), are in fact “hidden” in traditional accounts, whether at the micro level or at the level of national accounts, which therefore provide a misleading picture of the national economy, including distortions that derive from the uneven incidence of external costs on total costs across different sectors and subsectors.

A systematic measure of the absolute and relative importance of external costs is therefore immediately useful to policy makers in order to, notably

identify priorities of intervention e.g. in those areas/costs categories where external costs are higher

monitor the impacts of policy interventions on the national economy

carry out cross country comparisons/benchmarkings


The meaningfulness and usability of results directly depends on the availability and quality of data, and NEEDS has significantly contributed to improving existing datasets through

the collection of fresh data for countries previously under studied (Eastern and Mediterranean)

updating and improving the accuracy of existing datasets as a direct result of new methodological developments in NEEDS

filling data gaps where necessary thanks to the application of the generalisation and transferability approaches developed in NEEDS

Moreover, the further development and application carried out in NEEDS of Green Accounting methods and practice provides new evidence on the welfare effects of adjusting GDP values for environmental effects.

Selected results

As an example, Figure 34 below illustrates, for the external costs of GHG emissions, the highly differentiated incidence of the energy sector in the overall economy across EU 27 Member States

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Figure 34 – Contribution of the energy systems to CO2 damage costs

Main references

RS1d - T 3.1 Datasets on reference environment, technology and monetary valuesRS1d - T 4.1 Report on the geographical extension of EcoSenseRS1d - T 4.3 Project workshop on EcoSense software use (Tunisia, April 2007)RS1d - T4.2 Progress report on transferability of monetary values and exposure-response relationshipRS3a - D1.1 Report on the procedure and data to generate averaged/aggregated dataRS3a - D2.1 Report on value transfer techniques and expected uncertaintiesRS3a - D3.1 Report on how to analyze, treat and present uncertaintyRS3a - D4.1 Report on the applications of CBA to the energy sectorRS3a - D5.1 Report on the application of Green Accounting

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3.2.7 What is the likely impact of alternative scenarios on the future penetration of end use Energy technologies?

The query

Energy systems are not only characterised by the mix of energy supply options and technologies. Their performance also depends considerably on the penetration of end use technologies, especially in terms of the final energy efficiency. In turn, the relative penetration of end use energy technologies strongly depends on the structure of the supply mix and on targeted policies to promote them. Anticipating the impact of future technological developments and that of energy policies on the demand side technologies allow policy makers to identify priorities for demand side and energy efficiency policies, and to anticipate their effects on selected manufacturing sectors.


The level of detail of the representation of the energy systems in the NEEDS modelling platform (and, upstream, in the Technology Repository Database) is such that the effects on demand side technologies can be estimated at a highly disaggregated level.

Selected results

Figures 35 and 36 below illustrates the high differentiated profile of end use technology future contribution depending on the specific characteristics of selected scenarios (respectively for the household and services sector, and for the transport sector)

Figure 35- Technologies in household and commercial sector in 2050 in different scenarios BAU 450 ppm OLGA OLGA_nuc

Energy saving measures space heating + ++ ++ ++Energy saving measures space cooling + ++ ++ ++Oil boilers + o o oOil condensing boilers o + + +Gas boilers + - - -Gas condensing boilers ++ + + +Gas heat pump + ++ ++ ++Heat exchanger + + + +Absorption heat pump - o o oEl. groundwater heat pump o + + +El. air heat pump ++ + + +Electric heating ++ + + +Compression chiller for space cooling ++ ++ ++ ++Absorption chiller for space cooling + + + +Biomass boilers ++ + + +Solar collectors + ++ ++ ++Advanced electric appliances + ++ ++ ++ (++ more than 10 %; + between + 10 % and 1 %, o less than 1 %, - not used)

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Figure 36 - Technologies in the transport sector in 2050 in different scenariosBAU 450 ppm OLGA OLGA_nuc

Diesel ++ ++ ++ ++Gasoline ++ o o oHybrid o ++ + ++LPG + o o oBiodiesel o o o oEthanol + + + +Natural Gas + + + +Combined combustion - - - -Dimethyleter o o o oMethanol IC o + o oMethanol FC - - - -Hydrogen (g) IC - - - oHydrogen (l) IC - + o oHydrogen (g) FC o + ++ ++Hydrogen (l) FC - - - -Battery electric o + + +Plug-In-Hybrid o ++ ++ ++

(++ more than 10 %; + between 10 % and 1 %, o less than 1 %; - not used; IC Internal Combustion Engine; FC Fuel Cell; (g) gaseous; (l) liquid)

References

RS2a T 3.18 Summary report of Pan European model results – BAU scenarioRS2a T 4.19 Summary report of Pan European model results – Policy scenarios

3.3 Investment decision queriesThis section deals with the issue of Social Cost Benefit Analysis and its merits/applications in the perspective of the future developments of energy systems. The scale and scope of the investment decisions that can be addressed by SCBA can vary considerably, from the micro level of site specific projects (a new plant), all the way to the assessment of the costs and benefits of EU Directives affecting the energy sector. It therefore regroups a bundle of policy queries that, despite their difference in scope and scale, can be tackled with broadly similar answers, e.g. “How to select the best technology option for a given site specific generation plant?, or “Which energy technologies to invest in the future?” etc.

The queries

Traditional Cost Benefit Analyses fail to explicitly and fully consider the values of those cost and benefit items that are not recorded by an explicit economic transaction, despite their being costs (and benefits) for society in their own right. Decisions that are typically informed by the results of CBA (i.e. investment decisions) are thus based on incomplete information, which can (and often does) significantly distort the final ranking of alternative options, misleading decision makers.

Social Cost Benefit Analysis (SCBA) corrects these distortions by explicitly including the full range of social costs (i.e. including externalities) in the accounting framework. Although SCBA as a concept is now largely accepted, its practical, systematic adoption is often hindered by the lack of reliable data.

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NEEDS has made significant progress towards a more systematic and reliable adoption of SCBA, notably through:

the consolidation of a highly structured, robust and well proven methodology for SCBA, and the publication of detailed and friendly guidance to its application

the contribution of value transfer techniques (developed and validated in NEEDS) to filling the gaps in site-dependent data that are required for SCBA at the project level (without recurring to highly resource consuming bottom-up analyses which cannot always be justified at the scale of an individual project decision)

the illustration of the merits and decision effects of a correct application of SCBA to a series of case studies

Selected results

Several applications of SCBA to the construction of new power plants have been carried out in NEEDS. Figure 37 below shows how the inclusion of external costs and benefits in project assessment can radically change the final results, not only in terms of the viability of each alternative (NPVs changing sign), but, even more importantly, for what concerns the ranking of alternatives, and therefore the option to be preferred.

Figure 37 – Social Cost Benefits Analysis: the effects of including externalities

PV (NPV): Present Value (Net Present Value)Comparison of alternative coal combustion technologies (Czech Republic)

FBC brown = Fluidized bed boiler combusting brown coal IGCC = Integrated gasification combined cycle firing hard coal FBC biomass = Fluidized bed system cofiring coal and biomass CHP = Combined Heat and Power

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Main references

RS3a - D4.1 Report on the applications of CBA to the energy sector

4 The NEEDS products: format, functionalities and accessibility The NEEDS “products” can be broadly classified in three main categories:

Reports, including (i) documents that illustrate methodological issues, the science behind them and the process that has led to their development, and (ii) documents that present the results obtained (both qualitative and quantitative)

Databases

Tools, i.e. software that is fully or partially available to third parties.

Reports are by far the most numerous. Although several of these “paper Deliverables” present results that are in fact derived from collaborative work that has involved teams from different Workpackages and Streams, they are by and large “standalone” products, whose fruition is straightforward. Accordingly, it does not seem useful to list and describe here what would in fact be a replication of the list of project Deliverables. The emphasis hereafter is therefore on the other two categories, Databases and Tools, which are more amenable to interactive and dynamic fruition.

4.1 LCA database (RS1a)This database includes the LCI values for all the technologies analysed within NEEDS. It is worth noting that, beside providing a “cradle to grave” resource assessment and costs for power supply options into the energy models and the IPA framework, in NEEDS LCA has been further developed in a highly innovative direction, whereby processes have been analysed not only based on their present, known characteristics, but also in the perspective of their future evolution (time- and scenario-dependent). The LCI database is freely available on the web via http://www.isistest.com/needswebdb/ (see Figure 38). Data are available in the EcoSpold data format (xml technology), the most widespread and technically most advanced data exchange format worldwide. It allows for an easy import into leading life cycle assessment software tools such as SimaPro, OpenLCA or Umberto. The files are also offered in Excel and html formats.

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http://www.isistest.com/needswebdb/

Figure 38 - User interface of the NEEDS life cycle inventory database

4.2 EcoSense Web (RS1b)EcoSense Web is an interactive tool, developed within NEEDS and incorporating the full range of new findings from the project. It allows to estimate the external costs of energy technologies by taking account of the specific, context dependent variables associated to energy conversion (geography, population densities, etc.). It has been designed to be used also by non experts, and is available on the web. Results can be downloaded by the user who can then further process them to carry out sensitivity analyses, testing alternative assumptions (e.g. regarding monetary valuation in different countries etc.).

EcoSense Web is expected to be directly useful to all European and national policy makers, notably within charge setting processes and cost benefit analyses.

EcoSense Web has already been extensively used and validated within NEEDS (RS3a) to produce generalised values (Euro/ton of emission) per country and for the most important pollutants.

Partners of NEEDS and CASES, as well as EC officers have free access to EcoSense Web. For other users, access will be granted for a small fee, in order to cover (at no profit) the running expenses. EcoSense Web will be updated as improved methodologies and data are available (e.g. new concentration response function, new pollutants, updated monetary values, improved dispersion modelling, etc.). Users will be regularly informed about such updates, and will be provided with the updated methodological references directly on-line.

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4.3 Technology repository SubRES (RS2a).The Reference technology database includes a fairly complete set of technologies involved in all sectors of the economy, namely: primary energy extraction, energy processing and conversion, energy transport, and end-uses by four main sectors (residential, commercial, industry, transportation) with default technological and economical parameters to be used to perform any model development or scenario analysis. All data were assembled in Excel format and converted into a model’s user-interface ready format that allows direct import into the models. Among these, thanks to an iterative process of data harmonization among streams, it was possible to constitute a common technology database for the electricity generation sector, that represents a more complete subset of the whole reference technology database. The full description of this database and of how to access it is presented in the Technical Paper RS2a_T2.7: Reference technology database

4.4 Integrated modelling platform: the NEEDS Pan-European model (RS2a)

The 30 NEEDS TIMES country models6 were implemented on the basis of common European data sources (mainly the Eurostat energy section and DG TREN transport information) integrated with national data to correct major inconsistencies and complete missing data.Five “templates”, that are elaborate Excel spreadsheets, lay down the basic structure of the country models and hold the data necessary to calibrate the energy flows of the base-year (2000) per each sector modelled (RCA: Residential/Commercial/Agriculture, IND: Industry, TRA: Transport, ELC: Electricity/Heat production, and SUP: Energy Supply). To carry out the long term analysis (over a 50-year time horizon) three additional inputs have to be specified into VEDA-FE:

- Existing and future technologies and fuels- Demand drivers and elasticities- Scenarios parameters

Technical and economic information on each existing and future technology in each sector (Supply and Power generation, Industry, Residential, Commercial, Transportation) over the entire time horizon are provided in Excel files (SubRes New Techs) that include life cycle emissions coefficients and external costs. A Business As Usual – BAU scenario was implemented taking into account the national normative on energy and environment and the main requirements of the Pan EU model in order to allow an effective multi-region integration of country in a Pan EU framework. The results obtained in BAU constitute the baseline for scenarios analysis at country

The NEEDS-TIMES Pan European model represents a new alternative instrument for policy analysis of the European energy system, allowing to create contrasting scenarios representing the potential development of the energy panorama over the years up to 2050 according to the take up of different policy measures.It has a complex multi-region structure, based on the integration of 30 EU TIMES country models, including externalities linked to emissions and the main LCI data for EPG technologies. The model generator utilized for implementing the energy system models is The Integrated MARKAL-EFOM System (TIMES), developed by the Energy Technology Systems Analysis Programme (of the International Energy Agency (IEA), and used worldwide to implement both national and global models.

6 Adopted Country’s short names: Iceland IS, Norway NO, Sweden SE, Portugal PT, Spain ES, Cyprus CY, Greece GR, Malta MT, Ireland IE, Netherlands NL, Romania RO, Italy IT, Slovenia SI, Belgium BE, France FR, Luxembourg LU, United Kingdom UK, Poland PL, Slovak Republic SK, Switzerland CH, Denmark DK, Estonia EE, Latvia LV, Lithuania LT, Austria AT, Czech Republic CZ, Germany DE, Hungary HU, Finland FI.

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A common structure for the implementation of the country models was defined, based on a Reference Energy System and a set of data files that fully describe the energy in a format compatible with the associated model generator, allowing to obtain coherent policy insights both at Pan EU and country level. The main macroeconomic and sectoral assumptions are in line with the EU projections were derived with the GEM-E3 general equilibrium model and used to derive the sectoral demand projections. The integration efforts among streams resulted in the introduction of LCA and external costs data into the Pan European model.A set of contrasting scenarios was defined in agreement with stakeholders and analysed to illustrate how the Pan European TIMES model developed within the NEEDS project can contribute to the evaluation of long term policies for the energy system.The reference scenario (REF) describes the development of the EU-27 energy system in agreement with most of present policies, providing a baseline for comparing policy scenarios. Besides the Reference scenario, the policy scenarios analysed in the NEEDS project were aimed at addressing different policy issues on the table at EU level like environmental issues linked to energy (climate policy and local pollution linked to energy) and energy issues, such as energy dependence, international oil price, nuclear availability. Moreover, taking into account the current variability of oil prices, it was also investigated in depth the stability of the model’s solutions to oil price variations.This constitutes the basis for the analysis of many possible futures (scenario analysis), according to the aim of the study and stakeholders objectives. In particular, the NEEDS Pan European Model can support decision making by evaluating:

The impact of targeted air quality EU policies (emissions standards) on emissions, costs and climate change

The full costs and benefits of EU Directives that have an impact on the energy system The impact of different Post Kyoto strategies on the future of energy technologies The impact of alternative internalization policies and their contribution to sustainability The technologies and policies that exhibit the most robust behavior in an overall

sustainability perspective

4.5 Stakeholders database (RS2b)This database includes an extensive sample of stakeholders. Although contacts are included for 49 countries, including non EU states, it primarily addresses four countries (France, Germany, Italy and Switzerland), plus selected stakeholders in Belgium and the UK. It features ca. 2200 names of targeted stakeholders to whom the NEEDS surveys have been addressed.

4.6 Database of electricity generation technology-specific sustainability indicators (RS2b)

This database also covers the four countries explicitly targeted by the NEEDS surveys. For a full description of this database, please refer to

RS2b_T3.2: Report on candidate set of criteria and indicators

RS2b_D3.1: Final set of criteria and indicators to be quantified to the extent possible for the use in NEEDS

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4.7 Web based platform for the elicitation of stakeholder preferences (RS2b)

This interactive platform has been design for eliciting stakeholder preferences and for carrying out Multi-Criteria Decision Analysis (MCDA) combining interdisciplinary technology performance indicators with user-specific preferences. For a full description of this tool, please refer to:

RS2b_T9.2 Report on the survey of suitable MCDA methods and tools, including recommendations for use in NEEDS

RS2b_T10.1: Final test of MCDA methodology

5 Conclusions and way forwardNEEDS was set out to achieve a variety of very ambitious goals:

Devising new and improved methodologies, notably for what concerns the LCA of energy technologies, the valuation of external costs, the assessment of stakeholders preferences, the theory and practice of benefit transfer, and the representation and simulation of energy systems in a EU-wide perspective

Developing and applying tools (databases, models, indicators) to operationalise and validate these new methodologies

Generating new datasets (LCI, external costs, sustainability indicators) as a result of the application of these tools, and through new surveys and data collection campaigns

Identifying alternative policy options and simulating their effects within alternative energy scenarios at both the national and the EU level

Building capacity within and beyond EU Member States to promote the widespread and consistent application of state-of-the-art methods and tools

As extensively documented by the full set of NEEDS Deliverables and Technical Papers (more than 230, all available on the NEEDS website www.needs-project.org), these goals have been abundantly achieved, thanks to the continuing effort of a team of more than 200 scientists and researchers and to the contribution of external stakeholders and policy makers.Importantly, NEEDS was set up as an Integrated Project, where the reference to Integration means much more than the juxtaposition of individual efforts: in fact, integrating the various components of the project, the multidisciplinary teams behind them and the outcomes thus produced, has proved to be both a challenge and a major source of added value.The sheer number of partners (more than 60) and their “biodiversity” (geographical, disciplinary, human and cultural), have on the one hand prompted the need for a highly structured approach to management and communication, on the other they have generated a multitude of opportunities to confront and discuss scientific opinions, through heated and at times controversial debates. Ultimately, this has contributed to both the scientific value of results and, through the process of consensus building, to their robustness.The complex web of interactions between work packages and tasks was identified at the outset and provisions were accordingly made in the project design to ensure the timeliness and effectiveness of information and data exchanges that were known to be critical for the overall project success. In addition, many opportunities for synergies between tasks have emerged in the course of the project, and have in fact generated considerable added value, such as e.g. the intense collaboration between Stream 1d (Extension of geographical coverage) and Stream 3b (Transferability and generalisation).The complexity of internal collaboration and exchanges also included the need for iterative mechanisms, to ensure e.g. that the input provided by LCA and external cost valuation to the integrated energy models could be then followed by appropriate feedbacks. More such iterations

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http://www.needs-project.org/

could have been useful, to allow e.g. for the results of Stream 2b (stakeholders perspective) to feed back into externality valuation and into energy models, but time constraints have not always fully allowed to achieve them.Furthermore, effective integration is a basic requirement for ensuring the policy relevance of the project results. NEEDS has devoted particular attention, and dedicated efforts and resources, to ensuring the policy usability of the results, through the involvement of policy makers and stakeholders, the production of summaries and briefs, the staging of dedicated policy sessions within the project events, and the production of guidelines for the policy use of the project results.As illustrated in Section 4 of this report, NEEDS has developed operational tools that have not only allowed to generate the outcomes and results that were originally targeted, but – even more importantly – that can be considered as a solid, largely integrated toolbox for further applications and policy support. The NEEDS partners are individually and jointly committed to promote and diffuse this analytical platform and, possibly, to further enhance it and improve it.

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References

[Ricci 2006] - Andrea Ricci et al. First Integrated Report – NEEDS Deliverable RS Int D5.1

[Ricci 2007]- Andrea Ricci – Guidelines to the policy use of the NEEDS results – NEEDS Deliverable RS Int D5.2

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ANNEX - A summary account of the final debate

A. Ricci, ISIS - with contributions from NEEDS partners

TABLE OF CONTENT

EXECUTIVE SUMMARY 58

1 INTRODUCTION AND OBJECTIVES 59

2 BUILDING CONSENSUS AROUND THE NEEDS RESULTS 60

3 HOT TOPICS AND CONTROVERSIAL ISSUES 60

3.1 Uncertainties and limitations 60

3.2 Private costs of future energy technologies 61

3.3 Climate change 61

3.4 Full coverage of relevant externalities 62

3.5 Back-up costs 63

5.6 Social acceptance 63

5.7 Variability and transfer 64

4 TECHNOLOGY RANKING: THE ULTIMATE CHALLENGE? 64

5 SO: HOW DO ENERGY TECHNOLOGIES ULTIMATELY COMPARE? 67

6 CONCLUSIONS 69

Executive summaryThis document is a summary account of the final debate organised in Spring 2009 to ascertain the extent of the consensus achieved within the NEEDS community on selected scientific and policy relevant issues, notably including technology comparison and ranking, the expected performances (costs, efficiency, market penetration) of new and emerging energy options, and the valuation of “difficult” externalities.There is a generalised consensus on the methodological approaches adopted and on the analytical tools developed and used in NEEDS, notwithstanding the fact that in some instances different approaches have been used “in competition”.Numerical results are also broadly consensual. In the few cases where disagreements on results have emerged (e.g. the private costs of selected energy technologies, the preferred values for GHG costs, particularly in the short-medium term), these appear to reflect the unavoidable uncertainty attached to any prediction.Some unavoidable degree of controversy remains for what concerns the meaning and the interpretation of selected results, and in particular the use that can/should be made of the NEEDS numerical outputs to derive a possible ranking of future energy technologies.On the other hand, consensus has clearly emerged on the intrinsic limits of the very concept of technology ranking, especially when based on one-dimensional criteria, while the abundant results generated by NEEDS allow to compare future technology options and their potential role in future EU energy systems according to a variety of perspectives.

1. Introduction and objectivesAs the old saying goes, “…put 10 experts around the table, and you’re sure to get at least 11 different opinions”. With a multidisciplinary team of more than 60 participating institutions, NEEDS faced the painstaking challenge of achieving consensus on such complex issues as e.g. “what will be the lifecycle costs of energy technologies in 2050?”, “ is it possible to transfer external cost values from one electricity generation plant to another?”, “is there a robust methodology to measure social acceptability?”, and many others.Indeed, after almost 5 years of intense collaboration, heated debates and hard work, we certainly cannot claim to have ironed out all controversies. This reflects – among other factors - the innovative nature of the research carried out and the varying level of maturity of the many scientific issues addressed. It also reflects the intrinsic difficulty of tackling such issues as risk assessment, understanding the complex physical phenomena that characterise climate change, or predicting the long-term dynamics of citizens’ and stakeholders’ preferences. Ultimately, achieving full consensus would have been nothing less than… suspicious!The final NEEDS conference, hosted by the Economic and Social Council of the EU on 16-17 February 2009, while primarily focusing on the presentation of the most significant results achieved by the project and of their value as inputs to policy making, was also the opportunity for staging an extended debate with the participation of some 120 experts representing academia, public and private stakeholders, and the civil society. The discussion proved extremely lively and further allowed to highlight the many achievements of the project, as well as a number of issues that remain – at least partly – controversial. Despite the limited time available (NEEDS has officially concluded its work on February 28th, 2009), it therefore seemed interesting and appropriate to follow-up the conference discussions with a final wrap up exchange of views among the lead scientists within the project. The aim of the exercise was to summarise the current position of the NEEDS experts on those issues where some degree of controversy still remains. To trigger the debate, these issues were summarised in the following condensed form:The results presented by different Research Streams of NEEDS (and, in particular, by RS1a on LCA, RS1b on Externalities Valuation, and RS 2b on Stakeholders Perspective) appear to lead to different technology rankings. What are the scientific reasons behind this? It is recognised and agreed by all that externality valuation (monetary) still needs to be further improved, notably to take (better) account of a variety of criteria (e.g. risk aversion) which are not well captured so far. Does this state-of-the-art "penalise" some technologies more than others? And, if so, what can be done to correct such distortions without waiting for future RTD developments?The final debate was organised in 2 rounds: first, Stream Leaders were asked to formulate short statements addressing the above issues. The result was circulated to all contributors, and a second round of comments/responses was then elicited from all NEEDS partners willing to contribute.This document illustrates the outcome of the discussion. At the outset, it seemed difficult to achieve unanimous consensus, and the main goal of the exercise was to record diverging positions and the scientific arguments behind them. In fact, the debate showed that some degree of consensus can be achieved on most basic controversial matters, and that the main reason behind remaining divergences is the objective uncertainty that still surrounds a number of issues. Accordingly, this document presents the main outcomes of the debate without explicitly attributing the various statements to individual authors7

.2. Building consensus around the NEEDS results

7 Contributions to the debate were made by: Rainer Friedrich, Stefan Hirschberg, Wolfram Krewitt, Richard Loulou, Stale Navrud, Philipp Preiss, Milan Scasny, Denise Van Regermorten

NEEDS has generated, among other results, a wealth of new evidence that is directly relevant to policy decisions. Irrespective of its variety and complexity, the basic process followed for the production of numerical outputs can be schematised in a fairly standard manner along the following logic:

For instance, in NEEDS:

While controversial issues usually emerge in the last steps of this chain, when results (e.g monetary values of external costs) are published and subject to interpretation (e.g. technology ranking), the first challenge is to understand whether disagreements on results (or their interpretation) actually mask/reflect divergences on the early stages of the process, i.e. assumptions or/and methodologies.A first important conclusion of the debate is that there is a generalised consensus on the methodological approaches adopted in NEEDS and on the analytical tools developed and used to operationalise these methodologies, notwithstanding the plurality of methodological approaches that have been used in NEEDS and the fact that in some instances different approaches have been used “in competition” (e.g. monetisation of risk Vs qualitative appraisal of stakeholders’ risk perception).As an immediate consequence, numerical results are also broadly consensual, to the extent that they reflect the consensus on methodological approaches. In the few cases where disagreements on results have emerged (e.g. the private costs of selected energy technologies, the preferred values for GHG costs, particularly in the short-medium term), these appear to reflect the difference in specific assumptions (e.g. the future performance of advanced technologies, the dynamics of individual preferences and the preferred value of discount rates to be subsequently applied for the costing of selected externalities). In fact, it appears that these (moderate) disagreements reflect, in turn, the unavoidable uncertainty attached to any prediction, which is an important component of any scientific debate, and has been explicitly tackled in NEEDS, with dedicated project tasks and Deliverables.Ultimately, controversies appear to concentrate in the very last step of the process, i.e. for what concerns the meaning and the interpretation of selected results, and in particular the use that can/should be made of the NEEDS numerical outputs to derive a possible ranking of future energy technologies. The issue of ranking is explicitly addressed in a further section of this document.

3. Hot topics and controversial issues3.1 Uncertainties and limitationsAs previously remarked, all values about the future are uncertain, and a systematic assessment of uncertainty ranges - and of the extent that these affect the validity of the numerical results - is an integral part of any serious research. When it comes to assessing the uncertainty attached to the monetary valuation of external costs, three main factors can be broadly identified:

an insufficient knowledge of physical processes (e.g. effects of global warming, ecosystem changes and internal feedbacks, etc.)

the difficulty in accurately predicting the future evolution of ‘exogenous’ factors such as e.g. long-term economic growth, the dynamics of individual preferences, etc.

the limitations of the state-of-the-art scientific methods, for what concerns both the accurate modelling of physical phenomena (e.g. airborne pollutants dispersion, ecosystem changes etc.) and the monetary valuation of their impacts (e.g. the social value of biodiversity, of visual intrusion etc.)

Finally, the robustness of external cost values is affected by the considerable variability of specific cost items across regions and sites, and the intrinsic limitations of the methods and tools for value transfer.NEEDS has contributed to reducing these uncertainty factors in many areas, generating new knowledge, improving the accuracy of models, extending the coverage of essential data and testing alternative approaches and alternative assumptions through sensitivity analyses.This notwithstanding, uncertainties remain in a number of areas, which may contribute to explaining some diversities in the final interpretation of results, reflecting the legitimate subjectivity of the experts (e.g. “are optimistic scenarios too optimistic?”) in those areas where science does not (yet) provide clear and certain answers. The following paragraphs briefly illustrate the outcome of the NEEDS debate on those issues where some degree of controversy still remains.

3.2 Private costs of future energy technologiesThe degree of uncertainty affecting the future values of technology costs increases with the pace and magnitude of the anticipated technological improvement: new and emerging technologies are thus more affected by uncertainty than mature technologies for which learning curves can already incorporate past observations. Among the EPG technologies for which NEEDS has conducted new and detailed assessments, those more affected by uncertainty are therefore PV, CCS, wave and tidal energy technologies and Generation IV nuclear.

In fact, the future development of private costs of a given technology depends on a range of socio-economic conditions (e.g. market introduction schemes, policy targets, R&D expenditures, etc.). Variations can be significant, and sensitivity analysis is therefore of the essence. NEEDS (and specifically the LCA stream of research) has adopted a systematic approach to sensitivity analysis, whereby for all energy technologies three alternative development scenarios have been devised: (i) pessimistic, (ii) optimistic/realistic and (iii) very optimistic, which notably differ in terms of investment costs assumptions (higher costs for pessimistic scenarios and lower costs for optimistic ones).

The results indicate that the differences in private costs projections between ‘pessimistic’ and ‘optimistic’ technology scenarios are indeed significant. Whatever ranking based on the NEEDS results will clearly reflect these ranges.

3.3 Climate changeClimate change damage costs are known to be particularly uncertain, reflecting various factors, and notably (i) the currently insufficient scientific knowledge about the physical phenomena associated to climate change and the subsequent value of physical impacts (health effects, impacts on crops and ecosystems, impacts of extreme weather events, increased needs of air cooling and decreased needs of heating), and (ii) the very long term horizon of climate change effects and the subsequent very high sensitivity to the future evolution of individual preferences, discount rates etc.

Accordingly, the range of values considered as ‘reasonable’ by scientists within (and outside) NEEDS still covers several orders of magnitude. Moreover, CO2-emission characteristics differ widely across technologies, and as a result the total value of external costs associated to certain

technologies (e.g. fossil fuels) is in fact dominated by GHG-related costs, while those same costs play a marginal role for other technological options (e.g. nuclear and selected renewables). In the NEEDS context, this considerable difference in the weight of GHG costs across energy technologies is a major additional obstacle, which affects not only the reliability of the absolute cost values but, possibly more importantly, the robustness of any attempt to rank technologies based on their total external costs.

3.4 Full coverage of relevant externalitiesWhile it is clear that any assessment and decision to be taken in the current context can only be based on available and accepted knowledge, it is also largely recognised that for a number of external cost categories a reliable estimation is so far beyond the reach of state-of-the-art research. These cost categories – which primarily include costs associated to a variety of risks – are summarised in the table below:

Cost category Main obstacles to calculation

Assessment of ‘Damocles risks’8 No agreed methodology is so far available to estimate these risks

Risk associated to terrorism The basic information that would be required to estimate these risks is in general not publicly available

Risk associated to CCS (and in particular risks associated to possible releases of CO2)

Due to the recently emerging character of CCS options, almost no information is so far available on either probabilities or damages

Security of supply (especially for natural gas)

No agreed methodology is so far available to estimate these risks

Visual annoyance Damages deriving from visual intrusion are affected by a considerable variability in time and space, which makes it impossible to adopt benefit transfer methods

Most of the obstacles identified above are likely to be progressively removed in the future, thanks to additional research and data collection, some of which is already underway (e.g. on security of supply). Transaction costs to generate reliable cost figures may nevertheless remain high e.g. for visual annoyance costs whenever site-specific assessments (WTP or other CVM to elicit individual preferences) are required.As for Damocles risks, however, the difficulties are of a more conceptual nature, and it does not seem realistic, at least in the short term, to achieve consensus on a mainstream methodology to tackle the general issue of risk aversion in an analytical and quantitative manner. We know for example that in Switzerland the closer to Nuclear Power Plants people live, the lower their risk aversion towards nuclear; the further they are from the plant the higher their risk aversion. In other words those most exposed are least averted. And why are people not risk averted towards large Hydro Power Plants (considering the poor record of hydropower accidents world-wide?

8 Risk is calculated as the product of (i) the probability of occurrence of an accident (or of other unwanted/unpredicted events entailing negative consequences) by (ii) the magnitude of the damage in case the negative event occurs. Damocles risks are those associated to technological options for which the probability is low or very low while the potential damage is large or very large. Typical examples are nuclear plants or, in a different sector, air travel.

Eventually, alternative/complementary approaches are necessary, which NEEDS has experimented (particularly in the research stream dealing with stakeholders’ perspective), with a preliminary set of results that shed a stimulating light on this highly sensitive issue (to what extent is it possible to explain the divergences between ‘objective’ results derived from the state-of-the-art analytical methods and the ’subjective’ results derived from stakeholders’ surveys? Are these divergences primarily the consequence of irrational behaviour and ideological biases or/and are they mainly due to the insufficient lack of solid scientific knowledge? And to what extent are these two shortcomings feeding each other?)In the short term, what matters is to understand whether the current limitations affect the ‘policy support power’ of the available results. It is quite obvious that an incomplete coverage of potential impacts favours those technologies which cause impacts that cannot be quantified when external costs are used as the basic indicator for comparative ranking. If e.g. risks from long-term storage of CO2 are not known or cannot be quantified in monetary terms, external costs shall not be used as a basis for comparing CCS technologies against any other energy technology.In fact, there appears to be a reasonable consensus that the possible (future) inclusion of additional external costs such as visual intrusion or security of supply is not likely to modify the current estimations in a substantial manner, and that technology ranking9 will hardly be affected. The main exception, once again, are external costs associated to specific risks, and in particular to the Damocles risk, for which the current lack of an agreed approach to deal with risk aversion makes it difficult to gauge the possible consequences of its inclusion.

3.5 Back-up costsA complete social cost accounting framework should include all cost categories that can analytically be attributed to the various technology options. Back-up costs (i.e. those costs that must be faced to ensure that energy supply will be guaranteed at the desired level even in the event of unexpected plant breakdown/closure) should therefore be considered along with other private and external costs. The issue here is not so much to calculate the value of back-up costs, but rather to attribute them to specific energy options: the efforts required for ensuring firm capacity depend on the overall configuration of the supply system and can hardly be allocated to a single technology. More generally (as further discussed in this document), the efficiency of the energy system is affected in many ways by the qualitative and quantitative mix of energy sources, and by their spatial and temporal organisation.

3.6 Social acceptanceA policy relevant comparison of energy technologies is not possible if the indicator(s) used to compare them do not properly address key issues affecting societal acceptance of a given technology, and it so happens that social acceptance is particularly important precisely for those factors that are most affected by the current methodological limitations (e.g. risks associated to nuclear accidents, to CCS leakages etc.).

NEEDS has made a significant step forward in this area with the development of an original approach, based on a novel set of indicators (notably including energy-specific social indicators alongside with economic and environmental ones) and on Multi Criteria Decision Analysis (MCDA). 3.7 Variability and transferSite dependence of many external cost categories is a well-known problem, which also affects different energy technologies in different ways. Renewable Energy Sources (RES) are in general considered to be most affected by this variability: for instance, NEEDS has allowed to confirm that

9 The issue of ranking is discussed in a further section of this document

the impacts of wind turbines or wind farms on landscape are the biggest barrier in the Czech Republic, while it is not the case in North Africa where wind farms are mostly installed in deserted areas. Significant variability can also be found for private costs, e.g. in relation to the need to build dedicated/new transmission lines for grid connection of isolated RES plants.NEEDS has developed and formalized a structured methodology for value transfer, and despite some remaining limitations (e.g. the above mentioned example of visual annoyance), its application within the project has proved its robustness and has allowed to significantly extend the geographical coverage of the available datasets on external costs.

4. Technology ranking: the ultimate challenge?Eventually, the debate that took place in the final stages of NEEDS has shown that the one area where controversies persist is technology ranking. While it seems only natural that the abundance of numerical evidence produced and the systematic comparison it allows of technology performances would ideally lead to some kind of ranking, disagreements remain on the ranking-oriented interpretation of such evidence. In fact, as discussed below, the real issue is not only – and in fact not so much – on whether the NEEDS results are ‘good enough’ to allow for technology ranking, but rather on whether it makes sense to attempt any ranking that would be solely based on the individual merits of energy technologies.Indeed, a technology ranking based on the monetary valuation of social costs (private costs plus damage costs) can be used to issue statements regarding the efficiency of individual technologies and to support recommendations about which technologies should be preferred in a future energy mix. However, by no means this directly leads to the conclusion that only the technology with the lowest social costs should be used.Technology ranking is not such a solid concept, because technologies are not always in a situation of pure competition (they are not pure substitutes). In the Power generation sector for instance, it is often found that technologies A and B are partly complementary, and partly competing. This is due to the seasonal and diurnal characteristics of each, and to the difficulty of modulating their production to follow the load curve. For example: to say that Wind turbines are "better" or "worse" than some baseload plant is meaningless, because it ignores the essential fact that Wind turbines cannot fully replace baseload plants. More sensibly, one should evaluate and compare bundles of technologies, rather than individual technologies. For instance, a bundle consisting of wind turbines + large dam hydro plant could be compared with a bundle consisting of CSP + biomass plant. Some bundles may combine more than two technologies (e.g. Nuclear + gas turbine + pumped storage). Unfortunately, the number of possible bundles grows very rapidly and therefore becomes hard to even enumerate. This is precisely why integrated energy models (such as the TIMES model developed and extensively applied in NEEDS) are useful, since they can select optimal bundles without having to enumerate them explicitly. Technology ranking is a static concept. External costs estimates generated by NEEDS through the improvement and application of the methodology originally developed in ExternE, as well as any technology ranking based on such estimates, are correct only at the margin , i.e. in terms of being added to an existing baseload energy system. What is being estimated are (averaged) marginal external costs, which are therefore highly – but exclusively - relevant when discussing a (marginal) change to an existing bundle of energy technologies. Ranking technologies is as solid as the methods used for ranking and the data used in the implementation. Any method and dataset - and this applies to all the analytical frameworks used in NEEDS (LCA, Impact Pathway Approach, energy-economic optimisation models, MCDA) - is subject to limitations and uncertainties of different nature. Rankings based on these methods will obviously reflect their limitations and uncertainties. LCA analyses physical entities (inputs and outputs of processes) and therefore primarily deals

with variables that can be observed and measured, which increases its credibility. In NEEDS, LCA has been developed in a highly innovative direction, whereby processes have been

analysed not only based on their present, known characteristics, but also in the perspective of their future evolution (time- and scenario-dependent). While adding valuable insights to the discussion about future energy systems, this additional dimension of LCA clearly opens the door to uncertainties that are typical (and unavoidable) of any foresight exercise. The heated debate on the dynamics of private costs for selected emerging technologies is a clear illustration of this phenomenon.

Monetary valuation of external costs (typically carried out along the Impact Pathway Approach – IPA) generates values of social costs and benefits that can then be directly added and compared in the framework of e.g. Cost Benefit Analyses, or Green Accounting practices. It is based on the bottom-up estimation of actual damage costs (for which it clearly depends on the availability of high quality LCA data), and has the major advantage of providing results that are expressed in one and the same unit of measure (€). Its limitations primarily arise from the difficulty in measuring selected cost categories, thereby opening the door to possible criticisms about the complete coverage of all costs and benefits.

Integrated energy models aim at the identification of optimal energy mixes by modelling the interaction over time between technology characteristics, resource availability, technology costs (both private and external), prices, as well as a variety of policy dependent variables and constraints like capacities for building new power plants, emission caps, policy targets regarding renewable energy, etc. The optimal mix(es) found by such models will typically depend on the scenario being simulated, on the time period considered, and on the country being simulated. As for limitations, it can be argued that optimisation should not only be based on costs.

The MCDA approach (especially as applied in NEEDS) has a much broader scope than LCA or External cost valuation. First, it accommodates the most essential LCA-results; second, it accommodates the dominant contributors to external costs (global warming and health effects); third, it treats various types of risks in an explicit manner; fourth, it accommodates social concerns (risks being one example) that partially cannot be treated based on natural sciences; fifth, it deals with practical policy relevant issues such as operational aspects and security of supply (though admittedly in a much simplified manner that could be further advanced). The most important difference between MCDA and other approaches is that the earlier is a discursive approach; the approach as such will not resolve major controversies but gives the opportunity for representing explicitly the controversial aspects, dealing with them in a structured manner, increasing the sensitivity of stakeholders and decision-makers to strengths and weaknesses of technologies, helping to understand own priorities and guiding the debate on very complex issues.

The table below summarises the main strengths and limitations of the 4 analytical frameworks developed and applied in NEEDS.

Strengths Limitations

LCA Complete account of inputs and outputs

Uncertainties associated to long-term dynamics of private

Can accommodate time- and scenario-dependence

Provides fundamental input to external cost valuation

costs Indirect link to decision

making process

External cost valuation

All results in one and the same (monetary) unit

Based on real damage costs Can accommodate sensitivity

to critical parameters (value of life, costs of climate change, etc.)

Cannot generate cost values for non-quantifiable externalities

High sensitivity (and therefore uncertainty) to the dynamics of individual preferences (e.g. discount rate)

Integrated energy models

Account for the complex interactions between all major variables, constraints and policy options

Accommodates inputs from LCA and External costs valuation

Identifies optimal energy mixes ‘automatically’

Optimisation based on costs only

Risk of ‘black box’ perception

MCDA Accommodates inputs from LCA and External costs valuation

Explicit representation of risk and other social concerns

Provides an effective and comprehensive platform for dialogue

Critical dependence from the choice of indicators and of their weights

Does not provide ‘one definite result’, but rather patterns to be interpreted

If finally appears (and this was in fact one of the founding motivations of the NEEDS Integrated Project!) that none of the individual approaches can, alone, generate a straightforward ranking of energy technologies, while their combined use provides a variety of inputs that are directly relevant (and usable) to policy making. In summary:

the fact that ranking methods are not capable to cover all the aspects of interest is not a valid argument for not using them;

technology comparison through social costs does not lead to an absolute ranking, but rather one that (only) incorporates all quantifiable criteria;

rankings based on social costs cannot substitute models that take into account a wider set of variables and constraints. On the other hand, the comparison of the average social costs of different technologies can be used to iteratively crosscheck the model results e.g. to ascertain whether the introduction of certain technologies can be considered ‘reasonable’;

the differences of opinion about the use of total costs as an aggregated indicator of technology performance are nothing new. This has been one (among several) motivations behind the inclusion of MCDA in NEEDS, as an additional framework of assessment. The results well

reflect these issues and the impact of factors not included in the total cost approach and emphasize the need of scientifically guided/supported discursive processes with stakeholder involvement;

transparency in the presentation and explanation of the results of such a complex and multifaceted project as NEEDS is more important than full convergence, when one aims at building the trust of decision makers.

5. So: how do energy technologies ultimately compare?Despite the various caveats highlighted in the previous section, a wealth of new, significant evidence is available from NEEDS on the absolute and relative performances of energy technologies, which should be put in perspective. At the outset, one should recognize that nuclear plays a special role in this debate, as it is well known that the controversies about ranking are usually triggered by the inclusion of nuclear power in the basket of compared technologies. Some argue that nuclear energy should not be explicitly compared (social costs-wise) to other electricity generation options, owing to the imbalance created by the risk aversion factor. While the opinions within the NEEDS team diverge on this specific issue, a number of statements can be made that reflect the outcome of the final NEEDS debate: Social costs figures provide evidence on those cost categories that lend themselves to

quantification and monetization;

Nuclear energy is clearly ’favoured’ by a direct comparison of quantifiable social costs, in that the Damocles risk is not included;

The Damocles risk associated to nuclear is however not the only cost that is currently unaccounted for: similar risks should be estimated for other energy options for which it is likely to be also large (e.g. hydropower), and other risk typologies should also find their place in the social cost accounting frameworks, such as e.g. those possibly associated to the currently less known CCS options);

On the other hand, there are other external cost categories that are higher for nuclear than for competing technologies: this is typically the case for up- and down- stream costs, which are mostly negligible for the majority of energy options (at least when compared to the external costs arising from the process itself), while they are significant in the nuclear case. For instance, NEEDS has estimated that external costs arising from the operation of exemplary power plants in 3 Central and Eastern European Member States is about 0.03-0.06 €c/kWh (varies with plant, location and year), while they can be as high as 0.12-0.15 €c/kWh across the entire lifecycle;

Additional ‘distortions’ arise from the large uncertainty still remaining on the costs associated to climate change and GHG emissions, whose relative weight varies enormously across technology options;

One possible option would be to explicitly compare only those energy technologies that exhibit similar orders of magnitude for the various cost categories, leading e.g. to compare fossil fuel with biomass powered plants on the one hand, while comparing nuclear with RES on the other;

Other considerations are however also important when attempting comparisons based on social costs: new power lines and their impacts, including visual intrusion and ERF (both documented and

loss of well-being due to fear of impacts) largely depend on the energy technology used (and on the overall energy technology mix) . The need to build powerlines is in general higher for renewables like hydro and wind (which have to be developed where the wind and hydro

resources are located) than for fossil fuels and nuclear power plants (which can be built closer to where the population and industry needing electricity are located).

the ExternE methodology was originally developed to deal with external costs from fossil fuel cycles and emission to air and their impacts on health, agriculture and materials. In spite of the developments within the Externe Project Series and NEEDS to better deal with other sorts of impacts than emissions to air (e.g. biodiversity as pioneered by NEEDS), the original focus on health impacts, agriculture and materials from air emissions is still the most advanced and reliable part of the external costs estimates. Thus, external costs estimates for renewables like hydro and on-shore wind (for which pollutant emissions are almost negligible) are subtotals to a much larger degree than for fossil fuels.

In any instance, provided the information on what is really accounted for is clearly presented, there is no scientific reason to refrain from the publication of results.Ultimately, both the LCA and the External Cost Valuation approaches developed in NEEDS have delivered results that are policy relevant per se in terms of technology comparison. As for the outcome of the Integrated Energy Modelling– which has fully incorporated the inputs from both approaches – it was not meant to (and does not) provide evidence in the form of an explicit comparison of energy technologies, but rather a rich set of optimal energy mixes associated to a several differentiated scenarios and a number of variants thereof. When it comes to the final word on energy technology comparison, it seems therefore appropriate to primarily refer to the findings of the MCDA activity, which also accommodates the inputs from LCA and External Cost valuation, while relying on a broader assessment platform that explicitly represents those factors that are not (so far) amenable to consensual monetization: the individual preference profiles have a decisive influence on the MCDA-ranking of

technologies; this influence is particularly pronounced for technologies that have a highly differentiated profile, i.e. that show top performance on a number of indicators but also weak relative performance on some other. Such technologies may be controversial; nuclear energy is the most pronounced example having these features.

thus, given equal weighting of environmental, economic and social dimensions and emphasis on the protection of climate and ecosystems, minimisation of objective risks and affordability for customers, the nuclear options are top ranked. On the other side, focusing on radioactive wastes, land contamination due to hypothetical accidents, risk aversion and perception issues, terrorist threat and conflict potential, the ranking changes to the strong disadvantage of nuclear energy. This emphasizes the need of further technological developments towards mitigating the negative impacts of these issues.

While within the external cost estimation framework applied in NEEDS nuclear energy exhibits the lowest total costs, its ranking in the MCDA-framework tends to be lower, mainly due to the inclusion of a variety of social aspects not reflected in external costs. Thus:

o nuclear energy ranks in MCDA mostly lower than RES, which benefit from much improved economic performance

o RES whose production costs are assumed to be strongly reduced (drastically in the case of solar technologies), have a rather wide range of total costs, with biomass technologies (especially poplar) on the high side and solar and wind on the low. The latter have total costs comparable or even lower than fossil, depending on which value is used for the highly uncertain CO2-damage costs;

in the MCDA-framework RES show the most robust behaviour, i.e., in comparison to fossil and nuclear options, lower dependence of ranking on the differences in preference profiles; this applies especially to solar technologies;

Coal technologies have mostly lower total costs than natural gas. In the MCDA-framework coal on the other hand performs worse than centralized natural gas options; the latter are in the midfield and have thus a ranking comparable to nuclear;

the performance of CCS is mixed, i.e. in MCDA fossil technologies with CCS may rank better or worse than the corresponding technologies without CCS, depending on which specific CCS option is used. Total costs justify coal with CCS when the costs of CO2-damages are in the upper range of values.

the ranking of fossil technologies highly depends on the emphasis put on the environmental performance, which in relative terms remains to be a weakness, more pronounced for coal than for gas.

6. ConclusionsAs repeatedly stated, the value of the NEEDS results goes well beyond hypothetical rankings of energy technology options, not least owing to the largely recognised meaninglessness of any ranking that would rely on a one-dimensional aggregated indicator.Technology comparisons can be made in a variety of ways, depending notably on the background context (e.g. the structure of the existing energy system, the level of the existing scientific and industrial know how) and on the scope and scale of the decision at stake (e.g. identification of priorities for long term research, or short term investment decisions, or taxation policies, or target setting in the area of GHG emission, air quality, etc.)NEEDS has produced abundant evidence that feeds into the entire range of problematics and policy decisions. It has done so by (i) improving the scientific knowledge in many critical areas, (ii) applying new knowledge, models and tools to the actual calculation of a wide range of quantitative results (iii) supplementing the quantitative evidence with discursive – though analytical – assessments.Broad consensus has been achieved within the NEEDS community on both the validity of the methodologies and on the importance of integrating different analytical frameworks to increase the coverage and the robustness of each individual approach.Some degree of controversy persists, not so much on the numerical results generated by each stream of research, but rather on their ‘consensual interpretation’, particularly when it comes to the difficult challenge of establishing a univocal technology rankingOther remaining divergences mainly reflect the current state of uncertainty associated to some key parameters (e.g. costs of climate change) and the lack of solid approaches for the monetary valuation of risks.

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