World in Transition 3 - Towards Sustainable Energy Systems · 2019-05-24 · Energy in transition countries 26 Economic and geopolitical framework conditions 28 The institutional

World in Transition 3

German Advisory Council on Global Change (WBGU)

Towards Sustainable Energy Systems


EARTHSCAN

H. Graßl

J. Kokott

M. Kulessa

J. Luther

F. Nuscheler

R. Sauerborn

H.-J. Schellnhuber

R. Schubert

E.-D. Schulze

World in Transition

Members of the German Advisory Council on Global Change (WBGU)(as on 21 March 2003)

Prof Dr Hartmut Graßl (chair)Director of the Max Planck Institute for Meteorology, Hamburg

Prof Dr Dr Juliane Kokott (vice chair)Director of the Institute of European and International Business Law at the University of St. Gallen, Switzerland

Prof Dr Margareta E KulessaProfessor at the University of Applied Sciences Mainz, Section Business Studies

Prof Dr Joachim LutherDirector of the Fraunhofer Institute for Solar Energy Systems, Freiburg

Prof Dr Franz NuschelerDirector of the Institute for Development and Peace, Duisburg

Prof Dr Dr Rainer SauerbornMedical Director of the Department of Tropical Hygiene and Public Health at the University of Heidelberg

Prof Dr Hans-Joachim SchellnhuberDirector of the Potsdam Institute for Climate Impact Research (PIK) and Research Directorof the Tyndall Centre for Climate Change Research in Norwich, United Kingdom

Prof Dr Renate Schubert Director of the Center for Economic Research at the ETH Zurich, Switzerland

Prof Dr Ernst-Detlef SchulzeDirector at the Max Planck Institute of Biogeochemistry in Jena

German Advisory Council

on Global Change

World in Transition

Volume 3


Earthscan

London and Sterling, VA

GERMAN ADVISORY COUNCIL ON GLOBAL CHANGE (WBGU)Secretariat Reichpietschufer 60-62, 8th FloorD-10785 BerlinGermany

http://www.wbgu.de

Time of going to press, German version: 21.3.2003, entitledWelt im Wandel: Energiewende zur Nachhaltigkeit. Springer-Verlag, Berlin Heidelberg New York, 2003ISBN 3-540-40160-1

First published by Earthscan in the UK and USA in 2004

Copyright © German Advisory Council on Global Change (WBGU), 2004

All rights reserved

ISBN: 1-84407-882-9

Printed and bound in the UK Translation by Christopher Hay, DarmstadtCover design by Meinhard Schulz-Baldes using the following illustrations:Wind mills (M. Schulz-Baldes), solar thermal power plant (Plataforma solar de Almeria), 3-stone hearth (R. Sauerborn),petrol pump, oil pump, dam, smokestack (Pure Vision Photo Disc Deutschland)

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Earthscan publishes in association with WWF-UK and the International Institute for Environment and Development

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Wissenschaftlicher Beirat der Bundesregierung Globale Umweltveränderungen (Germany)World in transition : conservation and sustainable use of the biosphere / German Advisory Council on Global Change.

p. cm.Includes bibliographical references (p. ).ISBN 1-85383-802-0 (cloth)1. Biological diversity conservation--Government policy--Germany. 2. Nature conservation--Government policy--Germany.

3. Sustainable development--Government policy--Germany. I. Title

QH77.G3 W57 2001333.95'16'0943--dc21

2001023313

This book is printed on elemental chlorine-free paper

Council Staff and Acknowledgements

Secretariat

Scientific Staff

Prof Dr Meinhard Schulz-Baldes(Secretary-General)

Dr Carsten Loose (Deputy Secretary-General)

Dietrich Brockhagen (DEA oek)

Dr Martin Cassel-Gintz (until 30.06.2002)

Dipl-Pol Judith C Enders (01.05. to 31.07.2002)

Dr Ursula Fuentes Hutfilter

Dipl Umweltwiss Tim Hasler (from 01.09.2002)

Dipl Pol Lena Kempmann (from 01.10.2002)

Dr Angela Oels (until 06.08.2002)

Dr Thilo Pahl (until 31.01.2003)

Dr Benno Pilardeaux (Media and Public Relations)

Administration, Editorial work and Secretariat

Vesna Karic-Fazlic (Accountant)

Martina Schneider-Kremer, MA (Editorial work)

Margot Weiß (Secretariat)

Scientific Staff to the Council Members

Dr Carsten Agert (Fraunhofer Institute for Solar Energy Systems, Freiburg, from 01.08.2002)

Referendar jur Tim Bäuerle (Heidelberg, until31.12.2002)

Cand rer pol Markus Dolder (ETH Zürich, Institutefor Research in Economics, until 31.08.2002)

Lic rer pol Stefanie Fankhauser (ETH Zürich, Insti-tute for Research in Economics, until 31.07.2002)

Dr Thomas Fues (Institute for Development andPeace, Duisburg)

Dr Jürgen Kropp (Potsdam Institute for ClimateImpact Research)

Dr Jacques Léonardi (Max Planck Institute forMeteorology, Hamburg)

Referendar jur Christian Lutze (Heidelberg, from01.01.2003)

Dr Franziska Matthies (Tyndall Centre for ClimateChange Research, Norwich, UK)

Dr Tim Meyer (Fraunhofer Institute for SolarEnergy Systems, Freiburg, until 31.07.2002)

Dipl Volksw Kristina Nienhaus (ETH Zürich/Aka-demie für Technikfolgenabschätzung in Baden-Württemberg, Stuttgart, from 09.09.2002)

Dipl Volksw Marc Ringel (University Mainz)

Dipl Biol Angelika Thuille (Max Planck Institute forBiogeochemistry, Jena)

VI Council Staff and Acknowledgements

The Council ows its gratitude to the importantcontributions and support by other members of theresearch community. This report builds on the fol-lowing expert’s studies:– Dr Maritta von Bieberstein Koch-Weser (Earth

3000, Bieberstein) (2002): Nachhaltigkeit vonWasserkraft.

– Dr Ottmar Edenhofer, Dipl Volksw Nicolas Bauerand Dipl Phys Elmar Kriegler (Gesellschaft fürSozio-ökonomische Forschung – GSF, Potsdam)(2002): Szenarien zum Umbau des Energiesys-tems.

– Prof Dr Ing habil Hans-Burkhard Horlacher (TUDresden) (2002): Globale Potenziale der Wasser-kraft.

– Dr Ing Martin Kaltschmitt, Dr oec Dipl Ing DieterMerten, Dipl Ing Nicolle Fröhlich and Dipl-PhysMoritz Nill (Institut für Energetik und UmweltGmbH, Leipzig) (2002): Energiegewinnung ausBiomasse.

– Crescencia Maurer (Senior Associate in the Insti-tutions and Governance Program of the WorldResources Institute – WRI, Washington, DC)(2002): The Transition from Fossil to RenewableEnergy Systems: What Role for Export CreditAgencies?

– Dr Joachim Nitsch (DLR, Institut für TechnischeThermodynamik, Stuttgart) (2002): Potenziale derWasserstoffwirtschaft.

– Dipl Geoökol Christiane Ploetz (VDI-Techno-logiezentrum, Abteilung Zukünftige Technolo-gien Consulting, Düsseldorf) (2002): Sequestrie-rung von CO2: Technologien, Potenziale, Kostenund Umweltauswirkungen.

– Dr Fritz Reusswig, Dipl Oec Katrin Gerlinger andDr Ottmar Edenhofer (Gesellschaft für Sozio-ökonomische Forschung – GSF, Potsdam) (2002):Lebensstile und globaler Energieverbrauch.Analyse und Strategieansätze zu einer nachhalti-gen Energiestruktur.

– Keywan Riahi (Institute for Applied SystemsAnalysis – IIASA, Laxenburg) (2002): Data FromModel Runs With MESSAGE.

– Dr Franz Trieb and Dipl Systemwiss Stefan Krons-hage (DLR, Institut für Technische Thermody-namik, Stuttgart) (2002): Berechnung von Welt-potenzialkarten.

Valuable support was provided during an in-depthdiscussion with scientific experts. The WBGU thanksthe participants Prof Nakicenovic (IIASA, Laxen-burg), Dr Nitsch (DLR, Stuttgart) and Prof Dr vonWeizsäcker (MdB – Enquete Commission on Glob-alisation, Berlin).

The Council also wishes to thank all those who, innumerous instances, promoted the progress of thisreport through their comments and advice:

Jan Christoph Goldschmidt (Fraunhofer Institutefor Solar Energy Systems, Freiburg), Dr ThomasHamacher (Max Planck Institute of Plasma Physics,Garching), Dr Klaus Hassmann (Siemens AG), ProfDr Klaus Heinloth (University Bonn), Prof Dr Dieter Holm (former University Pretoria), Prof DrEberhard Jochem (Fraunhofer Institute for Systemsand Innovation Research, Karlsruhe), Prof Dr Wolf-gang Kröger (Paul Scherrer Institute,Villingen), ProfDr Matheos Santamouris (University Athens).

For their substantial assistance on issues relatingto rural electrification and energy supply in develop-ing countries, provided in connection with the prepa-ration of the World Energy Outlook 2002, we thankDr Fatih Birol, Chief Economist and Head of Eco-nomic Analysis Division of the International EnergyAgency (IEA, Paris) and Marianne Haug, Directorof the Energy Efficiency Department, Technologyand R&D of IEA as well as Laura Cozzi, EnergyAnalyst of the Economic Analysis Division of IEA.

The Council is much indebted to the persons whoreceived the WBGU delegation visiting the PR ofChina from March 10 to 22, 2002. Many experts frompolitics, administration and science offered guidedtours, prepared presentations and were available forin-depth discussions and conversations. In particularthe Council wishes to thank Ambassador JoachimBroudré-Gröger (German Embassy Beijing) andWilfried Wolf (Leader of the Economic Division ofthe German Embassy Bejing), without whose sup-port the substantive and organizational preparationand performance of the study tour would not havebeen possible, and the experts at Tsinghua Univer-sity, Beijing, and at the University of Shanghai, whoparticipated in highly informative energy expert pan-els with the Council.

The Council thanks Christopher Hay (Überset-zungsbüro für Umweltwissenschaften, Darmstadt)for his expert translation of this report into Englishfrom the German original.

Finally, we wish to thank Bernd Killinger, who, asan intern, carried out research and assembled litera-ture, as well as Sabina Rolle, who, as student assis-tant, supported our work.

1

22.12.22.32.42.52.62.72.8

33.13.23.33.43.53.63.73.8

4

4.1

4.24.3

Council Staff and Acknowledgements V

Outline of Contents VII

Contents IX

Boxes XV

Tables XVI

Figures XVIII

Acronyms and Abbreviations XX

Summary for policymakers 1

Introduction 11

Social and economic energy system linkages 13Introduction 13The global setting 13Energy in industrialized countries 17Energy in developing and newly industrializing countries 22Energy in transition countries 26Economic and geopolitical framework conditions 28The institutional foundation of global energy policy 32Interim summary: The starting point for global energy policy 41

Technologies and their sustainable potential 43Introduction 43Energy carriers 43Cogeneration 73Energy distribution, transport and storage 76Improvements in energy efficiency 83Carbon sequestration 88Energy for transport 91Summary and overall assessment 94

An exemplary path for the sustainable transformationof energy systems 97

Approach and methodology for deriving an exemplary transformation path 97

Energy scenarios for the 21st century 98Guard rails for energy system transformation 107

Outline of Contents

VIII

Towards sustainable energy systems: An exemplary path 126Discussion of the exemplary path 130Conclusions 139

The WBGU transformation strategy: Paths towards globally sustainable energy systems 143

Key elements of a transformation strategy 143Actions recommended at the national level 143Actions recommended at the global level 166

Research for energy system transformation 197Systems analysis 197Social sciences 199Technology research and development 202

Milestones on the WBGU transformation roadmap: Policy objectives, timeframes and activities 207

From vision to implementation: Using the opportunities of the next 10–20 years 207

Protecting natural life-support systems 207Eradicating energy poverty worldwide 211Mobilizing financial resources for the global transformation

of energy systems 213Using model projects for strategic leverage, and forging energy

partnerships 214Advancing research and development 215Drawing together and strengthening global energy policy institutions 215Conclusion: Political action is needed now 216

References 217

Glossary 231

Index 238

4.4 4.54.6

5

5.15.25.3

66.16.26.3

7

7.1

7.27.37.4

7.5

7.67.77.8

VIII Outline of Contents

Contents

1

2

2.1

2.22.2.12.2.22.2.3

2.32.3.12.3.22.3.32.3.4

2.42.4.12.4.2

2.52.5.12.5.22.5.32.5.4

2.6

Council Staff and Acknowledgement V

Outline of Contents VII

Contents IX

Boxes XV

Tables XVI

Figures XVIII

Acronyms and Abbreviations XX

Summary for policymakers 1

Introduction 11

Social and economic energy system linkages 13

Introduction 13

The global setting 13Rising energy and carbon productivity – trends up to 2020 13Energy use by sector 14Lifestyles and energy consumption 16

Energy in industrialized countries 17Energy supply structures 17Principles and objectives of energy policy 19Liberalization of markets for grid-based energy supply 20Renewable energies in industrialized countries 21

Energy in developing and newly industrializing countries 22Energy supply structures 22Trends in energy demand by sector 24

Energy in transition countries 26Energy use 26Trends in energy demand by sector 27Subsidies as a cause of inefficient energy consumption 27Privatization, liberalization and (re-)regulation of energy industries 28

Economic and geopolitical framework conditions 29

2.6.12.6.2

2.72.7.12.7.2

2.7.2.12.7.2.22.7.2.3

2.7.32.7.4

2.8

3

3.1

3.23.2.1

3.2.1.13.2.1.23.2.1.33.2.1.4

3.2.23.2.2.13.2.2.23.2.2.3 3.2.2.4

3.2.33.2.3.13.2.3.23.2.3.33.2.3.4

3.2.43.2.4.13.2.4.2

3.2.4.33.2.5

3.2.5.13.2.5.23.2.5.33.2.5.4

3.2.63.2.6.13.2.6.23.2.6.33.2.6.4

3.2.73.2.7.13.2.7.23.2.7.33.2.7.4

3.2.8

Globalization as a new framework condition for energy policy action 29Geopolitics 29

The institutional foundation of global energy policy 32Knowledge base 32Organization 32Political declarations 32International treaties 34Operational and coordinating activities of the international organizations 37Financing structure 38Fragmented approaches to global energy policy 41

Interim summary: The starting point for global energy policy 41

Technologies and their sustainable potential 43

Introduction 43

Energy carriers 43Fossil fuels 43Potential 43Technology/Conversion 45Environmental and social impacts 46Evaluation 47Nuclear energy 48Potential 48Technology/Conversion 49Environmental and social impacts 50Evaluation 51Hydropower 52Global potential 52Technology 52Environmental and social impacts 53Evaluation 55Bioenergy 56The potential of modern bioenergy 56Environmental and social impacts of traditional biomass

utilization in developing countries 61Evaluation 61Wind energy 62Potential 62Technology/Conversion 63Environmental and social impacts 64Evaluation 65Solar energy 65Potential 65Technology/Conversion 65Environmental and social impacts 71Evaluation 71Geothermal energy 71Potential 71Technology/Conversion 72Environmental and social impacts 73Evaluation 73Other renewables 73

XX Contents

3.33.3.13.3.23.3.33.3.4

3.43.4.13.4.23.4.3

3.4.3.13.4.3.23.4.3.3

3.4.43.4.4.13.4.4.23.4.4.33.4.4.43.4.4.5

3.4.5

3.53.5.13.5.2

3.63.6.13.6.23.6.3

3.73.7.13.7.2

3.7.3

3.7.4

3.8

4

4.1

4.24.2.14.2.24.2.34.2.44.2.5

4.2.5.14.2.5.24.2.5.34.2.5.4

4.2.6

Cogeneration 73Technology and efficiency potential 73Range of applications 75Economic performance 75Evaluation 76

Energy distribution, transport and storage 76The basic features of electricity supply structures 76Supply strategies for microgrids 76Supply strategies within electricity grids 77Fluctuating demand in electricity grids 77Fluctuating supply from renewable sources 77Strategies for matching energy supply and demand 78Hydrogen 79The basics 79Production 79Storage and distribution 81The use of hydrogen 81Potential environmental damage from hydrogen 82Electricity versus hydrogen: An assessment 83

Improvements in energy efficiency 83Efficiency improvements in industry and business 84Increased efficiency and solar energy utilization in buildings 86

Carbon sequestration 88Technical carbon management 88Potential for sequestration as biomass 89Evaluation 91

Energy for transport 91Technology options for road transport 92Improvements in efficiency through information technology and

spatial planning 93Sustainability and external effects of increased transport energy

demands 93Evaluation 94

Summary and overall assessment 94

An exemplary path for the sustainable transformation of energy systems 97

Approach and methodology for deriving an exemplary transformation path 97

Energy scenarios for the 21st century 98SRES scenarios as a starting point 98Basic assumptions of the SRES scenarios 100Emissions in the SRES scenarios 101IPCC climate change mitigation scenarios (‘post-SRES’ scenarios) 101Technology paths in the A1 world 102Comparison of energy structures and climate change mitigation strategies 102The role of carbon storage 103Cost comparison 103Environmental effects 105Selection of a scenario for developing an exemplary path 106

XIContents

Guard rails for energy system transformation 107Ecological guard rails 107Protection of the biosphere 107Tolerable climate window 108Sustainable land use 113Biosphere conservation in rivers and their catchment areas 115Marine ecosystem protection 116Protection against atmospheric air pollution 116Socio-economic guard rails 117Human rights protection 117Access to modern energy for everyone 118Individual minimum requirement for modern energy 118Limiting the proportion of income expended for energy 120Minimum per capita level of economic development 121Technology risks 123Health impacts of energy use 124

Towards sustainable energy systems: An exemplary path 126Approach and methodology 126Modifying scenario A1T-450 to produce an exemplary path 126The technology mix of the exemplary transformation path: An overview 129Conclusion: The sustainable transformation of global energy systems

can be done 129

Discussion of the exemplary path 130The MIND model 132The exemplary path: Relevance, uncertainties and costs 136Uncertainties relating to permissible emissions 136Costs of the exemplary transformation path, and financeability issues 138

Conclusions 139

The WBGU transformation strategy: Paths towards globally sustainable energy systems 143

Key elements of a transformation strategy 143

Actions recommended at the national level 143Ecological financial reform 144Internalizing the external costs of fossil and nuclear energy 144Removing subsidies on fossil and nuclear energy 146Conclusion 147Promotion 147Promoting renewable energy 147Promoting fossil energy with lower emissions 152Promoting efficiency in the provision, distribution and use of energy 152Conclusion 156Modern forms of energy and more efficient energy use in developing,

transition and newly industrializing countries 157The basic concept 157Practical steps on the supply side 157Practical steps on the demand side 160Conclusion 163Related measures in other fields of policy 163Climate policy 163Transport and regional development 164

4.34.3.1

4.3.1.14.3.1.24.3.1.34.3.1.44.3.1.54.3.1.6

4.3.24.3.2.14.3.2.24.3.2.34.3.2.44.3.2.54.3.2.64.3.2.7

4.4 4.4.14.4.24.4.34.4.4

4.54.5.14.5.2

4.5.2.14.5.2.2

4.6

5

5.1

5.25.2.1

5.2.1.15.2.1.25.2.1.3

5.2.25.2.2.15.2.2.25.2.2.35.2.2.4

5.2.3

5.2.3.15.2.3.25.2.3.35.2.3.4

5.2.45.2.4.15.2.4.2

XII Contents

5.2.4.35.2.4.4

5.35.3.1

5.3.25.3.2.15.3.2.25.3.2.3

5.3.35.3.3.15.3.3.25.3.3.3

5.3.4

5.3.5

5.3.5.15.3.5.25.3.5.35.3.5.45.3.5.55.3.5.6

5.3.65.3.7

5.3.8

6

6.1

6.2

6.36.3.16.3.26.3.3

7

7.1

7.27.2.17.2.27.2.37.2.4

7.37.3.17.3.2

Agriculture 165Conclusion 166

Actions recommended at the global level 166Expansion of international structures for research and advice in the

energy sphere 167Institutionalizing global energy policy 168The functions of international institutions 169Developing a World Energy Charter 169Towards an International Sustainable Energy Agency 170Funding global energy system transformation 174Principles for equitable and efficient funding of global energy policy 174Provision of new and additional funding 175Use of resources for energy system transformation by international

financial institutions 180Directing international climate protection policy towards energy system

transformation 182Coordinating international economic and trade policy with sustainable

energy policy objectives 183Conclusion of a Multilateral Energy Subsidization Agreement 183Transformation measures within the GATT/WTO framework 185Preferential agreements in the energy sector 186Technology transfer and the TRIPS Agreement 186Liberalizing the world energy products market? 188Rights and duties of direct investors 190Phasing out nuclear energy 191Development cooperation: Shaping energy system transformation

through global governance 192Launching ‘best practice’ pilot projects with a global impact 194

Research for energy system transformation 197

Systems analysis 197

Social sciences 199

Technology research and development 202Technologies for supplying energy from renewable sources 202System technology for sustainable energy supply 204Development of techniques for more efficient energy use 205

Milestones on the WBGU transformation roadmap: Policy objectives,time frames and activities 207

From vision to implementation: Using the opportunities of the next 10–20 years 207

Protecting natural life-support systems 207Reducing greenhouse gas emissions drastically 207Improving energy productivity 209Expanding renewables substantially 210Phasing out nuclear power 211

Eradicating energy poverty worldwide 211Aiming towards minimum levels of supply worldwide 211Focussing international cooperation on sustainable development 212

XIIIContents

Strengthening the capabilities of developing countries 212Combining regulatory and private-sector elements 213

Mobilizing financial resources for the global transformation of energy systems 213

Using model projects for strategic leverage, and forging energy partnerships 214

Advancing research and development 215

Drawing together and strengthening global energy policy institutions 215Negotiating a World Energy Charter and establishing coordinating bodies 215Enhancing policy advice at the international level 216

Conclusion: Political action is needed now 216

References 217

Glossary 231

Index 238

7.3.37.3.4

7.4

7.5

7.6

7.7 7.7.17.7.2

7.8

XIV Contents

Box 2.4-1

Box 2.4-2

Box 2.5-1Box 2.6-1Box 3.1-1Box 3.2-1Box 4.3-1Box 4.3-2Box 4.3-3Box 5.1-1Box 5.2-1Box 5.2-2Box 5.2-3Box 5.2-4Box 5.3-1Box 5.3-2Box 5.3-3

Energy carrier usage as a function of household income in developing countries 24

The case of India: Development patterns, reforms and institutional design in theenergy sector 25

The effects of eastward EU expansion upon European energy supply 28OPEC’s role as an energy policy actor 31Types of potential 44Biomass stoves cause disease: The example of India 62Guard rails for sustainable energy policy 108Defining guard rails in terms of international law? 109Corals under threat through climate change 110Guiding principles for the WBGU transformation strategy 144Quotas, tradable quotas, green energy certificates 150Renewable Energy Certification System 151EU-wide mandatory labelling of consumer goods 155Planned emissions trading in the EU 163Elements of a World Energy Charter 170Compatibility of the Kyoto Protocol with WTO rules 187Strategic partnerships for global energy system transformation launched

at the WSSD 193

Boxes

Table 2.2-1

Table 2.2-2Table 2.6-1Table 2.7-1

Table 2.7-2

Table 2.7-3Table 2.7-4

Table 3.2-1

Table 3.2-2Table 3.2-3Table 3.2-4Table 3.2-5Table 3.2-6

Table 3.2-7


Table 3.2-10Table 3.2-11Table 3.2-12Table 3.2-13


Table 3.6-1




World consumption of primary energy in 1998 by energy source with an indication of range 14Share of sectors in primary energy consumption 15Regional distribution of fossil energy reserves in 2000 30Sink potential of individual (groups of) countries through afforestation and

reforestation and forest management 36Lendings by the International Bank for Reconstruction and Development and

the International Development Association 39Change in the World Bank policies on the energy sector (selection) 40Financing provided by the ECAs from the USA, Japan and Germany for the

developing and transition countries’ energy sector 41Reserves, resources and additional occurrences of fossil energy carriers

according to different authors 45Further development of modern fossil power plants 46Current and possible further development of nuclear fission technologies 49Hydropower potential by continent 52Technological and economic bioenergy potential in Germany 57Summary of the technological and economic potential for the utilization of

biomass for energy generation and carbon storage in Germany 58Technological biomass potential for energy generation according to

material groups in the EU 59Global technological potential of biogenic solid fuels 60Geographic distribution of the technological energy potential of biogenic

solid fuels 60Health threats during different stages of the biomass fuel cycle 62Future development of photovoltaics 68Efficiencies of solar cells in the laboratory and in flat modules 69Efficiencies, costs, capacity range and special features of solar thermal power

plants in pure solar operation 70Overview of technical data of systems with full cogeneration 74Key data for selected methods to produce hydrogen, today and in 2020 80Efficiency/cost ratios between renewable electricity and regenerative hydrogen

for advanced technologies 83Efficiency of CO2 retention and sacrifices in efficiency for various capture

technologies 88Comparison of various geological sequestration options 89Total stored CO2 quantity for the period 1990–2100 in selected

A1 scenarios 104Potential area for energy crops and its regional distribution 113Scenario A1T-450: Estimated proportions of total terrestrial area of areas

cultivated for bioenergy crops in 2050 115Minimum per capita final energy requirement 119Indicators of selected low-income countries 122Global energy demand in the exemplary path 130

Tables


Table 5.2-1

Table 5.2-2

Table 5.2-3

CO2 emissions and carbon sequestration in the exemplary path 130Permissible cumulative CO2 emissions as a function of climate sensitivity 137Climate sensitivity and potentials to reduce greenhouse gas emissions within

the exemplary path 137Overview of the political instruments available for environmental protection in

specific industrialized countries 148Comparison of the expansion of wind energy capacity under various

promotion models in 2000 149Examples for selected technologies for the possible development of energy

systems in rural areas of developing countries 160

XVIITables

Figure 2.1-1Figure 2.2-1


Figure 2.3-2

Figure 2.3-3

Figure 2.3-4

Figure 2.4-1


Figure 2.4-4Figure 2.5-1Figure 2.6-1Figure 2.7-1Figure 2.7-2

Figure 3.2-1

Figure 3.2-2

Figure 3.2-3

Figure 3.2-4

Figure 3.2-5

Figure 3.2-6

Figure 3.2-7


Share of various energy sources in world primary energy consumption 13The relation between mean income and energy consumption in 1997 for

various country groups 15Worldwide energy consumption in the transport sector from 1971 to 1996 16Previous development and IEA forecast for future energy consumption of the

economic sectors of industrialized countries up to 2020 18Comparison of state subsidies for hard coal mining in four EU member

states in 1994 and 2001 19Comparison of public research and development expenditures

of selected OECD countries in the energy sector 20Development of renewables as a share of primary energy and electricity

in Germany 21Regional distribution of people without access to electricity and those

dependent on biomass for their energy supply 22Per capita energy consumption and Human Development Index 23The mix of energy sources and energy services for households in developing

countries relative to the income of the household 24Energy demand by sector in the four most populated developing countries 25Sectorial pattern of energy demand in Russia, Ukraine and Uzbekistan 27Countries with oil reserves exceeding thousand million tonnes 30Global energy policy today: The key institutions and their main functions 33Total investment in energy projects with private financing in developing

and newly industrializing countries 40Estimated distribution of annual health impact, expressed in DALYs

(Disability Adjusted Life Years) 62Global distribution of the conversion potential of onshore and offshore

wind energy 63Global distribution of area-specific conversion potential for energy

conversion via solar thermal power plants with linear optical concentration 66

Global distribution of area-specific conversion potential for energy conversion via centralized photovoltaic power plants without optical concentration 66

Global distribution of the area-specific conversion potential for decentralizedsolar-electric energy conversion via photovoltaic modules without opticalconcentration 67

Global distribution of the area-specific conversion potential for decentralized energy conversion via thermal solar collectors 67

Schematic diagram of future solar power plants based on photovoltaic systems with optical concentration 68

Schematic diagram of a future solar thermal trough power plant 69Levelling of fluctuations in the generation of electricity by linking a large

number of photovoltaic systems 78

Figures

Figure 3.4-2

Figure 3.4-3


Figure 3.6-1

Figure 4.1-1

Figure 4.1-2

Figure 4.2-1Figure 4.2-2Figure 4.2-3



Figure 4.4-3



Figure 4.5-4

Figure 5.3-1Figure 7-1

Figure 7-2

The supply of solar energy in Europe as a function of the time of day and location 78Annual curves of solar irradiance in the northern and southern hemisphere

for Algiers, Berlin, and Cape Town 78The principle of a home energy system based on hydrogen 82Energy losses within the energy utilization system represented by

Germany in 2001 84Global carbon inventories and flows in vegetation, soil, oceans and

the atmosphere 90Connection between guard rails, measures and future system

development 98Application of the guard rail approach to the coupled energy-climate

system 99Total energy system costs and cumulative CO2 emissions for the scenarios 104Specific (non-discounted) system costs 105Environmental effects for a path with strong expansion of non-fossil

technologies and a coal-intensive path 106The WBGU climate protection window 110Scenario A1T-450 in the climate window for a broad range of climate

system sensitivities 112Health impairment attributed to local air pollution 125Carbon sequestration in scenario A1T-450 and in the exemplary path 129Energy-related CO2 emissions in scenario A1T-450, in the exemplary path

and in the UmBAU path 129Contributions of energy carriers to energy demand for the exemplary

transformation path 131Energy efficiency enhancement in the exemplary path 131Visualization of the surface area required for solar electricity 132Energy use in the MIND model in the BAU (business as usual) and

UmBAU (‘transformation’) cases 133CO2 emissions in the MIND model for the BAU and UmBAU cases 134Percentage losses of consumption and income for the UmBAU scenario

compared to the BAU scenario 135Corridors for CO2 emissions taking CO2 sequestration into consideration,

and resource extraction 136The path towards an International Sustainable Energy Agency 171The transformation roadmap of the German Advisory Council on Global

Change (WBGU) 208Connection between guard rails, measures and future system

development 209

XIXFigures

Acronyms and Abbreviations

ACPAFRECARD

ASEANBMBF

BMU

BMWA

BMZ

BWRCCGTCDFCDMCERUPTCHPCISCOPDCSDCTIDADACDALYsDENA

DNIDSMDTIEECAsECTEDFEEAEGREIAEIBEOLE

EORERUPTESF

African, Caribbean and Pacific Group of StatesAfrican Energy CommissionMonitoring and Measuring Afforestation – Reforestation – Deforestation

(Kyoto Protocol to the UNFCCC)Association of South East Asian NationsBundesministerium für Bildung und Forschung[Federal Ministry of Education and Research (Germany)]Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit

[Federal Ministry for Environment, Nature Conservation and Reactor Safety(Germany)]

Bundesministerium für Wirtschaft und Arbeit[Federal Ministry of Economics and Labour (Germany)]

Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung[Federal Ministry for Economic Cooperation and Development (Germany)]

Boiling Water ReactorCombined Cycle Gas TurbineComprehensive Development Framework (World Bank)Clean Development Mechanism (UNFCCC)Certified Emission Reduction Unit Procurement Tender, The NetherlandsCombined Heat and PowerCommonwealth of Independent StatesChronic Obstructive Pulmonary DiseaseCommission on Sustainable Development (UN)Climate Technology Initiative (IEA)Development AssistanceDevelopment Assistance Committee (OECD)Disability Adjusted Life YearsDeutsche Energie Agentur

[German Energy Agency]Direct Normal IncidenceDemand Side ManagementDivision for Technology, Industry and Economy (UNEP)Export Credit and Investment Insurance Agencies (OECD)Energy Charter TreatyEuropean Development FundEuropean Economic AreaEnhanced Gas RecoveryEnvironmental Impact AssessmentEuropean Investment BankProgramme Français de Développement de Centrales Éoliennes Raccordées au

Réseau ÉlectriqueEnhanced Oil RecoveryEmission Reduction Unit Procurement Tender Programme, The NetherlandsEuropean Science Foundation

Energy Sector Management Assistance Programme (World Bank, UN)European UnionFood and Agriculture Organization (UN)Foreign Direct InvestmentFederal Energy Technology Center (USA)General Agreement on Tariffs and TradeGeneral Agreement on Trade in ServicesGross Domestic ProductGlobal Environment Facility (UNDP, UNEP, World Bank)Gesellschaft für Technische Zusammenarbeit

[German Society on Development Cooperation]Global Renewable Energy Education and Training (UNESCO)Human Development IndexHeavily Indebted Poor Countries InitiativeHuman Poverty IndexHigh Temperature ReactorHigh-Voltage Direct CurrentInternational Atomic Energy AgencyInternational Bank for Reconstruction and Development (World Bank)International Commission on Irrigation and DrainageInternational Centre for Integrated Mountain Development (Nepal)International Commission on Large DamsInternational Energy AgencyInternational Fund for Agricultural Development (FAO)International Finance Corporation (World Bank Group)Lehrstuhl für Energiewirtschaft und Anwendungstechnik der TU München

[Institute for Energy Economy and Application Technology, UniversityMunich]

International Hydropower Association (UNESCO)International Institute for Applied Systems Analysis (Laxenburg, Austria)International Monetary FundInstitute for Development and Peace, University DuisburgInstituto Nacional de Pesca y Agricultura (Columbia)

[National Institute for Fisheries and Agriculture, Columbia]Intergovernmental Panel on Climate Change (WMO, UNEP)Institute for Policy StudiesIntergovernmental Panel on Sustainable Energy (recommended by the

Council)International Renewable Energy Information and Communication System

(WSP)Fraunhofer Institute for Solar Energy Systems, Freiburg/Br. (Germany)International Sustainable Energy Agency (recommended by the Council)International Experimental Fusion ReactorJapan Bank for International CooperationJoint Implementation (Kyoto Protocol to the UNFCCC)Kreditanstalt für Wiederaufbau

[The German Development Bank]Least Developed CountriesLiquified Petroleum GasLight Water ReactorTop-down Macroeconomic Model (IIASA)Molton Carbonat Fuel CellMultilateral Energy Subsidization Agreement (recommended by the Council)Model for Energy Supply Strategy Alternatives and their General

Environmental Impact (IIASA)Model of Investment and Technological Development (PIK)

ESMAPEUFAOFDI FETCGATTGATSGDPGEFGTZ

GREETHDIHIPC InitiativeHPIHTRHVDCIAEAIBRDICIDICIMODICOLDIEAIFADIFCIfE

IHAIIASAIMFINEFINPA

IPCCIPSIPSE

IREICS

ISEISEAITERJBICJIKfW

LLDCLPGLWRMACROMCFCMESAMESSAGE

MIND

XXIAcronyms and Abbreviations

Mixed OxideNorth American Free Trade AgreementNorth Atlantic Treaty OrganisationNippon Export and Investment InsuranceNewly Industrializing CountriesOfficial Development AssistanceOrganisation for Economic Co-operation and DevelopmentOrganización Latinoamericana de Energia (Central America)Organization of Petroleum Exporting CountriesOverseas Private Investment CorporationConvention for the Protection of the Marine Environment of the North-East

AtlanticParts of Assigned AmountsPhosphoric Acid Fuel CellEnergy Charter Protocol on Energy Efficiency and Related Environmental

AspectsProton Exchanger Membrane Fuel CellPotsdam Institute for Climate Impact Research (Germany)Persistent Organic PollutantPoverty Reduction Strategy Papers (IWF, World Bank)PhotovoltaicsPressurized Water ReactorReactor Bolsoi Mochnosti Kipyashiy – Large Power Boiling ReactorRenewable Energy Certification SystemRat für Nachhaltige Entwicklung

[German Council for Sustainable Development]Small Grant Programme (GEF)Small and Medium-sized EnterprisesSolid Oxide Fuel CellSpecial Report on Emission Szenarios (IPCC)Rat von Sachverständigen für Umweltfragen

[Council of Environmental Experts (Germany)]Tata Energy Research Institute, IndiaTrade-Related Aspects of Intellectual Property RightsUnited NationsUN Department of Economic and Social AffairsUnited Nations Environment ProgrammeCollaborating Centre on Energy and Environment (UNEP)United Nations Educational, Scientific and Cultural OrganizationUnited Nations Framework Convention on Climate ChangeMonterrey Conference on Financing for DevelopmentUnited Nations Fund for Population ActivitiesUnited Nations Industrial Development OrganisationWissenschaftlicher Beirat der Bundesregierung Globale Umweltveränderungen

[German Advisory Council on Global Change]World Commission on DamsWorld Energy CouncilWorld Energy Research Coordination Programme (UN, recommended by the

Council)World Health Organization (UN)World Solar ProgrammeWorld Summit on Sustainable DevelopmentWorld Trade OrganizationYears Lived With DisabilityYears of Life Lost

MOXNAFTANATONEXINICs ODAOECDOLADEOPECOPICOSPAR

PAAPAFCPEEREA

PEMFCPIKPOPPRSPPVPWRRBMKRECSRNE

SGPSMEsSOFCSRESSRU

TERITRIPSUNUNDESAUNEPUNEP CCEE UNESCOUNFCCCUNFfD UNFPAUNIDOWBGU

WCDWECWERCP

WHOWSPWSSDWTOYLDYLLS

XXII Acronyms and Abbreviations

The first section of this summary for policy-makerspresents in brief the prime concerns surroundingtoday’s energy systems, while the second proposesthe criteria that need to be met to turn energy sys-tems towards sustainability. The third section, build-ing upon an exemplary scenario, sets out a possiblepath for transforming the global energy systemwithin the 21st century; this will require a substantialredirection of energy policies over the comingdecades. On that basis, the fourth section proposes aroadmap with concrete goals and policy options foraction by which to implement this global transforma-tion.

1Why it is essential to transform energy systemsworldwide

The German Advisory Council on Global Change(WBGU) illustrates in the present report that it isessential to turn energy systems towards sustainabil-ity worldwide – both in order to protect the naturallife-support systems on which humanity depends, andto eradicate energy poverty in developing countries.Nothing less than a fundamental transformation ofenergy systems will be needed to return developmenttrajectories to sustainable corridors.A further impor-tant aspect is that such a global reconfiguration ofenergy systems would promote peace by reducingdependency upon regionally concentrated oilreserves.

1.1The use of fossil energy sources jeopardizesnatural life-support systems

Today, 80 per cent of worldwide energy use is basedon fossil energy sources, and this share is rising. Burn-ing these fuels releases emissions to the environment,where they cause climatic changes, air pollution andhuman disease. The effects of emissions can be local(in the case of grit, benzene or soot), regional

(aerosols, short-lived gases) or global (persistentgreenhouse gases). Global climate protection is thesupreme challenge presenting an urgent need totransform energy systems.

Emissions of persistent greenhouse gases – aboveall carbon dioxide, but also methane and nitrousoxide – contributed substantially over the past 100years to a 0.6ºC increase in the mean ground-level airtemperature. For the next 100 years, the Intergovern-mental Panel on Climate Change (IPCC) forecasts arise in mean temperature ranging between 1.4 and5.8ºC, depending upon humanity’s behaviour andwithout taking climate protection measures into con-sideration.The Council considers a mean global tem-perature change of more than 2ºC compared to pre-industrial levels to be intolerable. The predicted shiftin climatic regions, in combination with more fre-quent weather extremes such as floods and drought,has the potential to impair severely, for millions ofpeople, the natural basis of human existence. Devel-oping countries are particularly threatened. Damageto sensitive ecosystems is already evident today. Therisk of irreversible ecosystem damage grows in linewith the level and rate of warming.

Besides carbon dioxide, the burning of fossil fuelsgenerates benzene and soot emissions with numer-ous damaging effects on health and ecosystems. Italso generates nitrogen oxides, hydrocarbons andcarbon monoxide, which promote the formation ofground-level ozone and reduce the self-purifyingcapacity of the atmosphere. Nitrogen and sulphuroxides, as well as ammonia, are converted chemicallyin the atmosphere and enter soils through acid depo-sition. Present energy systems damage the naturalenvironment in many and diverse ways, jeopardizehuman health and exert massive influences upon bio-geochemical cycles.

Summary for policy-makers

2 Summary for Policymakers

1.2Two thousand million people lack access tomodern forms of energy

Improving access to advanced energy in developingcountries is a fundamental contribution to povertyreduction and key to attaining the United NationsMillennium Development Goals. For some 2.4 thou-sand million people, notably in rural parts of Asiaand Africa, energy supply depends largely or entirelyupon biomass use (firewood, charcoal or dung) forcooking and heating. On average, 35 per cent ofenergy consumed in developing countries derivesfrom biomass; in parts of Africa this share reaches 90per cent. According to the World Health Organiza-tion, emissions from the burning of biomass and coal

indoors cause the death of 1.6 million people everyyear. This is substantially more than the one milliondeaths caused by malaria. A transformation ofenergy systems towards sustainability is thereforeessential in order to overcome development prob-lems.

2A corridor for sustainable energy policy: Guardrails for a global transformation

Sustainable transformation paths are bounded by socalled ‘guard rails’. The Council defines these guardrails as those levels of damage which can only becrossed at intolerable cost, so that even short-termutility gains cannot compensate for such damage

Box 1

Guard rails for sustainable energy policy

Ecological guard rails

Climate protection A rate of temperature change exceeding 0.2°C per decadeand a mean global temperature rise of more than 2°C com-pared to pre-industrial levels are intolerable parameters ofglobal climate change.

Sustainable land use10–20 per cent of the global land surface should be reservedfor nature conservation. Not more than 3 per cent shouldbe used for bioenergy crops or terrestrial CO2 sequestra-tion. As a fundamental matter of principle, natural ecosys-tems should not be converted to bioenergy cultivation.Where conflicts arise between different types of land use,food security must have priority.

Protection of rivers and their catchment areas In the same vein as terrestrial areas, about 10–20 per cent ofriverine ecosystems, including their catchment areas,should be reserved for nature conservation.This is one rea-son why hydroelectricity – after necessary framework con-ditions have been met (investment in research, institutions,capacity building, etc.) – can only be expanded to a limitedextent.

Protection of marine ecosystemsIt is the view of the Council that the use of the oceans tosequester carbon is not tolerable, because the ecologicaldamage can be major and knowledge about biological con-sequences is too fragmentary.

Prevention of atmospheric air pollutionCritical levels of air pollution are not tolerable. As a pre-liminary quantitative guard rail, it could be determined thatpollution levels should nowhere be higher than they aretoday in the European Union, even though the situationthere is not yet satisfactory for all types of pollutants. Afinal guard rail would need to be defined and implementedby national environmental standards and multilateral envi-ronmental agreements.

Socio-economic guard rails

Access to advanced energy for allIt is essential to ensure that everyone has access toadvanced energy. This involves ensuring access to elec-tricity, and substituting health-endangering biomass use byadvanced fuels.

Meeting the individual minimum requirement foradvanced energyThe Council considers the following final energy quantitiesto be the minimum requirement for elementary individualneeds: By the year 2020 at the latest, everyone should haveat least 500kWh final energy per person and year and by2050 at least 700kWh. By 2100 the level should reach1,000kWh.

Limiting the proportion of income expended forenergyPoor households should not need to spend more than onetenth of their income to meet elementary individual energyrequirements.

Minimum macroeconomic developmentTo meet the macroeconomic minimum per-capita energyrequirement (for energy services utilized indirectly) allcountries should be able to deploy a per-capita grossdomestic product of at least about US$3,000, in 1999 values.

Keeping risks within a normal rangeA sustainable energy system needs to build upon technolo-gies whose operation remains within the ‘normal range’ ofenvironmental risk. Nuclear energy fails to meet thisrequirement, particularly because of its intolerable acci-dent risks and unresolved waste management, but alsobecause of the risks of proliferation and terrorism.

Preventing disease caused by energy useIndoor air pollution resulting from the burning of biomassand air pollution in towns and cities resulting from the useof fossil energy sources causes severe health damage world-wide.The overall health impact caused by this should, in allWHO regions, not exceed 0.5 per cent of the total healthimpact in each region (measured in DALYs, disabilityadjusted life years).

3Summary for Policymakers

(Box 1). For instance, if, in the interests of short-termeconomic gains, the energy sector is transformed toolate, global warming will be driven to the point atwhich the costs of inaction would be much higherover the long term due to the economic and socialupheaval that is then to be expected. Guard rails arenot goals: They are not desirable values or states, butminimum requirements that need to be met if theprinciple of sustainability is to be adhered to.

3Turning energy systems towards sustainability isfeasible: A test run for system transformation

The sustainability of scenarios for energy futures canbe tested against the guard rails set out in the previ-ous section. In principle, many developments areconceivable that would turn today’s worldwideenergy systems towards sustainability. Insofar, thescenario created in this report should be viewed asone example (Fig. 1). Building upon scenarios for thestabilization of CO2 concentrations in the atmos-phere at a maximum of 450ppm, this report showsthat the global transformation of energy systemsover the next 100 years is in principle technologicallyand economically feasible.

The exemplary path charted by the Councilembraces four key components:1. Major reduction in the use of fossil energy

sources;2. Phase-out of the use of nuclear energy;3. Substantial development and expansion of new

renewable energy sources, notably solar;4. Improvement of energy productivity far beyond

historical rates.Analysis of this path yields the following key find-ings:• Worldwide cooperation and approximation of liv-

ing conditions facilitate rapid technology develop-ment and dissemination. High economic growthcan then, in conjunction with a strong increase inenergy productivity, lead to sustainable energysupply.

• It will only be possible to meet minimum climateprotection requirements if binding CO2 reductionrequirements are in place.

• Energy policy activities need to be supported byfurther measures to reduce greenhouse gas emis-sions from other sectors (for instance nitrousoxide and methane from agriculture) and to pre-serve natural carbon stocks.

200

400

600

800

1,000

1,200

1,400

1,600

2000 2010 2020 2030 2040 2050 2100

Prim

ary

ener

gy u

se [E

J/a]

0

Year

Oil

Coal

Gas

Nuclear power

Hydroelectricity

Biomass(traditional)

Biomass(advanced)

Wind

Solar power(photovoltaicsand solar thermalgeneration)

Solar thermal(heat only)

Otherrenewables

Geothermal

Figure 1Transforming the global energy mix: The exemplary path until 2050/2100.Source: WBGU


• While the exemplary path developed here is basedupon a stabilization of atmospheric CO2 concen-trations at 450ppm, due to uncertainties attachingto climate system behaviour this can by no meansbe taken as a safe stabilization level. The Councilrecommends retaining options by which toachieve lower stabilization concentrations.

• Even if climate protection goals are met, a fossil-nuclear path entails substantially larger risks, aswell as much higher environmental impacts.Moreover, it is significantly more expensive overthe medium to long term than a path relying uponpromoting renewables and improving energy effi-ciency, mainly due to the costs of CO2 sequestra-tion.

• Due to the long time lags, the next 10–20 years arethe decisive window of opportunity for transform-ing energy systems. If this transformation is initi-ated later, disproportionately high costs must beexpected.

• The transformation will only succeed if the trans-fer of capital and technology from industrializedto developing countries is intensified. To this end,industrialized countries will need to strengthentechnology development significantly in the fieldsof energy efficiency and renewable energysources, for instance by raising and redirectingresearch and development expenditure, imple-menting market penetration strategies, providingprice incentives and developing appropriate infra-structure.This can reduce the initially high costs ofthe new technologies and can accelerate attain-ment of market maturity, thus in turn facilitatingtransfer to developing countries.

• Over the short and medium term, it is essential toswiftly tap those renewable energy sources whichare already technologically manageable and rela-tively cost-effective today. These are in particularwind and biomass. Over the long term, the risingprimary energy requirement can only be metthrough vigorous utilization of solar energy – thisholds by far the largest sustainable potential. Totap this potential in time, installed capacity willneed to grow ten-fold every decade – now andover the long term.

• The utilization of fossil energy sources will con-tinue to be necessary over the next decades.Wher-ever possible, this needs to be done in such a fash-ion that the efficiency potential is tapped and boththe infrastructure and generating technology canbe converted readily to renewable sources. In par-ticular, the efficient use of gas, for instance in com-bined heat and power generation and in fuel cells,can perform an important bridging function on thepath towards a hydrogen economy.

• A certain volume of carbon sequestration inappropriate geological formations (e.g. depletedoil and gas caverns) will be necessary as a transi-tional technology during this century in order toremain within the climate guard rails. For ecologi-cal reasons, the Council rejects use of the oceansfor carbon sequestration.

4Milestones on the WBGU transformation roadmap:Targets, time tables and policies

4.1Protecting natural life-support systems

To keep global warming within tolerable limits,global carbon dioxide emissions need to be reducedby at least 30 per cent from 1990 levels by the year2050 (overview: Fig. 2). For industrialized countries,this means a reduction by some 80 per cent, while theemissions of developing and newly industrializingcountries are allowed to rise by at most 30 per cent.Without a fundamental transformation of energy sys-tems, emissions must be expected to double or evenquadruple in developing and newly industrializingcountries over that period. This is why in these coun-tries, too, a rapid redirection of energy productionand utilization is essential.The focus of such activitiesneeds to be placed on promoting renewables andenhancing efficiency. In view of the considerableuncertainties, e.g. regarding the behaviour of the cli-mate system, these emissions reduction goals areminimum requirements.

4.1.1Improving energy productivity

In order to minimize resource consumption, globalenergy productivity (the ratio of gross domesticproduct to energy input) needs to be improved by 1.4per cent every year initially, and then by at least 1.6per cent as soon as possible. At that rate, energy pro-ductivity would treble by 2050 from 1990 levels.Moreover, minimum efficiencies of more than 60 percent should be aimed at by 2050 for large fossil-fuelled power plants. To this end, the Council recom-mends• establishing international standards prescribing

minimum efficiencies for fossil-fuelled powerplants in a stepwise process from 2005 onwards,based on the corresponding European Union(EU) directive.


Oil

Coal

Gas

Nuclear powerHydroelectricityBiomass (traditional)Biomass (modern)Wind

Solar power (photovoltaics and solarthermal generation)

Solar thermal (heat only)Other renewablesGeothermal

200

400

600

800

1000

0

2003 2010 2020 2030 2040 2050Kyoto-1 Kyoto-2 Year

Global: Ensure expenditure to meet the most elementary energyrequirements is no more than 10 per cent of household income

OECD: Raise ODA to 0.5 per cent of GDP, and to 1 per cent of GDP over the long term

EU: Raise CHP share in electricity production to 20 per cent

Global: Integrate energy supply issues into PRSP processes

OECD: Launch new debt relief initiatives

Global: Establish new GEF window for sustainable energy systems

Global: Adopt Energy Charter and establish Global Ministerial Forum for Sustainable Energy

OECD: Introduce emissions-based user charge on international aviation

OECD: Increase funding for energy research to 10 per cent of overall research expenditure

OECD: Implement ecological financial reform at OECD level, and at global level over the long term

Global: Adopt Multilateral Energy Subsidization Agreement

Global: Set standards for CDM projects

Global: Found International Sustainable Energy Agency, as well as IPSE and WERCP

Global: Build capacities in developingcountries and transfer technologies

Global: Secure minimum supply of 500kWh per capita and year,rising to more than 700kWh by 2050

Global: Safeguard access to modern energy for all

Kyoto parties: Update emissions reduction targets for industrialized countries up to 2008,involve developing countries in emissions reduction regime by 2020

Global: Phase out nuclear energy

Global: Raise share of renewables in energy mix to 20 per cent, and to 50 per cent by 2050

Global: Treble energy productivity

Kyoto Annex B countries: Reduce greenhouse gas emissions by 40 per cent, and by 80 per cent by the year 2050 (1990 baseline)

Developing countries: Limit growth of greenhouse gas emissions to a maximum of 30 per cent from 1990 baseline

Obj

ectiv

es M

easu

res

Prim

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xem

plar

y tra

nsfo

rmat

ion

path

[EJ/

a]

Global: Introduce renewable energy quotas

Figure 2Overview of the transformation roadmap proposed by the German Advisory Council on Global Change (WBGU).CDM=Clean Development Mechanism, CHP=combined heat and power, GDP=gross domestic product, GEF=GlobalEnvironment Facility, IPSE=Intergovernmental Panel on Sustainable Energy, ODA=Official Development Assistance,OECD=Organisation for Economic Co-operation and Development, PRSP=Poverty Reduction Strategy Papers,WERCP=World Energy Research Coordination ProgrammeSource: WBGU


• generating, by 2012, 20 per cent of electricity in theEU through combined heat and power (CHP)production. There is a particular need to harnessthe potential offered by distributed production.Topromote this, the German federal governmentshould argue within the EU for the swift setting ofbinding national CHP quotas.

• initiating ecological financial reforms as a key toolfor creating incentives for more efficiency. Thisincludes measures to internalize external costs(e.g. CO2 taxation, emissions trading) and theremoval of subsidies for fossil and nuclear energy.

• improving the information provided to end usersin order to promote energy efficiency, e.g. bymeans of mandatory labelling for all energy-inten-sive goods, buildings and services. In the case ofgoods traded internationally, cross-national har-monization of efficiency standards and labels isrecommendable.

• exploiting the major efficiency potentials in theuse of energy for heating and cooling throughinstruments of regulatory law targeting the pri-mary energy requirement of buildings.

4.1.2Expanding renewables substantially

The proportion of renewable energies in the globalenergy mix should be raised from its current level of12.7 per cent to 20 per cent by 2020, with the long-term goal of more than 50 per cent by 2050. Ecologi-cal financial reforms will make fossil and nuclearsources more expensive and will thus reduce theirshare in the global energy mix. Consequently, theproportion of renewables will rise. As this rise willremain well below the envisaged increase to 20 percent and, respectively, 50 per cent, the Council rec-ommends that renewables be expanded actively. Inparticular, it recommends• that countries agree upon national renewable

energy quotas. In order to minimize costs withinsuch a scheme, a worldwide system of internation-ally tradable renewable energy credits should beaimed at by 2030. Its flexibility notwithstanding,such a system should commit each country to meeta substantial part of its quota through domesticgeneration.

• continuing and broadening market penetrationstrategies (e.g. subsidy schemes over limited peri-ods, guaranteed feed-in tariffs, renewable energyquota schemes). Until significant market volumehas been achieved, guaranteed feed-in tariffsunder which payments decline over time areamongst the particularly expedient options. Whena sufficiently large market volume of individual

energy sources has been reached, assistanceshould be transformed into a system of tradablerenewable energy credits or green energy certifi-cates.

• upgrading energy systems to permit the large-scale deployment of fluctuating renewablesources. This includes in particular enhancing gridcontrol, implementing appropriate control strate-gies for distributed generators, upgrading grids topermit strong penetration by distributed genera-tors as well as expanding grids to form a globallink. This should be followed later by the estab-lishment of an infrastructure for hydrogen storageand distribution, using natural gas as a bridgingtechnology.

• providing vigorous support to disseminate andfurther develop the technologies involved in solarand energy-efficient construction.

• building and strengthening human-resource andinstitutional capacities in developing countriesand intensifying technology transfer in order toimprove the framework conditions for the estab-lishment of sustainable energy systems.

• setting within export credit systems, from 2005onwards, progressive minimum requirements forthe permissible carbon intensity of energy produc-tion projects.

4.1.3Phasing out nuclear power

No new nuclear power plants should be given plan-ning permission. The use of nuclear power should beterminated worldwide by 2050.To this end, the Coun-cil recommends• seeking to launch international negotiations on

the phase-out of nuclear power.This process couldbegin with an amendment to the statutes of theInternational Atomic Energy Agency (IAEA).

• establishing by 2005 new, stricter IAEA safetystandards for all sites at which nuclear material isstored, as well as expanded monitoring and action-taking competencies of the IAEA in the field ofsafeguards relating to terrorism and proliferation.

4.2Eradicating energy poverty and seeking minimumlevels of supply worldwide

Access to advanced energy is a vital element forpoverty reduction and development. The Counciltherefore recommends adopting as an internationaltarget that access to advanced energy is safeguardedfor the entire world population from 2020, and that,


from that time onwards, all individuals have access toat least 500kWh per person and year to meet ele-mentary final energy requirements (Fig. 2). In thisendeavour, care needs to be taken that socio-eco-nomic disparities are reduced in connection with allmeasures seeking to transform energy systems. Theproportion of household income spent on energyshould not exceed 10 per cent. Access to advancedenergy is also a key contribution to achieving theUnited Nations Millennium Development Goals.

4.2.1Focussing international cooperation onsustainable development

Implementing new World Bank policy inassistance delivery practiceThe Council takes the view that the World Bank,which supports countries in expanding their energysystems, should also promote sustainable energy inorder to facilitate the leapfrogging of unsustainabledevelopment stages. In efforts to promote the trans-formation of energy systems, the World Bank has notyet moved sufficiently from the conceptual to theoperational level. An urgent need thus remains toredirect its assistance delivery procedures, whichuntil now have predominantly financed fossil fuelsaccording to the least-cost principle.The Council rec-ommends that• the new assistance delivery approach of the World

Bank is implemented in practice, starting immedi-ately. The German federal government should useits membership on the Board of Governors of theWorld Bank to work towards this.

Integrating sustainable energy supplywithin poverty reduction strategiesIn late 1999, the International Monetary Fund (IMF)and the World Bank began focussing their policiesvis-à-vis Least Developed Countries primarily onpoverty reduction. Poverty Reduction StrategyPapers (PRSPs) serve to steer the medium-termdevelopment of countries and provide a basis foreliciting international support. The Council recom-mends• integrating sustainable energy supply within

PRSP processes in order to raise the profile ofenergy-related issues in development coopera-tion.

Strengthening the role of regionaldevelopment banksThe role of regional development banks should bestrengthened. These have good regional connections

and more intimate knowledge of local problems thanglobal institutions do. The Council recommends that• Germany, in connection with its involvement in

these banks and within the EU context, workstowards the promotion of energy supply in devel-oping countries through the regional developmentfunds;

• the EU makes targeted use of the EuropeanDevelopment Fund to promote renewables in theACP (African, Caribbean, Pacific) states.

4.2.2Strengthening the capabilities of developingcountries

Promoting economic and social developmentin low-income countriesTo turn energy systems towards sustainability, a min-imum degree of economic development is a precon-dition. Many countries fall far short of the per-capitaincome required for this. The Council therefore rec-ommends not only intensifying development cooper-ation in the field of basic services and sustainableenergy supply, but also intensifying cooperation withlow-income countries in particular, in both quantita-tive and qualitative terms. Furthermore, within thecontext of the WTO ‘Development Round’,improved access for goods from all low-income coun-tries to the markets of industrialized and newlyindustrializing countries should be urged.

Launching new debt relief initiativesIn general, heavily indebted developing countrieshave little scope to cope with price fluctuations onworld energy markets. Their ability to financeimprovements to the efficiency of their energy sup-ply systems and to advance the deployment of renew-able energy technologies is similarly limited. Toembark on transformation, wide-ranging debt reliefis needed. The Council recommends that• the German federal government argues for new

debt relief initiatives within the G7/G8 context.

4.2.3Combining regulatory and private-sector elements

It is essential to take measures on both the supplyand demand side in order to improve access toadvanced low-emission energy forms and to renew-able energy sources, and to improve the energy effi-ciency in developing, newly industrializing and tran-sition countries.


Supply side: Combining liberalization andprivatization with regulatory interventionsOn the supply side, privatization and liberalizationneed to be combined with regulatory interventionsundertaken by the state. The mix of these threespheres will need to vary depending upon the specificcircumstances of a region. Liberalization and privati-zation require an attractive environment for private-sector investors and the tapping of internationalsources of capital. Stronger state interventionrequires the setting of standards, and also an expan-sion of public-private partnerships, possibly sup-ported by bilateral and multilateral developmentcooperation activities.

Demand side: Increasing the purchasingpower of the poorOn the demand side, the aim must be to increase pur-chasing power in relation to energy, particularly ofthe poor. This can be done by target-group specificsubsidies, or by expanding micro-finance systems. Toalso increase the willingness to use energy more sus-tainably, measures taken on the demand side need togive consideration to culture-specific and gender-specific framework conditions.

4.3Mobilizing financial resources for the globaltransformation of energy systems

To finance the global transformation of energy sys-tems towards sustainability, there is an urgent need tomobilize additional financial resources, as well as tocreate new transfer mechanisms or strengthen exist-ing ones in order to support economically weakercountries in this transformation process.The Councilwelcomes the programme on ‘Sustainable energy fordevelopment’ geared to establishing strategic part-nerships which the German government announcedat the World Summit on Sustainable Development.Over the next five years, a total of €1,000 million willbe budgeted for this programme.

Mobilizing private-sector capitalTo mobilize private-sector capital for the globaltransformation of energy systems, the Council rec-ommends• facilitating access to developing country markets

for small and medium-sized suppliers of renew-able energy technologies within the context ofpublic-private partnerships;

• establishing by 2010 a German and, if possible, EUstandard for the Clean Development Mechanism.This standard should permit exclusively, withexceptions to be substantiated in each case, pro-

jects that promote renewables (excluding largehydroelectric dams due to currently unresolvedsustainability problems), improve the energy effi-ciency of existing facilities or engage in demand-side management.

Boosting development cooperation fundingAt 0.27 per cent of gross domestic product (GDP) in2001, German official development assistance(ODA) funding is far from the internationally agreedtarget of 0.7 per cent. However, Germany has com-mitted itself to increasing ODA funding to a level of0.33 per cent of GDP by 2006. Even an increase tosome 1 per cent of GDP would be commensurate tothe severity of the problems prevailing. The Councilrecommends• as a matter of urgency, raising ODA funding

beyond the level of 0.33 per cent announced for2006, and proposes allocating, as a first step, atleast 0.5 per cent of GDP by 2010.

Harnessing innovative financing toolsTo implement the global transformation of energysystems, it will be essential to tap new sources offinance. Specially, the potential of raising charges forthe use of global commons deserves examination.The Council recommends • raising from 2008 onwards an emissions-based

user charge on international aviation, providedthat this sector is not yet subject by then to inter-national emissions reduction commitments.

Strengthening the Global EnvironmentFacility as an international financinginstitutionThe Global Environment Facility (GEF), operatedjointly by UNDP, UNEP and the World Bank, shouldbe used as a catalyst for global environmental pro-tection measures. The Council recommends • concentrating by 2005 the financial assistance pro-

vided for efficiency technologies and renewableresources in a newly created GEF ‘window for sus-tainable energy systems’. In order to be able togive greater consideration to development policyaspects in the deployment of funds, a simplifica-tion of the incremental costs approach should beconsidered. With a view to the high levels of fund-ing required to promote the global transformationof energy systems, GEF resources need to beexpanded considerably.


4.4Using model projects for strategic leverage, andengaging in energy partnerships

Sending out signals through model projectsThe Council argues in favour of using model projectsfor the introduction of new renewables on a largescale to deliver strategic leverage for a global trans-formation of energy systems towards sustainability.Such model projects could have global knock-oneffects. They would showcase how technology leapscan be implemented in energy projects. The Councilrecommends initiating the following model projects:• A strategic energy partnership between the Euro-

pean Union and North Africa, integrating intoEuropean power supply the potential of solarenergy use in a manner profitable for both sides;

• Developing the infrastructure needed to substi-tute traditional biomass use by biogenic bottledgas;

• Energy-efficient buildings in the low-cost sector,piloted by South African townships;

• Improving the power quality in weak electric gridsin rural African regions;

• ‘1 million huts electrification programme’ fordeveloping countries, generating the necessaryinternal dynamics for off-grid rural electrification.

Forming strategic partnerships to turnenergy systems towards sustainabilityExisting or emergent policy initiatives promoting aglobal transformation of energy systems towards sus-tainability provide a framework for action. TheCouncil recommends that, in addition to the WorldConference for Renewable Energy due to take placein 2004, the following policy processes in particularare used as catalysts to promote this transformation:• The international initiatives adopted at the World

Summit on Sustainable Development– Energy Initiative for Poverty Eradication and

Sustainable Development,– Global Village Energy Partnership,– Global Network on Energy for Sustainable

Development.• The economic partnership agreement currently

being negotiated between the EU and the ACPstates.

4.5Advancing research and development

Turning energy systems towards sustainability is amajor technological and social challenge on a scalecomparable to that of a new industrial revolution.For it to succeed, a major research and development

effort is necessary. This concerns renewable energysources, infrastructure, end-use efficiency technolo-gies as well as the provision of knowledge on the con-servation and expansion of natural carbon stocks andsinks. The social sciences also need to contribute, byanalysing the individual and institutional barriers tothis transformation process and developing strate-gies to overcome these barriers.

However, for many years now expenditure forresearch and development in the energy sector hasbeen declining. At present, across the OECD onlysome 0.5 per cent of turnover in the energy sector isdevoted to research and development activities, andthe percentage is dropping. Only if there is sustained,high investment in research and development canthere be a prospect of renewable-energy technolo-gies and efficiency-enhancing measures coming intowidespread use over the medium and long term atlow cost. The Council recommends• increasing at least ten-fold, above all through re-

allocation of resources from other areas, by 2020the direct state expenditure in industrialized coun-tries for research and development in the energysector from its current level of about US$1,300million annually (average across the OECD forthe 1990–1995 period). The focus needs to beshifted rapidly away from fossil and nuclearenergy towards renewables and efficiency.

• establishing within the UN system a World EnergyResearch Coordination Programme (WERCP) todraw together the various strands of national-levelenergy research activities, in analogy to the WorldClimate Research Programme.

4.6Drawing together and strengthening globalenergy policy institutions

Establishing coordinating bodies andnegotiating a World Energy CharterTo promote a global transformation of energy sys-tems towards sustainability, it is essential to coordi-nate activities at global level and consequently todraw together international institutions and actors.The Council recommends strengthening and expand-ing the institutional architecture of global energypolicy in a stepwise process, building upon existingorganizations:• As a first step, a World Energy Charter should be

negotiated at the planned World Conference forRenewable Energy to be held in Germany in 2004.This should contain the key elements of sustain-able, global energy policy and provide a joint basisfor action at global level.


• Moreover, this conference should decide upon –or better still establish – a Global MinisterialForum for Sustainable Energy responsible forcoordinating and determining the strategic direc-tion of the relevant actors and programmes.

• In parallel, a Multilateral Energy Subsidies Agree-ment (MESA) should be negotiated by 2008. Thisagreement could provide for the stepwise removalof subsidies for fossil and nuclear energy, andcould establish rules for subsidizing renewableenergy and energy efficiency technologies.

• At least the OECD states should commit them-selves to national renewable energy quotas of atleast 20 per cent by 2015. It would be important inthis context to agree to negotiate the globalizationand flexibilization of this system, such negotia-tions leading by 2030 at the latest to a worldwidesystem of tradable renewable energy credits.

• In support of these activities, a group of like-minded, advanced states should adopt a pioneer-ing role on the path towards sustainable energypolicies. The European Union would be a suitablecandidate for such a leadership role.

• Building upon the steps above, the institutionalfoundations of sustainable energy policy could befurther strengthened by concentrating competen-cies at global level.To this end, the role of the Min-isterial Forum could be further expanded.

• Using the experience gained until that date, byabout 2010 the establishment of an InternationalSustainable Energy Agency (ISEA) should beexamined.

Enhancing policy advice at theinternational levelIt is important that the political implementation of aglobal transformation of energy systems towards sus-tainability receives continuous support through inde-pendent scientific input, as is currently the case in cli-mate protection policy. To this end, the Council rec-ommends• establishing an Intergovernmental Panel on Sus-

tainable Energy (IPSE) charged with analysingand evaluating global energy trends and identify-ing options for action.

5 Conclusion: Political action is needed now

To protect natural life-support systems and eradicateenergy poverty alike, there is an urgent need to trans-form energy systems.This transformation will be fea-sible without severe adverse effects upon societaland economic systems if policy-makers grasp theopportunity to shape this process over the next twodecades.The intended effects can only be expected to

emerge after a certain time lag. This lag makes swiftaction all the more important. The costs of inactionwould be much higher over the long term than thecosts of initiating this transformation. Every delaywill make it more difficult to change course.

The direction of transformation is clear: Theenergy efficiency must be increased, and massivesupport for renewables must be provided. It will beparticularly important in this endeavour to reducedependency on fossil fuels.The long-term objective isto break the ground for a solar age.

In the view of the Council, the transformation isfeasible. It is also financeable if, in addition to inten-sified use of existing mechanisms (e.g. GEF, ODA,World Bank and regional development bank loans)and enhanced incentives for private-sector investors(e.g. through public-private partnerships), innovativefinancing avenues (such as user charges for globalcommons) are pursued.The present report highlightsthe key opportunities for steering energy systemstowards sustainability, guided by a transformationroadmap.

For the worldwide transformation of energy sys-tems to succeed, it will need to be shaped in a step-wise and dynamic manner, for no one can predicttoday with sufficient certainty the technological, eco-nomic and social developments over the next 50–100years. Long-term energy policy is thus a searchingprocess. It is the task of policy-makers to rise to thischallenge. The World Conference for RenewableEnergy announced by the German chancellor at theJohannesburg World Summit on Sustainable Devel-opment offers an excellent opportunity to takeaction.

1

Worldwide, energy demand is rising swiftly. This hasbeen the case above all in the industrialized and tran-sition countries since the onset of industrialization,despite massive efficiency improvements achieved insome fields. Since the end of the Second World War,the energy hunger of the developing and newlyindustrializing countries has also been on the rise. Inthe Least Developed Countries, however, energypoverty prevails. Some 2.4 thousand million peopleneed access to modern forms of energy to catch upwith the economic development of the industrializedcountries. Energy is a precondition to economicgrowth, and thus world consumption is set to risesharply in the 21st century. Present structures ofenergy use pose severe environmental risks and raisemajor barriers to development in many countries.Moreover, these global structures are a source ofsecurity risks. Steering energy systems towards sus-tainability is thus a key task of global environmentand development policy in the 21st century.

Problems associated with present patternsof energy useAlthough mineral oil resources extractable at lowcost are expected to be exhausted during the 21st cen-tury, rising energy demand is not primarily a problemof limited resources, as was commonly feared in the1970s.The problems associated with present patternsof energy use stem rather from the emission of gasesand particles to the atmosphere. This is becauseenergy use is based largely upon fossil fuels. Human-induced global climate change is the most severe con-sequence, joined by a host of further environmentaland health problems: The extraction, processing anduse of fossil fuels destroys landscapes, generates acidrain and eutrophicates marginal seas. It also causesrespiratory diseases attributable to both ambient airpollution in conurbations and indoor air pollution.Use of wood or charcoal as fuel leads to deforesta-tion of entire landscapes in many developing coun-tries. Not least, many inter-state conflicts result froma desire to control resources, including oil.

Conflicting goals in global energy policyThe task of supplying the world’s population withenergy thus harbours a goal conflict: On the onehand, the right of developing countries to developmust be observed while, on the other hand, global cli-mate change must be held within acceptable bounds.It needs to be kept in mind that the global distribu-tion of energy use is highly uneven. Just one-fifth ofthe world’s population uses some three-quarters ofthe world’s energy supply. This is the great challengein moving energy systems onto a sustainable path,and the starting point of the present report. The fol-lowing guiding questions arise:• What bearing does global warming have upon

global energy policy?• Which energy sources need to be harnessed more

vigorously in the future?• What are the present and prospective technologi-

cal options?• How can energy systems in industrialized and

transition countries be transformed in an environ-mentally benign fashion?

• How can it be ensured that all people have accessto a basic supply of modern energy forms?

• How can energy supply be ensured and expandedin developing countries in a manner that is bothcost-effective and environmentally sound?

• How can forms of energy use harmful to humanhealth be overcome?

• How should a global energy policy be shaped –structurally, institutionally and financially?

• Which challenges does the scientific communityface?

• Which concrete policies need to be adopted overthe next two decades?

In this report, the German Advisory Council onGlobal Change (WBGU) has taken up these guidingquestions, has sought answers and has identifiedways to overcome goal conflicts.The time horizon forpolitical action extends over the next 50 years. Somescenarios, such as on the long-term structure of theglobal energy system, probe the future even further,to the year 2100. It follows that the catalogue ofinstruments developed by the Council must not be

Introduction

12 1 Introduction

considered static. The measures recommended hereare rather intended as a basic pattern of transforma-tion, in the full knowledge that a search processextending over such a long period cannot be pre-dicted. Nonetheless, search processes, too, need to beinitiated and shaped.

This report’s innovative contributionOpinion papers and reports on sustainable energypolicy abound. Only recently, in mid-2002, the StudyCommission of the German Bundestag on ‘Sustain-able Energy Supplies in View of Globalization andLiberalization’ presented its final report.The presentreport – which concentrates explicitly on the globallevel – breaks new ground in four respects:1. The two overarching objectives of protecting the

world’s climate and overcoming energy povertyare given equal standing, and avenues are soughtby which to resolve goal conflicts. The discussionpresented here of ways to move global energy sys-tems onto a sustainable path does justice to theright of developing countries to catch up with theindustrialized world.

2. To signpost this transformation path, the Councildefines, in this report, the attributes required bysuch a path if it is to be sustainable, using a ‘guardrail’ approach. Guard rails define maximum limitsof damage; if these limits are crossed today or inthe future, this would entail intolerable conse-quences. Guard rails are not goals, but minimumrequirements that must be met if the principle ofsustainability is to be adhered to.This is the Coun-cil’s understanding of sustainability: The guardrails mark out the boundaries of the scope for sus-tainable action.

3. Building on the guard rail approach, the reportsets out a corridor for sustainable energy policyand draws up a roadmap for a global transition ofenergy systems to sustainability by the year 2050.The Council understands such a transformation asa search process, for no one is able to predictfuture developments with sufficient accuracy.Nonetheless, with its concrete time schedules andsubstantive goals, the transformation roadmapproposes key elements of policy redirection atboth the national and international levels.

4. The report’s recommendations tie in with ongoingpolicy processes, highlighting concrete interven-tions and alternatives. These recommendationsare summarized for policy-makers.

The transformation of energy systems is a Herculeantask, comparable to a new industrial revolution. Thereport shows why this is so and what needs to bedone.

Social and economic energy systemlinkages

2

2.1Introduction

Energy is an essential precondition for human devel-opment. From the first time wood was used for lightand heat thousands of years ago to the latest energytechnologies, greater quality and efficiency in energyuse has been an aim of and driving force behind inno-vation and progress. Three major transitions in thedevelopment of energy systems led to greater qualityin the types of energy: the use of coal-fired steamengines allowed for new, more efficient productionprocesses and simultaneously reduced dependenceon ever scarcer ‘traditional’ fuels (wood, manure).The second transition, from coal to oil, increasedmobility as the combustion engine was developed.Finally, the use of electricity (light, computers) ledhumankind into the age of information.

These developments, especially industrializationand urbanization, have brought about great struc-tural changes in the economy and in society. Fluidfuels and grid-based types of energy, which arecleaner and can be used more flexibly, also increasedthe quality of energy use. However, the amount ofenergy used grew several fold along with the techno-logical innovations and the concomitant structural

changes in society and the economy. At the sametime, energy systems moved from dependency on tra-ditional fuels to dependency on fossil energy sources.In the 1960s, oil surpassed coal as the most importantfossil energy carrier, a position coal had held foraround half a century (Fig. 2.1-1). The transport sec-tor, in particular, is almost completely dependent onoil as an energy source.

2.2The global setting

2.2.1Rising energy and carbon productivity – trends upto 2020

Today, 80 per cent of the energy we use worldwidecomes from fossil sources (Table 2.2-1). For the nextfew decades, the fossil resources currently availablewill suffice to meet demand. However, it is probablethat energy prices will rise during this period as theextraction of fossil resources becomes more compli-cated, and hence more expensive. Traditional bio-mass continues to play a dominant role in manydeveloping nations, especially in rural areas (UNDP

60

40

20

1850 1900 1950 2000

Wood

Coal

Oil

Gas

Nuclear

80

Sha

re [%

]

0

Year

Figure 2.1-1Share of various energysources in world primaryenergy consumption. In 100years, drastic changes in theenergy mix are possible, asthe example of coalillustrates.Source: Nakicenovic et al.,1998

14 2 Social and economic energy system linkages

et al., 2000). But globally, it only makes up around 10per cent of all energy generated. The fastest growingshares are of natural gas and ‘new’ renewable energysources such as wind, photovoltaics, and solar ther-mal, though they only make up around 2 per cent ofenergy generation worldwide. The InternationalEnergy Agency (IEA) expects new renewables togrow by 3.3 per cent annually and natural gas by 2.4per cent up to 2030. The growing share of gas, whichis mostly due to the development of inexpensivecombined-cycle (gas and steam) turbines, is eatingaway at the share of coal and nuclear energy. Never-theless, coal is still the most commonly used energysource for the generation of electricity. Nuclearenergy has been stagnant or falling somewhat; theIEA expects its share to drop to around 5 per cent by2030. The use of nuclear energy is only growing in afew (mostly Asian) countries (IEA, 2002c).

Population growth and economic and technologi-cal development are the main factors that determinethe world’s energy needs. Per capita energy con-sumption increases – with considerable variance –when incomes increase, as a comparison of numerouscountries reveals (Fig. 2.2-1).And yet, it also becomesclear that the same level of energy consumption canbring about quite different levels of material pros-perity: Japan’s per capita energy use is roughly thesame as South Korea’s, but Japan’s per capita incomeis seven times greater. In the last two centuries, theglobal gross national product increased by 3 per centannually, while global energy demand only rose by 2per cent per year (IPCC, 1996). Hence, economicenergy productivity has increased by 1 per cent annu-ally. This is not only due to technological progress(greater efficiency), but also to changing patterns inenergy services (such as shifts between sectors) andthe replacement of fuels with more modern types of

energy (such as gas replacing wood for cooking). Inaddition, changing consumption patterns and life-styles can affect energy productivity (Nakicenovic etal., 1998; Section 2.2.3).

Pollution usually goes hand in hand with theincreasing use of energy, though not proportionally:global emissions of carbon dioxide are not keepingpace with the increase in energy consumption. Theuse of less carbon-intensive fossil energy carriers,such as natural gas, as well as the use of nuclearenergy or renewable energy carriers instead of car-bon-intensive fossil energy carriers like coal arechanging the mix of energy carriers and leading todecarbonization. Per unit energy consumed, carbondioxide emissions are falling globally by 0.3 per centeach year.

2.2.2Energy use by sector

Today, the world’s main energy consumer is industrywith some two-fifths of the world’s primary energyconsumption. Private households and commercialbuildings consume somewhat less, while the trans-port sector consumes around a fifth (Table 2.2-2;IPCC, 2000b). In Asia, the share of industry is greater(59 per cent), while industry only takes up aroundone-third in the OECD countries, where transportmakes up one-fourth, compared to only 15 per cent inAsia. The agricultural sector only uses some 3 percent of commercial energy globally. Between 1970and 1990 annual global growth rates were greatest inthe buildings sector (heating, cooling, lighting, etc.) at2.9 per cent, followed by the transport sector at 2.8per cent (IPCC, 2000b). In the first half of the 1990s,the use of primary energy worldwide only grew by 0.7

Energy source Primary energy

[EJ]

Share

[%]

Static range ofreserves[Years]

Staticrange ofresources[Years]

Dynamicrange ofresources[Years]

Oil 142 35.3 45 ~200 95Natural gas 85 21.1 69 ~400 230Coal 93 23.1 452 ~1,500 1,000

Sum of fossilenergy sources 320 79.6

Hydropower 9 2.2 renewableTraditional

biomass 38 9.5 renewableNew renewables 9 2.2 renewable

Sum of renewables 56 13.9

Nuclear power 26 6.5 50 >>300

Total sum 402 100.0

Table 2.2-1World consumption ofprimary energy in 1998 byenergy source with anindication of range. Thestatic range is the number ofyears the knownreserves/resources will lastat current rates of annualproduction. In other words,it describes how long aresource will be available ifconsumption remains atcurrent levels. In contrast,the dynamic range is basedon the expected annualincrease in production.Source: UNDP et al., 2000

15The global setting 2.2

per cent, but the growth of consumption in the trans-port sector was greater at 1.7 per cent, especially inthe developing world (Table 2.2-2).

In industry, energy is mainly used to manufacturea few energy-intensive goods such as steel, paper,cement, aluminium, and chemicals. The demand forthese goods is growing in quickly developing coun-tries – for instance, due to the expansion of infra-structure – while demand for these goods, exceptpaper, is falling or stable in industrialized countries.

Some of the manufacturing plants for these goodshave moved to newly industrializing countries(NICs).

The important factors in energy consumption inbuildings include population density, urbanization,the number of housing units, per capita floor area, thenumber of people per household, age distribution,income per household, and the floor space used com-mercially. In general, the greater the degree of urban-ization, the more energy is consumed per household

0

12,000

24,000

36,000

48,000

60,000

72,000

84,000

96,000

108,000

120,000

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Income (GDP) [US$ per capita and year]

Industrialized countries

Newly industrializing countries

Developing countries

Singapore

USA

Australia

France

Germany Japan

Hong Kong

South Korea

Argentina

BrazilMexico

VenezuelaMalaysia

South Africa

a Chinab Indonesiac Nigeriad Benin

Saudi Arabia

Transition countries

1 Ukraine2 Belarus3 Kazakhstan4 Usbekistan5 Russia

Ene

rgy

cons

umpt

ion

[kW

h pe

r ca

pita

and

yea

r]

1

3 2

4

5

Uruguayab

c

d

Figure 2.2-1The relation between mean income (GDP per capita) and energy consumption (per capita demand in kWh) in 1997 for variouscountry groups. The primary energy consumption of a country is shown – i.e. its industry and transport are also included –divided by the number of inhabitants. The clusters for developing, newly industrializing, transition, and industrialized countriesare clearly disparate. Energy demand increases as income rises, but energy consumption reaches a plateau once income hasreached a very high level.Source: modified after WRI, 2001 and World Bank, 2001c

OECD

Total Rate 90–95

TransitioncountriesTotal Rate

90–95

Asia

Total Rate 90–95

Africa and Latin AmericaTotal Rate

90–95

World

Total Rate 90–95

[%] [%/a] [%] [%/a] [%] [%/a] [%] [%/a] [%] [%/a]

Industry 33 0.9 51 -7.3 59 5.9 36 3.5 41 0.2 Households/buildings 40 1.9 32 -6.8 22 4.8 33 3.8 34 0.8 Transport 25 1.6 14 -6.0 15 7.6 26 4.2 22 1.7Agriculture 2 1.6 3 -10.6 5 5.6 4 12.6 3 0.8

Total 100 1.6 100 -7.1 100 5.9 100 4.1 100 0.7

Table 2.2-2Share of sectors in primary energy consumption according to various country groups, and growth rates between 1990 and 1995.Households and commercial buildings are taken together.Source: IPCC, 2000b


– mainly due to the greater income in cities (Naki-cenovic et al., 1998). In industrialized countries, spaceheating and air-conditioning takes up a large part ofenergy consumption in buildings. Per capita energyconsumption in buildings is not only increasing inindustrialized countries, but also in NICs. In develop-ing countries, cooking and heating are the largest fac-tors.

The volume of traffic and the technologies useddetermine the amount of energy consumed in thetransport sector. In the past few decades, passengertraffic in private cars and aircraft as well as freighttransport on roads have increased greatly. The com-paratively small share of transport by railway contin-ues to fall, while transport by road (73 per cent) andair (12 per cent) dominate energy consumption in thetransport sector (Fig. 2.2-2).

The use of energy for transport depends on eco-nomic activities, infrastructure, residential patterns,and the prices for fuels and vehicles (IPCC, 2000b).The greater the population density, the lower theenergy use for transport (Newman and Kenworthy,1990). In industrialized countries, including Ger-many, new cars are becoming more energy-efficient(IPCC, 2001c). However, in passenger transport, thetransport services delivered relative to the energyused have decreased in most European countries andJapan since 1970: the growing number and lowercapacity utilization (fewer passengers) of cars out-weigh the lower fuel consumption of the vehiclefleets, and the trend towards larger cars and morepowerful motors has worsened the situation evenfurther (IPCC, 2000b). Global emissions from thetransport sector can also be expected to increase astraffic increases in the developing countries.

2.2.3Lifestyles and energy consumption

In modern consumer societies, lifestyles have oftenreplaced old class distinctions. Today, differences inincome and value-orientations are the major factorsthat determine a person’s lifestyle. Lifestyles inindustrialized countries have become greatly differ-entiated. People use their lifestyle to express a per-sonal and group-specific identity: they say who theyare or who they want to be. Individuals may choosetheir lifestyle, but the lifestyles to choose from comeabout within social structures and trends in thecourse of social interaction: people compare them-selves with others, look for role models, or set them-selves apart from others. Unsustainable consumptionthus cannot be reduced to individual consumer char-acteristics as laziness or egoism, but rather has to beseen and assessed in a societal context.

Mobility is a part of self-fulfilment for many peo-ple. Ecological criteria are often felt to be obstaclestowards this goal. Lifestyles and consumption poten-tial also affect social prestige. Ecological behaviour –such as the use of public transport or taking vacationsin one’s own country instead of going abroad – stilloften has a negative image. Differences in lifestylesmanifest themselves in patterns of energy use andCO2 emissions. Often, there is a connection with theavailable income of a household: emissions increasealong with income.

At the same time, a number of other factors influ-ence energy consumption:• Individual characteristics (such as value-orienta-

tions, environmental awareness, age, gender, pro-fession, education, origin, religion);

• The social environment (e.g. culture, social values,role models);

1971 1976 1981 1986 1991 19960

10

20

30

40

50

60

0

1

2

3

4

5

6

Ene

rgy

cons

umpt

ion

for

air

and

rail

tran

spor

t [E

J]

Ene

rgy

cons

umpt

ion

for

road

tran

spor

t [E

J]

Road

Air – national

Air – international

Rail

Year

Figure 2.2-2Worldwide energyconsumption in thetransport sector from 1971to 1996. While roadtransport more thandoubled over the 25-yearperiod, rail transportdeclined, particularly in the1990s.Source: WRI et al., 2002

17Energy in industrialized countries 2.3

• Structures and institutions (infrastructure, resi-dential environment, income, media, markettransparency, access to information and consult-ing).

Greater prosperity and an increase in energy con-sumption have long gone hand in hand in westernindustrialized countries and were seen as interdepen-dent prerequisites in the first 25 years after the Sec-ond World War. Under the pressure of the oil crises,however, the equation ‘more prosperity = greaterenergy consumption’ began to be called into ques-tion. In the meantime, the thesis that economic devel-opment and a high standard of living can be partiallydecoupled from an increase in energy consumptionhas been empirically proven for many OECD coun-tries. A comparison of energy consumption in coun-tries with a similar economic state of developmentalso reveals that there are various ways to attain thesame level of prosperity (Reusswig et al., 2002). Thegreat variance of income in countries with the samelevel of energy consumption illustrates this factclearly (Fig. 2.2-1).

2.3Energy in industrialized countries

2.3.1Energy supply structures

Within industrialized countries, a distinction can bemade between two groups in terms of energy andcarbon productivity: the US, Canada and Australiaon the one hand, and the OECD countries of westernEurope (mostly the member states of the EU) andJapan on the other. The OECD countries in NorthAmerica have the highest per capita consumption ofprimary energy in the world, more than twice asmuch as the western European OECD countries: theenergy productivity of the US and Canada, whichdepend heavily on the use of fossil energy, is 42 percent lower than that of the OECD countries of west-ern Europe and 100 per cent below that of Japan.Thewestern European industrialized countries and Japanconsume energy much more efficiently and are grad-ually lowering their carbon intensities.

Energy sources and energy needsDomestic reserves of conventional energy sourceslargely determine the structure of primary energyconsumption in industrialized countries. In the US,oil made up 39 per cent of the primary energy in1997, followed by gas at 24 per cent and coal at 23 percent. Nuclear energy made up 8 per cent, renewable

energy sources 4 per cent, and hydropower 2 percent. Primary energy consumption rose steadily dur-ing the 1990s. By 2020 an annual increase of 0.9 percent is forecast, compared to a 1.3 per cent increasebetween 1971 and 1997 (IEA, 2001b). According tothis forecast, of all fossil energy carriers natural gaswill grow the fastest at 1.3 per cent annually. Theshare of mineral oil will increase from 39 per cent to41 per cent due to greater demand in the transportsector. Overall, the renewable sources of energy(excluding hydropower) will grow the fastest at 1.6per cent annually, but given the low levels at whichthey are starting, their share in overall primaryenergy consumption will not increase considerablyunder the expected conditions.

In the OECD countries of western Europe, theconsumption of primary energy will probably growsimilar to the trend in the US at around 1 per centannually, which is only slightly lower than the 1.2 percent average annual increase between 1971 and 1997.But the structure of primary energy carriers willchange considerably, especially in comparison withNorth America. According to the estimates of theIEA, the shares of coal and nuclear power will con-tinue to drop (from 20 per cent to 14 per cent and 14per cent to 9 per cent, respectively). In contrast, nat-ural gas will grow by 3 per cent annually, increasingits share of primary energy consumption from 20 percent to 31 per cent. Though the consumption ofrenewable energy will also continue to increase, itsshare will only rise from 4 to 5 per cent (IEA, 2001b).

Trends in energy demand by sectorIn the US, the increase in transport of 1.6 per centannually by 2020 will determine energy demand mostof all. The growth in traffic will far outpace increasesin the efficiency of fuel consumption. In contrast, theenergy demand of the industrial sector will onlyincrease moderately at 0.5 per cent annually. Contin-uing structural change – the GDP share of the servicesector, which is less energy-intensive, will continue toincrease – will mean that industry’s share in overallenergy demand will decrease (Fig. 2.3-1).

In the EU, the transport sector presently con-sumes more than 32 per cent of final energy (over 80per cent of which is in road transport) (EEA, 2001),thus making it an important factor in the increase ofprimary energy consumption in western Europe. Incontrast, energy demand in the industrial sector hasremained constant over the past 30 years in theOECD countries of western Europe.

Dependency on importsIn industrialized countries, the security of energysupply is a key policy objective.The National EnergyPolicy Development Group in the United States esti-


mates that over the next 20 years the consumption ofmineral oil will increase by 33 per cent, natural gas by50 per cent, and electricity by 45 per cent (NationalEnergy Policy Development Group, 2001). Hence,the gap between domestic production and demandwill widen further. At current levels of consumption,US coal reserves will last another 250 years, giventhat 24 per cent of the coal consumed in the US isimported.The share of imports for other fossil energysources will rise more steeply; by 2020, the US willprobably have to cover some 70 per cent of its min-eral oil consumption with imports. This trend willhave important geopolitical consequences (Section2.6.2).

The EU’s dependency on imports is greater still.In the next 20–30 years, imports will increase from 50per cent to 70 per cent of overall consumption, thusalmost reaching the level of dependency of Japan,which currently imports 80 per cent of its energy.TheEU’s imports could reach 90 per cent for mineral oil,70 per cent for natural gas, and even 100 per cent forcoal. In light of its increasing dependency on imports,the EU elaborated a strategy in its Green Paper toensure the security of energy supply.The core recom-mendations in the Green Paper include greater pro-motion of renewable energy by means of financialand tax incentives and resolute policies to influenceenergy demand (EU Commission, 2000a).

Subsidy and research policy in the energysectorSubsidies are a key tool in energy policy. They areused to lower extraction and production costs,increase profits for producers, or lower prices forconsumers. To ensure the security of energy supply,subsidies aim to guarantee a certain share of domes-

tic production and the greatest possible variety ofenergy carriers (IEA, 1999). While Germany mostlysubsidized nuclear energy in the 1960s and 1970s,most of its energy subsidies now go to hard coal(UBA, 1997). Germany’s coal subsidies are by far thegreatest in all of Europe (Fig. 2.3-2). In addition todirect subsidies, fossil energy carriers also benefitfrom forms of indirect tax relief, such as the taxexemption for aviation kerosene and the distinctionmade between diesel and petrol.

In the US, too, subsidies especially promote fossilenergy: 50 per cent of the energy subsidies in the US– a total of US$6,200 million – go to fossil energy, 18per cent to renewables, and 10 per cent to nuclearpower generation (EIA, 2000).

State expenditures for research and developmentrepresent a special kind of subsidy. Though they donot directly affect the current extraction and supplyof energy or energy prices, they do influence thefuture development of energy markets and are thuscrucial for the transformation of energy systems. Asmall number of countries dominate state researchand development expenditures; all of them are indus-trialized countries. In 1995, only 10 of the 26 memberstates of the IEA accounted for 98 per cent of all ofthe research expenditures in the energy sector (IEA,1997). In the last two decades, research budgets in theenergy sector have been drastically cut in almost allindustrialized countries with the exception of Japan(Fig. 2.3-3). The cuts in the R&D budgets affected allenergy sources. Between 1980 and 1995, globalexpenditures for fossil energy dropped by 58 percent, by 56 per cent for renewables, and by 40 per centfor nuclear (Margolis and Kammen, 1999). PublicR&D expenditures, averaged across all industrial-ized countries, focus on promoting fossil and nuclear

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energy (55 per cent). Renewables and energy effi-ciency make up 40 per cent (UNDP et al., 2000).

Parallel to the drop in public research and devel-opment expenditures, the private research expendi-tures in industrialized countries have also fallen,especially in the US, Italy, Spain and Great Britain(Erdmann, 2001). But the different definitions andmethods make it hard to compare industrializedcountries. However, it can be stated that the energysector is one of the industries with the lowestresearch and development expenditures in terms ofworldwide revenue. For example, in 1995 the USenergy sector only invested 0.5 per cent of its revenuein research and development. In comparison, thepharmaceuticals industry and the telecommunica-tions industry each spent more than 10 per cent oftheir revenue on research (Margolis and Kammen,1999).

2.3.2Principles and objectives of energy policy

The energy policies of the industrialized countriespursue three objectives: energy supply security, lowprices resp. cost-effectiveness, and low environmen-tal impact.The most important objective is to provideand maintain the security of supply. This objective isoften the reason given for the considerable stateintervention on the markets for grid-based energy(electricity, gas) in the form of monopolies protectedand regulated by the government. Domestic energyreserves – usually fossil fuels – have been extractedto ensure a large degree of energy independence,especially during crises – hence the heterogeneous

mix of primary energy sources in the industrializedcountries. The objective of becoming independent ofenergy imports became especially important afterthe oil crises in the 1970s.

Many countries aim to attain the second goal ofenergy policy – providing energy at the lowest possi-ble price – by, among other things, establishing secu-rity reserves.The primary energy reserves (especiallyoil and coal) not only serve to ensure supply, but arealso used to stabilize world market prices. For grid-based energy supply, state investment and price reg-ulations were used for a long time to prevent uneco-nomic investments and protect consumers fromexcessive (monopoly) prices of utility companies.However, in many instances this policy did not pro-duce the desired economic efficiency. After the com-paratively positive experience with liberalization inthe US and Great Britain, the EU and other industri-alized countries also launched the liberalization oftheir electricity and gas markets in the 1990s to attaingreater economic efficiency and lower prices throughcompetition (Section 2.3.3).

Environmental protection is the third objective ofthe energy policies of the industrialized countries. Inthe 1970s and 1980s, the finiteness of fossil primaryenergy resources and the adoption of local clean airpolicies were the main issues in this field. In themeantime, climate change has become the focaltheme in many countries. However, national govern-ments vary greatly in the importance they attach tothis objective. Furthermore, the EU and the US dif-fer on the status that expanding renewable energyshould have.

Figure 2.3-2Comparison of statesubsidies for hard coalmining in four EU memberstates in 1994 and 2001.Source: EU Commission,2001a

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2.3.3Liberalization of markets for grid-based energysupply

Starting pointFor the grid-based supply of electricity and gas, therehave long been exceptional areas that were not sub-ject to competition, i.e. where the state directly han-dled the supply of electricity or regulated it compre-hensively. The economic justification for this is thatthe value chain of the generation of electricity is grid-based for long-distance transport and regional distri-bution to consumers. As provisioning is cheaper viaone line than via multiple lines, these grids constitutewhat is called a ‘natural’ monopoly.

Debate on the regulatory setting governing thesupply of electricity and gas began at the end of the1970s with the liberalization measures in the US andGreat Britain. The reasons given for the structuralreforms launched for greater competition in theenergy sector are primarily the goal of lower pricesand the decentralization of the energy sector (dis-tributed power). Deregulation and/or changes in theregulations (‘re-regulation’) are two ways of reach-ing these goals. To some extent, environmental pro-tection interests are also given as further reasons.

The majority of the industrialized countries arederegulating (especially regional monopolies, price

controls, and investment controls) to ensure thegreatest level of competition possible on the electric-ity markets. The monopolies are to be reduced to aminimum of grid-based types of energy by breakingup energy provision, transit transport, local distribu-tion, and the sale of electricity into separate sectors.In the areas where the market cannot provide anycompetition, there is to be competition for the mar-ket: tenders for temporary licenses.

Liberalization of electricity and gasmarkets in the EUThe EU’s liberalization efforts are based on the Sin-gle Market Directives for electricity and gas adoptedin 1997 and 1998. They are to be implemented on theelectricity market first. Liberalization is to take placein increments to facilitate adaptation for the powercompanies.According to the Single Market Directiveand the resolutions of EU government heads, startingin 2004 industrial customers will be able to choosetheir power company, followed by private consumersin mid-2007. The efforts to liberalize the electricitymarkets have advanced so far in some member statesof the EU – such as Great Britain, Sweden, Finlandand Germany – that all customers can already choosetheir power company. Often, the power companiesare vertically integrated firms, i.e. they serve all of thelinks in the value chain from primary to final energy.The Single Market Directive for electricity requires

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Figure 2.3-3Comparison of public research and development (R&D) expenditures of selected OECD countries in the energy sector in theyears 1980 and 1995. *Data for France are of 1985.Source: Margolis and Kammen, 1999 (after IEA, 1997)


this vertical integration to be broken up: the sectorsof provisioning, grid-bound transport, and sales haveto be separated, at least in terms of accounting. Thetransit grids have to be separate organizations withinthe company. All energy generators have to haveaccess to the grids.

The gas markets in the EU are also undergoing aliberalization process, but one that is less advancedthan the electricity markets. The Single MarketDirective for natural gas obliges EU states to opentheir gas markets in increments. First, 20 per cent ofthe total annual gas consumption of a member statehas to be open to competition by 2000, then 28 percent by 2003, and finally 33 per cent by 2008. GreatBritain and Germany have already completelyopened their gas markets on paper, but competitionis very slow in coming, especially in Germany (IEA,2001a).

Liberalization of grid-based energy supplyin the USAThe United States pioneered the liberalization of theenergy sector among industrialized countries with itsNational Energy Act of 1978. However, the imple-mentation of this basic law was left up to the energyauthorities of the various states, resulting in a hetero-geneous mix of institutional designs and primaryenergy sources used. California was considered aforerunner of future energy policy due to the liberal-ization of its markets for grid-based energy supplyand the use of renewable energy sources. But Cali-fornia’s energy crisis has led to a much more differ-entiated assessment of the state’s deregulation strat-egy.The goal of ensuring power supply moved clearlyback into the spotlight once the liberalized electricitymarkets began to present a risk of blackouts (bothcontrolled, i.e. ‘rolling’, and uncontrolled) on the eastcoast of the US. The old tenet of previous US admin-istrations that energy shortages are regional, tempo-rary phenomena has been abandoned. Under thedirection of the US Vice-President, a task force hasdeveloped proposals for a future national energy pol-icy. The ‘National Energy Policy Report’ (NationalEnergy Policy Development Group, 2001) focuses onexpanding domestic oil and gas production and min-ing coal to reduce the country’s dependency onenergy imports. In addition, nuclear power is to beexpanded as a non-polluting alternative to coal, oiland gas.

2.3.4Renewable energies in industrialized countries

European UnionIn accordance with an EU Directive of September2001 (EU Commission, 2001b), the share of renew-able energy in the EU’s gross domestic consumptionis to reach 12 per cent by 2010, with the share ofrenewables in total electricity produced rising to 22.1per cent. The mix of renewable energy sources in theEU differs from one member state to another.Hydropower is used most often, covering an espe-cially large part of the electricity generation in Aus-tria and Sweden due to the local geographic condi-tions there. In Germany, a melange of policy tools(the rates for power fed into the grid, market pene-tration programmes, voluntary measures, etc.) havebeen promoting the ‘new’ sources of renewableenergy since the early 1990s. As a result, the share ofrenewable energy has increased quickly in the past 10years, both in terms of the primary energy consump-tion and power consumption (Fig. 2.3-4). Similardevelopments – especially for wind power – arefound in many other EU countries.

USAIn the US, the current share of renewable energysources (including hydropower) in electricity is alsorelatively slight at 6–7 per cent (IEA, 2002b). Today,new renewable energy sources like biomass, geother-mal power, wind power, and solar energy only makeup 2 per cent of electricity generation, a figureexpected to rise to 2.8 per cent by 2020 (NationalEnergy Policy Development Group, 2001). Accord-

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Figure 2.3-4Development of renewables as a share of primary energyand electricity (without waste incineration plants) inGermany. Both shares doubled in ten years.Source: BMU, 2002a

ing to the National Energy Policy Group, the mainreason for the comparatively low consumption ofrenewable energy in relation to its technical potentialis the high cost compared to conventional resources.Hence, greater efforts to promote renewables areproposed.They include budget increases for researchand development in renewable energy and expandedtax rebates for power generated from renewables(wind, biomass). The US promotes renewables muchless than western Europe, usually limiting its work toresearch and development programmes. Althoughthe US is the third largest user of wind power afterGermany and Denmark, few states in the US canmatch the growth trends for the consumption of windpower in Germany, for instance. Hence, renewableenergy’s share of primary energy is expected to growmore slowly in the US than in the EU in the next fewyears (IEA, 2001b).

2.4Energy in developing and newly industrializingcountries

2.4.1Energy supply structures

Developing countriesAccess to modern energy is an essential part of thefight against poverty and a prerequisite for reachingthe Millennium Development Goals (DFID, 2002).Energy fosters income, education, social involve-ment, and health, particularly freeing women of such

time-consuming activities as collecting firewood andfetching water.

Today, 1,640 million people – some 27 per cent ofthe world’s population – have no access to electricity.99 per cent of these people live in developing coun-tries, 80 per cent of them in rural areas (IEA, 2002c;Fig. 2.4-1). This energy poverty goes hand in handwith a low index of human development (Fig. 2.4-2).China is an important exception here: 90 per cent ofthe population has access to electricity. Per capitaincome will grow the fastest in developing countriesover the next few decades. In a business-as-usual sce-nario, more than 60 per cent of the growth in demandfor primary energy will come from developing coun-tries between 2000 and 2030 (IEA, 2002c).

Another problem specific to developing countriesis drawing the attention of the world’s population:the considerable health risks, especially to womenand children, resulting from the use of wood andmanure for cooking and heating (Box 2.4-1). TheWHO estimates that 1.6 million people die each yearfrom indoor air pollution – more than twice as manyas from the effects of air pollution in cities and almosttwice as many as die from malaria annually (WHO,2002b). The development of income and technologywill not solve this problem alone. The IEA (2002c)estimates that the number of people who use tradi-tional biomass for cooking and heating will increasefrom 2,400 million at present to 2,600 million by 2030.

The developing countries are not pursuing anyunified energy policy. Nevertheless, some patternscan be identified:• The demand for commercial energy is growing

faster than the GDP, except in the poorest devel-oping countries. A 10 per cent increase in GDP is

Millions of people without electricity

Millions of people relying on biomass

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Figure 2.4-1Regional distribution ofpeople without access toelectricity and thosedependent on biomass fortheir energy supply. Thedifferent colours indicateregions and countries, whichrelate to the cited data.Source: IEA, 2002c

23Energy in developing and newly industrializing countries 2.4

accompanied by a 12 per cent increase in demandfor commercial energy (Leach, 1986). Above all,population growth is responsible for the above-average growth of the commercial energy sector(OTA, 1991): 90 per cent of the global populationgrowth currently stems from developing countries.At GDP growth rates of 2–3 per cent per year, thegrowth rates in the consumption of commercialenergy would be greater than the GDP even if theenergy mix remained unchanged.

• Many developing countries are setting up infra-structures, for instance for transport. In theprocess, a lot of materials whose manufacturerequires a great amount of energy – such as steeland concrete – are consumed, which will lead togreat increases in the use of commercial energy inthe mid-term.

• Rising rates of urbanization are leading to anincrease in the share of commercial energy. Bio-mass is mostly used in rural areas. Nevertheless,many of the poor in urban slums will continue tobe dependent on biomass and coal for heating andcooking.

• Modern methods of production are making elec-tric appliances such as refrigerators, televisions,radios and computers more affordable for con-sumers. This will, in turn, increase demand bothamong the consumers connected to the grid andthe businesses that manufacture these goods,some of which are located in developing countries.

• The energy sector in developing countries suffersfrom inefficiency and poor controls. In 1992, stateenergy subsidies in developing countriesamounted to a total of US$50,000 million, morethan the official development assistance (ODA)

for these countries (DFID, 2002). What is worse:these subsidies often do not reach the proper tar-get groups or promote sustainable technologies.For instance, in Ethiopia 86 per cent of the subsi-dies for petroleum do not go to the poor (Kebedeand Kedir, 2001).

Newly industrializing countriesNewly industrializing countries are closing the gap toindustrialized countries and will be able to movebeyond the characteristics of developing countriesthrough their own dynamics in the foreseeablefuture. Structurally, they have adapted the modern-ization patterns of the industrialized countries andare imitating their models of economic growth anddevelopment. According to the World Bank, thesecountries include: the ‘Tiger States’ of South Koreaand Taiwan; OPEC countries such as Saudi Arabiaand Iran; South American countries rich in resourcessuch as Brazil and Argentina; South Africa; and a fewsmall (and rich) tourism island states such as theBahamas and Mauritius.

The newly industrializing countries lie betweenthe industrialized and the developing countries bothin terms of per capita GDP and per capita energyconsumption. But there are considerable differenceswithin the newly industrializing countries: WhileUruguay consumes some 12,000kWh per capita,South Korea consumes some 50,000kWh per capita.Newly industrializing countries generally place greatstore on economic development, with less attentionpaid to environmental or social problems. Environ-mentally friendly energy sources thus play a subordi-nate role in these countries. For example, during aprosperous period of investment in South Korea in

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1995 the share of hydro, wind and solar only made up0.3 per cent of the primary energy supply, whileimported oil accounted for more than 60 per cent(Brauch, 1998).

The energy policies of most newly industrializingcountries do not include targets for efficiency strate-gies or investments in renewable energy sources,except for hydropower (EIA, 2001). Though somecountries like Brazil use their great potential forhydropower, they nonetheless rely on fossil fuels tocover the largest part of their energy demand (EIA,2002).

The restrictions on the economic options of newlyindustrializing countries caused by oil imports havebeen exacerbated by the devaluation of the curren-cies of many Asian countries. This trend has led to apolitical refocus in ASEAN member states; now, forthe first time, strategies for greater energy efficiencyare being formulated. Nonetheless, no shift in invest-ments towards renewable energy sources can beidentified to date (Luukkanen and Kaivo, 2002). Box

2.4-2 describes reform efforts for the representativecase of India.

2.4.2Trends in energy demand by sector

In developing countries, private households are thelargest group of consumers, followed by industry andtransport. Households make up some 25 per cent ofenergy demand worldwide. But in China, they makeup 37 per cent, in India and Indonesia 54 per cent,and in Nigeria even 80 per cent (Fig. 2.4-4, WRI,2002). As the economy becomes stronger, the shareof energy used in households drops noticeably asmore energy is used for industry, transport or agri-culture.

The types and amounts of energy used in develop-ing countries vary widely due to the prevailing differ-ences in income distribution as well as in institutionsand infrastructures. In most developing countries, at

Box 2.4-1

Energy carrier usage as a function of householdincome in developing countries

Figure 2.4-3 illustrates the connection observed betweenhousehold income, the energy services in demand, and theenergy sources. The supply of energy required for basicneeds is listed in the bottom row. As households becomemore prosperous, they use liquefied petroleum gas or fossilfuels instead of traditional biomass. Energy services such asrefrigerators, etc. are not available to the poorest house-holds. Where they are in demand, fossil fuels and – to alesser extent – electricity are used. Electricity is only used

for the ‘advanced’ energy services when income reaches acertain level. The chart does not reflect the differencesbetween urban and rural areas.

But there are exceptions to this diagram: in southernand south-east Asia, no connection was observed betweenincome and the use of traditional biomass (Hulscher, 1997),i.e. the wealthy continue to cook and heat in traditionalways.

The development towards modern types of energy willtake a long time and never be truly complete if energy poli-cies rely simply upon economic development rather thanstrongly supporting change.

Computer, IT

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Figure 2.4-3The mix of energy sourcesand energy services forhouseholds in developingcountries relative to theincome of the household.The plus symbols indicatethat households use thetype of energy concerned inaddition to the types ofenergy already used.Source: modified after IEA,2002c

25Energy in developing and newly industrializing countries 2.4

least half of the overall energy demand comes fromrural areas. In these regions, the energy pattern of theextremely poor are very similar: some 80 per cent ofthe low per capita energy consumption (<30GJ ofprimary energy per year) arises at home, almostexclusively for cooking (World Bank, 2001a).

In the newly industrializing countries, the demandfor final energy has risen continually in the past fewdecades, especially in industry and transport. A com-parison of the demand structure of industrialized,developing and transition countries reveals that

energy demand varies according to the size of theindustrial sector. One salient aspect is the extent towhich the newly industrializing countries haveapproached the sector pattern of industrialized coun-tries. The share of the transport sector in the newlyindustrializing countries is growing, though the sizeof this share still varies greatly. In South Korea, forinstance, it is lower than in the OECD at 20 per centvs. 32 per cent, respectively, for 1992 (Brauch, 1998).

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Figure 2.4-4Energy demand by sector inthe four most populateddeveloping countries –China, India, Indonesia andNigeria – as well as thenewly industrializingcountry of Brazil. The globalmean is provided forcomparison. All of thevalues are for 1997.Source: WRI, 2002

Box 2.4-2

The case of India: Development patterns,reforms and institutional design in the energysector

The supply/demand gap in power supplyIndia makes up 16 per cent of the world’s population butonly consumes 2 per cent of the world’s electricity. Elec-tricity is growing faster than all other energy sectors inIndia at 8 per cent.With the industry sector growing at 9 percent annually, the demand for energy is also growing at 9per cent and thus far above the average GDP growth of 4.5per cent per annum in the last 50 years.The power supply isinsufficient: supply has worsened further since 1991, and in1997 12 per cent of households – and even 18 per cent dur-ing peak times – did not have power.This gap entailed costsin the amount of 1.5–2 per cent of GDP.The unreliability ofthe power supply – power outages and frequent fluctua-tions in voltage – has led to the implementation of incen-tives to replace electricity with kerosene lamps and installdiesel generators and voltage regulators. At the same time,the introduction of energy-efficient technologies facesobstacles; for example, the service life of energy-savinglight bulbs is shorter due to the voltage fluctuations.

70 per cent of Indians live in rural areas, half of thembelow the poverty line of US$1 per capita per day. Thus,

only a third of the electricity is used in rural areas, though86 per cent of the villages already have access to electricity.Here, biomass is used to meet most energy needs.

Institutional reform in the energy sector is slowin comingThe partial liberalization of the energy sector in the 1990sled to greater imports of coal, oil and technology, a mod-ernization of power plants, and an incremental reduction ofsubsidies. But even in 1998, 64 per cent of private powerconsumption was still subsidized. And energy is subsidizedeven more in agriculture, where 20 per cent of electricity isconsumed. India’s electricity market is still a long way fromcomplete liberalization and deregulation. For instance,power companies still cannot choose their coal provider; 64per cent of power plants are coal-fired. Hence, operators ofcoal power plants cannot choose to use coal with little sul-phur and heavy metal. The inflexibility of state monopoliesand the unclear distribution of responsibilities among stateorganizations have delayed liberalization and deregulation.The reforms, which have gradually reduced subsidies anddone away with adjusted prices, have raised power pricesfor consumers. Although the supply of energy hasincreased, 75 per cent of the greater supply has not beenpaid for because the power is illegally tapped due to thehigher prices.Sources: Lookman and Rubin, 1998; IEA, 1999; Gupta etal., 2001; World Bank, 2001a; Ghosh, 2002


2.5Energy in transition countries

2.5.1Energy use

The transition countries are those in eastern CentralEurope, eastern and south-eastern Europe, the Balticstates, and the Commonwealth of IndependentStates (CIS). In the former Soviet Union, the energysector was expanded on the basis of centrally-planned targets. These targets left no room for freeenterprise and environmental criteria as theyfocused primarily on such political goals as the spa-tial integration of the economy or a plentiful energysupply for industry and the population. In theprocess, the centralized, hierarchic planning of allenergy sources led to the creation of unified energycomplexes that ensured the supply of energy to thewhole of the Soviet Union (UN-ECE, 2001). As theproduction, transport and distribution of energy didnot depend on considerations of costs or efficiency, asituation was created in which it became possible totap remote reserves of mineral oil and gas in the per-mafrost regions of Siberia (von Hirschhausen andEngerer, 1998). On the other hand, practically thewhole energy cycle lacked incentives for energy effi-ciency, especially as generally no reliable recordswere kept of the volume of energy extracted, trans-ported and consumed. The result was an energy sys-tem characterized by a very great extraction volume,excessive energy consumption, and great losses dur-ing transport and conversion.

The collapse of the socialist system in the early1990s opened the floodgates for a comprehensiveprocess of transition in these states. The transforma-tion of the former socialist planned economies intomarket economies led to partial de-industrializationin all of the transition countries. Today, the CIS facesthe challenge of ensuring its energy supply with theresources available domestically and the infrastruc-tures inherited. Most of the transition countries haveto pay a high price for imports of primary energy.Thecurrent infrastructure entails a great reliance onimports from other CIS states, notably Russia. Incontrast, countries that have extensive energyresources – such as Russia, Azerbaijan, Kazakhstan,Turkmenistan and Uzbekistan – primarily face theproblem of mobilizing capital for the development,maintenance and modernization of their mineral oil,gas and electricity industry. Not only does domesticenergy supply have to be ensured, but also enoughenergy resources made available for exports, asenergy exports generally make up a large part of the

export revenue of these countries. In Russia, forexample, oil and gas exports make up some 50 percent of the total export revenue and some 20 per centof GDP (EBRD, 2001).

In the CIS, energy demand fell by more than 20per cent between 1990 and 1997 and has since onlyrisen slightly (UN-ECE, 2001). The economic col-lapse and the widespread inability of both industryand private households to pay their power bills areprimarily responsible for this downturn. The energysector is suffering from considerable paymentdefaults as the political order prevents utility compa-nies from cutting off the power supply to industrial orprivate customers who have not paid. The lost rev-enue is then lacking when investments are desper-ately needed to service and modernize the energysector.This development has produced different out-comes for the various energy sources (EBRD, 2001;UN-ECE, 2001):• Oil production in the CIS fell by 31 per cent

between 1990 and 2000, from 571 to 395 milliontonnes. The main reason is the difference betweenworld market prices and fixed domestic prices,which makes the sale of oil to domestic refineriesunattractive, especially in light of their liquidityproblems.

• During the same period, production of coaldropped by 56 per cent from 703 million tonnes toless than 300 million tonnes. The main reasons arethe closing of uneconomical mines and the use ofmore environmentally friendly and often lessexpensive energy sources, especially natural gas.

• In the same period, gas production fell by 14 percent from 815,000 million m3 to around 700,000million m3, with the drop in domestic demand par-tially compensated for by a 12 per cent increase inexports.

• A total of 28 per cent less electricity was gener-ated, with thermal power plants – which accountfor some 70 per cent of the electricity generated –most directly affected. In contrast, the share ofelectricity generated by nuclear power plants (inRussia, Ukraine and Armenia) and hydropowerdams remained basically stable; the share of eachfigured just above 15 per cent of the total powersupply in 1997.

Renewable energy plays a minor role in the CIS, onlyattaining some 6 per cent, almost all of which comesfrom hydropower. Geothermal power makes up avery small percentage. Renewable energy is expectedto grow more slowly than energy demand. In the midto long term, however, the situation could change ifunsafe nuclear power plants are shut down and pricesfor fossil energy rise as further reforms take hold onthe energy markets.

27Energy in transition countries 2.5

2.5.2Trends in energy demand by sector

In the CIS, the service sector’s share of GDP grewfrom 35 per cent to 57 per cent from 1990 to 1998 dueto partial de-industrialization and is expected to con-tinue to grow. This development has slowed downenergy demand, however, due to the high energy pro-ductivity of the service sector. In other sectors(households, retail, agriculture, and public serviceproviders), energy demand has fallen much less thanin industry, presumably due to the energy supply pol-icy and the state guarantees that ensure power supply(Fig. 2.5-1). The IEA estimates that energy demandin these sectors will increase by 2.2 per cent annuallyup to 2010.While the energy demand of industry willalso increase, growth rates there will be lower (IEA,2001b).

The energy demand of the transport sector in theCIS is expected to grow especially quickly, withannual growth rates of 3.1 per cent up to 2020. In2020, transport will make up some 53 per cent of theoverall consumption of mineral oil (IEA, 2001b). Inthe Soviet Union, environmentally friendly transportmodes such as trains and local public transport madeup a much larger share of overall passenger andfreight transport than in western industrialized coun-tries. The share of transport in overall energy con-sumption was thus far smaller. But since the mid-1990s, the share of road traffic has been progressivelyrising: insufficient investment in railway infrastruc-ture and public local transport is making them muchless attractive than road transport. While there arecurrently only 100 cars for every 1,000 people in Rus-sia (compared to 510 cars for every 1,000 people inGermany; IEA, 2001b), the anticipated rise inincome is expected to lead to a larger number of cars.The effects of the EU’s eastward expansion are dis-cussed in Box 2.5-1.

2.5.3Subsidies as a cause of inefficient energyconsumption

In light of the energy sector’s predicament in the CIS,one would expect that measures to increase energyproductivity would be the highest priority both forthe government and businesses. And yet, productiv-ity gains have hardly been realized despite the greatpotential for savings. In 1997, the energy productivityof the CIS countries was around US$100 permegawatt hour (purchasing-power parity) and thusalmost 7 times lower than the average for OECDcountries (UN-ECE, 2001).The potential energy sav-

ings that could be taken advantage of in the CIScountries amount to around 15–18EJ annually, oralmost 40 per cent of the energy used. 90 per cent ofthis potential is in Russia and Ukraine alone.Roughly a third of this potential is in the energy andfuel sector itself, but the share of the industrial sectorin potential savings is even greater (Russia: 30–37 percent, Ukraine: 55–59 per cent). The third major areafor energy savings is the building sector. Generally,buildings in the CIS states are not equipped withheating and gas meters. In addition, material for insu-lation is often too expensive. The savings potential inthe building sector is estimated at 3EJ, or 16–18 percent of the overall potential (UN-ECE, 2001).

The continuing subsidies for energy consumptionare probably the main reason why this potential tosave energy is not being taken advantage of in mostCIS countries. Subsidy policies are characterized bythe following:• Energy prices are kept below the cost of genera-

tion by legal or political means as large sections ofthe industry and the population would not be ableto pay higher energy prices.

• There is a cross-subsidy of households by industry:energy prices in the industrial sector are keptroughly twice as high as for private consumption,but not high enough to provide incentives forincreases in efficiency.

• For political reasons, payment defaults may not becountered with the stoppage of power supply.There are either no insolvency proceedings, orthey do not work. The energy industry has playedan important role in the toleration of poor pay-ment practices in industry and thus preventedboth a restructuring of the industrial sector and anincrease in energy productivity (EBRD, 2001).

Industry(35%)

Transport(12%)

Retail and publicservice providers (8%)

Agriculture (7%)

Households(38%)

Figure 2.5-1Sectorial pattern of energy demand in Russia, Ukraine andUzbekistan.Source: modified after WRI, 2001


The subsidies not only make energy saving uneco-nomical for industrial and private consumers, butalso detrimentally affect the liquidity of power com-panies, which are no longer able to come up with thefunds to invest in reducing losses in transport andconversion. At the same time, there is a lack of pre-dictable market conditions and long-term prospectsfor profit for foreign investors, whose capital willprobably be indispensable for the modernization ofenergy systems in the foreseeable future.

2.5.4Privatization, liberalization and (re-)regulation ofenergy industries

Efforts to liberalize the energy industries of the CISare mostly based on the US/UK model. This modelprovides for a separation of energy provision, sales,and grid operation, the splitting up and privatizationof state power companies, and an independent regu-latory authority. Liberalization efforts have beenimplemented to various extents: Only a few coun-tries, such as Azerbaijan, have completely done with-

out reform, while many countries in the CIS haveconverted the various components of their energyindustry into private companies. However, control ofthese companies has largely remained in the hands ofthe political elite (in the form of state holdings orthrough the transfer of shares to former state actorsin the energy industry complex). At the same time,the possibilities for foreign investors to have holdingshave been severely limited.

The restructuring process in the energy industrycould be accelerated if Russia joins the World TradeOrganization (WTO) in the next few years. Russianlegislation and practices in the fields of industrialsubsidies, taxation, and customs policy do not cur-rently meet WTO requirements. Adaptation to theWTO’s conditions can be expected to lead to greatercompetition in the energy sector – and hence togreater efficiency. At the same time, the region’sattractiveness for foreign direct investors wouldincrease (EBRD, 2001; CEFIR and Club 2015, 2001).

Box 2.5-1

The effects of eastward EU expansion uponEuropean energy supply

The energy sector of the central and eastern Europeanstates is still in a restructuring phase. The key outcome ofEU accession will be the liberalization of grid-based energyindustries. This will lead to a mix of energy sources in theaccession states that is determined more by the marketthan by state targets. Liberalization is also expected toresult in a large drop in the share of coal (from 55 per centin 1990 to 38 per cent in 2020 in a business-as-usual sce-nario) and an increase in the share of natural gas (from 15to 30 per cent over the same period).The concomitant mod-ernization of power plants and heating systems will lead toa considerable drop in pollutant emissions. It is alsoexpected to reverse the upward greenhouse gas emissionstrend, levels of which have recently been rising again afterseveral years of economic recession. Enhancing energy effi-ciency will remain a priority after EU accession, especiallyas the available financial resources can generate the great-est effects in this sphere of action. However, the goal of theenergy policies of many new member states continues to beto expand exports to western Europe, which are limited atthe moment due to technical constraints.

The future of the 22 nuclear reactors in central and east-ern Europe remains problematic. On average, they providesome 30 per cent of the power supply or 6 per cent of totalenergy supply. Up to now, the EU has arranged for the step-wise decommissioning of a total of 6 nuclear generatingunits of the first generation of Soviet design in Bulgaria,Lithuania and Slovakia.The EU aims to shut down all reac-tors of the first generation (another 2 units) and increasethe safety standards of later reactors. But there is some

doubt about whether the funds provided by the EU (a totalof €850 million since 1990) are a sufficient contributiontowards financing the considerable costs of decommission-ing and safety improvements. An estimated €5,000 millionis required just for safety improvements in the new memberstates over the next 10 years.

At the same time, the question arises of the effects onthe CO2 emissions inventories of central and eastern Euro-pean states. If the nuclear power plants are replaced bythermal power plants, CO2 emissions are expected toincrease by the same amount as they would have todecrease in accordance with the targets agreed in the KyotoProtocol (generally 8 per cent below the levels of 1990).Nonetheless, in light of the drop in gross national productand the greater energy productivity, the Kyoto targets arenot necessarily endangered. However, the potential volumeof carbon trading under the Kyoto Protocol and the result-ing revenue would plummet.

But the greatest challenge for the EU’s climate policiesand those of its (future) member states may not stem fromdevelopments in the energy sector, but rather from thegrowth in traffic driven by the expansion of the EU. Expan-sion is expected to double the annual growth rate of thevolume of transport between new members states and thecurrent EU to 10 per cent, as well as that of exports fromthe new member states to 6 per cent, while the share of rail-way transport is expected to continue to decrease as it hasdone in the past years. In addition, the entrance of the newmember states will probably only further accelerate theirgrowth in the number of private cars, which already sky-rocketed over the past decade.The share of old, heavily pol-luting cars will also be much larger than in the current EU.

Sources: EU Commission, 1999b; Matthes, 1999; EU Com-mission, 2000b; Jantzen et al., 2000; IPTS, 2001.

29Economic and geopolitical framework conditions 2.6

2.6Economic and geopolitical framework conditions

The growing interdependencies in a globalized worldand the transformation of world politics since theearly 1990s have fundamentally altered the frame-work conditions of global energy policy. Firstly, amore integrated global economy has led to a rise inenergy consumption in the transportation andexchange of goods, services and personnel. Secondly,the end of the Cold War has facilitated the frontier-free tapping of energy resources – even in regions towhich the West’s transnational corporations previ-ously had little or no access.

2.6.1Globalization as a new framework condition forenergy policy action

For the energy sector, globalization is nothing new.The internationalization of markets and market play-ers occurred first, and is most advanced, in the energyindustry (Enquete-Commission, 2001). Due to theoften vast geographical distances between energycarrier production, on the one hand, and energy con-version and use, on the other, this sector has alwaysbeen a driving force in the deepening of internationaltrade relations. The liberalization of grid basedenergy in many countries has also contributed to thegrowth of the international energy trade.

When considering the impact of world trade onenergy supply and use, it is important to bear in mindthat global economic integration facilitates the trans-fer of standards in energy efficiency, products, tech-nologies, production processes and management sys-tems. In this aspect of globalization, the industrial-ized countries’ foreign direct investment (FDI) inother regions of the world plays a key role. FDI rosesignificantly in the 1990s: Global FDI (inflow andoutflow) amounted to 2.7 per cent of global GNP in1990, and to 4.3 per cent eleven years later (UN-CTAD, 2002).

On the one hand, the globalization of world tradefosters opportunities to export technologies for thegeneration of renewables. On the other, there is adanger that poor-quality, energy-inefficient tech-nologies and products – such as obsolete machinery,vehicles and plant – will be exported to developingand newly industrializing countries, negativelyimpacting on energy efficiency (Enquete Commis-sion, 2001).

Alongside the rise in commodity flows, passengertransport services – especially air travel – have adirect impact on the energy sector. Since 1968, thenumber of tourists travelling by air has increased

more than five-fold, from 131 million (1968) to 693million in 2001 (World Tourism Organization, 2002),and tourist numbers are expected to climb to 1,600million by 2020.World airline passenger traffic is cur-rently growing by 4–6 per cent annually (Lee et al.,2001), and air traffic’s share of total passenger trans-port volume is expected to quadruple to 36 per centby 2050 compared with a figure of 9 per cent for 1990(WBGU, 2002).

Another energy-relevant effect of globalization isthe transfer of Western lifestyles to the less industri-alized regions of the world. The global media corpo-rations and the entertainment industry are drivingforces here, among others. This transfer typicallyleads to changing consumption patterns, as is evidentfrom – among other things – the rise in privatehouseholds’ energy consumption, especially fordomestic purposes (living space, refrigeration/coolin-g) and the acquisition of electrical domestic appli-ances and communications equipment. It also has animpact on mobility and leisure.

2.6.2Geopolitics

The link between global energy supplies and geopol-itics relates primarily to oil and gas, as they are moreregionally concentrated in the Earth’s crust thanhard coal and lignite.The spatial gap between energyuse, on the one hand, and the extraction of energysources, on the other, means that the importing coun-tries are heavily dependent on a single geographicalzone, the resource and energy ‘ellipse’, comprisingthe Middle East region and the countries of the Cau-casus-Caspian region (Fig. 2.6-1). These regions,which are among the most politically unstable in theworld, harbour 70 per cent of the world’s oil and 65per cent of its gas reserves (Table 2.6-1). Their signif-icance for global energy supplies varies, however: Atthe current rate of output, the oil reserves in the Per-sian Gulf are likely to last for another 90 years, com-pared with just 20 years for the Caucasus-Caspianregion, while the figures for the gas reserves are 270and 80 years respectively (Scholz, 2002). The trans-portation conditions also differ. Oil has been pro-duced in the Persian Gulf for a long time and can bedistributed worldwide via pipelines and tankers. Gas,on the other hand, with the exception of liquefiedpetroleum gas (LPG) tankers, needs a networkedsystem of pipelines extending all the way to the enduser; until now, this has only been profitable for dis-tances up to 6,000km (Müller, 2002).

Since the industrialized countries’ own oil and gasreserves – where they exist – are rapidly dwindling,demand must now be met by an increase in imports.


For 2020, Germany’s dependency on energy importsis likely to be 75 per cent, with the corresponding fig-ures for the EU and the USA being 70 per cent and62 per cent respectively (Enquete Commission,2001). The petroleum exporting countries havejoined together to form OPEC, thus establishing astrong negotiating position (Box 2.6-1).

During the Cold War, securing the oil supply fromthe Middle East was a major priority for the USAand its NATO allies. This geostrategic goal wasunderpinned by the Carter Doctrine:“An attempt byan outside force to gain control of the Persian Gulfregion will be regarded as an assault on the vital

interests of the United States of America, and suchan assault will be repelled by any means necessary,including military force.” (US President JimmyCarter in his State of the Union Address, 23 January1980).

The demise of the Soviet Union led to a shift in theglobal political landscape and geopolitical options.The security interest of the Newly IndependentStates in the Caucasus and Central Asia in reducingtheir dependency on Russia gave the USA theopportunity to gain a foothold in the region – theypumped in massive amounts of economic and mili-tary aid, and, in the wake of 11 September 2001,established military bases within the framework ofthe ‘International Coalition against Terrorism’. Atthe same time, the USA has also focussed increas-ingly on the oil-rich regions of Africa: West Africaalready produces 15 per cent of the USA’s mineral oilimports, and this figure is set to increase to 25 percent within the next ten years through the expansionof production plants and the construction of apipeline between southern Chad and the Atlanticports (The Economist, 14.09.2002). In the mid to longterm, the Caucasus and West Africa could form animportant supplementary source of energy suppliesalongside the Gulf region. The ongoing crises in theMiddle East and Iraq, the political unpredictability ofIran, the growing domestic problems in Saudi Ara-bia, and the terrorist threat posed by Islamic funda-

Region Mineral oil[%]

Gas [%]

Coal[%]

Middle East 65 35 0CIS 6 38 23North America 6 5 26Central and South America

9 5 2

Europe 2 4 12Africa 7 6 7Asia/Pacific 5 7 30Total 100 100 100

Table 2.6-1Regional distribution of fossil energy reserves in 2000.Source: Enquete Commission, 2001

1–10 thousand million t 10–20 thousand million t > 20 thousand million t

Figure 2.6-1Countries with oil reserves exceeding thousand million tonnes. The regional distribution of reserves within the countries is notshown. The resource and energy ‘ellipse’ harbours around 70 per cent of the world’s oil reserves and around 40 per cent of itsgas reserves.Source: BGR, 2000

31Economic and geopolitical framework conditions 2.6

mentalists make the Gulf region increasingly unat-tractive as a source of supply. Nonetheless, the Gulf islikely to remain the main supplier of oil to the USAfor the foreseeable future.

Alongside the geopolitically motivated diversifi-cation of oil and gas sources, transport routes are alsobeing diversified for similar reasons. A pipeline fromKazakhstan through Russia to the Black Sea port ofNovorossiysk could be vulnerable to pressure fromRussia.A Mediterranean route from the Caspian Seathrough Azerbaijan, Armenia, Georgia and Turkeyor, alternatively, through Iran to Turkey’s Mediter-ranean port of Ceyhan would run through extremelyfragile states if the first route were chosen, or, if thesecond were chosen, through Iran. For security policyreasons, the US energy corporations are thereforetargeting their current strategic planning towardssecuring a transportation route from the Caspian Seathrough Turkmenistan, Afghanistan and Pakistan tothe Indian Ocean – on condition that the USA canguarantee political and military security. In fact, theWorld Bank recently announced plans to build a gaspipeline from Turkmenistan to Pakistan which willrun through Afghan territory (Agence France Press,2002).

Through its energy and geopolitical strategy onthe ‘energy ellipse’, the USA appears to be pursuingseveral objectives:

• Safeguarding energy supplies through the diversi-fication of sources and transportation routes;

• Preventing political and military control of pro-duction areas and transportation routes fromfalling into the hands of rival powers(Russia/China), potentially hostile states (Iran) orlocal warlords who could disrupt the highly vul-nerable transportation routes through terroristacts;

• Finally, developing a position of strength vis-à-vispotential economic rivals.

There is significant potential for inter-state conflict inthe Caucasus-Caspian region, which is a geostrategi-cally important and sensitive region where US, Russ-ian and Chinese interests collide. China is seeking togain access to energy sources in Kazakhstan, with theconstruction of a pipeline from Kazakhstan to Chinabeing a strategic objective (Morse, 1999). There isassumed to be a link between the military conflictover Chechnya and Russia’s strategic plans for oilpipelines.

A further potential source of conflict is the majoroil and gas reserves in the seabed, as the rights tothese reserves are disputed (Klare, 2001). The fiveCaspian seaboard countries, for example, have so farfailed to agree on the distribution of the oil and gasrights. Seven different states are engaged in a disputeover the oil and gas rights in the South China Sea.Similar conflicts over rights of ownership have arisen

Box 2.6-1

OPEC’s role as an energy policy actor

The Organization of the Petroleum Exporting Countries(OPEC) was founded in 1960 by Saudi Arabia, Venezuela,Iraq, Iran and Kuwait. Qatar (1961), Indonesia (1962),Libya (1962), the United Arab Emirates (1967), Algeria(1969) and Nigeria (1971) joined the organization later.Today, OPEC is a powerful alliance of newly industrializingcountries operating in the international energy market. Asthe amount of energy carriers exported by the OPEC coun-tries meets around one-third of the global demand for pri-mary energy, OPEC has considerable influence over thedevelopment of global energy systems. The 11 memberstates define themselves as developing countries whosegoal is to safeguard oil revenue and economic growth in thelong term. In economic and structural terms, oil revenue isof key importance to the OPEC states: Oil exports by the11 states totalled US$254,000 million in 2000, amounting toaround 30 per cent of their GDP (US$860,000 million in2000). There is a substantial prosperity gap within OPEC.At one end of the scale is Nigeria, whose per capita GDP isUS$319; at the other is Qatar, whose per capita GDP isUS$24,000.Within the OPEC countries, the energy sector iscompletely dominated by oil and gas.

In 1998, OPEC represented just 40 per cent of the inter-national mineral oil market, but it controls 78.5 per cent of

the known oil reserves worldwide. By comparison, itsglobal market share of refined products is just 10 per cent.OPEC operates as a cartel in the international oil market.Its influence has declined noticeably since the non-OPECstates – Mexico, Russia, Norway, Great Britain and China –entered the market, but it remains a powerful force world-wide nonetheless. OPEC’s internal cohesion is being chal-lenged, above all, by the conflict between densely-popu-lated countries with few oil reserves, on the one hand, andthe less populous countries with substantial oil reserves, onthe other. In future, the OPEC states are likely to face sev-eral economic challenges simultaneously:• An increase in oil extraction from non-OPEC sources,• new discoveries by small producers,• an expansion in production capacities within its mem-

ber states, especially in Venezuela and Nigeria,• fluctuations in demand in the petroleum importing

countries caused by economic cycles,• greater competition within the energy market due to the

expected greater impact of gas supplies and prices,• better drilling and exploration technologies, leading to

falling operational costs. If non-OPEC countriesincrease their oil output as a result, competition willintensify.

OPEC’s influence on the world’s oil market and its abilityto enforce high oil prices are therefore likely to decline.

Sources: Salameh, 2000; IEA, 2001b; OPEC, 2001; Jabir,2001; Odell, 2001


in the offshore areas of the Persian Gulf, the Red Sea,the Timor Sea, and the Gulf of Guinea.

2.7The institutional foundation of global energypolicy

In the past, energy policy was viewed primarily as anational government function, with security of sup-ply being the main objective. Over the last decade,three factors which encourage more internationaliza-tion in the energy policy field have increased in sig-nificance:• The recognition that global climate protection

needs international cooperation,• The liberalization of the energy sector in major

industrialized countries, but also in transition anddeveloping countries, which intensifies trade inenergy goods and services,

• The need for the global expansion of energy sup-ply, especially in the developing countries, both foreconomic and political reasons and in the interestsof climate protection.

Partly as a result of this development, numerousactors are now involved in energy policy issues atinternational level (Fig. 2.7-1).

A coherent global energy policy requires a coordi-nated approach and linkage with various other policyfields (including transport, environmental and devel-opment policy). This can only take place througheffective and coordinated institutions at interna-tional level. The following sections provide anoverview of the existing legal and institutional basesof international energy policy in core areas, i.e.knowledge base, organization and financing. It isintended to demonstrate whether the preconditionsfor an effective energy policy at global level arealready in place, and if not, where there is a need foraction. The text confines itself to the key institutionsand their main functions.

2.7.1Knowledge base

The range of scientific positions on energy and cli-mate policy is broad, with studies often arriving atconflicting conclusions. This further enhances theimportance of institutions whose agenda is to supplyan international scientific assessment as a basis forpolicy-relevant recommendations. The findings ofthe Intergovernmental Panel on Climate Change(IPCC) are viewed as important for the developmentof global energy policy. The IPCC was established bythe World Meteorological Organization (WMO) and

UNEP in 1988, and its Secretariat is hosted by theWMO in Geneva. The UNEP division responsiblefor implementing the Energy Programme worksclosely with the independent UNEP CollaboratingCentre on Energy and Environment (UCCEE),which plays an active role in research and analysis aswell as supporting the implementation of nationaland regional programme activities.

Together with the UN Department of Social andEconomic Affairs (UNDESA) and the WorldEnergy Council (WEC), UNDP prepared a globalenergy report, entitled ‘World Energy Assessment’,for the 9th Session of the UN Commission on Sus-tainable Development (CSD) in 2000. The report’skey demands include a basic supply of commercialenergy services worldwide and the provision ofadvice to developing countries on developing andimplementing energy projects.

The World Energy Outlook, published on a regu-lar basis by the International Energy Agency (IEA),is the most important source of energy statistics andenergy sector analyses worldwide, and also tracksglobal energy supply trends. The latest reportexplores the link between energy and poverty (IEA,2002c).

2.7.2Organization

As well as a sound scientific basis, a global energypolicy also needs institutions which define objectivesand are responsible for adopting and implementingappropriate measures. Political declarations, interna-tional treaties and the work of relevant UN agenciesare especially important in this context.

2.7.2.1Political declarations

In recent decades, progress has been made not onlywith the definition of problems by the scientific com-munity, but also in addressing these problems atinternational conferences and in declarations andtreaties.

At the United Nations Conference on Environ-ment and Development (UNCED) in Rio de Janeiroin 1992, the international community committeditself, for the first time, to comprehensive and ambi-tious targets in the twin areas of human developmentand environmental protection, set out in Agenda 21and the Rio Declaration. Although none of Agenda21’s 40 chapters focusses explicitly on the issues ofenergy or transport, energy does feature as a subsec-tion of Chapter 9 (Protection of the atmosphere) and

33The institutional foundation of global energy policy 2.7

Chapter 14 (Promoting sustainable agriculture andrural development).Transport is mentioned in Chap-ter 7 (Promoting sustainable human settlementdevelopment) and also in Chapter 9.

The Nineteenth Special Session of the UnitedNations General Assembly in New York five yearsafter UNCED (Earth Summit +5) identified a spe-cific need to support the developing countries inbuilding a sustainable energy supply, e.g. through

Resource generation and distribution, financial services

Implementation and management

Coordination

Fin

anci

ng

FunctionsK

no

wle

dg

e b

ase

Org

aniz

atio

nInstitutions

Information and technology transfer

Research and consultancy

Intergovernmental Panel on Climate Change (IPCC)

IEA (World Energy Outlook)

UNEP Collaborating Centre on Energy and Environment (UCCEE)

WEC, UNDP and UNDESA (World Energy Assessment)

Political declarations (UNCED, CSD-9, WSSD, etc.)

International treaties (ECT, UNFCCC, GATT, GATS, etc.)

Regional energy agencies (IEA, OLADE)

IAEA

UNESCO, UNDESA, UNEP, UNDP, etc.

Ad-hoc Interagency Task Force on Energy

UN Department of Economic and Social Affairs (UNDESA)

IAEA

EU

UNDP

UNEP

UNESCO

World Bank

Others: UNIDO, UNDESA, WHO, WMO, UNFPA, FAO,UN Regional Economic Commissions, UN Committee onEnergy and Natural Resources for Development

Private investment (Foreign Direct Investment)

National publicly funded financing mechanisms (ODA, debt relief, export credit agencies, etc.)

International publicly funded financial institutions (GEF, Climate Funds, World Bank, regional development banks, etc.)

Climate Technology Initiative (CTI)

Figure 2.7-1Global energy policy today: The key institutions and their main functions. For abbreviations, see List of Abbreviations.Source: WBGU


technology transfer and development cooperation.The meeting urgently recommended the incorpora-tion of external environmental costs into the pricingstructure and the dismantling of subsidies on non-sustainable energy carriers. It also identified a signif-icant need to improve the coordination of energy-related activities within the United Nations (UN,1997).

In April 2001, the UN Commission on SustainableDevelopment (CSD) adopted a number of globalenergy policy recommendations in the publication‘Energy for Sustainable Development: A PolicyAgenda’. They cover access to energy services,energy efficiency, renewables, next-generation fossilfuel technologies, nuclear power, rural energy sys-tems, and transport. Research and development,capacity building, technology transfer, access toinformation, mobilization of financial resources, theremoval of market distortions, and the inclusion ofstakeholders are identified as cross-cutting measures(UN-ECOSOC, 2001).

At the World Summit on Sustainable Develop-ment (WSSD) in 2002, energy was included as a sep-arate agenda item for the first time, with the focus onrenewables, access to energy services, organization ofenergy markets, and energy efficiency. However, thebalance sheet is sobering: Due to the blocking tacticsby the anti-target lobby comprising the USA, Aus-tralia and the OPEC countries, a target of at least 15per cent of global energy supply from renewables by2010 could not be adopted. For other targets, too –such as the removal of market distortions or boostingresearch and development in the field of energy effi-ciency – no success indicators or timeframes wereadopted, and nor were these targets established on alegally binding basis. Nonetheless, numerous ‘type 2’initiatives were adopted, with states, corporationsand NGOs pledging to cooperate. For example, theEU announced that it would work with a coalition oflike-minded states and regions to establish quantifi-able, timebound targets for the development ofrenewables and pledged €700 million to improveaccess to reliable and affordable energies in thedeveloping countries. UNEP launched the GlobalNetwork on Energy for Sustainable Development topromote ‘clean’ energy technologies in developingcountries. The German Chancellor announced thatGermany would host the International Conferencefor Renewable Energies, to take place in June 2004 inBonn.

2.7.2.2International treaties

Of the numerous treaties dealing with aspects ofinternational energy policy, only the most importantagreements are examined below. They are theEnergy Charter Treaty, the WTO/GATT rules, andthe UNFCCC together with the Kyoto Protocol.

Energy Charter TreatyThe Energy Charter Treaty (ECT) is the most signif-icant international treaty dealing explicitly withcross-border cooperation among industrializedcountries in the energy sector. The Treaty, whichevolved from the 1991 European Energy Charter,came into force in 1998. 46 states, mainly fromEurope and Central Asia, have ratified the Treaty (asat 11.09.2002). However, several major signatorystates (Russia, Japan, Norway and Australia) have yetto ratify the ECT, and various other states – notablythe USA and Canada – have not acceded to theTreaty.

The aim of the ECT is to promote economicgrowth through the liberalization of investment andtrade. To this end, it extends the GATT rules to theenergy sector. Minimum standards were agreed forforeign investment and energy transport. Both theseareas, as well as the issue of transit of energy prod-ucts, will be developed on a more binding basis infuture (Energy Charter Secretariat, 2000).

Environmental aspects of energy policy areframed in general terms and set out as recommenda-tions on energy efficiency, external costs, clean tech-nologies and cooperation on environmental stan-dards, etc. More detailed provisions are included inan additional environmental protocol, the EnergyCharter Protocol on Energy Efficiency and RelatedEnvironmental Aspects (PEEREA), although thishas no binding legal force.

GATT and WTO rulesFor a long time, the members of the World TradeOrganization were restrained about the inclusion ofenergy carriers in the GATT rules, although in prin-ciple, they fell within the scope of these provisions.This restraint was due to the specific role of theenergy sector in national security of supply, theOPEC countries’ non-membership of the WTO, andthe regulation of the energy sector at national level,especially the status of the state-sector energymonopolies.With regard to the electricity industry inparticular, international trade in electricity was notenvisaged when GATT was established, and eventoday, it is generally deemed to be a service at most,not a good, implying that GATT does not apply. Itwas only with the conclusion of the Uruguay Round


in 1994 that the members integrated a number ofenergy carriers, especially coal, gas and oil and partlyalso electricity, more fully into the world traderegime.This can be explained, among other things, bythe accession of various OPEC countries to theWorld Trade Organization and the progressive liber-alization of the energy markets. Substantial cuts intariffs on mineral oil, petroleum products and otherenergy carriers were not achieved, however, althoughtrade facilitation schemes for petrochemical prod-ucts such as plastics were agreed (, 2000).

Until now, electricity and energy-related serviceshave barely been covered by the GATT Agreement.The specific monopoly status of the vertically highlyintegrated and mainly nationalized energy supplysector has not only impeded trade; it also explainsstates’ restraint on the issue of concessions on marketliberalization (WTO, 1998). However, the latestnegotiating proposals indicate that market access forenergy services will be eased across the board infuture (WTO, 2001).

The WTO Secretariat views subsidies on energyprovision and consumption as the most importantbarrier to liberalization of the trade in energy. Thefull integration of this sector into the WTO rules andthe stringent application of the WTO Agreement onSubsidies and Countervailing Measures would helpto cut subsidies and thus make a major contributionto climate protection at the same time. According tothe WTO, the dismantling of all subsidies by 2010 –supported by appropriate flanking measures in theenvironmental policy field – could prevent around 6per cent of CO2 emissions worldwide (WTO, 2001).From an environmental policy perspective, however,it is unsatisfactory that the full integration of theenergy sector into the WTO would restrict the scopefor subsidies and other measures designed to pro-mote ‘green’ technologies.

The energy policy relevance of the WTO Agree-ments extends beyond the applicability of their rulesto trade in energy, petroleum products and energy-related services: As well as the impact of economicglobalization on energy supply and demand (Section2.1.6), other relevant factors are, firstly, the impact ofthe Agreement on Trade-Related Aspects of Intel-lectual Property Rights (TRIPS) and, secondly, thepotential for conflict between the flexible mecha-nisms defined in the Kyoto Protocol and the WTOrules (Greiner et al., 2001; Box 5.3-2).

UN Framework Convention on ClimateChange and the Kyoto ProtocolThe United Nations Framework Convention on Cli-mate Change (UNFCCC) defines objectives andprinciples, bodies and mechanisms for internationalclimate protection policy. It entered into force in

1994 and has been ratified by 184 states around theworld, including all the major industrialized anddeveloping countries.

Climate policy entails, above all, a radical reduc-tion in CO2 emissions worldwide. This can only beachieved through the comprehensive restructuring ofglobal energy systems (Chapter 4). Here, UNFCCChas a key role to play in international energy policy:It is the driving force and the most significant inter-national forum where states can discuss the interfacebetween environmental and energy policy and adoptmajor decisions.

The Kyoto Protocol to the UNFCCC was adoptedin 1997 by more than 160 nations. The Protocol setsout specific reduction commitments for a definedgroup of greenhouse gases. It commits the industrial-ized countries to reducing greenhouse gas emissionsby at least 5 per cent by the 2008–2012 period againstthe baseline year of 1990. Annex I of the Protocolstipulates a precise reduction target for each indus-trialized country (EU -8 per cent, USA -7 per cent,Japan -6 per cent, Australia +8 per cent, and Russia 0per cent).The developing countries point out that themain producers of climate change (i.e. the industrial-ized countries) should take the lead, and have notundertaken any specific reduction commitmentsthemselves to date.

The Protocol allows the industrialized countriessome flexibility in implementing their commitments.In a process known as emissions trading, an industri-alized country which exceeds its reduction target –for example, because emissions reductions can beachieved at low cost – can sell its surplus emissionspermits to countries which have difficulty meetingtheir commitments. However, industrialized coun-tries can also earn credits by investing directly inemissions reduction projects – such as modernizingan old power station – in other developed countriesthat have taken on a Kyoto target (Joint Implemen-tation, JI). The Clean Development Mechanism(CDM) is a way for industrialized countries to earncredits by investing in emissions reduction projects indeveloping countries while complying with specificrules and modalities.

The provisions of the Kyoto Protocol were furtherelaborated at Conferences of the Parties to the Con-vention (COP). It was not until the 7th Conference ofthe Parties (COP7) in 2001, building upon the 2000Bonn Agreement, that the way was clear for theKyoto Protocol’s rapid entry into force. The require-ment for entry into force is ratification by 55 statesrepresenting at least 55 per cent of the CO2 emissionsin the baseline year of 1990. This means that entryinto force is possible even without the USA and Aus-tralia, which have now pulled out of the Kyoto


process. The Protocol will enter into force with theannounced ratification by the Russian Federation.

The Kyoto Protocol enables states to earn creditsthrough afforestation, reforestation and deforesta-tion (ARD) and other forestry and agricultural mea-sures. For the first commitment period defined in theKyoto Protocol (2008–2012), states with reductioncommitments are expected to produce CO2 emis-sions amounting to 14Mt from ARD (Table 2.7-1;Schulze et al., 2002), but this will be more than offsetby the eligibility of around 70Mt of CO2 through landand forestry management. The sustainability of car-bon sequestration in soils of regenerative forestsrequires more detailed study, however. Some studiesindicate that carbon storage takes place primarily inthe layer of organic matter and topsoil (Thuille et al.,2000), but it remains unclear whether storage occursin the form of stable humus compounds in the deepersoil layers which has permanence even in a changedclimate (Section 3.6).

In practice, even as an unratified text, the KyotoProtocol has already had an impact on internationalenergy policy. The EU has adopted a climate protec-tion programme which contains Europe-wide provi-sions on energy efficiency, renewables, demand-sidemanagement and energy use in the transport sector.Many industrialized countries are producing andimplementing climate protection programmes, and insome cases, this has already led to a greater focus onthe role of renewables in energy policy. With theCDM, climate policy has developed a transfer instru-ment which effectively enables the industrializedcountries’ modern technologies to be made availablemore widely in the developing countries.

At COP7, the implementing rules for the CDMwere set out in detail, resulting in the registration ofthe first batch of CDM projects. The rules give prior-ity, among other things, to certain categories of small-scale CDM projects. It is difficult to predict whetherthe CDM will play a major role in driving forward

capital transfer for clean energy from the industrial-ized to the developing countries – firstly because it isstill unclear what proportion of the industrializedcountries’ reduction commitment will be fulfilledthrough the CDM. For example, the emission rightswhich Russia has not required due to its economicrecession are sufficient to cover the reduction com-mitments of all OECD countries except the US(Jotzo and Michaelowa, 2002). In this case, theCDM’s role would be negligible. Secondly, it isunclear how the CDM will be divided between sinkand energy projects. The Marrakesh Accords permitsink projects amounting to 1 per cent of the investorcountry’s 1990 emissions. Since COP8 there havebeen signs that sink projects may be less sustainableand therefore less attractive, despite their low costs,than hitherto assumed. Therefore, the likely level ofinvestment in sustainable CDM energy projects isuncertain. Simple estimates suggest that it is possiblefor around one-third of all reduction commitments tobe fulfilled via the CDM. Of this, around two-thirdscould be energy projects. With a possible volume ofaround 100MtC per year and an estimated price ofaround US$1 per tonne carbon, the total investmentvolume from CDM could thus amount to aroundUS$1,000–2,000 million annually (Jotzo andMichaelowa, 2002).

Will international climate policy continue to havea positive impact on energy policy? Can it evolve intoa driving force for change? This depends substan-tially on the progress made in the climate negotia-tions over the coming years. Key issues on the agendawill include the adoption of more stringent, whileappropriate, targets for the industrialized countriesand the inclusion of the developing countries in away which gives them scope for development whileguiding them, at an early stage, towards a sustainableenergy policy course.

Table 2.7-1Sink potential of individual(groups of) countriesthrough afforestation andreforestation (Article 3.3 ofthe Kyoto Protocol) andforest management (Article3.4). Negative values denotea carbon source; positivevalues denote a sink.Source: Schulze et al., 2002

Country/Group of countries

Sinks (Article 3.3- ARD)[Million t carbon]

Sinks (Article 3.4(Forest management)[Million t carbon]

Country reports

Eligible sinks

EU (15) -1 39 5Russian Federation -8 117 33USA -7 288 0Canada, Japan, Australia,

New Zealand 3 25 26Eastern Europe, Switzerland,

Liechtenstein, Monaco, Iceland 0 31 5

Ukraine 0 7 1

All Annex B states -13 507 70


2.7.2.3Operational and coordinating activities of theinternational organizations

UN agenciesAt operational level, various UN agencies, includingUNEP, UNESCO and UNDP, are involved in practi-cal energy projects, e.g. to promote renewables andincrease energy efficiency.

UNEP’s activities aim to increase the use ofrenewables and improve the efficiency of existingenergy systems. At political level, UNEP aims toincorporate environmental aspects into energy pol-icy and improve analysis and planning in the energysector.

With its Energy and Atmosphere Programme,UNDP is pursuing an integrated development strat-egy which is designed to take account of the manysocial, economic and ecological aspects of energypolicy. The Programme has been tasked with pro-moting sustainable energy policies and carrying for-ward the implementation of UNDP’s energy pro-grammes.

The World Solar Programme 1996–2005, which isorganized under the auspices of UNESCO, aims topromote the adoption and wider utilization of renew-able energy sources, particularly in rural areas whichcurrently have no access to electricity, through coor-dinated efforts at national, regional and internationallevel. UNESCO also funds individual projects, sup-ports developing countries in accessing sources offunding, and advises states on the development oflegal frameworks which promote the use of renew-ables and promote wider distribution of the relevanttechnologies. Through the GREET (Global Renew-able Energy Education and Training) and IREICS(International Renewable Energy Information andCommunication System) programmes, UNESCOwill focus more strongly on information and trainingin future (UNESCO, 2001; UN Ad Hoc Inter-AgencyTask Force on Energy, 2001).

The other international agencies which play anactive role in sustainable energy policy include theUN Regional Economic Commissions, the UN Com-mittee on Energy and Natural Resources for Devel-opment, the United Nations Industrial DevelopmentOrganization (UNIDO), the World Health Organi-zation (WHO), the World Meteorological Organiza-tion (WMO), the United Nations Population Fund(UNFPA), the Food and Agriculture Organization(FAO) and the International Atomic Energy Agency(IAEA).

This multitude of United Nations agencies with aglobal energy policy responsibility requires bettercommunication and coordination. For this reason,the Ad Hoc Inter-Agency Task Force on Energy was

set up in 1997, with an additional remit to preparecase studies and an overview of the activities of thevarious UN agencies in the field of sustainableenergy supply.

The United Nations Department of Economic andSocial Affairs (UNDESA) coordinates energy policywith other United Nations policy areas. UNDESAalso supports the work of the UN Commission onSustainable Development (CSD) and promotes theimplementation of sustainable energy policies indeveloping countries, e.g. through a technical cooper-ation programme funded by UNDP, GEF and theWorld Bank, among others.

The IAEA has a specific role to play in that itdeals exclusively with atomic energy. The structureand statute of this autonomous UN organization,which was founded in 1957, are geared towards pro-moting and monitoring the civilian use of nuclearpower.The political lobbying carried out by this well-established organization (annual budget aroundUS$300 million; approx. 2,200 staff) has traditionallyaimed to boost the use of nuclear power.

Knowledge transfer is supported, among others,by the Climate Technology Initiative (CTI) whichprovides information about climate protection tech-nologies, particularly to transition countries in East-ern Europe, newly industrializing countries in Asia,and the developing countries in Africa, and supportscapacity-building. The CTI was launched by 23IEA/OECD countries and the EU Commission atthe 1st Conference of the Parties to the UNFCCC inBerlin in 1995.

European UnionThe European Union has no separate Communitycompetence for energy policy. Until now, the internalmarket rules, competition law, subsidy controls andenvironmental legislation have provided the legalframework for the EU’s policies on energy and theenergy sector. However, the EU’s energy ministersmeet regularly at the EU Energy Council, coordinatenational energy policies, and deliberate the Commu-nity measures proposed by the Commission. Suchmeasures aim to achieve the energy policy objectivesdefined by the EU: Competition, security of supply,and protection of the environment.The primary issuefor the Energy Council is the liberalization of theelectricity and gas markets in the EU with the aim ofestablishing an internal market in grid-based ener-gies. Other key issues include measures to improveenergy efficiency and promote renewables.

Initiatives by the Commission to encourage EU-wide harmonization of energy policies have so farcollapsed in the face of opposition by the MemberStates. In order to avoid competitive disadvantagesfor their energy industries in a fiercely competitive


market, however, the Member States will probablyhave to fall into line soon.

Energy policy already plays a major role in theEU’s external relations: Through its funding pro-grammes, the loans and credits provided by the Euro-pean Investment Bank and the European Bank forReconstruction and Development, and politicaltreaties, the EU helps to improve the safety ofnuclear installations in Central and Eastern Europe,for example, and supports the development of anenvironmentally compatible energy industry in theMediterranean seaboard states.

2.7.3Financing structures

Global Environment Facility (GEF) The Global Environment Facility (GEF) is a finan-cial instrument which is designed to address six criti-cal threats to the global environment: Climatechange, biodiversity loss, ozone depletion, degrada-tion of international waters, persistent organic pollu-tants (POPs), and land degradation. The GEF is thedesignated financial mechanism for the UNFCCCand the Biodiversity Convention. From 1996, pro-jects launched under the Desertification Conventioncould only be funded by GEF if there were synergieswith climate protection and biodiversity conserva-tion, but since 2003, desertification projects are nowdirectly eligible for funding. GEF is jointly imple-mented by UNDP, UNEP and the World Bank. In1994, after a three-year pilot phase, the donor gov-ernments, mainly from the industrialized countries,initially provided US$2,000 million for the fund; thesame amount was made available again for Phase 2(1998–2002), rising to US$2,920 million for Phase 3(2003–2006). GEF is the most important fundingmechanism for projects aimed at improving energyefficiency and promoting renewables in developingcountries.To the end of 2000, a total of nearly US$570million had flowed into 48 renewable energy projectsin 47 states from GEF funds, with a further US$2,500million in co-financing from other institutions. GEFalso supports numerous energy efficiency projects.This funding is targeted primarily towards pilot pro-jects which demonstrate the opportunities associatedwith the utilization of renewable energies or energy-efficiency technologies. In project implementation,particular emphasis is placed on training and supportfor local personnel as well as institution-building inorder to promote wider use of the new technologies.For this reason, GEF also targets its funding towardsthe integration of the private sector in project devel-opment and implementation (GEF, 2000; UN AdHoc Inter-Agency Task Force on Energy, 2001).

Kyoto FundsAs the funding available from GEF for the establish-ment of a sustainable global energy supply is far toolow, the ‘Kyoto Funds’ were launched during thenegotiations on the Kyoto Protocol. The Special Cli-mate Change Fund and the Least Developed Coun-tries Fund will finance developing countries’ activi-ties relating to climate change in the areas of adapta-tion, promote North-South technology transfer, andassist developing countries whose economies arehighly dependent on income generated from fossilfuels in diversifying their economies.

The Adaptation Fund established under theKyoto Protocol is intended to support developingcountries suffering from the impact of climatechange. It will be funded from the share of proceedsfrom the Clean Development Mechanism. Providedthat the CDM functions in practice, it could becomean important financing mechanism.

One should be under no illusions, however, aboutthe level of funding provided to these Funds from thepublic purse or their effectiveness in restructuringenergy systems. All the Funds will focus primarily onadaptation measures rather than emissions reductionand technology transfer. At COP6 in Bonn in 2001,the EU and a number of other states pledged to pro-vide a total annual contribution of US$410 million tothese Funds by 2005 or provide bilateral support forthe purposes stated. For the Adaptation Fund andthe Special Climate Change Fund, no negotiations onfunding had taken place by the start of 2003. Only forthe Least Developed Countries Fund have therebeen initial indications from the developed countriesthat it will run to several tens of million euro per year(BMZ, personal communication).

World BankAlongside GEF, the World Bank is the most impor-tant provider of energy policy financing, especiallyfor developing countries. Since the World Bank’sestablishment, the energy sector has been a key areafor lending, with up to 25 per cent of the WorldBank’s total lending occurring in this sector for manyyears. However, energy lending for electricity, fossilenergy carriers and mining dropped by almost halffrom 1998 to 2001, combined with a fall in the num-ber of projects from around 160 to 110. The WorldBank cites a number of reason for this, including thereplacement of World Bank financing by privateinvestment, the introduction of lending by regionaldevelopment banks, and some countries’ aversion torisky energy sector reform (World Bank, 1993,2001b).

In response to this development, the World Banksought to exert greater influence over the economicviability of energy supply companies, especially in the


1980s. Overall, it was unable to halt the furtherdecline in energy lending during this period,although current lending to the energy sector at thestart of the 1990s still amounted to aroundUS$40,000 million, i.e. 15 per cent of all lending. TheWorld Bank’s financing of the energy sector furtherdecreased during the 1990s, especially after the Asiancrisis in 1997, standing at around US$12,000 millionin 2001, i.e. approximately 6 per cent of lending(Table 2.7-2).

The World Bank has set itself the following globalenergy policy goals for the next ten years:• Increasing the share of households with access to

electricity from 65 per cent to 75 per cent.• Increasing the share of large cities with acceptable

air quality from 15 per cent to 30 per cent.• Increasing the share of developing countries

where industrial consumers have a choice of sup-pliers from 15 per cent to 40 per cent, and increas-ing the share of developing countries where thepower industry stops being a burden on the bud-get from 34 per cent to 50 per cent (World Bank,2001b).

Although the more detailed definition of these tar-gets by the World Bank through specific indicators(Table 2.7-3) is welcome, it remains unclear, espe-cially in view of the current balance sheet, preciselywhich instruments will be deployed to achieve theseobjectives. The decline in demand for energy lendingfrom the World Bank indicates that there are stillsubstantial political concerns about the restructuringor, indeed, the privatization of the energy sector inmost developing countries. The success achieved bythe World Bank will therefore continue to depend onthe energy policies pursued by the developing coun-tries.

Development cooperation and private directinvestmentThe target adopted by the international communityto spend 0.7 per cent of GDP on official developmentassistance (ODA) has not been reached by Germany(0.27 per cent), the EU (<0.3 per cent), or the USA(0.1 per cent). In 2000, just 7.9 per cent of total ODA,i.e. US$3,760 million, flowed into infrastructure pro-jects in the energy sector (OECD, 2001). In contrastto the decrease in ODA, private investors stepped uptheir commitment to the energy sector in the 1990s.More than 600 electricity projects with privatefinancing and a total investment value of US$160,000million were implemented in more than 70 develop-ing and newly industrializing countries in the 1990s(Fig. 2.7-2). Private investment in energy projectspeaked (temporarily) in 1997, but then slumped as aresult of the Asian crisis and negative developmentsin Latin America.

Export Credit and Investment InsuranceAgenciesThe OECD countries’ Export Credit and InvestmentInsurance Agencies (ECAs) play a key role in traderelations between industrialized and developingcountries, especially in investment. The agenda ofthese institutions, which are generally publiclyfunded, is to boost domestic industry in foreign mar-kets. On payment of a relatively low fee, ECAs pro-vide insurance for exports to high-risk countries andforeign direct investment through state-guaranteedloans, guarantees, financing and credits. The ECAsare particularly active in the energy sector of devel-oping and transition countries. Here, fossil-fueledpower generation and major dam projects are themain focus of their work. Electricity generation fromsolar and wind energy and biomass has rarely beenpromoted to date. Nonetheless, export promotioncan also have a positive effect on the utilization offossil energy carriers, for example if old productionplants are replaced with new and more efficient tech-nologies or if energy efficiency is increased.

Foreign investment in the construction of powerplants in the developing and transition countriestotalled US$115,600 million during 1996 and 2001. Ofthis figure, US$50,000 million was supported byexport credit agencies. Of US$97,800 millioninvested in oil and gas development, the ECAs sup-ported a total of US$60,600 million.

On the recipient side, a strong geographical con-centration can be observed. The leading destinationsfor the ECAs’ financing – and, indeed, for privateinvestment – are a handful of countries which willplay a key role in the development of global green-house gas emissions in future: China, Indonesia,India, Mexico, Brazil, the Philippines and Turkey.

Region Powerplants[US$ 1,000 million]

Oil-/gasdevelopment[US$ 1,000 million]

Sub-Saharan Africa 1.92 0.68East Asia/Pacific 10.29 0.93Europe/Central Asia 3.69 1.94Latin America/Carribean 2.01 0.55Middle East 0.71 0.28Southern Asia 5.67 1.04

Total for sector 24.29 5.42

Table 2.7-2Lendings by the International Bank for Reconstruction andDevelopment (IBRD) and the International DevelopmentAssociation (IDA), which are part of the World Bank Group,for power plants and oil/gas development during the tradingyears 1990–2001. Share of total IBRD and IDA lending:power plants 9.2 per cent; oil/gas development 2.1 per cent.Source: World Bank, 2002b


Table 2.7-4 shows the financing provided by theECAs from the USA, Japan and Germany as a per-centage of investment in the developing and transi-tion countries’ energy sector. In terms of their com-mitment, the German agencies lag well behind thoseof the USA and Japan.

The relevance of trade promotion measures to cli-mate protection has been largely ignored until now.One exception is a report released by the Institutefor Policy Studies (IPS), which reveals that from 1992to 1998, US credit agencies underwrote financing forfossil energy projects around the world which, over

Table 2.7-3Change in the World Bank policies on the energy sector (selection). The International Finance Corporation (IFC) is part of theWorld Bank Group and the largest source of lending worldwide for projects in the developing countries’ private sector.Source: World Bank, 2001b

Former priorities More recent priorities New priorities

CHANGES IN THE INTERNATIONAL FINANCE CORPORATION’S PRIORITIES

Financing major power plants which sell to a state monopoly at guaranteed prices

Shift towards reforms in individual sectors, environmental protectionand access to energy services

Supporting reforms in the energysector and promoting competition

Improving environmental protection inenergy supply

Supplying people with no access toenergy services

CHANGES IN THE PRIORITIES IN OIL AND GAS DEVELOPMENT

1970s: Supporting public investment

1980s: Reforms in individual sectors, lib-eralization, improving parameters forand actively promoting private invest-ment

1990s: Reforms in the transition coun-tries’ oil and gas sector

Greater integration of activities in:• Environmental protection (clean fuels,

gas)• Social embedding (best practice, part-

nerships)• Further reforms

(privatization, more competition)• Governance (tax administration,

transparency)• Financing of selected private sectors

CHANGES IN THE PRIORITIES IN MINING DEVELOPMENT

To 1990: Investment assistance andtechnical support for lending to developthe mining industry

1991–2000: Promoting better parametersfor private investment in mining

Privatization, restructuring and closureof mines (Poland, Romania, Russia,Ukraine)

Sustainable mining

Regional/local development through private investment in the mining industry

25

20

15

10

5

0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Countries with low income

Countries with low and medium income

Countries with medium and high incomeCountries with medium and high income

Year

Inve

stm

ent [

US

$ 199

8 th

ousa

nd m

illio

n]

Figure 2.7-2Total investment in energyprojects with privatefinancing in developing andnewly industrializingcountries. Countries withlow income: per capita GDP1998: < US$760. Countrieswith low and mediumincome: per capita GDP1998: US$761–3,030.Countries with medium andhigh income: per capitaGDP 1998: US$3,031–9,360.Source: Izaguirre, 2000

41Interim summary: The starting point for global energy policy 2.8

their lifetimes, will release an additional 29,300 mil-lion tonnes of CO2 into the atmosphere (IPS, 1999).

2.7.4Fragmented approaches to global energy policy

The United Nations has a key role to play in theexpansion of the energy supply in developing coun-tries. However, energy policy is currently not a prior-ity at UN level.The brief overview of the activities ofthe various UN units and agencies (Section 2.7.2)clearly shows that the UN has no identifiable orcoherent strategy for the energy sector. The attemptto coordinate the various programmes and projectsthrough a Task Force, comprising representatives ofthe various units, is unlikely to be successful, firstlybecause the various agencies, programmes and actorsgenerally pursue their own particular interests, andsecondly because the Task Force’s mandate is inad-equate. Mechanisms which could help convert thefindings obtained within the CSD framework intopolitical criteria for the UN’s work are still in theirinfancy.The absence of a clear policy programme set-ting out the cornerstones of a UN strategy on theexpansion of sustainable energy in developing coun-tries also contributes to the fragmentation of the var-ious UN units’ energy-related activities. The failureto achieve effective policy coordination between theUN’s various individual strategies, donor countriesand key funding agencies further exacerbates the sit-uation.

The overview of the existing legal and institutionalbases of international energy policy illustrates thecurrent priorities and shortcomings in global policy-making (Fig. 2.7-1): Whereas international trade law

is increasingly focussing on the progressive liberal-ization of national energy markets and facilitatingtrade in energy goods and services, the environmen-tal and development dimensions of a sustainableenergy policy do not match up to what is required.The UNFCCC and the Kyoto Protocol are to be wel-comed as a successful starting point for the reductionof greenhouse gas emissions. For the second commit-ment period from 2012, the aim must be to achieve aclear increase in reduction commitments and to pro-gressively include, in an appropriate manner, some ofthe developing countries in the process as well. Inparticular, the institutional fragmentation, lack of anoverarching political strategy, and inadequate finan-cial resources impede the more effective use of theavailable instruments.

2.8Interim summary: The starting point for globalenergy policy

• Energy is a key prerequisite for social develop-ment and poverty reduction. Population growthand economic and technological developmentshave resulted in a substantial rise in worldwideenergy consumption in recent centuries anddecades, which has also increased environmentalpollution.

• The availability of high-quality forms of energy isunevenly distributed around the globe. Aroundone-third of the world’s population, primarily inthe developing countries, has no access to electric-ity. These people, who are often exposed to majorhealth risks as a result of their reliance on fuel-

Table 2.7-4Financing provided by the ECAs from the USA, Japan and Germany for the developing and transition countries’ energy sector(power plant construction, oil and gas development: 1996–2001). KfW Kreditanstalt für Wiederaufbau, JBIC Japanese Bank forInternational Cooperation, NEXI Nippon Export and Investment Insurance, Exim-Bank Export-Import Bank, OPIC OverseasPrivate Investment Corporation.Source: Maurer, 2002

Country Export creditagency

Power plant construction Oil and gas development

Guarantees/insurance[US$1,000 million]

Co-financing

[US$1,000 million]

Guarantees/insurance[US$1,000 million]

Co-financing

[US$1,000 million]

Germany Hermes 1.52 - 0.55 -KfW - 2.20 - 1.00

Japan JBIC 1.36 2.50 0.34 3.83NEXI 1.20 0.10 0.20 0.30

USA Exim-Bank 3.72 0.50 3.36 0.55OPIC 1.40 1.20 0.44 0.20

Total 9.20 6.50 4.89 5.88

wood or dung for cooking and heating, face majorobstacles to their development.

• Energy systems in the industrialized countries aregeared to three main characteristics: Security ofsupply, affordability, and environmental compati-bility. In the past, fossil and nuclear energy carrierswere often subsidized by the state, and the elec-tricity supply was subject to comprehensive statecontrol. More recently, there has been a moveaway from subsidies on fossil and nuclear energycarriers, a liberalization of the grid-based energymarkets, and greater government support forrenewable energies.

• Transition countries in eastern and south-easternEurope are noted for their heavy reliance on fos-sil energy carriers. Despite their major potential,renewable energies – such as biomass, wind andsolar power – play only a minor role.The weaknessof the economies during the last two decades hasresulted in a drop in energy production. Urgentlyneeded investment to maintain and modernize theenergy sector was not carried out, resulting in verylow efficiency of production plants. Major causesof this inefficiency are the subsidies on energy useand the close interdependencies between politicaland economic interests in the energy sector.

• Energy systems in developing and newly industri-alizing countries have no uniform pattern. Thereare substantial disparities between continents,countries, regions, urban and rural areas, and land-scape types. In general, demand for commercialenergy rises along with urbanization, and anincrease in energy demand can generally beobserved as per capita income rises. However, theincrease in energy use is restricted by the limitedavailability of financial resources and the sluggishexpansion of the energy supply. The energy poli-cies adopted by most newly industrializing anddeveloping countries do not make provision forefficiency strategies or investment in renewables.Instead, they rely on fossil energy carriers to covermost of the demand.

• Global energy policy is influenced substantially byincreasing economic and technological interde-pendencies. This facilitates the transfer of energyefficiency standards and technologies, for exam-ple. On the other hand, the intensive transporta-tion of goods and persons around the globe andthe transfer of Western lifestyles to less industrial-ized regions of the world lead to a rise in globaldemand for energy.

• Within the UN agencies and the World Bank, aglobally coordinated energy policy is still in itsinfancy. Institutional fragmentation and inade-quate financing mechanisms make it more diffi-

cult to achieve an energy reform aimed at sustain-ability.

• Many developing countries are still in the processof establishing a viable commercial energy system.As they can draw on a more extensive portfolio oftechnology options than the industrialized coun-tries at the same stage of development, there is achance for the parameters for a sustainable energysystem to be incorporated into this new structure(Goldemberg, 1996; Murphy, 2001). For example,investment in renewable energy systems enablesdistributed electricity supply to be brought onstream quickly and cost-effectively. However, thisrequires the rigorous rechannelling of privatedirect investment, government loans and creditguarantees in order to overcome, in developingcountries, too, the path dependency on fossil fuels.


3

3.1Introduction

The following discussion of a transformation of theglobal energy system identifies technology optionsand presents promising solutions, some of which arelittle known. A great array of technologies is avail-able at all levels, from primary energy generation toenergy services. Their deployment and mix is evalu-ated here from a sustainability perspective. Thisanalysis starts with an examination of the availableenergy sources and carriers. The realizable and sus-tainable potential (see definitions in Box 3.1-1) forfossil, nuclear and renewable energy is presented,conversion technologies are described, and environ-mental and social impacts evaluated. Moreover, thecurrent and future costs of the technologies are dis-cussed. While an increasing shortage of supplies willmake conventional forms of energy more expensivein the long term, an opposite trend of continuous costreductions is foreseeable for renewables. Any evalu-ation should therefore not be limited to the present.The analysis delivers the boundary conditions defin-ing the realm within which the Council’s exemplarypath for a sustainable transformation of energy sys-tems can be elaborated (cf. Chapter 4).

In addition to utilizing available energy sourcessustainably, it is essential to deploy technologies withmaximum efficiency for all conversion processes,from primary to useful energy and at the end user.Todeploy fluctuating renewable energy sources, tech-nologies for compensating such fluctuations or forenergy storage are key. The discussion of this issue isorganized around three aspects: first, distributedcombined heat and power, second, energy distribu-tion/transport and storage and, third, demand-sideenergy efficiency. Further sections of Chapter 3examine the options for decarbonizing the energysystem through secure and long-term carbon storage(sequestration), and the prospects for sustainableenergy solutions in the transport sector.

3.2Energy carriers

3.2.1Fossil fuels

3.2.1.1Potential

Today, petroleum, coal and natural gas dominate thesupply of heat, electrical energy and fuels in energysystems worldwide.These fossil energy carriers cover90 per cent of primary energy consumption world-wide (petroleum 40 per cent, coal 27 per cent, naturalgas 23 per cent; BGR, 1998). In terms of their eco-nomic and technological recoverability, a distinctionis made between reserves, resources and additionaloccurrences (BGR, 1998; Nakicenovic et al., 1998):• Reserves are defined as known occurrences that

have been recorded very accurately and can todaybe recovered technologically and economically atany time.

• Resources are defined as occurrences that havebeen identified or are believed to exist, and whichare not yet recoverable with today’s technologyand under current economic conditions, but whichare seen as potentially recoverable.

• Additional occurrences are those that cannot beclassified as reserves or as resources.The existenceof such occurrences is suggested by geologicalstudies, but their size and the technological andeconomic conditions for their recoverability arestill very uncertain.

The sum of reserves and resources is known as totalresource. Resources can become reserves if, forexample, fuel prices rise or recovery costs fall due totechnological progress. Similarly, through technolog-ical advances at least some of the additional occur-rences can move into the resources category in thelong term, thereby increasing the total resource. Thedistinction between resources and additional occur-

Technologies and their sustainablepotential

44 3 Technologies and their sustainable potential

rences is much less clear than that between reservesand resources (UNDP et al., 2000).

Between 1860 and 1998, the cumulative globalenergy consumption was 13,500EJ (UNDP et al.,2000). The energy stored in today’s reserves is of atleast the same order of magnitude (Table 3.2-1). Ifthe deposits that are classified as resources are alsotaken into account, the stored quantity of energyincreases 20-fold. Optimistic figures are usually sub-stantiated based on the assumption of large non-con-ventional oil and gas occurrences. The differencebetween conventional and non-conventional occur-rences is that the latter occur in significantly lowerconcentrations, require unusual or very high techno-logical effort for recovery and sophisticated conver-sion techniques, or have significant environmentalimplications. Examples are oil shale, tar sands andheavy crude, as well as gas in coal seams, tight sandformations and gas hydrates (Nakicenovic et al.,1998). With high oil prices, some of these non-con-ventional deposits (e.g. tar sands) can already be

recovered economically today and can thereforealready be classified as reserves (Table 3.2-1).

Coal deposits make up the lion’s share of the fos-sil reserves and would suffice to cover the expectedenergy consumption far beyond 2100. With currenttechnology, i.e. without the application of coal hydro-genation, coal is insignificant as an energy source forthe rapidly growing transport sector; growth predic-tions for coal are therefore lower than those for oil.According to most scenarios (Chapter 4), the pro-portion of coal in the fossil energy mix is likely to fallby 2100.

At present rates of consumption, the gas reserveswould be able to meet demand for another 60 yearsor so, but if the resources are also considered, therange extends to 170–200 years (IEA, 2002c). How-ever, since gas consumption shows the strongestgrowth rates of all fossil energy sources, with a dou-bling of consumption expected between 2000 and2030 (IEA, 2002c), gas reserves are likely to run outfaster. A potentially very large source for methane is

Box 3.1-1

Types of potential

The following terms are usually used in the discussion ofthe potential of different energy carriers: theoretical poten-tial, technological potential and economic potential. TheCouncil felt that it was necessary to introduce the addi-tional terms of conversion potential and sustainable poten-tial. This report is based on the following definitions:

Theoretical potentialThe theoretical potential identifies the physical upper limitof the energy available from a certain source. For solarenergy, for example, this would be the total solar radiationfalling on a particular surface.This potential does thereforenot take account of any restrictions on utilization, nor is theefficiency of the conversion technologies considered.

Conversion potentialThe conversion potential is defined specifically for eachtechnology and is derived from the theoretical potentialand the annual efficiency of the respective conversion tech-nology. The conversion potential is therefore not a strictlydefined value, since the efficiency of a particular technol-ogy depends on technological progress.

Technological potentialThe technological potential is derived from the conversionpotential, taking account of additional restrictions regard-ing the area that is realistically available for energy genera-tion.The criteria for the selection of areas are not dealt withconsistently in the literature. Technological, structural andecological restrictions, as well as legislative requirements,are accounted for to a greater or lesser degree. Like theconversion potential, the technological potential of the dif-ferent energy sources is therefore not a strictly definedvalue, but depends on numerous boundary conditions andassumptions.

Economic potentialThis potential identifies the proportion of the technologicalpotential that can be utilized economically, based on eco-nomic boundary conditions (at a certain time). For bio-mass, for example, those quantities are included that can beexploited economically in competition with other productsand land uses. The economic boundary conditions can beinfluenced significantly, particularly through political mea-sures.

Sustainable potentialThis potential of an energy source covers all aspects of sus-tainability, which usually requires careful consideration andevaluation of different ecological and socio-economicaspects. The differentiation of the sustainable potential isblurred, since ecological aspects may already have beenconsidered for the technological or economic potential,depending on the author. The Council proposes an exem-plary transformation path for the global energy system(Chapter 4) based on the sustainable potential, the activa-tion of which is regarded as realistic within certaintimescales.

Section 3.2 examines the potential of the energy carriersand energy sources from a global point of view. In particu-lar, global maps of the conversion potential for the follow-ing technologies were calculated for this report:• photovoltaic modules (without optical concentration),• solar thermal power plants,• solar collectors for heat generation,• wind energy converters.Based on these maps, the regional distribution of theenergy that can be recovered and utilized in principle canbe estimated. The calculations were carried out based on aglobal grid with a resolution of 0.5 ° longitude and latitude.The resulting potential is specified as average power den-sity per surface area or per tilted module/converter area, sothat the unit of measurement is always ‘output per area’.

45Energy carriers 3.2

represented by the gas hydrate deposits in the seabed and in permafrost soils, which are usually classi-fied as additional occurrences. If they could beexploited, the fossil resource base would multiply.However, currently the usability of the methanehydrate deposits is viewed rather cautiously. Thereare neither secure scientific statements about the sizeof the deposits nor attractive technical proposals fortheir recovery (UNDP et al., 2000), and further basicresearch is required in this area.

3.2.1.2Technology/Conversion

Currently, large central power stations dominate thepower supply in the electricity grids of industrializedcountries. For example, in Germany during 1999,such power stations (>100MW) provided around 80per cent of the total installed electrical capacity of

approximately 119,000MW, of which coal-firedpower stations provided approximately 52,000MWand gas-fired power stations around 16,000MW. Con-ventional steam plants are currently the predomi-nant technology used for converting coal, while com-bined cycle plants tend to be used for natural gas(Hassmann, personal communication, 2000). Forbase and intermediate loads, both power plant typesare operated without heat extraction, which meansthere is significant potential through increased effi-ciency. In this operating mode, CO2 emissions areproportional to the electrical efficiency. On average,the efficiency of German fossil fired power stations isonly approximately 39 per cent, while electrical effi-ciencies of more than 45 per cent for coal-fired plantsand nearly 60 per cent for combined cycle gas turbine(CCGT) plants have been reported, highlighting sig-nificant potential for reducing CO2 emissions. Inaddition to ‘classic’ power stations, further types aredeveloped with a view to utilizing coal in gas tur-

Table 3.2-1Reserves, resources and additional occurrences of fossil energy carriers according to different authors. c conventional(petroleum with a certain density, free natural gas, petroleum gas, nc non-conventional (heavy fuel oil, very heavy oils, tar sandsand oil shale, gas in coal seams, aquifer gas, natural gas in tight formations, gas hydrates). The presence of additionaloccurrences is assumed based on geological conditions, but their potential for economic recovery is currently very uncertain. Incomparison: In 1998, the global primary energy demand was 402EJ (UNDP et al., 2000).Sources: see Table

Energy carrier Brown,2002

IEA,2002c

IPCC,2001a

Nakicenovic et al.,1998

UNDP et al.,2000

BGR,1998

[EJ]

GAS

Reserves

Resources

Additionaloccurrences

5,600

9,400

6,200

11,100

c 5,400nc 8,000c 11,700nc 10,800

796,000

c 5,900nc 8,000c 11,700nc 10,800

799,700

c 5,500nc 9,400c 11,100nc 23,800

930,000

c 5,300nc 100c 7,800nca) 111,900

OIL

Reserves

Resources

Additionaloccurrences

5,800

10,200

5,700

13,400

c 5,900nc 6,600c 7,500nc 15,500

61,000

c 6,300nc 8,100c 6,100nc 13,900

79,500

c 6,000nc 5,100c 6,100nc 15,200

45,000

c 6,700nc 5,900c 3,300nc 25,200

COAL

ReservesResourcesAdditonaloccurrences

23,60026,000

22,500165,000

42,000100,000

121,000

25,400117,000

125,600

20,700179,000

16,300179,000

Total resource(reserves +resources)

Totaloccurrence

180,600 223,900 212,200

1,204,200

213,200

1,218,000

281,900

1,256,000

361,500

a)including gas hydrates


bines, with associated increases in efficiency andreductions in emissions (Table 3.2-2).

3.2.1.3Environmental and social impacts

Anthropogenic climate changeIn 1990, global CO2 emissions from the utilization ofpetroleum, coal and natural gas were approximately6.0GtC (IPCC, 2001a), with the combustion of petro-leum having the greatest share at 44 per cent. In addi-tion, there were 1.8GtCeq of methane and 2.5GtCeq ofnitrous oxide emissions, mainly from agriculture(IPCC, 2000a). During the last 100 years, the averageair temperature near the surface and in the loweratmosphere increased by 0.6 ± 0.2°C.Without climatepolicy measures, a global increase in temperaturebetween 1.4 and 5.8°C is expected by 2100. Thisincrease leads to increased atmospheric humidityand also often to higher precipitation, changes inatmospheric and oceanic circulation, melting of seaice and snow, and a rise in sea levels (IPCC, 2001a).

The predicted shift in climatic regions and more fre-quent extreme weather events such as flooding anddroughts are expected to have negative ecologicaland social impacts (IPCC, 2001b). In sensitive ecosys-tems, the damage can already be identified (Section4.3.1.2). The risk of irreversible damage of ecosys-tems increases with increasing temperature andincreasing rate of warming (IPCC, 2001b).

Weather-related damage has been on the increasefor 25 years, with large annual fluctuations. Themounting economic costs arising in the wake offlooding and droughts can be measured in manyregions (IPCC, 2001b; Münchner Rückversicherung,2001; Swiss Re, 2001). According to estimates by theInternational Red Cross, during the past 26 yearssuch events have affected approximately 2,500 mil-lion people (IFRC-RCS, 2001). Most of the damageoccurred during the 1990s, which were the warmestdecade since weather data started to be recorded(Milly et al., 2002; Münchner Rückversicherung,2001). In 2000 and 2001, a significantly higher num-ber of people were affected by droughts globally (176and 86 million compared with 20 million in 1998),

Table 3.2-2Further development of modern fossil power plants.Source: Hassmann, personal communication, 2002

Fuel Plant Capacity Netefficiency

CO2

emissionsEstimatedcosts

R&D statuscomments

Timescale

[MW] [%] [g CO2/kWh] [€/kW]

Coal Steam power plantwith high maximumsteam conditions 350 bar/700 °C

700–900 >50 168 >700 Proposed for around2010, material develop-ment

Around 2010

Combined cycle plant(gas and steam tur-bine) with circulatingfluidized bed(2nd generation)

700–800 54–55 150 650–700 Hot gas cleaning,robust gas turbine

After 2010

Combined cycle plantwith pressurized coalgasification (IGCC)

400–500 >45 184 approx.1,000

Low availability Pilot plantshave alreadybeen realized

Combined cycle plantwith pressurized pul-verized coal firing

400 54–55 150 >750 Hot gas cleaning,robust gas turbine

After 2015

Naturalgas

Advanced combinedcycle gas and steamturbine power plants(CCGT)

400 >60 80 approx.500

Further developmentrequired for: compres-sor, gas turbine (little),NOX burner, materialdevelopment for cat-alytic combustion, hotparts (combustionchamber lining, transi-tion elements, blades,blade cooling), com-pressor

From 2005


fewer were affected by flooding (62 and 34 millioncompared with 290 million in 1998), and a similarnumber were affected by severe storms (15 and 29compared with 26 million in 1998) (CRED, 2003). Itis likely that there is a relationship between theincreasing incidence of severe weather and observedclimate change.

Due to the geographic position and inadequateadaptability of developing countries, climate changeis threatening to cause particularly severe damage(IPCC, 2001b). In some cases, whole states could beobliterated by rising sea levels. Up to now, thesecountries have hardly developed any prevention andemergency response structures.

Air pollutionEmissions of benzene, soot and other particles fromindustrial combustion processes, power stations andtraffic have numerous ecotoxic effects. Furthermore,nitrogen oxides, hydrocarbons and carbon monoxidechange the oxidation capacity of the atmosphere,which can not only lead to local production of low-level ozone, but can change the self-purifying capac-ity of the atmosphere overall. Combustion processescause the emission of large quantities of nitrogen andsulphur oxides, which together with ammonia fromintensive animal husbandry are a key factor in thetransformation of bio-geochemical cycles by humans.These precursor substances for acids are chemicallyconverted in the atmosphere and enter the soilthrough ‘acidic rain’. While in industrialized coun-tries the problem has been successfully reducedthrough desulphurization and denitrification sys-tems, hardly any such measures have so far beenimplemented in developing and newly industrializingcountries.

Pollution caused by the recovery andtransport of fossil fuelsThe production of fossil energy carriers affects thesoil: On the one hand, large volumes of soil aremoved, particularly in open-cast coal and ore mining,which changes the morphology of the soil and leadsto subsidence effects in the land surface. On the otherhand, there are significant effects on hydrologicalprocesses such as drainage, the sediment load ofrivers and the ground water table, with possibleeffects on soils and ecosystems. In nearly all industri-alized countries, the intermediate storage of the soilduring open-cast mining is now a legal requirement.

Oil leakages cause particularly severe ecologicaldamage during recovery and transport. In westernSiberia, oil leakages are estimated to have amountedto 2.8 million tonnes of petroleum per annumbetween 1980 and 1990, causing the destruction of55,000km2 of the permafrost ecosystem (Stüwe,

1993). Between 1967 and 2002, 22 large tanker acci-dents (loss of oil >10,000 t) were recorded, in whichmore than 2.4 million tonnes of petroleum werespilled into the sea (Greenpeace, 2002), causing sig-nificant ecological damage. In addition, approxi-mately 520,000 tonnes of oil are drained into the seaeach year through the cleaning of tankers and illegalpumping out of machine oil.This is twice the amountentering the sea naturally through the sea bed.A fur-ther 57,000 tonnes per year enter the sea through off-shore oil installations (Feldmann and Gradwohl,1996).

Effects on human healthThe utilization of fossil fuels and wood for energygeneration is one of the main sources of air pollution,for example through NOX, SO2, CO, polyaromatichydrocarbons or formaldehyde. These substanceshave health effects for a large number of people.Dusts in the form of soil particles, mineral ashes orother small particles also have a detrimental effect onhealth. Further, more than 1,100 million people aresubjected to concentrations of aerosol particlesabove the levels specified in WHO guidelines(UNDP et al., 2000), with exposure being particularlyserious for the population of large cities, mainly inthe rapidly growing mega-cities of Asia, Africa andLatin America.

Air pollution can trigger a series of acute andchronic diseases such as respiratory diseases(asthma, lung irritation and lung cancer) and diseasesof the cardiovascular system.According to the WorldHealth Organization (WHO, 2000, 2002b)• there is a direct relationship between mortality

rates and the daily exposure to aerosol particles.Every year, 0.8 million people die as a conse-quence of urban air pollution;

• the life expectancy within a population that is sub-jected to high concentrations of particles in the airis reduced significantly;

• in strongly polluted regions, air pollution isthought to be responsible for 30–40 per cent ofasthma cases and 20–30 per cent of all respiratorydiseases.

3.2.1.4Evaluation

The consequences of the recovery, transportationand, above all, utilization of fossil energy carrierstoday affect every human being on the planet. Manybecome ill directly as a result of the inhalation of pol-lutants in the air, and everyone is affected by climatechange e.g. through increasingly frequent extremeweather events. Ecosystems also suffer severe dam-


age, from oil disasters after tanker accidents to theacidification of inland waters.

The most serious consequences arise from the cli-mate change that would result from the undimin-ished and continued utilization of fossil fuels (Sec-tion 4.3.1.2). The existing reserves of fossil energycarriers therefore cannot be utilized fully, since car-bon dioxide emissions will have to be limited due totheir effect on climate change, and because thecapacity to store carbon dioxide is very limited forboth technological and economic reasons (Section3.6). In order to achieve and maintain stabilization ofthe atmospheric carbon dioxide concentrationaccording to Article 2 of the UN Framework Con-vention on Climate Change, anthropogenic emis-sions need to be reduced in the long term, i.e. overseveral centuries, to such low levels that persistentnatural sinks are able to absorb them. These levelsare estimated to be very small (less than 0.2GtC peryear, compared with 6.3GtC per year of emissionsfrom fossil fuels and cement, averaged over the1990s; IPCC, 2001a). The Council therefore con-cludes that in the long term we will have to moveaway from fossil energy sources. However, it is unre-alistic to try and achieve such a transformation by2100, and for the long-term stabilization of the CO2

concentration a longer timescale is in fact adequate.In the short term, better environmental standards

and environmentally more benign recovery, trans-portation and utilization technologies are importantelements of environmental protection. What isrequired is a timely switch to less damaging bridgingtechnologies (e.g. the replacement of coal and petro-leum through natural gas), investment in increasedefficiency during energy conversion and utilization,and in the long term the replacement of fossil energycarriers by renewables (Chapter 4).

3.2.2Nuclear energy

3.2.2.1Potential

Nuclear fissionEnergy is released when heavy atomic nuclei aresplit. Some of the heavy chemical elements offer theopportunity to trigger a controlled chain reactionthat enables the release of very large amounts ofenergy from small quantities of fissile material. Innuclear power plants, the energy thus generated isinitially converted to heat and then into electricity.Modern nuclear technology is based on uranium asthe fissile material, with the radioactive isotope U-

235 being used as fuel. Natural uranium contains onlyabout 0.7 per cent of U-235. In nuclear reactors, theuranium is bombarded with neutrons. This leads tothe formation of plutonium, which is also fissile. Thebinding energy of the atomic nuclei that is released ina common nuclear reactor therefore originates fromthe fission of uranium and plutonium. For a compre-hensive estimation of the potential offered bynuclear energy, thorium should also be considered inaddition to uranium and plutonium, since the sponta-neous fission of thorium can also trigger a chain reac-tion, although this would require a different type ofreactor from those currently in use.

Currently, around 2.5 PWh of electrical energy aregenerated annually worldwide in 440 nuclear powerplants (mainly light water reactors, LWR) with aninstalled electrical capacity of 354GW at an averageutilization rate (based on continuous operation atrated capacity) of approximately 80 per cent, corre-sponding to 17 per cent of global electricity genera-tion. For generating 1TWh of electricity, approxi-mately 22t of (natural) uranium is required (UNDPet al., 2000), resulting in an annual demand of around55,000t of natural uranium. In its present form, theutilization of nuclear fission energy is therefore lim-ited by the Earth’s natural uranium deposits. World-wide, 3.2 million tonnes of uranium reserves (priceper kilogram below US$130; UNDP et al., 2000) havebeen identified, which would last 60 years at currentconsumption rates. If the presumed resources arealso considered, global deposits increase to approxi-mately 20 million tonnes or approximately 360 yearsat current consumption.This would correspond to anelectricity production of approximately 3,200EJ.These figures could be increased significantly, if onewere to succeed in utilizing the uranium that is dis-solved in sea water for energy generation (uraniumconcentration 3mg per tonne, approx. 4.5 milliontonnes in total). However, the large-scale applicabil-ity of associated extraction techniques has not yetbeen proven. Without considering unquantifieddeposits in China and in the CIS, thorium reservesare estimated to be around 4.5 million tonnes.

Plutonium is practically non-existent naturally,but is generated in nuclear reactors using uranium.After reprocessing into mixed oxide (MOX) fuelrods it can be reused as reactor fuel, thereby substi-tuting around one-third of the natural uranium thatwould otherwise have to be used. Furthermore, plu-tonium from nuclear weapons can also be returned tothe civilian fuel cycle, which could also extend theavailable resource.

The figures discussed above could be increasedsignificantly if breeder technologies were used. How-ever, to date these have not been mastered properlyanywhere in the world. The fundamental process of


breeder technology is the formation of fissile pluto-nium from the stable uranium isotope U-238. In thisway, 50–100 times more energy can be generatedfrom 1kg of natural uranium. Apart from unresolvedtechnological problems, the particular risk of prolif-eration associated with the generation of such largequantities of plutonium should be stressed in thiscontext (Section 3.2.2.3).

Nuclear fusionThe fusion of light atomic nuclei releases energy.While the ‘fusion reactor’ of the Sun uses ordinaryhydrogen, in associated technological processes onEarth the hydrogen isotopes of deuterium and tri-tium are merged to form helium. For a hypotheticalfuture utilization of nuclear fusion to meet the totalcurrent global electricity demand of 15 PWh peryear, approximately 600t of deuterium and 900t tri-tium as fusion fuel and around 2,000t of lithium forbreeding of tritium would be required. If the currentelectricity demand was met by nuclear fusion, thedeuterium reserves in the sea water (33g per tonne)would last several million million years, the lithiumreserves in the Earth’s crust (170g per cubic metre ofrock) would last several thousand years or severalmillion years if the lithium dissolved in sea watercould be utilized.The theoretical potential of nuclearfusion is therefore almost unlimited. However, sinceappropriate power plants will not be available beforethe second half of the 21st century at the earliest – ifat all – and furthermore are likely to create a seriousrisk potential of their own (see below), the Council’sview is that it is currently not justifiable to basefuture energy strategies on nuclear fusion, even inpart.


Nuclear fissionOf the nuclear power plant capacity installed world-wide, 88 per cent is made up of light water reactors,with three different types of reactor being particu-larly noteworthy: pressurized water reactor (PWR),boiling water reactor (BWR) and the Russiangraphite-moderated boiling water pressure-tubereactor (RBMK) (Table 3.2-3). These types todayachieve electrical efficiencies of 30–35 per cent (heatto electricity). The following improvements in cost-effectiveness and safety have been proposed,amongst others:• For water-cooled reactors, the main issue is the

introduction of so-called passive safety systems.• In gas-cooled reactors, the safety features of

ceramics-coated fuel particles could be utilized,and higher efficiencies and process heat utilizationwould be realized at significantly higher operatingtemperatures.

Until a few years ago, some countries pursued thedevelopment of breeder reactors, although theseefforts have now largely been abandoned for safetyand cost reasons.

Nuclear fusionTriggering of the energy-releasing fusion reactionsbetween the two hydrogen isotopes deuterium andtritium requires the temperature and density of thefuel to exceed certain values (Hamacher and Brad-shaw, 2001). Worldwide, two concepts are being pur-sued to achieve this: magnetic inclusion of the fuel orinertia fusion. In the first case, strong magnetic fieldsenclose the fuel in the form of hot plasma and keep itaway from the walls. In inertia fusion, small fuel pel-lets are made to implode through bombardment withparticles or through electromagnetic waves.

In the EU, the most advanced project is the JETjoint experiment. As early as 1997, the project suc-ceeded in generating significant fusion power of

Table 3.2-3Current and possible furtherdevelopment of nuclearfission technologies. ‘Fast’ inthis context refers to high-energy ‘fast’ neutrons. ‘Sub-critical’ reactors require anexternal neutron supply formaintaining a chainreaction. LWR light waterreactor. HTR hightemperature reactor.Source: Kröger, personalcommunication, 2002

2000 2020 2050

Main technology LWR LWR, HTR Also fast critical and sub-critical plants

Efficiency [%] 30–35 40–45 60 (with nuclear combinedcycle)

High-level and long-lived medium-level radioactive waste[mg/kWh]

9–11 2.4 0.5 (with comprehensiveseparation and transmuta-tion of actinides)

Production costs[€-Cent/kWh]

3–5 < 4 no information available

Capacity range [MWe] 1,000–1,500 150–1,500 (150–1,500)


12MW over approximately 1 second, with 65 per centof the power required for heating the plasma beingrecovered through fusion (Keilhacker et al., 1999).The aim of the next major step of global fusionresearch (IAEA, 1998, 2001), the ITER internationalexperimental reactor, is to demonstrate that signifi-cantly more fusion power can be generated than isrequired for heating the plasma. Once the ITERexperiment has been evaluated, construction of afirst prototype fusion power plant could commencein approximately 25 years, with commercial powerplants expected to be operational in approximately50 years (Bosch and Bradshaw, 2001). According tocurrent studies, the electrical output of such fusionpower plants is expected to be around 1–2GW. Theefficiency of power generation in water-cooledpower plants is likely to be around 33 per cent, inhelium-cooled plants between 38 and 44 per cent.Since no pilot plants are in existence as yet, any costestimates for fusion technology are inherently veryuncertain.


Safety and socio-political acceptanceIn its 1998 annual report, the Council classifiednuclear technology between the categories of ‘nor-mal’ and ‘not acceptable’ in terms of global environ-mental risk (WBGU, 2000).With over 30 new nuclearpower plants being commissioned every year, thenumber of new plants peaked in 1984 and 1985. Evenprior to the accident at Chernobyl in 1986, severalcountries regarded nuclear power to be unacceptablefor fundamental reasons. In Austria, a referendum in1978 prevented the country from getting involved inthe technology.After the accident at Chernobyl, peo-ple became increasingly sceptical vis-à-vis nuclearpower.As a result, the number of reactors coming onstream every year fell continuously, and some coun-tries decided to abandon nuclear energy technologyaltogether (e.g. Germany, Belgium, Sweden).

Cost-effectivenessIn liberalized markets, private investors determinethe generation side of the electricity sector. For them,nuclear energy is becoming increasingly unattractivefor several reasons:• The ratio of capital and operating costs is poorer

for nuclear power than for other conventionalenergy sources (delayed return). Analyses showthat, apart from few exceptions, in OECD coun-tries electricity from nuclear power plants is moreexpensive than from coal or gas-fired power

plants, due to the high capital costs (IEA, 1998;COM, 2000).

• The high absolute investment costs require a largenumber of contract parties, leading to complexinvestment and management structures. Thesafety regulations require long approvaltimescales for the industry.

• If the operators of nuclear power plants had totake out insurance against all possible risks similarto what is required from the operators of fossilplants, the financial burden for the plant operatorcould be extremely high.

Developing countriesTo date, nuclear power has hardly been utilized indeveloping countries for the following reasons:• The often decentralized supply structure is at odds

with the centralized supply system which charac-terizes nuclear power due to the Gigawatt size ofnuclear power plants.

• Construction, maintenance and operation ofnuclear systems require strict safety specifications,good management and supervision. The WorldBank and the European Commission found thatdeveloping countries usually have significantproblems in meeting these prerequisites (WorldBank, 1991; COM, personal communication,2002).

• With typically tight national budgets, nuclearpower plants are difficult to finance (COM, per-sonal communication, 2002).

Permanent disposalThe safety of potential sites for the permanent stor-age of nuclear waste is difficult to determine today.One of the main problems with the permanent dis-posal of nuclear waste is the extremely long periodover which safe enclosure must be ensured. Pluto-nium-239, for example, has a half-life of 24,000 years,although of course a halving of the radiation alonedoes not mean that the material no longer needs tobe stored safely. After 10 half-lives, the radioactivitywill only have fallen to 0.1 per cent, which still is avery dangerous level. The radioactive elements withatomic weights above that of uranium (transuranicelements) have to be stored safely for approximately1 million years.The Council feels that one-off storageover such long periods cannot guarantee the protec-tion of the biosphere.

In principle, the waste could be converted intomore short-lived radioactive isotopes through bom-bardment with particles from accelerators, whichwould significantly shorten the periods over whichnuclear waste would have to be stored safely. Sincethe technological application of this process mayrelease more energy than that required by the parti-


cle accelerators, one could imagine an almost resid-ual heat-free fission power plant without the risk of achain reaction. However, such a technology has notyet been demonstrated successfully at pilot scale.

ReprocessingCurrently, there are three large commercial plantsfor reprocessing spent nuclear fuel: La Hague(France), Windscale-Sellafield (Great Britain) andChelyabinsk-Ozersk (Russia). These plants processapproximately 25 per cent of the spent fuel rodsworldwide. During reprocessing, the quantity of radi-ation released has exceeded the permissible limits onseveral occasions (EU Parliament, 2001). Today theassociated technology cannot be regarded as safelycontrollable.

Proliferation and terrorismThe construction of nuclear weapons requires onlyrelatively little know-how (UNDP et al., 2000). Themain problem for the production of such weapons isthe availability of weapons-grade plutonium orhighly enriched uranium. Both are also created dur-ing civilian utilization of nuclear energy, for exampleas part of reprocessing. Nuclear research is a furtherpotential source of plutonium. The G8 countries cur-rently hold approximately 430t of plutonium,another 800t are present in spent fuel rods (ISIS,2000). Since only 1/4 of the spent fuel rods arereprocessed, the quantity of plutonium increases byapproximately 10t every year. On the other hand, forthe construction of a nuclear bomb only approxi-mately 6kg of plutonium are required (Froggart,2002). The G8 countries regularly discuss the prob-lem of the disposal of weapons-grade material, with-out a solution having yet been found or the financingof a solution having been agreed.

The Non-Proliferation Treaty was signed in 1968with the aim of preventing and controlling the circu-lation of military nuclear technologies and fissilematerial. So far, 182 countries have ratified the treaty,although India, Pakistan and Israel, who havenuclear weapons, have not. In January 2003, NorthKorea declared its intention to withdraw from thetreaty.The International Atomic Energy Agency car-ries out relevant inspections without actually beingable to meet its inspection remit, according to state-ments from within the organization (IAEA, 2001).Since 1993, more than 550 cases worldwide havebeen entered in the IAEA database on the blackmarket for nuclear material, of which 16 cases relatedto plutonium or enriched uranium. The number ofunrecorded cases is unknown, and comprehensiverecording of stolen fissile material appears impossi-ble (UNDP et al., 2000). Existing safety and registra-

tion levels vary, and there is no binding internationalstandard.

After 11 September 2001, potential terroristattacks on nuclear power plants became a policyissue, although such attacks had already been threat-ened and/or carried out as early as 1972 in Argentina,Russia, Lithuania, France, South Africa and SouthKorea (Bunn, 2002; WISE, 2001). Studies and testsshow that nuclear power plants are highly vulnerableto commercial aircraft, for example, but also to inter-nal sabotage or attacks (Bunn, 2002).

Outlook on the specific risks of nuclearfusionSince no pilot plants or actual fusion power plantsexist as yet, it is very difficult to predict the risks asso-ciated with this technology. Studies on the environ-mental effects of fusion currently focus on the possi-ble risks and effects of the radioactive inventory ofpower plants, i.e. tritium as radioactive fuel and theradioisotopes in the reaction chamber wall that aregenerated through nuclear reactions between thewall materials and the neutrons released duringfusion (Cook et al., 2001; Raeder et al., 1995).

Due to the small energy inventory, the effects ofany incidents are likely to remain restricted to theplant interior. The quantity and toxicity of theradioactive substances that are created in a fusionpower plant strongly depend of the chosen composi-tion of the materials. The properties of wastes fromnuclear fusion and fission differ significantly. This isshown clearly by the decay characteristics ofradiotoxicity – a measure for the biological risk fromthe substances. The radiotoxicity of the majority ofthe waste generated during nuclear fission remainsalmost constant over many centuries. In contrast, theradiotoxicity of fusion wastes decreases by three orfour orders of magnitude during the first 100 years.However, this technology would also require safepermanent disposal of large quantities of radioactivewaste over several hundred years.

3.2.2.4Evaluation

While the theoretical potential of nuclear energy islarge, due to the unacceptable risks of utilization theCouncil’s recommendation is to phase out existingnuclear power plants at the end of their current oper-ating licenses and not to build any new plants.

The risk potential of fusion power plants alsoappears to be significant. However, since such powerplants will not be available before the second half ofthe 21st century at the earliest (if at all), the recom-


mendation of the Council is to not consider fusionpower plants as part of any energy transition strategy.

The Council therefore assumes the sustainablepotential of nuclear energy to be zero. However, dueto the existing path dependencies, any realistic globalphase-out scenario is unlikely to reach this valuemuch before 2050. It is assumed that the nuclearpower plants currently being constructed in Asia andcentral and eastern Europe will come on stream.Themaximum contribution of nuclear energy towardsglobal electricity supplies between 2010 and 2020could be 12EJ per year (Table 4.4-1).

3.2.3Hydropower

3.2.3.1Global potential

Today, around 45,000 large hydroelectric dams are inoperation worldwide, of which approximately 300 are‘mega dams’ (ICOLD, 1998). With nearly all largedams, electricity generation is an important objectivein addition to flood protection, water storage, irriga-tion agriculture and improvement of navigablewaterways (WCD, 2000). Small hydroelectric plantsrequire higher investment costs per installed capac-ity, which is why 97 per cent of hydropower is sup-plied by large hydroelectric plants with more than10MW capacity (UNDP et al., 2000).The Earth’s the-oretical hydropower potential is estimated to beapproximately 150EJ per year, of which approxi-mately 50EJ per year could be classified as techno-logical potential and approximately 30EJ per year aseconomic potential (Horlacher, 2002; Table 3.2-4).Other authors have reported similar figures (UNDP

et al., 2000; IPCC, 2001c). Approximately one-thirdof the global economic hydropower potential has sofar been utilized, with significant differences in thedegree of utilization between different countries andregions. Significant hydropower potential remainsuntapped in Africa,Asia and South America, while inNorth America and central Europe (including Ger-many) the potential has largely been utilized.According to some forecasts, the installed capacitycould be more than doubled within 50 years to morethan 1,400GW worldwide (Horlacher, 2002). Mega-projects with capacities of more than 10GW will bethe exception.The majority of new projects are likelyto have capacities between 0.1 and 1GW.

3.2.3.2Technology

The technology used in hydroelectric plants ismature and has a reputation for being extremely reli-able. Depending on the circumstances, a watercourseis either dammed up to achieve the head required forutilizing the potential energy contained in the water,or large quantities of water are fed directly throughturbines with small gradient (run-of-river plants).Hydroelectric plants require very high investmentsfor construction, but benefit from long service life(≥100 years), low operating costs, low maintenanceeffort and very high efficiency. Water as the opera-tional resource is renewable and free of charge.Power plants with impounding reservoirs benefitfrom quick operational readiness (e.g. 1GW inapproximately 5–10 min) and can therefore be usedto generate peak electricity and to compensateextreme load changes within electricity grids (Sec-tion 3.4.3). Pumped storage systems are able to storelarge quantities of energy with very little losses.

Region Theoreticalpotential

[EJ/a]

Technologicalpotential

[EJ/a]

Economicpotential

[EJ/a]

Alreadyutilized potential [EJ/a]

Currentlyinstalledcapacity[GW]

Under constructionor planned[GW]

Africa 14.0 6.8 4.0 0.3 20.6 76.8

Asia 69.8 24.5 13.0 2.9 241 223

Australia 2.2 1.0 0.4 0.2 13.3 0.9

Europe 11.6 3.7 2.8 2.1 176 10

North and Central America

22.7 6.0 3.6 2.5 158 16

South America 22.3 9.7 5.8 1.9 111.5 50.2

World 143 51.7 29.5 9.9 720 377

Table 3.2-4Hydropower potential by continent. See Box 3.1-1 for a definition of the different types of potential.Source: Horlacher, 2002



An important motivation for large hydro projects isthe increasing demand for electricity and irrigationagriculture, often coupled with the desire for effec-tive flood control and the expansion of navigablewaterways. Many large dams have indeed met theseexpectations and brought significant socio-economicbenefits and made important contributions to devel-opment, although in many cases insufficient consid-eration is given to the ecological and social disadvan-tages (WCD, 2000).

Effects on ecosystemsLarge dams often trigger complex side effects onlandscape and ecosystems (WCD, 2000; McCully,1996; Pearce, 1992). First of all, a reservoir causes thedirect loss of land and its ecosystems. In addition, theblocking of a river section and its conversion into areservoir has far-reaching hydrological and ecologi-cal consequences. The storage or diversion of waterby the dam drastically changes the quantity, qualityand dynamics of the drainage and of the sedimenta-tion regime.

Reservoirs act as sediment traps, so that world-wide 0.5–1 per cent of the capacity of impoundingreservoirs is lost due to siltation every year (Mah-mood, 1987). Downstream of the dam, the reducedsediment quantity is leading to changes in sedimentdynamics, which not only has a negative influence onthe ecology of the river bed itself, but can also causesignificant damage at the mouth of the river due tocoastal erosion (e.g. Nile: Stanley and Warne, 1993;Indus: Snedacker, 1984). Other important factors(nutrients, temperature and water chemistry) arealso changed, so that negative ecological effects areexperienced a long way downstream. Overall, damscontribute significantly to the worldwide threat tothe biodiversity of freshwater fauna and flora (McAl-lister et al., 2000).

Greenhouse gas emissionsThe simplistic assumption that hydropower is cli-mate-friendly cannot be justified for all projects,because the breakdown of biomass in the impound-ing reservoir results in the release of the greenhousegases carbon dioxide and methane into the atmos-phere (WCD, 2000). Damming often leads to thereplacement of natural forests that can form a green-house gas sink by a reservoir representing on the onehand an emission source, but which on the otherahnd is also able to store carbon through sedimentformation (Raphals, 2001). These opposite effectsstrongly depend on the climate, the topography andthe greenhouse gas balances of the flooded ecosys-

tems and the emerging reservoir. For example, shal-low, tropical reservoirs can lead to higher emissionsthan fossil power plants with identical output (Fearn-side, 1995, 1997; IPCC, 2001b).Whereas, for deepreservoirs in higher geographical latitudes, the fossiloption is likely to have a significantly greater effecton the climate. This is also true in cases where largequantities of greenhouse gases were emitted fromecosystems before they were flooded (Svensson,1999). For assessing the effect of hydroelectric plantson the climate, the long-term greenhouse gas bal-ances before and after flooding have to be comparedfor each individual case, taking due account of sec-ondary effects (e.g. forest clearance triggered byresettlement, changes in carbon flows upstream anddownstream of the dam; WCD, 2000). The prepara-tion of comprehensive greenhouse gas balances forhydroelectric projects remains an important researchtask for the future.

Technological risksDams can fail, leading to the sudden release of largequantities of water, potentially claiming many vic-tims and causing severe damage. The worst dam dis-aster to date occurred in August 1975 during atyphoon in Henan, China, where 62 dams weredestroyed The failure of the Banqiao dam alonereleased 500 million m3 of water, villages and smalltowns were obliterated, and more than 200,000 peo-ple lost their lives (McCully, 1996). Of all dams builtbefore 1950, 2.2 per cent have failed, while for damsthat were built later the figure is less than 0.5 percent, i.e. significantly lower (WCD, 2000). Since thedesign of dams is usually based on previous long-term average climatic and hydrological conditions,global climate change can bring additional safetyrisks through changes in extreme precipitationevents. Further risks are the possibility of deliberatedestruction of dams during military conflicts orthrough terrorism.

Effects on human healthReservoirs and associated irrigation projects coverlarge areas of land with stagnant water. In the tropics,this leads to an increased risk of waterborne infec-tious diseases (Nash, 1993).The construction of damsin the tropics often leads to significantly increasedbilharziosis infection rates. The construction of theAkosombo dam in Ghana, for example, led to anincrease of this rate in children from below 10 percent to 90 per cent (1966–69; McCully, 1996). Malaria,encephalitis, Rift Valley fever, filarioses, poisoningthrough toxic blue-green algae and through mercuryleaching from the flooded ground are further exam-ples of life-threatening, directly associated healthrisks (WCD, 2000; McCully, 1996). Furthermore, the


indirect consequences of the poor water quality ofthe stagnant water (diarrhoea) and malnutrition as aresult of the destruction of social structures, of flood-ing of fertile soils and of the resettlement of the localpopulation also need to be considered in the assess-ment (Lerer and Scudder, 1999). In advantageouscases, impounding reservoirs can improve the watersupply and enable irrigation agriculture and fishing,with associated positive effects on the security offood supplies.

Social impactsHydropower provides approximately 19 per cent ofglobal electricity and is therefore currently by far thelargest renewable energy source for electricity pro-duction. In 24 countries, hydropower contributesmore than 90 per cent of the total electricity supply.While the estimated cost and timescale for the con-struction of large hydroelectric plants is oftenexceeded, the scheduled electrical output and eco-nomic profitability are usually achieved (WCD,2000).

However, large dams inevitably also create losers,mainly among the population that is forced to relo-cate, often involving significant violations of humanrights. During the 20th century, 30–80 million peoplewere adversely affected by the construction of largedams, and the trend at the start of the 21st century issimilar: The Three Gorges Dam in China will expelmore than 1.1 million people, the Pa-Mong Dam(Laos and Thailand) 500,000 people (WCD, 2000;UNDP et al., 2000). Often, the affected sections ofthe population neither receive appropriate compen-sation for the financial losses they suffer, nor are theyoffered appropriate agricultural land in compensa-tion for any land they may lose, particularly if theylive some way downstream of the project. It is impos-sible to put a monetary value on the loss of culturaland religious values and of social cohesion and iden-tity. In particular, this applies to the indigenous com-munities, whose culture and lifestyle is rooted in tra-dition and is very closely linked to the location and itsnatural ecosystems (McCully, 1996). An analysis ofcase studies shows that participation of the affectedpeople has hardly played a role in previous dam pro-jects, compensation payments were usually inade-quate, and the above-mentioned social effects wereregularly ignored in the plans of the dam builders(WCD, 2000).

Sustainability of hydropowerForced relocation, lack of participation, unfair distri-bution of economic benefits and the negative ecolog-ical consequences of dams create potential for socialconflicts (Bächler et al., 1996).As a consequence, thepolitical resistance against dams has increased over

recent decades (UNDP et al., 2000).This has also hadan influence on lenders and international institu-tions. First a slow rethink occurred, and then an opendiscussion process. The World Bank, for example,which played a significant role in the financing ofmany large dams in developing countries, retrospec-tively reassessed the projects it had funded. Today,environmental and social compatibility of new pro-jects has a much higher status within the multilateralfinancing institutions.

For all hydraulic engineering projects, compliancewith internationally agreed (e.g. World Bank,OECD) guidelines for sustainability should ensuretheir ecologically and socially compatible implemen-tation. Under these guidelines, hydroelectric projectsare to be avoided if alternative energy options can bedeveloped that are more sustainable and are not sig-nificantly more expensive in the long-term. Theseinternational guidelines are not necessarily in har-mony with often less demanding national legislation,which is frequently applied to the detriment of theaffected population and of nature conservation. Halfof all large dams, for example, were built without con-sideration of the environmental consequences forthe downstream ecosystems (Dixon et al., 1989).

On an international level, the highlights of the sus-tainability discussion to date are the analyses andrecommendations of the World Commission onDams (WCD, 2000). Within this difficult environ-ment, the Commission was able to develop a basis forthe evaluation of large dam projects, by bringingtogether representatives with different interests onan international level within an open-ended and con-sensual process (WCD, 2000). The result is impres-sive: despite the fact that some countries (e.g. China,India, Turkey) and players (e.g. International Com-mission on Large Dams – ICOLD, InternationalHydropower Association – IHA, International Com-mission on Irrigation and Drainage – ICID;Varma etal., 2000) were not happy with all results, the Com-mission’s report and the recommendations containedtherein were received positively overall.The problemis often not a lack of awareness of the problem or ofguidelines for sustainability, but the lack of a basicinstitutional framework. To date, sustainabilityguidelines could therefore only rarely be imple-mented coherently in practice.The following precon-ditions must be met, if an increasing proportion ofthe economically attractive projects is to be designedand implemented in a sustainable manner over thecoming decades:• Ensuring nature conservation: A global system of

protected areas for the purpose of preserving thenatural heritage (Section 4.4.1.3; WBGU, 2001a)should ensure that a certain proportion of the dif-ferent types of river ecosystems (including their


catchment area) remains free of intervention, i.e.above all free-flowing. Previous experience showsthat precautionary protection of ecologically valu-able regions has to be implemented quickly, par-ticularly in the catchment areas of possible futurehydroelectric projects, otherwise – regardless ofany guidelines – ‘facts’ can be created in advance,e.g. in the form of logging.

• Creating a scientific basis: There is often a lack ofecological, social and other location- and case-spe-cific basic data for sustainability analyses and forcomparisons with alternative options. Significantinvestments in a better scientific database over thecoming 5–15 years are therefore a central prereq-uisite for a more sustainable expansion ofhydropower (Section 6.3.1). This database shouldbe developed by independent regional researchcentres on the basis of the catchment areas (e.g.INPA in the Amazon region or ICIMOD in theHimalayas; von Bieberstein Koch-Weser, 2002), ina manner independent of individual projects.

• Ensuring participation of the affected population:Many negative effects could be contained withpreventive and compensation measures andthrough detailed preliminary work and participa-tion of the affected population. While during pre-vious consultations the concerns, demands orprotests of those affected tended to be made pub-lic, project management or government agenciesoften failed to take them into account properly.

• Rectifying local institutional deficiencies: Strongermutual trust and better acceptance can beachieved through an efficient mediation and juris-diction system. Environmental impact assess-ments (EIAs) should not be carried out retrospec-tively to justify projects, but should be evaluatedprior to any decision in favour of a particular pro-ject option. The relevant government authoritiesin developing countries should be able to checkand examine EIAs at a high technological leveland with adequate knowledge of the locality. Aneed for significant investment in capacity-build-ing thus remains. For cross-border catchmentareas, cross-country regional institutions for thedevelopment of hydroelectric installations shouldbe created. These could assist in the analysis ofalternative locations within the region that alsoconsider indirect and cumulative effects (e.g. for aseries of projects on the same river).

3.2.3.4Evaluation

Not all dam construction projects should be seen asnegative (WCD, 2000). The implementation of the

recommendations presented in Section 3.2.3.3 canmake additional sustainable hydropower potentialaccessible, although this would require a high degreeof long-term and international cooperation and closeintegration of development policy, export financingand energy planning (e.g. World Bank, regionalbanks and export credit agencies).

It is difficult to make general statements about theglobally available and sustainable hydropowerpotential, since it depends on many factors and onthe development of the above-mentioned scientificand institutional framework. While large technologi-cal hydropower potential (Section 3.2.3.1;Table 3.2-4;Horlacher, 2002) remains untapped, its realizationover the coming decades will only be justifiable inexceptional cases and with due consideration of sus-tainability criteria (von Bieberstein Koch-Weser,2002).

Overall, the Council estimates the usable poten-tial to be lower than other sources (e.g. UNDP et al.,2000), since the lack of a framework for the applica-tion of internationally recognized sustainability crite-ria seriously limits the scope. Most of the economi-cally more attractive and less controversial projectshave already been realized in the past. In NorthAmerica and central Europe (including Germany)for example, the additional sustainable potential isvery small. Furthermore, hydroelectric projects willbe significantly more difficult to implement in futuredue to the rightly increased requirements for envi-ronmental and social compatibility. Many of theremaining project options are located in poorlyaccessible tropical forest or mountain regions, wherethe complexity of the ecosystems (South America,South-East Asia, Africa), the vulnerability of theindigenous population (Colombia, Brazil, Laos, Viet-nam) or geological risks (Himalayas) present seriouschallenges. Others project options are located indensely populated regions, where large relocationprogrammes would be required (India, China, south-ern Brazil).

If the required framework (investments inresearch, institutions, capacity building, etc.) can becreated during the next 10–20 years, and a circum-spect approach is taken, approximately one-third ofthe hydroelectric potential utilized today could addi-tionally be made accessible in a sustainable fashion,i.e. 12EJ per year overall by 2030.This figure could beincreased to approximately 15EJ per year by 2100,but only if the above-mentioned preconditions aremet (Table 4.4-1).


3.2.4Bioenergy

3.2.4.1The potential of modern bioenergy

According to the World Bank, traditional biomassutilization currently contributes 7.2 per cent of theglobal primary energy use. In the developing coun-tries, 35 per cent of the energy is generated from bio-mass, and in some African countries even up to 90per cent. Around 2,400 million people exclusivelydepend on traditional biomass utilization for theirenergy supply (IEA, 2002c). This includes the use offirewood, charcoal and dung for cooking and heatingin private households. The fact that traditional bio-mass is mainly used in the poorest countries, withassociated disadvantages for the environment andfor health, is the reason for its poor reputation as anoutdated energy source. Despite this, biomass offerssignificant potential for future energy generation,which could be utilized more efficiently and largelyfree from negative effects on health.

Types of biomass that can be used for energygeneration and associated technologies‘Modern’ biomass that can be utilized for energy gen-eration comprises the following categories:• Agricultural waste products (e.g. straw, dung, rice

husks), as far as they can be utilized withoutdepriving farmland of nutrients;

• Timber residue and small branches, etc., insofar asthey do not have to remain in the forest for eco-logical reasons, or are used for different purposes,e.g. for economic reasons;

• Industrial residue and recycled wood (also witheconomic restrictions);

• Annual or perennial energy crops that are spe-cially cultivated for the purpose of energy genera-tion.

The options for energy extraction from biomassdepend on the range of the bioenergy carriers used.In addition to the combustion of biomass for gener-ating heat and/or electricity, various other technolo-gies are currently at an experimental stage or enroute to commercialization. The further develop-ment of power generation through gasification ofsolid biomass, and possible coupling with the hydro-gen economy are also being examined.

Technological and economic potential ofbiomass utilization in GermanyTable 3.2-5 summarizes the technological and eco-nomic potential of biomass for energy generation in

Germany. The detailed assessment for Germanyillustrates the principle that was used to assess thepotential on a European and global level.

Area distributionGermany has a total surface area of 35.7 millionhectares, comprising farmland (53.5 per cent), wood-land (29.4 per cent), settlements (12.3 per cent) andother areas (4.7 per cent) (Statistisches Bundesamt,2002). Nature reserves (without Wadden Sea areas)make up 2.6 per cent of the area, national parks andbiosphere reserves a further 6.4 per cent (BfN, 2002).Since there is some overlap between nature reservesand the core zones of the biosphere reserves andnational parks, the European Environment Agencyestimates protected terrestrial habitats to have a 8.3per cent share of the total area (Moss et al., 1996). Arecent amendment to the Federal Nature Conserva-tion Act sets the target of creating a habitat networkcomprising at least 10 per cent of the land area.

Setaside farmland totalling 2 million hectares(Kaltschmitt et al., 2002) could be used for the culti-vation of energy crops, as nature conservation areasor for afforestation for the purpose of carbon storageunder the Kyoto Protocol.The different types of landuse would result in different technological and eco-nomic potential for bioenergy generation or for sav-ing carbon dioxide emissions.

Potential from forestryIn Germany, less than 17 million tonnes of the annualwood increment (40.3 million tonnes dry matter –UN-ECE and FAO, 2000) is utilized as merchantabletimber. The quantities theoretically available for uti-lization in energy generation are therefore 9.6 mil-lion tonnes of residual forest timber, 7 million tonnesof small branches etc. and 6.6 million tonnes ofunused increment (Table 3.2-5). For forestry and eco-nomic reasons, the sustainable and economic poten-tial for residual timber is only approximately 10 mil-lion tonnes per year. In addition, there is approxi-mately 8.2 million tonnes of industrial timber andrecycled wood. Retrieval of the 0.2 million tonnes oftimber that accumulates during landscape manage-ment does not appear to be profitable. From an eco-logical point of view, the utilization of unused incre-ment for energy generation cannot be justified. Of atotal of 31.7 million tonnes per year, only approxi-mately 18 million tonnes of dry matter are thereforeavailable as economically usable potential. This situ-ation is unlikely to change significantly until 2030,since an increasing demand for material extraction(paper, packaging, etc.) is to be expected.The energypotential of wood-based biomass is thereforereduced to approximately 340PJ per year, equivalentto approximately 6.8 million tonnes of carbon. If the


Table 3.2-5Technological and economic bioenergy potential in Germany. The carbon equivalent figures show the quantity of greenhousegas emissions (carbon dioxide, nitrous oxide, methane, all expressed in C) that are avoided compared with the utilization offossil energy carriers (based on the current fuel mix in Germany). Total area of Germany: 35.7 million hectare. The economicpotential refers to the year 2001. DW dry weight.Sources: Kaltschmitt et al., 1997; Hanegraaf et al., 1998; Freibauer, 2002; Kaltschmitt et al., 2002

Area

[106 ha]

Utilizable quantity

[106 tDW/a] [t/ha/a]

Biogas

[106 m3/a]

Calorificvalue[MJ/kg]

Energypotential[PJ/a]

Carbonequivalent[106 t/a]

TECHNOLOGICAL POTENTIAL

Forest 10.5Timber residue 9.6 0.9 18.6 179 3.6Small branches etc. 7.0 0.7 18.6 130 2.6Increment 6.6 0.6 18.6 123 2.5Industrial timber 3.1 18.6 58 1.2Recycled wood 4.3–6.0 18.6 80–112 1.6–2.4Landscape management 0.4 0.2 0.5 18.6 4 0.1Total timber 10.9 30.8–32.5 573–605 11.5–12.1

AgriculturePermanent grassland 5.1

Meadows 4.1 0.9–1.4 0.2–0.3 750–1,100 17.7 16–24 0.3–0.5Others 1.0

Arable land 11.8Grain, corn, rape 8.1 7.6 0.9 17.0 130 2.5Other arable 3.7 0.8–1.5 0.1–5.0

Other agric. areas 2.2Total agriculture 19.1 9.3–10.5 750–1,100 146–154 2.8–3.0

Settlements and othersSettlements 4.4Others 1.7Landscape management 0.4–0.9 280–560 14.2 6–12 0.2Excrement 15.5 4,500 6.2 97 1.8Municipal waste 1.5 580 8.3 13 0.2Industrial waste 0.5–1.0 300–375 12.5 6–12 0.2Digester/landfill gas 2.0 2,450–3,050 18.8 35–41 0.7Total from waste 20–21 8,110–9,065 156–174 3.1

Setaside landa) 2Short-rotation forests 2 18 9.0 18.5 333 >6.4Energy grasses 2 24 12.0 17.6 422 7.5–8.1Grain crops, whole plant 2 20 10.0 17.0 340 3.3–6.5Rape oil 2 37.3 102 1.8Total energy crops 2 18–24 9.0–12.0 102–422 1.8–8.1

Overall total 77–88 8,860–10,165 977–1,355 18.9–25.8

ECONOMIC POTENTIAL

Forest 18.2 339 6.8Timber residue 6.5 18.6 121 2.4Small branches etc. 3.5 18.6 65 1.3Industrial timber 3.1 18.6 58 1.2Recycled timber 5.1 18.6 95 1.9

Agriculture and wastes 29–35 315 6.0Grassland 1.1 17.6 20 0.4Straw 7.6 17.0 130 2.5Biogas 20.5 8,588 165 3.1

Energy crops 18–24 17.0–18.6 102–422 1.8–8.1

Overall total 65–77 756–1,076 14.6–20.9

a)alternative utilization


nutrient supply of forests is considered, the utiliza-tion of dead wood and small branches is not sustain-able in the long term. The ecologically sustainablepotential is therefore approximately 20 per cent lessthan the economic potential. Overall, a maximum ofapproximately 15 million tonnes of carbon equiva-lent could be saved in Germany per year.

Potential from agricultureA sustainable energy potential of 315PJ per year(corresponding to 6 million tonnes carbon per year)can be expected from agriculture, with 10 per cent ofthe mowings from permanent grassland, 20 per centof the straw, excrement and various wastes being suit-able for energy generation (e.g. for the production ofbiogas; Kaltschmitt et al., 2002). Depending on theenergy carrier, this would result in an additionalenergy potential of 100–420PJ per year (1.8–8 milliontonnes carbon), if setaside areas were to be utilizedfor energy crops. The large range is due to differentgrowth rates and different effort required for the cul-tivation of energy crops. However, any assessment ofthis potential should consider the fact that the cur-rent setaside practice is to be replaced by a long-termecological setaside scheme that no longer offers theoption of financial support for the cultivation ofenergy crops (EU Commission, 2002).

Subsidies, operational flexibility and other factorsresult in farmers preferring the cultivation of annualplants that require the application of pesticides andfertilizers. However, for bioenergy purposes peren-nial plants are preferable, since they offer higherenergy yields with lower quantities of fertilizers andpesticides and less intense soil cultivation (Börjessonet al., 1997). For annual species, the ecologically sus-

tainable potential is approximately 30 per cent lowerthan the economic potential.

In Germany, bioenergy could compensate a maxi-mum of approximately 11 per cent of the energy-related carbon dioxide emissions (based on the year2000) and cover 7–9 per cent of the energy demand(technological potential; Table 3.2-6).

Potential for biomass utilization andcarbon storage in the EUEven for a region with good statistical documenta-tion, any estimate of the technological potential ofbiomass utilization in the European Union (EU-15)will have a high degree of uncertainty. Estimates ofthe potential range from 4,300 to 10,100PJ per year,with a median of 5,700PJ per year and a mean valueof 6,100±1,900PJ per year. The following observa-tions relate to Kaltschmitt et al., 2002 (with addi-tions), who came up with a value of 5,200PJ per year,which is below the mean value of the estimates foundin the literature (Hall and House, 1995; EU Commis-sion, 1998; AEBIOM, 1999; Grassi, 1999; Ministry ofTrade and Industry, 1999; FNR, 2000; fesa, 2002), butis relatively close to the median value.

The technological and economic potential ofbioenergy and of carbon storage through modifiedmanagement techniques within the EU is shown inTable 3.2-7. This potential amounts to 5,224PJ peryear, which could cover 8.6 per cent of the energyused in 2000 (60,926PJ; Eurostat, 2002).The total car-bon savings potential through the utilization ofbioenergy carriers and the creation of sinks throughmodified management techniques is approximately160 million tonnes of carbon equivalent (14 per centof the energy-related emissions in 1990). The eco-

Table 3.2-6Summary of the technological and economic potential for the utilization of biomass for energy generation and carbon storagein Germany. The energy use figures for Germany in 1990 and 2000 are shown for comparison.Sources: Kaltschmitt et al., 1997; Hanegraaf et al., 1998; Freibauer, 2002; Kaltschmitt et al., 2002

Energy balance Carbon balance Contribution total emissions

[PJ/a] [106 t Ceq/a] [% Ceq]

Base year 1990 17,402 330 100Base year 2000 14,278 270 82

technological economic technological economic technological economic

Bioenergy 977–1,355 756–1,076 19.2–26.3 14.6–20.9 5.8–8.0 4.4–6.3Forestry 573–605 339 11.5–12.1 6.8 3.5–3.6 2.1Agriculture 302–328 315 5.9–6.1 6.0 1.8–1.9 1.8Energy crops 102–422 102–422 1.8–8.1 1.8–8.1 0.6–2.5 0.6–2.5

Carbon storage 14.8 11 4.5 2.8–2.9Forestry 8.5 8.5 2.6 2.6Afforestation 1.2 0.0 0.4 0.0Agriculture 5.1 0.5–1 1.5 0.2–0.3

Total 34–41 26–32 10–13 7.2–9.1


nomic potential is significantly less than this value,since sink capacity and bioenergy partly compete forthe same areas. Ecological restrictions, such as theincreased occurrence of nitrous oxide emissions withreduced ploughing, further limit the potential(Freibauer et al., 2002). If 60 per cent of the techno-logical potential was utilized in a sustainable fashion,bioenergy would only contribute 3,134PJ per year or5.1 per cent of the primary energy use (figures for2000).The economic sink potential would be 119 mil-lion tonnes of carbon or 10.3 per cent of the emis-sions.

The utilization of biomass for energy generationreplaces approximately the same quantity of fossilcarbon as the carbon that could potentially be storedthrough cultivation measures. In this calculation, thecontribution that can be attributed to storage waslimited in the 2001 Bonn Agreements, as part of theKyoto follow-up process. Forest increment in the EUis equivalent to 164 million tonnes of carbon peryear, 103 million tonnes of which is felled (UN-ECEand FAO, 2000), and the remaining 60 million tonnescarbon per year are stored in the biomass as volumegrowth. For operational reasons, this quantity cannotbe harvested for the purpose of energy generation,but forms a carbon sink. The actual effect of forestryis therefore about 30 per cent higher than estimated(60 million vs. 39.4 million tonnes carbon; Table3.2-7).

Taking account of storage through management isvery significant for the Earth’s carbon balance, sinceit is the only mechanism through which the carbon

deposits in the soil can be protected. With 1,500–2,000Gt, an exceedingly large quantity of carbon isstored in the soils of the terrestrial ecosystems, cor-responding to approximately 300 years of emissionsfrom the utilization of fossil fuels at current con-sumption rates. Since this carbon can partly bereleased through cultivation measures, the protec-tion of these deposits has to be a primary target forthe preservation of the basis of human existence andof climatic conditions (Section 3.6).

Global bioenergy potential The Council estimates the global sustainable bioen-ergy potential to be around 100EJ per year (Table3.2-8), of which 40 per cent originate from forestryresidues and by-products, 17 per cent from agricul-tural waste and approximately 7 per cent from thecombustion of dung. Energy crops play an importantrole with a further 36 per cent.

In order to determine the potential of energycrops, the maximum area of arable land must beknown. Areas to be used for food production for agrowing world population and protected areas forthe preservation of biodiversity and ecosystem func-tions have to be taken into account. Deserts (19 percent) and mountain areas with a slope of more than30 per cent (11 per cent) also have to be ruled out(FAO Land and Plant Nutrition Management Ser-vice, 2002).

The area available for agriculture as a proportionof the global land area is around 12.5 per cent, ofwhich 26.5 per cent is used as permanent pasture.

Table 3.2-7Technological biomasspotential for energygeneration according tomaterial groups in the EU.In the base year of 1990,1,157 million tonnes ofcarbon were released fromfossil fuels. The carbonequivalent figures show thegreenhouse gas emissions(CO2, N2O, CH4), that wereavoided compared with theutilization of fossil energycarriers.The ARD balanceindicates the sink potentialfrom afforestation, refor-estation and deforestation.Sources: Freibauer et al.,2002; Kaltschmitt et al.,2002; Schulze et al., 2002

Calorificvalue[MJ/kg]

Quantity

[106 tDW/a]

Energypotential[PJ/a]

Carbonequivalent[106 t Ceq/a]

Area

[106 ha]

ENERGY POTENTIAL

Forestry 171.6 3,192 63.8 113Timber residue/firewood 18.6 44.5 828 16.6Small branches etc. 18.6 25.0 465 9.3Industrial wood residue 18.6 67.0 1,246 24.9Old timber 18.6 26.8 498 10.0Landscape management 18.6 8.3 154 3.1

Agriculture 63.8 1,098 20.3 74Straw 17.2 53.2 915 16.9 36By-products/wastes 17.0 10.6 183 3.4 38

Energy crops 17.7 52.8 935 17.8 7.4

Total (technical) 288 5,225 101.9

Total (economic) 3,134 61.1

SINK POTENTIAL

ARD balance 1.4 7.4Forestry management 39.4 108Agricultural management 16.4–19.1 74

Total 57.2–59.9

Total savings potential 119.6


Woodland covers approximately 30 per cent of theland area. If about 20 per cent is designated as pro-tected forests and natural grassland, a maximum of10 per cent remains for the cultivation of biomass. Inorder to assess the sustainability of this type of uti-lization, the potential for the individual continentshas to be considered separately (Table 3.2-9). Thetable shows that in Asia the existing bioenergypotential is already being over-utilized.

The calculated technological potential for energycrops requires an area of 322 million hectares, i.e.approximately 2.5 per cent of the land surface, ifmoderate bioenergy crop yields of approximately6–7t dry weight per hectare per year are to beachieved in industrialized countries and in LatinAmerica. In Africa, due to poor soils and traditionalfarming structures, yields of this order of magnitudeare often only achievable using fast growing treessuch as eucalyptus, with yields of 0.5–30t (on average8.5 t) per hectare per year depending on precipita-tion, while grain yields are less than 2t per hectareper year (Marrison and Larson, 1996; FAO, 2002).

In addition to energy crops, agricultural andforestry waste products contribute significantly to

the global bioenergy potential. Here ,too, sustainableutilization is a prerequisite for the calculation of thepotential. FAO data on land use, agricultural produc-tion and timber production (FAO, 2002) were usedfor the extrapolation.

AppraisalCompared with other estimates of the global bioen-ergy potential, the values assumed by the Council arerather low. One reason is the fact that competing landuse demands were considered. IPCC (2001c) esti-mated the global bioenergy potential for 2050 to be396EJ per year, with very high proportions of thetotal land area assigned to the cultivation of energycrops (16 per cent in Africa, 32 per cent in LatinAmerica). In Latin America, 30 per cent of the areais currently used as permanent pasture, and in view ofincreasing meat consumption this figure is unlikely tofall. According to IPCC, the required arable farm-land area will even increase to 15 per cent, while 9 percent of the continent consists of arid areas. In orderto achieve the IPCC values, the natural forest area ofSouth America would have to be reduced from cur-rently 46 per cent to approximately 16 per cent,

Area No. of animals Utilizable yield Totalquantity

Technological potential

[106 ha] [106 animals] [tdry weight/ha/a] [t/animal/a] [106 tdry weight/a] [PJ/a]

Forestry 4,173 0.5 2,237 41,600Agriculture 1,505 0.7 994 17,200Energy crops 322 6.6 2,113 37,400Dung 1,599 0.8 1,220 7,600

Total 103,800

Table 3.2-8Global technological potential of biogenic solid fuels. Since the potential was estimated cautiously, the specified values can beregarded as sustainable.Sources: FAO, 2002; Kaltschmitt et al., 2002

Table 3.2-9Geographic distribution of the technological energy potential of biogenic solid fuels.Source: Kaltschmitt et al., 2002

Europe FormerUSSR

Asia Africa MiddleEast

NorthAmerica

LatinAmerica

Total

Total energy potential [PJ/a]

Wood 4,000 5,400 7,700 5,400 400 12,800 5,900 41,600Stalks 1,600 700 9,900 900 200 2,200 1,700 17,200Energy crops 2,600 3,600 1,100 13,900 – 4,100 12,100 37,400Dung 700 300 2,700 1,200 100 800 1,800 7,600

Total 8,900 10,000 21,400 21,400 700 19,900 21,500 103,800

Currently utilized 2,000 500 23,200 8,300 – 3,100 2,600 39,700

[106 ha]

Area for energy crops 22 32 10 124 0 36 108 332


which from a nature conservation point of view candefinitely not be considered sustainable (WBGU,2001a). A similar argumentation applies to the situa-tion in Africa.

In terms of yields, IPCC assumes a figure ofaround 15t per hectare per year. This approximatelycorresponds to the value of 19.5t per hectare per yearachieved for sugar cane (Kheshgi et al., 2000). ForMiscanthus, 2–44t per hectare per year are assumeddepending on region and soil conditions(Lewandowski et al., 2000), for switchgrass (Panicumvirgatum) 4–34.6t per hectare per year (Paine et al.,1996; Sanderson et al., 1996). The yields of woodyenergy crops in moderate and northern latitudes areassumed to be 7–10t per hectare per year for poplars(Hanegraaf et al., 1998; Kheshgi et al., 2000), for wil-lows 4.7–12t per hectare per year (Tahvanainen andRytkönen, 1999; Goor et al., 2000). Only few authorsassume yields of more than 15t per hectare per yearfor willows (Boman and Turnbull, 1997). For manyregions, the yields assumed by IPCC are thereforetoo high. This applies in particular to traditionalfarming in Africa. The Council therefore assumedaverage dry matter yields of only 6–7t per hectare peryear.

With a comparable land distribution, otherauthors have also calculated a bioenergy potential of350–450EJ per year (Fischer and Schrattenholzer,2001). However, their figure for the potential of agri-cultural residues (35EJ per year) is twice the valueassumed by the Council, since twice the value wasassumed for the recovery per unit area.While a yieldof 1.2t per hectare per year of agricultural residues isrealistic in temperate latitudes, this value is not real-istic in the tropics, where the soil structure has to bestabilized by large quantities of carbon being fedback into the soil. While the Council assumedapproximately 0.5t per hectare per year of recover-able forestry residues, taking account of ecologicaland economic restrictions (no utilization in primevalforests or in regions with poor infrastructure),Fischer and Schrattenholzer (2001) assumed 1.4t perhectare per year of forestry biomass that can be uti-lized for energy generation.Although this figure maybe justified for the commercial forests of temperateregions, for tropical and boreal regions the valueappears too high. For energy crops, the average yieldsof 4.7t per hectare per year assumed by Fischer andSchrattenholzer are moderate, although the inclusionof the global grassland area in the utilization forenergy generation would violate ecological princi-ples (WBGU, 2001a).

3.2.4.2Environmental and social impacts of traditionalbiomass utilization in developing countries

Effects on the natural environmentBiomass is becoming scarce, particularly in aridregions such as the Sahel or in the steppes of Asia(BMZ, 1999), since more material is taken here thangrows back. In Asia, 1,700PJ per year is generatedfrom non-sustainable timber utilization, correspond-ing to approximately 20 per cent of the energy gen-erated from biomass. In Africa the proportion gener-ated in a non-sustainable fashion is 30 per cent, inLatin America 10 per cent (Kaltschmitt et al., 1999).Non-sustainable biomass utilization destroys forests,degrades soils, reduces biodiversity and damageswater resources.

Effects on human healthAccording to UN estimates, 1.6 million people world-wide die of the consequences of indoor air pollutionevery year (WHO, 2002b). Approximately half theworld population is subjected to the damaging effectsof traditional biomass utilization, the majority ofthem women and children (Bruce et al., 2000; Table3.2-10). Particular risks are associated with theincomplete combustion of wood or dung in tradi-tional, technologically inadequate stoves, with emis-sions of soot, suspended matter and carbon monox-ide significantly exceeding safe values (UNDP et al.,2000). Health risks are associated with small particles(particles with a diameter of less than 2.5 µm are par-ticularly dangerous), SOX, NOX, O3 and polycyclicaromatic hydrocarbons. The susceptibility to acuterespiratory tract infections is significantly higher forchildren who are subjected to fumes and exhaustgases from the combustion of biomass than for chil-dren in households with modern fuel utilization(Behera et al., 1998; Smith et al., 2000). Mothers andchildren also suffer an increased risk of chronicobstructive pulmonary diseases, lung cancer, tuber-culosis, asthma or ischaemic heart diseases (Smith etal., 2000; Smith, 2000; Box 3.2-1).

3.2.4.3Evaluation

The Council estimates the global potential of modernbioenergy to be approximately 100EJ per year, madeup of 20 per cent from the utilization of agriculturalwaste products and approximately 40 per cent eachfrom forestry waste products and energy crops. Suchan expansion could only be achieved over severaldecades (Table 4.4-1).The long-term potential of tra-ditional biomass utilization is approximately 5EJ per


year. The Council’s estimate places stronger empha-sis on the sustainability of biomass utilization thancomparable studies, e.g. by avoiding the conversionof natural ecosystems to cultivate energy crops, andensuring an adequate return of nutrients to wood-land and farmland soils.The figures are therefore sig-nificantly lower than other current potential esti-mates, such as those presented by IPCC (2001c) orFischer and Schrattenholzer (2001).

3.2.5Wind energy

3.2.5.1Potential

For calculating the onshore and offshore wind energypotential, it is assumed that advanced multi-mega-watt wind energy converters are used (Fig. 3.2-2).The

Table 3.2-10Health threats duringdifferent stages of thebiomass fuel cycle. Corpulmonale: right ventricularfailure due to chronicpulmonary disease.Source: WHO, 2002a, c

Fuel cycle stage Potential health effects

ProductionDung as fuelCharcoal

InfectionsCarbon monoxide poisoning,burns, traumas

Collection of fuel Reduced child careLess time for food preparationPoorer family nutrition

CombustionSmoke (acute effects)

Smoke (chronic effects)

Toxic gases (e. g. carbon monoxide)

Heat

Inflammation of the conjunctivaIrritation/inflammation of the upper respiratory tractAcute respiratory tract infectionsPositive effect: deterrent for insects, spiders, etc.

Lung cancerChronic obstructive pulmonary diseases, chronic bronchitisTuberculosisCor pulmonale

PoisoningFoetus: low birth weight, damage

Burns (acute effect)Cataract (chronic effect)

Box 3.2-1

Biomass stoves cause disease: The example ofIndia

Three-quarters of households in India (approximately 650million people) depend on biomass, which meets 85–90 percent of the energy demand. Due to inadequate combustiontechnology, this energy source represents a significanthealth threat from emissions, mainly for women and chil-dren. In India, the health risks due to indoor air pollutionare significantly greater than the risks due to outdoor pol-lution, even in large cities (Fig. 3.2-1 and Section 4.3.2.7).According to estimates, approximately 500,000 women andchildren under 5 die early due to the utilization of solidfuels in households.This is equivalent to 5–6 per cent of thenational disease figures and therefore exceeds the muchmore frequently mentioned risks of smoking or malaria.

In India, government and private programmes supportthe introduction of improved stoves. It is estimated that 7.6million efficient stoves were used in households in 1992.

Sources: Terivision, 2002; Smith, 2000; UNDP et al., 2000;Murray and Lopez, 1996.

Acute infections (11.8)

COPD (0.54)

Lung cancer (0.01)

Tuberculosis (1.85)

Asthma (0.46)

IHD (1.33)

Figure 3.2-1Estimated distribution of annual health impact, expressedin DALYs (Disability Adjusted Life Years), attributable toindoor air pollution caused by cooking in India. COPDchronic obstructive pulmonary diseases; IHD ischaemicheart diseases (e.g. heart attack).Source: Smith, 2000


conversion potential was calculated based on windspeeds interpolated from meteorological data for theappropriate hub height. Average values over a 14-year period were used (1979–1992). However, inaddition to the conversion potential, further limita-tions have to be considered for calculating the globaltechnological potential (Box 3.1-1). Urban areas, for-est areas, wetlands, nature reserves, glaciers and sanddunes, for example, were excluded from the calcula-tion. Agriculture, on the other hand, was notregarded as competition for wind energy in terms ofland use. However, the installation of wind powerplants may be prohibited by the prevailing wind con-ditions due to the topology (e.g. ravines, basins) orthe slope of the terrain (problem with foundations).Furthermore, certain minimum distances to settle-ments, for example, must be adhered ,too. Sea depthsof more than 40m are currently not considered to besuitable for offshore installations. The averageannual ice coverage of the sea and a regionally vary-ing minimum distance from the coast (0–12 nauticalmiles) were also taken into account. For both off-shore and onshore applications, local exclusion crite-ria (smaller nature reserves, infrastructure surfaces,military areas, etc.) were accounted for through cor-rection factors derived from the respective popula-

tion density. Taking account of these, the global tech-nological potential for onshore and offshore installa-tions was calculated as 1,000EJ per year.The Councilconsiders 10–15 per cent of this technological poten-tial to be realizable in a sustainable fashion, and pro-poses a figure of approximately 140EJ per year as thecontribution from wind energy for a sustainableenergy supply that is achievable in the long term.


Wind power plants convert the kinetic energy con-tained in moving air into mechanical rotation energyand subsequently into electricity. Theoretically, amaximum of just under 60 per cent of the power con-tained in the wind can be extracted (Dwinnell, 1949).

The global market for wind energy plants is cur-rently structured into two fundamentally differentareas of application: While in Asia tens of thousandsof very small, decentralized systems are used as bat-tery charging stations, large, grid-connected turbinesare more significant globally from a quantitative andeconomic point of view.

Conversion potential [W/m2]

Wind energy

0 1.5 2.5 3.5 4.5 5.50.5

Enlarged map section showing Europe

Figure 3.2-2Global distribution of the conversion potential of onshore and offshore wind energy (in the latter case up to a depth of 40 m).The conversion potential was derived from the theoretical potential, based on the predicted annual efficiency of a multi-megawatt wind energy converter in 2050 (see Box 3.1-1). Economic and land use restrictions were not considered. Theresolution of the calculation was 0.5*0.5°, approximately corresponding to 50*50km.Source: Kronshage and Trieb, 2002


In contrast to traditional windmills that operateaccording to the resistance principle, modern rotorsutilize the lift principle (similar to aeroplane wings).In addition to the rotor, large systems essentially con-sist of a generator and a tower. Different systemdesigns have been proposed over the years, althoughhorizontal three-blade models mounted on a towermade of steel tube have now become generallyaccepted. Usually, a mechanical gearbox is installedbetween the rotor axis and the generator for adjust-ing the rotor speed to the required generator speed,although more recently gearless generator technol-ogy has become established on the market.The ratedpower of grid-connected systems has increased fromtypically 30kW to up to 3MW over the last 30 years,with 5MW versions being envisaged for offshoreapplications.

Due to fluctuating wind speeds, the averageannual output of wind turbines is only between 20and 25 per cent of the rated power (more than 30 percent for offshore installations). In general, the powercontained in the wind is proportional to the cube ofthe wind speed. Modern systems start producingenergy at a wind speed of approximately 3m/s. Gov-erning sets in at wind speeds around 25m/s in orderto avoid damage to the systems. Since the averagewind speed at rotor height is an important parameterfor the yield from wind power plants, it has significantinfluence on the costs of electricity production. Tak-ing account of operation and maintenance costs, gen-eration costs are currently between €-cents 5.5 and13 per kilowatt hour at appropriate locations in Ger-many (BMU, 2002b).

Good onshore locations may become scarce withincreasing utilization of wind energy, so that offshorewind parks are now being proposed, with the firstsuch installations already in operation. While in theNorth Sea the number of full-load equivalent operat-ing hours can increase to up to 4000 hours per year,the installation costs also approximately double. Themain motivation for the installation of offshoreapplications is therefore not a possible price advan-tage, but the opening up of suitable new locations.For Germany, the installed capacity that could berealized largely conflict-free is estimated to be up to25GW.

During a 20-year service life, a wind power plantcan generate approximately 80 times the amount ofenergy that is currently required for its manufacture,utilization and disposal, depending on the location(Bundesverband Windenergie, 2001). The systemscan thus recover the energy required for their con-struction in approximately three months. Like formany renewables, no greenhouse gas emissions ariseduring system operating, but due to the energy

required for manufacture and disposal. Average CO2

emissions per kilowatt hour of wind-generated elec-tricity depend on the electricity mix in the country ofmanufacture and on the system. The more advancedthe transformation process towards a sustainableenergy supply system, the lower the specific CO2 val-ues. No explicit values are therefore provided.


The following issues occasionally lead to reservationsvis-à-vis wind energy due to possible environmentaland social impacts:• Land use: On the one hand, wind energy is cur-

rently one of the most economic forms of renew-able energy generation, on the other hand it is alsocharacterized by comparatively low energy densi-ties. Large areas of land are therefore required togenerate significant quantities of energy, typically0.06–0.08km2 per megawatt (EUREC Agency,2002). However, there is no reason why land onwhich wind power plants have been installedshould not continue to be used for agriculturalpurposes, so that the actual land use is only about1 per cent of the above figure (e.g. for foundations,access roads) and is thus very small.

• Noise pollution: Wind power plants generatemechanical and aerodynamic noise. Both compo-nents have already been reduced successfullythrough modern technology (acoustically opti-mized rotor profile, direct drive generators, mod-erate speeds). Provided adequate distances to set-tlements are maintained, noise emissions frommodern wind power plants are therefore no longera problem.

• Visual intrusion: Occasionally, wind power plantsare regarded as visually intrusive. While this sub-jective effect is difficult to quantify, it is neverthe-less one of the main obstacles for the expansion ofwind energy. Shadows and reflections are alsoregarded as visual interference. However, theseeffects can largely be avoided through carefulselection of the location and through appropriatetechnology (e.g. matt finish).

• Nature conservation and offshore systems: Theenvironmental effects of offshore wind energy uti-lization are currently the subject of intensive eco-logical research (BMU, 2002c).Among the factorsbeing examined are the location and size of windparks, noise emissions and the effects of energytransmission on birds, marine mammals and fish.Competing utilization of the sea by, for example,the fishing industry, the military, the steel industryand shipping also have to be considered.


3.2.5.4Evaluation

Electricity from wind energy can already be suppliedcost-effectively under current political boundaryconditions. The environmental relevance of the tech-nology (resource use, greenhouse gas emissions,material recycling) is regarded as positive.The Coun-cil therefore advocates further speedy expansion ofthis renewable energy source. Only a certain propor-tion of the calculated global technological potentialcan be regarded as sustainable. The Council recom-mends a figure of approximately 140EJ per year asthe contribution from wind energy achievable in thelong term for a sustainable energy supply.

3.2.6Solar energy

3.2.6.1Potential

The solar energy potential of four different technolo-gies was calculated:• Centralized solar thermal power plants with opti-

cal concentration (Fig. 3.2-3),• Centralized photovoltaic power plants without

optical concentration (Fig. 3.2-4),• Decentralized photovoltaic modules without opti-

cal concentration (Fig. 3.2-5),• Thermal solar collectors (Fig. 3.2-6).Without specifying a particular technology, photo-voltaic systems were assumed to have an annual sys-tem efficiency of 25 per cent by 2050. For solar ther-mal systems, the potential for combined heat andpower was not considered. For solar collectors forheat generation, an annual efficiency of 40 per cent isregarded as achievable by 2050. The technologicalpotential was calculated based on this conversionpotential, taking account of land and surface userestrictions (see Box 3.1-1 for a definition of the dif-ferent types of potential). Each of the conversiontechnologies considered yields values that corre-spond to multiples of all future projections of humanenergy use for the respective sectors. Against thisbackground, the global technological potential canbe regarded as practically unlimited.The annual flowof solar energy is distributed relatively uniformlyover the Earth’s more densely populated regions.This advantageous characteristic is reflected in themaps showing the potential of technologies withoutoptical concentration. However, considerable sea-sonal fluctuations occur in higher latitudes, whichhave to be compensated by other technologies.


PhotovoltaicsPhotovoltaic cells (‘solar cells’) convert light directlyinto electric energy. Solar cells currently consist ofseveral layers of different semiconductor materials.They are electrically connected in series and encap-sulated within modules. In this way, technologicallymanageable electrical voltages are generated. Theencapsulation protects the semiconductor elementsfrom environmental influences and guarantees longservice life. Photovoltaic modules can be connectedto module arrays and connected to consumer loadsor to the grid via suitable electronics. A storage ele-ment (e.g. rechargeable battery) is usually integratedin systems that are not connected to the grid.

Since the development of the first solar cell in1954, the dominant raw material for solar cell pro-duction has been crystalline silicon. Due to therequired high purity of the material, solar cells at cur-rent cell thicknesses are rather expensive. Numerousalternative technologies are being developed withthe aim of significant reductions in material use andcosts (Luther et al., 2003; Table 3.2-11).

For long-term global strategies, in addition to effi-ciency and price, the availability of raw materialsshould also be considered in the assessment of solarcell technologies. Silicon as the second most frequentelement of the Earth’s crust is non-critical, whileother elements such as indium and tellurium, whichare used in some thin film technologies, couldbecome scarce at high production rates.

A further consideration is the energy paybackperiod of the systems. In central Europe, moderngrid-connected systems recover the energy requiredfor their manufacture within approximately threeyears. This period is short compared with the con-firmed technological lifetime of the systems of morethan 20 years (Pehnt et al., 2003). It should be notedthat today’s systems are not optimized in terms ofenergy payback period.

Like for wind energy, any greenhouse gas emis-sions that may occur are not generated during theoperation of photovoltaic systems, but during manu-facture and disposal. The average CO2 emissions perkilowatt hour of solar electricity therefore depend onthe electricity mix within the country of manufactureof the system.

Since solar cells are connected to modules, whichin turn can be combined to systems of any size, pho-tovoltaics offers a wide range of possible applica-tions. Remote micro-systems typically supply sometens of watts, large, grid-connected power plants canbe designed for the megawatt range. While photo-voltaic systems in remote rural areas are today usu-


Conversion potential per land surface area [W/m2]

Centralizedsolar thermal power plants

0 25 40 55 70 8510

Conversion potential per land surface area [W/m2]

Centralizedphotovoltaic power plants

0 25 40 55 70 8510

Figure 3.2-3Global distribution of area-specific conversion potential for energy conversion via solar thermal power plants with linearoptical concentration. The specified power densities relate to the surface area used. Like for photovoltaic power plants, theannual system efficiencies, defined according to the current status, depend on the latitude, since the relative active collectorarea decreases towards the poles due to shading. Combined heat and power was not considered. The resolution of thecalculation was 0.5*0.5°, approximately corresponding to 50*50km. See Box 3.1-1 for a definition of the different types ofpotential.Source: Kronshage and Trieb, 2002

Figure 3.2-4Global distribution of area-specific conversion potential for energy conversion via centralized photovoltaic power plantswithout optical concentration. The specified power densities relate to the surface area used. Like for solar thermal powerplants, the annual system efficiencies, defined according to the status in 2050, depend on the latitude, since the relative activemodule area decreases towards the poles due to shading. The resolution of the calculation was 0.5*0.5°, approximatelycorresponding to 50*50km. See Box 3.1-1 for a definition of the different types of potential.Sources: Efficiency estimation: WBGU; technical implementation of the map: Kronshage and Trieb, 2002


Conversion potential per module area [W/m2]

Decentralizedphotovoltaic systems

0 25 40 55 70 8510

Conversion potential per collector area [W/m2]

Thermalsolar collectors

0 50 70 90 110 13030

Figure 3.2-5Global distribution of the area-specific conversion potential for decentralized solar-electric energy conversion via photovoltaicmodules without optical concentration. The specified power densities relate to the tilted module area, not to the horizontalground surface. The maps were based on the year 2050, with assumed annual system efficiencies of 25 per cent. The resolutionof the calculation was 0.5*0.5°, approximately corresponding to 50*50km. See Box 3.1-1 for a definition of the different typesof potential.Sources: Efficiency estimation: WBGU; technical implementation of the map: Kronshage and Trieb, 2002

Figure 3.2-6Global distribution of the area-specific conversion potential for decentralized energy conversion via thermal solar collectors.The specified power densities relate to the tilted collector area, not to the horizontal ground surface. The maps were based onthe year 2050, with assumed annual system efficiencies of 40 per cent. The resolution of the calculation was 0.5*0.5°,approximately corresponding to 50*50km. See Box 3.1-1 for a definition of the different types of potential.Source: Kronshage and Trieb, 2002

ally already more cost-effective than the alternativeof expanding of the central grid, in situations whereextensive grids already exist, such systems are farfrom competitive compared with large conventionalpower plants. As part of the exemplary Council sce-nario (Chapter 4), installation prices for the modulesand the associated system components of €1 per wattare regarded as realistic for grid-connected systemsin 2020. This is only approximately one-third oftoday’s investment costs. For 2020, this would resultin global average electricity costs of approximately€-cent 12 per kilowatt hour.The costs depend on thegeographical latitude – in tropical arid regions thecosts are only approximately half compared withEurope. In 2020, crystalline silicon is expected to bemass-produced and reach an annual capacity in theorder of 10GW. By then, mass production should alsohave been achieved for various thin film technologies(Lux-Steiner and Willeke, 2001). In future, differentsolar cell technologies will continue to be used in par-allel, with the specific choice being determined by thecosts, the application area, the regional field of appli-cation and the technological availability.

In the medium and long term, further technologiesthat are currently being developed in the laboratorymay contribute to cost reduction and tapping of newareas of application:• Photovoltaic power plants with optical concentra-

tion and capacities from several 100kW to MWcombine cost-effective concentrators (e.g. Fresnellenses) with highly efficient solar cells (Fig. 3.2-7).

• Solar cells based on dyes or organic compounds,for example.

Basic research is presently also exploring visionaryphotovoltaic concepts, the potential of which is diffi-cult to estimate at this stage (Chapter 6). Currently

achievable efficiencies of typical technologies aresummarized in Table 3.2-12.

Solar thermal power generationIn solar thermal power plants, direct sunlight is con-centrated onto an absorber via optical elements. Theabsorbed radiation energy heats a heat transfermedium. This heat energy can subsequently be usedfor driving largely conventional engines such assteam turbines or Stirling motors. Solar thermalpower plants are therefore closely associated withclassic power plant technology, with solar energyreplacing fossil fuels. All solar thermal systems built

Sun

Fresnellens

Solar cell

Heat sink Schematic diagramof possible configuration


Figure 3.2-7Schematic diagram of future solar power plants based onphotovoltaic systems with optical concentration. The solarradiation is concentrated onto a very small solar cell area viacost-effective lenses (left). The concentration factor couldreach a value of 1,000. The module systems have to track thesun (right). It is expected that any additional costs for theoptical components and the mechanical tracking system willbe compensated through savings and efficiency increases forthe semiconductor solar cells. Power plants using thistechnology could already be used in the near future forsupplying peak electricity (caused by, for example, electriccooling systems).Source: WBGU

Table 3.2-11Future development ofphotovoltaics. Due to thehigh modularity of thistechnology, applicationsmeeting a variety ofdemands can be realized. Itis therefore expected thatthe technological variety ofphotovoltaic electricitygeneration will persist. Theenergy costs are essentiallyinversely proportional to theannual insolation (Fig. 3.2-3).Source: WBGU

2000 2020 2050

Main, market-dominatingtechnologies

Crystalline siliconsolar cells

Crystalline Si andthin film solar cells.Tandem solar cellsfor PV powerplants with opticalconcentration.Organic and dyesolar cells

Thin film solar cells(incl. Si), tandemsolar cells, organicand dye solar cells,new concepts

Modul efficiency [%] 14–15 Si wafer module:18–20Thin film: 15Organic, etc.: 10Tandem: 40

no info available

Costs [€/kWh] ~0.6 (Location with 1000full load hours)

~0.14 (Location with 1300full load hours)

~0.06 (Location with 1300full load hours)

Capacity range W–MW W–MW W–MW


to date are based on strong concentration of sunlight,so that their application only makes sense in regionswith a high ratio of direct solar radiation. Three dif-ferent technologies have already been realized:• Parabolic trough power plants: Solar radiation is

focussed onto tubular light absorbers, usually con-taining special oil as heat transfer medium, in lin-ear reflectors with parabolic shape that track thesun around one axis. The oil is heated to approxi-mately 350–400°C and subsequently generatessteam in a heat exchanger for a largely conven-tional steam turbine. Such systems can bedesigned for relatively large capacities, currentlybetween 30 and 80MW. In California, such powerplants have already been supplying electricity formore than 10 years, with a total installed capacity

of approximately 350MW. Further significant costreductions could be achieved through directvaporization of water within the absorber tubes(Fig. 3.2-8).

• Solar power towers: A large array of movable mir-rors focuses the sunlight onto a receiver installedon a tower, where the heat transfer medium(water, salt, air) is heated to 500–1,000°C. Due tothe high temperatures, the energy can, in principle,be coupled directly into a gas turbine or a moderncombined cycle plant. Capacities of around200MW have been proposed for solar power tow-ers, which is approximately 10 times the capacityof current pilot plants.

• Parabolic dish power plants: This system uses par-abolic mirrors to track the sun. A heat transfermedium at the focus of the mirror can be heated to600–1,200°C. Such systems are usually rathersmall (some 10kW of nominal capacity). Theytherefore lend themselves for decentralized appli-cations. Engines are used to convert the heatenergy into mechanical energy and subsequentlyinto electrical energy. The technology is currentlyat an experimental stage.

In general, the aim is to design systems with highoperating temperatures, due to the higher efficien-cies that can thus be achieved during the conversionof heat into electricity in thermodynamic machines(Table 3.2-13).

Medium-term heat storage (hours, days) can sig-nificantly extend the scope for solar thermal powerplant technology. Using melted salts as a storagemedium, solar thermal systems have already beenrealized that generate electricity around the clockwithout conventional auxiliary heat supply.

The close relationship between solar thermal sys-tems and conventional power plants enables the inte-gration of fossil heating and solar thermal technologyin so-called hybrid power plants. For regions withhigh incident solar radiation, the extension of exist-

Table 3.2-12Efficiencies of solar cells inthe laboratory and in flatmodules. The figures inbrackets relate to valuesfrom pilot production orinitial commercialproduction. W wafer techno-logy, T thin film technology.Sources: Green et al., 2002;UNDP et al., 2000; Hein etal., 2001; Hebling et al., 1997

Cell technology W/T Efficiency in the laboratory [%]

Efficiency of themodule [%]

Monocrystalline silicon W 24.7 13–15Multicrystalline silicon W 19.8 12–14Amorphous silicon (incl.Si-Ge-tandem) T 13.5 6–9

Copper indium/galliumdiselenid T 18.9 (8–11)

Cadmium telluride T 16.5 (7–10)III-V concentrator cells(incl. tandem and triple) W and T 33.5 (25)

Crystalline thin filmsilicon cell T 19.2

Organic and dyesolar cells T 2–11

~

<

Turbine

Generator

Pump Waste heat

Thermal storewarm

AbsorberSun

coldCondenser

Figure 3.2-8Schematic diagram of a future solar thermal trough powerplant. In this example, the solar array is arranged as a Fresnelconcentrator, with the required parabolic shape beingrealized as a segmented reflector array made up of smallerflat glass mirrors. In contrast to systems commonly usedtoday, it is likely that in future water will be used as the heattransfer medium and evaporated directly in the absorbertubes. Such systems are expected to achieve lower costs andto avoid problems with thermal oils. The thermal store shownin the diagram is intended to enable operation of the powerplant even after sunset.Source: WBGU

ing fossil power plants with a solar thermal compo-nent is seen as an important short and medium termmarket for renewables.

Another possibility is the combination of solarthermal power plants with thermal biomass utiliza-tion. This would enable continuous operation ofmulti-megawatt power plants exclusively based onrenewables.

Solar thermal power plants can also be operatedin combined heat and power mode. An example iselectricity generation and the simultaneous extrac-tion of potable water through sea water desalination(e.g. via thermal distillation processes). Solar effi-ciencies of up to 85 per cent are possible in combinedheat and power mode.

In the long term, the concepts of parabolic troughsor solar power towers appear more promising thansmaller parabolic dish systems, since compared withphotovoltaics the latter have the disadvantages oftwo mechanical systems that are subject to wear andtear (optical alignment of the parabolic dish, thermo-dynamic machine). In sunny regions, parabolictroughs and solar power towers are currently by farthe most cost-effective option for generating electric-ity using solar energy in large power plants. Due totheir different features, it is expected that both tech-nology options will be used widely, depending on theunderlying conditions (size of power plant, infra-structure, local electricity demand, options for thetransmission of electricity over long distances, inci-dent solar radiation, etc.).

Solar heatSolar collectors convert solar radiation into heat.Typical applications are swimming pools, domestic orindustrial hot water, space heating, or process heat,with the required temperature increasing in theabove order. The higher the required temperaturelevel, the more complex the collector, since moreeffort is required to avoid heat losses.A distinction ismade between the following basic types of thermalcollector:

• Collectors with unglazed absorber: In this simplestform of solar collector, a heat transfer medium(e.g. water) flows through black plastic mats with-out cover. High heat losses occur through convec-tion and conduction, so that only moderate tem-peratures can be achieved. Due to their low costs,such collectors have become established for swim-ming pool heating.

• Flat plate collectors: In this collector type, heatlosses are usually reduced by two measures. Onthe side facing the sun, the absorber is coveredwith a glass pane, and at the back it is insulated. Afurther option is the use of optically selectiveabsorbers with strong absorption characteristics inthe visible and near infra-red spectral range, butlittle emission in the thermal infra-red range.Compared with unglazed absorbers, significantlyhigher temperatures can thus be achieved. Flatplate collectors are currently predominantly usedfor heating domestic or industrial water. In Ger-many, typically approximately 60 per cent of therelated annual heat demand can be covered by thesolar contribution. While demand can usually bemet fully in the summer, in the winter the watertends to be pre-warmed by the collector and sub-sequently heated by conventional means.Thermalcollectors are also increasingly used in so-calledcombination systems to support space heating.

• Evacuated tube collectors: With this type of collec-tor, vacuum insulation almost completely elimi-nates heat losses through conduction and convec-tion from the absorbers, which are located withinglass tubes. Such systems can achieve good effi-ciencies and high temperatures, even in winter.This type of collector is particularly suitable forhigher geographical latitudes, winter conditions orprocess heat applications. Due to the hermeticencapsulation of the absorber, they are also begin-ning to be widely used to heat domestic or indus-trial water in countries with less developed tech-nological infrastructure.


2000 2020 2050

Main technologies Parabolictroughs

Parabolic troughsand solar powertower

Parabolic troughsand solar powertower

Electrical efficiency [%] 14 20–25 25–30

Costs [€/kWh] 0.14–0.2 ~0.07–0.14 ~0.06

Features Integrated heat store for severalhours

Integrated heatstore for severalhours

Capacity range Several tens of MW

Several tens up to100MW

Several tens up to100MW

Table 3.2-13Efficiencies, costs, capacityrange and special features ofsolar thermal power plantsin pure solar operation. Theterm ‘parabolic troughs’ alsoincludes systems based onFresnel collectors (Fig. 3.2-8).The efficiency figures relateto the electrical annualsystem efficiencies peraperture area and per directvertical insolation on theconverter surface (‘directnormal incidence’, DNI)Source: WBGU


The heat energy collected in a solar collector systemis usually transferred to a heat store, so that differ-ences in heat demand and supply can be compen-sated over several days. Seasonal storage systemsthat enable heat collected in the summer months tobe utilized during the winter have also been testedsuccessfully in pilot plants. Since heat losses increasewith the ratio of surface to volume, seasonal heatstores (as far as they are based on the utilization ofsensible heat) should be comparatively large, whichnecessitates their integration into a local district heatnetwork.

In principle, the modularity of solar collectorsenables them to be used in any output range that maybe required. For a typical location in Germany, thecosts for heat generated in this way are currently €-cents 3–7 per megajoule (BMU, 2002b), for sunnierlocations costs are correspondingly lower. The mate-rials used in thermal solar collectors are usually envi-ronmentally compatible and can moreover be almostcompletely recycled.

Cooling with solar energyCooling and air-conditioning of buildings are idealapplications for solar energy, since demand largelycoincides with the availability of solar energy. Twotechniques are available: On the one hand, solar elec-tricity can be used to operate a conventional com-pression-type refrigerating machine. On the otherhand, solar heat can be used to drive thermodynamiccooling processes via sorption or adsorption tech-niques. Hybrid cooling systems utilizing solar andconventional energy can save more than half the pri-mary energy required for the operation of a conven-tional system.

As space cooling is associated with significantenergy consumption for newly industrializing anddeveloping countries in lower geographical latitudes,solar cooling technologies are an interesting alterna-tive: Furthermore, solar cooling technologies are wellsuited for the usually decentralized energy structuresin these countries. In future, the significance of cool-ing and air-conditioning technologies utilizing solarheat may increase considerably for many areas ofapplication and world regions.


Possible negative environmental effects of photo-voltaic energy technology result from the manufac-turing process and the materials used in the endproduct.While in principle the environmental impactof the manufacturing process can be reduced to lowlevels by implementing appropriate measures and

technologies, environmental risks cannot be ruledout completely for some thin film technologies. Inprinciple, toxic substances could be released duringaccidents (e.g. fires) or in the event of damage to thesolar modules. Safe recycling is an important factorfor the application of these technologies. No suchrisks exist if silicon is used for solar cells. Solar ther-mal power plants are benign, as long as environment-friendly heat transfer media are used. The same istrue for solar collectors. Moreover, the potentialmaps in Chapter 4 show that supplying Europe withsolar energy through energy imports from neigh-bouring world regions with high incident solar radia-tion is easier to realize than an autonomous energysupply system (Fig. 4.4-5). The creation of an associ-ated infrastructure in the Maghreb countries and inthe Middle East, including transmission cables toEurope, would be significant from a strategic policyangle as well as from a development angle.

3.2.6.4Evaluation

Solar energy can be used as a source for solar elec-tricity, hot water, space heating and cooling. Suitabletechnologies are available for all areas of application,although in some cases they still have to go throughcost-reduction processes, and further improvementsare required through research and developmentefforts. A significant expansion rate should be theaim for the medium term, so that reasonable cost-efficient solar technologies are available, once theexpansion of other renewable forms of energyreaches the limits of their sustainable potential. Incontrast to all other forms of renewables, based on allfuture projections of human energy consumptionboth the technological and the sustainable potentialof solar energy is practically unlimited.

3.2.7Geothermal energy

3.2.7.1Potential

The energy source for near-surface applications ofthe ground heat, e.g. in heat pumps, is the sun. In con-trast, systems that utilize the heat contained in lowerstrata tap into the Earth’s heat sources, i.e. the ther-mal energy dating back to the time our planet wasformed, but mainly the energy from the decay ofradioactive elements. The very high temperatures inthe Earth’s interior (probably around 5,000°C) cause


a continuous heat flow of approximately 0.1W persquare metre towards the surface through theEarth’s crust. In regions with geothermal anomalies,e.g. in volcanic regions, high temperatures occur closeto the surface of the Earth. Below 100°C, this geo-thermal heat is only suitable for heating purposes,above 100°C it may also be used for power genera-tion.

It is difficult to make general statements about thepotential: While in principle near-surface utilizationof geothermal heat is possible anywhere, so-calledhydrothermal utilization is bound to the occurrenceof hot water. The utilization of the heat contained indry, deep rock is still under development.

According to estimates, within the next 10–20years economic reserves will reach the level of thecurrent global primary energy use (UNDP et al.,2000). However, in order to avoid global utilizationof geothermal heat becoming unsustainable, theamount of geothermal heat being extracted shouldbe limited to the Earth’s natural heat flow. Thepotential available regionally is often unknown. Dueto open questions regarding the technological imple-mentation and various sustainability aspects of uti-lization (e.g. unresolved disposal of large quantitiesof waste heat due to lower conversion efficiencies inlow-temperature processes), the Council hasassumed a realistic and sustainable potential of 30EJper year by 2100.


Deep, hot rock or hot sedimentsIn the so-called hot dry rock technique, cold water ispressed through deep boreholes, and heated water isextracted. For the heat exchange with water, dry hotrock strata with cracks and fissures are required.With this technique, comparatively high tempera-tures of approximately 100–180°C can be achieved.At other locations, water is pressed through the poresof hot sedimentary rock, although this technique islimited to temperatures of around 100°C.

In both cases, the extracted heat can be fed intolocal or district heat networks, or used as process heatin industry. The higher the temperature, the moreefficient the electricity generation.While at tempera-tures above 150°C, steam can be used directly forelectricity generation in appropriately adapted con-ventional steam turbines, so-called binary systemswill usually have to be used for lower temperatures.In these systems, the heat energy contained in thewater is transferred to another liquid within a heatexchanger. Depending on the temperature of thegeothermal heat, such systems only reach electrical

efficiencies of 10–16 per cent, at temperatures ofabout 80°C even less (BMU, 2002b). Significantquantities of waste heat are thus generated, whichcan be utilized locally or has to be disposed of. Cur-rent cost estimates for electricity generation varybetween €-cent 7–15 per kilowatt hour. Due to theconstancy of the geothermal heat flow, geothermalpower plants with capacities in the megawatt rangeare particularly suitable for base load operation.

Hydrothermal systemsIn contrast to the hot dry rock application, at otherlocations steam or hot water may already be presentin the ground, which can be extracted through bore-holes and used directly for heating or electricity pro-duction. The water should be returned to the samedepth via a second borehole in order to maintain thewater cycle, and to avoid the contamination of sur-face waters through the high mineral content of thewater extracted from the ground. At temperaturesbetween 40–120°C, geothermal heat from thermalaquifers has hitherto only been utilized for space andwater heating.

Near-surface geothermal heatThe key technology for utilizing near-surface geot-hermal heat is the heat pump. It transforms heat froma lower to a higher temperature level, consumingadditional energy in the process. Usually, geothermalheat in the 5–10°C temperature range is extractedfrom the ground through heat exchangers placed at adepth of 1–2m.

All heat pumps require high-quality energy fortheir operation, which must be taken into account offor their evaluation. The so-called coefficient of per-formance (COP), i.e. the ratio of useful energy (uti-lized heat energy) and energy used (e.g. electricity,gas), is used for this purpose. Since in conventionalpower plants only approximately one-third of theprimary energy is converted to electricity, a heatpump running on electricity at today’s energy mixshould have an annual COP of significantly morethan 3.6. With all other heat pumps, for which theenergy balance does not include waste heat losses atpower plants, a COP of 1.1 is adequate. Current pro-totypes and small versions of thermally driven heatpumps (natural gas) achieve annual COPs of 1.3.Electrically driven compression heat pumps achieveCOPs of more than 3.6.

In combination with heat pumps, the ground canbe used as a heat store, if the same systems are usedfor cooling/air conditioning in the summer. In thiscase, the waste heat generated during the coolingprocess is stored in the ground, thereby increasingthe temperature for heating operation during thewinter.

73Cogeneration 3.3


Hot water extracted through deep boreholes has tobe re-injected, since it not only contains minerals, butalso hydrogen sulphide, ammonia, nitrogen, heavymetals and carbon dioxide. Suitable technologyalready exists. For electricity generation with ther-modynamic machines based on volatile media, theorganic medium used should be non-toxic and nothave significant greenhouse potential. Due to the lowflow temperatures and low conversion efficiencies,large quantities of waste heat are generated locallyduring geothermal electricity generation, which haveto be disposed of.

For electric heat pumps, the total energy balancehas to be considered carefully. Low-temperature heatsources also have to be selected carefully: Strongcooling of ground water should be avoided, but theextraction of heat from rivers subjected to waste heatloads may in fact be ecologically sensible.

3.2.7.4Evaluation

Geothermal heat has large technological potential.In contrast to solar and wind energy, it is continu-ously available. The Council nevertheless estimatesthe sustainable potential by 2100 only very cautiouslyat 30EJ per year.

Geothermal heat from large depths at high tem-perature levels can be used for electricity generation,local and district heat networks, or a combination ofboth. On the other hand, only thermal applicationsare suitable for lower temperature levels. The Coun-cil recommends the further development of relevanttechnologies and the promotion of their more wide-spread use. Care needs to be taken that heat pumpsusing near-surface heat have adequate COPs.

3.2.8Other renewables

In addition to the technologies for utilizing renew-able energy sources described so far, for which large-scale application within a sustainable energy systemcan be assumed, first attempts are being made to con-vert renewable energy sources that are at an earlystage of development.

The marine energy sources of tidal and waveenergy fall into this category. Under certain geomor-phological conditions, where a flow of water isrestricted and thus accelerated, the velocity of thetidal water flows may be sufficient for energy gener-

ation purposes. Due to the significantly higher den-sity of water compared with air, much lower flowvelocities are required than for wind energy. Tidalflows with speeds as low as approximately 1m persecond appear to be suitable for utilization. In estu-aries and river mouths, the tidal amplitude can bemore than 2m and can be used for the operation ofturbines in tidal power plants.Wave energy is createdthrough the interactions of the surface of the sea andthe wind. The energy density increases with the dis-tance from the coast. The technological challenge istherefore to develop systems for locations at signifi-cant distance from coastlines. A variety of conceptshave already been proposed, some of which are beingtested.

In many processes of the chemical, petrochemicalor associated industries, fossil energy carriers are notonly used as raw materials for products, but are alsoutilized to some extent for energy generation. Inorder to decouple energy generation and the utiliza-tion of fossil energy carriers for non-energy purposes,the sun can take over the energy function directly inmany cases. For high-temperature processes, forexample, technological concepts can be used that aresimilar to those used in solar thermal power plants(Section 3.2.6.2).

Sunlight can also be used in photochemical andcatalytic applications, which are currently dominatedby artificial light sources. In principle, the photo-chemical synthesis of liquid energy carriers should bepossible. Other promising approaches for the futureutilization of solar energy are membrane systemsemploying processes similar to photosynthesis, orphotochemical and biological production of hydro-gen.

The research section of this report (Section. 6.3.1)addresses energy conversion concepts that the Coun-cil considers to be capable of developing into mar-ketable technologies over the next 10–20 years.Overall, the Council cautiously estimates the poten-tial of these emerging technologies at 30EJ per yearby 2100.

3.3Cogeneration

3.3.1Technology and efficiency potential

In combined heat and power (cogeneration) plants,fuels are fired not just to generate electricity but alsoto utilize heat that would otherwise go to waste. Thisheat can then be used for e.g. heating purposes. Inthis way, such plants attain a high degree of utiliza-


tion of the fuel employed, possibly up to 80 to 90 percent with well designed plants. Cogeneration is there-fore an important technology for conserving primaryenergy.

Cogeneration plants may be employed wherever,alongside electricity generation, there is a demandfor low-grade heat (up to around 120°C) or processheat (up to around 200°C). There is a wide selectionof cogeneration technologies available in a powerrange from 1kWe to several hundred MWe (Table 3.3-1). The electricity utilization factor today attain-able during cogeneration operation ranges from 15per cent for smaller steam turbines to 45 per cent inhigh efficiency engine-generator sets and, in future,this could climb to 60–65 per cent, for example incombination power plants employing fuel cells whenthis technology matures. The electricity-to-heat ratiovaries accordingly between 0.20 and 1.50 and, overthe long term, may even attain 2.50. High ratiosfavour the application of this technology, since thetrend is for heat demand to reduce relative to elec-tricity consumption at typical sites. Additionally,such plants will fare economically better, as usuallyrevenues from electricity are higher than from heat.

As fuel, fossil energy sources, like coal, oil or gas,may be fired but fuels from renewable sources and, infuture, even hydrogen may be employed. Steam tur-bines and Stirling engines may also fire solid fuels,like coal and wood, but all other technologies require

liquid or gaseous fuels, in some cases with high purityrequirements. For fuel cells, in addition hydrogenmust be won from fuels containing this element. Theactual energy transformation component is thereforeonly a part of the complete system that must alwaysbe considered as a whole in terms of efficiencies andcosts.

As a rule, cogeneration plants are more efficient intheir use of primary energy than if electricity anduseful heat were to be furnished separately. Theenergy savings that can be realistically attained andthe resulting cut in CO2 emissions depend verygreatly on the size and type of the cogenerationplant, its design parameters, reference system andfuels fired. Typical primary energy savings withcogeneration plants are 15–30 per cent, correspond-ing to a CO2 abatement of up to 50 per cent, whencomparing natural gas-fired cogeneration with sepa-rate generation of electricity and heat from coal.When the avoided additional heat generation is cred-ited, typical specific CO2 emissions of cogenerationplants firing natural gas are 0.19 to 0.25kg per kilo-watt hourelectrical (Nitsch, 2002).The higher the overalldegree of utilization and electricity-to-heat ratio of acogeneration plant, the greater its energy and eco-logical advantages; consequently, over the longerterm, relevant technologies – combined cycle, fuelcells and high efficiency engines – are more advanta-geous.

Table 3.3-1Overview of technical data of systems with full cogeneration: figures in brackets are the maximum electricity-to-heat ratiosthat will be attainable in future. cogen cogeneration, PAFC phosphoric acid fuel cell, PEMFC proton exchanger membrane fuelcell, MCFC molten carbonate fuel cell, SOFC ceramic solid oxide fuel cell.Sources: Nitsch, 2002, and WBGU

Technologies Capacity

[MW]

Electricalefficiency[%]

Electricity-to-heat ratio

Technology status and potential

Steam turbine cogen plant 1–150 15–35 0.20–0.50 Mature

Gas turbine cogen plant 0.5–100 25–35 (40) 0.30–0.60 Still development potential

Combined cycle cogen plant 20–300 40–55 (60) 0.60–1.20 Still development potential

Small scale engine cogenunits

Spark-ignitionDiesel

0.005–200.005–10.05–20

25–45 (50)25–37 (45)35–45 (50)

0.40–1.000.40–0.800.60–1.00

Still development potential,especially for small outputs

Micro-gas turbines 0.02–0.5 20–30 (35) 0.30–0.50 Still significant development potential,market penetration commencing

Stirling engines 0.001–0.05 30–35 (45) 0.30–0.60 Still development potential,market penetration commencing

Fuel cellsPAFCPEMFCMCFCSOFC

0.001–200.1–0.20.001–0.20.1–100.001–20

30–50 (60)35–4030–40 (50)45–50 (55)40–45 (60)

0.80–1.500.80–1.000.80–1.001.00–1.401.00–1.50

Still major development potential

75Cogeneration 3.3

3.3.2Range of applications

In principle, by applying cogeneration it is possible tomeet a very high share of the demand for space heat-ing and hot water, amounting to some 65 per cent,and of the demand for industrial process heat,amounting to up to 80 per cent of medium-gradeheat. But cogeneration technologies may also beapplied for cooling, air drying, air-conditioning andseawater desalination, for example by solar-thermalpower plants in countries with high insolation.

In urban areas, the possibilities for cogenerationrange from supplying single- and multi-familyhouses, office blocks and commercial buildingsthrough groups of buildings up to entire housingestates and industrial or commercial zones. Addi-tional options for cogeneration result from moreeffective utilization of existing district heating supplynetworks and replacing heating plants by cogenera-tion plants.

In industry, the focus is on modernization of ‘tra-ditional’ cogeneration, for example replacement ofsteam and simple cycle gas turbines by IC engine,combined cycle and, over the medium term, fuel cellplants, but also on expansion of process heat genera-tion. Decentralized cogeneration plants, like ICengines, gas and micro-gas turbines, Stirling enginesand fuel cells, are undergoing rapid technical andeconomic development, which means that the rangeof application for cogeneration is steadily growing.

At present, cogeneration in Germany supplies165TWh heat per year, or 11 per cent of the total heatdemand, and 72TWh electricity per year, or 13 percent of total electricity generation, at an electricity-to-heat ratio of 0.43. Currently, it prevents CO2 emis-sions of around 30 million tonnes per year comparedto the separate generation of electricity and heat.This means that Germany is a mid-field runneramong European countries. Outside of Europe,cogeneration is rather more restricted in application.But the theoretical potential of cogeneration in Ger-many at around 500TWhe electricity, or some110GWe of installed capacity, is approximately seventimes today’s share, and thus corresponds to virtuallythe entire present electricity generation. For this cal-culation, an appreciable reduction in heat demanddown to some 60 per cent of today’s level and con-tinued evolution of cogeneration technologies with acorresponding increase in the average electricity-to-heat ratio to roughly 1.0 has been assumed (Nitsch,2002). By 2030, a relatively certain total potential ofaround 200TWh cogeneration electricity per yearand 280TWh useful heat per year may be expected,corresponding therefore to a three-fold increase of

the current level, with an average electricity-to-heatratio of 0.7. To attain this, about 20,000MWe of addi-tional cogeneration capacity would be required, ofwhich some two-thirds would fall on decentralizedplants (rated less than 10MWe).The mobilizable CO2

abatement potential is around 80 million tonnes CO2

per year, and corresponds to roughly 7 per cent ofGerman emissions in the reference year, 1990.

3.3.3Economic performance

From the aspect of provision of electricity, a cogener-ation plant is financially viable if the additionalexpenditures for extraction of heat and reduced elec-tricity generation in comparison to conventionalpower plants are at the very least offset by revenuesfrom heat sales. For today’s larger turbine- andengine-based cogeneration plants, the electricity gen-eration costs so determined are €-cent 3.5 per kilo-watt hourelectrical and for smaller plants €-cent 6 perkilowatt hourelectrical.

From a macro-economic viewpoint, application ofcogeneration would be worthwhile even now, espe-cially if external costs are factored in. Like in thepast, it may be expected that capital and runningcosts will drop even more, particularly for smallercogeneration units. But if comparisons are made onthe basis of short-term marginal costs, that is the cur-rently low costs of purchasing electricity from thepresent already partially depreciated power plantinventory, the financial performance of cogenerationplants will only be satisfactory in exceptionallyfavourable cases. The financial problems of existingcogeneration plants are due almost solely to the dropin electricity prices following liberalization of elec-tricity markets. Consequently, the further marketprospects for cogeneration plants depend greatly onthe energy policy setting, for example the Germanlaw on cogeneration.

For innovative cogeneration systems, like thoseemploying fuel cells, Stirling engines and micro-gasturbines, their introduction faces similar obstacles.Togain broad market acceptance they will have to attainas a minimum the cost level of cogeneration systemsalready deployed today, which means, for fuel cellcogeneration plants, installation costs of €1,000 to1,200 per kilowatt hourelectrical, signifying a necessarycost reduction by one order of magnitude.When con-sidering the learning curves of comparable decen-tralized technologies, this should certainly be attain-able with larger market volumes.


3.3.4Evaluation

Thanks to its energy and ecological advantages com-bined with its economic performance, especially ifexternal costs are considered, cogeneration technol-ogy is an indispensable component of any efficiency-raising strategy for energy-transforming systems.Today’s cogeneration technologies in particular fitvery well into the emerging trend for greater inter-meshing and decentralization of energy supply.

Extending cogeneration is therefore a significantspecific measure for raising the efficiency of energysystems on the supply side. Although from themacro-economic aspect this technology’s perfor-mance is already positive, the conditions currentlyprevailing on the market are problematical. TheCouncil therefore recommends that expansion ofcogeneration be fostered to a greater degree byenhancing the energy policy setting.

3.4Energy distribution, transport and storage

3.4.1The basic features of electricity supply structures

The regional structures of global energy supply varygreatly since energy supply and demand depend onnumerous local factors. Basically, a distinction can bemade between contiguous, densely populatedregions and expansive, sparsely populated regions.While the former often have electricity and gas gridsover large areas, the latter usually have a distributedapproach using microgrids and single-home powersystems (off-grid concepts; Section 3.4.2).The qualityof the energy supply does not necessarily differ inthese two fundamentally different concepts. Supplystrategies for large grids deserve special attention asthey handle the largest share of energy supply by far(Section 3.4.3).

In electricity grids, the amount of electricity gen-erated and consumed always has to be the same. Ifthe amount generated exceeds current consumption,the frequency and voltage of the grid rise; if genera-tion is lower, they drop. If no remedy is provided,equipment connected to the grid could be damaged.Hence, knowledge of the statistical and empiricalshares of generation and consumption are decisive incontrolling electricity grids; characteristic daily andannual trends help to this end.As grids consist of sev-eral voltage levels, the various load curves have to betaken into consideration at all levels; even if the high-

voltage level is balanced, a part of the grid at themedium-voltage level could be overloaded, forexample. As fluctuating renewable energy sourcessuch as wind power and photovoltaics become moreimportant, the supply side is also becoming moredynamic. There are several strategies for the optimalcoordination of fluctuating energy supply anddemand:• Adaptation of energy demand to supply (load

management);• Modification of structures on the generation side

with the aim of adapting the generation of elec-tricity to energy demand;

• Large-area networking of power producers andconsumers to use statistical balancing effects tomatch generation and consumption;

• Storage of energy.

3.4.2Supply strategies for microgrids

Rural areas in developing countries not only lacksuch basic goods as clean drinking water andtelecommunications, but also energy services (Sec-tion 2.4). Expanding the grid in these regions is unre-alistic in many cases as the low expected power con-sumption of users would not justify the high cost ofextending the grid over long distances. Thus, electric-ity is preferably supplied from distributed sources, asare other energy services.

The technologies for distributed power supply fitinto two categories: isolated systems for single usersand microgrids for larger user groups, such as vil-lages. Diesel, wind power, photovoltaics, and micro-hydropower are used to generate electricity as theycan be tailored to the local needs perfectly and com-bined to reduce costs. Isolated systems for individualusers usually only have to satisfy very small energyneeds. Photovoltaics is best suited for this purpose assuitably sized PV-generators are available, and oper-ation of the systems is low-maintenance. The typicaltechnology for individual systems is called a SolarHome System. Such a system generally comprises aphotovoltaic module, a battery, and a charge con-troller. While smaller systems are designed for directcurrent for, e.g., several fluorescent lamps and aradio, larger systems can provide alternating currentand hence even run colour televisions and otherappliances. One major obstacle towards the intro-duction of such systems is the relatively high initialinvestment, combined with a lack of microcredit.Hence, fee-for-service concepts are often used; here,an investor installs a system for the customer, whocan only use the power for a fee. Overall, the socio-economic barriers are often greater than the techni-

77Energy distribution, transport and storage 3.4

cal ones when it comes to such individual solutions. Ifthe costs of the technologies used today (primarybattery, petroleum lamps, diesel generators) are cal-culated for the service life of systems using renew-able power, photovoltaics, hydropower and windpower generally turn out to be more economical.Another type of individual application that is wide-spread are photovoltaic pump systems.These systemsoften create additional income by increasing agricul-tural production.

Under certain conditions (such as when the spacebetween homes is small enough), it might make moresense to set up micro-systems for multi-user groupsinstead of using individual systems. The greaterdemand for electricity provides more flexibility inthe selection of the power generator. In addition, amicrogrid can be designed to allow for a connectionto the national grid when it is extended.

3.4.3Supply strategies within electricity grids

3.4.3.1Fluctuating demand in electricity grids

The energy demand in expansive electricity grids likethe European interconnected power grid consists ofa large number of consumers with different con-sumption patterns at different times of the day andyear. The consumption of most consumers can bepredicted: electricity is needed at certain times of theday for cooking and lighting.While the exact times atwhich appliances are switched on and off cannot bepredicted, the large number of spatially distributedpower consumers level out the statistical fluctua-tions, leaving relatively smooth daily and annualcurves.

The patterns of consumption vary between coun-tries, regions and climatic zones. For example, in hotcountries the use of air-conditioners affects the dailycurve. In Germany, power is mostly needed duringthe day and in the evening. The base load is the low-est level of consumption in the daily pattern, which inGermany is approximately just below the halfwaypoint for the daily peak.To cover fluctuating demandand ensure the power supply, base load power plants(such as coal-fired and run-of-river plants), whichcannot increase and decrease output quickly, areused in combination with gas and pumped storagehydropower plants, which can be run up and downmore quickly to meet fluctuating demand. Overall,enough power plants have to be available to coverpeak demand. But since the plants do not generatepower all the time, capacity provisioning is a cost fac-

tor. Hence, the gap between peak load and base loadhas been brought down in the past few decades bymeans of measures to control energy demand (loadmanagement of major industrial consumers, cheapnight power, etc.).

3.4.3.2Fluctuating supply from renewable sources

The supply of energy from renewable sources likewind and solar fluctuates greatly. The relevant timeframes depend on the type of final energy (electricityor heat) and the potential to store it. As heat cannotbe transported well, the daily load curve cannot beleveled out by means of a large heat grid.The optionsused to store heat are much more simple and localthan those used to store electricity. The fluctuationsin electricity can be viewed in seconds, minutes,hours, and over the yearly load curve.

Fluctuations in seconds/minutesIn this time frame, random fluctuations occur withwind power and solar energy due to passing cloudsand gusts of wind. These statistical fluctuations donot, however, correlate if the systems are in differentlocations: if many systems are networked, theseshort-term fluctuations are balanced (Fig. 3.4-1).Hence, in large-scale, bi-directional grids no prob-lems are expected in this time frame. Even extremefluctuations, such as emergency shutoffs duringstorms, are technically manageable. Power plants thatcan be easily regulated (gas turbines, pumped storageplants, etc.) have to compensate for the remainingvariations in electricity production from wind andsolar sources.

Fluctuations in the hourly rangeThe power output of solar energy systems dependson the angle of solar radiance, which in turn dependson the time of day. Hence, the hourly fluctuations areeasily predictable. The amount of time during whichelectricity can be generated from solar energy can beincreased by connecting systems in an east/westdirection (Fig. 3.4-2).

The use of solar thermal power plants for the gen-eration of electricity can increase this time frameeven longer. These power plants can deliver powerfor some five hours after sundown by means of ther-mal storage tanks (Nitsch and Staiß, 1997). It makesmost sense to use such power plants in the westernparts of a grid, for instance in Spain for Europe.

The wind speed does not have a salient daily loadcurve. On the average, there is more wind when thereis a lot of cloud cover so that solar and wind correlatenegatively. Hence, wind and solar energy converters


compensate for each other to a certain extent in thehourly range.

Seasonal fluctuationsThe power that can be generated from solar energyvaries from season to season and according to lati-tude. Near the equator and at high latitudes, rainyseasons and heavy clouds affect the yearly load curveadditionally. In principle, a large-scale north/southgrid can compensate for these effects (Fig. 3.4-3).

Seasonal fluctuations in wind power are moreregional and harder to forecast than solar radiation.The supply of hydropower has a clear yearly curve(for instance, due to rainy seasons), which can par-tially be compensated for by storing water behinddams.As biomass can be stored readily, energy can begenerated from it throughout the year.

3.4.3.3Strategies for matching energy supply anddemand

Meeting the fluctuating energy demand with the like-wise fluctuating supply of energy from renewablesources also poses a considerable challenge. In thefollowing, some tools are described to this end; allneed to be adapted to special regional features.

Electricity transport and distributionThe fluctuations on the supply side (Section 3.4.3.2)recommmend having power provision technologiesand regions linked in a large grid so that the energysupply can fulfil demand at any time of the day oryear. As electricity can be easily transported, regionsthat are far from each other – and hence have differ-

0

0.2

0.4

0.6

0.8

1.0

0 12 24 36 48 60 72

100 systems

1 system

Hours

Nor

mal

ized

pow

er o

utpu

t

Intermediatestorage

Out

put

Time CET [hour]

06:00 12:00 18:0000:00 00:00

Moscow Berlin Lisbon

Algiers

Cape Town

1 2 3 4 5 6 7 8 9 10 11 12

Berlin

Irra

dian

ce a

s m

onth

ly m

ean

Month

Figure 3.4-1Levelling of fluctuations inthe generation of electricityby linking a large number ofphotovoltaic systems. Acomparison of the highlyfluctuating single system andthe mean of 100 systemswith the same output indifferent locations.Source: Wiemken et al., 2001

Figure 3.4-2The supply of solar energy in Europe as a function of thetime of day and location. The use of thermal intermediatestorage can extend the daily operating time of solar thermalpower plants.Source: Quaschning, 2000

Figure 3.4-3Annual curves of solar irradiance in the northern andsouthern hemisphere for Algiers, Berlin, and Cape Town.Source: Quaschning, 2000


ent energy production times and consumption pat-terns – could be connected in a grid.

To help identify different regional supply strate-gies, a distinction needs to be made between thelarge-scale, global connection of regions and thefinely meshed grids for the local population: one canimagine generating large amounts of power in areasthat will not have any finely meshed grid for the fore-seeable future.The energy could be transported fromthere to highly industrialized centres without anygreat losses. For example, the transport losses in high-voltage, direct-current lines for solar power fromnorthern Africa to central Europe would be about 10per cent over some 3300km. Indeed, transcontinentaland intercontinental links can be envisioned all theway up to a ‘global link’, especially if there are break-throughs in technology development (such as asuperconductor).

Control of electricity demand, loadmanagementThe load curve can be adapted to the supply struc-ture if proper incentives and technologies are used(Section 3.4.3.1). Such measures would reduce thetransmission losses and the need for storage as theshare of renewable sources grows. The potential ishard to estimate at present but is probably at leastaround 20 per cent of electricity demand in the win-ter and some 10 per cent in the summer, or 10 percent of household consumption. Load-based ratesare the main incentive for consumers; here, ratelamps or switches could be introduced for this pur-pose. This would provide the incentive for ‘intelli-gent’ appliances (refrigerators, electric cars, etc.) thatonly consume electricity when rates are low.

Energy storageIn the long term, the transport and direct consump-tion of electricity in extended grids will probablyremain less expensive than storage. Storage shouldtherefore be kept to a minimum. Even if load man-agement is optimized, however, fluctuations in thepower grid are expected to be so great once the shareof renewable energy sources has reached around 50per cent that the daily and yearly load curves willexhibit both excess power and shortages, necessitat-ing additional energy storage. There are a number ofdifferent technical solutions to meet the wide rangeof trigger speeds, output power, and storage capacity.The technologies can be roughly divided up intoquite fast storage types with high output (such ascapacitors, flywheels, superconductors) and slowerones with high energy content (pumped storagehydroelectric plants, compressed air tanks, electro-chemical storage, etc.). To keep costs down, pumpedstorage hydroelectric plants are used most often to

provide large-scale grid support for mid- to long-term energy storage. Redox systems, especially thoseusing hydrogen, are being developed for future stor-age systems.

Synergies of electricity and heatIn high latitudes, the demand for energy correlateswith the demand for heat. If the energy supply mainlystemmed from solar energy, a shortage of electricitycould be expected in winter. If wind power domi-nates the generation of electricity, then one wouldexpect to have excess power in winter. The use ofheat pumps can link power consumption to heatneeds; greater heat demand can then be met whenthe supply of electricity increases.

Demand for electricity and heat can also bedecoupled if the heat storage capacity increases. Forexample, control reserves in grids can be designed asCHP plants. The excess heat can be stored, thusincreasing overall efficiency. Heat pumps can furtherbe used to store heat from potential excess electric-ity.

3.4.4Hydrogen

3.4.4.1The basics

Hydrogen has long been known as an important, uni-versally useable element in metallurgy and for thesynthesis of chemical compounds. It was used forenergy purposes in Germany in the past as an essen-tial component of town gas. The volume of hydrogenconsumed today is equivalent to around a fifth of theworld’s consumption of natural gas. In terms ofenergy, the use of hydrogen has, however, been negli-gible. It is important for the transformation of theenergy system as basically only water and energy arerequired to produce it and almost no pollutants areemitted when it is used. Hydrogen technology wouldallow for the long-term storage of large amounts ofenergy, and the gas can be easily transported. In com-bination with renewable energy sources, hydrogenthus has the potential to become a crucial energy car-rier in a future sustainable energy system.

3.4.4.2Production

There are two basic steps to manufacture hydrogen:from organic matter (fossil resources or biomass) orby splitting water molecules using electricity (elec-


trolysis). Hydrogen can be produced in great quanti-ties from hydrocarbons (natural gas, oil, coal, bio-mass, etc.) by means of a reformation process. Theheat for the high reaction temperatures (850–2,000°C) results from the partial combustion of theraw materials. Some 60 per cent of the energy in coaland up to 85 per cent of the energy content of naturalgas can be stored as chemical energy in hydrogen.The energy balance sheet could be improved evenfurther in the long run if high temperature solar heatis used. In particular, hydrogen technology wouldallow for biomass to be used efficiently: a synthesisgas containing hydrogen occurs during gasificationand contains some 75 per cent of the chemical energystored in the biomass; thus, if efficient energy con-verters are used (such as fuel cells), the overall effi-ciency for the generation of electricity could be ashigh as 40 per cent.

In addition to biomass conversion, electrolysis isthe most important way to produce hydrogen fromrenewable energy without any by-products or toxicemissions. All renewable energy sources that can beused for the generation of electricity can thus be usedto produce hydrogen. One special benefit that elec-trolysis offers is that even a fluctuating supply ofelectricity from renewable sources can be efficientlyused (Section 3.4.3.2). The largest electrolysis sys-tems currently have a connected load of 150MWe.While alkaline electrolysis at ambient pressure haslong been used commercially and is a mature process,more advanced concepts – like high-pressure elec-trolysis – are still under development. Table 3.4-1compares the most important methods of producing

hydrogen. It also contains the data that can beexpected to apply when hydrogen is brought to mar-ket according to the transformation roadmap pro-posed by the Council (starting around 2020, Chapter4). The efficiency of all of the processes, includingconstruction of facilities and procurement ofresources, is around 60 per cent and will increase tojust below 70 per cent in future.

Facility output varies greatly across productionprocesses. To lower costs, conversion plants for nat-ural gas are designed for the highest output possibleper facility, while transport costs for the primaryenergy carrier limit the size of biomass plants. Elec-trolysis can be used as a modular technology both fordistributed power supply close to the consumer (suchas at filling stations) or centrally to suit the output ofthe plant generating electricity.

At electricity costs of around €-cents 4 per kilo-watt hour, hydrogen could cost around €-cents 7–8per kilowatt hour in the long term (Nitsch, 2002). Incontrast, hydrogen produced from natural gas isalready half as expensive at €-cents 4, though CO2 isreleased into the atmosphere in this process. Hydro-gen produced with renewable electricity has the eco-nomic disadvantage of necessarily being moreexpensive than the electricity it is produced with.

3.4.4.3Storage and distribution

Like natural gas, hydrogen can be compressed andliquefied for storage and transport in liquefied gas

Steam reformation ofnatural gas

Gasification of biomass

Electrolysis (module)

Today >2020 Today >2020 Today >2020

H2 production[m3/h][MWH2

]100,000

300100,000

30013,000

4013,000

40500

1.5500

1.5

Resource input[MW] 405 385 551) 531)

Electricity required[MW] 1.5 1.5 3.0 2.8 2.1 2.0

Process efficiency[%] 74 78 73 76 73 77

Water required[m3/h] 58 58 28 28 0.4 0.4

Operating pressure[bar] 30 30 50 50 30 100

Efficiency, gaseoushydrogen at consumer[%]

64 68 60 66 632) 672)

Investment costs[€/kWH2

] 350 350 ca. 700 ca. 500 1,000 ca. 700

Table 3.4-1Key data for selectedmethods to producehydrogen, today and in2020.1) corresponds to some12t/h of wood;2) without the deploymentof renewable electricity,but with transport lossesacross 3,000km as high-voltage direct current.Sources: WBGU withreference to Nitsch, 2002;Pehnt, 2002; Dreier andWagner, 2000; Winter andNitsch, 1989; BMBF, 1995;DLR and DIW, 1990


tanks and compression tanks. In addition, hydrogencan be bound e.g. to metal hydrides for depressurizedstorage. In the long term, hydrogen will probably bestored in very large quantities to compensate fordaily and seasonal fluctuations. Here, the tried andtested technologies for the underground storage ofnatural gas in empty salt caverns and gas or oil stor-age sites are available. The storage costs of hydrogenare roughly twice as high as for natural gas due to thelow energy density of hydrogen. But the effect ofthese costs will be minimal as these costs only makeup a small portion of the overall costs. In addition toliquefaction, which consumes roughly a third of theenergy content of hydrogen, high-pressure compos-ite tanks for up to 700 bar are especially interestingfor mobile applications. In addition to the specificcosts for fuel, the much greater costs for the storageof hydrogen required for its mobile use in compari-son to these costs for petrol and diesel will greatlystep up the trend to much more efficient vehicles.

When assessing the infrastructure needed for theuse of hydrogen, it must be kept in mind that its pro-duction and consumption will be closely related tothe electricity supply as electrolysers can be designedfor distributed power and adapted to the main pointsof consumption (such as combined heat and powerunits with local heat distribution networks, filling sta-tions, and industrial plants). In addition, one greatadvantage of hydrogen as an energy carrier is thatthe existing infrastructure for natural gas can be usedfor transport and distribution. Solely hydrogen gridshave also been in operation for many years. Overall,the conditions are good for the long-term, gradualtransition towards hydrogen as an energy carrier forstationary applications based on the well developednatural gas infrastructure.

High-voltage, direct-current power lines are avail-able as a tried and tested technology for the long-term, long-distance transport of energy across thou-sands of kilometres. Transport via pipelines will notbe necessary or economically attractive until a regen-erative hydrogen economy has been established on alarge scale, entailing very large amounts of energy fortransport. A typical pipeline, for instance one fromnorthern Africa with a diameter of 1.6–1.8m, wouldsupply some 23GW of H2, which would cover some10 per cent of Germany’s current energy needs(Nitsch, 2002). The transport costs for these dimen-sions and a distance of 3000km would be around €-cents 1.5 per kilowatt hour of hydrogen (Winter andNitsch, 1989). This figure takes into account energylosses of 15 per cent due to the compression andtransport of the gas. Another option for long-dis-tances is the transport of liquified hydrogen intankers. While transport via tankers is very inexpen-sive and entails little loss, some 10kWh of electricity

per kilogram of H2 is needed to liquefy hydrogen at-253°C. The overall efficiency of around 75 per centfor gaseous hydrogen then drops to around 60 percent for liquid hydrogen. But if hydrogen is to be con-sumed as a fluid (for instance as fuel), large-scaleliquefaction and tanker transport are nevertheless aninteresting option.

3.4.4.4The use of hydrogen

Hydrogen can be used in many of the same ways asnatural gas. All of the common energy converters(flame burners for heaters, industrial and powerplant boilers, turbines, and combustion engines)require only moderate adaptations to be run onhydrogen or gas mixtures rich in hydrogen.

The efficiency of hydrogen combustion in enginesis comparable to that of petrol with state-of-the-arttechnology. As the only pollutant emitted is NOX,emissions can be kept very low by optimizing thecombustion process (Section 3.4.4.5). Both in station-ary (CHP units) and mobile applications, hydrogenwould largely solve the problems of the local emis-sion of pollutants, even if only ‘conventional’ tech-nologies are used, as the exhaust gas does not containcarbon monoxide, sulphur dioxide, hydrocarbons,lead compounds, or soot particles. Combustion ofpure H2/O2 is also interesting; here, one direct by-product (i.e. without a heat exchanger) is dry steam,which can be conditioned with the addition of water.This technology is well suited for the provision ofprocess steam in industry and to generate power forpeak loads.

Furthermore, hydrogen can also be used withother technologies that are less suitable for hydro-carbons and would require that the hydrocarbons bereformed beforehand.The best known process is fuelcell technology. In addition, catalytic combustion,which occurs below 500°C and only has minimal NOX

emissions, is a noteworthy option. It allows for theconstruction of open heating surfaces using cataly-sers, for instance for space heating with ‘zero emis-sions’.

Fuel cells are an important building block inenergy systems supported by regenerative hydrogenas they can convert hydrogen into electricity and use-ful heat directly, efficiently and without any emis-sions. Fuel cells are available as pilot and demonstra-tion systems and in small batches for a wide range ofoutputs from a few watts (portable systems) to unitswith several kW (small and mid-size combined heatand power units) and even several MW (large CHPplants). They run at temperatures of 80–800°C (Fig.3.4-4). Combined power plants with fuel cells as aux-


iliary units in the 50–100MW range are also alreadyin planning. The automotive industry is intensivelydeveloping fuel cells to make them ready for produc-tion as zero emission drive units for vehicles.The effi-ciency rates for commercial systems considered pos-sible for the short term are 45 per cent (for PEMFC,probably surpassing 60 per cent in the long term) and55–60 per cent (for MCFC, SOFC). In combinationpower plants, efficiency rates up to 70 per cent areconsidered possible (Table 3.3-1). It should be kept inmind here that these rates of efficiency are even pos-sible for small units with only a few kW of outputthanks to their modular design, thus making fuel cellswell suited for efficient, distributed CHP units with ahigh overall degree of usage (Section 3.3). However,the proven rates of efficiency in practice still fallsome 5–10 per cent short of these targets.

To become competitive in the short term, fuel cellswill require further progress in technology and sys-tem design and, above all, an enhanced energy policysetting, especially for CHP units. This is essential toprovide a secure basis on which developers canadvance the technology and make the investmentsneeded before products can be brought to market.

The development of energy converters is increas-ing the importance of efficient systems with rela-tively low output levels. What began over a decadeago with renewable energy technologies is now con-tinuing with combined heat and power units, microgas turbines, Stirling motors, and fuel cells. Powerplants are also now being planned as combined-cycle(gas and steam) systems with far lower outputs of nomore than 200MW. Progress in electronics and ITwill allow for the combination of a growing number

of small units into distributed power plants. The lib-eralized energy market rewards such developmentsas these systems can respond flexibly to marketdemands and investments in them are modest.

3.4.4.5Potential environmental damage from hydrogen

The flame temperatures for the combustion ofhydrogen must not be allowed to reach levels thatwould produce great amounts of NOX. Solutions tothis problem are, however, already available as thelack of other pollutants has allowed researchers tofocus on the optimization of the combustion processto minimize NOX emissions.

Hydrogen molecules are a natural component ofthe atmosphere at a concentration of around 0.5ppmnear the surface. When hydrogen is used in largeamounts, the atmospheric concentration mayincrease due to leaks, causing chemical reactions thatindirectly increase the concentration of the heat-trapping gas methane. Some initial estimatesrevealed that the current use of hydrogen bymankind does not significantly affect the methaneconcentration (IPCC, 2001a). Even if H2 fuel cellsreplace 50 per cent of fossil fuels and less than 3 percent is lost due to leaks, this additional volume wouldnot exceed the current hydrogen source (volatileorganic compounds including methane) (Zittel andAltmann, 1996). To resolve the current uncertainties,these issues need to be taken up in research onatmospheric chemistry. In addition, the decomposi-tion of hydrogen in soil needs further study.

Gas

Gas treatment

Electricity for localconsumption andthe gridAir

Fuel cell Electricityproduction

Heatexchanger

Heatstorage

Heating for home

Figure 3.4-4The principle of a homeenergy system based onhydrogen. Such homes canalso be connected to ahydrogen grid, in which casedistributed gas reformationand purification would notbe necessary.Source: WBGU

83Improvements in energy efficiency 3.5

3.4.5Electricity versus hydrogen: An assessment

The basic efficiency/cost ratios for the generation ofrenewable electricity and regenerative hydrogen bymeans of electrolysis are listed in Table 3.4-2.Gaseous hydrogen in central Europe has some 65 percent of the energy content of solar electricity at thepoint of deployment.With liquid hydrogen, users stillhave somewhat more than 50 per cent of the originalsolar power.

Today, electrolysis is, beside biomass reformation,the most favourable conversion method for renew-able energy from hydrogen. Regenerative hydrogenis thus provided less efficiently and at a higher costthan renewable electricity. It will hence only beimportant for the energy industry when it can beused in applications that make economic sense andcompliment the universally useful energy source ofelectricity.The main argument for the introduction ofhydrogen technology will be its good storage proper-ties.

Most energy services (space heat, hot water,process heat, propelling power, light, and communi-cation) can be provided using useful heat and elec-tricity from renewable energy sources. Both are lessexpensive than regenerative hydrogen. Using hydro-gen only makes sense when the direct use of electric-ity or heat is not possible for technical or structuralreasons (such as in the transport sector or when thesupply of renewable electricity exceeds demand andthe excess power needs to be stored). The gains interms of storability or applicability have to beweighed against the additional costs and conversionlosses, both for individual applications (niche mar-kets) and for the overall energy system.

The importance of hydrogen for the energy indus-try thus lies in the possibility of expanding the applic-able limits of renewable energy sources. But first, thedirect use of these energy sources will have tobecome more common itself, of course. The impor-tance of hydrogen is thus directly linked to the inten-sity and continuity of an overall strategy for the tap-ping of renewable sources of energy.Various applica-tions can be envisioned for the energy function, the

storage function and the transport function of hydro-gen:• The storage of large amounts of fluctuating elec-

tricity from renewable sources once a very largeshare of renewable energy has been attained andconventional load management and storage nolonger suffice;

• The transport of energy across long distances,even between continents;

• The requirement for zero emissions locally or inthe overall electricity system (CO2-free energysystem). This will entail a suitable energy supplyfor users even in areas not or hardly accessible forelectricity (such as transport, notably aviation, andpart of industrial high-temperature heating).

Provided the share of renewable energy sources inthe overall energy supply does not exceed 50 percent, supply fluctuations can be compensated for inlarge interconnected grids and by combining variousrenewable energy sources. In addition, load manage-ment (control of user demand) and (thermal) energystorage in solar thermal power plants, for instance,could also level out fluctuations. As electricity fromrenewable energy sources increasingly penetratesthe grid, however, large-scale technologies to storehigh-quality energy will probably become indispens-able.

Hydrogen can perform this task. It also will bene-fit from the current ascent of natural gas, which isconsidered a form of fossil ‘transition energy’towards an energy system with more renewableenergy and hydrogen.This is because the investmentsin infrastructure, which often hamper the introduc-tion of new energy sources, will be kept compara-tively low since the natural gas infrastructure can beused very well to transport hydrogen. Hence, onlydistributed hydrogen grids will have to be estab-lished.

3.5Improvements in energy efficiency

Today, in industrialized countries significant lossesstill occur during various energy conversion stagesand during the application of useful energy:

Degree of utilization Costs

Only production

Including long-distance transport

Only production

Including long-distance transport

Electricity 1 0.9 1 1.5H2, gaseous 0.75 0.65 1.65 1.9H2, liquid 0.6 0.52 2.5 4

Table 3.4-2Efficiency/cost ratiosbetween renewableelectricity (generation = 1.0)and regenerative hydrogenfor advanced technologies.Source: Nitsch, 2002


• approximately 25–30 per cent during the conver-sion from primary energy to final energy;

• on average approximately one-third during theconversion from final energy to useful energy, withhigh losses of approximately 80 per cent in thedrive systems of road vehicles;

• approximately 30–35 per cent through unneces-sarily high useful energy demand, e.g. for air con-ditioning of buildings and in industrial high-tem-perature processes (Fig. 3.5-1).

In theory, the energy demand for each energy servicecould be reduced by more than 80–85 per cent of cur-rent energy demand (Jochem, 1991). Within theframework of discussions on sustainable develop-ment, in Switzerland this potential became the basisfor the technological vision of a ‘2000 watt society’,which could be achieved around the middle of thiscentury (ETH-Rat, 1998).

In addition to technological aspects of energy andmaterial efficiency and of closed-loop materials man-agement, the demand for energy and material ser-vices, which changes with increasing income, higherresource efficiency and the move towards a knowl-edge society, also needs to be made a focus of debate.The question is whether post-industrial societiesneed to aim for sufficiency in material goods (includ-ing mobility) in the long term. This would not lead toa risk of stagnation for the world economy, sincegrowth in intangible goods (e.g. services) would notbe restricted.

3.5.1Efficiency improvements in industry and business

The general target of increased efficiency can be dif-ferentiated technologically as follows:

Energy services

Efficiency in %

Useful energy accordingto sector

Primary energy14,565PJ

(100%)

(65%)

Final energy9,469PJ

(16.4%) (10.5%) (19.6%) (18.5%)

Industry Commerce, trade,services

Domestic Transport

2,686PJ2,859PJ1,533PJ2,391PJ

Losses4,478PJ(30.7%)

535PJ(3.7%)

2,015PJ(13.8%)

929PJ(6.4%)

1,512PJ(10.4%)

Total useful energy 4,991 PJ (34%)

Non-energy-relatedconsumption

1,052PJ (7.2%)

Conversion losses4,044PJ (27.8%)

Conditioned Space heating 76spaces

Industrial Process heat 57products

Mobility Motive power 19 for transport

Automation, Other drives 59refrigeration

Illuminated Lighting 9surfaces

PC-, telephone, Information and unknowninternet operation communication

Figure 3.5-1Energy losses within the energy utilization system represented by Germany in 2001. Primary energy consumption in that yeartotalled 14,565PJ. After conversion losses and non-energy-related consumption, the remaining final energy consumed was9,469PJ. The conversion into heat and mechanical energy led to significant losses totalling 4,478PJ. The box lists the efficiencyof conversion from final energy into useful energy for different energy services. Ultimately, only 4,991PJ or 34 per cent of theprimary energy used was converted into useful energy.Source: IfE/TU Munich, 2003


• significantly improved efficiencies during the con-version stages of primary energy/final energy andfinal energy/useful energy, often using new tech-nologies, e.g. combined heat and power or com-bined refrigeration and power systems, fuel celltechnology, replacement of burners with heatpumps (Williams, 2000);

• significantly reduced useful energy demand perenergy service through low-energy buildings,through substitution of thermal productionprocesses with physical/chemical or biotechnolog-ical processes, through light-weight design of mov-ing parts and vehicles, of through recovery or stor-age of kinetic energy (Levine et al., 1995; IPCC,2001b);

• reduction of no-load losses, i.e. of the final energyuse consumed during the lifetime of devices andsystems without serving a purpose. One way ofachieving this is through a reduction of idle timesand no-load power by using more efficient tech-nologies and by influencing user behaviour;

• increased recycling of energy-intensive materialsand increased material efficiency throughimproved design or material characteristics, withsignificantly reduced primary material demandfor each material service (Angerer, 1995);

• more intense utilization of long-lived investmentand consumer goods through machine and equip-ment hire, car sharing and other related services(Stahel, 1997);

• the spatial arrangement of new industrial andother settlement areas according to exergy criteria(Kashiwagi, 1995), and better mixing of settlementfunctions in order to avoid motorized mobility.

In principle, the options for reducing the energydemand of industrial production while demand forenergy services grows can be split into five cate-gories, only two of which are subject to thermody-namic limits (Jochem, 1991).

Improvements in the efficiency of energyconvertersEnergy converter systems (e.g. burners, turbines,motors, etc.) can be technologically improved, forexample, through more heat-resistant materials, bet-ter controls, etc.The replacement of burners with gasturbines in medium-temperature processes, forexample, or the use of heat transformers and thearrangement of new enterprise zones with cascadingheat utilization open up further potential (Stucki etal., 2002; Kashiwagi, 1995).

Reduction of useful energy demandthrough process improvements andsubstitutionsProcess improvements and substitutions offer signif-icant options for increasing energy efficiency. Exam-ples are:• substitution of metal rolling including intermedi-

ate heating furnaces through casting with near-final dimensions, and in the more distant futurethrough spraying of shaped sheet metal compo-nents in their final form;

• substitution of thermal separating processesthrough membrane, adsorption or extraction tech-niques, as already used in the food and pharma-ceutical industries;

• application of new enzymatic or biotechnologicaltechniques for synthesis, dyeing or material sepa-ration; improvement of mechanical drying tech-niques or extension/combination with new con-cepts (e.g. ultrasonic, pulse technique);

• substitution of heat treatment techniques throughtechniques with higher accuracy and controllabil-ity (e.g. electrical ultra-short heating throughmicrowaves, laser techniques);

• returning of braking energy into the grid (regen-erative braking) through appropriate power elec-tronics.

Increased recycling and improved materialefficiency The production of energy-intensive materials fromdiscarded materials often requires significantly lessenergy than their production from raw materials,even taking account of the energy required for therecycling processes. Relatively high recycling ratesare today achieved for those materials that havealready been in use for decades (e.g. in Germany:crude steel: 42 per cent, paper: 60 per cent, containerglass: 81 per cent); on the other hand, the values fornewer materials are much lower (e.g. plastics: 16 percent). Through further utilization of the recyclingpotential, total industrial energy demand could bereduced by at least 10 per cent (Angerer, 1995). Fur-ther potential results from reducing the materialdemand per unit service provided by a material. Thiscan be achieved by modifying the material character-istics and through changes in product design (e.g.thinner packaging materials, foams, flatter surfacestructures) (Enquete Commission, 2002).

Substitution of materials through lessenergy-intensive materialsThe substitution of materials opens up significantenergy saving potential. Decisions about materialsand their substitution are today predominantly madebased on costs, material and utilization characteris-


tics, as well as the image of the material and currenttrends. In future, low total energy demand or lowtotal emissions should become increasingly impor-tant criteria. Materials and products that are biogenicor can be produced using biotechnological tech-niques (e.g. wood, flax, starch, natural greases andoils) can thus become interesting alternatives.

More intense use of consumer goodsMore intense use of consumer goods can also con-tribute to improving material and energy efficiency.The notion of a parallel economy (‘using instead ofpossessing’) describes the idea of making goods froma pool accessible to several users. Familiar examplesare the rental of construction or agriculturalmachines, electric tools, cleaning machines, cars (carsharing) or bicycles. In this way, a lower quantity ofgoods can satisfy the same social needs (Fleig, 2000).

The energy saving potential inherent in these fiveoptions requires further examination, and futuretechnological developments are in any case difficultto forecast. Overall, the total technological energysaving potential is estimated as more than 50 per centof today’s industrial energy demand (Jochem andTurkenburg, 2003).

3.5.2Increased efficiency and solar energy utilization inbuildings

Any discussion about increases in efficiency forenergy use in buildings has to take account of verydifferent basic conditions around the globe, becauseeconomic, social and natural influences (e.g. buildingtradition, available materials, population density,family structures and particularly the climate) lead todifferent designs. Even within individual countries,the differences between poor/rich, towns/rural areasand existing buildings/new buildings mean thatincreases in efficiency in the building sector have tobe approached from different angles.

Space heatingIn high latitudes, and particularly in continental cli-mate regions, domestic energy use is dominated byspace heating, so that improved thermal insulation ofbuildings has to be a priority. For example, vacuuminsulation systems are currently under developmentoffering up to 10 times higher insulation with identi-cal thickness than conventional insulating materials.They are of particular interest for building refurbish-ment projects. A further example of an innovativeapproach is transparent thermal insulation installedon the exterior walls of buildings. While sunlight canpenetrate the material and is absorbed in the dark

wall behind the insulation, any heat released by thewall cannot escape back through the insulation mate-rial and therefore contributes to heating the building.

Further keywords for technological efficiencyimprovements are efficient gas condensing boilers,avoidance of electric resistance heating and connec-tion to local or district heating networks or cogener-ation power plants. Overall, energy efficient build-ings require heat supply systems that efficiently andcost-effectively meet the remaining low heatdemand. Micro-heat pumps will therefore becomeincreasingly significant in future, since they utilizethe available electricity infrastructure and can beoffered cost-efficiently as mass products; micro-cogeneration plants with fuel cell technology couldalso become interesting in future (Section 3.4.4.4).

Improved economic stimuli also have large poten-tial. In eastern Europe, the introduction of individualbills for users of district heating systems alonereduced demand by up to 20 per cent.The conversionfrom manual control of district heating networks toautomatic control offers similar potential.

WindowsSolar and energy-efficient construction aims to cre-ate an innovative building envelope, with energy,light, sound and mass transfers adjusted according toseasons and user demands. One of the central ele-ments are the windows, with two different require-ments being in conflict with each other:While for thepurposes of illumination and (particularly in domes-tic buildings) of heat gain, the aim is to let as muchsunlight as possible enter a room via a window, theheat flow back through the window has to be mini-mized in order to maintain a comfortable indoor cli-mate. In a multi-pane glazing system, for example, theglass panes facing each other may be coated in such away that visible light can enter the room, while lossesthrough infra-red heat radiation are largely sup-pressed. Through the use of selective coatings andfilling with heavy inert gas, modern triple glazing canreduce heat losses to very low levels of approxi-mately 0.5W per square metre and Kelvin (U-value:thermal transmittance of a window). In future, vac-uum windows may lead to further advances.

In order to avoid overheating in the summer, opti-cal switching functions can be implemented in win-dows that control their optical characteristics withoutsignificantly influencing their thermal behaviour andwithout using conventional shading mechanisms (e.g.slats). The trend in technological developments istowards coatings whose optical properties can bechanged reversibly across a wide range (e.g. electro-chromatic or gas-chromatic glazing).


Heating of domestic and industrial waterDue to the relatively low temperature required forheating domestic and industrial water, solar energy iseminently suitable for this purpose (Section 3.2.6.2).If fossil or electric energy is used to complementsolar energy, like for space heating, gas condensingboilers or heat pumps provide a very attractive andenergy-efficient solution. Good thermal insulation ofpipes and boilers and devices for water saving aresimple and economic measures, but unfortunatelyare still not implemented as a matter of course.

Space coolingIn many countries, the air inside buildings is cooled inthe summer or all year round. The worldwide trendtowards urbanization increases this trend.With iden-tical temperature difference to external air, theenergy consumption for cooling is higher than forheating, because the buildings being cooled oftenhave poor thermal insulation. Proposals for effi-ciency improvements include:• Buildings: Improved air conditioning technolo-

gies; of particular interest are automated completesolutions for commercial buildings with numerousnetworked individual components. Controlledventilation in combination with heat exchangersand heat or cold stores offer significant potential.The options for active cooling of buildings usingsolar energy were discussed in Section 3.2.6.2. Pas-sive cooling concepts can be used that enable apleasant indoor climate to be achieved in mid-lat-itudes without the use of refrigeration machines.Examples of suitable measures are night ventila-tion or concrete core cooling via ground probes orheat pumps.An innovative technology is the use ofmicro-encapsulated phase-change materials thatenable light-weight buildings to be made ‘ther-mally heavy’. In this case, heat loads occurringduring the day are stored by melting the materialsat almost constant temperature, and then releasedto external air during the night.

• Town planning: More green spaces and better airflow through building agglomerations have a pos-itive influence on the urban climate. Similar tolocal district heating, local district cooling net-works with efficient central cooling devices couldbe a useful option. In analogy to CHP, combinedcooling and power via appropriately modifiedthermodynamic heat transformers could be con-sidered.

CookingGiven the current energy mix in industrialized coun-tries, electricity should not be used for cooking, sincethe utilization of gas is more advantageous for thispurpose. In developing countries, liquid gas or

kerosene cookers are preferable to traditional stovesusing wood or charcoal as fuel (Section 3.2.4).

LightingGood daylight utilization in office buildings can saveenergy for artificial illumination and increase work-ing comfort. Daylighting systems therefore try toreduce the difference in brightness between the areasnear the windows and core areas, and to improve nat-ural illumination so that less artificial light isrequired. These measures reduce the electricitydemand for illumination and the associated genera-tion of heat, which in turn does not have to be com-pensated through additional cooling. Where this isnot possible, fluorescent lamps, which are five timesmore efficient, should be used instead of incandes-cent lamps. In developing countries, within the con-text of electrification the aim is to switch fromkerosene lamps to fluorescent lamps.

Other electrical appliancesLike all other forms of final energy, electricity shouldbe used as efficiently as possible. While suitableappliances are often more expensive to buy, higherinitial costs are usually compensated through lowerconsumption over the lifetime of the device. No-loadlosses are particularly problematical. Consumer elec-tronics and communications devices in particular areoften not isolated from the mains when operated byremote control, but remain in standby mode withreduced electricity consumption. A convenientoption for avoiding unnecessary electricity consump-tion is the installation of an automatic switchbetween the device and the socket, which separatesthe respective device from the mains in standbymode. To increase the prevalence of efficient domes-tic appliances, consumers should be able to easilyidentify whether a particular device has low standbyconsumption or can be separated completely fromthe mains.

The electricity consumption of large domesticappliances (e.g. dishwashers, washing machines andrefrigerators) on the market could be reduced signif-icantly through obligatory EU efficiency labels. Tar-geted consumer information can significantlyincrease the efficiency of energy utilization withoutany technological investment. Refrigerators, forexample, use significantly less energy if they areplaced in a cool and well ventilated space. Mechani-cal spin driers use much less electricity than heateddriers to extract moisture from laundry.

Removal of structural obstaclesIn the building sector, structural barriers need to beremoved. Architects, for example, are usually paidaccording to the value of the building, and not


according to its efficiency. As contact persons forclients, architects and installers play a significant roleas energy advisors, for which they should be trainedadequately. Another issue is the so-calledlandlord/tenant dilemma, with the former often notbeing motivated to make investments in improvedinsulation and heating technology, because theinvestment costs cannot be fully reflected in the rent,while the tenant benefits from lower energy costs.The tenant, on the other hand, is unlikely to makesuch investments, because the costs usually do notpay for themselves over a comparatively short ten-ancy period.

3.6Carbon sequestration

Carbon dioxide can be removed from the atmo-sphere in three ways: through natural uptake in thebiosphere, by dissolving in seawater followed by sed-imentation, and by human intervention in the form oftechnical carbon management. Falling under the lat-ter is capture of CO2 before or after the combustionof fossil energy carriers, its transformation into theliquid or solid phase, and transportation to reposito-ries for long-term sequestration in suitable geologicreservoir formations or in the deep ocean (Reichle etal., 1999; Ploetz, 2002).

3.6.1Technical carbon management

A high rate of CO2 capture is possible by technicalmeans at point emission sources, like coal- and gas-fired power plants, cement plants, steelworks and oilrefineries. Basically, a distinction can be madebetween two methods of CO2 capture:• flue gas scrubbing, in which CO2 is removed from

the flue gas stream by absorption or adsorption,membrane separation or distillation;

• removal prior to combustion, in which first ahydrogen-rich synthesis gas is won from coal ornatural gas by coal gasification or steam reform-ing, followed by CO2 removal.

Power plant efficiency is reduced by CO2 capture andstorage. The main reasons for this are the energyexpended for regeneration of absorbents, mem-branes and solvents as well as for their manufactureand disposal, and for CO2 transportation (Table 3.6-1).

The estimated costs for CO2 capture includingcompression/liquefaction for transportation accountfor some three-quarters of the total costs of seques-tration both in the ocean and in geologic formations(Reichle et al., 1999; Grimston et al., 2001) and aretherefore the overall cost determining factor. Hen-dricks and Turkenburg (1997) quote, for a standardpower plant, capture costs of €100 to 250 per tonnecarbon and, for a combined cycle power plant withintegrated coal gasification, less than €100 per tonnecarbon.

Estimates of future potentials for CO2 sequestra-tion are currently focused on storage capacity. It islikely that these will be determined less by technicalfeasibility than by costs in comparison with otherCO2 abatement strategies as well as by social andpolitical acceptance. It is estimated that, if geologicsequestration were to be applied on an industrialscale, electricity costs for the final consumer couldrise by 40 to 100 per cent (Grimston et al., 2001).

Current estimates of potential appear in nationalresearch programmes as medium- and long-termobjectives. Thus the American Federal Energy Tech-nology Center (FETC) states a target for reducingCO2 sequestration costs by a factor of 10–30 by 2015.As from 2050, around half the required emissionreductions (referred to a 550 ppm stabilization sce-nario for CO2) is to be attained by CO2 sequestration.However, the US Department of Energy does notexpect sequestration even to be practicable on anindustrial scale before 2015 (US DOE, 1999).

Table 3.6-1Efficiency of CO2 retentionand sacrifices in efficiencyfor various capturetechnologies.Source: Göttlicher, 1999

Process CO2 retentionefficiency[%]

Loss in efficiency forpower generation[%]

CO2 removal from synthesis gas followingCO conversion (from coal gasification orsteam reforming of natural gas) 90 7–11

Build-up of CO2 concentration in effluent gas(usually by combustion in atmosphere ofoxygen and recirculated flue gas) ~100 7–11

CO2 removal from flue gases no data 11–14Carbon removal before combustion no data 18CO2 retention in power plants with

fuel cellsno data 6–9

89Carbon sequestration 3.6

Sequestration in geologic formationsThe aim of CO2 sequestration is to segregate thegreenhouse gas for as long a period as possible fromthe atmosphere. To this end, following its capture,CO2 must be stored where it can be isolated fromcontact with air. Coming into consideration as stor-age options are deep geologic formations, like saltcaverns, deep coal seams, depleted and active gas andoil fields as well as deep (saline) aquifers. But whenassessing a repository, a distinction must be madebetween permanent storage and applications whereCO2 is pumped in only as an additional economicmeasure. Thus injecting CO2 into deep coal seamsthat cannot be mined serves methane recovery(EGR or enhanced gas recovery; Bachu, 2000). CO2

also reduces oil viscosity, which is why it is used allover the world in oil wells to improve their yield(EOR or enhanced oil recovery). But the retentiontime of a few months up to years for CO2 sequesteredin this way is short (Bachu, 2000). Therefore, thesetwo options have to be assessed critically with regardto their carbon balance. For estimates of storagepotential worldwide, usually the theoretically avail-able storage capacity is quoted (Table 3.6-2), and notthe technical or economic potential. The figures varygreatly, in particular because just a few systematicinvestigations of storage capacities are available.

If large quantities of CO2 are stored underground,there is a risk that it could be liberated if leaks occur.Because CO2 is heavier than air, a CO2 lake couldaccumulate at the ground where the gas exits, inwhich all life would be asphyxiated (Holloway, 1997).Therefore, the integrity of the repository is of greatimportance. At present, only depleted gas and oilfields may be regarded as secure repositories, and toa lesser extent also saline formations. For deepaquifers, the integrity of these repositories is stillunknown, although it is assumed that this will behigh. Pilot applications, like in the Sleipner Field inthe North Sea appear to confirm this (Baklid et al.,1996; Torp, 2000). But there are still no integrity andmonitoring guidelines or assessment criteria for stor-age quality requirements (Gerling and May, 2001).

Ocean sequestrationUse of the huge CO2 repository represented by theoceans and seas with its estimated capacity foranthropogenic CO2 much exceeding 1,000GtC(IPCC, 2001c; Herzog, 2001) involves, at today’s sta-tus of knowledge, high risks with respect to longevityof storage and environmental impacts. The storageperiod depends on where the CO2 is injected and onprevailing ocean currents as well as depth of injec-tion. Simulations show that CO2 has to be placed atgreater depths to prevent its rapid release into theatmosphere. At an injection depth of 950m atfavourable locations, CO2 could be retained overlong periods in the ocean, of an order of magnitudeof 1,000 years (Drange et al., 2001).

Due to injection, the partial pressure of the CO2 isincreased and at the same time the seawater’s pH islowered. Although as yet the biological conse-quences have not been adequately investigated, theyare a cause for concern. Proven are significantchanges in the structures of microbiological commu-nities, inhibition of metabolism and an appreciablesensitivity of marine organisms to lowering of pH.Upsetting the acid-base equilibrium by lowering pHcould result in disintegration of calcium-containingskeletons as well as changes in metabolism that mayreduce the growth and activity of organisms(Nakashiki and Oshumi, 1997; Seibel and Walsh,2001). It has also been observed that fish find it diffi-cult to breathe (Tamburri et al., 2000). The costs forCO2 sequestration in the sea, including capture andtransportation, are today quoted as 30 to 90 US$ pertonne CO2 (Hendriks et al., 2001; DeLallo et al.,2000).

3.6.2Potential for sequestration as biomass

Carbon sequestration in terrestrialecosystemsAt present, terrestrial ecosystems store some460–650GtC in vegetation and 1,500–2,000GtC in thesoil (Fig. 3.6-1; IPCC, 2000a, 2001a). 30–50 per cent ofthe carbon exists in an easily degradable form, whichmeans that if no precautions are taken some 700Gt of

Table 3.6-2Comparison of variousgeological sequestrationoptions.EOR Enhanced OilRecovery, EGR EnhancedGas Recovery.Sources: Parson and Keith,1998; IPCC, 2001c; Herzog,2001

Sequestration option

Estimatedcapacity[GT C]

Relative costs Repositoryintegrity

Technicalpracticability

Active oil wells (EOR) low very low good high

Deep coal seams (EGR) 40–300 low unknown unknown

Depleted oil and gas repositories 200–500 low good high

Deep aquifers,caverns/salt domes 100–1,000 very high good high


carbon could be liberated over a short time bychanges in land use. On the other hand, according tosimulation calculations, by 2050 these reservoirscould be augmented by some 70GtC in forests and afurther 30GtC on land used for agriculture (IPCC,2001c). Despite its substantial sink capacity, CO2

uptake in the terrestrial biosphere can offset only toa small part anthropogenic greenhouse gas emis-sions, including emissions from land use, as docu-mented by the rising concentration of CO2 in theatmosphere. Due to the increase of biomass in theforests of North America and Europe, since thebeginning of the 1990s some 10 per cent of globalemissions have been absorbed (IPCC, 2001c). Ananalysis of carbon flows of entire continents showsthat, for example, the primary forests of Siberia elim-inate a large part of the CO2 emissions of Russia andthe EU due to intensified photosynthesis (Schulze,2002).

In contradiction to the hypothesis of ecologicalequilibrium (Odum, 1969) and despite a relativelyconstant core biomass, natural ecosystems are capa-ble of tying in large quantities of CO2 (Schulze et al.,1999). Within the climate system, primary forests actas important CO2 sinks, but are under increasingthreat due to human intervention ranging up to theircomplete destruction. Their protection would havepositive impacts for both climate protection andnature conservation.

The behaviour of the natural carbon reservoir insoils under the influence of temperature rise is verydifficult to estimate at present, since the effects of cli-mate on the stored amounts differ between the trop-ics and the boreal zones. But more serious than thepossible impacts of climate change would appear tobe the effects of anthropogenic changes in land useon the carbon storage capacities of soils. Accordingto IPCC (2000a, 2001a), in the 1980s and 1990s1.6–1.7GtC per year were liberated from terrestrialecosystems. Even if it proves possible to greatly limitthe consumption of fossil fuels, failure to protect thesoil carbon inventory would completely countervailall climate protection efforts. One possibility to pro-mote carbon storage is offered by changing the man-agement regime of ecosystems used for agricultureand forestry to one designed for carbon sequestra-tion. Forest measures encompass, for example, avoid-ance of clear-cutting combined with ecologicallycompatible practices. However, in agriculture there isa high degree of uncertainty concerning both suitableareas of land and the level and permanence of theattainable sequestration. Changed management ofagricultural soils, for example modified ploughingtechniques, might involve raising nitrous oxide emis-sions and increasing fertilizer application, thus result-ing in liberation of carbon dioxide (Freibauer et al.,2002).

Clearance

of vegetation

CO2 (3.5)CO (0.5)

Carbon-containingaerosols (<0.1)

Ocean[39,000]

Vegetation [460–650]

Soils [1,500–2,000]

DOC export(0.4)

Charcoalformation(<0.1)

Atmosphere[730] (increase per year: 3.2)

Combustion of fossil

energy carriers

(6.3)Uptake in seas and oceans (1.9)

(4)

Land-usechange (1.7)

Uptake onland (1.9)

Photosynthesis(110)

Autotrophicrespiration (50)

Heterotrophicrespiration (55)

Ocean-atmosphereexchange(90)

Figure 3.6-1Global carbon inventories and flows in vegetation, soil, oceans and the atmosphere. All values in Gt carbon (inventories:square brackets) or Gt carbon per year (flows: round brackets and in italics).Source: amended from Ciais et al., 2003

91Energy for transport 3.7

Carbon sequestration in marine ecosystemsSingle-cell algae in the world’s oceans – phytoplank-ton – are responsible for around half of global carbonfixing by photosynthesis. In some areas of the ocean,phytoplankton growth is greatly restricted due to alack of the micro-nutrient iron, for example in thesub-Arctic Northeast Pacific, in the Pacific near theequator and in the South Seas. Various ocean fertil-ization experiments have demonstrated that a localand short-duration algae bloom can be triggered byadding iron (Martin et al., 1994; Boyd et al., 2000).

Watson et al. (2000) assume when estimating thelongevity of sequestration that iron will have to beadded continuously to achieve permanent removalof CO2 from the atmosphere. If the additional phyto-plankton does not sink but instead remains near thesurface, within a year the carbon would return to theatmosphere. Despite the large uncertainties, com-mercial projects are already underway (Markels andBarber, 2001).

The global potential of biological marine CO2

sequestration is limited to ocean areas that are defi-cient in micro-nutrients, for example in the SouthSeas. Because here deep water is formed that feedsthe upwelling areas in the tropics, nutrient-poorbuoyant water could result in losses in primary pro-duction. Consequently, on an overall balance, fertil-ization with iron could be a zero-sum game. Addi-tionally, serious consequences are to be expected formarine ecosystems as a result of fertilization withiron (Chisholm et al., 2001) in the form of a reductionin the species diversity and composition of phyto-plankton communities, an increase in toxin-produc-ing cyanobacteria as well as eutrophication andaccelerated oxygen consumption in the deeper oceanlayers, with the consequence of anoxic degradationprocesses, so possibly liberating greenhouse gaseslike methane or nitrous oxide.

3.6.3Evaluation

Generally, all options for carbon management areless sustainable than measures for emissions reduc-tion by raising efficiency and switching from fossilfuels: carbon enters, from stable fossil repositories, acycle that leads also into the atmosphere with greateror lesser risk, where its greenhouse action comes intoplay. However, in many countries fossil carriers willremain as the predominant energy source overdecades (Chapter 4). Therefore, end-of-pipe tech-nologies for carbon sequestration offer an option forclimate protection to hinder excessive emissions, inparticular during this century. Criteria for evaluatingspecific carbon management options are the

longevity of sequestration, its reliability, and its envi-ronmental impact.

The Council regards geological sequestration aspossessing an interim potential that could be used forremoving CO2 from the atmosphere under the condi-tion that the integrity of the repository can be guar-anteed and the retention period is sufficiently great,i.e. exceeds 1,000 years. At today’s status of knowl-edge this is the case for storage in depleted and activegas and oil fields as well as in salt caverns.The Coun-cil conservatively estimates the sustainable potentialto be around 300GtC.The greater technical potentialof CO2 sequestration in saline aquifers of more than1,000GtC is assessed by the Council as non-sustain-able at present knowledge, as there is sufficient evi-dence neither of the longevity and integrity of stor-age nor of the avoidance of environmental harm.Before pursuing this sequestration approach, furtherresearch is needed.

Concerning sequestration in the ocean via bothdeep-sea injection and iron fertilization, on accountof the environmental risks and uncertainties in thelongevity of storage, in particular in the case of ironfertilization, the Council does not regard this as hav-ing any sustainable potential.

The terrestrial biosphere makes a key contribu-tion to stabilizing atmospheric carbon dioxide con-centrations. But there is hardly any scope for extend-ing this repository, as natural ecosystems like primaryforest and wetlands are limited in their area andadditionally are suffering widespread destruction byhuman activity. Therefore, the creation of additionalsinks does not represent an alternative to avoidanceof fossil emissions.

3.7Energy for transport

Due to the fact that a high proportion of energydemand is consumed for transportation, this sectorplays a crucial role for the transformation of energysystems. The challenge is to enable mobility whilereducing the consumption of fossil fuels. Strategiespreventing traffic and shifting the modal split, andconcepts improving transport efficiency provide cru-cial stimuli for the political debate surrounding sus-tainable development and climate protection. In theEU and Japan, trends towards efficiency improve-ments are now becoming apparent: more economicalaviation engines, the marketability of ultra-efficientcars and the emerging mass production of fuel cellvehicles show that the industry already sees eco-nomic potential.


3.7.1Technology options for road transport

The route towards environment-friendly road trans-port is characterized by a variety of options for effi-cient and renewable drive and fuel systems, althoughthe ideal solution has yet to be found (Wancura et al.,2001). Only few of the technologies, for which broadmarket penetration can be expected over the next 30years, are likely to offer relief for the environmentand the climate. Some are even likely to lead to addi-tional greenhouse gas emissions, for example the pro-duction of methanol from hard coal, or the produc-tion of hydrogen in conventional power plants(ETSU, 1998).

Vehicles with fuel cellsVehicles with hybrid fuel cell drive will be able toreduce emissions of greenhouse gases and air pollu-tants by almost 100 per cent. The gaseous or liquidenergy carrier generates electricity in an electro-chemical oxidation process, with the only by-prod-ucts being water and heat.The vehicle is driven by anelectric motor, perhaps in combination with batterysystems. Hydrogen, methanol or petrol are currentlyused as fuels. Hydrogen can be produced from nat-ural gas or via the electrolysis of water, with the elec-tricity originating from either fossil or renewablesources (Section 3.4.4). Methanol produced fromnatural gas and petrol have a high hydrogen content,which can be separated and utilized directly in thefuel cell.

The weak point of this technology has hithertobeen the high energy consumption during the pro-duction of the fuel. In the most favourable case, a fuelcell car is estimated to reduce CO2 emissions byabout 50 per cent over its life time, compared with anaverage diesel or petrol car (Bates et al., 2001).Another issue is the storage of hydrogen in the car,which has not yet been solved economically. Assum-ing wide application of fuel cells and a high propor-tion of renewable energy carriers used for their pro-duction, most noxious substances can be reduced bymore than 90 per cent (IABG, 2000b).

Natural gasFrom an environmental perspective, the utilization ofnatural gas for transportation is a positive bridgingtechnology on the route from fossil fuels to renew-able solutions (Section 3.2.1). Compared with petrolor diesel, natural gas can improve the greenhouse gasbalance and reduce urban air pollution. Furtherexpansion should be encouraged through a densernetwork of gas filling stations and vehicle conver-sions, particularly in towns and regions suffering

from high pollution. Bi-fuel technologies combinethe utilization of two fuels (e.g. natural gas andpetrol) within the same vehicle and offer an impor-tant transition option as long as area coverage of gassupply is still patchy (Halsnaes et al., 2001).

Hybrid drives and batteriesHybrid drives combine electric motors and combus-tion engines. They are currently being tested for cars,buses and small lorries. Hybrid drives with electricmotors are expected to lead to a doubling of primaryenergy efficiency (Johansson and Ahman, 2002).Modern battery and storage technologies havestrategic importance for the whole energy system,particularly in combination with fuel cell drives,where they play an essential role (Section 3.4; IABG,2000b; Halsnaes et al., 2001). Before the wide marketintroduction of vehicles with hybrid drives and elec-tric vehicles, further technological improvements interms of battery capacity, charging process andcharging stations are required (Fischedick et al.,2002).

Improvements in efficiency for conventionalvehiclesToday, the development of more efficient drive tech-nologies is a standard strategy of all European carmanufacturers. Improving the efficiency of combus-tion processes is currently the subject of intenseresearch (e.g. through the integration of ceramiccomponents, new ignition systems, variable valvemanagement, improved turbo chargers; Halsnaes etal., 2001). Compared with 1995, the fuel consumptionof diesel engines, and therefore the CO2 emissionsper mile, have already been reduced by 20 per cent.A reduction of the energy and environmental costsby a further 50 per cent is considered feasible(Johansson and Ahman, 2002). The advantage ofoptimized conventional drive systems is the option ofrapid introduction on the market. Efforts are alsobeing made in the construction and design of vehi-cles, with targeted modifications being introducedthat lead to less energy consumption for the samemobility service. However, this efficiency potential ismuch lower than for drive and fuel technologies. Amaximum of 6 per cent of CO2 have been avoidedthrough weight reductions achieved to date; reducedrolling resistance has only saved about 1 per cent(Bates et al., 2001).

Drive systems with renewable fuelsRenewable fuels such as biogas, biodiesel, ethanol,methanol from residual timber and hydrogen arecurrently being introduced on the market.They offersome reduction in environmental and energy costs,but prices are higher (e.g. for hydrogen from wind or

93Energy for transport 3.7

solar electricity), which is why subsidies for theirintroduction on the market are required in themedium term.

3.7.2Improvements in efficiency through informationtechnology and spatial planning

Information technology has already revolutionizedthe transport sector, so that today persons and goodscan be moved much more efficiently (Golob andRegan, 2001). However, in an era of growing world-wide flows of commodities, freight transport in par-ticular offers further potential for significant effi-ciency improvements. The volume of road freighttraffic outside urban areas could be reduced by up to8 per cent in the short term through the applicationof telematics for fleet management (Kämpf et al.,2000).The total potential for reductions through effi-ciency measures in road transport is estimated to bemore than 60 per cent (IPCC, 2001c). However, sincein Germany road transport is only responsible forapproximately 5 per cent of all CO2 emissions, a max-imum of 2–3 per cent of nationwide CO2 emissionscould be saved, assuming no change in overallmileage. The best short-term result (10–15 per centefficiency improvements) is expected from electronicroad charging (ETSU, 1998).

The investments in telematics and informationsystems are currently motivated mainly by the desireto improve traffic flows, and less by environmentalaspects. A particular side effect of telematics couldprove to be problematical: improved traffic flowscould lead to further increases in the volume of traf-fic, thus compensating any emission reduction thatmay have been achieved.

With the aid of information technology, the transi-tions between road, rail, local public transport andinland water transport are today facilitated throughconcepts such as multi-modality or ‘combinationtransport’. All approaches for promoting a multi-modal infrastructure aim to increase the demand forand the attractiveness of non-polluting means oftransport. The worldwide potential for efficiencyimprovements through the expansion of multi-modalinfrastructures is very large. In this context, makingrail use more attractive through political measuresshould have a high priority (Section 5.2.4.1). Cur-rently, rail has a weak competitive position comparedwith the car. The area coverage of rail network isinadequate. Prices and transfer facilities are not veryattractive. Options for rail use are limited, particu-larly for the populations of smaller towns.

Modern concepts for spatial, urban and transportplanning offer much more than technological effi-

ciency improvements and can achieve a net reduc-tion in the amount of traffic per capita or per tonneof goods. New settlements are today designed in sucha way that traffic is avoided right from the start, withmixed use ensuring short routes, or good local publictransport connections and high population densityleading to good public transport utilization. Theseconcepts have not yet been implemented widely andoffer significant potential for better energy efficiencyin the transport sector worldwide.

3.7.3Sustainability and external effects of increasedtransport energy demands

Road transport not only causes the familiar environ-mental effects associated with fossil fuels (Section3.2.1), but has many other negative ‘external effects’(accidents, land sealing, noise, etc.; UNEP, 2002).Emissions from aviation have a particularly strongeffect on the climate, since at typical cruising alti-tudes they contribute to the greenhouse effect notonly via the CO2, but also through the formation ofozone and vapour trails. No comprehensive evalua-tion of different transport technologies from a sus-tainability perspective has been undertaken to date(Enquete Commission, 1995). In order to avoid newtechnologies being developed without considerationof environmental issues, the Council recommendsthe evaluation of options for future transport tech-nologies in consultation with experts from the cli-mate, energy, ecology and town planning disciplines.

While renewable fuels such as biodiesel (methylester), ethanol and methanol from biomass arethought to have large technological potential, theirenvironmental balance and in particular their green-house gas balance needs to be examined critically. Ifthey are produced in conventional agriculture, theemission of greenhouse gases (N2O, CH4) during pro-duction may even completely negate the CO2 emis-sion reduction effect of biogenic fuels. Their produc-tion therefore only makes sense if sustainable agri-cultural methods are applied, if adequate land area isavailable, and if a positive overall greenhouse gasbalance is achieved (IPCC, 2000a). In view of theintroduction on the market of biofuels and bio-oils itis sensible to promote integrated research along thechain of ‘cultivation method – industrial processing –fuel utilization’, in order to be able to define condi-tions for the sustainable production and use of suchfuels.


3.7.4Evaluation

To achieve a transition towards sustainable energyuse in the transport sector, efficiency improvementsfor existing technologies (e.g. improved engines,fuels) and the increased utilization of renewable,more environment-friendly energy sources for drivesystems should have priority. In view of the problemsassociated with the allocation of land (Sections 3.2.4and 4.3.1.3) and the low natural conversion rate ofonly 1 per cent from solar energy to biomass, theCouncil’s recommendation is to limit efforts associ-ated with the technology option of ‘biogenic fuels’,and to reduce current levels of support. Priorities forsupport should be fuel cell drives, natural gas andhybrid vehicles, telematics and multi-modality. Com-pared with petrol or diesel, natural gas has environ-mental benefits, mainly for the climate and for airquality. It should therefore be supported as a bridg-ing technology. In the long term, fuel cell enginesusing fuels produced from solar or wind energy openup a promising avenue towards sustainable develop-ment.

3.8Summary and overall assessment

Chapter 3 assesses the sustainably utilizable fossil,nuclear and renewable energy resources, based on anappraisal of the specific conversion technologies andan evaluation of their environmental and socialimpacts.

The fossil fuel resource base – potential geopoliti-cal developments aside – appears sufficient to meet aglobally growing energy demand throughout andbeyond the coming century. This, however, is unac-ceptable for climate protection reasons (Section3.2.1).The Council views geological storage of carbondioxide as providing only a limited potential of – cau-tiously estimated – some 300GtC if depleted oil andgas caverns are used. On the basis of the knowledgecurrently available, the Council does not consider theother options for CO2 sequestration to be sustainablyutilizable (Section 3.6).

In the Council’s assessment, the use of nuclearpower is not sustainable because it is associated withintolerable risks (e.g. proliferation, terrorism, and theabsence of secure final repositories). Similarly, theCouncil currently does not see a potential for use ofnuclear fusion within the context of a sustainableenergy system. This technology would not be avail-able in time to contribute to the transformation

process, and would also be associated with substan-tial risks (Section 3.2.2).

The use of traditional biomass prevailing in manydeveloping countries is assessed by the Council to beunsustainable because, among other things, it gener-ates substantial health hazards (Section 3.2.4.2).

The Council appraises the sustainable hydro-power potential relatively cautiously at 15EJ annu-ally (in 2100). This is because, in many developingcountries, in particular, the preconditions are scarcelyin place to meet the requirements upon their envi-ronmental and social impacts which, quite justifiably,have become stricter (Section 3.2.3).

In contrast, new renewable energy sources harboura major sustainable potential for the future: solarenergy, wind power, modern biomass use, geothermalenergy and other sources. While those sources thatcan only be expanded to a limited extent (e.g. windpower, bioenergy) are often already available todayat competitive prices, the sources which can beexpanded practically without limit (e.g. photo-voltaics, or solar thermal power generating plants)are still comparatively expensive today in a micro-economic perspective. For cost-reducing learningprocesses to be able to run their course in the field ofsolar electric energy conversion, a vigorous expan-sion rate would need to be ensured over the mediumterm. Only then will the technologies that can beexpanded effectively without limit be available atsufficiently low cost at the point in time when theexpansion of other types of renewable energy meetsthe limits of their sustainably utilizable potential.

The Council estimates the globally sustainablepotential of bioenergy at about 100EJ per year. Thisis significantly lower than other recent appraisals ofbioenergy’s potential because the Council has givenstronger weight to the limitations upon biomassusage that result from sustainability considerations(Section 3.2.4). Wind power can already be producedtoday in a manner that is both environmentallysound and, in some cases, micro-economically cost-effective. The Council estimates the sustainably uti-lizable potential at approx. 140EJ per year (Section3.2.5).Against the background of all future prospectsof human energy usage the sustainably utilizablesolar energy potential is practically limited only bytechnological and economic restrictions upon growthin installed capacity, but not by resource availabilityas such (Section 3.2.6; Fig. 4.4-5). Capacity could beraised by the end of the century to more than 1,000EJper year (Table 4.4-1). Due to technological uncer-tainties, the Council has estimated the sustainablepotential of geothermal energy cautiously at 30EJ peryear by 2100 (Section 3.2.7). In addition to the abovesources, it is reasonable to expect that in the futurecurrently unforeseeable technological developments

95Summary and overall assessment 3.8

will lead to the tapping of other renewable energysources or novel conversion technologies (Section3.2.8). The Council integrates this expectation withinits assessment by assigning it a sustainably utilizablepotential amounting to 30EJ per year in 2100 (Table4.4-1).

The Council’s assessment underscores the majorpotential to improve efficiency in conversionprocesses throughout the entire chain of the energysystem, e.g. by expanding the use of combined heat(and cold) and power technologies (Section 3.3).Moreover, there is a major potential to improve effi-ciency in the use of final energy, as well as at numer-ous further points in industry, commerce and build-ings (Section 3.5).

The increasing use of fluctuating renewableenergy sources will impart growing relevance to theissues surrounding the transportation, distributionand storage of energy. Here there is major potentialfor technological development, for instance by shap-ing power demand and the ever closer networking ofpower production through to an interconnectedworldwide system (Section 3.4). Over the long term,hydrogen can play a key role as energy carrier andstorage medium. The intensified use of natural gasand the associated expansion of appropriate infra-structure will facilitate the transition to a hydrogeneconomy (Section 3.4.4).

In the transportation sector, the key medium-termchallenges are, in the view of the Council, to improvethe efficiency of existing technologies and establishnew mobility concepts. The Council views fuel celldrives within the context of a hydrogen economy as ahighly promising long-term option, but can lend onlylimited support to the large-scale use of biogenicfuels.

Current global energy systems are based essen-tially upon fossil fuels and nuclear power as well as,in developing countries, the use of traditional bio-mass.The Council’s assessment of the sustainably uti-lizable potential of energy carriers available world-wide shows that these energy systems are in need ofa transformation that must be shaped in a long-termprocess.This global transformation of energy systemstowards sustainability will have to rely above allupon vigorous expansion of renewable energies, andupon efficiency improvements (Chapter 4).Appraisal of the sustainably utilizable potentialshows that, over the long term, solar energy will needto be made the key element of global energy supply.

4

4.1Approach and methodology for deriving anexemplary transformation path

The first chapters of this report discussed the initialsetting (Chapter 2) and the technological and sus-tainable potentials of present global energy sources(Chapter 3). For several reasons, today’s globalenergy system must be considered non-sustainable.In particular, its climate impacts jeopardize the life-support systems on which human existence depends,air pollution and the unsustainable use of biomassgenerate substantial health problems and some 2,000million people still lack access to modern forms ofenergy.

ApproachChapter 4 elaborates one of many possible scenariosfor the transformation of present energy systemstowards a sustainable energy future. The stress hereis on ‘possible’. Many developments are conceivablethat would reconfigure present worldwide energysystems in a sustainable fashion. Insofar, the scenarioderived in this chapter is not to be understood as pre-scriptive, but illustrative. It illustrates that it is bothtechnologically and economically feasible to turnglobal energy systems towards sustainability.

MethodologyTo derive a transformation path, the German Advi-sory Council on Global Change applies the principleof setting normative guard rails which it has alreadyused previously (WBGU, 1997b; Toth et al., 1997;Petschel-Held et al., 1999; Bruckner et al., 1999).Thisis based on the concept of demarcating potentialfuture development trajectories by guard rails.Guard rails thus deliver criteria that a scenario mustmeet if it is to be sustainable (Fig. 4.1-1). Compliancewith guard rails is a necessary condition for the sus-tainability of a path, but not a sufficient one, as guardrails can shift, for instance through new knowledge,or can be joined by entirely new guard rails. TheCouncil takes this approach because it is generally

difficult to provide a positive definition of sustain-able futures. It is easier to demarcate the realm per-ceived as unacceptable.Within the sustainable realm,under the restrictions posited, there are no furtherrequirements upon a scenario for the future.The sce-nario can follow any trajectory within that realm. Aslong as it does not collide with a guard rail, it remainssustainable.

The guard rail approach for selecting sustainablescenarios can be compared to a filter that tests aseries of plausible scenarios for the future in terms oftheir compatibility with a set of guard rails. At thesame time, using a modelling approach, simulationsare computed that identify sustainable path trajecto-ries.The guard rails themselves are formulated by theWBGU (Section 4.3). The filtering method does notlead to any single viable path, but merely sets limitsto the diversity of possible futures.

The guard rails can also be used to identify theareas in which measures can be taken – either to leadthe system out of the non-sustainable into the sus-tainable realm, or to change the direction of a trajec-tory which, while presently still in the sustainablerealm, would collide with a guard rail if it were tocontinue unaltered (Fig. 4.1-1). Such measures arediscussed in Chapter 5.

Figure 4.1-2 concretizes the analysis philosophy ofthe guard rail concept for the example of the climatesystem. Here the guard rail method is applied as fol-lows:1. First, a basic set of scenarios for the future is pre-

sented (Section 4.2).2. The Council selects a scenario (Section 4.2.6) that

is conservative in terms of the transformability ofits structures towards less energy-intensive prod-ucts and services. If the transformation towardssustainability can be demonstrated for such a ref-erence scenario, then the condition of sustainabil-ity will also hold for scenarios that are less conser-vative with regard to these structures.

3. In the next step, the guard rails are discussed, andcompliance of the selected scenario with these istested (Section 4.3). This reveals certain problemsthat attach to this scenario. In particular, the sce-

An exemplary path for the sustainabletransformation of energy systems

98 4 Sustainable transformation of energy systems

nario transgresses the climate guard rail (Section4.3.1.2), as do all the other basic scenarios exam-ined in the first step.

4. Subsequently, the selected scenario is modified insuch a way that it complies with the guard rails.This delivers an exemplary transformation path(Section 4.4).

5. Finally, simulations are carried out using another,newly developed modelling approach, in order tounderpin the exemplary path. Here cost-effectivepaths complying with the climate guard rail areidentified, and the scope for action explored thatresults if various guard rails are stipulated. Theseadditional analyses are used to discuss the proper-ties of the exemplary transformation path (Sec-tion 4.5).

4.2Energy scenarios for the 21st century

From the numerous energy scenarios that are avail-able, the WBGU chose the IPCC scenarios as thebasis for its analysis. These scenarios focus on the cli-mate problem, which corresponds to the Council’spriorities. The IPCC scenarios are recognized by theinternational scientific community and are based on

consistent assumptions about the driving forces forgreenhouse gas emissions.

4.2.1SRES scenarios as a starting point

The analysis of possible long-term developments ofthe energy system is based on a range of scenariogroups developed by the IPCC (2000b, 2001c): Thenon-mitigation emissions scenarios – i.e. scenarios inwhich additional climate policy measures areassumed to be absent – described in the IPCC SpecialReport on Emissions Scenarios, SRES (IPCC, 2000b;referred to in the following as ‘SRES scenarios’)serve as reference scenarios for the IPCC climatechange mitigation scenarios that build upon them(‘post-SRES scenarios’; IPCC, 2001c).The SRES sce-narios show the wide range of plausible future devel-opments, resulting from the uncertainties attachingto the driving forces and their interactions and to themechanisms simulated in the different models(IPCC, 2000b). Many of the scenarios assume strongenvironmental or social interventions, which distin-guishes them from conventional business-as-usualscenarios.

A total of 40 scenarios were grouped into fourfamilies. All scenarios within a ‘family’ have a char-

Non-sustainable area

Guard rail

Currentstate

Currentstate

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sure

Goal: To prevent non-sustainable trajectories

Goal: To steer the system out of the non-sustainable area

Mea

sure

Mea

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Mea

sure

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Figure 4.1-1Connection between guardrails, measures and futuresystem development.The figure shows possiblestates of a system in terms ofits sustainability, plotted overtime. The current state of asystem relative to the guardrail can be in the green area,the ‘sustainable area’according to best availableknowledge, or in the redarea, the ‘non-sustainablearea’. If a system is in thenon-sustainable area, it mustbe steered by appropriatemeasures in such a way thatit moves ‘through’ the guardrail into the sustainable area.The guard rail is thuspermeable from the non-sustainable side. If a systemis in the sustainable area,there are no furtherrequirements upon it at first.The system can develop inthe free interplay of forces.

Only if the system, moving within the sustainable area, is on course for collision with a guard rail, must measures be taken toprevent it crossing the rail. The guard rail is thus impermeable from the sustainable side. As guard rails can shift due to futureadvances in knowledge, compliance with present guard rails is only a necessary criterion of sustainability, but not a sufficientone.Source: WBGU

99Energy scenarios for the 21st century 4.2

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acteristic storyline, i.e. a description of the relation-ships among influencing factors and their develop-ment. For simplicity, the four families can be distin-guished along two dimensions: In the first dimension,a distinction is made between a world focussing onstrong economic growth (A), in contrast to a worldfocussing strongly on sustainability (B). In the Bworld, environmental measures are considered, e.g.for air pollution control, but not measures specifi-cally aimed at climate protection (e.g. CO2 taxes).The second dimension distinguishes between a worldwith increasing economic convergence and socialand cultural interaction among regions (globaliza-tion, 1) and a world with stronger emphasis onregional differences and local solutions (regionaliza-tion, 2).

This leads to four scenario families: A1 (highgrowth), B1 (global sustainability), A2 (regionalizedeconomic development), B2 (regional sustainabil-ity).

4.2.2Basic assumptions of the SRES scenarios

A1 world: high growthThe A1 storyline has the following characteristics:strong market-orientation, sustained economicgrowth (worldwide approximately 3 per cent peryear, corresponding to the growth rate over the last100 years), strong emphasis on investment and inno-vation in education, technology and institutions,rapid introduction of new and more efficient tech-nologies, increasing mobility and increasing socialand cultural interaction and convergence amongregions (e.g. in terms of per capita income). In thelong term, the current demographic developments inindustrialized nations (very low fertility rates, highdegree of aging) are assumed to be transferred to thedeveloping countries, due to the global convergenceassumed in the A1 world. Following an increase ofthe world population to approximately 9,000 million,a reduction to approximately 7,000 million in 2100 isexpected from 2050. This population development isin the lower range of existing projections, but abovethe lowest UN projection (IPCC, 2000b).

Energy productivity will increase by approxi-mately 1.3 per cent, which is faster than the averageover the last 100 years. However, low energy pricesoffer little incentive for the efficient utilization offinal energy, so that very high primary energy con-sumption is assumed, with a strong increase in motor-ization and urban sprawl worldwide. In effect, thescenarios transfer the economic development inJapan or South Korea after World War II or in Chinaover recent years to all developing countries (Roehrl

and Riahi, 2000). In terms of economic growth andglobal convergence of per capita income, the scenar-ios are therefore very optimistic.

Within the A1 scenario family, a distinction wasmade between four different paths, depending on theassumed technology development: the carbon-inten-sive path A1C, the oil- and gas-intensive path A1G,path A1T with a high proportion of non-fossil energycarriers, and finally the middle path A1B, for whichsimilar improvement rates were assumed for allenergy carriers or technologies. This differentiationhighlights the influence of technological develop-ment, with the other driving forces remainingunchanged (in particular identical economic devel-opment) (Section 4.2.5).

B1 world: global sustainabilityThe B1 scenarios assume the same population devel-opment and similarly strong economic growth as theA1 scenarios. Here ,too, the development in the dif-ferent regions is assumed to converge (‘globaliza-tion’). Disparities in income are assumed to narrowat the same speed as in the A1 scenarios.

However, the B1 world is distinguished from theA1 world by a strong social and environmentalawareness – de Vries et al. (2000) characterize it as‘affluent, just and green’.The world is also character-ized by high efficiency improvements in the energysector. A high proportion of increases in productionand income are utilized for the expansion of socialinstitutions, redistribution measures and environ-mental protection. Economic structures are charac-terized by rapid change towards a service and infor-mation society, in which materials are used sparingly.Clean and efficient technologies are introducedrapidly. Values shift towards a non-material mindset.

Despite strong economic growth, energy demandis low, i.e. only approximately one-quarter of theenergy use in the A1 scenarios in 2100. On average,energy intensity decreases by approximately 2 percent per year over the next 100 years. Compared withthe historic rate of 1 per cent per year this representsa significant improvement, driven particularly byhigh energy prices. This world is characterized byhigh income transfer and high taxes. Globalizationand liberalization are combined with a strong inter-national sustainability policy. Strong support forresearch and development is provided. Citiesdevelop in a compact way and with a high proportionof non-motorized traffic. Furthermore, the trendtowards urbanization is dampened. Even withoutdeliberate climate policy measures, these develop-ments lead to low greenhouse gas emissions, becausethey are in themselves very effective in terms of cli-mate protection.


A2 world: regionalized economicdevelopmentThe A2 world is heterogeneous, since the regionswant to preserve their national, cultural and religiousidentity and take different development paths(Sankovski et al., 2000). Separate economic regionsdevelop. Economic growth and the speed of techno-logical developments is therefore lower than in otherscenario families. Technologies spread more slowly,and trade flows are smaller than in A1 scenarios. Percapita income converges less strongly than in the A1or B1 scenarios. The scenario is based on very highpopulation growth (15,000 million by 2100), since fer-tility patterns do not converge, in contrast to the A1and B1 scenarios. Energy productivity increases byonly 0.5–0.7 per cent per year, and energy demand ishigh, although not as high as in the A1 scenarios. Theenergy systems of the A2 world are very heteroge-neous. The energy carrier mix in the individualregions strongly depends on resource availability.

B2 world: regional sustainabilityThe B2 storyline describes a future in which local andregional solutions for sustainable development playa significant role. International institutions and struc-tures become less important. The emphasis is onenvironmental protection, but only at a national andregional level.The growth in population is lower thanin A2 scenarios (approximately 10,000 million by2100). Economic growth is moderate, technologicaldevelopment is less pronounced than in the B1 or A1world. Many projections match today’s trends, forexample in terms of population or economic growth,or the increase in energy productivity. Energydemand is lower than in the A1 and A2 scenarios, buthigher than in the B1 scenarios. The current trend ofdeclining investment in research and development isassumed to continue.

4.2.3Emissions in the SRES scenarios

There is a strong variation in the emission of green-house gases and noxious substances between andwithin the scenario families. The fossil-intensivegrowth scenarios A1C and A1G show the highestCO2 emissions, although the A2 scenarios also havevery high emissions: Whilst economic growth is lessstrong, slower technological development leads to asmaller reduction in carbon and energy intensity.A1B and B1 scenarios show a change in trendtowards lower emissions from about 2050. This canbe attributed to a trend reversal in population devel-opment, and also to improvements in productivity.These trends more than compensate the economic

growth. Conversely, the A2 and B2 scenarios showcontinuously growing CO2 emissions. The B1 andA1T scenarios have the lowest CO2 emissions of allscenarios.They are both based on rapid developmentof non-fossil technologies, although there are strongdifferences in energy use.

The scenarios also differ in terms of land use andchanges thereof: The trend towards a reduction inglobal forest areas is reversed in most scenarios, par-ticularly in B1 and B2 scenarios. Due to the assumedlower growth in population and the reduction in pop-ulation after 2050, and due to increased productivityin agriculture, methane and nitrous oxide emissionsare much lower in A1 and B1 scenarios than in A2and B2 scenarios. Sulphur emissions are generallylower than in previous projections, since it is thoughtthat local and regional air pollution will be abatedmuch earlier than previously assumed.

According to these model calculations, the globalaverage ground-level temperature will increase by1.4–5.8°C between 1990 and 2100 (IPCC, 2001a).Thisrange is a result of uncertainties both in the climatesystem and in the socio-economic driving forces.Even the B1 and A1T scenarios with the lowest emis-sions violate the guard rail of the WBGU climatewindow (Section 4.3). The IPCC climate change mit-igation scenarios, which are based on these SRESscenarios, are therefore introduced below.

4.2.4IPCC climate change mitigation scenarios (‘post-SRES’ scenarios)

The IPCC Third Assessment Report (TAR) devel-oped possible paths for achieving different stabiliza-tion targets for the CO2 concentration of the atmos-phere (between 450ppm and 750ppm) based on theSRES scenarios (IPCC, 2001c). The assumptionsabout the main driving forces (population, economicgrowth, demand for energy services) match those ofthe respective SRES scenarios. Stabilization of theCO2 concentration by 2150 at the latest was specifiedas an additional condition. However, the reductiononly applies to energy-related greenhouse gas emis-sions: CO2 emissions from changes in land use and(non-energy-related) emissions of other greenhousegases are identical to those in the reference scenarios.

Even for a stabilization level of 450ppm, theexpected global warming during the 21st century willonly remain below the WBGU guard rail (globalwarming less than 2°C relative to pre-industrial val-ues; Section 4.3.1.2) for medium to low climate sensi-tivity values. For the long-term equilibrium, globalwarming above the limits specified in the WBGU cli-mate window is expected, even for low climate sensi-


tivity (IPCC, 2001d). If the climate window guard railspecified by the WBGU is to be complied with, stabi-lization levels of 450ppm or less are thereforerequired. However, no post-SRES stabilization sce-narios with lower target levels are available, althoughother scenarios (e.g. Azar et al., 2001) show that sta-bilization levels of 350ppm can be achieved, forexample through increased utilization of biomass incombination with carbon storage. By choosing a450ppm scenario, the WBGU does not wish to givethe impression that this is a safe greenhouse gas con-centration level in the sense of Article 2 UNFCCC.Compliance with the WBGU climate window willrather require an analysis of integrated climate pro-tection strategies (not only energy policy) and thedevelopment of appropriate scenarios.

Yet existing scenarios show (IPCC, 2001d) that inorder to reach stabilization levels of 450ppm CO2 orbelow, the increasing trend of global emissions has tobe reversed very quickly, i.e. within 10 or 20 years,after which rapid reduction needs to continue overthe following decades. If additionally the long invest-ment cycles for power plants and distribution net-works are considered, it becomes clear that the next10–20 years are the crucial time window for the trans-formation of energy systems.

4.2.5Technology paths in the A1 world

The A1 scenarios show the different technologicalpaths that are conceivable under the same economic,social, political and demographic driving forces. Forall paths, stabilization at 450ppm can be achieved,albeit with very different energy strategies, costs andrisks.

4.2.5.1Comparison of energy structures and climatechange mitigation strategies

The A1-450 stabilization scenarios and their respec-tive reference paths within the A1 scenario group areexamined more closely below. The MESSAGEdynamic optimization model, coupled with theMACRO macro-economic model was used for quan-tification purposes (Messner and Schrattenholzer,2000). MESSAGE minimizes the aggregated costs ofenergy production with given demand for energy ser-vices (preset by the macro-economic model) and cal-culates a cost-optimized energy carrier mix on thisbasis. Changes in demand resulting from measuresfor limiting CO2 emissions (e.g. through a CO2 tax)were not considered in the scenarios analysed in this

report. In the stabilization scenarios, primary energyuse relative to the respective reference scenario doesnot decline.The stabilization scenarios with intensiveuse of fossil energy carriers even show a strongincrease in primary energy demand. This can beattributed to the application of energy-intensive car-bon dioxide separation technologies for carbon stor-age (Section 3.6.1; Table 3.6-1).

Depending on the assumptions about the techno-logical paths in the reference scenarios, the develop-ment paths for the energy systems in the A1 scenar-ios differ for the same stabilization target. This high-lights the path dependency associated with a prefer-ence for certain technologies in the individualreference scenarios. In the A1T path, for example, theproportion of solar energy increases due to climatepolicy measures, whilst the ‘balanced’ A1B scenarioand coal-intensive A1C scenario show a strongincrease in the proportion of nuclear energy (Roehrland Riahi, 2000).

Coal and nuclear energy-intensive path:A1CThe A1C scenarios are characterized by the utiliza-tion of coal technologies with reduced noxious sub-stance emissions, which, without additional climatepolicy measures, lead to very high greenhouse gasemissions, although they are environment-friendly ifthe climate change problem is left aside. They arebased on the assumption that conventional oil andgas reserves will decline quickly, requiring stronginvestment in cost-intensive new coal technologies(high temperature fuel cells, coal gasification andliquefaction). But nuclear technology is also devel-oped further (for example uranium extraction tech-nologies), since intensive use is made of nuclearenergy, particularly in regions with low coal deposits.In the A1C reference path, coal is the main energycarrier, with a primary energy share of 47 per cent in2100. The nuclear energy share is 18 per cent. Due tothe high demand for coal, which cannot be satisfiedwith domestic coal in all regions, an intensive globalmethanol trade will develop, since methanol (gener-ated from coal) is required, particularly for the trans-port sector.The main mitigation measures for achiev-ing the 450ppm stabilization target are carbon stor-age and increased efficiency, but these scenarios alsorequire strong expansion of nuclear energy.

Oil- and gas-intensive path: A1G The main characteristic of the A1G scenarios is theutilization of non-conventional oil and gas resources,including oil shale, tar sands and methane hydrates(Section 3.2). Rapid technological progress in extrac-tion and conversion technologies for oil and gas isassumed. Global trade in oil and gas will increase


strongly, and new gas pipelines will be built from2010 or 2020. Due to the energy demand for extrac-tion and gas transport, primary energy demand isparticularly high. In the A1G reference path, gas isthe main energy carrier in 2100 (45 per cent share ofprimary energy), followed by renewable energysources (25 per cent) and oil (14 per cent). However,nuclear energy also has a high share (12 per cent).With a cumulative consumption of approximately34,000EJ of oil and 59,000EJ of gas, even these oil-and gas-intensive scenarios use during the 21st cen-tury only a fraction of total fossil fuel occurrences(Nakicenovic and Riahi, 2001). It is assumed that asmall proportion of deposits that are today classifiedas additional occurrences will already be recoverableduring the 21st century (Table 3.2-1).

Here ,too, carbon storage and increased efficiencyare the main climate change mitigation measures forreaching the stabilization target of 450ppm CO2. There-injection of CO2 into oil and gas fields plays animportant role. However, drastic structural changeswould be required during the 22nd century, since thecapacity limits for re-injection into gas fields wouldbe reached.

Mixed path: A1BThe A1B scenarios (‘balanced technology’) assumethat all technologies will develop uniformly. Lowerpath dependency is therefore assumed than in theother A1 scenarios: A coordinated global strategy ofresearch, development and application of technolo-gies leads to regionally differentiated specializationin different technologies. To secure carbon dioxidestabilization, A1B scenarios focus on carbon storageand on increased development of non-fossil energycarriers and conversion technologies, particularlynew nuclear reactors, hydrogen fuel cells for thetransport sector and additional hydroelectric plants.Hydrogen is mainly produced from renewableenergy sources.

Strong development of non-fossil energycarriers: A1TThe A1T scenarios are characterized by a rapiddevelopment of solar and nuclear technologies andby the large-scale application of hydrogen technol-ogy. Prerequisites are very large and dedicatedinvestment in research, development and applicationof these technologies, for example in new, ‘inherentlysafe’ nuclear energy technologies (e.g. high tempera-ture reactor) and renewables. Higher investments inenergy efficiency are also assumed, so that thedemand for final energy is lower than in the other A1scenarios (with identical demand for energy ser-vices). On average, energy productivity increases by1.4 per cent per year. In 2100, renewables and nuclear

energy together have a primary energy carrier shareof 86 per cent.

Due to the already low CO2 emissions, the A1Tscenarios require only few reduction measures toachieve the 450ppm stabilization target. Carbon stor-age is therefore only used moderately. Technologicalprogress is similar to the A1B scenarios, although thedeparture from the fossil path is even clearer. TheA1T-450 scenario thus illustrates developmenttowards a hydrogen economy. Hydrogen is producedin nuclear reactors and with renewable energysources (e.g. solar thermal technology). Coal utiliza-tion ceases at the end of this century. The utilizationof nuclear energy (high temperature reactors) isincreased slightly, and so is the utilization of hydro-gen fuel cells for transport.

4.2.5.2The role of carbon storage

Since CO2 storage is cost-intensive (Section 3.6.1), itis not used in the reference scenarios without climatepolicy measures, except for re-injection into oil andgas fields. It is, however, used in all A1 post-SRES sta-bilization scenarios, albeit to a very different extent(Table 4.2-1). The figures are comparable with thepotential estimates for carbon storage in oil and gasfields (200–500GtC) and in deep aquifers (100 tomore than 1,000GtC) (Section 3.6), although thesefigures are subject to a high degree of uncertainty.The fossil-intensive paths A1C-450 and A1G-450, butalso the ‘medium’ path A1B-450, far exceed theguard rail of 300GtC set by the WBGU as the upperlimit for carbon storage during the 21st century (Sec-tion 4.3). In scenarios A1C-450 and A1G-450, therequired CO2 sequestration is greater than the poten-tial estimated to be available for geological storage,so that storage in deep ocean water would berequired. The WBGU regards anthropogenic carbonstorage in the ocean as non-sustainable (Section3.6.3).

4.2.5.3Cost comparison

Figure 4.2-1 shows the dependency of energy systemcosts on the technological development in the refer-ence scenarios and on the stabilization target(Roehrl and Riahi, 2000). The energy system costsare defined as the sum of investment, operation andmaintenance costs, including the costs for distribu-tion and for environmental technology. Whilst theMESSAGE model discounts energy system costs at 5


per cent (assuming minimization), they are shown asnon-discounted in Figure 4.2-1.

It is evident that the cost differences between thereference scenarios and the associated stabilizationscenarios are usually lower than the cost differencesbetween the individual reference scenarios. Forexample, the difference between the costs for the fos-sil-intensive paths (A1G, A1C) and the A1T path,which strongly depends on non-fossil technologies, isfar greater than the costs for stabilization at 450ppm,for example for the balanced A1B path or the A1Tpath.The fossil path is therefore an inherently expen-sive path. The main reason for the high costs is theapplication of partly outdated energy structures(path dependency), in which comparatively smalllearning effects can be expected.An additional factoris the increasing cost of resource extraction for non-conventional resources (Section 3.2.1). In the coal-intensive path, a large proportion of the futuredemand for liquid fuels has to be supplied throughcoal liquefaction or methanol production, both ofwhich are very expensive.

For the coal-intensive path, whose reference sce-nario already shows the highest costs, the additionalcosts for a stabilization of the carbon dioxide con-centration to 450ppm are particularly high. Fixationon a coal-intensive path therefore not only leads toan expensive energy system in the long term, but alsocauses very high CO2 reduction costs with a stabiliza-tion target of 450ppm.

However, research and development costs andadditional macro-economic adaptation costs orexpenditure for the development and procurementof end-use devices (e.g. vehicles, production plants,domestic appliances) are not included in the energysystem costs shown here. Expenditure for researchand development is higher in the A1T scenario thanin the other scenarios. The research intensity of theenergy sector (i.e. the proportion of expenditure forresearch and development relative to turnover) inthe A1T scenario between 1990 and 2050 reachesglobally averaged values between 4 and 13 per cent,depending on how strongly research and develop-ment expenditure influence the technology costs(Riahi, personal communication). For comparison,

Figure 4.2-1Total (non-discounted)energy system costs(1990–2100) and cumulativeCO2 emissions for thereference and stabilizationscenarios (stabilizationlevels 750, 650, 550 and450ppm of CO2). Each pointrepresents a scenario. A1C:Coal-intensive path. A1G:Oil- and gas-intensive path.A1B: Mixed path. A1T:Strong development of non-fossil technologies.Source: Roehrl and Riahi,2000

Scenario A1B A1B-450 A1G A1G-450 A1C A1C-450 A1T A1T-450

[GT C]

EOR + EGR 28 98 171 366 0 63 29 69Other storage 0 762 0 1,148 0 1,492 0 148

Total 28 860 171 1,514 0 1,555 29 217

Table 4.2-1Total stored CO2 quantity for the period 1990–2100 in selected A1 scenarios (reference and 450ppm CO2 stabilizationscenarios). EOR Enhanced Oil Recovery, EGR Enhanced Gas Recovery (Section 3.6.1). A1C coal-intensive path, A1G oil- andgas-intensive path, A1B mixed path, A1T strong development of non-fossil technologies, 450 stabilization at 450ppm CO2.Source: Roehrl and Riahi, 2000

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the extremely research-intensive pharmaceuticalindustry currently has a research intensity of approx-imately 10 per cent (Section 2.3.1). By contrast, in thecoal and nuclear-intensive scenario A1C, the globallyaveraged research intensity only reaches a value ofapproximately 0.3 per cent during the same interval.This corresponds to the current research intensity ofthe energy sector in the OECD countries. The mas-sive increase in research and development expendi-ture (against the current trend) in the energy sectorto US$19908–25 million million for the period 1990–2050 is a prerequisite for the cost reductions achievedin the A1T scenarios for technologies to exploitrenewable energy carriers. The additional expendi-ture for research and development compared withthe A1C scenarios, where only approximatelyUS$19901 million million are spent, is at least compen-sated by the cost reductions and the much lowerinvestment costs. During the same period, the invest-ment costs for the A1T scenarios are approximatelyUS$51 million million, for the A1C scenarios approx-imately US$73 million million. Nevertheless, even inthe A1C scenarios the investment costs amount to amaximum of 1.7 per cent of GDP. The difference inthe total energy system costs is even greater: For theA1C scenarios, total energy system costs amount toapproximately US$230 million million during thesame period, in the A1T scenarios they are approxi-mately US$190 million million. In addition to strongmarket growth, higher expenditure for research anddevelopment over the next decades is a prerequisitefor the realization of the comparatively very highassumed learning rates (26 per cent for solar photo-voltaic, 11 per cent for wind energy, 10 per cent forelectricity from biomass, 8 per cent for nuclearenergy, 10 per cent for natural gas fuel cells; Riahi,2002).

For the transformation of energy systems not onlythe cumulative costs are significant, but also theirdevelopment over time (Fig. 4.2-2). For example, thecost advantages of the non-fossil A1T path vis-à-visother paths only become apparent after more than 20years when comparing the non-discounted energy-specific energy system costs. The cost advantage ofthe non-fossil climate change mitigation path com-pared with the coal-intensive reference path onlybecomes apparent from about 2040. However, thecoal-intensive climate protection path A1C-450 ismore expensive than the other paths from the outset,since expensive measures are required, e.g. forsequestration, due to the high emissions assumed inthe reference path (Roehrl and Riahi, 2000).

This highlights the path-dependency risk, with thefossil path, and in particular the coal-intensive pathonly being able to be maintained at very high costs.The high costs of the coal-intensive climate protec-tion path A1C-450 that are incurred from the outsetmake the political enforceability of ambitious cli-mate policy measures in a world taking such a pathappear doubtful.

4.2.5.4Environmental effects

Figure 4.2-3 shows the annual emissions of carbondioxide, methane and sulphur dioxide, as well as tem-perature change for the coal-intensive and non-fossilpaths, both for the respective reference scenarios andfor the 450ppm stabilization scenarios.

It can be seen that the non-fossil climate protec-tion path causes far lower sulphur dioxide emissionsthan the carbon-intensive path. In the carbon-inten-sive path, they increase despite the significant invest-

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Figure 4.2-2Specific (non-discounted)system costs (based on finalenergy) for the A1C andA1T reference scenarios andfor the A1C-450 and A1T-450 stabilization scenarios.The cost path for the B2reference scenario is shownfor comparison. For theinvestment decisions inMESSAGE, future costs arediscounted with 5 per cent.No discounting was carriedout for this graph, in orderto avoid a distortion of costdevelopment over time.Sources: Roehrl and Riahi,2000; Riahi, 2002


ments in low-polluting coal technologies over thenext decades to nearly twice the current value beforea reduction can be observed (Fig. 4.2-3b). Due to thecooling effect of sulphate aerosols, initially this leadsto lower warming in the fossil path with the sameCO2 stabilization target, despite the higher methaneemissions.

4.2.6Selection of a scenario for developing anexemplary path

The WBGU considers it difficult to imagine that thedevelopment described by the A2 scenarios can besteered into the sustainable realm. The combinationof a lack of global convergence, the associated slowtechnological development and low efficiencyimprovement and decarbonization, together with theabsence of a general environmental orientation,make the attainment of climate protection targets

within the WBGU climate window extremely diffi-cult and expensive, if not impossible.

A B2 scenario could be considered for the devel-opment of an exemplary path towards sustainability,even if it reaches the sustainable realm later in termsof the socio-economic guard rails (Section 4.3) thanthe A1 and B1 scenarios, which are characterized bystrong convergence. However, since no B2 scenario isavailable with an energy system model containingthe required technological detail, with stabilization ata CO2 concentration of 450ppm (Morita et al., 2000),for pragmatic reasons the WBGU has not selectedthe B2 scenarios for further examination.

Because a world of global convergence (A1 andB1 scenarios) leads more quickly into the sustainablerealm defined by the WBGU’s socio-economic guardrails (Section 4.3), the B1-450 stabilization scenariowould lend itself as a basis for a path modifiedaccording to WBGU criteria, in view of its orienta-tion to both social and environmental compatibility.However, the WBGU regards it to be more advisable

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Figure 4.2-3Environmental effects for a path with strong expansion of non-fossil technologies (A1T, red) and a coal-intensive path (A1C,black) with identical assumptions for population and economic development. In each case, the effects for the reference path(continuous line) and the stabilization scenario (stabilization of the carbon dioxide concentration at 450ppm, dashed line) areshown. Stabilization in the coal-intensive path A1C is only possible with extensive sequestration.a) anthropogenic carbon dioxide emissions,b) anthropogenic sulphur dioxide emissions,c) anthropogenic methane emissions,d) mean global warming (from 1990 baseline) with an assumed climate sensitivity of 2.5°C.Source: Riahi, 2002

107Guard rails for energy system transformation 4.3

to demonstrate the option of an energy system trans-formation towards sustainability on the basis of a sce-nario that assumes strong growth in primary energydemand. The options for structural change towardsless energy-intensive products and services, orchanges in preferences, consumer habits andlifestyles are thus estimated more cautiously.

The WBGU regards the fossil and nuclear energy-intensive paths of the A1 scenarios (global conver-gence, high growth, rapid technological develop-ment) as non-sustainable, even if the minimum socio-economic requirements (Section 4.3.2) and a stabi-lization of the carbon dioxide concentration at450ppm could be achieved. This stabilization is onlypossible with extensive sequestration, so that at theend of the 21st century the limits to storage in geolog-ical formations would be reached. Storage in deepocean water may even be required, which the WBGUregards as non-sustainable. These scenarios repeat-edly overstep the guard rail for the maximum tolera-ble utilization of carbon storage (Section 4.3.1.2).Furthermore, these paths hinder the transformationof the energy system for future generations, sincethey are unlikely to be able to be continued duringthe 22nd century. The WBGU also regards the highproportion of nuclear energy as non-sustainable.Finally, the energy system costs for these fossil-nuclear scenarios are very high. Stabilization of theCO2 concentration at 450ppm only appears possibleat very high cost. Moreover – with the same stabiliza-tion level of atmospheric carbon dioxide concentra-tion – due to emissions of other pollutants (e.g. SO2),the environmental effects of the fossil paths are sig-nificantly greater than those of the non-fossil path,despite the fact that significant investments in thedevelopment of power plants producing lower emis-sions are assumed.

Since even the A1B path with a balanced technol-ogy mix relies for stabilization at 450ppm on geolog-ical storage to an extent that is not acceptable to theWBGU, the WBGU uses post-SRES scenario A1Twith a 450ppm stabilization target for the develop-ment of an exemplary path, because with certainmodifications it can comply with all guard rails. Itavoids a deepening of dependency on fossil tech-nologies, has low emission values and assumes sus-tained economic growth and economic convergenceamong countries, as well as strong technologicaldevelopment.

This choice does not imply a statement aboutwhich of the SRES worlds the WBGU regards as themost probable one. Quite the opposite: Since the A1world is based on optimistic assumptions, particularlyin terms of the rapid reduction in divergencebetween rich and poor countries as well as lowgrowth in population, the realization of a (modified)

A1T-450 path requires not only energy policy mea-sures, but also economic and development policymeasures. To reach robust conclusions, it wouldtherefore be sensible to also examine an appropriatepath from the B2 world. However, this would requirethe development of a corresponding climate changemitigation scenario in the B2 world with a detailedconsideration of technologies.

4.3Guard rails for energy system transformation

Guard rails are quantifiable limits to damage whosetransgression would entail intolerable consequencestoday or in the future. Even major utility gains wouldnot offset this damage (WBGU, 2001a). In the fol-lowing, the Council defines guard rails for the pro-tection of natural life-support systems, and for theoperationalization of socio-ethical goals guided bythe vision of sustainable development (ecologicalguard rails, Section 4.3.1; socio-economic guard rails,Section 4.3.2). These guard rails establish concretelimits in relation to energy use that must be observedin order to live sustainably (Box 4.3-1), and can beapplied to test the sustainability of future energy sce-narios. Guard rails should by no means be under-stood as goals. They do not establish desirable valuesor states, but rather absolute minimum requirementswhich have to be complied with if the principle ofsustainability is to be observed. Nonetheless, theguard rail approach can indeed be used to deduceconcrete goals (Chapter 5).

Even if development trajectories remain withinthe guard rails, this need not mean that all socio-eco-nomic grievances or ecological damage can beaverted. Nor do global guard rails reflect the signifi-cant regional and sectoral disparities that may arisein relation to the impacts of global change. Finally,the guard rails stated by the WBGU can be no morethan proposals, for the determination of non-tolera-ble impacts cannot be left up to the academic com-munity but needs to take place – supported by scien-tific expertise – within a worldwide, democratic deci-sion-making process (WBGU, 1997b; Box 4.3-2).

4.3.1Ecological guard rails

4.3.1.1Protection of the biosphere

In earlier reports, the WBGU has developed five‘biological imperatives’ as general principles

(WBGU, 2001a). These form the basis for a sustain-able use of the biosphere, and thus also of energy.They include:– sustaining the integrity of bioregions,– securing biological resources,– conserving biopotential for the future,– protecting the global natural heritage, and– preserving the system control functions of the

biosphere.The definition of ecological guard rails presented inthe following proceeds from this normative basis.

4.3.1.2Tolerable climate window

Present energy systems are a prime driver of globalclimate change. This climate change will have signifi-cant impacts upon ecosystems as well as human civi-lization. The following discussion therefore developsa climate protection guard rail designed to excludeintolerable ecological and socio-economic climatechange effects.

Defining the guard railThe WBGU already developed the climate windowin earlier reports (WBGU, 1995, 1997b). The deter-mination of what is deemed to be intolerable warm-ing is oriented to the stress limits of human society


Box 4.3-1

Guard rails for sustainable energy policy

Ecological guard rails

Climate protection A rate of temperature change exceeding 0.2°C per decadeand a mean global temperature rise of more than 2°C com-pared to pre-industrial levels are intolerable parameters ofglobal climate change.

Sustainable land use10–20 per cent of the global land surface should be reservedfor nature conservation. Not more than 3 per cent shouldbe used for bioenergy crops or terrestrial CO2 sequestra-tion. As a fundamental matter of principle, natural ecosys-tems should not be converted to bioenergy cultivation.Where conflicts arise between different types of land use,food security must have priority.

Protection of rivers and their catchment areas In the same vein as terrestrial areas, about 10–20 per cent ofriverine ecosystems, including their catchment areas,should be reserved for nature conservation.This is one rea-son why hydroelectricity – after necessary framework con-ditions have been met (investment in research, institutions,capacity building, etc.) – can only be expanded to a limitedextent.

Protection of marine ecosystemsIt is the view of the Council that the use of the oceans tosequester carbon is not tolerable, because the ecologicaldamage can be major and knowledge about biological con-sequences is too fragmentary.

Prevention of atmospheric air pollutionCritical levels of air pollution are not tolerable. As a pre-liminary quantitative guard rail, it could be determined thatpollution levels should nowhere be higher than they aretoday in the European Union, even though the situationthere is not yet satisfactory for all types of pollutants. Afinal guard rail would need to be defined and implementedby national environmental standards and multilateral envi-ronmental agreements.

Socio-economic guard rails

Access to advanced energy for allIt is essential to ensure that everyone has access toadvanced energy. This involves ensuring access to elec-tricity, and substituting health-endangering biomass use byadvanced fuels.

Meeting the individual minimum requirement foradvanced energyThe Council considers the following final energy quantitiesto be the minimum requirement for elementary individualneeds: By the year 2020 at the latest, everyone should haveat least 500kWh final energy per person and year and by2050 at least 700kWh. By 2100 the level should reach1,000kWh.

Limiting the proportion of income expended forenergyPoor households should not need to spend more than onetenth of their income to meet elementary individual energyrequirements.

Minimum macroeconomic developmentTo meet the macroeconomic minimum per-capita energyrequirement (for energy services utilized indirectly) allcountries should be able to deploy a per-capita grossdomestic product of at least about US$19993,000.

Keeping risks within a normal rangeA sustainable energy system needs to build upon technolo-gies whose operation remains within the ‘normal range’ ofenvironmental risk. Nuclear energy fails to meet thisrequirement, particularly because of its intolerable acci-dent risks and unresolved waste management, but alsobecause of the risks of proliferation and terrorism.

Preventing disease caused by energy useIndoor air pollution resulting from the burning of biomassand air pollution in towns and cities resulting from the useof fossil energy sources causes severe health damage world-wide.The overall health impact caused by this should, in allWHO regions, not exceed 0.5 per cent of the total healthimpact in each region (measured in DALYs, disabilityadjusted life years).


and the observed range of fluctuation in the recentQuaternary period, during which humankind and itsenvironment have co-evolved.The aim is to preservethe natural environment as the life-support systemfor humankind and all other organisms. Defining thistolerable window thus establishes an important basisfor implementing the UN Framework Convention onClimate Change (UNFCCC), the ultimate objectiveof which is to achieve ‘stabilisation of greenhouse gasconcentrations in the atmosphere at a level thatwould prevent dangerous anthropogenic interfer-ence with the climate system. Such a level should beachieved within a time-frame sufficient to allowecosystems to adapt naturally to climate change, toensure that food production is not threatened and toenable economic development to proceed in a sus-tainable manner’ (Art. 2, UNFCCC).

Recent IPCC assessments (2001a) confirm theWBGU’s decision to adopt the climate window as aguard rail against intolerable climate change.The cli-mate window is defined by two limits: Both a tem-perature change rate of more than 0.2°C per decade

and a mean global temperature change of more than2°C relative to pre-industrial levels are deemed unac-ceptable. The form of the WBGU climate windowalso needs to be noted (Fig. 4.3-1), for the maximumtolerable warming rate declines with increasing prox-imity to the maximum tolerable absolute warminglevel, i.e. the climate window is not rectangular. Thearguments in support of this guard rail are substanti-ated in the following.

Climate zone shiftOne aim of the UNFCCC is to allow ecosystems toadapt naturally to climate change (Art. 2 UNFCCC).The impacts of climate change upon the world’secosystems are not yet fully understood. What is cer-tain, however, is that the geographical extent of dam-age to ecosystems will grow in step with both the rateof climate change and its absolute level and willinvolve the loss of biological diversity (IPCC, 2001a).If climate zone shifts are too swift or too large, sev-eral of the biological imperatives will be infringed.Hazards to certain particularly sensitive ecosystems

Box 4.3-2

Defining guard rails in terms of internationallaw?

A binding definition of sustainable energy policy guardrails at international level can be established primarilythrough international law, starting with the binding princi-ples and objectives enshrined in international treaties andconventions. However, it may be possible to derive guardrails from customary international law as well. Political dec-larations, resolutions and other ‘soft law’ agreements,although non-binding, can contribute towards the defini-tion of international legal principles.

Until now, the key instrument in the development ofsustainable energy policy has been the United NationsFramework Convention on Climate Change (UNFCCC),together with the Kyoto Protocol to the Convention. TheKyoto Protocol commits the industrialized and transitioncountries to reducing greenhouse gas emissions by 5 percent on average by the 2008–2012 period against the base-line year of 1990. However, this must be regarded merely asa first step towards defining binding long-term climateguard rails.

For this reason too, there is increasing debate aboutwhether states’ obligations can already be derived fromcustomary international law, particularly the principlewhich prohibits transboundary environmental damage.Tuvalu, the Maledives and Kiribati, whose survival isthreatened by climate-related sea-level rise, are planninglegal action against major industrialized countries beforethe International Court of Justice. For this reason, there isnow more intensive debate on the issue of the industrial-ized nations’ liability under international law for damagewhich can be expected to occur in developing countries infuture, especially in the small island states which are mostat risk. Until now, states have tended to be reluctant to

enforce claims against other countries. The general prefer-ence has been to seek diplomatic solutions or developinternational civil liability instruments. However, given theextent of climate damage and the completely inadequateresources available to the Adaptation Fund establishedunder the Kyoto Protocol, the worst-affected states maywell attempt to pursue claims based on the principle ofstate responsibility more vigorously in future. An increasein tort claims against major emitters can also be expected atthe same time.

As well as many practical problems, enforcing claims inaccordance with the principle of state responsibility createsa number of legal problems to which there are no clearsolutions.They include, for example, the scope and applica-tion of the principle prohibiting transboundary environ-mental damage, the question whether the UNFCCC andthe Kyoto Protocol may potentially exclude any possibilityof inter-state claims, and which actions could establish anystate responsibility for climate damage in the first place.Here, as with tort liability, far more research is required.

Although the Kyoto Protocol has given rise to a defini-tion of the ‘climate protection’ guard rail for the first com-mitment period from 2008 to 2012, socio-economic guardrails (Section 4.3.2) have rarely been integrated into bind-ing legal instruments until now.

The failure to develop, harmonize or define sustainableglobal energy policy guard rails or integrate energy-rele-vant development goals fully into climate protection policyis a distinct shortcoming in international climate policy atpresent. The WBGU recommends that a World EnergyCharter be developed as a first step towards implementinga sustainable energy policy. In order to overcome resistanceto this – initially non-binding – agreement, the key task willbe to convince the international community that this typeof global energy strategy offers added value (Section5.3.2.2).

Sources: WBGU, 2001c; Tol and Verheyen, 2001


(e.g. coral reefs, tropical forests, wetlands) must beexpected from an absolute warming level of 1–2°Cand are in some instances already apparent today(Box 4.3-3).

An absolute global warming level of more than2°C may cause fundamental changes in many naturalsystems. This would lead to major additional green-house gas emissions (IPCC, 2001a). The risk ofextreme climate events would then also rise sharply.From a warming level of 3.5–4°C onwards, adverseeffects must also be expected for anthropogenicecosystems in most regions of the world (IPCC,2001a).

Climate zone shifts trigger the migration of ani-mals and plants. Transportation routes and humanland uses (agriculture, settlement, etc.) stand in theway of this form of adaptation (WBGU, 2001a), sothat the loss of entire ecosystem types and speciesmust be feared.

Thermohaline circulationThe thermohaline circulation of the world ocean hasgreat importance for the global water and heat bal-ance. It is driven by the downward flow of cold andsalty water, above all in the Labrador Sea and Green-land Sea, but also in the Weddell Sea. The cold waterflows as a deep current southwards through theAtlantic, while in exchange warm upper water is con-veyed from tropical regions to the north by, amongother things, the Gulf Stream. If certain climatewarming thresholds are overstepped, both a shut-down of regional components (e.g. in the LabradorSea or in the Greenland Sea) and a complete collapseof the circulation are conceivable. The changes thustriggered could set in suddenly and would be irre-versible over a period of centuries (IPCC, 2001a).Within a few decades, the climate of western andnorthern Europe could cool by about 4°C – withimmense impacts upon Europe’s economy and ecol-ogy. As long as the climate guard rail defined aboveis not overstepped, a collapse of the thermohalinecirculation is highly improbable (WBGU, 2000).

Sea-level riseThe rising mean sea level is a result of warming dri-ven by greenhouse gas emissions. Over the 20th cen-tury, the absolute mean sea-level rise alreadyamounted to 10–20cm (IPCC, 2001a). This is about

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Box 4.3-3

Corals under threat through climate change

Even today, coral reefs are under threat due to increasedtemperatures in the upper layer of the tropical seas.At tem-peratures above 30°C corals increasingly lose their sym-biontic algae (zooxanthellae). This impairs the corals’skeleton growth, reproductive capacity and stress resis-tance. Reefs are hotspots of biological diversity. Althoughthey cover less than 1 per cent of the seafloor, they host athird of all known marine species. Moreover, they haveimportant resource functions, e.g. for coastal protection,fisheries and tourism. As many reef-building corals liveclose to their upper temperature limit, even a slight rise inwater temperature leads to increased bleaching. This phe-nomenon will intensify with climate change and is alreadyobservable today during an El Niño. If intervals between ElNiño events are short, it is scarcely possible for corals torecover. The outcome is a loss of irreplaceable natural her-

itage together with its biopotential. Model computationsindicate that the temperature tolerance of reef-buildingcorals will be exceeded within the next decades.

Coral reefs are also threatened by sea-level rise.Healthy reefs can achieve vertical growth of up to 100 mmper decade; this is at the upper limit of the sea-level rise of20–90 mm per decade estimated by the IPCC. However, inview of the many additional anthropogenic stress factors itis dubious whether present coral growth will suffice to keepup with the anticipated sea-level rise. One reason is that theincreased CO2 concentration in the atmosphere and in theupper layer of the ocean is reducing the calcium carbonatecontent of seawater. This is reducing the growth rates ofcoral reefs and is thus hampering their adaptation to risingsea levels.

A guard rail of at most 2°C mean global warming isprobably already too high to safeguard the survival of manycoral reefs.

Sources: Gattuso et al., 1999; Hoegh-Guldberg, 1999; IPCC,2001a; Coles, 2001

Figure 4.3-1The WBGU climate protection window. The window showsthe tolerable rate of warming as a function of the absolutewarming level already reached. The acceptable rate of changedrops with increasing proximity to the maximum warminglevel of 2°C relative to pre-industrial levels.Source: WBGU, 1995


ten times the mean rise over the previous 3,000 years.It is important in this context to take into considera-tion the great inertia of the climate system: Theanthropogenic emissions already caused today andthe resultant thermal expansion of seawater will onlylet sea levels stabilize at a new value in centuries.Thetime constants are even substantially longer if weconsider the melting of inland glaciers such as inGreenland.

In the WBGU’s opinion it is essential to preventthe melting of the Greenland ice, as such a processwould cause the mean sea level to rise by severalmetres over many millennia (IPCC, 2001a). Modelcomputations indicate that for this to happen the crit-ical warming over Greenland is around 3°C. Localwarming over Greenland is higher than global warm-ing by a factor of 1.3–3.1 (IPCC, 2001a). If we assumean amplification factor of 2, then a global warming byabout 1.5°C could already lead to an irreversiblemelting of the Greenland ice in its entirety.

The mean global warming level of 2°C relative topre-industrial levels deemed unacceptable by theWBGU translates into an absolute sea-level rise of25–100cm (depending upon model) over the next 100years (IPCC, 2001a). It is thus probable that theupper limit of 15–25cm mean sea-level rise discussedby the WBGU in an earlier special report will alreadybe exceeded significantly in this century (WBGU,1997b). In scenario A1T-450 (Section 4.2.5), with aclimate sensitivity (being the magnitude of globalwarming that follows from a doubling of the CO2

concentration in the atmosphere relative to pre-industrial levels) of 2.5°C, sea-level rise will bearound 50cm by 2100. Even such a rise will involvesevere social impacts, major costs for the adaptationof coastal infrastructure and serious losses of valu-able coastal ecosystems (IPCC, 2001a).

These more recent findings affirm the WBGU cli-mate window. The WBGU wishes to stress that thisguard rail cannot entirely exclude the risk of theGreenland ice sheet melting. Moreover, the existenceof a number of small island states would be jeopar-dized, and the number of people threatened by stormsurges would rise substantially.

Besides the absolute rise, the rate of sea-level riseis a key parameter, as the adaptive capacity of soci-eties and ecosystems declines if the rise happensfaster. Major socio-economic and ecological damageis anticipated in coastal regions in the event of swiftsea-level rise. The curve of sea-level rise in the 21st

century is very similar with different CO2 stabiliza-tion concentrations and across different models; therate of sea-level rise can thus be taken to be a func-tion of the absolute rise (IPCC, 2001a). As the ratioof the maximum to average gradient of sea-level riseappears to be constant, a guard rail for the speed of

sea-level rise can be translated into a guard rail forthe absolute warming level. If we were to postulate aguard rail of 5cm per decade, then this would onlyjust be transgressed in scenario A1T-450. A slightlylower stabilization concentration would presumablyensure compliance with the guard rail. Thus, as theWBGU temperature window already limits the rateof sea-level rise, a separate guard rail does not appearnecessary.

Economic adaptabilityA first-order analysis (WBGU, 1995, 1997b) hasshown that from a temperature change of 0.2°C perdecade onwards such high climate change costswould result that the adaptive capacity of nationaleconomies would be exceeded, resulting in intolera-ble economic and social disruption. It is thus alsoessential for economic reasons to remain within theWBGU climate window.

Food securityClimate change impacts greatly upon agriculturalecosystems and thus upon food security (IPCC,2001b). In a global perspective, climate change willnot impact negatively upon food production (if theincrease of global mean temperature does not exceed2°C), as both the increased temperature and theincreasing precipitation in some ‘winner regions’may be able to compensate for losses in ‘loserregions’. Absolute warming of up to 2°C is evenexpected to lead to global growth in cereal produc-tion by 3–6 per cent (Fischer et al., 2001).The winnersare predominantly industrialized or transition coun-tries which, due to their location in colder regions,would profit from the increased temperatures (suchas Canada and Russia).The losers would be develop-ing countries, above all in sub-Saharan Africa and inLatin America (Fischer et al., 2002). However, thisassessment does not yet take into considerationeffects such as increasing extreme weather events ormounting soil degradation, so that the ‘winners’ maymerely become the ‘less affected’. Even if global cli-mate change causes increased temperature extremesof only brief duration, this could lead to broad-scalecrop failures (IPCC, 2001d). Climate change at anabsolute level of 2°C would not trigger an acuteglobal food crisis, but must be expected to heightento an unacceptable degree the already prevailingglobal imbalance of food supply.

Human healthIt is to be expected that the negative effects of cli-mate change upon human health will outweigh thepositive ones (IPCC, 2001b). Increased extremeevents such as heat waves and extreme storms orfloods would amplify the risk of infectious diseases,


particularly in developing countries. For instance, ris-ing temperatures could cause infectious diseases tospread into regions where peoples’ immune systemsare not adapted to these diseases (IPCC, 2001b).However, the presently available data do not permitrealistic modelling of climate change impacts uponhealth. It is therefore not possible at present to statea tolerable limit of climate change in relation tohuman health.

Testing the guard railThe A1T-450 scenario selected by the WBGU as thereference for its transformation pathway (Section4.2.6) runs slightly outside the climate window if a cli-mate sensitivity of 2.5°C is assumed (Fig. 4.3-2). Sta-bilization at 450ppm will thus not suffice to remainwithin the guard rail under all possible climate sensi-tivity values.

Further uncertainties attach to this finding:• Window shape: The rounded right upper corner of

the climate window has not yet been definedquantitatively in scientific terms; it merely reflectsgeneral systems theory considerations (WBGU,1995).

• Absolute versus relative: Assuming a climate sensi-tivity of 2.5°C, the maximum absolute warminglevel of 2°C is only just complied with in this cen-tury. During the period between 2010 and 2030,the warming rate exceeds the permissible maxi-mum of 0.2°C per decade.

• Climate sensitivity: Climate sensitivity is a keyvariable for the further debate (Fig. 4.3-2; Section

4.5.2.1) but is very hard to estimate. Building onclimate model computations using seven differentcoupled atmosphere-ocean-land models, theIPCC (2001a) reports possible climate sensitivityvalues ranging from 1.7 to 4.2°C. The IPCCrefrains from determining a most probable valueand stresses that climate sensitivity can also beoutside of the stated range (IPCC, 2001a).

• Climate modelling: There are a number of furtherfactors that need to be considered: The responseof carbon reservoirs to climate change, the climateeffects of aerosols (direct and indirect effects; Sec-tion 4.5) and tropospheric ozone, condensationtrails and other aviation-related ice clouds, as wellas the effects of the Kyoto Protocol. The first fac-tors relate to the natural sciences and amplify ordiminish (in the case of aerosols) mean globalwarming. The Kyoto Protocol is contained indi-rectly in scenario A1T-450 and causes a reductionof the greenhouse gas emissions of industrializedcountries. However, given the withdrawal of theUSA and the accounting of carbon sinks under theProtocol, it must be assumed at present that indus-trialized country emissions will merely stabilize.Thus this uncertainty, too, leads rather to anunderestimation of warming.

Therefore, with the assumed climate sensitivity of2.5°C, scenario A1T-450 lies at the margin of the cli-mate protection window and for a certain period oftime is partly outside of it. The scenario is conse-quently by no means secure within the meaning ofUNFCCC Article 2 at a stabilization concentrationof 450ppm. The uncertainty attaching to climate sen-sitivity has a much greater effect than a few giga-tonnes of additionally emitted CO2. It follows that, toadhere to the precautionary principle, scenario A1T-450 must be complemented by substantially morevigorous climate protection policies that embraceactivities beyond the energy sector. This will beessential to develop a sustainable scenario.

Geological carbon storageGeological CO2 sequestration in depleted or stillworked oil and gas fields has a sustainable potential.This potential cannot be quantified precisely at pre-sent, but in total it can be assumed to be in the orderof several hundred GT C. To test the present scenar-ios, a guard rail of 300GtC is assumed as a firstapproximation (Section 3.6). At 226GtC, total geo-logical storage of carbon between 1990 and 2100 iswithin this guard rail in scenario A1T-450.The poten-tial of geological storage in deep saline aquifers issubstantially larger, but so too are the uncertaintiesrelating to feasibility and environmental conse-quences. In view of the inadequate state of knowl-edge and potentially substantial ecosystem impacts,

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Figure 4.3-2Scenario A1T-450 in the climate window for a broad range ofclimate system sensitivities (1.5°C, 2.5°C and 4.5°C climatesensitivity). Climate sensitivity expresses the warming levelthat follows from a doubling of the CO2 concentration in theatmosphere relative to pre-industrial levels.Source: WBGU, using IIASA data


the WBGU deems an application of this technologyinappropriate before an in-depth technology assess-ment has taken place (Section 3.6).

4.3.1.3Sustainable land use

In an earlier report, the WBGU provided a first-order calculation of how the sustainable use of thebiosphere can be ensured for present and future gen-erations alike (WBGU, 2001a). This indicated that10–20 per cent of the worldwide terrestrial biosphereshould be safeguarded by a global network of pro-tected areas. As this network needs to be establishedin a manner differentiated according to biomes,countries, regions, etc., there can also be regions forwhich a far larger priority conservation area percent-age is appropriate. For other regions, 2–5 per centmay suffice.

Population growth additionally exacerbates theland-use conflict between agriculture or forestry andnature conservation. In the densely populatedregions of South Asia, 85 per cent of the potentialarable area is already used for food production, butthe agricultural area per capita is still smaller thanfood security would require (WBGU, 2001a). TheIPCC assumes a worldwide growth of utilizable agri-cultural area by some 30 per cent in the 21st century.The range is from 7.5 per cent in developed countriesto 96 per cent in Africa (IPCC, 2001b).

Defining the guard railTo prevent land-use conflicts, it is essential to definelimits for the cultivation of bioenergy crops and forterrestrial CO2 storage. The two following principlesneed to be observed in this context:• Bioenergy carrier production and terrestrial CO2

storage must not jeopardize implementation ofthe WBGU conservation area target of 10–20 percent. As the present worldwide total of conserva-

tion areas only figures 8.8 per cent (category I-VIareas; Green and Paine, 1997), the conversion ofnatural ecosystems into land cultivated for bioen-ergy crops is rejected as a matter of principle.

• The production of food must have priority overthe production of replenishable energy carriersand over storage.

These principles provide a basis for estimating themaximum area devoted to cultivating bioenergycrops worldwide and in certain regions. As a globalguard rail, the WBGU recommends allocating atmost 3 per cent of the terrestrial area to such energypurposes. Cultivation of bioenergy crops on this areacould yield some 45EJ primary energy. However, inview of disparate local conditions, it is essential tocarry out a detailed examination of the individualcontinents in order to avoid land-use conflicts withfood and timber production, as well as with the con-servation of natural ecosystems. Table 4.3-1 lists theWBGU’s proposals for regional guard rails. A pre-condition to their implementation is that therequired worldwide protected area network has beenrealized beforehand (WBGU, 2001a).

Quantifying the guard rail For the European Union, Kaltschmitt et al. (2002)state 10 per cent of the arable area (7.4 million ha) asthe potential area for cultivating energy crops; thefigure is mainly a result of taking agricultural areasout of production (Section 3.2.4.2). If we assume forthe whole of Europe that in future 10 per cent ofarable land and 10 per cent of pasture land will beavailable for energy crops, then we receive an area ofapprox. 22 million ha or 4.5 per cent of the terrestrialarea as a guard rail (Table 4.3-1).

In Asia, it has been shown that biomass resourcesare already over-exploited in some areas(Kaltschmitt et al., 1999). Consequently, the availablearea is small. No appraisals are available for Aus-tralia, but in view of the large desert and semi-desert

Table 4.3-1Potential area for energycrops and its regionaldistribution, and energyquantity that can beproduced annually fromthese areas. The energyquantity is calculated from amean yield of 6.5 t/ha/y anda calorific value biomass of17.6MJ/kg. The percentagesrelate to the total areas ofthe various continents.Source: WBGU compilation

Region Potential area Source WBGU guard rails

[million ha] [%] [million ha] [%] [EJ/a]

Europe 22 4.5 Kaltschmitt et al., 2002 22 4.5 2.5

Asia andAustralia 37 0.7 IPCC, 2001c 29 0.5 3.3

Africa 111 3.8 Marrison and Larson,1996

111 3.8 12.7

Latin America 323 16 Schneider et al., 2001;only Brazil

165 8 18.8

North America 101 5.9 Cook et al., 1991;only USA

67 3.6 7.7

World 595 4.6 394 3.0 45.0


areas the opportunities to cultivate energy crops arevery limited.

An appraisal conducted by Marrison and Larson(1996) for Africa assumes that arable land will grow2.4 fold and that the areas of forests and natural land-scapes will remain unaltered. Schneider et al. (2001)estimate for South America that 16 per cent of theterrestrial area would come into question for culti-vating bioenergy crops (extensive grassland,degraded soils) without needing to convert naturalecosystems. However, their study area in north-eastBrazil, in the state of Maranhao, had only a small pro-portion of tropical rainforest. As that proportion ishigher in the rest of Latin America, the guard rail forthe whole subcontinent is set at 8 per cent of the areain order to safeguard the conservation of tropicalprimary forest remnants.

For the USA, 40 per cent of the bioenergy cultiva-tion area reported by Cook et al. (1991) is made up ofagricultural areas that are no longer utilized, whilethe other 60 per cent are made up in roughly equalmeasure of meadows, pastures and forests. If weexclude the conversion of forests, and reduce becauseof prevailing demand uncertainties the area of mead-ows and pastures coming into question by half, thenwe arrive at a potential cultivation area of 61 millionha. By adding 10 per cent to this value to representCanada, we arrive at a maximum utilizable area forNorth America of 67 million ha or 3.6 per cent of theterrestrial area.

Principles presenting limits to biomass useEnergy crops: On all areas which, after balancing dif-ferent uses, are deemed suitable for cultivating bio-mass as an energy carrier or for storing carbon, suchcultivation must be sustainable and ecologicallysound. Fertilizer and pesticide inputs must thereforebe minimized and tillage must be low-impact in orderto keep erosion to a minimum. These requirementsare simpler to implement when cultivating perennialgrasses and rapidly growing trees than when engag-ing in the intensive cultivation of annual energy crops(Graham et al., 1996; Paine et al., 1996; Zan et al.,2001). Moreover, when cultivating energy crops inplantations, a minimum of species, genetic and struc-tural diversity must be maintained within the areas.Furthermore, cultivation should be integrated intothe surrounding landscape.

Use of residues: In agriculture, care needs to betaken that the use of straw and other residues doesnot jeopardize over the long term the conservation ofsoil structure, the recycling of nutrients and the pro-portion of organic matter in the soil. The quantitiesthat can be extracted vary depending upon nutrientsupply and soil structure. They are close to zero onpoor tropical soils (e.g. oxisols, ultisols), but on richer

soils they can quite well be around 1–2t per hectareand year.Assuming a global mean of 0.7t per hectareand year and a calorific value of 17.6MJ per kilo-gram, a utilizable agricultural area of 1,500 millionhectares worldwide yields a potential of 18EJ peryear.

The use of forestry residues, too, must not impairnutrient recycling. Care further needs to be takenthat a sufficient quantity of dead wood remains in theforests. Under European conditions, it can beassumed that approx. 1.5t of forest timber can beused sustainably for energy purposes per hectare andyear. In view of the inaccessibility and conservationvalue of large parts of the boreal and tropical forests,it appears purposeful to proceed at a global levelfrom about one-third of the European value, i.e. toextract no more than 0.5t per hectare and year. Givena global forest area of 4,170 million ha and a calorificvalue for wood of 18.6MJ per kilogram, this results ina sustainable potential of 39EJ per year.

Thus, in total, the cultivation of energy crops(approx. 45EJ per year), the use of agriculturalresidues (18EJ per year) and of forestry residues(39EJ per year) yields a sustainably utilizable poten-tial of modern biomass amounting to approx. 100EJper year. This is joined by a further 5–7EJ per yearfrom the traditional use of cattle dung to produceenergy (Section 3.2.4.2).

CO2 storage in terrestrial ecosystemsFor the storage of carbon in biological sinks, too, itneeds to be ensured that the appropriation of areas issustainable. Food production and nature conserva-tion goals must not be jeopardized. The intensifieduse of biomass as a renewable energy source com-petes with carbon storage on the same area. Becauseraising the share of renewable energy sources is a keygoal of the WBGU, using the areas coming into ques-tion to produce energy from biomass has preferenceover pure carbon storage through afforestation of‘Kyoto forests’. In existing forests, however, the con-servation of stocks has priority, for the rise in atmos-pheric CO2 concentration that would result from thedestruction of their carbon stocks is greater than theCO2 savings that can be achieved through measuresaccountable in the first commitment period underthe Kyoto Protocol. Thought therefore needs to begiven to an appropriate commitment to also conservenatural stocks in future commitment periods.

Testing the guard railIn scenario A1T-450 modern bioenergy providesabout 205EJ primary energy in the year 2050.To pro-duce the required biomass, the scenario assumeslarge areas for the cultivation of bioenergy carriers.These areas exceed both globally and on the individ-


ual continents the WBGU guard rail for sustainablebiomass use (Table 4.3-2). The scenario assumes anenergy yield of 112GJ per hectare and year (corre-sponding, at a calorific value of 17.6MJ per kilogram,to about 6.6t per hectare and year), which certainlyseems realistic.

The origin of the areas on which to cultivateenergy crops remains unclear in this scenario. Overthe period considered, the areas for forests, grasslandand arable farming change very slightly, while theareas aggregated under the ‘other’ category declineby the year 2100 from 3,805 to 3,253 million hectares.If we assume that, besides deserts, mountains andbuilt-up areas, the areas in question are mainly aridand semi-arid, then the question arises whether theyields which the scenario assumes for bioenergy pro-duction are possible on these areas. A sustainablescenario will need to manage with much smalleramounts of energy from biomass.

4.3.1.4Biosphere conservation in rivers and theircatchment areas

As for terrestrial land uses, so also are there limits tosustainable use for freshwater ecosystems (lakes,rivers) and their catchment areas. In relation to theenergy sector, hydropower use is the aspect of partic-ular relevance, for dams have numerous ecologicalimpacts that also extend beyond the immediate loca-tion of the hydropower plant (Section 3.2.3.3). Of the106 large catchment areas of the world, 46 per centhave been modified by at least one dam (Revenga etal., 1998). Even today, the cumulative negativeimpact on aquatic ecosystems is considerable. Inmany cases, people who had adapted their lifestylesand traditions to their river are also adverselyaffected (for instance by forced resettlement). Forthese reasons, the principle of sustainable develop-ment requires limits to the expansion of hydropower.

Sustainability of hydropowerBecause many factors interact, it is not possible tostate a simple absolute and global guard rail for thesustainability of hydropower projects (Section3.2.3.3). Nonetheless, compliance with certain frame-work conditions is essential when hydropower plantsare built (Section 3.2.3.4):• Nature conservation: As for terrestrial areas, a cer-

tain proportion (about 10–20 per cent) of riverineecosystems including their catchment areasshould be reserved for nature conservation. Espe-cially in the catchments of potential futurehydropower projects, areas of particular conserva-tion value need to be protected swiftly in a pre-cautionary manner (Section 3.2.3.4).

• Principles for major hydraulic engineering pro-jects: The existing international guidelines for sus-tainability (World Bank, OECD) need to beapplied to all hydraulic engineering projects. Animportant basis has also been elaborated by theWorld Commission on Dams (WCD, 2000) in aworldwide discussion process. Implementation ofthe guidelines at national level presupposes tech-nical and institutional capacity-building as well aslong-term responsibilities. To elaborate sustain-ability analyses, the scientific basis first needs to becreated. Research needs to be conducted for thespecific catchment areas by independent regionalcentres, in a manner independent of concrete pro-jects (Section 6.3.1). Such centres can also estab-lish the basis for comparing regional site alterna-tives, and can keep indirect and cumulative effects(e.g. of a series of projects on one river) in focus(Section 3.2.3.3).

Defining the guard railIf the necessary framework conditions (investmentin research, institutions, capacity building, etc., Sec-tion 3.2.3) are created over the next 10–20 years,then, with a sufficiently circumspect approach, anadditional third of the presently utilized potentialcan be made accessible in a step by step process until2030 (power production then totalling approx. 12EJper year). Only if the above preconditions are met

Table 4.3-2Scenario A1T-450:Estimated proportions oftotal terrestrial area of areascultivated for bioenergycrops in 2050, compared toWBGU guard rails.Source: WBGU

Scenario region Area and proportion of total area WBGU guard rail

High estimate Low estimate

[million ha] [%] [million ha] [%] [%]

Europe 144 29.4 129 26.2 4.5Asia 589 12.1 494 10.2 0.5Australia 186 21.9 147 17.4 0.5Africa 288 9.7 241 8.1 3.8Latin America 266 13.2 225 11.2 8North America 353 18.9 294 15.7 3.6

World 1,826 14.0 1,529 11.7 3


could the value be raised by 2100 to approx. 15EJ peryear.

Testing the guard railScenario A1T-450 envisages hydropower beingexpanded from its present level of approx. 9.5EJ to35EJ in 2100, i.e. more than three-fold growth. Thisvalue oversteps by far the guard rail set by theWBGU.

4.3.1.5Marine ecosystem protection

The marine biosphere is already impaired by con-ventional energy systems, for instance through oilpollution, the warming of estuaries and coastalwaters, and the dumping of nuclear waste. Newenergy technologies are being debated in connectionwith the restructuring of global energy systems thatmay have further major impacts upon the marineenvironment. Decisions thus need to be taken onwhich of these technologies are non-sustainable.Thisappraisal is difficult because marine ecosystems arecomparatively poorly researched and the conse-quences of interventions are thus hard to evaluate.Consequently there is a particular need here toobserve the precautionary principle. As it is not pos-sible to define a universal guard rail for marine con-servation – this would have to remain too general –we discuss here the tolerable limits for specific tech-nologies.

Defining the guard railTwo technology options are currently under debatefor carbon storage in the oceans: Dissolution in sea-water and storage in marine ecosystems (Section3.6). Deep-sea injection of carbon dioxide elevatesthe partial pressure of the CO2 and at the same timelowers the pH value of the seawater. There is inade-quate scientific understanding of the biological con-sequences. Similarly, iron fertilization, for instance inthe South Seas, is feared to entail severe impactsupon marine ecosystems. For both options, majoruncertainties attach to the permanence of storage.With due regard to the precautionary principle, theWBGU therefore recommends using neither of theoptions within a sustainable energy system.

Using offshore wind powerIn principle, wind power is a form of energy produc-tion that is both renewable and has low environmen-tal impact. The development of offshore technologyhas given wind power a major new potential that isexpected to further accelerate the advance of thisform of energy generation. However, the establish-

ment of large-scale offshore wind farms may haveadverse effects upon the marine biosphere (e.g. interms of bird conservation); research is currentlyunder way to resolve these issues (Section 3.2.5). Aneed remains to develop guidelines for the handlingof this technology on a firm scientific basis, in orderto minimize environmental effects. Areas thatalready have a designated nature conservation statusmust be excluded from areas designated for offshorewind farms, as must areas that may fall within thescope of the European Union Habitats Directive, aswell as important bird breeding or migration areas.Offshore wind power use competes with other usesof the areas in question:The demands of shipping, oilindustry, fishery, nature conservation and other inter-ests need to be reconciled when planning the uses ofareas. The available data does not suffice to define auniversally valid guard rail.

4.3.1.6Protection against atmospheric air pollution

The ecological effects of atmospheric pollution arediverse.The nitrogen oxide (NOX) and sulphur oxide(SOX) emissions formed when fossil fuels and bio-mass are burnt play a key role in the human modifi-cation of biogeochemical cycles. They impact uponsoils, terrestrial ecosystems and water bodies and area cause of forest dieback. Ground-level ozoneformed from NOX and hydrocarbon emissions in asmog reaction under sunlight elevates plant respira-tion while at the same time reducing biomass forma-tion and increasing plants’ susceptibility to pests anddisease (Percy et al., 2002). Reduced biomass forma-tion lessens the sink effect of the biosphere andamplifies human-induced global warming. Emissionsof volatile organic compounds, soot and other sus-pended particulates as well as of heavy metals andpersistent organic compounds from combustionprocesses produce direct toxic, but also ecotoxiceffects when these substances enter ecosystems andaccumulate in organisms.

Tentative guard rail definition‘Critical loads and levels’ are science-based maxi-mum limits for specific pollutants and receptors ofvarying sensitivity (ecosystems, sub-ecosystems,organisms through to materials). Critical loads andlevels need to be formulated by preference at thereceptor and in an impact-related manner (UBA,1996; SRU, 1994). They are determined numericallyas the rate of deposition which, if not exceeded, is notexpected to damage receptors according to the cur-rent state of knowledge. Defining and reviewingthese ceilings is resource-intensive and complex


because doing so requires high-resolution spatialmapping of the different receptors (e.g. ecosystem orsoil types) and of pollutant loads for each individualpollutant. This concept is implemented in the shapeof the 1979 Geneva Convention on Long-RangeTransboundary Air Pollution. However, until nowthe Convention has remained limited to Europe andNorth America. It thus does not provide a basis forderiving a global guard rail.

As a proxy guard rail for worldwide emissions, wecould take the criterion that pollutant loads else-where must not be higher than those in Europetoday. Given that the situation in Europe today is notsatisfactory yet for all pollutants, this can only be anabsolute minimum requirement. It also entails aseries of problematic assumptions, e.g. that theregional distribution of pollutants is similar, that pol-lutant imports and exports are negligible, and thatecosystem and soil types are all similarly sensitive.Regional guard rails could be set and implementedon the basis of the critical loads concept by adoptingnational environmental standards or multilateralenvironmental agreements. If we assume an equalquantity of utilized energy services, we can expectthat vigorous application of the state of the art inpower plants, households and transportation wouldallow compliance with the guard rail.

Testing the guard railTo produce a preliminary assessment, the WBGUhas calculated the SOX emissions per unit area in thedifferent regions.This provides a very rough measureof the environmental impacts of emissions. Consider-able sources of error are tolerated in this calculation;for instance, it does not consider the transboundaryor seaborne transport of pollutants. The test showsthat, in scenario A1T-450, mainly East Asia (China,Korea and neighbouring countries) as well as easternEurope suffer high loads. In this scenario the guardrail is complied with everywhere in the second half ofthe 21st century, because the technology by which toprevent these emissions is already available and isincreasingly also deployed in the ‘critical’ regionswhere strong growth in energy demand is to beexpected. A more rapid transformation towardsrenewable energy sources would hasten compliancewith the guard rail.

4.3.2Socio-economic guard rails

4.3.2.1Human rights protection

When formulating strategies for the transformationof energy policy, the WBGU is also guided by humanrights imperatives, i.e. by universal principles whichapply to all social systems. In order to define moreprecisely and implement the socio-ethical objectivesof the sustainable development model, reference canbe made to norms codified in international law, suchas the human rights and labour conventions, andprinciples of universal justice, such as the equal dis-tribution of global environmental space.

Meeting the individual minimum requirementfor energyThe WBGU considers that one of the objectives of asustainable transformation of energy systems mustbe to enable all households worldwide to gain accessto modern energy. This objective is underpinned bythe International Covenant on Economic, Social, andCultural Rights. In Article 11, the States Parties tothe Covenant recognize the right of everyone to anadequate standard of living for himself and his fam-ily and to the continuous improvement of living con-ditions.

This right includes adequate housing, whichencompasses, among other things, access to energyfor cooking, heating and lighting (CESCR, 1991). Atthe same time, it follows from this article, in conjunc-tion with Article 12 which recognizes the right tohealth, that adequate housing must protect its resi-dents from health risks. This means that the fuel useof traditional biomass is incompatible with theCovenant whenever it produces indoor air pollutionto an extent that endangers health (Sections 3.2.3,4.3.2.7). The energy supply must be developed in away which ensures that burdens are shared equallyand reasonably between women and men, and thatthe rights of children to special protection (Conven-tion on the Rights of the Child) are guaranteed. Spe-cific references to an obligatory timeframe withinwhich a basic energy supply must be guaranteed can-not be derived from the Covenant.

Safeguarding the energy-related bases ofthe right to development As an adequate energy supply is a key prerequisitefor economic and social development (Section 2.2), acollective entitlement to the amount of energyrequired to facilitate and promote development


could be derived from the ‘right to development’. In1986, the UN General Assembly adopted its Decla-ration on the Right to Development, which estab-lished the right to development ‘as a universal andinalienable right and an integral part of fundamentalhuman rights’. At the World Conference on HumanRights in Vienna in 1993, the Western states finallydropped their reservations about this Declaration.Article 4 (1) of the 1986 Declaration, which has nobinding force under international law, imposes thefollowing obligation on States:“… to take steps, indi-vidually and collectively, to formulate internationaldevelopment policies with a view to facilitating thefull realization of the right to development”. Itremains unclear, however, precisely what is meant bydevelopment on an individual basis, whether any spe-cific provision of services can be derived from this‘right to development’, and if so, which services theyare. Only Article 8 sets out a catalogue of objectivesfor ‘equality of opportunity for all in their access tobasic resources, education, health services, food,housing, employment and the fair distribution ofincome’. A legal entitlement to an adequate energysupply could be derived, at most, from the demandfor ‘equality of opportunity for all in their access tobasic resources’.

A ‘right to development’ which is unenforceablein law is of little value. Nonetheless, it could – in con-junction with Article 11 of the InternationalCovenant on Economic, Social, and Cultural Rights –underpin a claim to an adequate energy supply onhuman rights grounds, since this is necessary not onlyfor the development of agriculture and industry butalso for the ‘continuous improvement of living condi-tions’. And this right is undisputed in internationallaw as well.

4.3.2.2Access to modern energy for everyone

Basic energy services include lighting, cooked food,comfortable interior temperatures, refrigeration andtransportation (UNDP et al., 2000), but also access toinformation and communications and to motivepower for simple industrial and agriculturalprocesses. The WBGU considers that access to mod-ern forms of energy is essential to safeguard theseenergy services, because traditional biomass use,especially for cooking and heating, is both an imped-iment to development and health-endangering andmust therefore be substituted (Sections 3.2.4.2,4.3.2.7). Electricity supply is also of great importance.Electricity not only provides lighting and refrigera-tion and facilitates domestic and industrial processes;it also offers access to communications, opening up

educational opportunities and expanding the scopefor participation.

Section 2.2 makes it clear that the current situa-tion is still far removed from this objective. If presenttrends continue, it will take more than 40 years foraccess to electricity to be available to all householdsin South Asia, for example, and around twice as longfor sub-Saharan Africa (IEA, 2002c). If anticipateddemographic development is also taken into account,the timescale is likely to be even longer. The WBGUconsiders this prospect to be intolerable. Additionalefforts must be made to ensure access to modernenergy.

Defining the guard railAs a minimum requirement for a sustainable trans-formation of energy systems, the WBGU recom-mends that access to modern energy should be pro-gressively secured for the entire global population.This applies especially to the switch from health-endangering biomass use for cooking and heating tomodern energy carriers (Section 3.2.4.2) and to elec-tricity-dependent energy services. Based on thisguard rail, the WBGU derives various objectiveswhich are set out in more detail in Section 7.3.1.

Testing the guard railThe A1T-450 test scenario does not supply the neces-sary data to allow this guard rail to be tested in quan-titative terms. However, since this is a scenario withhigh economic growth, achieving the guard railwithin a matter of decades seems entirely feasible.Indeed, the World Energy Council defines the provi-sion of electricity to all households which currentlyhave no electricity supply as operationally feasible by2020 (WEC, 2000). Given China’s recent success inconnecting an average of 6 million people in remoterrural areas to the electricity grid each year (Chen etal., 2002), it should be possible to replicate thisachievement ten-fold across the world, especially ifstand-alone energy sources (e.g. village electricitysupply systems) are established at first.

4.3.2.3Individual minimum requirement for modernenergy

Defining the guard railIn order to meet the world population’s individualminimum requirement for modern energy, theWBGU recommends that:• by the year 2020 at the latest, everyone should

have at least 500kWh final energy per person andyear;


• by 2050, everyone should have at least 700kWhfinal energy per person and year;

• by 2100, the level should reach 1,000kWh.The WBGU considers the absolute minimumrequirement for individual needs to be approxi-mately 450kWh per person and year (in a 5-personhousehold; Table 4.3-3) or 500kWh per person andyear (in a 2-person household). These figures arewithin the range of 300 to 700kWh per person andyear generally postulated in the literature. Indeed,some WEC authors consider 1,000kWh per personand year to be the adequate minimum requirement(WEC, 2000). A level of 450 to 500kWh per personand year must be the absolute minimum, since thistakes no account of heating, transportation and sup-porting domestic and subsistence-economy activities.Furthermore, while the efficiency level assumed forthe purposes of the calculations is desirable and fea-sible in principle, downward adjustments may berequired. On the other hand, technological advancesmay mean that the basic requirement, defined above,can in future be met with less primary energy.The fol-lowing discussion provides a more detailed quantifi-cation of the guard rail.

Quantifying the guard rail Defining a minimum per capita energy requirementposes significant normative, methodological andtechnical problems.Among other things, climatic andgeographical aspects must be taken into account,along with cultural, demographic and socio-eco-nomic factors. Furthermore, when converting energyservices into the energy amounts required, assump-tions must be made about the technologies used. Forthis reason, the literature contains very little detaileddata about such a minimum requirement.

Despite these problems, the calculation seems rea-sonable (Table 4.3-3), as this minimum requirementis not defined as an objective but as an absolute min-imum, and failing to achieve it must be regarded asincompatible with sustainability. Table 4.3-3 assumes

that efficient technologies are used in line with thecurrent state of technology.

Requirement for electricityThe individual minimum requirement for electricityto safeguard a basic supply for lighting, refrigerationand communications is around 60kWh per personand year, assuming a 5-person household. For 2-per-son households, whose numbers are increasing indeveloping countries as well, it must be assumed thatthe household requirement is somewhat lower – asmaller refrigerator, etc. Their per capita require-ment is thus estimated at around 100kWh per personand year.

The report by the G8 Renewable Energy TaskForce (2001) is one of the few analyses to break downthe basic electricity requirement on a quantitativebasis. It arrives at similar conclusions. A Chinesestudy distinguishes between low, medium and highbasic requirements for a 4-person household anddefines the requirement for China as the equivalentof 37, 94 and 668kWh per person and year in eachcategory (Chen et al., 2002). Unlike Table 4.3-3, how-ever, refrigeration is not calculated into the low andmedium basic requirement, while a washing machineand freezer are factored into the high basic require-ment.

The World Energy Council (WEC) estimates cur-rent electricity consumption by the people in devel-oping countries who have access to electricity to be,on average, 1,300kWh per person and year. In thelowest income quintile with access to electricity, theaverage is 340kWh per person and year (WEC,2000). If the technologies used were replaced bymore efficient ones, this electricity consumptioncould more than cover the minimum requirement.

Energy requirement for cooking andheatingThe energy requirement for cooking and heatingmust be viewed separately from the other energy ser-vices as no electricity has to be used here. In the

Table 4.3-3Minimum per capita finalenergy requirement. Failureto achieve this must beviewed as non-sustainable.The calculation is based on a5-person household.Sources: WBGU; G8Renewable Energy TaskForce, 2001

Energyservice

Explanations Final energy requirement[kWh per person andyear]

Potable water Electric pump for 5l per person and day 2

Lighting 5hrs a day with 20W per household 7

Information,communications

Communication equipment (radio, TV, etc.)5hrs at 50W per household

18

Refrigeration 0.4kWh per day per household,primarily for food

29

Total Interim 56 (electricity)

Cooking 1.5 cooked meals per day 400 (fuel)

Total 456


developing countries, around 0.15EJ from biomass isused for cooking (IEA, 2001b; G8 RenewableEnergy Task Force, 2001). In Table 4.3-3, it is assumedthat the per capita basic requirement is for 1.5cooked meals per day on average (Grupp et al.,2002). If highly efficient gas cookers are used, thisyields an energy requirement of 700–750Wh percooked meal and thus a requirement of around400kWh per person and year.

The WBGU has not included space heating in itscalculation of the individual basic requirement inTable 4.3-3. There are two main reasons for this:Firstly, the need for heating and the amount ofenergy used for this purpose depend on local climaticand building conditions which vary so much, bothinternationally and regionally, that statements aboutaverage heating requirements are meaningless. Sec-ondly, in the majority of countries with a low electri-fication rate and a high proportion of traditional bio-mass use, indoor heating is rarely required. In indi-vidual cases, however, the energy requirement forheating may be very high. For example, to heat aroom of 20m2 requires around 800kWh per year evenin a low-energy house in Germany.

Energy requirement for transportThere is a minimum requirement for mobilitybecause schools, medical facilities and markets mustbe accessible for everyone under acceptable condi-tions. This minimum requirement probably varieseven more substantially than the domains examinedabove, because infrastructure and distances, forexample, also vary widely. It is almost impossible toconvert the basic requirement for transport servicesinto units of energy, since no general assumptions canbe made about the mode of transport used (truck,ferry, bicycle, animal, etc.). For this reason, energy formobility requirements is not included in Table 4.3-3.Nonetheless, a ‘soft’, i.e. purely qualitative mobilityguard rail should be considered.

Reducing disparities in energy supplyThe disparities in meeting the minimum per capitaenergy requirement can be very substantial, bothbetween countries and between population groupswithin a single country. The disparities between thebest- and worst-supplied groups are often so greatthat the latter is unable to participate satisfactorily ineconomic, political or cultural life. For this reason,the WBGU recommends that the absolute ‘Individ-ual minimum requirement for modern energy’ guardrail be supplemented by relative sub-limits. Thisapplies, not least, because – as in the context ofpoverty – it is not only the actual, but also the per-ceived availability of energy services which is signifi-cant. It is impossible, however, to derive an absolute

quantitative guard rail for the disparities which con-tinue to be acceptable at national and internationallevel. Aside from normative/ethical and technical/methodological difficulties, climatic and socio-cul-tural differences between regions and countriesstand in the way of such a calculation. However,analyses show that the current disparities betweencountries or regions are far from being what theWBGU classifies as sustainable. This applies even ifextreme values are not included in the calculation.The WBGU therefore introduces a tangible reduc-tion of current disparities as a realistic minimum con-dition upon the scenario.

‘Dynamizing’ the guard railThe minimum requirement for energy, like the socio-cultural minimum subsistence figure (minimumhousehold income), is not a value which is indepen-dent of the system state. For this reason, it wouldseem appropriate to ‘dynamize’ the ‘Individual mini-mum requirement for modern energy’ guard rail.This also implicitly takes account of the disparityaspect of the guard rail. If income and energy use inthe developing countries increase (‘Economic mini-mum energy requirement per person’ guard rail; Sec-tion 4.3.2.5), the underlying distribution normrequires a relative lower limit so that the amount ofenergy available to the energy-poorest householdsincreases.

Testing the guard railTaking the amount of energy available per capita tothe bottom 10 per cent of the population, it is possi-ble, in scenario A1T-450, to obey the guard railsalmost across the board. Exceptions are, in 2020, theMiddle East/North Africa and South Asia, where thevalues are missed by a narrow margin.

4.3.2.4Limiting the proportion of income expended forenergy

The WBGU considers that poor households shouldnot need to spend more than one-tenth of theirincome to meet their elementary energy require-ments (500kWh per person and year). This would bea significant improvement on the current situation inpoor developing countries. Nonetheless, the propor-tion of income expended for energy would still be sixtimes higher than in industrialized countries.

Defining the guard railAs a guard rail, the WBGU proposes that expendi-ture to cover elementary individual energy needs


should be a maximum of 10 per cent of householdincome.

Quantifying the guard railDefining a quantitative guard rail which describesthe maximum proportion of household incomewhich should be used to cover the minimum require-ment for energy services also poses major normativeand methodological problems. For example, by defin-ing a percentage, direct assumptions are made aboutthe share of income which is appropriate to coverother needs. The variations in household incomesmust also be taken into account.

Assessments of the current proportion of expen-diture bring us closer to a quantification of the guardrail. Various studies agree that in the OECD, i.e. theindustrialized countries, this proportion is around 2per cent (G8 Renewable Energy Task Force, 2001;World Bank, 2002a). Few case studies are availablefor the developing countries (LSMS, 2002; WorldBank, 2002a). However, the general impression isthat people in countries without access to ‘modern’energy spend a far higher share of their income onenergy than people in countries or regions withsecure access. The estimates on the share of dispos-able income spent on energy by poor populationgroups in developing countries vary between 10 and33 per cent, depending on the energy services and thetype and size of the group observed (ESMAP, 1998,1999;World Bank, 2002a). Expenditure on energy forcooking is often not included in these estimates. Iffuel is gathered at no cost, this expenditure may bevery low in many rural areas, but is nonetheless asso-ciated with sometimes high ‘costs’, such as the timespent and the damage sustained to health (Sections2.6, 3.2.4).

With an estimated 1,200 million people currentlyliving below the poverty line of US$1 per day, the 10per cent guard rail means that these people must beable to meet their elementary energy requirement ata cost of at most US$37 per year. For a further 1,600million people who live on between US$1 and US$2a day, the tolerable amount ranges between US$ 37and US$73 per year. On the very simplistic assump-tion that income and income distribution remainconstant and all of the 2,800 million poorest peoplehave a disposable annual income of preciselyUS$365, the first 500kWh per year should not costthem more than 7.3 US cents per kilowatt hour onaverage (electricity or fuel).The necessary cross-sub-sidizing or social transfers (‘heating and electricitybenefit’) decrease as the income of the poorestgroups increases. Here, the income-generatingeffects of access to modern and affordable energyshould act as an accelerator.

Testing the guard railWhereas scenario A1T-450 does not supply the datanecessary to test this guard rail (e.g. electricity prices,income/consumption), scenario B1-450 can be usedin this instance. It is assumed that average privateconsumption among the poor population groups isequivalent to private income. Then, via the distribu-tion of income in the poorest developing countries,an estimated value for the income of the poorest 10per cent of the population is calculated. Since a max-imum of 10 per cent of this value is available for 500kWh per person and year, a still tolerable elec-tricity price can be calculated, which is then com-pared with the price in the scenario. This calculationposes many uncertainties. For example, electricityprices within a country may vary widely: In ruralregions, where electricity is produced with diesel gen-erators, the price is far higher than in the cities. Dif-ferent subsidy practices further distort the values.The result of the calculation for scenario B1-450shows that compliance with the guard rail can beguaranteed from the middle of this century. How-ever, as scenario A1T-450 has higher economicgrowth rates and therefore income increases, the sit-uation is likely to be better here. For these reasons,the WBGU considers that compliance with the guardrail from 2050 at the latest is a realistic prospect.

4.3.2.5Minimum per capita level of economicdevelopment

Total per capita energy requirement must alsoinclude the energy services used indirectly in themanufacture and distribution of all public and pri-vate goods which the person consumes.This includes,for example, transportation services which, formethodological reasons, are not taken into accountwhen calculating individual energy requirement(‘Individual minimum requirement for modernenergy’ guard rail, Section 4.3.2.3).A useful indicatorof the sum of the goods and services produced isgross domestic product (GDP), although it has vari-ous shortcomings and does not fully reflect the infor-mal sector or family/voluntary work, for example.The WBGU is aware of the normative problemsassociated with a minimum value for the GDP indi-cator per person and year. However, as this thresholdis defined not as a goal but a guard rail, transgressionof which is viewed as unsustainable in social and eco-nomic terms, the WBGU nonetheless proposes thefollowing definition.


Defining the guard railAll countries should be able to deploy a per capitagross domestic product of at least US$2,900 in 1999values.

Quantifying the guard railThe guard rail was determined as follows: Out of the70 poorest countries, the ten were identified whichcombine a relatively high value on the HumanDevelopment Index (HDI) and income-adjustedHDI with a low value on the Human Poverty Index(Table 4.3-4).

The ten countries selected have an adjusted HDIof 0.7–0.8 and an HPI of 11–29. Despite their rela-tively low GDP, they are countries which UNDP hasclassified as falling within the medium range ofhuman development, and they are also included inthe 50 per cent of developing countries with an HPIlower than 30 (UNDP, 2002a). They include LatinAmerican and Asian but not African countries. Thearithmetic mean of the ten countries’ annual percapita GDP is US$2,900 per person and year, whichthe WBGU considers to be the lower limit for a lifein human dignity. Sixty countries with a total popula-

tion of 2,200 million did not achieve this threshold in1999. In 21 countries with a total population of 375million, the indicator was actually lower thanUS$1,000.

In principle, a macroeconomic minimum energyrequirement per person and year could be derivedfrom the primary energy consumption of the tencountries selected. If Jamaica is excluded due to itsextremely high consumption, per capita consumptionof commercial energy in the remaining nine coun-tries stands at between 4,500 and 10,500kWh per per-son and year, with a mean of 7,500kWh per personand year (Table 4.3-4).

Alternatively, the lower limit of US$2,900 per per-son and year could also be used directly to derive theeconomic minimum energy requirement. Takingmean primary energy required by all countries with aGDP of between US$2,600 and US$3,200 per personand year to manufacture a product with a value ofUS$1 in 1998, this results in a economic minimumprimary energy requirement of 7250kWh per personand year. Finally, reference could also be made to theaverage energy intensity of the OECD countries

Table 4.3-4Indicators of selected low-income countries with acceptable successes both in the area of development and in povertyavoidance. HDI Human Development Index, HPI Human Poverty Index, GDP Gross Domestic Product. The average valueswere calculated as an unweighted arithmetic mean.Sources: UNDP, 2002a; World Bank, 2002a

Country Per capitaGDP (1999)

[PPP US$/per capita/a]

HDI (1999)

Income-adjustedHDI

HPI(1999)

Population(1999)

[Million]

Commercial energy use(1997)

[kWh/per capita]

Commercialenergyuse/GDP(1997)[kWh/PPP US$]

Traditionalenergy(1997)

[% of total use]

Vietnam 1,860 0.68 0.78 29.1 77.1 6,044 2.9 37.8Nicaragua 2,279 0.64 0.69 23.3 4.9 6,394 2.9 42.2Honduras 2,340 0.63 0.69 20.8 6.3 6,171 2.6 54.8Bolivia 2,355 0.65 0.71 16.4 8.1 6,354 3.0 14Indonesia 2,857 0.68 0.74 21.3 209.3 8,039 2.5 29.3Ecuador 2,994 0.73 0.81 16.8 12.4 8,271 2.7 17.5Sri Lanka 3,279 0.74 0.81 18.0 18.7 4,478 1.5 46.5Jamaica 3,561 0.74 0.81 13.6 2.6 18,003 5.3 6China 3,617 0.72 0.78 15.1 1,264.8 10,521 3.0 5.7Guayana 3,640 0.70 0.76 11.4 0.8 – – –

Average 2,878 0.69 0.76 18.6 8,253 2.9 28.2

FOR COMPARISON:

Developingcountries 3,530 0.65 0.68 4,609.8 2.7 16.7

Poland 8,450 0.83 0.87 38.6 31,564 3.6 0.8 Portugal 16,064 0.87 0.89 10 23,792 1.7 0.9 Germany 23,742 0.92 0.93 82 49,080 2.1 1.3USA 31,872 0.93 0.92 280.4 93,682 3.0 3.8Eastern Europe

and CIS 6,290 0.78 0.82 398.3 5.6 1.2OECD 22,020 0.90 0.90 1,122 2.5 3.3


(Table 4.3-4). As this also stands at 2.5kWh per USdollar, the identical result is achieved.

However, due to a lack of available data, this valuedoes not fully reflect energy consumption from tradi-tional biomass use, which plays a significant role inalmost all developing countries (Table 4.3-4). Takingthis fully into account is likely to increase the averagevalue by at least 1,000kWh per person and year.

In view of the wide range of energy intensity, thedifficulties associated with sectoral and geographicalcomparison between economies, and the variationsin the amount of traditional energy used, the WBGUhas decided not to set a ‘hard’ or quantitative guardrail for minimum energy consumption.

The WBGU has simply tested whether, and fromwhich point in time, the various scenarios enable anenergy requirement of 7,250kWh per person andyear to be achieved. Assuming an annual efficiencyincrease of 1.4 per cent (to 2040) and 1.6 per cent(from 2040), the threshold in 2020 would be around5,400kWh per person and year, and in 2050 onlyaround 3,500kWh per person and year.

Testing the guard railIn order to obey this guard rail, all countries mustexceed a per capita income of US$19992900. This isalready the case in scenario A1T-450 from 2020, butthese data are only available for four regions of theworld. In a country review, supplying the amount ofenergy stated above by 2050 could pose a problem.However, due to the lack of available data in this sce-nario, this could not be tested.

Based on this guard rail – and depending onincreases in energy efficiency – with around 7,600million people in 2020, for example, a global primaryenergy consumption of 104–137EJ is derived. As400EJ are already used worldwide today and primaryenergy consumption will increase to 650EJ by 2020 inscenario A1T-450, the guard rail is unlikely to poseany fundamental problems with the quantity ofenergy, but at most with its distribution.

4.3.2.6Technology risks

Defining the guard railA sustainable energy system needs to build upontechnologies whose operation remains within the‘normal range’ of environmental risk across theentire supply chain, from the various primary energycarriers to the end consumer and possible waste.Here, the ‘normal range’ – as opposed to the border-line and prohibited ranges – is defined in line with theWBGU’s Report, ‘Strategies for Managing GlobalEnvironmental Risks’ (WBGU, 2000).

In the production and transportation of fossil fuelsand the operation of fossil-fuelled power stations,accidents may occur due either to error or sabotage.Such accidents have a limited impact in spatial andtemporal terms, and can therefore be included in thenormal range of environmental risk (WBGU, 2000).The risk of emissions is restricted by other guard rails(CO2: ‘Climate protection’ guard rail; other emis-sions:‘Prevention of atmospheric air pollution’ guardrail). Other renewable energy carriers (small-scalehydropower, wind, various forms of solar energy, bio-mass, geothermal energy, etc.) are non-hazardousand thus fall within the normal range of environmen-tal risk, well within the bounds of the guard rail. Evenwhen operating normally, hydropower plants withlarge reservoirs fall within the borderline range ofenvironmental risk and may therefore collide withthe guard rail (WBGU, 2000; Section 3.2.3.3). Thisapplies especially to the threat posed by terrorism.

Nuclear powerThe present use of nuclear energy (from uraniumextraction to reprocessing) involves the release ofradiation and thus poses an environmental risk. Inthe context of nuclear power, there are two maindomains which collide with the risk guard rail: Firstly,the risks associated with normal operation and wastemanagement, and secondly, those associated withproliferation and terrorism (Section 3.2.2).

Normal operation and waste management: Therisks associated with the normal operation of nuclearpower plants fall within the borderline range of envi-ronmental risk (WBGU, 2000).The OSPAR limit val-ues are an example of internationally defined thresh-olds for the discharge of radioactive substances intothe sea. The objective of OSPAR is to achieve con-centrations in the environment close to zero for syn-thetic substances. The discharge of radioactive liquidwaste from the nuclear reprocessing plants at Sell-afield and Cap de La Hague has, in both cases,exceeded the limit values regionally (EU Parliament,2001). Then there is the standard set by the Interna-tional Commission on Radiological Protection,which defines acceptable doses of radiation exposureper person and year (ICRP, 1991).This limit value hasalso been exceeded by many times in the area aroundthe nuclear reprocessing plants (EU Parliament,2001). The nuclear reprocessing currently takingplace in Europe exceeds the limit values agreed atinternational level. In light of the situation concern-ing the storage of nuclear waste, discussed in Section3.2.2, the WBGU considers that the management ofwaste from the nuclear industry must also be classi-fied in the borderline range.

Proliferation and terrorism: Due to the unresolvedproblems (Section 3.2.2), the WBGU classifies both


proliferation and nuclear terrorism in the low tomedium probability range with the extent of damagebeing substantial. This falls between the borderlineand prohibited ranges and thus conflicts with the riskguard rail.

As there is currently no immediate prospect ofbeing able to guarantee worldwide the safe operationof nuclear power plants, the non-hazardous long-term storage of nuclear waste, and the non-prolifera-tion and avoidance of any illicit use of radioactivematerials for terrorist purposes, the WBGU recom-mends abstaining from the use of nuclear power inthe long term.

Testing the guard railAs scenario A1T-450 contains a substantial propor-tion of nuclear energy, it conflicts with this guard rail.

4.3.2.7Health impacts of energy use

The International Covenant on Economic, Social,and Cultural Rights defines health as a fundamentalhuman right (Article 12). It also recognizes the rightto an adequate standard of living (Article 11), whichincludes access to energy, e.g. for cooking and heating(‘Access to modern energy’ guard rail). In manycountries and regions of the world, these rightsremain unfulfilled because no ‘clean’ or fit-for-pur-pose energy is available. The energy carriers used inthese areas can significantly impact on human health.In all, around 25–35 per cent of health impairmentcan be attributed to environmental risk factors(Smith et al., 1999), but it is difficult to establish clearcausal chains between energy production and use, onthe one hand, and health damage, on the other.Alongside the fundamental risks which cannot beavoided when dealing with energy, there are twodomains in particular which have a proven impact onhealth and which appear, in the WBGU’s view, to beglobally relevant for the definition of guard rails:

Local urban and indoor air pollution is identifiedworldwide as one of the major risk factors for healthdamage and mortality (especially in relation to acuterespiratory illness; Michaud et al., 2001; WHO,2002b). This is caused by fumes from the burning offossil fuels or biomass (Sections 3.2.1, 3.2.4). Thetechnology used for this purpose (which ranges froma 3-stone hearth to a modern low-emission powerstation) plays a key role in determining the extent ofhealth impacts.

Radiation is health-damaging, so that the use ofnuclear energy (from uranium extraction to repro-cessing and storage) is invariably associated withhealth risks (Section 3.2.2).

DALYs (Disability Adjusted Life Years) can beused to formulate health guard rails with the aim ofestablishing tolerable limits for health impairment(morbidity) caused by energy production and use.DALYs are a measure of burden of disease in popu-lations by combining ‘Years of Life Lost’ (YLLs) and‘Years Lived with Disability’ (YLDs) (Murray andLópez, 1996). However, this indicator has been criti-cized due to its weighting of age and specific diseases,which can under- or overestimate certain healthimpacts (e.g. UNDP, 2002b). Nonetheless, DALYs arecurrently the best available measure for standardizedand comparative statements. In the World HealthReport 2002, the WHO has already begun toattribute specific risk factors to specific healthimpacts and quantify the proportion of health dam-age caused in terms of DALYs, and this applies tourban and indoor air pollution as well (WHO,2002b).

Defining the guard railBurning fossil fuels and biomass produces air pollu-tion in the form of gases and particulate matter whichpose major health risks to the exposed population(Fig. 4.3-3).

Urban air pollution, especially in the rapidly grow-ing megacities in developing and transition countries,causes major health impairment claiming around 0.8million lives every year (Section 3.2.1.3).Almost halfof the 7.9 million DALYs attributable to urban airpollution worldwide affect people in the westernPacific region and in South-East Asia (especiallyChina).

Fumes in indoor areas resulting from the burningof solid fuels (especially biomass) in householdsposes an even greater hazard, claiming around 2 mil-lion lives every year, primarily in developing coun-tries (Section 3.2.4.2; UNDP, 2002a). Africa andSouth-East Asia each account for one-third ofDALYs caused by indoor air pollution. In India, thehealth impairment caused by indoor air pollution iseven greater than that caused by smoking or malaria(Box 3.2-1).

Even today, values below 0.5 per cent as a share ofregional DALYs are achieved for urban and indoorair pollution in much of the world (Fig. 4.3-3). TheWBGU therefore proposes, as a guard rail, that theshare of regional DALYs caused by these two riskfactors should be reduced to below 0.5 per cent for allWHO regions and sub-regions.

To this end, the phasing out of health-endangeringforms of traditional biomass use and the develop-ment and implementation of appropriate alterna-tives are essential. This poses a major challenge(availability of clean fuels, improved burning andventilation technology; Box 2.4-1; Section 5.2.3.2).To


0.5 1 2 3 4 No data>4

Proportion of DALYs in the subregion [%]

b

a

Figure 4.3-3Health impairment attributed to local air pollution. The proportion of DALYs in the specific subregion is used as indicator.Values above 0.5 per cent lie outside the guard rail proposed by the WBGU and are coloured red.a) Health impairment caused by urban air pollution.b) Health impairment caused by fumes in indoor areas.Source: WHO, 2002b


promote compliance with the guard rail, thresholdvalues can be set for air pollutants. Since the 1950s,the WHO has evaluated the health impacts of theemission of air pollutants. It drafted the ‘Air QualityGuidelines for Europe’ in 1987 and later extendedthem to global level (WHO, 1999). They proposeguidelines and threshold values for air pollutantssuch as ozone, carbon monoxide, volatile organiccompounds, nitrogen oxides, sulphur oxides and sus-pended particulates, and may serve as a basis for theformulation of national standards. It is the task ofnational governments, based on the preliminarywork undertaken by the WHO, to set appropriatelyadjusted national emissions standards for the burn-ing of fossil fuels and/or biomass and monitor com-pliance with these standards.

Testing the guard railThe scenarios do not provide any values for DALYs,so that direct testing of the guard rail is impossible.Huynen and Martens (2002) observe, in an overviewof 31 scenarios, that health is described adequately inonly 14 scenarios, and just 4 scenarios take account ofsocio-cultural, economic and ecological factors asdriving forces for health development. Scenario A1T-450 obeys the ‘Prevention of atmospheric air pollu-tion’ guard rail across the board in the second half ofthe century (Section 4.3.1.6) and largely phases outthe use of traditional biomass by 2100. The highgrowth rates assumed in the scenario thus suggestthat implementing the recommendations set out hereis entirely feasible by 2050.

4.4 Towards sustainable energy systems: Anexemplary path

4.4.1Approach and methodology

The previous section of this report tested scenarioA1T-450 as to whether it is compatible with the guardrails set by the WBGU. It became apparent that thisscenario oversteps various guard rails, such as therisk guard rail through the scenario’s expansion ofnuclear energy, or the ecological guard rails throughits highly ambitious expansion of biomass use. Theclimate protection guard rail, too, is transgressed if amedium climate sensitivity is assumed. Nonetheless,scenario A1T-450 is valuable as a starting point forthe WBGU’s recommendations, as it combines thestabilization of atmospheric carbon dioxide concen-trations with dynamic economic growth withoutrequiring deep-seated changes in consumption pat-

terns (Section 4.2). The scenario has leeway for fur-ther climate protection through additional enhance-ment of energy productivity; this makes it appearpossible to bring emissions down to values at whichthe climate guard rail would be complied with.

Consequently the present section of this reportdevelops a modified A1T-450 scenario designed toensure compliance with all guard rails. The modifiedscenario represents the technological, supply-sideaspect of an exemplary transformation path. By‘exemplary’, the WBGU means that the technologi-cal details of the path are not the one and only possi-ble solution for a path towards sustainable globalenergy systems. For instance, the mix of renewablesources could be composed differently. Similarly, lessprimary energy and less fossil energy carriers wouldneed to be used if a scenario were taken that does notassume major energy hunger but rather a path givinggreater consideration to measures reducing energydemand (e.g. a B1 scenario, Section 4.2). The exem-plary path thus provides ‘evidence’ that, even ifenergy demand continues to grow strongly, it is pos-sible to transform the global energy system in a man-ner compatible with the guard rails. Other paths,however, could do this too.

4.4.2Modifying scenario A1T-450 to produce anexemplary path

This section presents and discusses the WBGU’smodifications to scenario A1T-450. Section 4.4.3 thenprovides an overview of the exemplary path. Allparameters not noted specifically in this sectionremain unaltered compared to scenario A1T-450.

As scenario A1T-450 is based on a set of mutuallydependent assumptions, it cannot be modified at willwithout becoming inconsistent. In particular, all basicassumptions concerning economic growth, invest-ment, technological progress, the relationshipbetween industrialized and developing countries,international cooperation, population development,etc. must be retained. Consequently, the WBGU hasrestricted its adjustments to a technological modifi-cation of the scenario. The energy sector in scenarioA1T-450 receives by 2100 a strong hydrogen compo-nent supplying half of total global energy use. Inorder to ensure in this setting the compatibility of theexemplary path with scenario A1T-450, the electric-ity/heat/hydrogen and fossil/non-fossil energy supplyratios are kept identical as far as possible.As heat canbe supplied efficiently at any time from hydrogenand electricity and conversion in the opposite direc-tion entails high losses, it suffices to verify that, in theexemplary path, at all times at least as much electric-

127Towards sustainable energy systems: An exemplary path 4.4

ity and hydrogen can be supplied as in scenario A1T-450. This verification is non-trivial and was providedthrough extensive calculations not reported in detailhere.

The A1T scenarios start in 1997. Thus in scenarioA1T-450 the values for 2000 are already projections.In contrast, the exemplary path uses observed valuesfor 2000.

Methodology for quantifying primaryenergyThe joint presentation of different forms and sourcesof energy within a global quantitative structure is afundamental problem, because while some conver-sion paths supply high-grade final energy directly(e.g. power or hydrogen from solar energy), otherconversion paths generate corresponding energyforms through an intermediate thermal stage (e.g.fossil power plants). We follow here the quantifica-tion approach taken by the world of the SRES sce-narios by using the ‘direct equivalent method’: Fornuclear energy and all renewables that deliver elec-tricity or hydrogen directly as final energy (wind,hydro, photovoltaics, other renewables), the valuesstated correspond to high-grade final energy. Forenergy forms that can only be upgraded to electricityor hydrogen via the production of heat (e.g. fossilfuels, biomass, geothermal), energy figures corre-spond to thermal primary energy equivalent values.The scenario discussion summates the two energyquantifications without correction.

Renewables and nuclear energyThe WBGU made the following modifications to sce-nario A1T-450 regarding renewables and nuclearenergy:• Nuclear energy: In the exemplary path, the quan-

tity of energy provided by nuclear sources for theyear 2000 is based on real IEA figures. The A1T-450 value was adopted for the year 2010. However,in departure from A1T-450, nuclear energy use isphased out by 2050 in the exemplary path.Nuclear-based electricity or hydrogen is substi-tuted by renewable sources and, for a limitedperiod, by natural gas.

• Hydropower: The start value for 2000 was takenfrom IEA figures. Capacity is then expanded mod-erately, finally reaching 15EJ per year (comparedto 35EJ per year in A1T-450).

• Biomass: The start value for 2000 is based on esti-mates (Kaltschmitt et al., 2002). Noteworthyuncertainties attach to this value, but it is close tothe A1T-450 estimates. The breakdown in roughlyequal shares of modern/traditional use is adoptedfollowing A1T-450. Traditional biomass use isreduced over the long term on a trajectory similar

to that in A1T-450; 5EJ per year remain perma-nently from 2050 onwards (compared to 0 in A1T-450). As it can be assumed that this energy quan-tity can then be used without causing indoor airpollution, this modification is compatible with theWBGU health guard rail. Levels of modern bio-mass use are raised in a manner similar to A1T-450, but expanded less strongly over the long termand finally limited to 100EJ per year (compared to260EJ per year in A1T-450).

• Wind energy: The start value for wind energy wasderived from real data on installed worldwidecapacity (BTM Consult, 2001). An annual growthrate of 26 per cent is assumed until 2020 (tenfoldgrowth per decade); this rate then slows. Over all,wind energy is expanded to a much greater degreethan in A1T-450. Nonetheless, at 135EJ per year,the final level reached is still substantially belowthe technological wind energy potential identifiedin Chapter 3 of this report.

• Solar electricity: The start value for solar powergeneration in the year 2000 is based on measureddata. In the following period, it is assumed thatsolar-based power generation (distributed photo-voltaics, photovoltaic and solar thermal powergeneration) grows tenfold each decade until 2040.The aggregated growth curve of solar power gen-eration meets the A1T-450 curve shortly beforethe year 2050; in the opinion of the WBGU, theA1T-450 curve is unrealistically high in the previ-ous years. Towards 2100, the exemplary pathslowly adopts a trajectory approaching that inA1T-450. The level reached in 2100 still falls farshort of the maximum potential (Chapter 3).

• Solar thermal: In the exemplary path, the thermaluse of solar energy (‘solar thermal’) is increased ina manner similar to that in A1T-450. The A1T-450figure for the year 2000 is hard to substantiate, asglobal solar-based hot water production in 1998was actually far lower. However, it is difficult toappraise precisely the contributions of active andparticularly passive solar thermal use, so that,despite reservations, the A1T-450 value wasadopted for the exemplary path.

• Geothermal: This form of energy is not quantifiedspecifically in A1T-450. The WBGU considers thepotential of geothermal energy to be so important– with regard to both thermal applications andelectricity production – that it has set up a specificcategory. It was assumed regarding the power/heatratio that half of the primary energy is used ther-mally (heating, cooling, process heat) and theother half is used to generate power. The respec-tive efficiencies are lower than those of fossilpower plants, because geothermal heat is usuallyavailable at a comparatively low temperature


level. The start value for 2000 was adopted fromthe World Energy Assessment (UNDP et al.,2000).

• Other renewables: Here primary energy contribu-tions were assumed that are significantly moreoptimistic than those of A1T-450.The WBGU is ofthe opinion that the development of new tech-nologies to harness renewable energy sources isfar from concluded. Technologies already underdebate today include solar chemical energy sys-tems (producing storable energy carriers), tidaland wave energy, as well as energy conversionusing artificial membrane systems employingprocesses similar to photosynthesis.

Fossil sourcesFossil energy is key to CO2 emissions and thus to theclimate guard rail. Fossil energy use is modified onlyvery slightly in the exemplary path, which appliesreal energy consumption levels for the year 2000,based on current US government statistics (US-DOE, 2002). From 2010 up to 2050, the exemplarypath adopts the contributions of the individual fossilsources from A1T-450 almost unaltered.There is onlyone modification: The transient power bottleneck atthe beginning of the century that results from thecomparatively slighter use of biomass and hydro iscompensated for by an additional, time-limited use ofgas-fired power plants. This leads, over an interimperiod, to a slight increase in energy requirementcompared to scenario A1T-450. The gas is used tosupply sufficient electricity to compensate for theshortfalls arising among non-fossil energy sourcescompared to A1T-450. Assuming 50 per cent powerplant efficiency, this results in some 17GtC additionalCO2 emissions over the period until 2050.

In contrast, the use of fossil sources is set some-what lower than in A1T-450 throughout the secondhalf of the century, as in that period intensified effi-ciency improvements lead to reduced energydemand. Initially demand is reduced equally in boththe fossil and non-fossil sectors. As a result, energy-related CO2 emissions drop by about 24GtC between2050 and 2100. This more than compensates for theelevated level of gas consumption in the first half ofthe century.

Energy productivityIt is assumed that energy productivity in the exem-plary path outstrips energy productivity in scenarioA1T-450 from 2040 onwards. While historicallyenergy productivity has grown on average across theworld by about 1 per cent annually since the onset ofindustrialization, the A1T scenarios assume approxi-mately 1.3 per cent annually. Scenarios making moreambitious assumptions in this respect even take 2 per

cent per year (B1; Section 4.2). The exemplary pathassumes an energy productivity growth of 1.6 percent annually from 2040 onwards. This is still consis-tent with the assumptions of the A1 world, becausescenario A1T-450 scarcely takes into considerationmeasures to reduce energy demand, for instancethrough price incentives. It thus leaves sufficient lee-way to assume further improvements in energy pro-ductivity without – as in the B1 world – needing topresuppose a shift in values and structures towardsless energy-intensive industrial products and ser-vices. As a result, energy usage is reduced by 22 percent compared to scenario A1T-450 by the year 2100.

Carbon dioxide storage (‘sequestration’)A distinction can be made between carbon dioxidesequestration from fossil power plants and from bio-mass plants.• Carbon dioxide sequestration from fossil plants: In

scenario A1T-450, about 218GtC are sequesteredin total by 2100; in that year, the rate of sequestra-tion still figures 1.7GtC per year.The WBGU con-siders it important to limit the period during whichcarbon dioxide is sequestered because of the lim-ited capacity of repositories. The exemplary paththus distributes storage across time in such a waythat it is terminated by the end of the 21st century.However, as scenario A1T-450 already assumesthat the greater part of carbon arising in powerplants is sequestered, there is very little scope forsuch redistribution and the cumulative quantity ofcarbon stored had to be reduced slightly in theexemplary path compared to scenario A1T-450.

• Carbon dioxide sequestration from biomass powerplants: In biomass-fired power plants, as well as infacilities for the production of synthesis gas(hydrogen) from biomass, the carbon contained inthe biomass can be separated from the flue gas inthe form of CO2 and then consigned to storage.This leads to a net removal of carbon dioxide fromthe atmosphere. In the exemplary path, the corre-sponding technology is introduced and expandedfrom 2040, whereby energy production in biomassfrom facilities with storage amounts to 25EJ annu-ally in the decades between 2060 and 2080. Thistechnology can be phased out again towards theend of the century. With an assumed storage effi-ciency of 70 per cent, this development over timeyields compared to A1T-450 additional CO2 emis-sions savings amounting to some 21GtC. Figure4.4-1 compares carbon sequestration in the exem-plary path to that in A1T-450.

Total CO2 emissionsFigure 4.4-2 compares the energy-related CO2 emis-sions of scenario A1T-450 with those of the exem-

129Towards sustainable energy systems: An exemplary path 4.4

plary path, as the outcome of all modifications dis-cussed above. The differences are comparativelysmall. Including non-energy-related CO2 emissions,which are the same in both scenarios, both result incumulative CO2 emissions of just below 650GtC by2100. The distribution of emissions over time is alsovery similar in both scenarios. Even taking into con-sideration the uncertainties discussed in this section,all statements regarding global warming that wereformulated when testing the climate guard rails forA1T-450 thus also apply to the exemplary path. Byway of comparison, the figure also shows the CO2

emissions of another path (MIND) derived from afurther model computation (Section 4.5).

4.4.3The technology mix of the exemplarytransformation path: An overview

Table 4.4-1 shows the contributions of energy carri-ers to meeting energy demand in the exemplary path,assuming the modifications discussed above. Table4.4-2 provides an overview of CO2 emissions and car-bon sequestration. Figure 4.4-3 shows the contribu-tions of energy carriers in the exemplary path. Due tothe uncertainties attaching to long-term projections,the figure only shows the last years of the 2050–2100period. The projection for 2100 highlights the greatimportance of solar energy in this scenario.

Not only the way energy demand is met by a cer-tain energy carrier mix is crucial to the exemplarypath, but also the greater energy productivityenhancement assumed compared to scenario A1T-450. Such an increase can be achieved in many

ways, for instance through price-induced reduction ofenergy demand, which leads to efficiency improve-ments in both energy conversion and final energyuse, as well as through sectoral structural change andaltered settlement and transportation structures, orchanged consumer behaviour. In sum, this can pre-vent so much energy use that energy productivityenhancement becomes one of the main pillars of theexemplary path (Fig. 4.4-4).

4.4.4Conclusion: The sustainable transformation ofglobal energy systems can be done

In the previous sections, the WBGU performed aconsistent modification of reference scenario A1T-450 in such a way that it now obeys all guardrails (on the climate guard rail cf. Section 4.5.2). Thisproduces an exemplary transformation path demon-strating that, even in a world characterized by rapidlygrowing energy consumption, it is possible to trans-form global energy systems such that they becomesustainable. A number of key properties of this pathwarrant special mention.

The exemplary path is characterized by highgrowth rates of both energy use (three-fold growthby 2050) and economic development (six-foldgrowth by 2050). It builds upon three pillars: Declin-ing use of fossil sources, rising use of renewables andgrowing energy productivity. From the middle of thecentury onward, renewables account for the greaterproportion of energy provision. In the exemplarypath their share amounts to some 50 per cent in 2050and almost 90 per cent in 2100. This goal will require

2000 2020 2040 2060 2080 21000

1

2

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6

Car

bon

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tion

[Gt C

/a]

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Year

Figure 4.4-1Carbon sequestration in scenario A1T-450 and in theexemplary path.Source: WBGU and Riahi, 2002

Figure 4.4-2Energy-related CO2 emissions in scenario A1T-450, in theexemplary path and in the UmBAU path computed using theMIND model.Source: WBGU and Riahi, 2002; Edenhofer et al., 2002


massive growth rates of almost 30 per cent annuallyfor several decades. This is feasible, as the growthrates of wind and solar energy achieved in a numberof countries have recently demonstrated. The greatgrowth of solar energy is a key property of the exem-plary path. Figure 4.4-5 illustrates the surface areathat would be needed to supply the solar power pro-jected for Western Europe and North America in theexemplary path, if all solar power facilities were con-centrated at one location. Such a concentration is byno means envisaged; in fact, facility use is highly dis-tributed, even at middle latitudes and in industrial-ized countries. A global energy system buildingessentially upon solar power would not require unac-ceptably large areas compared to settlements andpresent infrastructural facilities, particularly consid-ering that in arid regions the use of land for solarpower production scarcely competes with other land-use forms, and dual uses are possible, for instance onroofs or transport infrastructure areas.

In the scenario underlying the exemplary path, therapid technological development is attributable toswift economic growth worldwide and particularly in

developing countries, providing sufficient financialresources for the transformation process. Lessenergy-hungry paths will presumably leave evenmore scope for transformation, if the economic andtechnology development setting changes accord-ingly. This confirms the key statement of the exem-plary transformation path: The sustainable transfor-mation of global energy systems can be done.

4.5Discussion of the exemplary path

This section examines in more detail the exemplarypath derived above. This includes in particular a dis-cussion of the uncertainties and costs of this path. Toprovide a basis for this discussion, Section 4.5.1 usesan endogenous model to perform alternative modelcomputations in order to explore the scope for actionthat is available when transforming energy systemswhile observing defined guard rails. Section 4.5.2then discusses the exemplary path, particularly with

Table 4.4-2CO2 emissions and carbon sequestration in the exemplary path.Source: WBGU

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

[GT C]

Annual energy-relatedCO2 emissions 7.3 8.4 9.4 9.5 7.8 5.6 4.3 4.0 3.9 3.7 3.6

Annual energy-relatedcarbon sequestration 0 0.1 0.9 3.0 4.1 4.5 4.2 1.5 0.7 0.3 0

Annual non-energy-relatedCO2 emissions (e. g.logging) 1.1 1.1 0.3 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1

Total 8.4 9.5 9.8 9.7 8.0 5.7 4.4 4.1 4.0 3.8 3.8

Table 4.4-1Global energy demand inthe exemplary path, brokendown according to energycarriers. The figures werecalculated using the directequivalent method (Section4.4.2).Source: WBGU

2000 2010 2020 2030 2040 2050 2100

[EJ]

Oil 164 171 187 210 195 159 52Coal 98 111 138 164 126 84 4Gas 96 138 196 258 310 306 165Nuclear 9 12 12 6 3 0 0Hydropower 9 10 11 12 12 12 15Biomass,

traditional 20 17 12 8 7 5 5Biomass,

modern 20 48 75 87 100 100 100Wind 0.13 1.3 13 70 135 135 135Solar electricity 0.01 0.06 0.6 6 63 288 1,040Solar thermal 3.8 9 17 25 42 43 45Other renewables 0 0 2 4 10 15 30Geothermal 0.3 1 3 10 20 22 30

Total 420 519 667 861 1,023 1,169 1,620

131Discussion of the exemplary path 4.5

200

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Total fossil sourcesplus nuclear

Total renewablesources

Energy savings throughimproved energyproductivity

Figure 4.4-3Contributions of energy carriers to energy demand for the exemplary transformation path. This path demonstrates that thesustainable transformation of global energy systems is technologically viable. A different renewable technology mix could alsoproduce the same outcome.Source: WBGU

Figure 4.4-4Energy efficiency enhancement in the exemplary path. This path assumes from 2040 onwards a 1.6 per cent annual increase inenergy productivity, compared to the historical figure of 1 per cent annually.Source: WBGU


regard to the aspect of compliance with the climateguard rail.

4.5.1The MIND model

To underpin economically the findings of Section 4.4above, the WBGU deploys an innovative modellingapproach that permits a consistency check of theexemplary path. This is done by means of the MINDmodel (Model of Investment and TechnologicalDevelopment; Edenhofer et al., 2002). MIND is anendogenous energy system model coupled to a cli-mate model.

The exemplary path derived in Section 4.4 buildsstrongly upon the assumptions of scenario A1T-450(Section 4.2).These concern among other things pop-ulation development, economic growth, the develop-ment of energy requirements as well as technologicalprogress, which are all predetermined exogenously.

An alternative approach is to determine key vari-ables such as economic growth, energy requirementsor efficiency and productivity improvements endoge-nously, i.e. within the model. In contrast to the MES-SAGE model with which the computations for A1Tscenarios were conducted, only few framework dataand a set of plausible decision criteria for dynamicoptimization are predetermined in MIND. The

model delivers neither a regional resolution nor atechnology resolution. Nonetheless, this alternativeapproach permits further plausibility tests of theexemplary path. MIND is a global model allowingassessment of long-term options for climate changemitigation action with regard to the necessary invest-ments and technological dynamics. It permits, in par-ticular, a critical review of the hypothesis that thecosts of transformation are far too high and are outof proportion to the benefits.

In the model, essentially only population develop-ment, technology learning curves and the availabili-ties of coal, oil and gas are predetermined. Futuredevelopments, such as demand for fossil and renew-able energies and consumption levels, are computedendogenously by the model. As is common practicein the theory of economic growth, an investor isassumed who seeks to maximize per-capita consump-tion of products and services over time (Ramsey,1928). Emission paths are determined on the basis ofendogenized technological progress, technologicaldevelopment being a process co-determined deci-sively by economic activities.This applies particularlywhen scarcities, such as an oil crisis, generate innova-tions (Ruttan, 2000; Goulder and Mathai, 2000).MIND also takes into consideration effects inducedby efficiency improvement measures and learning,e.g. through rising production volumes or throughmounting resource scarcity. Furthermore, the

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Figure 4.4-5Visualization of the surface area required for solar electricity. The squares represent the surface areas that would be needed toproduce the solar power assumed in the exemplary path for the year 2050. (a) Areas required for North America, assuminggeneration in Texas (100 per cent in solar power plants). (b) Areas required for Western Europe, whereby two-thirds of thesolar power are generated in central Europe (upper square; insolation values of Belgium, 25 per cent generation in solar powerplants, 75 per cent distributed) and one-third in the Sahara (lower square; insolation values of Algeria, 100 per cent generationin solar power plants). The regions of Western Europe (WEU) and North America (NAM) are defined as in Nakicenovic et al.,1998. The calculation is based on the technological potential. Transmission losses are assumed to be 10 per cent throughout.Source: WBGU


WBGU does not use in MIND any cost-benefitanalyses such as are common in climate economics(e.g. Nordhaus and Boyer, 2000). This is because theWBGU considers it exceedingly difficult to moneta-rize climate damage appropriately.

MIND contains three different energy sectors,each of which is examined as an aggregated whole:renewable energies, energy production from fossilfuels, and the extraction of fossil fuels. The fossilenergy mix is not modelled explicitly; rather, thedevelopment over time of the carbon content of thefossil energy mix is adopted from the exemplarypath. Fossil primary energy carriers are converted tofinal energy in MIND in the fossil energy sector.Conversion efficiency can be modified endoge-nously, by substituting primary energy with capital.Energy derived from non-fossil sources is added tofinal energy from fossil sources.This approach corre-sponds to the direct equivalent method, which wasalso applied to generate the exemplary path. InMIND, renewable energy carriers are the ‘new’renewables, i.e. those that have a potential for furthertechnological development in the future (solar, wind,modern biomass, etc.). They, too, are modelled as anaggregated set. Conventional renewables such as tra-ditional biomass and hydropower are not modelledexplicitly in MIND. The quantities of energy gener-ated from these sources and from nuclear power areadopted from the exemplary path (Section 4.4). Thesame applies to emissions of other greenhouse gases(methane, nitrous oxide, CO2 from land-use changeand fluorinated gases), and to carbon storage in geo-logical formations. This ensures that all factors notmodelled by MIND agree with those of the exem-

plary path. MIND computes different scenarios forthe BAU case (business as usual) and the UmBAUcase (‘UmBAU’ meaning ‘transformation’ in Ger-man). In the BAU case, unconstrained cost-effectivepaths are computed, while in the UmBAU case theclimate guard rail defined by the WBGU is intro-duced in addition. Finally, corridors of future emis-sion paths are computed – these corridors are com-patible with the climate guard rail and are economi-cally acceptable in international development terms.

MIND findingsFigure 4.5-1 shows the findings of the MIND simula-tions for the development of primary energy use, andits breakdown between renewable and fossil ener-gies. In the BAU case, new renewables only becomeeconomically profitable at the beginning of the 22nd

century, as it is then that the higher exploration andextraction costs of coal, oil and gas lead to massiveinvestment in renewables (Fig. 4.5-1a). However, themodel computations also show that under these con-ditions the global mean temperature must beexpected to rise by more than 4°C (Fig. 4.5-2c). Theclimate problem is thus not solved solely by themounting scarcity of fossil resources. Consequently, asecond case is examined – UmBAU (‘transforma-tion’) scenarios involving the introduction of the cli-mate guard rail.

Despite the different approach as compared toscenario A1T-450, MIND arrives in the UmBAU sce-nario (Fig. 4.5-1b) at energy requirement trajectoriesfor fossil and renewable energies that are similar tothose of the exemplary path (Fig. 4.4-3). Further-more, it is apparent that in such a scenario renew-

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Figure 4.5-1Energy use in the MIND model in the (a) BAU (business as usual) and (b) UmBAU (‘transformation’) cases, the latterinvolving compliance with the climate guard rail. The breakdown according to fossil, new renewable and traditional non-fossilenergy sources is shown. In BAU, energy use dips slightly towards the end of the 21st century, because the increasing scarcity offossil resources then comes into play. However, due to the massive introduction of renewables, energy use rises again after 2100(not shown here). Because the MIND calculations start in 1995, the values of the UmBAU and BAU cases already diverge inthe year 2000, as in the UmBAU case investors already take the climate guard rail into consideration in their decision-making.Source: Edenhofer et al., 2002


ables become macro-economically profitable farsooner. The model simulations thus verify the viabil-ity of the exemplary path.

The findings illustrate that in the UmBAU caseCO2 emissions can be cut massively compared to theBAU path (Fig. 4.5-2a,b). Nonetheless, the climateguard rail can only be complied with if over the next100 years approx. 200GtC are sequestered in securegeological formations (Fig. 4.5-2b,c). Compared tothe exemplary path, the UmBAU path entails about100GtC less cumulative emissions over the2000–2100 period. The atmospheric CO2 concentra-tion thus rises in the UmBAU scenario to no morethan 410ppm (in the year 2100).

Necessary investmentMIND confirms, as a coupled climate-energy systemmodel, that emissions targets must be announced in acredible fashion if the expectations of investors are to

change in such a manner that they invest in trans-forming the energy system. If investors expect thepolicy arena to make entitlements for atmosphericemissions scarcer over the long term, e.g. throughcertificate trading or through environmental qualityobjectives, then this expectation already becomes apart of investment appraisals today.

For the UmBAU case, MIND computes cumula-tive investment into the global energy system from2000 to 2100 amounting to US$330 million million,and for the BAU case US$300 million million. Asmajor uncertainties attach to the appraisal of futureglobal investments (UNDP et al., 2000), it is difficultto use empirical investment data of recent years toverify these figures.

The MIND simulations show in the BAU case forthe year 2000 an investment of 3.9 per cent of globalGDP (extraction, but without R&D) in the fossilenergy sector.The World Energy Assessment Report

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Figure 4.5-2CO2 emissions in the MIND model for the (a) BAU (business as usual) and (b) UmBAU (‘transformation’) cases. TheUmBAU case shows in addition the CO2 emissions prevented by sequestration. Figure (c) shows the WBGU climate windowand the temperature development for the 2000–2100 period for the two scenarios (BAU red, UmBAU black). As MIND is anoptimization model, in the UmBAU case part of the temperature development follows the edge of the climate window closely.A climate sensitivity (this is the warming that follows from a doubling of CO2 concentrations compared to pre-industrial levels)of 2.5°C was assumed. The sum of red and light-red areas represents actual emissions. The sum of the black and light-red areasrepresents the resources extracted. Because the start year for MIND is 1995, the UmBAU and BAU values already diverge in2000, as in the UmBAU scenario investors must already take the climate guard rail into consideration in their decisions.Source: Edenhofer et al., 2002


produced by UNDP et al. (2000) states only 1–1.5 percent. However, UNDP itself assumes this ratio to betoo low (approx. 3 per cent is debated in the litera-ture), because capital costs are significantly under-estimated. MIND is initialized with a relatively highratio of investment to GDP, because this is approxi-mately consistent with the capital costs stated in thatReport.

These uncertainties aside, the MIND computa-tions show that, in the business-as-usual case, invest-ment in renewables only starts when fossil resourcesdwindle. In the UmBAU case, there is an earlychange in investor behaviour; the climate guard railcan be complied with without massive macro-eco-nomic losses, and the transformation of global energysystems can be accelerated greatly. While slight con-sumption and income losses arise at the beginning ofthe transformation phase (amounting to less than 4per cent change), after conclusion of the transforma-tion phase (after 2100) welfare gains in fact ensuedue to rising returns to scale (Fig. 4.5-3a).The under-lying learning curves need not exceed historical rates.Over the relevant period (2000–2100) aggregatedlearning curves with a constant rate of learning areassumed for renewables. This involves the assump-tion that new technologies enter the market whoseaverage costs can be lowered through learning bydoing. Moreover, sensitivity analyses show that thefindings would not change qualitatively even if learn-ing curves have a declining rate of learning. Systemscan be transformed sustainably without majormacro-economic losses if the renewable energy sec-tor succeeds in maintaining its historically achievedrates of learning (Fig. 4.5-3b).

Permissible emissions corridorsWithin the context of the scenario approach, as setout in Section 4.1, not only are cost-effective paths

examined with regard to compliance with a climateguard rail, but also an analysis is conducted of thescope that this constraint leaves to the economic sys-tem as defined by MIND to extract fossil resources,with the associated emissions. The Tolerable Win-dows Approach (WBGU, 1995; Toth et al., 1997;Petschel-Held et al., 1999; Bruckner et al., 1999) is auseful tool in this context. The Tolerable WindowsApproach offers a procedure by which to identifyemissions corridors (Leimbach and Bruckner, 2001).Emissions corridors represent the aggregate emis-sions values over time that an emissions path com-patible with the guard rails can have. The TolerableWindows Approach does not involve an optimizationof the economic system, so that, in addition to the cli-mate guard rail, socio-economic guard rails are intro-duced in order to demarcate the realm of permissibleemissions futures (Section 4.3). To this end, a mini-mum growth of average per-capita consumption wasstipulated in order to do justice to the developmentrequirement of developing countries. As a furtherconstraint, an excessive scarcity of energy as a factorof production was excluded.

Figure 4.5-4 shows corridors for emissions andresource extraction that are compatible with theguard rails. The width of the corridors results aboveall from the sequestration of a part of energy-relatedCO2 emissions. Land-use-related emissions furtherwiden the corridors. The bold lines within the corri-dors indicate the cost-effective UmBAU (‘transfor-mation’) paths that obey the climate guard rail. Beingwithin the corridors, these paths also comply with theother two guard rails. Moreover, the paths arelocated in the upper part of the corridors.This meansthat even more drastic emissions reductions are fea-sible within the space demarcated by the socio-eco-nomic guard rails. The economic system modelled byMIND is therefore flexible enough to transform

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energy systems early on and thus bring down theshare of fossil energy carriers in energy productionquickly enough to ensure climate change mitigationwhile at the same time doing justice to aspects of eco-nomic development.

MIND thus computes a climate change mitigationpath which, for a medium climate sensitivity, remainswithin the WBGU climate window and still does notpresent politicians with unsolvable allocation prob-lems. This reaffirms the exemplary path used by theWBGU. It does, however, require a massive increasein the level of investment in the renewable energysector. The interplay of promotion measures – toaccelerate learning – with long-term emissions limi-tation for climate change mitigation allows effectivecontrol of the transformation process towards a sus-tainable future.

4.5.2The exemplary path: Relevance, uncertainties andcosts

This section discusses the exemplary path developedin Section 4.4. The discussion concentrates on theuncertainties relating to permissible emissions, andon the question of the path’s financeability.

4.5.2.1Uncertainties relating to permissible emissions

The exemplary path entails about 100GtC morecumulative CO2 emissions over the period from 2000to 2100 than the path computed by the MIND modelin the UmBAU scenario. However, the discussion inSection 4.4.2 shows that the exemplary path fullyexploits the available scope to reduce CO2 emissions.For instance, an assumed stronger increase of energyproductivity would no longer be consistent with theunderlying A1 world, more CO2 sequestration wouldconflict with the requirement to phase out sequestra-tion entirely by 2100, and a more rapid expansion ofrenewables is not possible. The following discussionillustrates how sensitive all scenarios are with respectto the uncertainties surrounding climate sensitivityvalues – an aspect already discussed in qualitativeterms in Section 4.3.1.2.

Climate sensitivity of the exemplary pathUsing an energy balance climate model, Kriegler andBruckner (2003) have determined how much cumu-lative carbon emissions a pure CO2 emissions sce-nario that neglects the net radiative forcing ofaerosols and other greenhouse gases can contain atmost over the period from 2000 to 2100 if it is not togenerate global warming of more than 2°C relative topre-industrial values. Their findings are shown inTable 4.5-1.

This shows clearly that permissible emissions candiverge by more than 1,500GtC between the twoextreme values of climate sensitivity.This divergenceis more than the total cumulative emissions of the

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Figure 4.5-4Corridors for (a) CO2 emissions taking CO2 sequestration into consideration, and (b) resource extraction. The corridors werecomputed under the requirement of complying with the WBGU climate window and the socio-economic guard rails. The non-sustainable realm is outside of the corridors. However, not all trajectories within the corridors are necessarily sustainable. Forinstance, a path remaining continuously at the upper limit of the corridor conflicts with the climate window. Compliance withthe corridor is a necessary, but not sufficient condition for compliance with the guard rails.Source: Edenhofer et al., 2002


exemplary path (650GtC). To place these valuesapproximately in relation to the exemplary path,which also gives consideration to other greenhousegases and aerosols, the relative differences betweenthe permissible emissions need to be transferred tothe exemplary path’s carbon dioxide emissions. Anassessment has shown that the exemplary path wouldremain within the WBGU climate window at anassumed climate sensitivity of about 2.2°C.

The range of climate sensitivities assumed in Table4.5-1 reflects the state of current knowledge (IPCC,2001a). It must be noted in this context that, due tothe major uncertainties, particularly with regard tothe indirect and feedback effects in the climate sys-tem, the IPCC no longer states any value as being themost probable. Nonetheless, it can be said that a

value of 2.2°C is within the range stated by the IPCCand is thus a plausible assumption. Recent studieshave attempted to reconstruct climate sensitivityfrom comparisons between model simulations andempirical data using probability density functions,and discuss climate sensitivities that significantlyexceed 4.5°C (Andronova and Schlesinger, 2001; For-est et al., 2002; Knutti et al., 2002). There is an urgentneed to engage in further research to provide a moreaccurate estimation of climate sensitivity (Section6.1).

Table 4.5-1 yields a further important aspect: If theexemplary path would need to obey the absolutewarming guard rail not at a climate sensitivity of2.2°C, but about 3°C, then the volume of permissiblecumulative emissions would shrink by about 200GtC.Viewed within the context of current debate, a cli-mate sensitivity of 3°C is also a plausible assumption.Its consequences therefore need to be discussed.Thequestion arises how the greater greenhouse gas emis-sions reduction that would then be required could berealized. Table 4.5-2 lists various options, showinghow even more emissions could be prevented withinthe exemplary path.

The 200GtC could be saved through carbonsequestration, through emissions reductions in agri-culture, and through a swifter increase of energy pro-ductivity. Savings will be difficult to tap in agricul-ture. Initial studies on methane emissions from ricefields and on the use of nitrogen fertilizers haveshown that emissions reduction potentials eitherrequire interventions in cultivation techniques(Mitra et al., 1999; Bharati et al., 2001) or their imple-mentation is limited or difficult and in some instances

Table 4.5-1Permissible cumulated CO2 emissions over the 2000–2100period for an absolute warming of at most 2°C relative topre-industrial values, as a function of climate sensitivity. TheIPCC states the possible range of climate sensitivity to be1.5–4.5°C (IPCC, 2001a). By comparison, cumulativeemissions within the exemplary path over the same periodfigure some 650GtC.Source: after Kriegler and Bruckner, 2003

Assumed climate sensitivity[°C]

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Table 4.5-2Climate sensitivity andpotentials to reducegreenhouse gas emissionswithin the exemplary path.Source: WBGU

Uncertainty factors andoptions within the exemplarypath

Equivalent worldwide per-missible greenhouse gas emis-sions, cumulative (2000–2100)

Notes

3°C climate sensitivity assumed instead of 2.2°C

Exemplary path would entailadditional excessive emissionsof about 200GtCeq

The IPCC states the rate ofclimate sensitivity to be 1.5–4.5 ºC.

50% reduction of CH4 andN2O emissions in agriculture

Would yield about 200GtCeq

savings50% is a very high reductionrate. It can scarcely beassessed whether it will bepossible to stabilize emissionsin agriculture at all.

Storage up to the maximumamount permitted by theWBGU guard rail (300GtCinstead of 200GtC)


savingsThis would mean that CO2

sequestration could not bebrought down to zero by 2100within the exemplary path.

Raise energy productivitygrowth rate from 1.3% perannum to 2% per annum


savingsCorresponds to a transitionfrom the A1 world to the B1world in the SRES scenarios.

Raise energy productivitygrowth rate from 1.3% perannum to 2.5% per annum


savings2.5% per annum improvementmay be the very maximum fea-sible.

also expensive (Scott et al., 2002). A major potentialsuch as listed in Table 4.5-2 will therefore be very dif-ficult to achieve.

If only little can be reduced in agriculture, then themissing 200GtC would need to be achieved mainly byraising energy productivity more swiftly, or by raisingthe volume of sequestration.About 100GtC could besequestered additionally without overstepping theWBGU guard rail for secure storage in geologicalformations. This, however, would mean that in theexemplary path CO2 sequestration could not bebrought down to zero around 2100.

About 200GtC could be achieved by raisingenergy productivity more rapidly. The rate of 2.5 percent enhancement per year stated in the table isviewed in the literature as the maximum rate feasible(Hoffert et al., 1998). It must be stressed that anenergy productivity improvement rate of 2 per cent(B1 scenarios) or even 2.5 per cent can only beachieved if at the same time technological efficiencyrises steeply and, as determined in scenario B1 (Sec-tion 4.2), structural change towards less energy-intensive products and services takes place, includingchanges in settlement and transportation structuresas well as lifestyles. This additional productivityimprovement of the energy sector requires strongincentives to reduce energy demand.

4.5.2.2Costs of the exemplary transformation path, andfinanceability issues

Turning energy systems towards sustainability willrequire a transformation process extending over 100years and more. To calculate the cumulative costs ofthis transformation, we would need to be able to pre-dict not only the development of capital investment,research expenditure, operating input costs and sys-tem maintenance costs for the exemplary path, butalso the costs of the BAU path and of other referencescenarios. It is obvious that price developments, e.g.for primary energy carriers, cannot be projected withsufficient reliability over a period of a century. Thesame applies to future fundamental innovations inenergy conversion and use that are still unknowntoday, and to the costs or cost savings that may resultfrom their implementation. These cannot be cap-tured sufficiently by the commonly appliedapproaches of scale economies and learning curves.

This is further compounded by the major difficul-ties attaching to an identification and monetarizationof the external costs of energy system transformationand alternative energy paths. Nonetheless, while noprecise statements can be made about the level ofexternal costs, comparisons are indeed possible. For

instance, the exemplary path shows that a switch torenewable energy carriers reduces both local andglobal environmental damage. In contrast, the fossil-nuclear path leads to massive environmental impacts,particularly through climate change. Climate change,in turn, generates macro-economic damage andadaptation costs. Similarly, the external costs causedby health damage are also lower in the exemplarypath. Furthermore, the exemplary path holds out,compared to the fossil path, the potential for a ‘solardividend’. This refers to savings in energy policymotivated defence expenditure, whose necessitydeclines through a switch to renewables, as importdependency upon fossil sources drops. It is estimatedthat the energy policy motivated defence expendi-ture of the USA alone amounts to approx. US$33,000million annually (Hu, 1997). This would be joined byfurther avoided costs of combating nuclear terror-ism.

In view of the uncertainties and imponderabilitiesattaching to cost assessments, the WBGU abstainsfrom a quantitative estimate of total costs. However,as the question of the financeability of energy systemtransformation and thus the level of necessary invest-ment is of immediate practical interest, the data ofthe model runs are taken to provide a rough pictureof the investment that may be involved in imple-menting the exemplary path.The MIND model com-putes for the 2000–2100 period cumulative invest-ments in the global energy system amounting toUS$300 million million for the BAU (business asusual) case and US$330 million million for theUmBAU (‘transformation’) case. Scenario A1T-450,which is the reference scenario for the exemplarypath, requires according to IIASA calculations acumulative investment of about US$190 million mil-lion over the same period, while the coal-intensiveand nuclear growth path of scenario A1C-450 wouldrequire some US$500 million million. Overall, theenergy requirement of the exemplary transformationpath is lower than that of scenario A1T-450. Fossilsources and carbon sequestration are almost identi-cal in the two scenarios, but the exemplary pathinvolves less nuclear, hydropower, solar thermal andbiomass, and would therefore presumably requireless cumulative investment for these energy sources.Cumulative investment only exceeds that of scenarioA1T-450 in the case of wind power and solar electric-ity generated through photovoltaics. Taking all rele-vant costs into consideration, the Council assumes onthe basis of its own estimates that the modificationsto scenario A1T-450 entailed by the exemplary pathmay roughly offset each other in financial terms.These estimates relate to scenarios involving animmediate launch of the transformation process. Iftransformation is postponed by several decades, the


139Conclusions 4.6

investment costs and, all other conditions remainingequal, the transformation costs would rise steeplydue to deepening path dependency. The WBGU iswell aware that the exemplary path, involving stronginitial support for new renewables, is more expensiveover the short term than a path relying initially uponexploitation of cost-effective greenhouse gas reduc-tion potentials. However, it can certainly be assumedthat the exemplary path will be more cost-effectiveover the long term, as only this path makes availablewithin a few decades the solar energy supply capacityneeded to avert major global warming damage. It fol-lows from all of the above that:• Major uncertainties attach to statements on the

costs of transforming the global energy system.Various models estimate cumulative investmentcosts for the period from 2000 to 2100 in theregion of several hundred million million US dol-lars.

• Using modified model findings, a cumulativeinvestment from 2000 to 2100 ranging fromUS$190 to 330 million million can be estimated forthe exemplary path.

• Over the long term, the exemplary path entails upto 2100 much lower investment costs than a coal-intensive and nuclear path and, moreover, avertssubstantial macro-economic damage.

However, the financeability of transformationdepends less upon the absolute level of cumulativeinvestment over 100 years, than upon 1. the relative level of requisite energy investment

(measured as e.g. the share of gross domesticproduct), and

2. the rate at which investment would have to growover the short to medium term.

Neither the IIASA scenarios nor the MIND modelrequire a strong rise in the ratio of energy investmentto GDP over a long period. At no point does invest-ment in the energy sector exceed twice its presentshare of GDP.

The second factor – the rate at which investmentmust grow over a given period – impacts morestrongly upon the appraisal of financeability. Invest-ment in the requisite transformation of energy sys-tems must be carried out mainly by private-sectoractors. Private-sector investment is based upon prof-itability considerations. This is why there can be noabsolute guard rail for the level of investment in theenergy system, e.g. in the form of a maximum share ofGDP. If political decisions modify the investment set-ting, the profit expectations for investment in energyefficiency and renewables can improve greatly. Onthe other hand, changes in the setting redirect capitalflows, which is problematic for those sectors of theeconomy from which capital is withdrawn. This cancause considerably adaptation difficulties in both

economic and social terms. The economic growthpotential would be reduced, particularly if thisprocess were to occur abruptly and within a shortperiod.A doubling of investment in the energy sectorwithin a few years could therefore exceed the adap-tive capacity of national economies. If the processoccurs over one or two decades, however, a doublingis possible without significant frictional losses. His-torical experience shows that in other, similarly largesectors the investment ratios (ratio of sector invest-ment to GDP) have even in some cases more thandoubled within a decade without having caused sig-nificant macro-economic disruption.

In order to safeguard the financeability and thuseconomic feasibility of energy system transforma-tion, it is essential to design a long-term transforma-tion strategy (Chapter 5) that does not impair theadaptive potential of market-based mechanisms, butrather harnesses them for the transformationprocess. That economic actors have planning cer-tainty is a precondition to this. It is essential that theycan rely on certain energy policy framework condi-tions over a period of at least 10–20 years. If actorscan orient their behaviour to interim targets andinstruments set out in a transformation roadmap(Chapter 7), their investment behaviour will adjustaccordingly. The WBGU thus considers it essentialthat the policy arena wastes no more time and givesclear signals pointing towards energy system trans-formation. This must take place at both the nationaland international levels. Under such conditions of astrategic transformation, the WBGU is convincedthat the selected sustainable path is financeable andcan be travelled without significant economic losses.Short-term adaptation costs will be unavoidable atcertain points, but can be minimized by applying theright instrument mix (Chapter 5). Overall, the consis-tent, long-term implementation of energy systemtransformation will enhance societal welfare and willtap new welfare potential.

4.6Conclusions

The analysis of scenarios for the long-term develop-ment of energy systems (Section 4.2) and the exami-nation of an exemplary path (Sections 4.4 and 4.5)consistent with the WBGU guard rails (Section 4.3)produce a series of conclusions. These are also thebasis for the recommendations for action developedin Chapter 5.• Global cooperation and convergence – both eco-

nomic and political – facilitate the rapid technol-ogy development and dissemination required forthe transformation. High economic growth can

then, in conjunction with a strong decrease inenergy and carbon intensity, lead to sustainableenergy supply. Present developing countries canprofit from this: through catching up quickly withthe development level of industrialized countries,through technology and capital transfer as well asthrough the opportunities resulting from theexport of high-quality energy products. This canmake it possible to attain, early on, the goal of pro-viding all people with access to modern, cleanforms of energy. This, however, will require notonly energy policy measures, but also activities inthe development and economic policy realms.

• Binding CO2 reduction commitments and theassociated price signals as well as other incentiveswill be essential in order to transform energystructures quickly enough for them to meet mini-mum climate protection requirements. GlobalCO2 emissions will need to be reduced by at least30 per cent by the year 2050 from a 1990 baseline,whereby industrialized countries need to reducetheir emissions by about 80 per cent and develop-ing countries need to limit their emissions growthto about 30 per cent.

• Energy policy activities need to be supported byfurther measures to reduce non-energy-relatedemissions (for instance from agriculture) and topreserve natural carbon stocks.

• While the exemplary path developed here by theWBGU is based upon a stabilization of atmos-pheric CO2 concentrations at 450ppm, due touncertainties attaching to driving forces and cli-mate development this can not be taken as a safestabilization concentration.With due regard to theprecautionary principle, the WBGU therefore rec-ommends retaining the option of aiming at lowerCO2 stabilization targets.

• Even if climate protection goals are met, a fossil-nuclear path entails substantially larger risks con-sidered intolerable by the WBGU, as well as muchhigher environmental impacts. Moreover, it is sig-nificantly more expensive over the medium tolong term than a path relying – as does the exem-plary path developed by the WBGU – upon pro-moting renewables and improving energy effi-ciency. The exemplary path leads to the followingrecommendations: The share of renewablesshould be expanded by about 50 per cent world-wide by 2050, and should figure about 85 per centby 2100. Energy productivity should rise over thelong term by 1.6 per cent annually. The use of coalshould be phased out by the end of the century,and the use of nuclear power already by 2050.

• Due to the long investment cycles, for instance ofpower plants or transport networks, the next10–20 years are the decisive time window for

putting energy systems on a sustainable track. Ifthis opportunity is used, it will be possible to trans-form systems in a way entailing only low incomelosses. This will prevent a deepening of pathdependency upon present fossil-nuclear energysystems. Moreover, developing countries will beable to leapfrog non-sustainable technologies.

• The transformation will only succeed if the trans-fer of capital and technology from industrializedto developing countries is intensified. To this end,industrialized countries will need to strengthentechnology development significantly in the fieldsof energy efficiency and renewable energysources, for instance by raising and redirectingresearch and development expenditure, imple-menting market penetration strategies, providingprice incentives and developing appropriate infra-structure.This can reduce the initially high costs ofenergy system transformation and can accelerateattainment of market maturity, thus in turn facili-tating transfer to developing countries.

• Over the short and medium term, it is essential toswiftly tap those renewable energy sources whichare already technologically manageable and rela-tively cost-effective today. These are in particularwind and biomass and also, within limits,hydropower. However, as their sustainable poten-tial is limited (Chapter 3), their vigorous expan-sion will already meet its limits in the first half ofthe present century.

• Over the long term, the rising primary energyrequirement can only be met through vigorous uti-lization of solar energy – this holds by far thelargest long-term potential.To tap this potential, itis essential to ensure that installed capacity growsten-fold every decade – now and over the longterm.

• The utilization of fossil energy sources will con-tinue to be necessary over the next decades.Wher-ever possible, this needs to be done in such a fash-ion that the efficiency potential is tapped and boththe infrastructure and generating technology canbe converted readily to renewable sources. In par-ticular, the efficient use of gas, for instance in com-bined heat and power generation and in fuel cells,can perform an important bridging function on thepath towards a hydrogen economy.

• To harness the worldwide potential of solarenergy and balance regional fluctuations, it will beessential to establish global energy transmissionnetworks over the long term (‘global link’).

• A certain volume of carbon sequestration in geo-logical formations (oil and gas caverns), but not inthe oceans, will be necessary as a transitional tech-nology in this century, given sharply rising primaryenergy demand.The quantity of sequestration will


141Conclusions 4.6

be moderate compared to fossil scenarios.The sus-tainable use of biomass through gasification, inconjunction with storage of the carbon dioxidearising in the process, even presents the opportu-nity to create a carbon sink.

• Besides modifying supply-side structures, it isimportant to engage in a strategy to enhanceenergy productivity far beyond historical trends –from a rate of improvement of about 1 per centtoday, to at least 1.6 per cent annually as a long-term global mean value. This means that globalenergy productivity must improve at least four-fold within the next 60–70 years. Three-foldimprovement should be aimed at by 2050.This willrequire measures (such as price incentives) toimprove efficiency and reduce energy demand inboth energy conversion and final energy use. Itwill also require further measures such as infra-structure policies aiming to modify transportationand settlement structures.

5

5.1Key elements of a transformation strategy

The previous chapters of this report have set out therequirements that globally sustainable energy sys-tems must meet. Present and future generationsshould command over the resources and goods nec-essary to meet their needs. This must be ensured insuch a way that environmental changes do not jeop-ardize the natural life-support systems on whichhumankind depends, and in such a way that no unac-ceptable social developments occur.The non-sustain-able realm is defined by the ecological and socio-eco-nomic guard rails set out in Section 4.3 of this report.If trajectories remain within the action space circum-scribed by the various guard rails, there is a prospectthat future generations have a similar scope foraction as the present one. The WBGU transforma-tion strategy towards globally sustainable energy sys-tems thus builds upon two fundamental goals:Goal 1: To protect natural life-support systems

(compliance with ecological guard rails);Goal 2: To secure access to modern energy forms

worldwide for all (compliance with socio-economic guard rails).

The calculations presented in Chapter 4 show thatnot every development of energy systems is compat-ible with these requirements.The exemplary path setout in that chapter outlines a possible sustainabledevelopment trajectory and identifies the key ele-ments of a global, sustainable energy strategy. Theconclusions presented in Section 4.6 point to the fol-lowing principal fields of action: engaging in climatepolicy; developing and applying new technologies;securing the engagement of developing countries;intensifying cooperation and convergence at theglobal level; and, finally, achieving greater policyintegration. It must be kept in mind that the next 10to 20 years represent the decisive window of oppor-tunity for transforming energy systems – it is in thisperiod that systems must be put on track towardstransformation. The Council’s recommendationsthus concentrate upon this period.

The quantification of the exemplary transforma-tion path underscores that by 2020 the share ofrenewables in the global energy mix should be raisedfrom its current level of less than 13 per cent to atleast 20 per cent, and should reach more than 50 percent by 2050. A promising approach by which toachieve this goal is to set minimum quotas for renew-able energies, which should be raised step by step(Box 5.2-1). In order that such a scheme covers theentire global energy mix, ideally all states shouldcommit to binding quotas. Because the potential forsustainable expansion varies widely among the indi-vidual forms of renewable energy, it would be expe-dient to set sub-quotas differentiated according toenergy carriers. In an economic perspective, it wouldbe desirable to give the system greater flexibility overthe long term by integrating agreed country quotaswithin a tradable quota system.Within such a system,a country would not need to fulfil its entire quotadomestically, but would have the option of offsettinga part of its assigned quantity of ‘green’ energyagainst energy from countries which produce quanti-ties of renewable energies exceeding their quota.

A further question is that of which concrete mea-sures can be deployed to increase the share of renew-ables and transform present energy systems intoglobally sustainable systems. The following sectionsprovide answers to this question. National-level mea-sures (Section 5.2) must be supported and comple-mented by well-integrated policies and effectiveinstitutions at the international level (Section 5.3).The Council orients its selection of measures to cer-tain guiding principles (Box 5.1-1).

5.2Actions recommended at the national level

In the following recommendations, a distinction ismade between industrialized, developing, newlyindustrializing, and transition countries in order totake account of the quite different settings in the var-ious country groups.

The WBGU transformation strategy:Paths towards globally sustainableenergy systems

144 5 The WBGU transformation strategy

5.2.1Ecological financial reform

Ecological financial reform concerns the financialrelationship between the state and its citizens, whichshould be restructured according to sustainabilitycriteria. On the revenue side, the taxation of non-renewable energies has been the main focus of thedebate until now. However, other environmentallevies, tax credits and the general process of trawlingthe tax system to identify disincentives to sustain-ability are integral elements of an ecological reformof the revenue system. On the public expenditureside, it is the subsidies paid to industries and individ-ual companies, as well as research subsidies but alsotransfers to private households, which must bereviewed and, if necessary, restructured according toenvironmental criteria. Not least, a general focus onthe environment in all aspects of public spending(e.g. environmentally compatible procurement, envi-ronmental management of public institutions, etc.) is

an integral part of an ecological spending reform(Burger and Hanhoff, 2002). In the following sec-tions, the WBGU focuses on taxation of non-renew-able energy carriers and the systematic removal ofsubsidies which result in harmful effects on the envi-ronment as two key elements of an ecological finan-cial reform.

5.2.1.1Internalizing the external costs of fossil andnuclear energy

The basic conceptThe major obstacle to the establishment of globallysustainable energy systems is the inadequate inter-nalization of the external effects of the fossil andnuclear energy chain from generation to use. As aresult, fossil and nuclear energy is priced more attrac-tively for the individual consumer than renewableenergies, although their external effects are far lower.

Box 5.1-1

Guiding principles for the WBGUtransformation strategy

• Promote good governance: For a global transformationof energy systems to get under way in Least DevelopedCountries, too, it is essential to strengthen their capabil-ities. Planning certainty, functioning state structures andfunctioning markets are basic preconditions for foreigndirect investment and the sustainability and effective-ness of development policy measures.

• Assume common but differentiated responsibility: Cli-mate change is essentially a consequence of presentenergy use in industrialized countries. It is the develop-ing countries, however, which will suffer the greatestimpacts. This places an obligation upon industrializedcountries not only to initiate the transformation ofenergy systems themselves, but also to provide financialand technical support to developing countries in thisprocess.

• Obey the precautionary principle: Global energy systemtransformation is a search process that needs to be re-adjusted continuously in line with the steadily growingbody of knowledge and shifting framework conditions.To obey the precautionary principle in this process, it isessential that development trajectories do not cross theguard rails defining the non-sustainable realm.

• Observe the subsidiarity principle: The subsidiarity prin-ciple demands that competencies for tasks must in prin-ciple first be devolved to the lowest level. A shift to thenext higher level is only legitimate if it can be proventhat the higher level can implement and finance energypolicy strategies more efficiently.

• Pursue regional approaches: Regional approaches (clubsolutions) can enhance the political enforceability of atransformation. Successful club solutions are an incen-

tive to other states or regional state groupings, andshould therefore be promoted.

• Create a level playing field for all energy carriers: Fossiland nuclear energy generation still receive very largesubsidies. Moreover, only a fraction of the external costsof fossil and nuclear energy systems have been internal-ized. The creation of a level playing field for all energyforms, particularly with regard to research and develop-ment, is therefore a basic precondition if market-basedimpulses for the transformation of energy systems are tounfold.

• Shape liberalization sustainably: The liberalization ofenergy markets creates, in many instances, the precon-ditions for harnessing economic potentials. However,the special conditions prevailing in the rural regions ofLeast Developed Countries also need to be kept in mind– here the initial concern is to secure supply. For newenergy markets to develop according to sustainabilitycriteria, liberalization needs to be combined with frame-work conditions set by the state.

• Tap transformation potentials swiftly: To enhance politi-cal enforceability, initially – and above all in developing,newly industrializing and transition countries – the mostcost-effective transformation potentials should betapped, such as efficiency improvements; concurrentlythose technologies that are not initially cost-effectiveshould also be promoted. The financial resources thussaved can be used to provide targeted support to e.g.renewable energies.

• Harness social and economic forces: By integrating pri-vate-sector actors, catalysts can be gained for the trans-formation process. The energy industry commands overthe necessary capital and to some degree over the req-uisite knowledge. The state must create an appropriatesetting: at the international level by, e.g., opening mar-kets and harmonizing international competition law,and at the national level by, e.g., preventing distortionsof competition and removing market barriers.

145Actions recommended at the national level 5.2

This creates distortions of competition which putrenewables at an disadvantage.

Full internalization of external costs worldwidewould be the most significant contribution to estab-lishing fair competition between the various types ofenergy. Fair competition is essential if renewableenergy sources and efficiency increases are tobecome more profitable than current forms ofenergy. This would put in place the conditions for aswift energy reform towards sustainability.

Two primary effects justify an ecological taxreform:1. The environment-related incentive effect resulting

from the taxation of non-renewable energy carriers:A tax on fossil fuels increases the price of thesefuels, leading to a fall in demand while marketconditions stay the same, and resulting in theirsubstitution by other energy carriers. There is alsoan incentive to increase energy efficiency and pro-mote the technological development of renewableenergies.

2. The fiscal effect of revenue use: Strictly speaking,revenue is merely a secondary effect which islargely irrelevant to the internalization approach.If the ‘correct’ rate of tax is selected, distortions ofallocation are removed. However, the purpose ofan ecological tax reform is not to introduce anindividual pollution tax as an isolated measure,but to replace other revenues with a more efficientenvironmental levy.

This concept is based on the ‘double dividend’hypothesis (Goulder, 1995): As well as producingbehaviour-modifying effects in favour of environ-mental policy objectives (first dividend), the effi-ciency of national taxation systems can also beincreased (second dividend). The second dividend isbased on the assumption that through tax revenue,distorting – and therefore efficiency-reducing –levies, such as income tax or social contributions, canbe reduced in a revenue-neutral way. If the distor-tions caused by the tax which is to be cut outweighthe distortions caused by an environmental levy (e.g.substitution effects in the area of intermediateinputs), a double dividend would be achieved. Inpractice, however, reducing the costs of the labourfactor by cutting non-wage labour costs only pro-duces a double dividend if specific assumptions aremade about the labour and goods markets (SRW,1998; Wissenschaftlicher Beirat beim Bundesminis-terium der Finanzen, 1997). Due to this uncertainty,the Council endorses the view, propounded by theGerman Council of Environmental Advisors (SRU),that taxing fossil energy carriers at national level isjustified not in terms of the second dividend butsolely in terms of its environment-related incentiveeffect (SRU, 2002).

As a general principle, tradable emissions rights(permits) – i.e. a quantitative solution – can achievethe same ecological objectives as taxes. But permitsare not suitable for all pollutants or polluters. Thenational debate in particular has therefore generallybeen dominated by the issue of eco-taxes. However,in climate policy at global and European level, thefocus is shifting towards the permit approach. So thatthe plethora of quantitative and tax-based solutionsdoes not block the progress of environmental andenergy policy at national or international level, inter-national climate policy in particular must focus to agreater extent on ensuring compatibility betweennational and international instruments in future.

Practical stepsAgainst the background of the basic concept out-lined above, the WBGU recommends the followingmeasures to the German federal government:• Strengthening steering incentives by taxing non-

renewable energy carriers: In the interests of cli-mate protection, lignite and hard coal should besubject to the highest taxes, followed by fuel oil,gasoline and natural gas. To produce dynamicinnovation incentives, it is crucial always to raisethe rates of tax in small steps so that actors can fac-tor energy price rises into their long-term deci-sion-making. Non-environmentally compatibleexemptions for energy-intensive industries mustbe progressively dismantled. In highly integratedeconomic areas such as the EU, a joint approach isessential, and the long-term aim should be toadopt such an approach at global level as well.

• Implementing an ecologically effective and eco-nomically efficient ‘tool box’: The further develop-ment of ecological tax reforms should be guidedby the CO2 emissions trading established throughthe Kyoto process and planned on an EU-widescale (Section 5.2.4.1). In this context, it is impor-tant to ensure that no double financial burdenarises due to the co-existence of these twoschemes. This means that stationary major pol-luters which join the emissions trading schemeshould not be subject to eco-tax or other leviesimposed in the interests of climate protection.However, the precondition for exemption fromthe eco-tax would be that the emissions reductionsachieved through emissions trading should be atleast equivalent to those achieved through theeco-tax. The WBGU views voluntary commit-ments as a supplementary climate protection toolwhich is compatible with, but not an alternative to,CO2 taxes and permits.

• Use of revenue: The WBGU is in favour of allow-ing the revenue from national CO2 taxes and otherenvironmental levies to flow into the general bud-


get, to be used – like other revenue – in line withthe priorities set by Parliament. In the interests ofa comprehensive ecological tax reform, a parallelreduction of purely fiscally motivated taxes –which produce high losses in terms of both alloca-tion and growth – is recommended. However, tem-porarily ringfencing a proportion of the revenueaccruing from the taxation of non-renewables tobenefit research, development and commercial-ization of renewable energies is justified, in theCouncil’s view, until external energy costs are fullycovered by adequate tax or quantitative solutionsand while subsidies on non-renewable energy car-riers and forms of use remain in place.

The ecological financial reform is likely to be of pri-mary importance for the industrialized countries inparticular. Although internalizing the external costsof fossil and nuclear energy is important in principlefor the developing, newly industrializing and transi-tion countries as well, ecological financial reform islikely to fail in these countries in the short to mediumterm due to their often inadequate public fiscal sys-tems. The WBGU therefore recommends working toensure that in the long term, ecological financialreform can have a positive impact in these countriesas well.

5.2.1.2Removing subsidies on fossil and nuclear energy

The basic conceptUnless energy subsidies are paid as compensation foran external benefit, they result in energy price distor-tions. The Council therefore regards the majority ofovert and hidden energy subsidies as one of the mostsignificant barriers to energy system transformation.Energy subsidies contribute substantially to the pathdependence of the traditional energy system. Withfossil energy, this applies especially to coal subsidiesand price subsidies for oil and gas, which keep energyprices at an artificially low level.With nuclear energy,subsidies are generally indirect: For example, somestates exempt their nuclear industry from 100 percent liability and pay into a risk protection fund.

Removing these subsidies would have two posi-tive effects: Firstly, there is an anticipated environ-ment-related incentive effect. Price rises make fossilfuel use less attractive to energy producers and con-sumers. Secondly, a fiscal effect can be expected. Pub-lic funds are freed up and can be used for other –especially energy-related – purposes, e.g. promotingresearch into renewables and energy efficiency.

It is estimated that every year, around US$240thousand million is paid in subsidies to the energysector worldwide. This includes around US$80 thou-

sand million in the OECD countries (van Beers andde Moor, 2001). In the developing countries, statesubsidies to the energy sector amount to US$50 thou-sand million – more than the total funds allocated toODA (DFID, 2002).These figures still do not includenon-internalized external effects (known as ‘shadowsubsidies’) because they are extremely difficult toquantify precisely. Nonetheless, despite these quan-tification problems, the external costs should alwaysbe considered in qualitative analyses as they arehighly relevant to energy policy decision-making.

Dismantling these subsidies offers great potentialto make savings. In a study for a number of non-OECD countries, the IEA has calculated that bycompletely dismantling distorting energy subsidies,average efficiency gains of 0.7 per cent of GDP canbe achieved. Furthermore, an anticipated reductionin energy use, amounting to 13 per cent on average,would cut CO2 emissions by 16 per cent (IEA, 1999).

Removing subsidies and/or reforming subsidy pol-icy also offers economic benefits. Nonetheless, oppo-sition to these moves can be substantial because sub-sidies always have distributional effects. The eco-nomic sectors affected will therefore try to block anysubsidy policy reforms which put them at a disadvan-tage. In order to reduce this opposition, subsidy pol-icy reform should take place progressively in accor-dance with fixed timetables. This leaves adequatescope for adjustment. In the interests of political via-bility, some of the funds freed up could be used tocushion the social impacts of the resulting structuralchange.

Two developments at international level can ben-efit the reform of current subsidy practice in manydeveloping and transition countries:• Accession to the WTO: Accession to the World

Trade Organization (WTO) is an important polit-ical objective for many of these countries, such asRussia. Domestic oil, gas and electricity prices,which are far lower than the world market price,are a major point of contention at the WTO acces-sion negotiations. If the objective of WTO acces-sion is pursued further, this is likely to drive for-ward subsidy policy reform as well.

• International climate protection: The CO2 emis-sions reduction commitment may trigger therestructuring of the energy sector in line with mar-ket principles, which will also enhance energy pro-ductivity. The introduction of market prices forenergy use would create incentives to improveproductivity in many transition countries. In thisrespect, dismantling subsidies in line with climateprotection criteria is doubly useful – benefitingpublic budgets and contributing to the fulfilmentof reduction commitments.


Practical stepsThe WBGU recommends the implementation of thefollowing, mutually reinforcing measures to the Ger-man federal government:• Drafting comprehensive documentation on envi-

ronmentally harmful subsidies in general and thesubsidies on fossil and nuclear energy in particu-lar. This documentation could, for example, beprepared as part of the regular report on subsidies.It should list not only direct payments but also taxcredits. Such a report on the ecological impacts ofsubsidies should also provide at least a qualitativeimpression of shadow subsidies (external effects).

• The German federal government should continueto press ahead with the removal of subsidies onfossil and nuclear energy at national level. Itshould also lobby, firstly at EU or OECD level andthen at global level, for an internationally coordi-nated removal or reform of energy subsidies. Inthis context, the conclusion of a multilateral agree-ment on energy subsidies (MESA) should begiven particular consideration (Section 5.3.5.1). Inthe interests of climate policy, it is especiallyimportant for the federal government to abandonits opposition to the phasing out of state subsidiesfor coal mining at EU level and support the targetof removing coal subsidies by 2010. This wouldalso be in line with the decision, adopted at COP7,which calls on countries named in Annex II of theUNFCCC (primarily the OECD countries) tophase out subsidies to sectors which emit green-house gases (UNFCCC, 2002).

• In the long term, all energy subsidies should beremoved except for those which promote funda-mental research into innovative energy technolo-gies, renewables and rational energy use, becauseexperience has shown that these services are notadequately delivered by the market. This shouldinclude research on the final storage of radioactivewaste and, more generally, the closure of nuclearpower plants.

It has already been pointed out that rigorously dis-mantling all state subsidies on fossil and nuclearenergies is likely to make nuclear energy non-viableas an industry (Section 3.2.2). The removal of subsi-dies facilitates compliance with the guard rails out-lined in Chapter 4. Germany has already begun tophase out nuclear energy. The Council recommendscontinuing along this path. Germany should also tryto bring influence to bear on other industrializedcountries, but also on developing, newly industrializ-ing and transition countries, in order to achieve theprogressive phasing out of nuclear energy worldwide.

For the latter groups of countries in particular, thesuccess of such endeavours is likely to depend pri-marily on the availability of sustainable alternative

supplies of energy. Measures to promote renewables,low-emission fossil energies, and especially greaterefficiency in energy supply, distribution and use (Sec-tion 5.2.2), as well as to develop modern forms ofenergy and efficient energy use in the developing,newly industrializing and transition countries (Sec-tion 5.2.3), are therefore of key importance.

5.2.1.3 Conclusion

Ecological financial reform is a key component in thepackage of measures to transform energy systemstowards global sustainability. In this context, the firstpriority must be to internalize the external costs offossil and nuclear energies. This is essential to ensurethat sustainable energies, which at present are gener-ally characterized by far lower negative externalitiesbut higher market prices, are able to achieve a break-through. Tools to compensate for these disadvan-tages include levies on fossil and nuclear energiesdue to their environment-related incentive effects,and if necessary, the temporary earmarked use of theaccrued revenue. An ecological financial reformshould be completed by 2020 in the OECD countriesand be a long-term objective worldwide.

As well as internalizing external costs, it is essen-tial to remove the existing subsidies on fossil andnuclear energy carriers. Fossil and nuclear energiesshould no longer be subsidized; indeed, they shouldbe subject to fiscal charges equivalent to their nega-tive externalities. Ecological financial reform willmake fossil and nuclear energy carriers more expen-sive and thus reduce their share of the global energymix. This will increase the share of renewables used.However, this will fall far short of the desired targetof a 20 or 50 per cent increase.The WBGU thereforerecommends the pro-active expansion of renewableenergies. Ecological financial reform is likely to takeplace primarily in the industrialized countries. Themeasures outlined in the following section can alsobe implemented in developing, newly industrializingand transition countries.

5.2.2Promotion

5.2.2.1Promoting renewable energy

The basic conceptToday, renewable energy only covers a small part ofthe worldwide primary energy requirement. In


OECD countries, its share is estimated at 4 per cent,most of which is generated from hydropower andwind power (Section 2.3). Direct support for renew-able energy can come in the form of direct paymentsfrom the state to the relevant actors, tax exemptions,state financing of research and development, or mea-sures promoting market penetration. In industrial-ized countries, many and varied supportive measuresare in place (Table 5.2-1).The lowest level of supportis currently found in the US, where expenditures forR&D projects to commercialize renewable energyare combined with tax credits for power plant opera-tors who use renewable energy (IEA, 2002b). EUmember states are intervening in their liberalizedenergy markets to a greater extent. In addition topromoting R&D, they mostly use price and quantitycontrols to this end.

Direct subsidies have primarily been used as pricecontrols for renewable energy. In some EU countries,such as Germany, rates are also fixed for power fedinto the grid. In these countries, the government firststipulates that grid operators have to purchase theelectricity generated from renewable sources. Then,compensation for the power is agreed at a rate abovethe market price by law or in contracts freely negoti-ated between the power generators and the gridoperators. Compensation rates vary according to theenergy source and are primarily based on the costdrawbacks of the renewable energy sources com-pared to conventional energy.As the costs for the useof renewable energy will drop in the long term astechnological progress is made and economies ofscale realized, compensation generally tapers offover the years towards the market price.

The obligation to purchase and pay compensationfor power fed to the grid basically constitute cross-

subsidies within the energy sector. These obligationsconstitute additional expenses for grid operators andutility companies, which they then largely pass on toconsumers. The result is higher consumer prices,which may lead to lower demand – and hence lessenthe burden on resources. In Germany, Spain, Den-mark, and France, the system of feed-in rates has ledto steadily rising use of renewable energy. In the pastfew years, Belgium, Luxemburg, and Austria havealso adopted the concept.

In contrast, the EU has long viewed price-basedpromotional measures for renewable energy sourcescritically (EU Commission, 1998). The EuropeanCommission argues that consumers in a completelyliberalized European electricity market will choosethe provider with the lowest prices, and thatproviders from countries without such costly obliga-tions will be at an unfair advantage. In competitionwith foreign providers, utility companies that have tobuy expensive renewable power would then nolonger be able to pass on the higher costs to con-sumers. Hence, the European Commission advocatesusing quantity controls (EU Commission, 1999a) topromote renewable energy sources; at the same time,the EU is not vocal in its criticism of feed-in rates atpresent, and price controls remain in line with theEU’s current subsidy regulations towards the harmo-nization of promotion mechanisms envisioned for2005 (EU Commission, 2001d).

The simplest model of quantity-based promotionis the use of quotas for energy from renewableenergy sources (Box 5.2-1). In this model, all utilitycompanies and grid operators are obliged to cover acertain legally specified amount of the heat or powerthey sell with renewable energy that they either gen-erate themselves or purchase. State tenders for cer-

Table 5.2-1Overview of the political instruments available for environmental protection in specific industrialized countries. X in place, Pplanned.Source: modified after Espey, 2001

Price control Quantity control Financial incentives

Subsidiesforrenew-ables

Taxes on fossil sources

Fixed ratefor powersold to thegrid

Political targets forquantities

Emissionstrading

Tenders Quotas StateR&D

Marketpenetra-tion

Germany X X X X X XDenmark X X X X X P XFrance X X X X X X XGreat Britain X X X X X P X XNetherlands X X X X X X XSweden X X X X P P X XSpain X X X XUSA X X X P XEU (frame-work-setting) X X P X X


tain energy quotas for renewable energy that has tobe sold to the grid are another possibility. In this pro-cedure, the government sets quotas for the amount ofenergy from renewable sources that has to be sold tothe grid, with the least expensive investor generallybeing awarded the contract. The tendering processensures, through competition among power genera-tors, that mainly those producers or generation tech-nologies will advance which are able to overcome thecost barriers of market access quickest.

Recently, the EU has been discussing tradablequotas and ‘Green Energy Certificates’ for the use ofrenewable energy. In this model, which has been usedin the Netherlands and more recently in Denmark,the government stipulates the minimum amount orshare (quota) of electricity and heat from renewableenergy sources, which can then be provided flexibly(Box 5.2-1). Tradeable quotas and Green EnergyCertificates ensure that the state quotas can be ful-filled flexibly and at low cost. The power generationcapacity is expanded where it is least expensive to doso. However, this model fails to promote specificallythe very technologies that will be crucial in the futurebut are still expensive today. To do so, complemen-tary state subsidies would be needed.

Practical stepsThere is no ideal way to increase the share of renew-able energy through direct support. There is a broadconsensus that state expenditures for research anddevelopment have to be clearly increased, but this isthe only uncontroversial approach. In light of themajor role that renewable energy sources are to playin globally sustainable energy systems even in thenext few decades and the very minor role they nowplay, the WBGU believes that support for public andprivate research and development in renewable

energy be increased quickly and comprehensively(Chapter 6).

The Council proposes that the German govern-ment should look into both quantity-based policiesand price controls, especially a step-wise transition toquotas that takes account of each energy source andtechnology. Guaranteed rates for renewable energysold to the grid is one of the options that makes a lotof sense as start-up financing, especially when itcomes to promoting technologies that are far fromcompetitive. In our experience, set rates for powerfed to the grid and subsidies that provide differentrates of compensation appear to be more effectivethan quotas in compensating for the higher costs ofrenewable energy sources. The example of windpower, which was uncompetitive at the beginning ofthe 1990s, underscores this fact (Table 5.2-2). Whilequotas could be set for each individual energy source(Deutsche Bank Research, 2001), the high costs ofthe technical implementation of emerging technolo-gies make this difficult, and Green Energy Certifi-cates are not easily tradable. Therefore, Germanyshould maintain its current practice of tapering feed-in rates for relatively uncompetitive energy sourcesand technologies.

However, the outcomes shown in Table 5.2-2 areless the result of a fundamental superiority of feed-inrates than of the specific design of the various instru-ments: quotas for renewable energy are often quitemodest, while the rates for renewable energy sold tothe grid are relatively high. Hence, it seems thatincentives are easier to implement via price controlsthan quotas.

Once the market share of a technology for the useof renewable energy has grown significantly and thetechnology has become competitive, direct quotasshould replace subsidies for renewable energy so thatcompetitive processes can better promote the innov-

Table 5.2-2Comparison of the expansion of wind energy capacity under various promotion models in 2000.Source: modified after Gsänger, 2001

Incentivemechanisms

Country Installedcapacity end of 1999[MW]

Installedcapacity end of 2000 [MW]

Growth rate

[%]

Ratedpower

[W/per capita]

Ratedpowerper surface[kW/km2]

Price control(fixed rate forpower sold tothe grid)

GermanySpainDenmarka)

4,4431,5421,771

6,1132,5352,282

386429

74.5164.39

430.48

17.125.02

52.95

Quantitycontrol(tenders, quotas)

Great BritainIrelandFranceb)

3447322

4069360

1827

173

6.8825.101.02

1.671.320.11

a) The great wind capacity in Denmark is mostly due to previous state minimum price controls.b) In 2000, France switched to a price-control model like that of the German Einspeisevergütung (fixed rate for power sold to thegrid). The very high growth rates are the result of special state subsidies for wind energy (EOLE 2000 incentive programme).


ative and allocative functions of renewables. In thelong term, a transition to a model of Green EnergyCertificates for ‘green’ power generated withincreasingly competitive renewable energy sourcesseems possible and appropriate, especially as greaterefficiency will result from the international trading of

such certificates. The time frame for the transition ofprice controls – such as compensation for power soldto the grid – towards tradable quotas will basicallydepend on the expected volume of the quota market.For instance, wind power and hydropower can beexpected to cover a large part of electricity genera-

Box 5.2-1

Quotas, tradable quotas, green energycertificates

Quantity targets for the use of renewableenergy sourcesThe goal is a minimum share of the desired type of energyin overall energy consumption. The target can be anabsolute value or a quota (such as 10 per cent of the elec-tricity generated) to be fulfilled by a certain deadline.

National and international quotasThe German government has set a goal of doubling theshare of renewable energy in its electricity supply, whichmeans the national target is 12.5 per cent by 2010.The guidevalue for the European Union is to raise the share ofrenewable energy in its energy supply from 6 per cent in2001 to 12 per cent in 2010, and specifically for the supplyof electricity to 22 per cent by 2010.The EU’s overall quotais split up into sub-quotas for the member states. The vari-ous states can choose how they fulfil these quotas. Severalstates have chosen quantity targets (Table 5.2-1 for theEuropean Union).

Quotas versus tradable quotasWithin a country, power companies or energy providers areusually obliged to provide a quota of the power they sellfrom (certain) renewable forms of energy. Relatively wide-spread in industrialized countries, this concept is called aportfolio model. If the overall quantity target is brokendown across the various parties obliged to meet the target,the target is quantified for each actor. In addition, it is gen-erally not difficult to monitor the degree to which the tar-get has been met. However, the economic efficiency of rigidquotas is limited.

As power companies and energy generators incur dif-ferent costs for the fulfilment of the quota, the quotasshould be made flexible by allowing trading to lower costs.If an electricity generator has to generate a certain amountof electricity from renewable energy within a certainperiod, it can chose to generate it itself or purchase ‘greenpower’ from another power generator. As a result, the gen-erators of ‘green power’ who operate most inexpensivelywill produce power, while generators with higher produc-tion costs will purchase power from them. With tradablequotas, the overall quota would thus be reached at loweroverall costs than in the portfolio model.

Up to now, tradable quota models have mostly beenimplemented at the national level. However, there are afew model projects to test international trading quotas forrenewable energy.

Green energy certificates

Basic conceptThe model of green energy certificates represents a furtherdevelopment of flexible, tradable quotas. Here, individualquotas or absolute amounts that individual parties have tofulfil are a prerequisite. Unlike with tradable quotas, theparties do not have to generate the energy themselves orbuy green energy physically, however, but only prove theyhave fulfilled the quota by owning a relative amount ofgreen energy certificates. These certificates are issued togenerators of ‘green power’ by a state supervisory author-ity for a certain amount of energy (say, 1MWh). Not onlypower companies and producers, but also consumers canreceive tradable green energy certificates. The free tradingof certificates would create a new market – an ‘environ-mental service market’.

Pricing and economic efficiencyPure price competition will continue to determine the pricefor electricity on the traditional market. Generators of‘green electricity’ can compensate for cost disadvantageswith additional income from the functionally separate cer-tificates market. Providers of certificates will demand atleast the price based on the difference between the costs ofgenerating ‘green power’ and the market price for electric-ity.The most efficient providers of ‘green electricity’ will beawarded contracts. No distorted costs due to collusion orabuse on the part of dominant power generators areexpected because the purchasing power company can alsoproduce ‘green electricity’ itself to procure these certifi-cates.

The advantage over tradable quotas is mostly theirgreater transparency and lower contract costs. In addition,consumers such as voluntary participants (environmentalprotection organizations, environmentally concerned citi-zens) can be better integrated.

Strategies for not yet competitive new technologiesIn practice, the advantage of economic efficiency can leadto a disadvantage: specializing in inexpensive generationand inexpensive forms of energy will only promote com-petitive energy sources, such as windpower and hydro-power, in the current state of technology.Thus, not yet com-petitive, but promising energy sources would be left out ofthis system of incentives. As a result, quotas would have tobe set for these technologies and certificates markets estab-lished – such as a certificates market for power sold to thegrid from geothermal plants. This would not make muchsense for the latest technologies as the market volume ofcertificates sold and bought would be too slight to ensurethat the market would remain functional. Hence, start-upfinancing is indispensable for emerging, not yet competitiveforms of energy (such as state subsidies, fixed rates forpower fed to the grid, etc.). As soon as the technologieshave matured enough, quotas can replace subsidies, and agreen energy certificate market for that particular energysource can be envisioned.


tion quickly, which is not the case for photovoltaics orgeothermal power. At the same time, policy makerswill not be able to do without subsidies completely inpromoting innovative renewable energy technolo-gies anytime soon. On the one hand, free-enterprisecompetition is not expected to produce sufficientresearch findings; on the other, promising new tech-nologies will emerge in the period of transition –which will last at least 50 years – that will not be ableto compete if only supported in quota systems.Hence, no single promotion mechanism will sufficefor the successful market penetration of renewableenergy; rather, a mix of various mechanisms will besttake account of the different degrees of competitive-ness of the respective types of renewable energysources. Thus, the WBGU recommends:• Continuing and expanding market penetration

strategies (such as temporary subsidies, fixed ratesfor power sold to the grid, quotas). Until a consid-erable market volume has been attained (or atechnology has proven to be non-viable), fixed,tapering rates for power fed to the grid is one ofthe best options.

• In the mid-term, quotas should be used moreoften, leading to a Europe-wide system of tradablequotas and Green Energy Certificates for renew-able energy sources in the foreseeable future.Intensive research is necessary for the design andtransferral of tradable quotas to the global level.

The incompatibility of the various national systemsmakes international trading of these certificates dif-ficult. An initiative of European power companiescreated the certificate system RECS (RenewableEnergy Certification System) to demonstrate that

Green Energy Certificates can be traded; this systemwas tested from 2001 to 2002 (Box 5.2-2). Participa-tion in RECS is currently voluntary.The incentive forthe companies is image benefits; for private house-holds (such as in the Netherlands) tax credits for thecertificates purchased. After the test phase, theRECS system is to be further institutionalized.Expanding the innovative initiative of certificates topromote international trading would be an appropri-ate first step towards a global solution. The WBGUrecommends that more German institutions shouldjoin the RECS initiative to include their ideas andconcerns in the trading system.

For specific countries, the time frames and designsof the transition from a price control system to aquantity control system for renewable energy have tobe specified in accordance with their special settings.Social science research needs to be conducted toidentify optimal strategies (Section 6.2).

To expand renewable energy beyond its currentmarket volume in developing and newly industrializ-ing countries, the proper technologies will have to bemass-marketed and promoted. The WBGU thus rec-ommends that the German government design itsdevelopment cooperation programmes both techni-cally and financially to achieve this goal. In particu-lar, training programmes and demonstration projectswould be helpful in the field of energy to promotemarketing strategies for renewable energy, as well asother measures designed to increase demand forrenewable energy (Section 5.2.3).

The success of renewable energy in the transitioncountries will depend on whether market-basedreform of the energy sector are pursued consistently.

Box 5.2-2

Renewable Energy Certification System

Electricity providers (generators, traders, grid operators,etc.), state institutions, associations, service providers, andhouseholds can participate in a Renewable Energy Certifi-cation System (RECS). Up to now, some 170 organizationsare members in the RECS. They include almost all EUcountries, Norway, and Switzerland. There are also cooper-ative deals with Australia, Japan, New Zealand and the US.The participants agree to accept the ‘basic commitments’,which define trading institutions and the flow of trading.The national ‘issuing bodies’ play a crucial role; they issuecertificates and monitor trading. Certificates are issued toaccredited electricity generators if the power was not pro-duced with fossil or nuclear energy sources. Details aboutgeneration are checked in the course of accreditation andkept in national databases.The certificates from the issuingbody are based on units of 1MWh of electricity generated.To prevent electricity being certified twice, the certificatescontain information about the location of the production

plant, the manner of generation, the date of issue for thecertificate, and the identification of the certifier. The net-working of the issuing bodies’ databases provides the ITbasis for the trading system. Each generator has an accountin the databases, where it receives certificates for eachMWh fed to the power grid. Generators can offer certifi-cates on a market. The buyers in the market are generallyproviders of ‘green’ products, private households (in theNetherlands), or environmentally conscious power con-sumers who require proof of the origin or means of gener-ation of their power. Finally, power companies that have tofulfil a certain quota of renewable energy (portfolio stan-dards) could use certification to demonstrate that theyhave fulfilled their quotas. Transactions between marketpartners have to be reported to the issuing body, whichchecks and corroborates the information provided by theparticipants. A certificate is invalidated as soon as it hasreached the customer of a ‘green’ product or – in the caseof the Netherlands – has been turned in for tax credit. Bymid-2002, certificates for more than one TWh of electricityhad been traded within the RECS.

Sources: RECS, 2002; Groscurth et al., 2000

Here, subsidies for fossil and nuclear power will haveto be done away with and incorrect market signalscorrected. A stable, reliable set of market rules andregulations for the energy sector and correspondingqualities of public administration play a key role inthis context. The use of market-based instrumentssuch as eco-taxes (green taxes) or certificate tradingcould provide incentives for greater use of renewableenergy.

The eastern European EU accession statesalready meet important institutional prerequisitesfor the implementation of instruments to promoterenewable energy. It is recommended to integratethem in the planned EU certificate trading as soon aspossible to take optimal advantage of economic costreduction potential. The situation regarding instru-ments in the CIS nations is quite different, however.In light of the continuing great need for reform andthe insufficient capacity within companies and publicadministration, there is even a risk that implementingsuch instruments would have the opposite effect(Bell, 2002).

5.2.2.2Promoting fossil energy with lower emissions

The basic conceptIn the short to mid-term, the world cannot do withoutfossil energy. Renewable energy will not be able toreplace fossil fuels completely anytime soon. In orderto ensure power supply even while reducing depen-dence on fossil fuels, two factors have to be kept inmind: on the one hand, new investments in fossilenergy sources should be kept to a minimum; on theother, investments in the field of fossil fuels that seemto be indispensable for socio-economic reasonsshould be made in types of energy that producelower emissions and can be implemented in a flexibleinfrastructure. A temporary expansion of fossilenergy can thus be designed to allow for new facili-ties – such as power plants or grids – to be operatedwith renewable energy sources as well. Increasing theshare of natural gas could provide the desired flexi-bility if, for instance, plants that initially run on nat-ural gas can be later retrofitted to run on biogas orhydrogen.

Practical stepsThe temporary expansion of fossil energy with loweremissions is especially important in developing,newly industrializing, and transition countries withno real alternatives for power supply in the short tomid-term, especially given their strong economicgrowth. For instance, Russia plans to cover the

expected growing demand for energy by using itscoal reserves to reduce its dependency on natural gas(IEA, 2002a). Such a development is less criticalwhen the additional use of coal can be compensatedfor by technology that will reduce emissions. At leastin the transition phase, modern technology for theuse of fossil energy sources will have to be trans-ferred to the transition and developing countries.Here, development cooperation will play an impor-tant role, either directly or indirectly (such as bymeans of export credit guarantees).The Kyoto mech-anisms (joint implementation und clean develop-ment mechanism) could prove to be beneficial here:they provide industrialized countries with an incen-tive to transfer low-emission technology for fossilenergy sources to developing and transition coun-tries.

Problems can be expected mostly in developingcountries if a country with great coal reserves andmany coal-fired power plants wants to switch to nat-ural gas, and hence import gas that it cannot pay for.Thus, financial and technical support should accom-pany the expansion of low-emission technologies forthe use of fossil energy in these countries (Section5.2.3).

Liquefied petroleum gas is most likely to replacetraditional biomass for cooking in the mid-term.Even if all of the 2,400 million people currently livingin energy poverty switch to liquefied petroleum gas,the emissions would only make up some 2 per cent ofthe world’s emissions (Smith, 2002). Brazil hasalready replaced biomass with liquefied petroleumgas for cooking in 94 per cent of its households.While40kg of liquefied petroleum gas are consumed thereper capita annually, China and India only consumearound 10kg, while sub-Saharan Africa uses less than1kg per capita (Reddy, 2002). The Council findsliquefied petroleum gas to be an especially good sub-stitute for the traditional use of biomass as the tech-nology is readily available and can be implementedquickly; it also will allow for a later transition torenewable energy sources. In the long term, liquid gasshould be made from biomass.

5.2.2.3Promoting efficiency in the provision, distributionand use of energy

The basic conceptThere is great potential for enhanced efficiency in theprovision, distribution and consumption of energy.The technologies required are already available forthe efficient and inexpensive provision of energy ser-vices, the prevention of transport losses in grid-basedenergy transport across long distances, and the effi-



cient use of energy by consumers (Section 3.5). Inindustrialized countries, the untapped efficiencypotential is around 60 per cent on the demand side(Enquete Commission, 2002). In the developing,newly industrializing, and transition countries, thepotential efficiency gains are probably much greater.

Efficient provision of final energyThe liberalization of energy markets will providemost of the incentives for more efficient energy pro-vision. Here, the crucial elements are the abolish-ment of governmental supervision of investments,demarcation contracts and concession agreements,the separation of electricity generation and gridoperation, and a limitation of the role of the govern-ment in setting rules. With grid-based power supply,customers can take advantage of the liberalization ofelectricity markets by choosing their power provider,thus influencing the structure and technology of gen-eration. Liberalization can in principle be expectedto lead to structural changes among the electricityproviders. Only the providers who produce electric-ity with economic efficiency will be able to stay onthe market in the mid to long term. Indeed, electric-ity prices had been falling in the EU until recently.However, critics of liberalization fear that a concen-tration of companies will eventually hamper compe-tition on the electricity market (Kainer andSpielkamp, 1999). For instance, in Germany the fourlargest companies provide a majority of the powersupply. But such a concentration is not a foregoneconclusion. After all, liberalization means openingthe market up to a potentially larger number ofproviders. For instance, more providers of ‘greenpower’ have entered the market since liberalization.

Liberalization can also be expected to producelong-term structural changes in the generation ofelectricity. For example, distributed power units mayproduce more electricity. For industrialized coun-tries, this trend would not be a return to the spot solu-tions of the last century, but rather the inclusion ofsmall, local power plants in the public grid.The devel-opment of information and communications technol-ogy makes it easier to bundle and coordinate a num-ber of small power plants in one ‘distributed powerplant’ (Section 3.4.3). As Germany is planning torevamp its network of power plants in the next fewyears from the ground up, this country offers anexcellent opportunity to change the spatial supplystructure by building new power plants. The Councilfeels that the German government should look intorestructuring the supply structures and promotingpilot projects and market implementation pro-grammes. Current campaigns within the EU andGermany should be expanded even further.

A more distributed power supply could increasethe share of renewable energy and combined heatand power plants (CHP). Local distributors (munici-pal power companies) used to be the main source ofinvestments in renewable energy and CHP on behalfof the communities. Now that complete liberalizationhas removed the special status of local distributors,however, a lot of CHP plants operated by municipalpower authorities are being shut down in Germany(BMU, 2000). One of the reasons is the subsidies forfossil and nuclear energy and the insufficient inter-nalization of external costs, which has distortedprices.

If the potential efficiency gains are to be realizedon both the supply and demand sides, one will haveto move beyond liberalization (IEA, 2000).The addi-tional internalization of the external costs of fossiland nuclear power will ensure that the price for effi-ciently generated power is raised to the price levelthat corresponds to the true scarcity of the sources.Only then can the central criterion that consumersbase their purchases of electricity on – the price – beused to create incentives for more efficient powerdemand. In addition, it would make sense to havemandatory labelling for electricity from renewablesources. The demand for electricity from regenera-tive energy sources would be easier to realize, andcompetition on liberalized markets would have aqualitative component in addition to prices. Thelabelling would also be an initial step towards a sys-tem of tradable green energy certificates (Batley etal., 2000; Section 5.2.2.1).

In addition, liberalization means opening nationalelectricity markets to power imports, thus increasingcompetition on the national electricity market. How-ever, such electricity imports will only increase theefficiency of supply and demand if the external costsof fossil and nuclear energy are internalized in for-eign countries as well. Energy imports from countrieswhere the external effects have not been internalizedcould lead to the suppression of domestically gener-ated energy that is more expensive due to the greaterdegree of internalization (Section 5.3.5).

The WBGU holds that the state should intervenein the process of liberalization to help shape theseevents. Long-term, stable general frameworks shouldbe created for the new markets, and the proper func-tioning of competition should be ensured. Theincreasing integration of the energy markets inEurope requires the creation of a supranational reg-ulatory authority to protect competition, such as aEuropean competition authority (Duijm, 1998). Nev-ertheless, the principle of subsidiarity stipulates thatnational and regional decision-makers should deter-mine energy policy to the extent possible so that spe-


cial national and regional needs and features can betaken into consideration.

The simultaneous supply of electricity and heatingor cooling from CHP plants offers great potentialefficiency gains (Section 3.3). But the price dropscaused by liberalization, the ongoing subsidies forfossil and nuclear power, and the wholly insufficientinternalization of external costs are weakening thecurrent competitiveness of this comparatively envi-ronmentally friendly technology. Hence, the WBGUrecommends that incentives be continued specifi-cally for CHP plants and that quotas be implementedat the EU level. The WBGU also calls for a greatershare of power from CHP than the level suggested inthe EU’s 6th Environment Action Programme: 20per cent instead of 18 per cent by 2012. In addition tothe proposal for a European CHP Directive, whichcalls for disclosure of CHP power by 2005 andrequires that national subsidies should only begranted to CHP power when the heat is also used, theGerman government should set national, bindingquotas as soon as possible. Tradeable quotas wouldbe one way of providing power in the most economi-cally efficient manner from CHP plants. These regu-lations should take the concept of distributed gener-ation of electricity (Section 3.4.3) into account.

Efficiency increases in the provision of energy indeveloping, newly industrializing, and transitioncountries often require the prior transfer of bettertechnologies to these countries. While some easternEuropean coal-fired plants only have 28 per cent effi-ciency and some in China only 20 per cent, moderngas turbines attain nearly 60 per cent efficiency. TheWBGU thus recommends granting the transfer ofenergy technologies a higher status. On the one hand,more technology could then be transferred in thecontext of development aid; on the other, privatetechnology transfers could receive more support. Inaddition to better credit conditions, tax exemptionsand state risk guarantees would be possible. In addi-tion, the German government should support thestep-wise establishment of international standardsfor minimum efficiency levels for fossil power plants.Such standards should be based on the EU IPPCDirective and take effect no later than 2005.

Efficient energy transport structuresIn the course of the liberalization of the energy mar-kets, environmentally desirable increases in effi-ciency among operators of transit grids could stemfrom the separation of distributors and providers. Asthese companies concentrate on operating grids, bet-ter transmission technologies can be expected to pro-vide efficiency gains, thus reducing transmissionlosses. However, grid operators that also own the

grids only have an incentive for more efficient gridoperation when the income from better transmissiontechnologies is greater or the returns to scale for cen-tralized power less than the costs for grid losses. Thiswill probably not be the case very often. Long-termstrategies have to be developed to make the gridsready to cover large areas of power generation.

In transition countries, considerable increases inenergy efficiency have resulted from improvementsin existing district heating systems. These systemshave been suffering from high transit and distribu-tion losses. Relatively simple measures – such as theintroduction of consumption meters, variable-speedpump motors, and the revamping of the insulationused on piping – could provide major efficiencygains. Investments of this type usually pay for them-selves within only two years (van Vurren and Bakkes,1999). The WBGU recommends supporting transi-tion countries in reducing their transit and distribu-tion losses.

Efficient energy useThe efficiency of energy consumption can also beincreased for consumers who co-determine theenergy demand in buildings or with machines, appli-ances, cars, transport services, etc. However, privatehouseholds are rarely able to get information aboutthe energy balance sheet for individual alternativeproducts and houses or apartments and to assess it.Hence, labels and minimum efficiency standardshave been established since the 1980s. However,these labels are often voluntary or limited to certainmarket segments. For instance, for a long time therewere only efficiency classes and labels for ‘whitegoods’ (refrigerators, washing machines, etc.) in theconsumer goods sector, while ‘brown goods’ (televi-sions, stereos, etc.) were rarely labelled.

The Council thus recommends expanding theselabels to all consumer goods and making this devel-opment mandatory in the EU. In the long term, labelsshould be made mandatory for all energy-intensiveconsumer goods, buildings, industrial plants, and ser-vices to the extent possible.The EU’s Energy Perfor-mance Directive (EU Commission, 2003) has alreadyset the date for energy labelling for buildings at 2006.

At the same time, the requirements for labellingare to be adapted to the current state of technologyin regular intervals. When revising the label features,more attention should be paid to consumption dur-ing stand-by for many consumer appliances. Stand-byconsumption is estimated at around 10 per cent ofthe electricity demand in homes in the OECD coun-tries, with potential savings averaging around 75 percent (IEA, 2001c).


The international harmonization of efficiencystandards and labels would be helpful towards over-coming the confusion produced by a plethora oflabels, especially for goods traded in large volumesinternationally. Bilateral agreements within the EUcould be a step in this direction (Box 5.2-3). Interna-tional labels are usually only based on the lowestcommon denominator so that they should notreplace, but rather be integrated into more ambitiouslabelling systems. If, for example, a ‘single globalenergy star’ were introduced for tradable consumergoods for the long term, regional and nationallabelling systems should continue to be implementedand further developed to provide information aboutfar more ambitious efficiency standards, such as aEuropean ‘double energy star’ or national ‘triplestar’.

Great efficiency gains could also be made for theuse of heating and cooling energy if ordinances werepassed to reduce heat loss in winter (insulation, heatrecovery) and provide better protection from sum-mer heat for buildings (Section 3.5.2). The construc-tion sector could be made more environmentallyfriendly if the legal minimum standards containedambitious targets and suitable incentives. Forinstance, the Energy Performance Directive stipu-lates that the energy consumption analysis of build-ings is to be based on the consumption of primaryenergy (including energy for cooling and lighting)starting in 2006, which is already being worked on instandardization committees. In the process, essentialelements of the German Building Energy Conserva-tion Ordinance (Energieeinsparverordnung) of 2002and some methods already established in Switzer-land can be adopted. Furthermore, applied researchis currently promoting demonstration projects thatprovide a comprehensive energy analysis of heating,ventilation, cooling, and lighting.There is also a greatpotential to lower CO2 by supporting better supplytechnology, such as through low-interest loans(Enquete Commission, 2002).

Efficiency gains are also to be made on thedemand side by means of ‘demand control’ in the

strict sense of the term, i.e. demand side manage-ment. Load management would be one way of doingso; here, the maximum electricity consumption isshifted to times of lower consumption, thus helpingto reduce the number and capacity of power plantsneeded. Variable rates and support for certain stor-age technology would provide incentives for thisapproach (Melchert, 1998). Though variable ratestructures already exist today, consumers rarely takesufficient notice of them. Here, one can imagine hav-ing a display of the current rate in apartments on anelectronic display or automatically controlling appli-ances based on the current rate.

In addition, ‘contracting’ is recommendable, espe-cially for companies (Melchert, 1998). Here, a thirdparty – the contractor – plans, conducts, and possiblyfinances energy projects. Whereas equipment con-tracting means that the construction and operation ofa certain production plant is outsourced, the contrac-tor in performance contracting looks for ways to saveenergy in the company and takes measures to saveenergy independently (Freund, 2002). Not only dothe contractor and the customer profit from perfor-mance contracting, but also the environment. Hence,this model is a win-win-win instrument worth pro-moting.

For contracting to be established as a voluntaryservice on a liberalized market, the liberalization ofthe markets for grid-based energy supply is crucialand will have to be completed quickly. Only then willall customer groups be able to switch to energyproviders with an especially favourable service offer.One can also imagine contracting offers that ensurethat renewable energy or cogeneration (CHP) unitscan cover the energy services needed for a buildingor a plant. In the end, energy service providers canhelp make the current market for final energy (elec-tricity, gas) into a market for services (lighting andwarm/cool rooms, hot and cold meals, etc.).

To provide consumers with the relevant informa-tion, the WBGU recommends better consumer infor-mation about contracting and demand side manage-ment. Standardized sample contracts including envi-

Box 5.2-3

EU-wide mandatory labelling of consumergoods

Since August 1999, there has been mandatory EU-widelabelling of ‘white’ appliances (cooling units, washingmachines, etc.). The various EU states implement themandatory labelling, monitor it, and ensure that the greatvariety of labels stays within certain bounds and consumersare informed about the labelling by means of campaigns.

The labelling is also beginning to apply to ‘brown’ goods(televisions, stereos, etc.). For instance, the EU adopted theUS ‘Energy Star’ labelling for office and telecommunica-tions equipment (PCs, screens, faxes, copiers, scanners, etc.)in 2001.The value of the transatlantic trading of such equip-ment – some US$40,000 million – is one main reason whythe label was adopted at least up to 2005 instead of devel-oping a European label. There are similar agreementsbetween the US and other states such as Australia and NewZealand.

Sources: WTO, 2001; Energy Star Australia, 2002


ronmental information could lower the informationcosts and help consumers, especially small ones, over-come their inhibitions.

Incentive systems for specific target groupsLifestyles influence the structures of energy con-sumption decisively, especially in industrializedcountries (Section 2.2.3). Likewise, the possibilitiesof taking advantage of efficiency potential on thedemand side or attaining a sustainable level ofenergy consumption differ according to lifestyles.Lifestyle research shows that environmentally alter-native lifestyles like those of the 1970s and 1980shave not established themselves (Reusswig et al.,2002). In other words, for the foreseeable futurestrategies to save energy will probably only be suc-cessful if people feel that they will not have to lowertheir standard of living. The 2000 Watt Project inSwitzerland can be considered a relatively successfulattempt to propagate sustainable energy consump-tion, including efficient energy use, without leavingthe impression of having to ‘do without’ (Spreng andSemadeni, 2001).

The incentive systems will have to be as varied asthe target groups they address. The motivation tosave energy can be the act of saving itself, an interestin modern technology/innovations, or an internalizedresponsibility for future generations. To reach alllifestyle groups, there will have to be a mixture ofenvironmental policy instruments.

Communication concepts for the specific targetgroups appear suited to complementing and support-ing political frameworks. For instance, the municipalutility of Kiel conducted a market study in order toallow it to respond to a highly differentiated buyer’smarket with marketing tailored to specific targetgroups. In the process, the utility found out thatenergy-saving behaviour not only differs from groupto group, but also from sector to sector (heating, elec-tricity, water). The various groups choose their gen-eral environmental behaviour and, in particular, theirways to save energy for all kinds of reasons that stemfrom their lifestyles (Reusswig, 1994).

The WBGU thus recommends integrating the dis-cussion about sustainable lifestyles and environmen-tal awareness in the ongoing negotiations on theimplementation of Article 6 of the UNFCCC dealingwith education, training, and public awareness aboutclimate change. By 2005, a discourse about lifestylesshould be part of school curricula in industrializedcountries. Furthermore, campaigns addressing spe-cific target groups should be carried out among thepopulation. In the end, the extent to which con-sumers associate the transformation of energy sys-tems towards sustainability with a vision that will

personally benefit them will be decisive: a betterstandard of living, more freedom to choose, morejobs, and technological innovations.

5.2.2.4

Conclusion

Fossil and nuclear energy must be made more expen-sive than they currently are by means of fiscal mea-sures so that they will become less attractive. On theother hand, the transformation of energy systemsalso requires special incentives to make both renew-able energy and low-emission fossil energy moreattractive in addition to directly increasing the effi-ciency of the production, distribution and consump-tion of energy.

In principle, price controls and quotas can both beused to promote renewable energy. Direct subsidiesor set rates for power fed to the grid can be used verywell as price controls.The various types of quotas forminimum shares of electricity or heat from renew-able energy sources are essential for quantity control.These quotas can be designed so that certificates forthe production of electricity from renewable energysources can be purchased and sold in a market.

Quantity controls basically have the advantage ofbeing more targeted. Tradeable quotas – with theaddition of the system of green energy certificates –are also an attractive national and internationalinstrument for the expansion of renewable energy interms of efficiency. On the other hand, promising newtechnologies may not be competitive due to a lack ofproduct maturity and small production volumes,problems that tradable quotas will not remedy. Here,the promotion through price instruments is moresuitable. The selective transition from a price-basedto a flexible, quantity-based system of incentivesshould be tailored to the special features of the tech-nologies, markets, and countries concerned.

Efficiency gains can come from measures on boththe supply and demand side. Here, state regulationsplay an important role, as do an increase in competi-tion (due to liberalization) and better informationfor consumers from the propagation of mandatorylabelling on all energy-intensive consumer goods,buildings, industrial plants, and services. The interna-tional harmonization of efficiency standards andlabels is recommended for goods traded internation-ally in large volumes. In addition, the instruments ofdemand side management and contracting should besupported in liberalized energy markets and con-cepts for incentives and communications developedto address specific target groups.


Great potential efficiency gains in energy used forheating and cooling would result from ordinancesregulating the thermal performance of buildings.Legal minimum standards combined with ambitioustargets and appropriate incentive programmes arerecommended.

The transfer of technology from industrialized totransition, newly industrializing, and developingcountries is important to increase the efficiency offossil power plants. In addition, the German govern-ment should support international standards for min-imum efficiency levels for fossil power plants. TheCouncil also recommends specifically promotingcombined heat and power (CHP) plants. Here, theGerman government should work for the quickadoption of national target quotas in the ongoingnegotiations on the EU’s CHP Directive. By 2012, 20per cent of the electricity in the EU should be gener-ated by CHP. Tradeable quotas would be one way ofproviding power in the most economically efficientmanner from CHP.

5.2.3Modern forms of energy and more efficientenergy use in developing, transition and newlyindustrializing countries

5.2.3.1The basic concept

For developing and newly industrializing countries,population growth and the sometimes above-averagegrowth of the gross domestic product are only someof the reasons why the demand for energy servicescan be expected to increase. The investment costsneeded to meet this demand in the energy sector willamount to some US$180,000–215,000 million (in1998 dollars) over the next twenty years, or 3–4 percent of the annual GDP of these countries (UNDP etal., 2000; G8 Renewable Energy Task Force, 2001).The latest estimates of the IEA find that the transi-tion countries will have similar demand. For instance,from 1999 to 2020 the investments needed for Rus-sia’s energy infrastructure (including investments inenergy efficiency and promoting renewable energy)amount to US$550,000–700,000 million (IEA,2002a). In light of the weak economies of these coun-tries and the extent of the financing required, theywill not be able to finance these investments on theirown in the foreseeable future (Dunkerley, 1995). Forthese reasons, and because private investments canbe expected to provide far more financing than fundsfrom development aid programmes, the only waythat the energy sector can be expanded as required is

if private investments are expanded, especially fromforeign investors.

However, private investments will only be madewhen profits can be expected at least in the mid-term.In light of the current energy policies of developingcountries, the incentives for private investments inthe energy sector are very limited, both for theexpansion of current electricity grids and improve-ments in access to modern energy in rural areas.Hence, in the mid-term expanding the energy supplyto rural areas by means of distributed approachesand microgrids will primarily remain a task for thelocal governments and development aid agencies.

In addition to improvements in the supply ofenergy, better access to modern energy with lowemissions also requires measures on the demandside. Expedient measures range from subsidies forefficient, low-emission energy consumption to theexpansion of microfinancing for private householdsand aspects concerning the acceptance of differenttechnologies and means of financing.

Various measures for supply and demand are nowdiscussed in greater detail. It should be kept in mindhere that the energy systems of developing, newlyindustrializing and transition countries all varygreatly, even within the respective groups. Hence, therecommendations for energy policies given in the fol-lowing should not be considered a recipe for all cases.On the contrary, the great variety of demographic,geographic, cultural, social, economic and politicaldistinctions in addition to the great variety of currentenergy systems make it clear that any proposals for atransformation of energy systems will have to beadapted to local conditions.

5.2.3.2Practical steps on the supply side

Creation of attractive general frameworksfor private investorsThe initial experience of some developing countrieswith the partial privatization of the energy sectorhave shown that private investors increase the effi-ciency of the power supply considerably given properregulations. At the same time, the countries benefitfrom access to international capital markets (Bondand Carter, 1995). This is not, however, true of thepoorest developing countries, where not enough pur-chasing power can be created on the demand side tomake great investments profitable. In many develop-ing countries, especially the poorest, the grids of thepublic power companies are limited to large cities, inparticular the inner cities.

Privatization creates incentives for expansion andefficiency increases in the provision of energy. The


WBGU thus recommends that one of the followingprivatization paths be taken when granting creditand projects to developing countries, depending onthe setting in the specific country (Bond and Carter,1995):• Private energy companies are granted access to

the existing grids of the state power company.After a transition period, the state power com-pany (with or without previous restructuring) isincrementally or completely privatized.

• The state power company is spun off into smallerunits, with the generation, transport and sale ofpower separated. Then, the individual units areprivatized; at the same time, independent genera-tors are granted access to the existing grids.

• The whole state energy monopoly is privatized.Only later is the market opened for other privateproviders.

In many developing countries, high import duties arecharged for the import of industrial goods. This notonly makes it more expensive to set up new plants,but also to purchase the necessary spare parts. Thereare special barriers for photovoltaics, for instance,which are seen as luxury items subject to greatimport duties. Locally manufactured energy units orspare parts, on the other hand, are often not reliableenough to ensure the smooth operation of techno-logically complex plants (UNEP-CCEE, 2002). TheWBGU thus recommends that the German govern-ment work for an increase in the quality of locallyproduced units and components in its developmentpolicy. The more competitive locally produced com-ponents are, the less the domestic industry will haveto be protected with import duties. Furthermore,industrialized countries could lower their trade tar-iffs and other trade barriers to give developing andnewly industrializing countries an incentive to lowertheir own customs duties.

The prerequisites for private investments in theenergy sectors of developing countries are oftenunfavourable due to the limited markets. Regionalintegration could enlarge the markets, allowing for amore efficient use of investments and even con-tributing to a greater diversification of commercialrisks. Given proper competition, economies of scalewould lead to lower prices for consumers. Therefore,technical standards should be unified and the plan-ning of energy projects coordinated at the regionallevel to promote the integration of regional markets.In the process, the infrastructure needed for energytransport has to be treated as a primary goal of suchinvestments. The expansion of trading organizationsshould be considerably stepped up, especially inAfrica, where intraregional trade only makes up 6per cent of the trade volume (Davidson and Sokona,2001). The Council recommends that the German

government integrate these aspects in its planning ofdevelopment policies.

The attractiveness of the developing, newly indus-trializing and transition countries for foreign invest-ments in the energy sector can be increased with spe-cific measures in the energy sector, but also by meansof general economic and legal policies. Some exam-ples are measures to increase legal security and lowerpolitical risks (Johnson et al., 1999). Such steps couldset the foundation for the expansion of energy ser-vice companies in countries like Russia, whereunclear legal relations and opaque permit proce-dures have kept foreign investors from committing tothis potentially giant market (EBRD, 2001).

Foreign direct investments in the energy sectors ofdeveloping, newly industrializing and transitioncountries are especially attractive when the countriesthe investors come from provide favourable creditand export guarantees. To promote global, sustain-able energy systems, it makes sense to grant suchfavourable terms to project categories that fulfil sus-tainability criteria. Hence, no investments or exportsshould be promoted for new plants to generate elec-tricity from fossil fuels or nuclear power or todevelop and market raw materials for fossil or atomicenergy. Exceptions should be made if the followingcan be proven: the alternative with the lowest carbonemissions was selected; the project will fit the long-term, sustainable energy planning of the guest coun-try; and renewable energy does not constitute a fea-sible or useful alternative. Promoting old plants forthe generation of electricity from fossil fuels at leastmakes sense in the transitional period if the goal isonly to modernize and take advantage of existingcapacity so as to increase efficiency significantly.

The Council is aware that some governments andnon-governmental organizations in developing coun-tries, such as India’s Centre for Science and Environ-ment, reject such conditionality. The reason given isthat the ‘North’ is setting the development path forthe ‘South’ and wants to have the South shoulder theburden of the additional expenses for a sustainableenergy path on its own (CSE, 2001). The WBGUnonetheless holds to its conviction that state invest-ment and export incentives have to be subordinatedto the overriding goals of sustainable energy policy.However, this also means that there must be a struc-tural change in the energy policies of industrializedcountries.

At the Economic Summit in Genoa in July 2001, atask force set up by the G8 made proposals of howexport credit institutions could play a decisive role inthe transformation of energy systems (G8 Renew-able Energy Task Force, 2001). State export creditinstitutions should become active in expanding theOECD guidelines in this area. For renewable energy


sources, the deadlines for repayment, interest rates,and the criteria for risk assessment have to be modi-fied just as they have been in special sector agree-ments for nuclear energy, power plants, ships andplanes.

The second proposal from the G8 task force con-cerned the OECD’s environmental guidelines forexport credit agencies. These guidelines are to spec-ify universally applicable minimum standards forenergy efficiency and carbon intensity as well as aunified reporting framework for the local and globalenvironmental effects of a project. The Council sup-ports these recommendations. To give the activitiesof export credit institutions the greatest possibleleverage for a global transformation of energy sys-tems, the WBGU supports further reform (Maurerand Bhandari, 2000):• Full-cost calculations for projects relevant to

energy: In order to prevent the use of fossil energysources leading to social and environmental dam-age, export credit institutions have to insist on atleast an approximate inclusion of external costs inthe profitability calculations for specific projects.

• Quotas for projects for the transformation ofglobal energy systems: The export credit institu-tions should specify quotas in their portfolios forrenewable energy and for increases in energy effi-ciency in the context of international agreements.Starting in 2005, progressive minimal standardsfor the admissible level of carbon intensity shouldbe specified for energy-generation projects.

• Criteria for promotion: In promoting large dams,the criteria formulated by the World Commissionon Dams must be upheld. In the opinion of theCouncil, nuclear energy should not be promotedany longer.

• Greater transparency: The public should be givenample notice when a project is applied for, espe-cially concerning its environmental and socialeffects, before a decision is reached to promote theproject.The US Export-Import Bank is exemplaryin this respect. It publishes environmental impactassessments for projects 30 days before a decisionis made and lists all incentives and all of the com-panies involved, including the amounts, in itsannual report.

• Limits on state export incentives: As general subsi-dies of export activities should be viewed criticallyin terms of market-based policies and such subsi-dies are the very purpose of export credit institu-tions, international negotiations to reduce theintervention of export credit insurance policiesshould be held with the aim of making sustainabil-ity an expressed prerequisite for the inclusion ofexports in the support of export credit institutions.

Regulation of the energy sectorIn addition to the regulation of market frameworksin which, for instance, the conditions for access topower grids are specified, other regulations can makean essential contribution to increasing the environ-mentally friendliness and efficiency of the energysector. To ensure this, rates and standards have to bespecified. The WBGU recommends that the Germangovernment take this into account in its energy pol-icy activities concerning developing countries as fol-lows:1. Market supervision and competition for the mar-

ket. Competition in or for liberalized energy mar-kets increases the efficiency of energy conversionand reduces the costs of conversion and powersupply. When competition is fair, lower prices arepassed on to customers, with the poorest thus gain-ing access to modern energy more easily. Oftenthough, power companies keep the benefits ofefficiency gains to themselves, especially for grid-based energy. In developing nations, which rarelyhave an effective policy to protect them fromunfair competition, it thus makes sense to checkpower companies regularly to see if they haveintentionally engaged in unfair competition and toensure both that efficiency gains are passed on toconsumers in an appropriate manner and that thepromises made in tenders are kept.Another prob-lem of liberalization is that customers in ruralareas get short shrift. To accommodate for them,power companies should be obliged to providepower to all consumers within a certain region. Toensure the efficiency of the energy supply, theWBGU recommends that subsidies be granted ina transparent bidding process.

2. Setting standards. Energy systems in developingcountries often suffer from low efficiency andgreat transport and distribution costs. Even if lib-eralization creates incentives to save and leads tothe revamping of the power system to increaseefficiency, quality standards should be set for thedevelopment of new energy projects. Such stan-dards ensure the efficiency and proper functioningof energy systems, thus improving acceptanceamong the population that often suffers from thepoor quality of the energy supply (UNEP-CCEE,2002). In addition, technical standards in certainmarket segments can contribute to the opening oflarger markets.This is the case for liquefied petro-leum gas, which is only efficient if standardizedcontainers are used in the whole country or atleast large regions. To keep costs as low as possi-ble, technical standards should not be based on thewestern model, but should instead take account ofthe often varying needs of consumers in develop-ing countries. On the demand side, binding stan-


dards for consumer devices can contribute to effi-ciency increases in energy consumption, andhence to greater availability of energy (Davidsonand Sokona, 2001).

5.2.3.3Practical steps on the demand side

Promoting access to modern forms of energyThe Council holds that access for all people to mod-ern energy is the minimum requirement for the sus-tainability of the transformation of global energy sys-tems (Section 4.3.2.2).This access is to be ensured forall people by 2020, with at least 500kWh of modernenergy available per capita annually to everyone by2020, 700kWh no later than 2050, and 1000kWh percapita by 2100 (Section 4.3.2.3).As a person’s overallenergy consumption consists both of individualenergy needs and energy services used indirectly(manufacture and transport of goods), the overall percapita energy consumption will be even greater (Sec-tion 4.3.2.5).

Table 5.2-3 contains a selection of technologicaloptions for the development of sustainable energysystems in rural areas of developing countries. First,the use of traditional biomass is damaging to people’shealth and must be reduced (Sections 3.2.4; 4.3.2.7).

To this end, the WBGU recommends that at least 80per cent of the world population should not have touse biomass in ways damaging to human health by2020, with this figure increased to cover the worldpopulation no later than 2050. Second, liquefiedpetroleum gas could be used instead (Section5.2.2.2). In addition, access to energy services basedon electricity must be provided (lighting, cooling,support for household and commercial activities, andaccess to communication).

The WBGU recommends paying attention to dis-parities in all efforts to transform energy systems. Fordisparities within a country, disadvantaged groupshave to be specifically promoted and attention has tobe paid to cultural and gender differences. For dis-parities between countries, the most important chal-lenge is that the per capita income in the poorestcountries has to increase faster than elsewhere. Insome cases, this may require cross-subsidies or socialtransfers (state support for electricity and heating).

Two important prerequisites must be met toimprove access to modern energy services in devel-oping and newly industrializing countries: on the onehand, the infrastructure for energy supply must becreated or expanded; on the other, energy must beaffordable for the whole population. The Councilproposes that by no later than 2050 no householdshould be forced to spend more than 10 per cent of its

Activities Currently Short-term Mid-term Long-term

Cooking Wood stoves Liquefied petroleum gas Biogas Biogenic liquefied petroleum gasLighting Lighting Candles, oil, kerosene, Fluorescent lamps battery-powered light LED lamps bulbs

Shaftpower Machines powered by Electric motors humans and animals, Highly efficient combustion engines, motors running on biofuels combustion engines, micro-hydropower

Water Hand pumps, Electric pumps (powered by e. g. photovoltaics), purifcation technology for use of surface water drinking water from conventional sources, activation of deep wells and shallow wells Highly efficient irrigation technology, desalination plants running on renewable energy Telecommuni- TV and radiocations Mobile phones Internet connections Satellite-supported Internet connections Battery power Photovoltaic power Wind power Power from diesel generators Power from advanced motors/generator systems

Table 5.2-3Examples for selected technologies for the possible development of energy systems in rural areas of developing countries.Source: modified after Reddy, 2002


income on its most elementary energy needs. In thelong term, the figure should be much lower. Compa-nies operating for profit will only make sure thataccess to modern forms of energy is expanded toareas with sufficient purchasing power so that thegreat investment costs both for the expansion of grid-based and distributed energy systems pay for them-selves relatively quickly. Hence, access in poor,sparsely populated and remote regions – in themountains or in shanty towns around cities – willdepend on public funds, which will have to be paidfor with development assistance. In addition, in suchareas complete privatization of the energy supplyand far-reaching liberalization of the markets wouldnot appear to be suitable, at least in the transitionalperiod. Slight margins and great investment riskwould have to be made more attractive by means oftemporary monopolies. Privatization and liberaliza-tion would be counterproductive here without a suit-able regulatory framework. In projects promoted bydevelopment cooperation, public-private partner-ships should be considered very important.

Distributed energy supply (such as with hybridsystems using diesel generators and photovoltaic sys-tems) is often a better solution than grid-basedpower in sparsely populated areas (BMZ, 1999;Goldemberg, 2001). Expansions of grid-based energysystems mostly depend on the distance to the currentgrid, the number of households to be connected, andtheir demand (World Bank, 2000). The low demanddue to the lack of purchasing power and low popula-tion density mean that the grid is only expandedwhen the distance to the current grid is below around10km (ESMAP, 2001).

Poor sections of the population in developing andnewly industrializing countries and consumers intransition countries have only been able to purchaseenergy services because state subsidies often loweredthe prices far below the costs of generation. How-ever, it is the better-off (urban) population that usu-ally benefits from these subsidies because the ruralpopulation does not have access to the subsidizedgoods or the consumption of the poor remains lowdespite subsidies (UNDP et al., 2000). If poor sec-tions of the population are to be explicitly grantedaccess to modern energy services, subsidies for spe-cific target groups make more sense in combinationwith rate structures determined by the market. TheWBGU recommends that the German governmentwork towards such structural changes in its develop-ment cooperation. To prevent the negative effects ofsuch subsidies, four criteria should be met (UNEPand IEA, 2001):1. The subsidies should be limited to a clearly

defined target group to the extent possible.Beforehand, the economic, social and environ-

mental effects should be analysed to ensure thatthe positive goals desired can be attained.

2. The programme must make do with little adminis-tration.

3. The costs and operating principle of the pro-gramme have to be transparent. In particular, bur-dens on the public sector should be itemized in thestate budget.

4. In designing the programmes, long-term incen-tives for the provision of energy services should becreated (UNDP et al., 2000).

The Argentinean model is interesting in terms of thelast point. In Argentina, there was a call for tendersfor the expansion of the power supply to ruralregions – at set rates, but without specifying the typeof electricity supplied. The bidder who offered toexpand the power supply with the least subsidies wasawarded the contract (ESMAP, 2000). In SouthAfrica, a similar model was used during the restruc-turing of the electricity market. There, concessionswere auctioned for areas with a certain share ofregions not connected to the grid and with the provi-sion that power be provided either by expanding thegrid or setting up microgrids. While the state coversthe initial investment costs in this model, later thereis a cross-subsidy between the various consumergroups (Clark, 2001). Although it is too early toassess the success of the two models, subsidies at thesales level seem especially suited to reaching largerural regions comparatively quickly. Given attractivemarket conditions, investors will be interested in suchconcessions so that the energy supply may increase inthe mid to long term.

It is important that the subsidy mechanisms bedesigned for a transparent bidding process that notonly power companies, but also consumers, villagecommunities and project organizers have access to.In addition to explicitly addressing different targetgroups with the subsidies, the period for the subsidiesis important towards improving access to energy.Here, a distinction can be made between short-termcredit – especially microfinancing – and long-termfinancing.

In particular, long-term financing can be ensuredby means of leasing contracts, consumer credit, or‘pay-for-service’ contracts. In all of these cases, theseller of the energy ensures the required financing.Whereas the buyer generally retains ownership inleasing and consumer contracts once the financingphase has been completed, in ‘pay-for-service’ con-tracts the customer only pays for the energy servicemade available. The special advantage of this type ofcontract is the great incentive for sellers to ensurethat the system is kept in working order and thatusers of the system are instructed about how to use itcorrectly. One problem in this type of financing is


access to start-up capital for small and mid-sizeenergy providers.

Use of microfinance systemsMicrofinance systems were created in the 1980s as acounter-movement to the state development banksand subsidized credit programmes that were neitheravailable to a lot of people nor economically viable.Instead of promoting individual state credit pro-grammes, today the focus is on improving generalinstitutional frameworks and setting up privatelyorganized microfinance institutions (GTZ, 1998). Inthe meantime, they have proved useful in practiceand are often conducted by NGOs. On the one hand,microfinance programmes are tailored to low-income sections of the population; on the other, localknowledge helps prevent wrong decisions beingmade and helps detect undesired developments.Microfinance is characterized by• Low credit and savings volumes,• Closeness to the customer, which simplifies and

facilitates credit granting procedures,• The relatively low importance of past economic

data for credit approval in favour of prospects offuture income, hence enabling the financing ofinnovative activities of small entrepreneurs,

• The acceptance of credit security uncommon forbanks (jewellery, group liability, etc.).

The drop in public support requires a bundling ofactivities. Therefore, in the past few years a numberof networks of microfinance institutions have sprungup (such as the Grameen Trust, or Banking with thePoor).At the same time, donor coordination commit-tees were founded (such as Sustainable Banking withthe Poor, or the Donor Working Group for FinancialSector Development), which are mainly controlledby the World Bank.

Microfinance projects can make an importantcontribution towards the financing of energy pro-jects. The combination of micro-credit with invest-ments in energy systems, especially photovoltaicunits, does pose some difficulties, however. A photo-voltaic system can cost around US$500, which ismore than usually granted as microcredit. At thesame time, most microfinance organizations haveshort terms of 6 months to no more than 2 years,while most potential purchasers would need terms ofup to five years to pay off a loan for a photovoltaicsystem (Philips and Browne, no year indicated). Thepositive examples of the Grameen-Shakti photo-voltaic programme in Bangladesh and Genesis inGuatemala prove that these difficulties can be over-come in some cases.

The WBGU is of the opinion that the importanceof microfinance in improving access to modernenergy services that are better for human health and

the environment should not be underestimated,especially for private households, small businessesand micro-enterprises. The Council thus recom-mends using and expanding the microfinance sys-tems to include energy projects as well. To this end,microfinance systems should continue to be sup-ported from development cooperation funds andstate subsidies taken into consideration for develop-ment measures.

Culture-specific frameworksEven if a greater supply of modern energy can beprovided in developing and newly industrializingcountries and purchasing power can be created totake advantage of this availability, the efficient use ofenergy is still not ensured. Types of energy usehanded down and accepted combined with a lack ofknowledge about how to deal with new energy carri-ers or about their advantages can prove to be barri-ers towards the use of sustainable forms of energy inthese countries. In developing countries, switchingfrom a three-stone stove to a gas cooker can prove tobe just as difficult as switching from a centrally con-trolled source of heat to a distributed supply withconsumption-based billing in transition countries. Inaddition, the financing models for modern forms ofenergy, such as the purchase of Solar Home Systems or monthly invoicing for electricity, will probably alsonot be accepted without further ado.

To overcome such barriers, quantitative and qual-itative improvements in training for energy systemsare needed and knowledge about investments andsaving disseminated in development cooperation. Inaddition, research about the acceptance of technicaland financial systems has to be intensified with rep-resentatives of the countries, regions and communi-ties and of ethnic and social groups (Section 6.2).

Inclusion of womenThe use of modern energy also depends on how thetechnologies and their financing are tailored topotential users. One especially important group, par-ticularly for the use of energy in private householdsin developing countries, is women. They are tradi-tionally responsible for the procurement of energysources for cooking, heating and drying (Section 2.4).More frequent use of modern forms of energy couldlead to considerable improvements here. For this tohappen, women will need to accept the modernforms of energy and their financing and have accessto them. Here, too, the findings of acceptanceresearch are just as indispensable as the generalframeworks in creating incentives for women. Theseconsiderations should be integrated in developmentprojects.


5.2.3.4Conclusion

Measures on both the supply and demand side canlead to improvements in access to modern forms ofenergy with low emissions and increase the efficiencyof energy consumption in developing, newly industri-alizing and transition countries.

On the supply side, privatization and liberalizationneed to be combined with state regulations. Depend-ing on regional specifics, the mix of these three fieldswill vary. For liberalization and privatization, attrac-tive general frameworks for private investors and thetapping of international sources of capital are impor-tant. Governments will have to become more heavilyinvolved in the specification of standards and theexpansion of public-private partnerships, supportedby bilateral and multilateral development coopera-tion.

On the demand side, the goal must be to increasepurchasing power for energy, especially among poorsections of the population. One way of doing this is totarget subsidies to specific groups; another, to expandmicrofinance systems. Specific cultural and genderissues on the demand side have to be taken intoaccount to ensure that not only purchasing power,but also the willingness to use energy in more sus-tainable ways will increase.

5.2.4Related measures in other fields of policy

Energy policy measures have to be accompanied byrelated measures in other areas of policy. Key areas –

climate policy, transport policy and agricultural pol-icy – are dealt with below.

5.2.4.1Climate policy

National climate policies, especially those of theindustrialized countries, have to support and step upinternational climate protection. Here, the Councilwould like to underscore the positive role the Ger-man government played both in the 5th national cli-mate protection programme and in climate negotia-tions for the formulation of the Kyoto Protocol at theEU and international level.This pioneering role is anessential contribution to the further development ofthe Protocol. In two respects, the WBGU finds Ger-many’s pioneering role to be especially interestingfor the future: in international certificate tradingmodels, and in the creation of a CDM standard. TheCouncil refers the reader to the 2002 report of theGerman Council of Environmental Advisors(Sachverständigenrat für Umweltfragen, SRU) forrecommendations concerning national-level mea-sures to mitigate climate change (SRU, 2002).

Pioneering ambitious internationalcertificate tradingGermany and the other EU countries could lead theway in designing the planned EU emissions tradingdirective (Box 5.2-4):• The German government should develop criteria

and strategies aimed at getting other memberstates to impose equally ambitious reduction tar-gets on their industries as Germany has done.That

Box 5.2-4

Planned emissions trading in the EU

In December 2002, the Council of Environment Ministersagreed to introduce European trading of emissions rightsstarting in 2005. In the beginning, stationary generators ofelectricity and heat, the iron and steel industries, refineries,the paper and cellulose industry, and the mineral-process-ing industry (cement, glass, ceramics, etc.) will take part inthe trading, with some states being able to opt certainindustries out of the trading system up to 2007 or opt somein from 2008 onwards.The trading partners initially receiveentitlements at no charge; starting in 2008, up to 10 per centare to be auctioned according to the wishes of the Euro-pean Parliament.After the first certificates are issued, trad-ing with CO2 emission entitlements can begin. In additionto the industrial companies involved, other actors such asnon-governmental organizations can take part. To ensurethat the transfer of entitlements among the emittersinvolved is also linked to equivalent adjustments in CO2

emissions (reduction or increase only in the amountallowed), the proposed directive provides for comprehen-sive monitoring and reporting duties on the part of memberstates vis-à-vis the European Commission.

The further consultations in the European Parliament,which has the right of veto, should clarify the other detailsof the system. According to the Council’s resolutions, sanc-tions in the amount of €40 per tonne of CO2 (€100 startingin 2008) shall be imposed for any emissions not covered bycertificates. The central and eastern European accessioncountries could be directly included in the trading systemthrough their reduction commitments under the KyotoProtocol.The Commission also aims to consider linking EUtrading with other trading systems and is thinking aboutways of expanding the EU system to the entire EuropeanEconomic Area (EEA). If all EEA states, Canada andJapan can be included, more than three-quarters of theAnnex B parties to the Kyoto Protocol would be involvedin the trading system. The EU would then have a consider-able influence on the ultimate design of international emis-sions trading in the first Kyoto Protocol commitmentperiod.


should prevent industry playing governments offagainst each other to lower reduction targets orgovernments providing hidden subsidies by allo-cating too many emission rights.

• The absolute level of emissions reduction in theself-imposed declaration by German industryshould serve as a starting point for the mandatoryreduction goals for industry to be imposed by gov-ernment. These goals should, however, be madestricter as industry will have a certain degree offlexibility in emissions trading. This is especiallytrue when – as the European Commission is plan-ning – parts of the reduction commitments are tobe met via JI or CDM projects outside the EU.

• The Council thus recommends that the Germangovernment works towards ensuring that emittersmeet at most half of their reduction commitmentsthrough international emissions trading withcountries outside the EU. This is to ensure thatemissions trading does not replace national mea-sures.

• The system should then be expanded to cover thewhole European Economic Area. If the EEAstates can be included, three-quarters of theAnnex B parties in the Kyoto Protocol would beinvolved in the trading system. The EU wouldthen probably have a considerable influence onthe further design of the international emissionstrading system in the further Kyoto process.

Creation of a ‘CDM standard’ for therecognition of emission creditsIn the course of implementing the Kyoto Protocol atthe national and EU level, the German governmentshould work for the creation of a Germany-wide and– if possible – EU-wide standard for clean develop-ment mechanism projects. Generally, the standardshould only permit CDM projects that promoterenewable energy (except large hydro due to theunsolved sustainability problems; Section 3.2.3),increase the energy efficiency of existing plants(including those fired with fossil fuels), or concerndemand-side management.Applicants for CDM pro-jects promoting fossil energy should prove that thealternative producing the least amount of carbon waschosen, that the project will dovetail with the partnercountry’s long-term sustainable energy planning, andthat renewable energy does not represent a feasiblealternative in the foreseeable future; financing can-not be the argument.

5.2.4.2Transport and regional development

In addition to energy policy, national transport andregional development policy plays a crucial role inthe transformation of global energy systems towardssustainability. As a detailed discussion of these poli-cies would go beyond the scope of this report, a fewapproaches shall only be briefly described.

Motorized transport is continuing to grow inindustrialized countries. In the past 30 years, thenumber of cars in the EU has tripled, and growth isexpected to continue.This causes major consumptionof fossil energy (Section 2.3.1). The EU’s transportsector derives 98 per cent of its energy from mineraloil, some 70 per cent of which is imported (EU Com-mission, 2001c). Road transport causes a consider-able amount of toxic emissions. Some 29 per cent ofthe total CO2 emissions in the OECD are caused bythe transport sector (IEA, 1997).Transport emissionshave long been monitored by national and local envi-ronmental authorities and regulated by law. This hasled to technological improvements (catalytic con-verters, optimization of engines, etc.), thus reducingemissions of some pollutants (such as lead, SO2) dra-matically (Section 3.7). Such national and local solu-tions should be stepped up even further and trans-ferred to transition and developing countries to agreater extent.

To move the transport sector into a more sustain-able direction, more renewable energy sources andforms of energy low in carbon and pollutants shouldbe used as fuels to the extent possible, and as quicklyas possible. To this end, taxation of fossil fuels(ECMT, 2001; Gröger, 2000) and (cross-)subsidies foralternative fuels in the form of price-controls andquotas are recommended. It is important that themarket penetration of vehicle technologies – such asfuel cell cars – be promoted in research and develop-ment projects and that the necessary infrastructurebe established.

Dynamic standards (such as the EU pollutantstandards EURO 2, 3, 4) can step up the process ofdeveloping efficient technologies to facilitate marketaccess for the new technologies (Johansson andAhman, 2002). In addition to reducing emissions,incentives should basically be designed to: promotethe abatement of pollutants that have local andregional impact, lower noise pollution, reduce theamount of land required for infrastructure, and lowerthe risk of accidents.

On the demand side, there are also various ways toincrease the efficiency of and lower demand fortransport services.To this end, programmes should bedeveloped that improve capacity utilization in pri-vate car traffic (car sharing, etc.) and public passen-


ger transport. Here, ‘multimodality’ should be thegoal – a combination of the various means of trans-port: private cars, local public transport, trains andplanes (WBCSD, 2001; Royal Commission on Envi-ronmental Pollution, 2000). Multimodal nodes – suchas ports, railway stations and airports – should beequipped with telematic systems and their infrastruc-ture modernized. In the long term, new regional plan-ning concepts that bring residential areas and busi-ness areas closer should complement such measures.Research and social discourse on these concepts hasto be further intensified (Section 6.3.3).

In the rail sector, the incremental liberalization inmany industrialized countries has not increased thecompetitiveness of the sector compared to othertransport modes to the extent desired.The Council isnot of the opinion that the rail sector cannot benefitfrom liberalization; rather, the poor general settingfor the sector was the cause of the failures. Forinstance, Deutsche Bahn is focusing on faster long-distance connections to the detriment of regionalconnections due to the one-sided profitability crite-ria of the privatization process. To remedy this, theCouncil recommends the following: restructuring theexpansion of railway lines to improve coverage ofrural areas; gradual reduction of mileage allowances;temporary subsidies for unprofitable lines; andgreater competition. Here, a rail system that servesthe aims of sustainability should not only competewith planes, but also cars, i.e. taking the train fromand to mid-size and small towns should not entailchanging trains often or require complicated plan-ning.

In developing, newly industrializing and transitioncountries, a great increase in transport volume isexpected in the next few decades (Sections 2.4 and2.5). As standards of living rise, the number of carsper person and the general transport volume willgrow. Hence, measures have to be taken in the shortto mid-term to keep the growth of energy consump-tion and emissions in the transport sector belowthese other growth rates. Technological measuresalone will not suffice to make transport sustainable;individual conduct will also have to change. There-fore, the transport sectors of developing, newlyindustrializing and transition countries require acomprehensive strategy. Some core elements couldbe the following (van Vurren and Bakkes, 1999):• Maintaining and expanding public short-distance

transport systems;• Promoting rail freight transport;• Promoting joint ventures and other kinds of col-

laboration between automobile manufacturersfrom western Europe and the transition countriesto reduce fuel consumption;

• Promoting international research collaborationon energy efficiency and reducing emissions inurban passenger and freight transport (Section6.3.3);

• Inclusion of external costs in prices for fuels.The Council recommends that the German govern-ment support developing, newly industrializing andtransition countries directly or indirectly (via condi-tionality) in developing and implementing compre-hensive strategies aimed at promoting the sustain-ability of the transport sector.

5.2.4.3Agriculture

The agriculture sector is responsible for a consider-able share of greenhouse gas emissions: some 50 percent of the methane, 70 per cent of N2O, and 20 percent of the CO2 emissions (IPCC, 2001a). The mainsource of methane emissions is rice cultivation andthe husbandry of ruminant livestock. Some 70 percent of anthropogenic N2O comes from fertilizedfields (Beauchamp, 1997), even from fields taken outof food production.

Today, it would be relatively easy to reducemethane emissions from rice cultivation; for instance,irrigation strategies could be improved and betteradapted rice varieties planted (Bharati et al., 2001).In contrast, reducing methane emissions from rumi-nating animals is more difficult as CH4 is a product ofthe feed used. While these methane emissions couldbe greatly reduced if feed additives were used(methane oxidants, bacteria that hamper the creationof methane, or an increase in the content ofstarch/cellulose in the feed), this approach will prob-ably be too expensive for developing countries.

The picture is much the same for reductions ofN2O emissions. In global terms, the use of fertilizers isincreasing; only in industrialized nations is the levelroughly constant (Scott et al., 2002). Highly technicalapproaches like ‘precision farming’ (the use of geo-graphic information systems and global positioningsystems to increase efficiency) are available but canonly be implemented in industrial countries in theshort term. For developing countries, they are tooexpensive, and there is a lack of local knowledgeabout such systems.

In conclusion, a sustainable reduction of emissionsfrom the agricultural sector requires both specificinfrastructure and specific knowledge, both of whichare often lacking. Studies show that the agriculturalsector will remain problematic in climate policyterms, even in industrialized countries (Kulshreshthaet al., 2000). In light of increasing food production, areduction of emissions would require a vast effort.


5.2.4.4Conclusion

A successful transformation of energy systemstowards global sustainability is only realistic if otherareas of policy support – or at least do not counteract– the measures taken in the field of energy.Above all,the goal must be to increase energy efficiency, useless fossil and nuclear energy and more renewableenergy, and curb greenhouse gas emissions drasti-cally.

Greater sustainability in the transport sector, lessemissions from agriculture, and a determined com-mitment in climate policy are indispensable. Thesegoals can be attained via a great variety of measures.The optimal combination of measures will varybetween regions and target groups. Social scienceresearch in the areas mentioned can make an impor-tant contribution to providing consistency and coher-ence in the respective policy fields and in the field ofenergy.

5.3Actions recommended at the global level

Implementing ecological financial reforms, regulat-ing liberalized energy markets according to sustain-ability criteria, and promoting energy efficiency,renewables and access to modern forms of energy areall important elements of the WBGU’s transforma-tion strategy. It is beneficial, as a matter of principle,to have a great diversity of tools and ways in whichthey are shaped at country level. Different tools ortool mixes will be appropriate in the various coun-tries depending upon their ecological and geograph-ical, socio-economic, political and cultural settings.Efficiency considerations of location theory alsospeak in favour of open competition among differentapproaches.

Nonetheless, despite these arguments for a diver-sity of tools, there is also a need to act at global level,as already noted in connection with RECS or con-sumer labelling schemes (Sections 5.2.2.1 and5.2.2.3). This has several reasons:1. Utilizing the benefits of ‘rational’ harmonization.

Transboundary and global environmental impactstriggered by state-level approaches to energy use,as well as the ever closer economic integrationamong states, jeopardize the ecological effective-ness and economic efficiency of national-levelmeasures. For instance, levying a national-levelCO2 tax can lead to industries shifting their loca-tion, which reduces the ecological effectiveness ofthis measure (Copeland and Taylor, 2000).As con-cerns economic efficiency, it would be advanta-

geous if the market-based instruments favouredover the long term by the WBGU – notably emis-sion rights, tradable quotas and green energy cer-tificates – were to be applied beyond nationalboundaries. This, however, requires compatibilityamong instruments; in individual cases, explicitharmonization may even be necessary. Moreover,‘rational harmonization’ reduces the potential forconflict between the WTO and energy policy, aswell as the resultant welfare losses. A further ben-efit is that of timely adaptation to internationalclimate protection instruments.Within the climateregime, emissions trading presents the parties tothe UNFCCC with a framework into whichnational-level instruments must be fitted. Aninternationally coordinated approach can do jus-tice to future requirements ex ante and can thusreduce the cost of instrument adaptation thatwould otherwise be necessary.

2. Inadequate financial resources at national level.Many states, especially the poorer developingcountries, do not command over sufficient finan-cial resources to meet the initial extra costs oftransforming their energy systems. Here the inter-national community is called upon to supportthese countries financially and technologically – inaccordance with the subsidiarity principle and theability to pay principle – in reconfiguring andbuilding their energy systems.

3. Inadequate administrative capacities and capabili-ties. Many developing countries, but also somenewly industrializing and transition countries, lacksufficient state governance capabilities to shapethe transformation process according to sustain-ability criteria.This concerns, for instance, the pro-motion of renewable energies and of efficiencytechnologies, the internalization of negative exter-nal effects, and the liberalization of energy mar-kets. There is a great need for industrialized coun-tries to provide supportive consultancy inputs inthis respect.

4. Overcoming barriers at national level. Manydomestic companies fear that they will sufferinternational competitive disadvantages as aresult of national measures to curb emissions,internalize external costs and remove subsidies inthe energy sector. An internationally coordinatedapproach reduces this threat and thus contributesto removing barriers.A further aspect is the incen-tive effect that the internationalization of aninstrument can produce. For example, the resis-tance expressed among many developing coun-tries against greenhouse gas emission caps will bereduced if they are integrated into a system ofinternational emission rights trading and can thengenerate revenues. Conversely, for such a trading

167Actions recommended at the global level 5.3

system to function, the climate protection instru-ments deployed at national level need a certaindegree of harmonization.

The following sections set out the measures requiredwithin a global energy policy context – but also cli-mate, economic and development policy context – inorder that a transformation of energy systemstowards sustainability can succeed.

These recommendations reflect the Council’s con-viction that transboundary problems necessitateboth international cooperation and a legal safe-guarding and deepening of such cooperation throughmultilateral regimes. In the opinion of the WBGU, amultilateral approach at global level is the key totransforming energy systems.

5.3.1Expansion of international structures for researchand advice in the energy sphere

The worldwide transformation of energy systemstowards sustainability requires a significant and swiftintensification of research efforts (Section 5.2). In theview of the WBGU, the tasks of energy research insti-tutions are above all:1. Assessment: Analysing global energy trends and

identifying options for action;2. Coordination: Promoting the formation of net-

works and of complementary cooperativearrangements, and coordinating initiatives andorganizations;

3. Implementation: Carrying out and financingresearch projects.

While Chapter 6 sets out the substantive focuses thatfuture national and international research projectswill need to pursue, the following section explores,proceeding from the above three functions, the insti-tutional architecture of energy research at globallevel.

AssessmentIn its previous reports, the Council has frequentlynoted the importance of independent scientific pol-icy advice for global sustainability policy (WBGU,1997a, 2000, 2001a).To be able to identify and resolveproblems in situations frequently characterized by‘action under uncertainty’, it is essential that scien-tific analyses are conducted at regular intervals, andthat these are presented in a manner relevant to pol-icy processes. Systematic dissemination of scientificfindings and options for action creates a basis uponwhich policy governance bodies can adopt precau-tionary strategies and adapt existing strategies tonew needs. The Intergovernmental Panel on ClimateChange (IPCC), with its assessment reports on cli-

mate change, provides a model. The IPCC processshows how, through broad-based international par-ticipation of researchers, a widely recognized scien-tific basis for climate policy decisions can be built. Inorder to keep the influence of political interests uponthe outcomes of scientific assessment processes assmall as possible, it is essential to safeguard the inde-pendence of such advisory bodies.

As a classic cross-cutting theme, energy policytouches upon many policy areas, such as environ-mental, development, economic, trade and transportpolicy. The WBGU therefore wishes to stress that,when developing goals, strategies and instrumentsfor promoting energy system transformation, it isessential to analyse systematically the interactions ofenergy policy with other policy arenas and to takethese into consideration in recommendations foraction. In particular, care needs to be taken to ensurethe coherence of policy measures. A comprehensivestocktaking of the status and trends of global energypolicy should proceed along the lines of the goals andcontent of a World Energy Charter that yet needs tobe developed (Section 5.3.2.2). This is essential inorder to be able to assess progress made in theprocess of transforming global energy systems. In thisconnection, the following issues need to be addressedin particular:• Compilation and presentation of trends in pri-

mary energy use, together with statements on therange, energy productivity and shares of final con-sumption sectors in total primary energy use, pre-sented wherever possible at a worldwide level andbroken down according to regions;

• Development and continuous updating of energyscenarios;

• Detailed quantification of the sustainable poten-tials of renewable energy sources;

• Analysis of the environmental, social and healthimpacts of present energy systems at the local,regional and global levels;

• Presentation of developments relating to the basicsupply of commercial energy services in develop-ing and newly industrializing countries;

• Processing and presentation of policy-relevantdata such as the levels of direct and indirectenergy subsidies (worldwide and broken downaccording to regions or countries) and the levels ofresearch and development expenditure (in the pri-vate and public sectors);

• Examination of the geopolitical aspects of glob-ally sustainable energy systems;

• Presentation of successful best-practice nationalstrategies to promote energy system transforma-tion towards sustainability.

The World Energy Assessment published in 2000,involving the UNDP, UNDESA and the World


Energy Council (WEC), provides orientation for away to institutionalize such a comprehensive stock-taking of global energy policy. The goal should be toreport regularly – at least every 5 years – on the suc-cesses and deficits in implementing globally sustain-able energy systems. The Council therefore recom-mends to the German federal government that iturges a continuation of the World Energy Assess-ment process, possibly in the form of ‘assessmentreports on global energy policy’. In view of the posi-tive experience with the IPCC, the Council recom-mends establishing for this purpose an Intergovern-mental Panel on Sustainable Energy (IPSE). Thisshould involve maximum regional representation,whereby, in analogy to the IPCC, the participation ofscientists from developing countries should be pro-moted by means of targeted support. Over the longterm, a newly created International SustainableEnergy Agency (ISEA; Section 5.3.2.3) could assumeresponsibility for the World Energy Assessmentprocess.

CoordinationTo derive synergies from national energy research, itis recommendable to coordinate existing initiativesand programmes. The aim should not be to create acoordinating body seeking to establish internationaldivision of labour – for energy research profits fromthe competition between different research initia-tives. However much cooperation and consultationthere may be at global level, the subsidiarity principleshould always be observed, and competition amongnational research bodies fostered. Thus, to coordi-nate energy research at global level, rather a world-wide networking of research centres should be pro-moted. Following the model of the World ClimateResearch Programme established in 1980, the Coun-cil recommends the establishment of a correspond-ing World Energy Research Coordination Pro-gramme (WERCP) under UN auspices. This pro-gramme could be managed scientifically by a jointscientific committee, representing relevant disci-plines of the natural, engineering and social sciences.

ImplementationThe Council argues in favour of pluralism and diver-sity in the international research landscape, on boththe implementing and financing sides. Consequentlythe WERCP should not have a mandate to imple-ment and finance international research projects. Itstask should rather be to harness national-level grantfunding for international research projects. Thismeans the programme could serve as a clearinghousefor information on research funding worldwide. Thiswould initiate competition among national researchinstitutions for the award of grants.All research insti-

tutions coming potentially into question could thusbe motivated to collaborate in solving priorityresearch questions in the energy sphere.A prime goalin this context should be to stimulate transboundarycooperation.

For energy research and for the transfer ofresearch findings into practice alike, a cooperationarrangement among national research promotioninstitutions modelled e.g. on the European ScienceFoundation (ESF) would be worth considering.

5.3.2Institutionalizing global energy policy

At present, global energy policy institutions arehighly fragmented (Section 2.7), characterised byduplicated work, overlaps and conflicting develop-ments. The WBGU recommends that the Germanfederal government work pro-actively for moreenergy policy coherence. To this end, the coordina-tion of individual processes and actors is urgentlyrequired.

The link between energy policy and develop-ment/environmental issues has also been neglectedat global level so far. There is an urgent need formore effective integration of sustainable energy pol-icy into the international institutional architecture.The development aspect in particular means that therange of tasks must not be defined too narrowly here.

In a resolution as early as November 1990, the UNGeneral Assembly noted with concern that the pro-gramme of action for the development and utiliza-tion of new and renewable energies was being imple-mented too slowly, thus failing to meet the pressingneeds of the developing countries. It underlined theneed for sustained commitment and action by theinternational community and called on MemberStates to consider further measures to promote newand renewable energies, including the establishmentof an international institution. Yet despite repeatedcalls by the UN, the institutional weakness of globalenergy policy and the lack of coordination betweenthe relevant actors were not addressed at the UNSummits in Rio de Janeiro in 1992 or Johannesburgin 2002. The German Advisory Council on GlobalChange (WBGU) has already criticized the poorinstitutionalization of global sustainable develop-ment issues and has proposed various options to rem-edy the situation (WBGU, 2001b).


5.3.2.1The functions of international institutions

The first step in strengthening the institutional archi-tecture is to identify the functions which are neces-sary for energy system transformation. They can bedivided into groups, which are listed below in ascend-ing order as the transfer of energy policy compe-tences to global level increases:1. Advisory function: Providing continuous analysis

and options for action by the scientific community• Defining research gaps; initiating and coordi-

nating research; establishing research net-works;

• Assesing the global situation: Status and trendsin energy transformation (e.g. follow-up to theWorld Energy Assessment), organizing datacollection and statistics;

• Developing global scenarios for a sustainableenergy future;

• Devising options for action and strategies forenergy system transformation.

2. Clearing-house function: Organizing transfer ofinformation and technology • Establishing a clearing-house for sustainable

energy systems; collating and circulating infor-mation;

• Organizing non-commercial technology trans-fer; evaluating applied technologies and bestpractices.

3. Coordination function: Coordinating activitiesbetween the international institutions and boostingcooperation; coordinating national transformationpolicies• Ensuring a clear division of responsibilities

between organizations and encouraging coop-eration;

• Through the approximation of national energypolicy instruments, reducing the worldwidecosts of transformation, dismantling economicdistortions of competition, and anticipatingfuture requirements (e.g. under the Kyoto Pro-tocol).

4. Implementation function: Implementing sustain-able energy policy at national and regional level • Providing strategic advice for governments:

Devising and implementing (with support frompartners) national programmes for energy sys-tem transformation and/or a sustainable energyinfrastructure;

• Promoting capacity-building in developingcountries: Training and development (for civilservants, technicians, craftspersons, small andmedium-sized enterprises, etc.), distribution ofinformation, provision of advice and assistancewith funding options;

• Establishing regional research&developmentand centres of excellence.

5. Management function: Establishing instrumentplatforms• Providing management capacity, e.g. for the

organization of a global trading scheme forGreen Energy Certificates or similar global orregional instruments;

• Involvement in defining environmental andsocial standards for the energy sector.

6. Financing function• See Section 5.3.3

These functions can either be integrated into existinginstitutions or carried out by newly established agen-cies. In principle, the Council is in favour of estab-lishing a new global organization, as this would endthe current fragmentation of energy policy activities.However, equipping a new institution with compe-tencies and responsibilities for policy developmentwould entail a loss of sovereignty for the nation-states, so that resistance to its establishment can beexpected. The World Summit on Sustainable Devel-opment (WSSD) showed that many countries’ will-ingness to commit to real targets and measures isvery low. The WBGU therefore views a step-by-stepapproach as realistic:A new institution should not bedemanded from the outset. Instead, existing and newinitiatives should form a ‘core’ which should be inte-grated in the UN system and could be expanded fur-ther if necessary.

5.3.2.2Developing a World Energy Charter

As a common basis for the work of the relevant insti-tutions, the Council initially recommends the devel-opment of a global energy strategy which should benegotiated at international level without any bindinglegal force and which could take the form of a WorldEnergy Charter, for example. It should set out theelements of global energy policy, including verifiabletargets and time frames (Box 5.3-1). The Council hasalready proposed the launch of a World EnergyCharter in its policy paper for the WSSD (WBGU,2001c).

The option of its further development into alegally binding energy convention over the long termshould not be ruled out, but should not be pursued asthe primary objective. Implementing the WorldEnergy Charter would remain the task of the indi-vidual states and international institutions operatingin the relevant sectors.

Developing a World Energy Charter will only holdout any prospect of success if the current oppositionto more intensive utilization of sustainable energies


can be dismantled successfully from the outset.Among the industrialized states, it is primarily thepresent governments of the USA and Australia whoare opposed to global energy system transformationand wish to safeguard their energy supply by expand-ing fossil energy.Although the international commu-nity will probably have to develop a global energystrategy without any involvement by these countriesinitially, it is likely that the pace of technologicaldevelopment in the renewables sector and their long-term superiority over fossil development paths willultimately lead to a shift in policy. In the long term, asustainable energy policy will not be viable unlessthese two countries are involved.

The newly industrializing and developing coun-tries are also sceptical about the efforts to promoterenewable energy. They are concerned that this is anattempt to deny them opportunities for cost-effectivedevelopment. To ensure that the developing coun-tries are also involved in the development of theWorld Energy Charter, these concerns must be thestarting point for the strategy.That means persuadingthe developing countries that a mix of sustainableenergies and greater efficiency of fossil technologiesis a future-proof development path, and that they cancount on international support if they pursue thisroute.

The World Energy Charter could and should be animportant outcome of the International Conferencefor Renewable Energies in Germany in 2004, whichwas announced by the German federal governmentat the WSSD.

5.3.2.3Towards an International Sustainable EnergyAgency

The existing institutional architecture should be con-centrated and reinforced on the basis of the World

Energy Charter (Fig. 5.3-1): Starting with the func-tions defined above, the first task is to focus and coor-dinate the work of existing organizations (Phase 1).Then, on this basis, the institutional foundations for aglobal energy policy should be enhanced through thepooling and strengthening of competencies (Phase2). Finally, if necessary, the option of establishing anew overarching institution (International Sustain-able Energy Agency – ISEA) should be explored(Phase 3).

Phase 1: Focussing and coordinating thefunctions of existing institutions

Boosting research and adviceInstitutionalizing independent scientific advice onglobal energy policy and improving coordinationbetween national research institutes and interna-tional initiatives were discussed in Section 5.3.1.

Organizing the transfer of information andtechnologyTo support the dissemination and utilization of sus-tainable energy technologies at regional and nationallevel, it is important to press ahead with the globalnetworking of research, development and transfercentres. With the German federal government’s sup-port, UNEP has already laid the foundation stone forthis process with the Global Network on Energy forSustainable Development, which was launched atWSSD. In order to be able to perform this functionsatisfactorily, UNEP should be expanded andequipped with better financial resources.

The existing network of national energy agenciessuch as the German Energy Agency (DENA), which– as a support network for institutions with interna-tional and global responsibility – could drive forwardthe regional implementation of global targets, shouldalso be supported.

Box 5.3-1

Elements of a World Energy Charter

1. Protecting natural life-support systems• Substantially reducing greenhouse gas emissions,• Removing subsidies on fossil energy carriers and

nuclear power in the medium term,• Substantially increasing energy efficiency,• Significantly expanding renewables,• Phasing out nuclear power.

2. Safeguarding access to modern forms of energy world-wide• Attaining a minimum level of supply worldwide,

• Targeting international cooperation towards sustain-able development,

• Mobilizing financial resources for global energy sys-tem transformation,

• Enhancing the Least Developed Countries’ capabil-ities,

• Utilizing pilot projects as a strategic lever, and forg-ing energy partnerships.

3. Pressing ahead with targeted research and development

4. Pooling and strengthening global energy policy at insti-tutional level • Improving policy advice at international level,• Creating a coordination body.


Whereas other authors recommend generally lim-iting the institutionalization of a global energy strat-egy to establishing and reinforcing networks(Fritsche and Matthes, 2002), the Council regards a‘network solution’ as inadequate in the energy policyfield. Experience from other sectors indicates thatcountries would be inclined to absolve themselves ofresponsibility for the developing and financing ofglobal sustainable energy policy by pointing out thatthey are involved in promoting networks. For indi-vidual aspects of global energy strategy, such as theabove-mentioned exchange and dissemination oftechnologies, networks can be very useful. However,in the WBGU’s view, they must be augmented byinstitutions which have the power to shape policy ina substantive way.

In the interests of sharing information, and dis-seminating ‘best practices’ and ‘clean’ technologies,establishing a central liaison office is a sensibleapproach. A clearing-house of this kind, with its ownsecretariat, could be integrated into an existing UNorganization. UNEP, with its Division of Technology,Industry, and Economics, which is responsible,among other things, for promoting clean energy tech-nologies, would be appropriate to take on this role.

However, UNEP could only deal effectively with thisnew task if its human and financial resources weresubstantially increased.

Finally, in order to promote internationalexchange and cooperation in the energy sector, aglobal dialogue forum should also be considered.Stakeholders from the public and private sectorswould thus have the opportunity to exchange viewson targets, mechanisms and new partnerships. Itcould be modelled on the forums held in advance ofthe WSSD, such as the UNDP Global Round Tableon Energy for Sustainable Development and theMulti-Stakeholder Round Table on Energy for Sus-tainable Development, set up by the Tata EnergyResearch Institute (TERI) in India. In order to safe-guard the global focus and the involvement of thedeveloping countries, it would be advisable to estab-lish the dialogue forum in a sub-organization of theUN. Ideally, this would be UNDP, as it could draw onits previous experience in organizing this type offorum. It could be launched at the 2004 InternationalConference for Renewable Energies announced bythe German federal government. The forum couldthen be held every two years.

Global Ministerial Forumfor Sustainable Energy

Coordination

Function

Kn

ow

led

ge

bas

eO

rgan

izat

ion

Institutions

Research &advice

Intergovernmental Panel on Sustainable Energy (IPSE)World Energy ResearchCoordination Programme (WERCP)

IPSE and WERCP

Information &technology transfer

Clearing house at UNEPGlobal dialogue forum at UNDPRegional energy agencies International

SustainableEnergy Agency(ISEA)

Implementation &management

World Bank, GEF, UNDP, UNEP

Global MinisterialForum for Sustainable Energy

World Bank, GEF, UNDP, UNEP

1st stage:Focusing and coordinatingexisting institutions

2nd stage:Creating a leadingactor

3rd stage:Foundingthe ISEA

Figure 5.3-1The path towards an International Sustainable Energy Agency.Source: WBGU


Regional, as well as global, energy forums alsoplay a key role in energy policy. In order to promoteregional cooperation and exchange of experience inthe energy sector, it would be helpful to establishregional energy agencies akin to OLADE (Organi-zación Latinoamericana de Energía). The EuropeanCommission is pressing ahead with the establishmentof a European Energy Agency. In Africa, the AfricanEnergy Commission (AFREC), which is in theprocess of being set up, could form the core of thistype of organization. The activities of these regionalagencies should be in line with the World EnergyCharter and be coordinated at international level.Their names should clearly reflect the commitmentto sustainable energy policy.

The OECD’s International Energy Agency (IEA)should be developed further towards sustainableenergy policy. The IEA, which was established in1974 in response to the oil crisis, aims to reduce itsmembers’ reliance on oil imports by promoting theuse of fossil and renewable energies. As the industri-alized countries’ energy agency, it has performedvaluable work in evaluating and processing informa-tion about national trends and instruments as well asdeveloping best practices. Although established bythe industrialized states, the IEA has already openedup to the developing, newly industrializing and tran-sition countries in recent years, by establishing aNon-Member-Countries Department and holdingdialogue forums. Furthermore, the focus of its workhas also changed: Due to the desire to diversify theirenergy carriers in the interests of security of supplyand also as a result of climate change, its members’interest in renewables has increased. The Councilconsiders that this positive development must bepursued further.

Improving coordination between countries andinstitutionsThe positive experiences with the Global MinisterialEnvironment Forum suggest that it would be usefulto set up a Global Ministerial Forum for SustainableEnergy. Setting a new energy policy course can onlybe successful if it is underpinned by the necessarypolitical leadership and support from the nationalgovernments. The Global Ministerial Forum for Sus-tainable Energy, which should meet at regular inter-vals and have its own small secretariat, would pro-vide advice on the direction to be taken in the workof the various UN units and the World Bank in theenergy sector and draft recommendations for theinstitutions. However, the World Bank, UNDP,UNEP and other relevant actors, depending on theexpertise required, should continue to be responsiblefor coordinating projects in the field. The Forumshould also be responsible for coordinating, monitor-

ing and developing the progressive institutionaliza-tion of global energy policy in line with the WorldEnergy Charter. The World Energy Charter shouldsafeguard the inclusion of environmental and devel-opment policy goals, e.g. by stating that the objectivesset forth in the UNFCCC must be upheld in decision-making.The decision to establish the Forum could beadopted at the International Conference for Renew-able Energies in Germany in 2004.

In addition, a group of like-minded states couldact as pioneers in setting a course towards a sustain-able energy policy. In theory, this could be achievedwithin the OECD framework. However, this wouldrequire fundamental agreement with the USA, Japanand Australia on the need to transform the energysector towards renewables by utilizing bridging tech-nologies. This appears to be an unlikely prospect atpresent. The EU would therefore be a more likelycandidate for a leadership role. It is easier to achievea common approach in highly integrated economicareas such as the EU than in other internationalalliances. Although the inclusion of an energy chap-ter in the EU Treaties is still viewed with restraint byMember States, the dynamics of the internal marketare gradually leading to a shift in thinking. What’smore, the EU is already playing a pro-active role inenergy system transformation: The Commission’sefforts to include environmental aspects to a greaterextent in the Community’s energy policy, its plannedemissions trading system, relatively ambitious Kyotocommitments, and progressive policy approaches inthe majority of its fifteen Member States make theEU a key player in energy system transformation.

The EU could also take on a leading role in alarger group of countries:At the WSSD, it launched acoalition of like-minded countries and regions com-mitted to increasing their use of renewable energiesthrough quantified targets. Numerous developingcountries joined this initiative.Although it remains tobe seen how the coalition will perform in practice,this process could certainly be used as a startingpoint.

Strengthening implementation and managementfunctionsManagement or implementation functions within theWorld Energy Charter framework are virtuallyimpossible to perform without support and monitor-ing by a UN organization. In this context, the UNSecretary-General and UNDESA propose trans-forming UNESCO’s Solar Programme into a ‘WorldSustainable Energy Programme’. However, as anorganization, UNESCO deals with education, sci-ence and communications, and would thus seem ill-equipped for the tasks of formulating and imple-


menting sustainable energy policies and strategies atnational and regional level.

The World Bank and UNDP or UNEP would bemore appropriate institutions to perform these tasks.Through their expertise and competencies in the pol-icy development field, they are ideally suited toadvising governments, implementing national pro-grammes and undertaking capacity-building. As wellas offering loans, the World Bank is increasingly pro-viding policy advice, technical support and knowl-edge transfer. Furthermore, with its 180 members, ithas considerable powers of enforcement. In theenergy sector, however, it is exposed to various con-flicts of interest. For example, its energy supply pri-orities are distinctly at odds with efforts to achieve aneffective climate policy. UNDP admittedly has tograpple with its reputation as a poor performer, aswell as with stagnating contributions and increasingcompetition from the World Bank, but it continues tobe the central funding, coordination and steeringbody for the UN’s development operations and isgreatly trusted by the developing countries. UNEPcould draw on its substantial environmental policyexpertise, but its work is also hampered at present byunder-funding and staff shortages. For the effectiveimplementation of the tasks set out in a WorldEnergy Charter, a clear and balanced division ofcompetencies and coordinated cooperation betweenUNDP, UNEP and the World Bank should bedefined. Instead of UNEP, the international environ-mental organization also demanded by the Councilcould take on appropriate implementation tasks inthe long term (WBGU, 2001b).

Management functions at international level arealso necessary for another key aspect of the desiredenergy system transformation: The phasing out ofnuclear energy worldwide. The most appropriateorganization to take on this responsibility is theInternational Atomic Energy Agency (IAEA). Thisorganization, which currently has a remit to promoteand monitor the civilian use of nuclear energy, isunlikely to undergo a swift or rapid transformationinto an agency responsible for phasing out nuclearpower. Nonetheless, the WBGU recommends work-ing towards a change in the IAEA Statute, with theaim of removing all references to the specific objec-tive of promoting the further expansion of nuclearenergy. In the medium term, the IAEA should moni-tor and coordinate the winding down of the nuclearpower industry worldwide. If the international com-munity decides, en masse, to phase out nuclearpower, the IAEA will continue to be indispensable tomonitor fuel cycles, prevent proliferation of existingfissile material, and secure any nuclear plants whichcontinue in operation during a transitional phase,along with final storage facilities.

Phase 2: Pooling and reinforcingcompetencies at global levelIn a further step towards the institutionalization ofglobal sustainable energy policy, the responsibilitiesand competencies of the Global Ministerial Environ-ment Forum should be expanded. This requires anincrease in the personnel and financial resources ofits secretariat. As well as coordinating the relevantactors, the Forum should also promote and monitorthe implementation of the World Energy Charter.For this purpose, it should review global develop-ments in light of the Charter’s objectives and withreference to new scientific findings, monitor theeffectiveness of national activities in the energy sec-tor, and make policy recommendations. As well asthis steering and policy advice function, it could alsoincreasingly take on tasks relating to the implemen-tation of the World Energy Charter’s objectives andtechnology transfer, e.g. supporting the developingcountries in setting up research and developmentcentres or providing training and development.

Phase 3: Setting up an InternationalSustainable Energy Agency If it becomes apparent that even with the strongerinstitutional architecture resulting from Phase 2, theabove-mentioned tasks cannot be managed satisfac-torily at global level, the option of setting up an orga-nization with a specific remit for sustainable globalenergy policy should be considered.

The establishment of an international organiza-tion responsible for renewable energies has beendemanded, primarily by NGOs and producers ofrenewable energy conversion technology, for manyyears. However, two difficulties arise in this context:• The WSSD showed that establishing a new inter-

national organization for renewable energies atthe present time would be very difficult to achieve.It became apparent that the developing countriesview this new institution very critically, regardingit as a vehicle for the promotion of exports fromnorth to south, while the majority of industrializedcountries are keen to avoid any additional finan-cial and administrative burdens.

• The Council considers that a new organization topromote the use of renewables could play animportant role in promoting sustainable forms ofenergy and the relevant industries. However, itwould not be a suitable vehicle to push forwardthe global transformation of energy systems. Forthis purpose, a new institution, which couldinclude the full spectrum of energy systems in thereform process, must be established.

The WBGU therefore recommends the establish-ment of a International Sustainable Energy Agency


(ISEA), whose remit would be based on the WorldEnergy Charter.

This new agency could develop from the Ministe-rial Forum, mentioned above, which could then act asa steering committee.The advantage of this approachis that the ISEA would thus secure the necessarypolitical leadership and support from the nationalgovernments. In setting up the ISEA, it should beclear that as well as environmental aspects, develop-ment policy issues are also a priority. This wouldencourage the developing countries to endorse theproject.

Opposition to this way of institutionalizing globalenergy policy is likely to come from a number ofindustrialized countries, primarily the USA, Japanand Australia. Tactically speaking, it is thereforeimportant for the interested industrialized countries(EU, etc.) and the developing countries to forgealliances from the outset. Whether or not countriessupport the proposal to set up an ISEA will dependlargely on the perceived ‘value added’ offered by thisnew institution. The ISEA’s great advantage is that itwould offer the opportunity to draw together energy,environmental and development issues at global andinstitutional level for the first time. Based on theWorld Energy Charter, the new body could be suc-cessful in encouraging energy, environment anddevelopment ministers to commit themselves to acoordinated energy policy. In the long term, theglobal energy research undertaken by the Intergov-ernmental Panel on Sustainable Energy (IPSE) andthe World Energy Research Coordination Pro-gramme (WERCP) could also be incorporated intothe ISEA (Section 5.3.1). On environmentally rele-vant aspects of energy policy, the ISEA should workclosely with the International Environmental Orga-nization proposed by the Council (WBGU, 2001b).

5.3.3Funding global energy system transformation

5.3.3.1Principles for equitable and efficient funding ofglobal energy policy

The starting point for the following hypotheses is theCouncil’s recommendations on the financing ofglobal sustainability policy (‘Earth Funding’;WBGU,2001b). In specific terms, the task is to develop afunding system for the transformation of globalenergy systems which responds effectively to two keychallenges:• Supplying the resources to cover the financial

requirement;

• Creating transfer mechanisms to support econom-ically weaker countries during the transformationprocess.

Devising an equitable and economically efficientfunding system to develop a sustainable energy sup-ply is an ambitious project, and a long-term imple-mentation plan is essential. In the Council’s view, itshould be guided primarily by the subsidiarity princi-ple. The subsidiarity principle relates, firstly, to thedivision of functions and competences in the publicsector, and, secondly, restricts the state’s roles tothose tasks which, from a governance perspective,exceed the capacities of the private sector. Based onthese twin functions, two significant conclusions canbe drawn for the funding of global energy policy:

The private sector invests substantially in theenergy industry. The states’ task is to provide addi-tional funds for those investments which, from a nar-rower micro-economic perspective, are not (yet)profitable but which contribute to developing a sus-tainable global energy system. In line with the sub-sidiarity principle, the international communityshould only bear the share of investment costs whichdelivers global benefits (‘incremental costs’). Inorder to minimize the level of these incrementalcosts, existing disincentives (especially subsidies onnon-sustainable and other market-distorting rules)must be dismantled and new incentives created forinvestment in energy system transformation.This canoften take place without funds being deployed, andso improving the institutional framework at nationaland international level is seen as a major contribu-tion to reducing the requirement for public fundingand financial transfers.

In line with the subsidiarity principle, nationalsources of capital to fund the transformation shouldbe deployed first. However, the economic capacity ofstates and hence their ability to finance the transfor-mation of the global energy systems as a global pub-lic good vary significantly. Left to themselves, thepoorest countries will be unable to restructure theirenergy systems according to sustainability criteria.International transfers are therefore required.

The financial resources which cannot be providedeither by the market or the developing country itselfmust be supplied via official development assistance(ODA) or from other international sources. TheCouncil considers that the process governing thedelivery of these funds should be as equitable as pos-sible. It identifies three principles as viable bases ofan equitable funding system:– The ability to pay principle,– the benefit principle,– the polluter pays principle.In line with the ability to pay principle, charges arelevied in accordance with taxpayers’ individual con-


tributive capacity. In a national context, this is gener-ally assessed according to the individual’s incomeand assets. There has also been a long debate aboutthe extent to which consumption is an indicator ofeconomic performance. At international level, it isnational rather than individual economic perfor-mance which is the focus of interest. The ability topay principle is currently the funding principle whichis generally applied by international organizations.Per capita GDP is most commonly used as an indica-tor in this context.

‘Benefit’ is another recognized funding principle.This states that taxes should be based on the benefitsreceived by people using the good financed with thetax. Individual contribution levels are based on theindividual benefit received (benefit equivalence).However, as the individual benefit received frompublic goods is frequently difficult to measure oridentify, the ‘cost equivalence’ principle is often usedinstead. Here, the individual’s financial contributionis based on the costs arising from his or her use of thepublic good. The benefit principle results in a carefulweighing up of the costs and benefits of services andencourages efficient service delivery. The benefitprinciple is rarely applied at international level, but itdoes flow into the financial formula used by a num-ber of organizations (e.g. the WTO, Intergovernmen-tal Organisation for International Carriage by Rail).

The polluter pays principle is of key importance toenvironmental policy and, in the WBGU’s view,should play a central role in funding energy systemtransformation as well. The application of the pol-luter pays principle means that the person whosebehaviour results in a requirement for the delivery ofa publicly funded service must pay the ensuing costs.The lines between the polluter pays and the benefitprinciple are blurred, however.

The Council also bases its recommendations onthe following criteria which must be considered whendeveloping a funding system. They are: Target andsystem conformity, stability and reliability of revenuegeneration, political viability, and technical practica-bility. The Council attaches particular importance topolitical viability. Proposals for institutional reformshould link in with the status quo, the prevailing dis-courses, and the interests of key actors so thatendogenous forces can develop in support of thetransformation. In other words, the WBGU is pursu-ing an incremental approach which focuses on initialpragmatic steps towards a funding system for globalenergy system transformation.

5.3.3.2Provision of new and additional funding

Requirement for international fundingOver the next 20 years, annual investment of US$1998

180–215 thousand million will need to flow into thedeveloping and newly industrializing countries’energy sector in order to meet the growing energydemand (WEC, 2000; G8 Renewable Energy TaskForce, 2001).A higher figure is required if highly effi-cient technologies and renewable energies are to bedeployed (Ad Hoc Open-ended IntergovernmentalGroup of Experts on Energy and Sustainable Devel-opment, 2001). It is unclear which proportion of therequired investment will, or should, come from thepublic purse or the private sector and from nationalgovernments or the international community. In theinterests of efficiency, it is desirable for a substantialshare of this investment to be funded by the privatesector. Moreover, in view of the low GDP andextreme scarcity of capital in most developing coun-tries, it is almost inevitable that a substantial amountwill be provided by the international community.

Mobilizing private capitalThe investment needs make it clear that private cap-ital will be essential to fund energy system transfor-mation.The last decade of the 20th century saw a dra-matic rise in the amount of private direct investmentflowing into the developing countries (Section 2.7.3).According to the World Bank, from 1990 to 1999, 733energy projects were carried out with private-sectorparticipation, with a total investment volume ofUS$186.7 thousand million, especially in LatinAmerica and East Asia (Izaguirre, 2000). By inte-grating the private sector more fully into the work ofthe multilateral development banks, it has been pos-sible to increase project volumes many times over.Furthermore, private-sector actors have an interestin long-term returns on their investment.They utilizetheir expertise and work pro-actively to improve eco-nomic efficiency. These are key factors in ensuringthe success of projects to restructure the energy sup-ply in the developing, newly industrializing and tran-sition countries (G8 Renewable Energy Task Force,2001; Enquete Commission, 2002).

Nonetheless, much more far-reaching efforts arerequired to secure adequate foreign private capitalfor direct investment in the energy sector, especiallysince only a handful of countries have benefited fromsignificant levels of investment to date. The first stepis to improve the framework conditions for a stableeconomic and monetary system at both national andinternational level, since avoiding economic andmonetary crises is a key prerequisite in attractingdirect investment. A priority at national level is to


establish legal certainty, including the guarantee thatcontractual arrangements can actually be enforced.The liberalization of the energy markets contributessignificantly to enhancing transparency and marketaccess in the developing countries as well. Finally, theremoval of subsidies on fossil energy carriers is alsoimportant in mobilizing private capital to develop asustainable energy supply (Enquete Commission,2002; Section 5.2.1.2).

Despite the importance of private capital, theextent to which private investment genuinely con-tributes to achieving energy system transformationtargets must be critically examined. Until now, themain focus has been on large fossil-fuelled power sta-tions. Renewables accounted for just 2 per cent ofprivate direct investment in energy projects in devel-oping countries during the 1990s (KfW, 2001). TheGerman federal government should utilize theopportunities to restructure this trend:• By reforming export guarantees in order to give

targeted preference to project categories whichmeet sustainability criteria (Section 5.2.3.2);

• by increasing policy advice within the develop-ment cooperation framework, in order to boostpartner countries’ capacities to create conditionswhich are conducive to investment;

• by creating a ‘public-private partnership forrenewable energies’ funding instrument, particu-larly to facilitate market access for small andmedium enterprises which supply renewables indeveloping countries;

• by supporting the development of small grantsschemes in developing countries in order toimprove funding for smaller projects which focuson improving efficiency and renewables use (Sec-tion 5.3.3.3).

Additional private funds can also be generatedthrough more intensive promotion of foundations.For example, the Ford and Rockefeller Foundationsprovide funding for energy policy projects whichhave social and environmental benefits (CENR,2000). In Europe, there are fewer tax incentives tosupport the work of foundations than in the USA.There is scope to encourage the mobilization of pri-vate capital here (World Bank, 2002b).

The Council considers that an international finan-cial requirement of several hundreds of thousandmillion US dollars per year during the first twentyyears is plausible. Based on the current total foreigninvestment volume of US$205 thousand millionannually in developing countries (, 2002) and a fur-ther US$7 thousand million or so, at the most, sup-plied for international development cooperation bythe non-profit organizations (OECD, 2002), it isunlikely that private sources will be sufficient to fundenergy system transformation. Indeed, private

investors cannot be expected to fund in full the pro-portion of investment required to create externalglobal benefits. An increase in direct public transfersto the energy sector is therefore essential.

Increasing and restructuring the resourcesfor development cooperationThe regional priorities for private investment arecurrently East Asia and Latin America. By contrast,most African and South Asian countries have littleappeal for private investors. These regions includethe poorest developing countries with very lowincome levels, poor purchasing power and extremecapital poverty. Establishing a sustainable energy sys-tem here will be impossible without the support ofdevelopment cooperation. In the Council’s view,development policy can act as a catalyst for energysystem transformation. Through the developmentpolicy framework, influence can be brought to bearon the key policy areas of relevance to energy systemtransformation towards sustainability: promotingefficiency and renewables, and improving access tomodern energy services. However, the existing finan-cial resources allocated to development cooperationfall a long way short of what is required to establishglobally sustainable energy systems, especially in thepoorest developing countries.The volume of ODA in2000 totalled just US$54 thousand million. It is esti-mated that 3.1 per cent of bilateral ODA (whichtotalled around US$36 thousand million in 2000), i.e.just US$1.2 thousand million, flowed into the energysector (OECD, 2002). For multilateral developmentfunding, the figure rose to around 8 per cent due tothe regional development banks’ strong commitmentto the energy sector (OECD, 2002). The World BankGroup, as the largest multilateral financing institu-tion, provided just US$2.2 thousand million for envi-ronmentally relevant investment in the energy sectorin 2001 (World Bank, 2002c). These figures graphi-cally illustrate how much extra investment isrequired.

In its reports, the WBGU has repeatedly criticizedthe industrialized countries’ failure, so far, to honourtheir pledge, announced as early as 1992 at UNCED,to boost their financial support for the developingcountries significantly. In 2000, development cooper-ation amounted to just 0.22 per cent of the OECDstates’ GDP, falling well short of the internationallyagreed target of 0.7 per cent. Furthermore, the pro-portion of development cooperation budgets allo-cated to supporting renewables is decreasing. Tosome extent, this decrease can be offset by the rise inprivate investment. Nonetheless, the need for pro-grammatic support for the developing countries inrestructuring their energy supplies towards more


efficient and renewable technologies remains sub-stantial (G8 Renewable Energy Task Force, 2001).

The Council regards the outcomes of the Interna-tional Conference on Financing for Development(Monterrey 2002) and the USA’s and EU’s pledge,on that occasion, to increase their development bud-gets as an initial step. Yet even if these increases doindeed produce an additional US$12 thousand mil-lion for development cooperation in 2006, these com-mitments can only be a start. They would boost theEU’s development budget to just 0.39 per cent ofGDP – still a long way short of the 0.7 per cent target.At Monterrey, Germany committed itself to increas-ing its ODA to 0.33 per cent of GDP by 2006. TheWBGU urges the German federal government toimplement a far more substantial increase in its ODAfunding beyond the 0.33 per cent announced for 2006and recommends that by 2010, at least 0.5 per cent ofGDP be allocated to ODA. Indeed, given the pres-sure of the problems faced, an increase to 1 per centof GDP would be appropriate.

Moreover, the priorities governing the use of thefunds should be changed. In this context, the Councilwelcomes the ‘Sustainable Energy for Development’programme announced by the federal government atthe WSSD, which aims to establish strategic energypartnerships. Over the next five years, a total of €1thousand million will be provided for this purpose,comprising €500 million for renewables and €500million to boost energy efficiency. However, in theWBGU’s view, an annual figure of €100 million topromote the use of renewables is far too low a pro-portion of the total budget of the Federal Ministryfor Economic Co-operation and Development(BMZ), which stands at around €3.8 thousand mil-lion (2001). Here, the Council recommends a signifi-cant increase in the share of funds allocated to sus-tainable energy projects within the ODA commit-ments, where the percentage has been far too lowuntil now, amounting to 6.8 per cent (€282 million) in1999 and 3.3 per cent (€105 million) in 2000. Givinghigher priority to energy in the development cooper-ation context does not necessarily conflict with theMillennium Development Goals; on the contrary,funding sustainable energy policy can form a key ele-ment of a coherent poverty reduction strategy.

Creating the financial scope for energysystem transformation in developingcountries through debt reliefDebt relief for developing countries does much toestablish the preconditions necessary for energy sys-tem transformation. The Council recommends thelaunch of new debt relief initiatives. The HeavilyIndebted Poor Countries Initiative (HIPC Initiative)– the debt relief programme initiated by Germany at

the G7 Summit in Cologne – plays a key role in shap-ing sustainable energy policy as it improves theframework conditions in the poorest developingcountries. The total volume of debt relief for thepoorest developing countries amounts to US$70thousand million.The highly innovative aspect of thisinitiative is that debt relief is coupled to verifiablepoverty reduction programmes, which includeenergy sector projects.The opportunity to reduce thedebts of the poorest developing countries could beexpanded substantially as part of this initiative.

Introducing an emissions-based user chargeon aviationThe advantage of directly funding global energy pol-icy from official development assistance (ODA) isthat the financial resources consist of allocationsfrom the industrialized nations’ budgets and are thussubject to regular parliamentary control. Thisencourages the efficient use of resources. However, adisadvantage is that the funding for ODA is providedvoluntarily, which creates incentives to ‘free-ride’.When budgets are tight, these resources are vulnera-ble to cuts. The Council therefore recommends thatthe funding of global energy policy be spread acrossmany different mechanisms and programmes inorder to ensure that funds flow as continuously aspossible. In this context, innovative funding mecha-nisms must also be scrutinized in terms of theirapplicability.

Due to their ecological steering effects and fund-ing implications, the Council is in favour of levyingcharges for the use of global public goods. It hasexplored this concept in detail in a special report andproposed a number of policy recommendations(WGBU, 2002).The ‘user charge’ concept is based onthe benefit and polluter pays principles. It is there-fore an improvement on many other internationallevy-based solutions. It establishes a direct linkbetween the payment of the charge and the servicebeing funded, thus highlighting the scarcity of envi-ronmental goods. This has a positive impact on theefficient use of environmental resources. Further-more, the ringfenced use of the ensuing fundsenhances political viability: Unlike national environ-mental levies, the Council recommends for interna-tional charge-based approaches that the accruedresources be ringfenced as precisely as possible sincethere is no democratically elected institution at inter-national level which could decide on the use of thefunds based on citizens’ preferences.The user chargeapproach thus offers the opportunity to take initialpragmatic steps towards an international system oflevies to underpin global sustainability policy.

With a view to transforming global energy sys-tems, the Council urges the German federal govern-


ment to lobby for the levying of an emissions-basedcharge on the use of the Earth’s atmosphere by inter-national aviation. Aviation is the fastest-growingsource of greenhouse gases worldwide. Despite theirsubstantial impact on climate, emissions produced byinternational aviation are still not subject to anyreduction commitments. As long as this regulatoryloophole remains, an emissions-based user chargeshould be levied. The revenue accrued will providenew additional funds for climate protection mea-sures, the need for which arises as a result of aviation,among other things. The WBGU recommends thatthe financial resources thus accrued be distributed tothe new climate funds (Special Climate ChangeFund, Adaptation Fund, Least Developed CountriesFund) and the GEF climate window. However, itshould be ensured that these new financial resourcesare not used to offset development budget cuts, butare deployed as additional funding.

Tradeable quotas for renewablesInternational tradable quotas (e.g. flexible nationalor company permits, or Green Energy Certificates)would generate transboundary payment flows whoseextent and payer-recipient structure depend, amongother things, on the level of the individual quotas.This financing aspect should be taken into accountfrom the outset when devising a global system oftradable quotas, for although the system is only likelyto be implemented in the long term, it has an impacton the willingness of the poorer countries in particu-lar to expand their renewables in the short tomedium term. Developing countries are more likelyto commit to minimum renewable energy quotas ifthere is an increasing probability that they willbecome net recipients of payment flows as soon asthe quotas are transferred to a global system of trad-able quotas.

Provision of new funding within theframework of international climateprotection policy The UNFCCC commits the developed countriesincluded in Annex II to providing new and additionalfinancial resources and to transferring technology tothe developing countries so that the latter can makea contribution to climate protection. The developingcountries’ further integration into international cli-mate protection will depend on whether the industri-alized countries uphold this pledge to meet theagreed full incremental costs. This is a key issue forthe Kyoto Protocol’s second commitment period.

At the Sixth Session of the Conference of the Par-ties to the UNFCCC in 2001, the launch of three newfunds was agreed, to be supported by voluntary con-tributions from the industrialized countries. At the

Conference, the EU and other states (Canada, NewZealand, Norway, Switzerland) made a joint politicalstatement pledging to contribute US$410 million peryear to these funds by 2005. The USA, Japan andAustralia did not announce any contributions. Onlythe Adaptation Fund is funded by a regulated financ-ing mechanism consisting of a 2 per cent tax on CDMprojects. The Council welcomes the German federalgovernment’s statement that it will support the newclimate funds. However, it recommends the furtherdevelopment of the funding structures and advocatesmeasures to ensure that the funding commitmentbecomes legally binding in order to avoid any arbi-trary ad hoc financing of these major funds. In thiscontext, the Council also draws attention to its rec-ommendation that a proportion of the revenueobtained from charging for use of the atmosphere byinternational aviation be allocated to these funds.

The climate regime’s project-based mechanismswill also contribute to additional financial and tech-nology transfer which can benefit energy systemtransformation. It is estimated that through theCDM, up to US$20 thousand million in incrementalfunding will be transferred to developing countries.This amounts to more than 50 per cent of total ODAin 2000.A CDM market volume amounting to US$10thousand million could generate US$90–490 thou-sand million in additional investment in more sus-tainable technologies (Öko-Institut and DIW, 2001).Due to their smaller project volumes, renewableenergy and energy efficiency projects have structuraldisadvantages compared with other – usually large-scale – CDM projects which aim to improve theenergy efficiency of large power stations or creategreenhouse gas sinks. In particular, higher transac-tion costs pose a major obstacle to the promotion ofrenewables use through the CDM. To overcome theblockades against the CDM and JI, the project-basedKyoto mechanisms should therefore be promoted bylaunching a fund based on the Dutch ERUPT andCERUPT programmes.

Vision: Establishing a revenue-strongfunding and transfer mechanism Far greater financial potential is offered by the fur-ther development of emissions trading, as envisagedin the Kyoto Protocol (Article 17).The plan until nowhas been to define countries’ maximum permissiblegreenhouse gas emissions during the first commit-ment period from 2008 to 2012. Parties thus have aright to use the global good known as ‘the atmo-sphere’s capacity to absorb greenhouse gases’(Brockmann et al., 1999), while a ceiling is imposedon their greenhouse gas emissions at the same time.If the emissions fall below the maximum permissiblelimits, the surplus can be sold to other parties. Any


such trading is supplemental to domestic actions forthe purpose of meeting quantified emission limita-tion and reduction commitments. However, the useof the flexible Kyoto mechanisms to fulfil reductioncommitments has yet to be precisely defined in quan-titative terms. Emissions trading during the first com-mitment period is limited to the countries listed inAnnex B of the Kyoto Protocol and thus excludesdeveloping and newly industrializing countries(Öko-Institut and DIW, 2001).

In order to achieve the objective, defined in theUNFCCC, of stabilizing greenhouse gases in theatmosphere at a non-hazardous level, the developingcountries must be integrated more fully into theinternational climate protection regime in future andmore ambitious reduction targets must also beachieved. The developing countries must thereforebe incorporated into a global emissions tradingregime during the next commitment period.

The Council has spoken out several times infavour of taking principles of equity into accountwhen initially distributing emissions permits (e.g.WBGU, 2001c). The ethical standard underlyinginternational climate policy should be the right to thesame per capita emissions of greenhouse gases, whichwould also comply with the ‘polluter pays’ principle.This would enable maximum permissible greenhousegas emissions to be defined on the basis of the sameper capita emissions.The system could be designed totake account of the different energy needs dependingon climatic zone. Any inappropriate incentivesencouraging population growth could be avoided bya baseline rule, for example. Initial distribution basedon this modified per capita approach would trigger afinancial transfer amounting to several hundreds ofthousand million euro from the industrialized coun-tries to the developing countries while ensuring com-pliance with the Council’s guard rails. This wouldexceed the current resources allocated to develop-ment cooperation many times over. In principle, thisapproach would establish a carbon-based system forthe payment of global financial compensation. How-ever, there is still a long way to go before this visionis achieved. Nonetheless, measures to develop cli-mate protection policy towards this objective couldstart right away.

The economic impacts on countries with high percapita emissions depend both on the absolute level ofemissions but also on the speed with which such anapproach is implemented. A shift to the per capitaprinciple during the next commitment period wouldimpose too great a strain on the industrialized coun-tries’ economies. For this reason, the currentapproach should initially continue, with reductionquotas being defined on a differentiated basis, e.g.according to past reductions, energy policy starting

conditions, and economic costs. In the long term –over 20–30 years – however, the modified per capitaapproach should increasingly be used as the stan-dard. This progressive implementation would notexceed the capacities of the national economies toadjust to more stringent reduction targets and wouldreduce the economic costs of environmentally effec-tive climate protection to a tolerable level.

As a market economic alternative to a modifiedper capita approach in a global system of tradableemissions rights, the debate is currently focussing ona global CO2 tax. This tax was being discussed as apossible global climate protection instrument evenbefore UNCED in 1992 (Pearce, 1991; Cnossen andVollebergh, 1992), although in the event, a quantita-tive approach was opted for instead, along with thegreater flexibility afforded by the Kyoto mechanisms.The unresolved question of how to fund the ambi-tious development objectives adopted at the UN’sMillennium Summit in 2000 has put the global CO2

tax back on the international agenda.The Council views the concept of an international

CO2 tax as an interesting approach. However, it isimportant to consider that the emissions tradingregime envisaged in the Kyoto Protocol is likely tolead to a substantial financial transfer from north tosouth in the long term once the developing countriesare integrated into the system and permits have beendistributed accordingly. For this reason, an interna-tional CO2 tax should be introduced simply as a tem-porary additional funding instrument until a globalpermits system based on the Kyoto Protocol andenvironmentally effective reduction commitmentshave been established. This would not only reinforcethe Kyoto Protocol’s steering incentives in the shortto medium term, but would also fill existing fundinggaps in international climate protection. If it wereshaped appropriately, an international CO2 taxwould also be in line with the ‘polluter pays’ and, tosome extent, the benefit principle. However, it isimportant to ascertain whether the proposal for aninternational CO2 tax is likely to trigger further polit-ical blockades which would make it impossible toimplement.

Based on this comparison of possible fundingmethodologies, the WBGU draws the following con-clusion. In accordance with the precautionary princi-ple, it recommends to the German federal govern-ment that the quantitative approach established inthe Kyoto Protocol continue to be supported in com-bination with the flexible mechanisms. The progres-sive development of the Kyoto method towards amodified per capita approach could create a fundingand transfer mechanism which would amount to thepayment of global financial compensation and beunique in international political history.


5.3.3.3Use of resources for energy systemtransformation by international financialinstitutions

Strengthening the Global EnvironmentFacilityWith the establishment of GEF, additional fundswere made available for global environmental pro-tection, while the adoption of double weightedmajority voting created a mechanism which guaran-tees the industrialized and developing countries anequal amount of influence over the use of resources.Over the last ten years, GEF has established itself asan important international funding mechanism forglobal environmental protection. At the WSSD inJohannesburg, the third replenishment of GEF fundswas agreed, amounting to US$3 thousand million tocover GEF’s operations during the period2003–2006. GEF’s remit was also enhanced with theexpansion of project funding to cover ‘land degrada-tion’ and ‘persistent organic pollutants’.

These positive developments indicate that it mayalso be appropriate to utilize GEF as a financinginstitution for global energy system transformation.In this context, however, the criticisms of GEF’swork and the new challenges arising in the frame-work of global sustainability policy must be consid-ered. The ‘incremental costs’ principle is a majorbureaucratic obstacle to the funding of many projectswhose implementation would be beneficial in termsof sustainability. The process of defining incrementalcosts is also extremely controversial (Horta et al.,2002). Projects which encourage the transfer of cheaptechnologies, build on the indigenous knowledge ofthe local population or support capacity-building inthe developing countries through investment in pub-lic education are rarely covered by the ‘incrementalcosts’ concept and are generally ineligible for GEFfunding. Global sustainability policy should build to agreater extent on the catalysing effects of local andregional approaches and pursue integrated concepts.Yet GEF is accused of failing to take adequateaccount of local conditions and, therefore, of notexploiting appropriate catalysing effects (Keohane,1996).

Despite these criticisms, the Council recommendsthe expansion of GEF as a financing institution forglobal energy system transformation and as a catalystfor a more comprehensive financial framework. Thealternative would be to establish a completely newfinancing institution, e.g. in the form of a Global Sus-tainable Energy Facility. However, this would requirea lengthy negotiation process at international levelwhich would currently have little prospect of success.In order to establish an effective international mech-

anism to fund the transformation of global energysystems as quickly as possible, GEF’s structuresshould therefore be utilized. As part of this process,however, its working methods should be geared morestrongly towards promoting global sustainableenergy systems. The WBGU therefore recommendsthat the German federal government work pro-actively for the following reforms in GEF’s organiza-tion, working methods and status in global sustain-ability policy:• Establishing a new window to promote globally

sustainable energy systems: Through the climatewindow, projects are already being funded whichlower the barriers to promoting energy efficiencyand renewables and reduce the costs of measuresto cut greenhouse gas emissions in the long term.Furthermore, additional funds for adaptation toclimate change are being made available. TheWBGU recommends that by 2005, available fund-ing for efficiency technologies and renewables bepooled in a new GEF window so that a new strate-gic direction can be adopted in GEF’s funding pol-icy in this area.

• Modifying the criteria governing the granting offunding under the new ‘window to promote glob-ally sustainable energy systems’: The WBGU viewsthe incremental costs principle as a key concept inthe funding of global environmental protection. Inorder to achieve a global energy system transfor-mation in line with the WBGU’s transformationstrategy, however, the funding criteria must besimplified so that development policy aspects canbe taken into account more fully in resource uti-lization, e.g. by promoting rural developmentthrough renewable energies. This modification ofthe funding criteria should be based on a WorldEnergy Charter. As many sustainable energy pro-jects have a low volume of funding, the positiveexperiences with the GEF’s successful SmallGrant Programme (SGP) should be capitalizedupon. This modification would establish a newstrategic framework for the promotion of effi-ciency technologies and renewables which wouldensure that projects are not just funded on an adhoc basis without a broader programmatic context(UNDP et al., 2000).

• Expanding cooperation with regional institutions,the private sector and local communities: TheWBGU welcomes the substantial increase in thenumber of implementing agencies. Alongside theWorld Bank, UNDP and UNEP, the regionaldevelopment banks, UNIDO, the FAO, and theIFAD (International Fund for Agricultural Devel-opment) can now submit projects to GEF (Kutter,2002). The WBGU also recommends the furtherexpansion of cooperation with the private sector


and the greater involvement of local populations.This substantially increases projects’ prospects ofsuccess and triggers the necessary catalysingeffects, such as the development of markets for‘green’ products and the mobilization of addi-tional private capital.

• Further boosting GEF’s financial resources andenhancing its status: The WBGU welcomes theincrease in GEF’s resources for the third phase.However, it points out that GEF’s mandate hasalso been expanded at the same time. In light ofthe substantial financial requirement to fundglobal energy system transformation, GEF’s bud-get should therefore be further increased. At thesame time, its status should be enhanced in orderto prevent its efforts from being undermined byconflicting effects, particularly the programmesbeing implemented by other multilateral organi-zations.

Integrating the World Bank and IMF intoenergy system transformation towardssustainability The World Bank, which not only functions as aprovider of loans and credit but also gathers infor-mation about the solvency of developing countriesand, through its sector investment programmes,directly influences the developing countries’ nationalpolicies, defined new energy policy objectives in 2001(Section 2.7.3). They include supporting energy sec-tor reform, promoting competition, improving envi-ronmental protection in energy generation, and pro-moting solutions for the delivery of sustainableenergy services to the poor. The World Bank is alsocoordinating the planned ‘Global Village EnergyPartnership’, which is intended to guarantee betteraccess to energy services to the poor. The Germanfederal government has already announced its par-ticipation in this initiative.

However, the WBGU considers that the WorldBank’s activities will only move in the right directionif it abandons its commitment to the least-cost prin-ciple, i.e. to supporting profitable forms of energy,mainly on a micro-economic basis, without ensuringthe internalization of external costs. It must also beensured that long-term framework conditions areconsidered when implementing new technologieswhich are not yet market-viable. The World Bankshould also see itself as a funding bank for sustain-able energies and help to ensure that more effectivefinancial incentives are created to increase the shareof renewables in the developing countries. In general,the World Bank and the regional development banksshould play a more active role in transforming energysystems worldwide than is currently the case. So far,the shift from the conceptual to the operational level

has not been adequately implemented. The WBGUtherefore recommends the practical implementationof the World Bank’s new funding strategies. The fed-eral government should work actively to achieve thisgoal through its membership of the World Bank’sBoard of Governors.

Utilizing the European Investment Bank asa funding instrument The Cotonou Agreement was concluded between theEU and 77 ACP states in June 2000 and regulates, fora 20 year-period, the political, development and traderelations between the two groups of countries. Thepartnership is centred on the objective of reducingand eventually eradicating poverty in line with theobjectives of sustainable development and the grad-ual integration of the ACP countries into the worldeconomy (Article 1, paragraph 2). From the time ofthe Cotonou Agreement’s entry into force, an Invest-ment Facility is envisaged which consists of risk capi-tal totalling up to €2.2 thousand million from theEuropean Development Fund (EDF) and an addi-tional €1.7 thousand million in loans from the ownresources of the European Investment Bank (EIB)over a five-year period (2000–2005).

Within the framework of the Financial Protocolannexed to Lomé IV for the period 1995–2000, theEIB already administered risk capital amounting to€1.3 thousand million from the European Develop-ment Fund’s resources, with a further €1.7 thousandmillion in loans from the EIB’s own resources.Investment priorities for the EIB are infrastructure,especially energy and transport, and industrial devel-opment. For the energy sector, the Council recom-mends giving priority to promoting renewables infuture. Until now, the EIB has focussed mainly onpromoting fossil energy carriers.

Strengthening the regional developmentbanksIn the energy industry, the regional developmentbanks, which mainly support public-sector projects,have generally focussed on establishing and expand-ing the electricity grids and reforming the energy sec-tor.When granting credit and loans, the banks pursueregion-specific approaches which take account of thehighly diverse problems faced, and are thereforeimportant potential partners in overcoming energypoverty in Africa, Latin America, the Caribbean andAsia. However, the prerequisite is that the develop-ment banks’ management capacities are progres-sively strengthened and developed.

The WBGU recommends that through its share-holdings in these banks and within the EU frame-work, Germany work to promote the funding of thedeveloping countries’ energy supplies via the


regional development funds, which are administeredby the regional development banks. In general, thesecountries do not have the resources to provide asecure energy supply to their poor populations.Moreover, many developing countries, faced withhigh levels of foreign debt, have very limited scope tomanage the expected increases in the price of fossilfuels or to fund improvements in the efficiency oftheir energy supply. Due to their extremely high debtburden, too, few of them can afford to purchase plantand technologies in the field of renewables. Withoutextensive debt rescheduling and targeted support forthe developing countries and help from the regionaldevelopment funds, energy system transformation ishighly unlikely to occur in these countries. In addi-tion, Germany could lobby for the more intensiverefocusing of the regional development banks’ fund-ing policies towards environmental protection. Ger-many has the opportunity to bring influence to bearsince it holds shares in the regional developmentbanks’ capital stock. These amount to around 4.1 percent in the African Development Bank (and, indeed,to 10 per cent in the group of non-regional mem-bers), around 5.8 per cent in the Caribbean Develop-ment Bank, 1.9 per cent in the Inter-AmericanDevelopment Bank, and around 4.5 per cent in theAsian Development Bank.

Integrating energy supply into the PRSPprocessThe IMF and World Bank responded promptly to thedecision, adopted at the G7 Summit in Cologne in1999, to couple expedited debt relief with povertyreduction programmes (VENRO, 2001). At the endof 1999, they submitted preliminary papers outliningtheir poverty reduction policies for the poorest coun-tries. Since then, around 70 countries, especiallyheavily indebted poor developing countries, havedevised their own national poverty reduction strate-gies, known as ‘Poverty Reduction Strategy Papers’(PRSP), which ought to be prepared by governmentsthrough a participatory process involving civil soci-ety and development partners. The BMZ supportscountries engaging in this process. The PRSPs arealso intended to act as steering mechanisms for themid-term development of these countries as well as abasis for attracting international loans. A PRSP willin future be a prerequisite for debt relief through theHIPC Initiative. A more significant development, inthe long term, is that the IDA (International Devel-opment Association) countries will only obtain newconcessional lending from multilateral and bilateraldonors on the basis of a PRSP. Currently, energy sup-ply is not covered by the PRSP process. The WBGUrecommends that energy supply feature prominently

in these strategies and that adequate participation bycivil society actors be guaranteed.

5.3.4Directing international climate protection policytowards energy system transformation

A key step in the further development of the KyotoProtocol is to flesh out the objective contained inArticle 2 of the UNFCCC, namely to ‘prevent dan-gerous … interference with the climate system’. Thismust be defined more precisely in order to establishmore specific targets for the necessary emissionsreductions.This should take place by 2005 so that theresults can flow into the negotiations, scheduled tobegin in 2005, on reduction targets for the secondcommitment period.

The exemplary path (Section 4.4) is based on ascenario in which the industrialized countries imple-ment the Kyoto Protocol, in the form negotiated in1997, by 2010. In the technical formulation of theProtocol, the industrialized countries were permittedto offset substantial carbon sinks against their reduc-tion commitments. Furthermore, no quantitativereduction commitments exist for international mar-itime and air transport. Overall, instead of the origi-nal 5 per cent reduction compared with the base yearof 1990, a slight increase in emissions until 2010 istherefore anticipated for the industrialized countries.There is still no effective protection of carbon stocksin the biosphere.

The guard rail analysis in Section 4.3 shows thatthe first decades of the 21st century are particularlycritical as regards compliance with tolerable rates ofwarming. As an adequate reduction in the industrial-ized countries’ emissions from 2012 (around 45 per-cent from 2010 to 2020, based on WGBU, 1997) isviewed as unattainable, climate guard rails can onlybe obeyed if the developing countries curb theirrapidly increasing emissions paths earlier than origi-nally envisaged (WBGU, 1997b). Emissions controlrequirements should therefore come into force fordeveloping countries by 2020, while the newly indus-trializing countries should adopt initial quantifiabletargets even earlier than this.

However, this will be extremely difficult to imple-ment because the industrialized countries are prov-ing very sluggish in fulfilling their reduction commit-ments and the UNFCCC contains the principle thatthe industrialized countries must take the lead inreducing emissions. It can therefore be assumed thatthe developing countries will initially resist, justifi-ably, any form of quantified reduction targets.

The Council therefore recommends that the Ger-man federal government work pro-actively to ensure


that the EU launches a ‘developing countries initia-tive’ with the following features:• Objective: Closer cooperation is required to

restore the confidence of the developing countries(historic alliance between the EU and the devel-oping countries at COP1 in Berlin in 1995) andprepare the ground for future negotiations onemissions reductions. The developing countrieswill only be prepared to enter into commitmentsonce they recognize that the Kyoto Protocol ben-efits them too.

• Regional partnerships: Individual EU MemberStates are seeking to establish contacts with spe-cific developing countries or groups of countrieswith the aim of engaging in coordinated longer-term initiatives, e.g. through working groups whichjointly set climate protection and other develop-ment targets. Technology transfer in particularshould be promoted through joint projects (e.g.through the CDM). In principle, initiatives forsuch partnerships should also be launched bydeveloping countries and lead to mutual benefitsin the long term.

• Best practice: Germany and other Annex I coun-tries should set an example to other countries intheir fulfilment of the current provisions of theKyoto Protocol. This applies especially to the‘demonstrable progress’ achieved in implement-ing the Kyoto reduction commitments by 2005, theregistration, development and management ofCDM projects, the provision of resources for thethree newly launched funds for developing coun-tries, preventive measures to mitigate the effectsof climate change, and capacity-building and tech-nology transfer.This would enhance confidence inthe process and create a basis for the developingcountries’ involvement.

• Feasibility: In order to persuade the developingcountries, the short-, medium- and long-termemissions reduction capacities of the major devel-oping countries and regions must first be ascer-tained. This is the only way to ensure that thedeveloping countries do not reject all negotiationsaimed at curbing emissions increases.

• Closing gaps: Greenhouse gas emissions producedby air and maritime transport are currently notsubject to any quantitative reduction commit-ments. The WBGU therefore recommends thatthese gaps in international climate protection beclosed, either by integrating these emissions intothe Kyoto Protocol or by levying user charges(WBGU, 2002; Section 5.3.3.2).

In this context, the Council welcomes the EU’s ini-tiative, at the WSSD, to establish a coalition of like-minded states for the voluntary fulfilment of quan-tifiable targets to increase the use of renewables,

which many developing countries have also joined.The task now is to breathe life into this initiative.

5.3.5Coordinating international economic and tradepolicy with sustainable energy policy objectives

The process of turning energy systems towards sus-tainability must be flanked by measures to establishappropriate economic, legal and political frameworkconditions. From a global economic perspective, thefirst task is to create conditions which encouragedomestic and foreign private investment in theenergy sector and the international exchange of sus-tainable technologies and knowledge. Secondly, itmust be ensured that international economic lawdoes not obstruct the energy strategy but supports itspractical implementation.

5.3.5.1Conclusion of a Multilateral Energy SubsidizationAgreement

The WBGU calls for the start of negotiations on aMultilateral Energy Subsidization Agreement(MESA) with the aim of progressively removing sub-sidies on fossil and nuclear energy carriers andadopting rules on the payment of subsidies forrenewables and more efficient energy technologies.Experience at European and international level hasshown that the removal of subsidies worldwide canbe initiated most effectively through internationalagreements, because very few countries will be pre-pared to adopt a ‘go-it-alone’ approach to cuttingsubsidies due to their concerns about the ensuing lossof competitiveness on the international markets,especially for energy-intensive companies and theenergy supply industry.

The international community should start negoti-ations as soon as possible on a MESA which shouldenter into force by 2008. The agreement should aimto achieve the following objectives:• The removal of all subsidies on fossil and nuclear

energy in industrialized and transition countriesby 2015 and worldwide by 2030, and

• the removal of subsidies on fossil fuel extraction(coal mining, oil drilling, etc.) in developing coun-tries by 2020.

In this context, the – now obsolete – ‘traffic light’approach adopted for the WTO’s Agreement on Sub-sidies and Countervailing Measures could be revivedand modified. The key features of a MESA could beas follows: A blanket ban would apply to all obvi-ously non-sustainable subsidies which are harmful to


the environment, such as general energy price subsi-dies, which would be classified as ‘red light’ subsidies.Subsidies paid to producers and suppliers of fossiland nuclear energy should be classified as ‘red light’subsidies except when they are targeted towards pro-moting higher environmental standards (energy effi-ciency, filters, ‘greener’ methods of oil, coal and gasextraction) or improving the safety of existingnuclear power plants.Timetables should be drawn upfor the progressive dismantling, or at least therestructuring according to sustainability criteria, ofexisting ‘red light’ subsidies, while the introduction ofnew ‘red light’ subsidies would be prohibited. Inaddition, a list of ‘green light’ subsidies, which couldnot be the subject of legal challenges, should bedrawn up in line with a World Energy Charter.These‘green light’ subsidies could include, for example:• Subsidies or tax credits for renewable energies to

compensate for any remaining non-internalizedcosts of fossil/nuclear energies (including pay-ments for feeding into the grid);

• Subsidies for research into renewables and effi-ciency improvements up to a specific proportionof total research expenditure;

• Subsidies for supplying electricity to poor house-holds/rural regions in developing countries;

• Subsidies for the replacement of traditional bio-mass by sustainable fuels for heating and cooking;

• Subsidies for energy-efficient buildings and theuse of solar technologies in construction;

• Social transfers to poor households (state supportfor heating and electricity);

• Cross-subsidies for electricity prices for house-holds to the extent necessary to ensure compli-ance with the ‘affordable individual minimumrequirement’ guard rail.

Energy subsidies which are not classified as ‘red light’or ‘green light’ subsidies would be open to legal chal-lenges on principle. These ‘amber light’ subsidiescould be called into question by other parties to theAgreement, either on account of their incompatibil-ity with the objectives of the World Energy Charteror because they violate principles already enshrinedin the WTO (GATT and the Agreement on Subsidiesand Countervailing Measures).

In the developing countries, the expansion of fos-sil energy use is unavoidable, also in the longer term,in the interests of social and economic progress. Inorder to take account of this specific starting posi-tion, one option is to grant them preferential treat-ment.This would mean, for example, that for a speci-fied period, less stringent criteria would be applied tosubsidies on fossil energies in these countries thanproposed above in the context of ‘red light’ subsidies.

Institutionalizing the MESAIn institutional terms, the MESA could be estab-lished as a separate agreement or be incorporatedinto an existing institution. In the Council’s view, therecommended option is the MESA’s institutionaliza-tion within the framework of an International Sus-tainable Energy Agency (ISEA) (Section 5.3.2.3).However, to prevent any unnecessary delays in com-mencing the removal of subsidies worldwide, theCouncil is also considering the various options avail-able within the existing institutional architecture. Forexample, the MESA could be integrated into aninternational energy, trade or environmental agency,such as the Energy Charter,WTO or UNEP. One fac-tor currently militating against the MESA’s institu-tionalization within the Energy Charter frameworkis the low number of states which are party to thisCharter – which makes it little more than a regionalagreement – and its lack of significance.

By contrast, the clear advantage of integrating theMESA into the WTO rules would be that it wouldthus cover virtually the entire international commu-nity. Furthermore, the WTO is a fairly effective orga-nization which has acquired sufficient experience ofsubsidy agreements and is equipped with the neces-sary mechanisms, such as dispute settlement proce-dures. The WTO Secretariat regards the energy sec-tor’s full integration into GATT and GATS, andhence the application of the GATT Agreement onSubsidies and Countervailing Measures, as a win-winstrategy for economic efficiency and environmentalprotection. However, the WBGU takes the view thatin the short term at least, not all energy market seg-ments should be fully subordinate to the WTO rules.Furthermore, the WTO Agreement on Subsidies andCountervailing Measures generally applies differentcriteria from those required to achieve the MESA’sobjectives. For this reason, integrating the energy sec-tor into the WTO Agreement on Subsidies andCountervailing Measures is likely to produce littlemore than the partial dismantling of environmentallyharmful subsidies, while the possibility that environ-mentally beneficial subsidies would be subject tolegal challenges cannot be ruled out. Finally, the vir-tual universality of the WTO Agreement on Subsi-dies and Countervailing Measures is also an obstacleto a MESA’s political viability. A more promisingprospect would probably be to start work on an inter-national subsidy agreement with a smaller group ofcountries, which would offer scope for the individualcountries to make a variety of concessions. Member-ship could then be expanded from there. These fac-tors, and the energy sector’s specific characteristics,suggest that an Energy Subsidy Protocol within theWTO framework, similar to the protocols existing for


individual services under the GATS regime, is thepreferable option.

Alternatively, the OECD states could press aheadwith an agreement, especially since the environmentministers of the OECD countries have alreadyagreed to dismantle environmentally harmful subsi-dies. A further argument in favour of this option isthe expertise acquired within the IEA. Accessionshould then also be opened to non-OECD states sothat in the long term, the MESA can be transformedinto a global convention.

Incorporating the MESA into UNEP or integrat-ing it into a multilateral environmental agreement,such as the climate protection regime, is undoubtedlymore likely to do justice to its overriding environ-mental policy focus, but also its development policyobjectives, than incorporating it into the WTO, whosecapacities must not be overtaxed with non-trade pol-icy issues. As yet, however, UNEP has not acquiredthe necessary capacities and enforcement mecha-nisms. The climate protection regime is a very inter-esting alternative, although it has still to prove itsenforceability and functionality in the coming years.

Based on these considerations, the WBGU recom-mends that the MESA concept be addressed both atthe international climate protection negotiationsand, in parallel, at the OECD. The long-term aimwould be to integrate MESA into the InternationalSustainability Energy Agency (ISEA) recommendedby the Council. More generally, however, there is stilla substantial need for debate and research into thespecific form to be adopted by a MESA as well as itsinstitutional framework (Section 6.2).

5.3.5.2Transformation measures within the GATT/WTOframework

At present, the energy sector is only partially coveredby the World Trade Organization (WTO) rules. Themore fully energy products are integrated intoGATT, the more relevant the issue of compatibilitybetween WTO agreements and energy system trans-formation measures will become. This applies even iffar-reaching concessions on liberalization were to beachieved for the electricity and gas sector or energy-related services at the GATS negotiations. At pre-sent, there are few points of friction between energypolicy transformation measures and the world traderegime.

For example, the subsidies on ‘green’ energy tech-nologies, which the Council views as a useful energypolicy tool, could conflict in principle with the WTOAgreement on Subsidies and Countervailing Mea-sures. This might occur, for example, if direct subsi-

dies on energy technologies result in real competitivedisadvantages for related sectors in other countries.Although GATT explicitly permits measures neces-sary to protect the environment (GATT, ArticleXXb), such measures must distort trade as little aspossible. Sector subsidies often do not satisfy this cri-terion. Nonetheless, the Council does not considerthat this so far hypothetical dispute creates anyurgent need for a reform of GATT. If such a disputedid occur and could not be averted in advance by aMESA (Section 5.3.5.1) or other energy agreementtaking precedence over GATT/WTO, a decision canstill be taken on whether possible countervailingduties by other countries are accepted by the subsi-dizing country or whether an exemption is soughtunder the Agreement on Subsidies and Countervail-ing Measures.

Further conflict potential between energy policymeasures and GATT/WTO could arise from themain principles underlying the current world traderegime: The principle of national treatment – i.e. theequal treatment of domestic and foreign products –and the most-favoured-nation clause. In their practi-cal implementation, the question of which specificgoods must be treated equally, and hence the issue of‘like domestic products’ (GATT, Article III 2), are ofkey importance. Unequal treatment of ‘like’imported goods due to their indirect energy contextor the method by which the energy required for theirproduction was supplied is unlikely to be compatiblewith the world trade regime’s core principles at thepresent time. There are fears, therefore, that nationalmeasures to promote sustainable energy systems willlead to competitive disadvantages for numerousdomestic companies in the home and world markets.Firstly, this increases the costs of adjustment anddecreases the acceptance of transformation efforts;secondly, the global environmental effectiveness ofpromoting sustainable energies will be reduced asother countries will increasingly specialize in theproducts which have become more expensive on thedomestic markets. Many countries are thereforeplanning to adopt energy tax exemptions for energy-intensive industries due to fears about competitivedisadvantages. In general terms, this is compatiblewith GATT. However, the Council specifically pointsout that tax relief for energy-intensive sectors is cer-tainly not an instrument which is designed to pro-mote the establishment of sustainable energy sys-tems.

An alternative is to introduce border adjustmenttaxes in order to compensate, to some extent, for thecost disadvantages faced by domestic companiesresulting from such tax policy measures. The WTOrules allow all the product taxes applying in a givencountry to be imposed on imported goods, while


goods for export can be exempted. In the interests ofenvironmental efficiency and practicability, however,it is often necessary to impose a tax not on the endproduct but directly where the pollution occurs. Thequestion which thus arises is whether border adjust-ment measures comply with the WTO rules even ifthe domestic final product is only indirectly subjectto national environmental charges.These can includeemissions charges, e.g. a CO2 tax, or input taxes, suchas a fuel tax. The WTO’s Committee on Trade andEnvironment has already debated the issue of borderadjustment taxes as compensation for national envi-ronmental levies, but has not reached any far-reach-ing conclusions as yet. In general, the GATT compat-ibility of compensating for emissions charges by tax-ing imports is a highly contentious issue. On exports,the majority view is that it is incompatible withGATT (Greiner et al., 2001). Border taxes to com-pensate for the imposition of national input taxes, onthe other hand, are deemed to be compatible withGATT (Jenzen, 1998). Various decisions by theWTO’s dispute settlement body point in this direc-tion. The Council recommends to the German fed-eral government that it clarify, within the WTO, theissue of the admissibility of border adjustment mea-sures for CO2, fuel and other environmental taxesand press for the development of pragmatic and –above all – transparent solutions to avoid unequaltreatment of various forms of taxes and environmen-tal protection instruments.

There is occasionally a debate about whether theKyoto regime of tradable emissions rights is compat-ible with the WTO principles (Box 5.3-2); similarly,the issue of compatibility between the WTO rulesand the trade in Green Energy Certificates, which isrecommended by the Council, could also be dis-cussed. In the Council’s view, however, these certifi-cates for green electricity or heating, which can beused to cover national renewable energy quotas, donot constitute a product or service as defined byGATT or GATS. If a global system of tradable GreenEnergy Certificates were to be implemented, theCouncil recommends that a separate trading regimebe established here, as with the emissions trading setup under the Kyoto Protocol.

5.3.5.3Preferential agreements in the energy sector

Through preferential agreements, it is possible todiverge from the most-favoured-nation principlewithin the WTO.The most important types of prefer-ential agreements are customs unions with commonforeign trade policies (e.g. the EU), free trade agree-ments (e.g. NAFTA), and trade preference systems

with particularly low tariffs or other trade benefitsfor imports from developing countries.

While national preference systems have, in prac-tice, decreased in significance due to the general cutin the tariff level, the number and importance ofregional trade associations are still increasing. In thiscontext, in order to be recognized by the WTO, cus-toms unions and free trade areas must fulfil three cri-teria relating to both products and services: Customsunions and free trade agreements must cover most ofthe trade in goods and services among their mem-bers, and individual sectors may not be excluded. Interms of the agreement’s scope of application, all tar-iffs and quantitative restrictions must be progres-sively abolished within a 10-year period, and internalliberalization within the framework of a customsunion or free trade area must not result in new andadditional obstacles to market access for productsfrom other WTO member countries (Cottier andEvtimov, 2000).

In the energy sector, preferential agreements areof particular interest as they allow liberalization ofboth goods and services which goes further than theagreements reached within the WTO framework.This offers the opportunity, especially for developingcountries, to open up their energy sectors, initiallywithin existing regional trade areas, without havingto face direct competition with producers and serviceproviders from industrialized countries. The Councilrecommends that the German federal governmentsupport such regionally restricted liberalizationefforts among developing countries through appro-priate capacity-building.

5.3.5.4Technology transfer and the TRIPS Agreement

The international diffusion of ‘green’ technologies isa key element in turning energy systems towards sus-tainability. This includes the transfer of technologyand knowledge from north to south. This transfer isinfluenced by the Agreement on Trade-RelatedAspects of Intellectual Property Rights (TRIPS).TRIPS commits all WTO members to relatively highminimum standards of protection for intellectualproperty rights. While the industrialized countrieswere required to implement these standards by 1996,a general transitional period of five years applied tothe developing countries until 2000 (with an addi-tional five years, i.e. to 2005, for product patents), andfor the Least Developed countries until 2010 andbeyond. For the industrialized countries, the TRIPScommitments entail relatively minor changes to theirlaws applicable to intangible property, but manydeveloping countries are required to undertake


major reforms.Among other things,TRIPS regulatesthe protection of technical inventions (patents) andthus has an impact on international technology trans-fer.

On the one hand, the implementation of TRIPShas impeded the transfer of patented technologies tothe developing countries because the costs increaseas a result of the licence fees; licensing negotiationsalso have to be conducted, for which many compa-nies in developing countries lack both the resourcesand the expertise.There is also a risk that technologytransfer will not take place if patent owners pursue avery restrictive licensing policy (Enquete Commis-sion, 2002).

On the other hand, empirical studies show thatcountries with a high level of patent protection gen-erally attract more foreign investors than other coun-

tries (Maskus, 2000), so that the introduction of West-ern patent standards is likely to encourage the trans-fer of environmental technologies, among otherthings. Furthermore, effective patent protection indeveloping countries encourages companies in bothnorth and south to undertake research and develop-ment into energy technologies which are tailoredspecifically to the needs of these developing coun-tries. The prerequisite, however, is that there is ademand – backed by real purchasing power – for theinnovations, which are now patentable worldwide.Yet this is rarely the case, especially in the poorestdeveloping countries.

Overall, then, the impact of TRIPS on the transferof ‘green’ energy technologies is ambivalent. For thisreason, the Council recommends a twin-pronged pol-icy to enhance the positive effects and reduce the

Box 5.3-2

Compatibility of the Kyoto Protocol with WTOrules

The compatibility of the Kyoto Protocol’s flexible mecha-nisms with basic commitments arising from the WTO rulesis increasingly viewed as problematical. The WBGU con-siders, however, that through the appropriate developmentof the instruments established under the Kyoto Protocoland the evolution and interpretation of the WTO rules, theKyoto Protocol approach and the WTO’s core principlescan both be safeguarded.

First of all, it should be noted that in the Council’s view,the various tradable and transferable emissions reductionunits are not products or services as defined by GATT orGATS. Emissions reduction units only become effectivethrough legislative measures or via the institutions estab-lished under the Kyoto Protocol, and are therefore similarto a legal authorization which, on principle, is not coveredby GATT or GATS. The situation is rather different, how-ever, with regard to services supplied through emissionstrading or as part of the certification process.These are gen-erally covered by GATS. However, even if a WTO membercommits itself to according equal treatment to suppliers oflike services from another WTO member (Article II,GATS) and publishes all the relevant measures of generalapplication in advance of their entry into force (Article III,GATS), the commitments will not be affected by the KyotoProtocol.

Another point of conflict concerns the restrictions aris-ing from the WTO Agreement on Subsidies and Counter-vailing Measures. Whereas GATS currently contains nospecific subsidy restrictions, all financial transfers and taxexemptions fall within the scope of the Agreement on Sub-sidies and Countervailing Measures. Subsidies are there-fore prohibited on principle if they are only available to onespecific sector or company (‘specificity’) and if they causesevere adverse effects to the interests of other members(Article 5 of the Agreement on Subsidies and Countervail-ing Measures).

The issue which therefore arises in the context of emis-sions trading is whether all the various possible procedures

for the initial distribution of emissions rights (free distribu-tion, auction) are compatible with the Agreement on Sub-sidies and Countervailing Measures. The decision on theinitial allocation has strong regulatory characteristics and istherefore more comparable to the setting of emissions stan-dards or the imposition of a tax than the granting of subsi-dies. In the Council’s view, there is therefore no incompati-bility with the Agreement on Subsidies and CountervailingMeasures.

A more difficult question to answer is whether govern-ment funding for Clean Development Mechanism (CDM)projects can be regarded as subsidies which are not com-patible with GATT in individual cases. The first point tonote in this context is that the financial transfers fromindustrialized countries or international institutions todevelop these projects in developing countries must beregarded on principle as development assistance and not asa subsidy as defined by GATT or a future GATS subsidyagreement. However, problems can arise if the countryhosting the CDM projects supports their developmentfinancially in order to create additional incentives for‘green’ foreign investment.Although the Council considersthat the GATS Agreement does not apply to emissionsreductions within the framework of CDM projects, theproducts and services produced as part of CDM projectswould profit from such subsidies and could thus result in aviolation of the Agreement on Subsidies and Countervail-ing Measures. Compatibility with WTO rules thus depends,first and foremost, on the way in which the CDM regula-tions are developed at national level, and can be safe-guarded by ensuring that such subsidies are not only avail-able to specific sectors.Overall, it is noted that few points of friction exist betweenthe Kyoto Protocol and the WTO rules. To avoid conflicts,further efforts should be made, when developing the Kyotomechanisms – especially at national level – to ensure thatthe necessary transparency continues to be guaranteed,that major decisions are taken on the basis of consensuswherever possible, and that potential conflicts can beaddressed through a dispute settlement procedure withinthe Kyoto Protocol framework.

Sources: Werksmann, 2001; Petsonk, 1999; Wiser, 1999


negative impacts. It includes providing training forinstitutions and companies in patent and licensingissues through the development cooperation frame-work. The WBGU also sees a need for research todetermine which international mechanisms are suit-able to increase the incentive potential of patent pro-tection for innovations which are especially relevantto developing countries while contributing to innova-tion diffusion at the same time. This might include,for example, subsidizing the acquisition of patentsand licences for ‘green’ energy technologies by com-panies in developing countries; in this context, theinnovators must be made aware, in advance and atleast in outline, of the criteria and scope of the subsi-dies. The proposal for an international patent fund(Enquete Commission, 2002) aims to achieve similargoals; this fund would acquire licences itself in orderto grant licences, at subsidized prices and accordingto agreed criteria, to companies or institutions indeveloping countries. Such measures would accordwith the developed countries’ pledge to provideincentives to enterprises and institutions for the pur-pose of promoting and encouraging technologytransfer to Least Developed Countries (TRIPS,Arti-cle 66(2)).

On the other hand, measures which interfere withthe rights of the patent owner may conflict with theprovisions of TRIPS. This applies especially to com-pulsory licences and the withdrawal of patents.TRIPS Article 27(2) grants Members the opportu-nity to exclude from patentability “inventions, theprevention within their territory of the commercialexploitation of which is necessary ... to avoid seriousprejudice to the environment ...”. Furthermore, com-pulsory licences are permissible if the patent ownerrefuses to authorize licences or applies anti-competi-tive licensing practices (TRIPS, Articles 31 and 40).Finally, WTO Members may adopt measures ‘neces-sary to protect public health and nutrition, and topromote the public interest in sectors of vital impor-tance to their socio-economic and technologicaldevelopment, provided that such measures are con-sistent with the provisions of this Agreement’(TRIPS, Article 8(1)). The flexibility of these exemp-tions is disputed, so that dispute settlement proce-dures will be required before the scope for restric-tions on patent protection which are motivated byenvironmental policy considerations can be properlyassessed.

The Council does not consider that the aim oftransforming energy systems worldwide creates anyneed for a reform of TRIPS at the present time. How-ever, it points out that anti-competitive practices bypatent owners may constitute a barrier to the diffu-sion of sustainable (energy) technologies, and thatArticles 31 and 40 of the TRIPS Agreement appear

inadequate to respond to this problem. The Councilrecommends, among other things, that the Germanfederal government continue to work pro-activelyfor the internationalization and, ultimately, the glob-alization of the core principles of competition law.

5.3.5.5Liberalizing the world energy products market?

Mobile primary energy carriers (especiallyoil and coal)While efficiency and therefore welfare gains arearguments in favour of the full integration of oil andcoal into the WTO rules, specific interests of theexporting and importing countries conflict with sucha move. The major oil exporters currently controlprices by imposing restrictions on export quantities,among other things. This is only partially compatiblewith GATT. Importing countries naturally have aninterest in the lower oil prices which would resultfrom world market liberalization. On the other hand,they are pursuing policies to promote domestic fossilenergies, to the detriment of imports, in order toreduce their import dependency.

Grid-based energy (especially gas andelectricity)The worldwide liberalization of the internationaltrade in grid-based energies is slowed down, first andforemost, by problems with technical implementa-tion. Firstly, there is no global main grid for electric-ity or gas, but only regional networks. Secondly, trans-port losses are an impediment to dynamic interna-tional trade, although these losses are likely todecrease in the foreseeable future with the introduc-tion of more efficient technologies, such as high-volt-age direct current power transmission or even hydro-gen pipelines (Section 3.4). However, it is not onlytransport but also transit which is causing difficulties.Electricity transmission lines and especially gaspipelines are owned by private or national monopo-lies which charge monopoly prices for transport andgive priority to their own or national interests, andthe interests of importers and exporters, over freetrade principles. Not surprisingly, the liberalization ofthe energy trade within the framework of the EnergyCharter Treaty has failed until now, mainly due to theissue of the conditions under which Russia allows itspipelines to be used. The differences between coun-tries in their level of energy market liberalizationalso impede the swift opening of these markets toforeign suppliers.

Finally, there is currently a risk that subjecting theelectricity trade to GATT rules would tangiblyrestrict environmental policy scope at national level.


While there is broad agreement that coal, oil and gasare not ‘like’ forms of energy despite their mutualsubstitutability, electricity – from the WTO’s per-spective – would simply equal electricity. If electricityimports were treated unequally or were discrimi-nated against compared with domestic energies, thiswould violate the core principles of GATT. Thiswould make it more difficult to give political prefer-ence to ‘green power’, as opposed to other forms ofelectricity, by imposing environmental taxes or levies.There is controversy over the extent to which thegeneral exceptions set out in Article XX b, g GATT(protection of the environment/exhaustible naturalresources) would allow the unequal treatment ofelectricity from renewable energies and othersources.

Recent dispute settlement cases at the WTO indi-cate, however, that the Appellate Body, set up as partof the WTO’s dispute settlement mechanism, doesnot view the unequal treatment of products as incom-patible per se with GATT if, at least, individual pro-duction and process methods cause substantial trans-boundary pollution. Furthermore, environmentallymotivated trade restrictions are more likely to beaccepted if they are anchored strongly in a multilat-eral environmental protection agreement (WGBU,2001a). If the further opening of the energy supplymarkets, e.g. between the parties to the Energy Char-ter Treaty, did indeed lead to dissent over the grant-ing of trade policy preference to ‘green’ electricity, asopposed to other forms of electricity, there is a goodchance that a dispute settlement panel would rulethat such preference is compatible with the WTOrules, referring in this context to the Kyoto Protocolor a ‘World Energy Charter’.

In any event, the full integration of electricity intoGATT is not on the agenda at the current WTOnegotiations, as very few WTO members classifyelectricity as a product (WTO, 1998). Instead, thenegotiations are focussing, at the most, on the inte-gration of electricity into the General Agreement onTrade in Services (GATS). The GATS negotiatingsystem is relatively complicated, with each memberidentifying the sectors for which it wishes to grantmarket access and making detailed concessions. Inthis context, given the limited transportability ofmany services, the primary issue is freedom of estab-lishment for foreign suppliers and their nationaltreatment.

Will countries make concessions in the electricitysector? This will largely depend on whether theenergy sector is classified as a separate area, thuspaving the way for a GATS sub-agreement or proto-col. So far, eight (groups of) countries have put for-ward negotiating proposals (USA, EU, Canada, Nor-way, Venezuela, Chile, Japan and Cuba). Although

there seems to be a consensus that energy-related‘non-core’ services (WTO, 2001) – such as consulting,engineering and construction services, and mainte-nance – should be part of the negotiations, there areclear concerns about the inclusion of energy-related‘core services’, i.e. transmission, distribution, andsales. It is a completely open question at presentwhether, in the foreseeable future, the GATS negoti-ations will deal with foreign suppliers’ access todomestic resources (especially oil, coal and gas) orfreedom of establishment for energy suppliers/pro-ducers. There is no doubt that in the long term, theuse of renewables requires a more or less global net-work for electricity, and probably also for hydrogen,in order to function efficiently.

Energy-related servicesThe opening of national markets to foreign trade inenergy-related ‘non-core’ services offers nationaleconomic efficiency gains as the entry of foreign sup-pliers into the market strengthens competition, bothon price and quality, in the domestic market andresults in cost savings, e.g. in the construction andmaintenance of grids or through operation and per-formance contracting. However, the static anddynamic efficiency gains are unlikely to develop fullyat macroeconomic level unless liberalization of theelectricity and gas markets leads to the separation ofenergy production and grid operation.

Energy extraction and productionIn the direct extraction and production of energy, theopening of markets to foreign trade also results inefficiency gains and helps to overcome the lack ofcapital and technology at domestic level which is aserious barrier to transformation, especially in thedeveloping countries. On the other hand, these sec-tors are of such key strategic importance in political,economic and social terms that many governmentsare deciding not to open their markets to foreign sup-pliers for fear that this will result in a loss of nationalcontrol over the energy sector (, 2001). This riskincreases as the energy markets become more con-centrated. In the least favourable scenario, when dif-ferences exist between countries in their level ofenergy market liberalization, opening the markets toforeign investors can lead to competitive advantagesfor some companies, notably those which dominatethe market and/or are protected by the state. If thesecompanies ease generally well-performing domesticsuppliers out of the market, there is a risk that aglobal oligopoly with very few suppliers will emerge,and that this will be difficult to break apart due to thehigh start-up investment in the energy sector. Finally,negotiations on the opening up of grid-based energysupply would need to examine the extent to which


freedom of establishment at local level, and non-dis-criminatory grid access, create any right to importelectricity or gas. This right would cause similar envi-ronmental policy problems as integrating electricityas a ‘product’ into GATT.

Recommendations for action onliberalizationThe WBGU recommends that the German federalgovernment bring influence to bear in the EuropeanUnion to ensure that the EU lobbies for the furtherintegration of unrestricted mobile primary energycarriers (oil, coal) into GATT. Better account can betaken of the issue of import independence by pro-moting renewable energies and efficiency increasesthan by protecting domestic coal or gas production.The Council makes the same recommendation inrespect of the inclusion of all energy-related servicesinto the GATS negotiations, as this can produceglobal welfare gains. The Council emphasizes, how-ever, that this reinforces the need, at the same time,to press ahead speedily with energy system transfor-mation. Otherwise, the risk that liberalization willresult in rising external costs, leading on balance towelfare losses, cannot be ruled out.

The Council is very sceptical, on the other hand,about individual proposals to liberalize trade in elec-tricity immediately and subject it to the GATT rules.If the energy supply sector is to be fully integratedinto GATS, it is important to ensure, as a precaution-ary measure, that trade restrictions which are neces-sary for environmental policy reasons – e.g. for non-sustainable energies – cannot be subject to legal chal-lenges. However, if renewable energy quotas andminimum health, environmental and socio-economicstandards for energy generation are to apply world-wide, the Council can envisage the full internationalliberalization of the energy supply sector in the longterm. This would promote the implementation of aglobal grid, which under certain conditions couldresult not only in economic and environmental effi-ciency gains but also export opportunities for devel-oping countries.

The Council is in favour of swift liberalization ofthe trade in goods and services in the renewables andenergy efficiency sector. Efforts by WTO members toexempt environmental protection products and tech-nologies from tariffs must be pursued vigorously,especially in the area of ‘green’ energy technologies.As this is still a relatively new market, the opportuni-ties associated with liberalization (market sizeadvantage, knowledge transfer, technology diffusion)appear to outweigh any risks, especially in the devel-oping countries. In order to reflect the significance ofthese sectors, especially in future, the Council consid-ers that the conclusion of a separate protocol to the

GATT and GATS agreement is desirable. If possible,this should contain a commitment to providingaccess for renewable energy generation plants to theexisting supply grids.

5.3.5.6Rights and duties of direct investors

Private direct investment plays a central role in trans-forming energy systems, especially in developing,newly industrializing and transition countries (Sec-tion 5.3.3.2). Despite the continued need forimprovements in this area – through bi- and multilat-eral agreements within the context of the EnergyCharter Treaty, among other things (Waelde et al.,2000) – substantial progress has been made in recentyears on the protection of direct investments. How-ever, the lack of any obligation on direct investors tocomply with social and environmental standards isincreasingly regarded as a regulatory loophole (Esty,1995; Subedi, 1998).

Implementing high-quality and effectivelyenforced standards for all investors in all countries isa worthwhile objective, but it is only likely to beachievable in the long term. The first task, then, is topersuade foreign investors, at least, to uphold specificenvironmental and social standards in the host coun-try. In the Council’s view, this can only be achievedthrough a mix of measures. Apart from the furtherdevelopment of international environmental law andthe reform of export promotion, which is addressedabove (Section 5.2.2.3), the following options shouldtherefore be explored:

At international level, particular considerationshould be given to the greater integration of environ-mental policy issues into the existing WTO rules andthe Energy Charter Treaty. In the Council’s view, theincorporation of commitments under environmentallaw into economic agreements, as envisaged in theEnergy Charter Treaty, is desirable. This should aimto safeguard compliance with international minimumstandards. As a further instrument, based on theNAFTA model, it would be desirable to prohibit anyreduction of environmental standards undertakenfor the purpose of attracting investors (Muchlinski,1998).

In addition, stronger regulation of direct investorsby their home countries should be considered. TheCouncil is in favour of extending the geographicalscope of national liability law in line with the USmodel, preferably through a European initiative.Under US law, foreign nationals can sue for compen-sation in the US courts if the damage they sustainedis defined as unlawful under the foreign law and wascaused by a subsidiary of an American corporation.


In the energy sector, the US legal system has shownthat it has teeth, especially in relation to oil explo-ration and transport.The liability criterion applied toestablish negligence by the subsidiary in questionshould be based on the current knowledge availableto the parent company (Subedi, 1998).

The Council also supports the development oflegally non-binding codes of conduct for the energysector. In terms of content, a code of this kind couldbe established on the basis of Article 19 of theEnergy Charter Treaty, for example.Although volun-tary codes can contribute to supporting environmen-tal and development policy objectives, their functionis still limited due to the absence of any control andenforcement mechanisms (Dröge and Trabold, 2001).The OECD Guidelines for Multinational Enter-prises, published in 2000, encourage companies to ini-tiate a variety of measures, including the develop-ment of environmental management systems, grant-ing access to key environmental information, compli-ance with statutory requirements in the host country,and adhering rigorously to the precautionary princi-ple in corporate policy-making. The Guidelinesattempt to reduce the shortcomings of voluntarycodes through a specific implementation processwhereby national liaison offices advise interestedcompanies about the content of the Guidelines andthe progress made on implementation. It remains tobe seen whether the Guidelines will develop, in thelonger term, into a generally recognized ‘frame ofreference for socially responsible corporate conduct’(OECD, 2000) for the energy sector as well.

More far-reaching proposals aim to develop a sep-arate legally binding international convention oncorporate responsibility (WEED, 2002a, b). Along-side measures to uphold and promote human rightsand international labour standards, one proposal isthat this convention should contain commitments onenvironmental protection. Issues under discussioninclude, firstly, the standards set out in the non-bind-ing OECD Guidelines, and, secondly, more far-reach-ing commitments. In the Council’s view, some of theproposals are worth further consideration. However,it emphasizes that first and foremost, there is still asubstantial need for research into the political andlegal obstacles, the practicability and effectiveness, interms of achieving the desired objectives, and theeconomic and social side-effects and long-termimpacts of implementing such a convention, espe-cially as regards the extraterritorial application ofenvironmental law. Other measures, in the Council’sview, should be explored in more detail:• Obligation to use the best technology available

locally;• Obligation to comply with the national environ-

mental law of the host country, including stan-

dards arising from international environmentalconventions ratified by the host country;

• Obligation to carry out environmental impactassessments in line with the World Bank’s stan-dards, including the development of environmen-tal management plans to minimize damage;

• Supporting the transfer of environmentally rele-vant operating procedures, technologies and man-agement know-how;

• Obligation to identify and analyse the key mater-ial flows and product life-cycle phases relevant toenvironmental impacts;

• Raising environmental awareness among staffthrough their active involvement in setting up andrunning environmental management systems.

5.3.6Phasing out nuclear energy

The civilian use of nuclear energy has shown itself tobe unsustainable: Reprocessing and final storage, butalso proliferation and terrorism harbour a significantpotential risk. The lack of economic efficiency in lib-eralized energy markets and the growing public crit-icism in many countries of the environmental andhealth risks associated with nuclear power haveresulted in a dramatic fall in the number of nuclearpower stations being connected to the grid each year(Section 3.2.2). The Council welcomes this develop-ment and advocates that no more new nuclear powerstations be approved and built. The Council also rec-ommends that efforts be made to commence negoti-ations, as swiftly as possible, on an internationalagreement on the phasing out of civilian nuclearenergy use by 2050. The agreement should providefor the conversion of the International AtomicEnergy Agency into a body responsible for windingdown the industry, and should also dismantle the sub-sidies and special provisions for the nuclear industry,as these distort competition in the energy industryand tie up substantial financial resources in this non-sustainable industry which could otherwise be usedto promote a sustainable energy sector (Section5.3.2.3). In this context, the Council welcomes theGerman Bundestag’s recommendation that the pro-motion of nuclear energy through the EuratomTreaty be allowed to expire.

The problematical dual use of nuclear technologyis particularly evident in the context of proliferation.This concerns not only the reactors but the entirenuclear energy chain, from uranium extraction, con-version and use to interim and final storage. TheIAEA monitors the non-proliferation commitmentsarising under the 1970 Treaty on the Non-Prolifera-tion of Nuclear Weapons through ‘safeguard agree-


ments’. However, the discovery of Iraq’s secretnuclear weapons programme after the 1991 Gulf Waror North Korea’s nuclear programmes have shownthat these control systems are inadequate. Throughits Additional Protocol, the Agency has now acquiredthe right to investigate undeclared nuclear materialsand activities as well. However, just 22 states haveratified the Protocol, and only two of these statesengage in nuclear activities (Froggart, 2002). TheIAEA’s powers are inadequate, for although it canrecord the proliferation of nuclear material, it cannotprevent it.

International rules to avert nuclear terrorism alsofall short of the mark. The only agreement currentlyin place, namely the IAEA Convention on the Phys-ical Protection of Nuclear Material, is limited to pro-tecting international transports of nuclear materialagainst theft or robbery. After 11 September 2001,the IAEA’s General Assembly endorsed 12 new safe-guards but rejected any form of mandatory reportingor international control. The Council therefore rec-ommends that more stringent IAEA security stan-dards be adopted for all plutonium storage facilitiesby 2005 and that the IAEA’s powers to initiate thecontrols and measures necessary to guard against ter-rorism and proliferation be expanded.

A problem relating to the normal operation ofcivilian nuclear power plants is that safety levels vary,and there is no binding international standard. TheWBGU recommends that safety standards be har-monized internationally at a high level by 2010. Fur-thermore, the insurance obligations relating tonuclear power plants should be borne solely by theoperators, and tax advantages should be dismantled.Possible starting points here are the European Com-mission’s two draft proposals for directives, datedNovember 2002, which concern the safety of nuclearinstallations and the management of radioactivewaste. The long-term solution for the storage ofnuclear waste continues to be one of the major chal-lenges facing the nuclear energy industry. Currently,there are just three potential countries with sites forfinal storage, i.e. Finland, the USA and Russia. It isalmost impossible to predict, at this stage, whetherthese sites will ever be able to accept nuclear waste.The Council therefore recommends that from 2010,the operation of nuclear power plants be permittedonly when the operators can certify that they havereserved space for their nuclear waste in an existingfinal storage facility. This should be regulated by theIAEA.

The reprocessing of spent fuel elements at Sell-afield and La Hague represents the largest release ofanthropogenic radioactivity worldwide (WISE,2001). This violates the WGBU guard rail, whichstates that risks must be kept within the normal range

(Section 4.3). In the Council’s view, the German fed-eral government should therefore press the Euro-pean Commission for the adoption of moratoria onthe operating licences of the reprocessing plants atSellafield and La Hague by 2010: Licensing of theplants under Article 6 of Directive 96/29/Euratomshould be suspended as long as their operation vio-lates international agreed limit values. In this con-text, the Convention for the Protection of the MarineEnvironment of the North-east Atlantic (OSPARConvention) can serve as a strategic starting point.This came into force in 1998 and aims to achieve con-centrations in the environment close to zero forharmful substances.

5.3.7Development cooperation: Shaping energy systemtransformation through global governance

In the WBGU’s view, the group of developing coun-tries is too diverse to enable energy system transfor-mation here to be promoted through an overarchingstrategy or a single policy approach. In policy formu-lation, the group of Least Developed Countries(LDCs) in particular must be differentiated from theother developing countries. In the poorest, generallyheavily indebted developing countries, liberalizationapproaches for the energy market often have littlebearing on reality. Financial, personnel and technicalsupport at all levels is essential here.

Key recommendations for action in the field ofdevelopment cooperation are set out in Sections 5.2und 5.3 above. In this context, special emphasisshould be placed on the strategic partnershipsbetween industrialized and developing countrieswhich were launched at the WSSD (Box 5.3-3). In theWBGU’s view, they should be supported and devel-oped further.

However, without conducive framework condi-tions at national and international level or coherentsectoral policies, these initiatives and projects havelittle prospect of success. The WBGU therefore con-siders that the primary task must be to change thestructures of international political processes in thelong term to ensure that they support globally sus-tainable development. In this context, changes in thepolicies of key international institutions haverecently been observed. For example, new guidelineshave been introduced for the OECD countries’development policies, while the World Bank hasrecently prioritized poverty reduction. Other exam-ples include the decisions adopted at major negotiat-ing processes, especially the Millennium Summit, theWTO Conference in Doha, the UNFCCC, the HIPCInitiative, the International Conference on Financing


for Development in Monterrey, and the replenish-ment of GEF until 2006. The outcomes of theserecent international political processes are crucial forthe successful implementation of sustainable energypolicies in the developing countries. They are alsostarting points for the development of a global gov-ernance policy.

Transforming energy systems in the developingcountries makes intervention within the frameworkof a global structural policy a necessity. To this end,the key points of leverage must first be identified.The WBGU notes that:• A universal energy supply cannot be achieved

without adequate income opportunities, even ifelectricity and energy prices are low, i.e. subsi-dized. Access for the LDCs to the industrializedcountries’ markets, as already announced by theEU (‘Everything But Arms’), and the swift dis-mantling of farm subsidies in the EU, USA andother OECD states are therefore necessary. Farmexport subsidies are particularly problematical asthey threaten the survival of farming communitiesin the developing countries.

• As a result of the developing countries’ often highlevels of foreign debt, these countries often havelittle scope to implement a sustainable energystrategy. Energy system transformation in thesouthern countries is therefore highly unlikely tooccur without a comprehensive debt relief pack-age. The WBGU recommends that the Germanfederal government take the initiative here withinthe G7/G8 framework.

• In the WBGU’s view, overcoming energy povertyshould also be included in the ‘social basic ser-vices’ funding priority and in the 20:20 Initiative.

• In the development cooperation undertaken bythe OECD countries, the principles of coherence,convergence and complementarity should beupheld to a greater extent. To this end, the newdevelopment policy guidelines adopted by theDevelopment Assistance Committee (DAC) in2001 for its member countries must be imple-mented in practice (OECD, 2002). A key task inthis context is to integrate the principles of sus-tainable development. The document emphasizesthat the development process must be driven bythe needs and priorities of the developing coun-tries themselves. It also underlines the need tointegrate various sectoral policies and calls forcoherent policy development on the donors’ sideas well. The new DAC Guidelines also containrecommendations on how development coopera-tion could be developed further. A priority, in thiscontext, is the development of a long-term energystrategy.

A sustainable energy strategy should fit into theseexisting structures and programmes. Coherence mustbe a particular priority when several donors areengaged in activities in one country. Here, the WorldBank’s Comprehensive Development Framework,which is currently being established, could serve as auseful tool. This instrument offers a conceptualframework which draws together all elements ofdevelopment and focuses them on the recipientcountry’s development strategy.

Box 5.3-3

Strategic partnerships for global energysystem transformation launched at the WSSD

Existing or emerging initiatives to promote global energysystem transformation can serve as a framework for globalenergy policy. The Council recommends that the followinginternational initiatives, which were launched at the WSSDin 2002, be used as catalysts to promote global transforma-tion:

EU Energy Initiative: Energy for PovertyEradication and Sustainable DevelopmentThis EU initiative aims to play a catalyzing role in achiev-ing the WSSD objectives and the Millennium DevelopmentGoals and serves as a platform for the coordination andcoherent development of energy projects with developingcountries at EU level. This strategic energy partnership isintended to promote partnerships for energy access, inte-grating civil society and the private sector in this process.Phase 1 of the initiative is anticipated to last until 2004.

Phase 2, on implementing the agreed action, will begin sub-sequently.

Global Village Energy PartnershipThe Global Village Energy Partnership aims to ensureaccess to modern energy services by the poor. To this end,investment funds, framework conditions conducive to theestablishment of rural energy systems, and networking bykey players are supported. The initiative is sponsored,among others, by UNDP, numerous governments (includ-ing Germany), the World Bank and the private sector andis currently in its preparatory phase.

Global Network on Energy for SustainableDevelopmentThis Network, which was initiated by UNEP, aims to pro-mote research, development and distribution of sustainableenergy systems in developing countries and establish aglobal network of energy ‘centres of excellence’ linkinggovernments and the private sector. It involves numerousgovernments (including Germany), energy institutions, UNagencies, the World Bank and the private sector (ShellFoundation, World Energy Council, UN Foundation). Thenetwork is currently being established.


5.3.8Launching ‘best practice’ pilot projects with aglobal impact

Progress with the introduction and expansion ofrenewable energy carriers is still very sluggish.This isdue, among other things, to the high start-up costs,inadequate knowledge of what is technically feasibleand – especially in the developing countries – poorinfrastructure, as well as uncertain or low profitexpectations.The WBGU therefore recommends uti-lizing a small number of large-scale ‘best practice’pilot projects as a strategic lever for global energysystem transformation. These ‘best practice’ pilotsshould send out a signal worldwide that improvingenergy efficiency or establishing a renewable energysupply is already feasible under current technologi-cal, political and socio-economic conditions in manyareas and can generate long-term profits. Successful‘best practice’ projects would act as a positive incen-tive for private investors and also increase the politi-cal viability of energy system transformation. Theyshould all be underpinned by research programmes.The WBGU proposes the following ‘best practice’projects:

Sahara power for EuropeBased on the WBGU’s quantifications, it is estimatedthat western Europe’s energy consumption in 2050will amount to around 100EJ per year. Two-thirds ofthis should be supplied from renewables. Thisamount of energy is roughly eight times the Euro-pean Union’s current total energy consumption. It issensible, therefore, to integrate North Africa’s solarand wind energy into the European energy supply inthe medium term as well. The WBGU recommendsestablishing a strategic energy partnership betweenthe EU and North Africa. For Europe, this would notonly be a cost-effective way of securing a climate-rel-evant volume of renewable energy; it would also be amajor step towards more intensive economic and for-eign policy cooperation with North Africa. For NorthAfrica, this partnership would offer an opportunityto link climate protection with industrial and socialdevelopment. The energy partnership could be a dri-ving force for development in the region. This strat-egy has three key elements:1. The construction of major power plants in North

Africa to generate electricity from renewablesources;

2. The provision of transmission capacities to theEuropean grid;

3. The establishment of a European liaison office forthe North African project partners and Europeaninvestors.

Using ‘best practice’ pilot projects, the feasibility ofsupplying energy from renewable sources usingexisting technologies could be demonstrated, obsta-cles identified and overcome, and the necessarystructures developed in advance of private-sectorinvolvement. In order to establish and utilize a learn-ing curve, the projects should contain a strongresearch element. As well as establishing a coordi-nating body at European level, the WBGU recom-mends that the following pilot projects be carriedout:• Planning and tendering for a large-scale photo-

voltaic and a solar thermal power station in coop-eration with one or more North African countries;

• Planning and tendering for a large wind farm incooperation with one or more North Africancountries;

• Planning and tendering for a transmission linefrom North Africa to Europe;

• The output of solar and wind power generationshould be adapted to the minimum feasible trans-mission capacity of the power transmission line. Ifnecessary, the power stations should be dividedinto sub-units. Provision must also be made for theuse of the generated electricity at local level.

As far as is compatible with competition law, the EUshould ensure that the project package is sufficientlyeconomically attractive by signing time-limited elec-tricity purchase agreements at guaranteed prices inorder to secure private-sector support for the pro-ject’s implementation. It is also important to createthe political and diplomatic framework for the strate-gic partnership. This could take place through theEconomic Partnership Agreements currently beingnegotiated between the EU and the ACP countries.

Distributed energy supply through climate-neutral liquefied gasIn developing countries, the traditional use of bio-mass often poses a major problem (health impair-ment caused by fumes, over-exploitation of local tim-ber stocks; Section 3.2.4.2), which could be reducedby progressively replacing the traditional three-stonehearth with liquefied gas cookers. However, thelarge-scale use of liquefied gas from fossil sourcescannot be viewed as sustainable in the long term inthe interests of climate protection.There is, however,the option of producing this energy carrier from bio-mass: Through gasification or anaerobic digestion/conversion, synthesis gas (CO/H2) can be producedfrom biomass which can then be converted intolonger chain hydrocarbons. In this way, biogenicliquefied gas could be manufactured. The chemicalprocesses involved can be supported through the useof solar thermal energy. A starting point for this pro-ject could be the EU Energy Initiative: Energy for


Poverty Eradication and Sustainable Development.The WBGU recommends:• Initiating the substitution of traditional three-

stone hearths with liquefied gas cookers throughGerman development cooperation;

• Through research cooperation with developingcountries, creating facilities for the environmen-tally compatible synthesis of liquefied gas,adapted to local conditions.

Energy-efficient buildings in the low-costsector, piloted by South African townships Since 1994, more than one million new dwellingshave been constructed in South African townships inorder to improve the living conditions of disadvan-taged population groups. However, the aspect of sus-tainable construction was largely overlooked duringthis process. For example, tin roofs without any insu-lation have generally been constructed, resulting inunbearable indoor temperatures in summer and win-ter alike. Open coal fires cause pollution which is upto eight times higher than the international stan-dards, resulting in health costs amounting to €244million per year (Holm, 2000). The WBGU recom-mends that through German development coopera-tion and in conjunction with South African partners,pilot projects on energy-efficient construction in thelow-cost sector be carried out. Due to the multipliereffects, it is specifically recommended that these pro-jects be undertaken near well-frequented sites (e.g.railway stations). This type of project could be car-ried out as part of the ‘Global Village Energy Part-nership’, which is a WSSD initiative.

Improving the power quality in weakelectric grids in rural African regionsWhen bringing electricity to rural regions in devel-oping countries, a frequent problem is that due to lowuser density, large distances have to be bridged inweak electricity grids. This reduces electricity quality(voltage, frequency and reliability of the grid), espe-cially for users in more remote areas. The technolo-gies developed in Europe to integrate the differentrenewable energy sources into the grid could be uti-lized profitably and cost-effectively to improve thissituation, but they are still largely unfamiliar to thelocal grid operators. The WBGU recommends thatwithin the framework of technical and financialcooperation, a selected rural region be connected tothe grid in cooperation with a larger African energysupplier and using appropriate new technologies.Cooperation with the local grid operator is essentialin order to produce a multiplier effect. Here ,too, thestarting point could be the EU Energy Initiative‘Energy for Poverty Eradication and SustainableDevelopment’.

‘One Million Huts’ programmeAs part of the process of supplying electricity to ruralregions in developing countries, distributed conceptssuch as individual photovoltaic systems and micro-grids are essential – alongside intelligent grid expan-sion – as a response to low population density. Untilnow, this type of practical project has taken place ontoo small a scale to develop the necessary momen-tum, and social and technical conditions have gener-ally been overlooked. The WBGU therefore recom-mends launching a ‘One Million Huts’ programmeon the required scale and with the necessary dura-tion, which must also include a new dimension oftechnical and socio-economic support. For the pro-ject to have a sustained impact, it must draw on theexpertise of leading companies from industrializedcountries, launch regional training programmes anddevelop local financing structures and supply indus-tries. The Global Village Energy Partnership Initia-tive offers an appropriate framework for projectimplementation.

6

The task of energy system transformation has a mag-nitude comparable to that of a new industrial revolu-tion. It will continue to pose major technological andsocietal challenges for many decades. Therefore, forthe process to succeed, a substantial research effort isessential to support transformation – both in advanceand throughout the process. In Section 5.3.1 of thepresent report, the German Advisory Council onGlobal Change (WBGU) has already made concreterecommendations on ways to further developresearch structures in institutional and financialterms. The present chapter focuses exclusively onquestions of research content.

The Council’s aim here is not to present a com-prehensive research strategy or analysis of researchactivities surrounding the theme of energy. The pur-pose of this chapter is rather to identify thoseresearch themes which, in the course of work on thisreport, have emerged as key preconditions to imple-menting the energy system transformation that thisreport outlines.

No attempt is made to specify which researchactors at which levels are best suited to tackle theresearch questions presented here. The suggestionsmade here do not target specifically the German orEuropean research landscape, but are directed to allcountries and actors with an interest in energy systemtransformation. These suggestions can representimportant components of various research pro-grammes at various levels. Consequently, the individ-ual points are not placed in relation to the greatdiversity of already ongoing and highly committedGerman or European research programmes.

The Council always examines energy systemsfrom the perspective of environment and develop-ment issues. Research on systems analysis, presentedin Section 6.1 below, therefore plays a key role.Whenimplementing and applying system transformationrecommendations, economic, political and societaltasks arise that need to be prepared and supportedthrough research. These include the market penetra-tion of new technologies, the comparative analysis ofsocio-economic instruments, the management oftechnology transfer or the transition to sustainable

lifestyles (Section 6.2). Finally, research on and devel-opment of new technologies are key to the success ofenergy system transformation (Section 6.3).

6.1Systems analysis

Knowledge base for guard rails‘Guard rails’ demarcate the viable action space, andthus play a key role in the policy advice provided bythe WBGU (Section 4.3). It remains difficult, how-ever, to determine these socio-economic and ecolog-ical boundaries of the tolerable domain of humanactivities. Neither is the necessary knowledge avail-able in satisfactory quality on, for instance, the pre-cise position of ‘catastrophe domains’ that must beavoided unconditionally, nor are modellingapproaches sufficiently mature to give adequate con-sideration to all important factors impinging uponpredictions. As a first step, the knowledge base forsetting normative guard rails thus needs to beimproved.This can be done by means of modern andpartly unconventional modelling approaches. Sys-tems analysis is thus part of an iterative process, con-tinuously improving the basis for predictions aboutfuture development trajectories.

ModellingModels help to explore the entire action space andthus to develop consistent predictions and scenariosconstrained by normative guard rails. There is a sub-stantial need for research to further develop themethodologies of existing models, for instance withregard to the coupling, regionalization, sectoraliza-tion and integration of climate, land-use and macro-economic energy system models (integrated assess-ment models). There is also a need to develop novelmodelling techniques (qualitative, semi-quantitativeand hybrid models) that do greater justice to theinherent uncertainties. It would be useful in this con-text to endogenize various processes (such as tech-nological progress), which should no longer be exam-ined in isolation from macro-economic development.

Research for energy systemtransformation

198 6 Research for energy system transformation

Important specific questions include the effects uponlong-term investment behaviour of emissions reduc-tion targets pre-announced in binding form (Section4.5.1), the potential risks of path dependency raisedby sequestration strategies (Section 3.6), the impactsof land uses upon greenhouse gas emissions, and theeconomic effects of control instruments such as cer-tificate trading.

Developing theoretical concepts ofsustainabilityThere is still a lack of fundamental theoretical con-cepts of sustainability, which would need to be linkedwith Earth System analysis and the guard rail con-cept. These should help to answer the question, forinstance, which of the possible development pathscan be termed acceptable under the conditions of acertain sustainable development paradigm (pes-simization, standardization, etc.; Schellnhuber, 1998).How must control or management strategies – whichcan range from e.g. access to electricity over changinglifestyles through to strict non-intervention – bedesigned in order that the guard rails can be obeyed?How to develop early warning systems that registerin time a slip into non-sustainable domains? Whichsynergies among anthropogenically influenced, butnot yet sufficiently understood, Earth Systemdynamics can be harnessed? May there even be a‘global conscience’ that, as an emergent feature, com-mands over a collective perceptual faculty to the ben-efit of humanity and the Earth System? The answersto these questions will ultimately determine theimplementation and further development of interna-tional regimes (such as the UNFCCC).

Scenario developmentThe findings presented in this report show that it isalso recommendable to develop CO2 stabilizationscenarios for low equilibrium concentrations(<450ppm).To this end, the regional and sectoral res-olution of the corresponding models needs improve-ment. Building upon regional quantifications, it maybe possible to develop stabilization scenarios at lowglobal warming levels, which are able to model thespecific properties of sectoral and regional units andthus provide an improved basis on which to identifyconcrete options for action.

Climate sensitivityIt is evident that climate research can make a keycontribution to energy system transformation, for itdelivers the knowledge and the substantiation for theclimate protection guard rail (Section 4.3.1.2). If CO2

and climate should be found to be coupled moreclosely than has previously been thought, or ifunknown amplifying ecosystem processes are found,

then this would call for not only an acceleratedenergy system transformation, but also a transforma-tion of land uses (Section 4.6). Sensitivity to anthro-pogenic perturbations therefore continues to be oneof the crucial factors of the climate system that is notyet sufficiently quantifiable (Sections 4.3.1.2 and4.5.2.1). As a consequence, the IPCC refrained in its2001 Third Assessment Report from stating a meansensitivity of the climate system that would followfrom a doubling of the CO2 concentration. Consider-able research efforts need to be undertaken in orderto be able to better assess climate sensitivity.

CO2 sources and sinksSince the 1950s, the USA has been operating impor-tant measuring stations (e.g. on Mauna Loa inHawaii, at the South Pole, and other island stations),which form the backbone for assessments of the car-bon cycle to date. There is an urgent need for Ger-many and Europe to make stronger contributions inthe future to efforts to verify trends in CO2 sourcesand sinks:A worldwide observation system should beestablished on the continents and linked to the exist-ing marine observation system. With such a system itwould become possible to check the hypothesis that,at present, a major part of anthropogenic emissions isstored in the boreal forests of Siberia. Responsibleecological management to strengthen this naturalsink could provide a valuable additional option forthe energy system transformation process.

Impacts of high CO2 concentrations and ofclimate change upon terrestrial ecosystemsThe forecasts of the impacts of climatic changes uponterrestrial ecosystems in Europe still have a widerange and are thus greatly in need of improvement.Afirst step is to optimize the database, which is the pre-condition for more accurate model computationsand predictions. Moreover, the models themselvesneed further development – this is a point alsostressed by the EU’s 6th Framework Programme.Consideration further needs to be given to theresponses of silvicultural and agricultural plantspecies and varieties.

Impacts upon soilsEurope’s soils store large quantities of carbon accu-mulated in approx. 10,000 years of vegetation devel-opment following the ice age. If substantial parts ofthis carbon were released through land-use changes,then even complete implementation of the measuresfor energy system transformation recommended inthis report (Chapter 5) would not suffice to obey theclimate guard rail (Section 4.3.1.2). There is a needfor basic research to improve the understanding ofaccumulation and degradation processes in soils.The

199Social sciences 6.2

findings of such research could also create the pre-conditions for harnessing further control options, andfor the accounting of carbon changes in soils.

6.2Social sciences

A key task of social science research for energy sys-tem transformation must be to elaborate options foraction at the political and economic levels, and toassist in selecting those options that are indispens-able and most suitable for system transformation.Potential barriers standing in the way of systemtransformation need to be identified and analysed,and ways to remove them found.

Effects of liberalization and globalizationin the energy sectorIn the course of globalization and liberalization, com-plex new conditions have emerged in the energy sec-tor. To identify their implications for sustainabledevelopment adequately, it will be essential to estab-lish a joint, international research effort. In particu-lar, research is needed to develop recommendationsthat combine sector liberalization with compliancewith ecological and social guard rails (Section 4.3).Research on the benefits and drawbacks of variousderegulation and regulatory instruments and on pre-vailing market barriers remains one of the key tasksof socio-economic research relating to the energysector. It needs to be clarified which market struc-tures promote energy system transformation goals,and what influence liberalization and globalizationexert upon structures, notably upon supplier struc-tures of energy production and supply markets.

There is a need for intensified research on theeffects of private foreign direct investment (FDI) inliberalized energy markets. It needs to be clarifiedunder which conditions FDI will tend to rather pro-mote or hamper the development of sustainableenergy systems. Furthermore, there continues to be aneed for research on the opportunities for and limitsto orienting the behaviour of transnational corpora-tions abroad to sustainability requirements, forinstance through quality labels, voluntary codes ofconduct, international soft law, extraterritorial appli-cation of liability and environmental law, or interna-tional environmental and social standards.

Analysis of small and medium-sized enterprises(SMEs), which include many providers of wind andsolar energy technology, and of their importance toenergy system transformation should become a focusof research in economics and political sciences. Arecent study has shown for Switzerland that moststate assistance provided to SMEs ultimately fails to

address their specific needs and difficulties (Iten etal., 2001). It therefore needs to be clarified in partic-ular to what extent SMEs may contribute to a world-wide diffusion of renewable energy use, and howSME foreign direct investment in the energy sectorcould be facilitated.

Transforming energy systems in developingcountriesThere is a need for supplementary study on mini-mum energy requirements, and on the socio-eco-nomic linkages between poverty, lack of energy anddevelopment barriers. Comprehensive primary dataon energy use is lacking, above all in newly industri-alizing and developing countries. The World EnergyOutlook 2002 provided for the first time a country-specific analysis of electricity and biomass consump-tion (IEA, 2002c). However, comparable data on theuse of other energy carriers as well as analyses of thepotential to deploy the various renewable energycarriers are still largely absent. Data collection needsto distinguish more clearly between the conditionsgoverning access to energy in urban areas and thosein rural areas. Given that urban-rural divergence isexpected to intensify, research must provide specificanswers concerning the ways to ensure supply inthese two types of area. It needs to be kept in mindthat different barriers to energy access prevail in thetwo settlement types. When researching the barrierspreventing the poor from gaining access to sufficientand affordable energy services and to forms ofenergy acceptable in environmental and healthterms, careful consideration needs to be given notonly to the opportunities and risks of privatizationand liberalization. The ambivalent role of major pri-vate sector and state power supply companies alsoneeds to be explored.

Evaluation of the potential to reduce and controlgreenhouse gas emissions in developing countriescarries particular importance for sustainable climateprotection in view of anticipated economic growthand improved private household access to energyservices in these countries. Here there is a need forfurther research, in particular regarding the designand monitoring of the flexible Kyoto Protocol mech-anisms.

The Council has called in this report for a long-term phase-out of traditional biomass use; this givesrise to a considerable need for social science researchon the suitable path towards this goal.The number ofpeople using health-endangering traditional biomassfor cooking and heating in developing countries willnot drop over the next 30 years if no targeted mea-sures are taken (IEA, 2002c; UNEP, 2002). Even if allpeople were to gain access to power or gas, past cook-ing and heating habits would not be abandoned


immediately; traditional biomass use would persist,at least partly. It remains unclear which incentive sys-tems and which logistic effort would be required toovercome these behavioural patterns and deliver thetransition to healthy and culturally as well as finan-cially appropriate energy carriers. Here the Councilsees a need for interdisciplinary case studies across arange of environmental, economic and cultural set-tings, integrating economics and cultural studies,engineering sciences and health studies.

The same techniques are handled differently bydifferent cultures. Technologies therefore not onlyneed to be developed, but also transferred, adaptedto local circumstances and integrated within existingsocial systems. To overcome barriers, quantitativeand qualitative improvements are needed in devel-opment cooperation in training with regard to energysystems as well as with regard to savings and invest-ment. Furthermore, research on the acceptance oftechnical and financial systems needs to be intensi-fied, together with representatives of the countriesconcerned and of indigenous as well as local commu-nities.

Health impacts of energy systemsA programme of empirical research needs to belaunched that is capable of identifying the adversehealth effects of different energy systems (in extrac-tion, transportation and use), building upon, forinstance, the Disability Adjusted Life Years (DALYs;Section 4.3.2.7) methodology developed by theWHO.The goal of this research would be to quantifythe connection between energy use and disease bur-den.

Financing requirements for systemtransformationGlobal energy system transformation requires theredirection and mobilization of substantial invest-ment funding, particularly in the initial phases of theprocess.Aspects of particular interest include the dif-ferentiated quantification of the short to mediumterm, regionally specific investment requirement,and of the necessary capital transfer from industrial-ized to developing, newly industrializing and transi-tion countries (IEA, 2003). Options for financialarrangements at an international level also need fur-ther research, e.g. the question of the extent to whichthe Kyoto mechanisms and an adaptation fund maycontribute to capital transfer.

Institutional dimensionsTo reduce the economic uncertainties attaching toclimate protection efforts, new ideas expanding uponcertificate trading are under debate. There is a needfor further research on their prospects for implemen-

tation.They include e.g. the concept of a ‘safety valve’combining quantitative restrictions (through certifi-cates) and levies (acting in a manner similar to pricecaps for certificates). Proposals seeking to supple-ment or substitute internationally agreed quantita-tive approaches by means of a CO2 levy also deservefurther study.

Implementation of the Kyoto mechanisms inenergy projects is currently a focus of policy analysisand at the same time a research task for numerousinstitutions such as the World Bank, GEF, OECD orIEA. These efforts must be continued and, wherepossible, integrated within the overall context of aglobal research strategy (Section 7.6). Researchefforts should also address the further developmentof the Kyoto Protocol after 2012, for instance theissue of how flexible mechanisms can be developedin order to involve newly industrializing and devel-oping countries in reduction efforts more closelythan in the first commitment period.

Implementation of the Multilateral Energy Subsi-dization Agreement (MESA) proposed by the Coun-cil will require in-process research, in particular onthe Agreement’s concrete design, institutionalizationand enforcement mechanisms.

Energy useThe debate on energy system transformation needsto give greater attention to the high savings potentialon the demand side – particularly given continuingpopulation growth. The development of sustainablepatterns of consumption, as called for at the Rio deJaneiro Conference on Environment and Develop-ment (UNCED) in 1992, can be achieved mainly bymeans of efficiency measures on the demand side.This will need to be supported by changed attitudesamong consumers, and a transformation of the ‘west-ern-industrialized lifestyle’. This goes beyond energyefficiency, and concerns the prospects for reducingenergy demand (sufficiency); major barriers yetstand in the way of any such development. Todevelop socially equitable options for removingthese barriers, research needs to tackle the issue of‘lifestyles’, which has not yet been studied systemati-cally on a global scale. There is a great need forresearch in this field. Furthermore, in view of theinadequate implementation of international resolu-tions on consumer-focussed sustainability policy, it iscurrently unclear which policy solutions should befurther pursued to tackle consumption patterns atglobal level. Further research is needed here in orderto better shape and implement guidelines for sus-tainable consumption (UNEP, 2002).

There is still a major lack of understanding of thelinks between information availability, energyrequirement and economic performance. For

201Social sciences 6.2

instance, it is still unclear whether the ‘New Econ-omy’ has led to a reduction of the private sector’senergy requirement. An empirical study conductedin the USA identified such a trend in the late 1990s,but was unable to verify causality unequivocally(Sanstad, 2002). This debate ties in with questionssurrounding the dematerialization of the economy,and developments towards a service society. Both arevariable quantities with contradictory impacts uponenergy demand. It will be essential to have moreknowledge about these connections to make tar-geted recommendations on how to shape the transi-tion towards sustainable energy systems.

Instruments for the direct promotion ofrenewablesAn extensive range of potential mechanisms bywhich to promote the use of renewables is available.Although there is broad debate in industrializedcountries on the individual mechanisms, a need forfurther research remains on the long-term effects ofthese instruments, and on their transferability toother country groups or to the global level. Ways tolink instruments within integrated packages of poli-cies (e.g. levies and quotas for the various differentsectors) need further study. It also needs to be exam-ined in this context what the relationships among thevarious instruments are, i.e. whether, for instance, it ispossible or purposeful to combine different instru-ments within one sector or within one energy or tech-nology field, or whether the application of one instru-ment excludes other measures (e.g. CO2 or energytax and Green Energy Certificates). A question ofparticular relevance to the transformation process isthe extent to which a universally valid ‘promotionroadmap’ can be drawn up for the deployment ofinstruments, and whether it is possible to plan shiftsbetween instruments over the course of time (e.g. ini-tial financing through price instruments such as statesubsidies or fixed rates for power sold to the grid, fol-lowed by a long-term selective transition to quantita-tive instruments such as quotas and Green EnergyCertificates). Promotion in the field of electricitysupply must give attention to the economic-technicalaspect of how to tie renewables into integratedmains-borne services (suitability for distributed feed-in with high investment and operating costs, irregu-larly fluctuating power output; Section 3.4.3). Theseaspects still require major research efforts, forinstance on how to shape distributed power plants ordistributed feed-in structures and the question oftheir long-term effects, including socio-economiceffects.

Geopolitical research requirementsIn Germany, geopolitical research lags far behindinternational standards. In other western countriesthere are research centres and specialized journalson geopolicy, but not in Germany. Peace and conflictresearch has albeit focussed increasingly since the1990s upon intra- and inter-state resource conflictsand the threats that these pose to peace. However, aslong as the major dependency upon energy importscould be resolved relatively easily through markets,as long as no scarcity problems were perceptible, andas long as the USA ensured in both political and mil-itary terms the resource security of Western Europeand Japan in addition to its own, security policyresearch and research promotion lacked a vital inter-est in the geopolitics of resource security.This tendedto be treated as a marginal theme, on the fringes ofthe debate, emerging after the end of the cold war, on‘new threats’ and the concept of ‘extended security’.

There is a major need for research, but a lack ofresearch resources in Germany. This is especiallyapparent in comparison to France and Great Britain,both of which have a global policy tradition and – still– ambition. While in these two countries about2,500–3,000 (and in the USA even around 10,000)researchers work on international affairs, in Ger-many they number just 250–300.

Key research issues from a German and Europeanperspective are:• Are there geopolitical tendencies indicating that

competition over energy resources is once againmaking war a means of policy? How could theUnited Nations be placed in a position to fulfil itsmandate to maintain peace, as established in itsfounding charter, despite heightening interna-tional conflicts over resources and growing unilat-eralism on the part of the USA?

• What opportunities does Germany have, togetherwith the other EU member states, to safeguard itsresource security through peaceful means, i.e.through market relations and scientific as well astechnical cooperation?

• How can the EU influence political, social andeconomic developments in the CIS states at itsperiphery (the Caucasus and Central Asia) inorder to promote peaceful development in thisregion rich in energy resources which, while insta-ble, is of great importance to the global economy?

• How can Germany and the EU provide targetedsupport to renewables and energy efficiency inorder to reduce dependency upon fossil fuelimports, and thus also mitigate potentially violentcompetition over energy extraction regions?


6.3Technology research and development

The exemplary transformation path (Section 4.4)developed by the Council relies equally upon thestrong expansion of renewable energy use and majorefficiency improvements. Such a transformation ofthe global energy system will only succeed if researchand development is pursued or intensified across abroad range of highly diverse fields of technology.

The sources that can only be expanded to a limiteddegree (e.g. wind, hydropower; Section 3.8) are partlyalready available today at competitive prices, so thatresearch now needs to focus above all upon furtherimproving efficiency, tapping new fields of applica-tion and reducing environmental and social impacts.

In contrast, those sources that can be expandedalmost without limit, such as solar-electric energyconversion, are still relatively expensive today inmicro-economic terms (Section 3.2.6). Nonetheless,the appraisals of sustainably utilizable potentialsshow that, over the long term, solar-electric energyconversion must become the main pillar of globalenergy supply. For cost-reducing learning processesto take place swiftly in this field, it is essential to con-tinue pursuing the related research and developmentactivities vigorously, besides ensuring a committedand sustained rate of expansion. An excellent basishas already been established in this respect in Ger-many and Europe, thanks to state R&D programmesas well as industrial activities. Learning must beaccelerated so that solar energy is available at suffi-ciently low cost at the point in time when the expan-sion of other renewable forms of energy meets thelimits of its sustainably utilizable potential (Section3.8).

At the same time, the integration into globalenergy supply structures of renewable energy frommostly fluctuating sources requires the further devel-opment of broad-scale, networked energy distribu-tion structures. In this connection, suitable energystorage systems will need to be developed over thelong term (Section 3.4).

6.3.1Technologies for supplying energy fromrenewable sources

Photovoltaic electricity generation (solarcells) Along with solar thermal power generation, photo-voltaics (PV) is one of the two key technologies forsolar-electric energy conversion (Section 3.2.6). TheCouncil welcomes the current intense research and

development effort in this area and stresses thatthese efforts should be continued in a dedicated fash-ion, since in the long term they represent an impor-tant element of the exemplary transformation pathproposed by the Council. Several promisingapproaches for cost reduction and increased effi-ciency are currently being pursued. Since a soundevaluation of the different approaches in terms oflong-term developments is currently not possible,support for a diverse range of technologies should bemaintained. The emphasis for the medium termshould be on environmentally benign silicon technol-ogy. Current research activities relating to manufac-turing processes of thinner wafers (150µm) and ultra-thin wafers (target: 50µm) should be intensified.Crystalline silicon thin film technologies on foreignsubstrates continue to require high research anddevelopment effort. Furthermore, previous effortsregarding thin film technologies based on other envi-ronmentally justifiable materials should be re-inten-sified speedily.

For the development of power plant applicationsin sunny regions, research activities concerning PVpower plants with optical concentration should beintensified, and the development of appropriatestacked solar cells, e.g. based on III-V semiconduc-tors, should continue. For the long-term developmentof photovoltaics, the continuation of the researchactivities regarding organic and dye-sensitized solarcells is essential. Such concepts may form the basisfor completely new photovoltaic conversion tech-niques that are not based on semiconductors. Ulti-mately, application-oriented basic research should beundertaken in order to assess concepts that are cur-rently rather speculative but may offer high potential(e.g. quantum well structures, thermo-photonics,multi-band cells, auger cells, cells with extraction ofhot load carriers, self-organizing organic photo-voltaic structures, application of molecular antennastructures for energy conversion).

For all solar cell technologies, appropriate moduleencapsulation technology should be developed. Par-ticular emphasis should be placed on fully automaticproduction, low material use and reusability of thephotovoltaic elements and materials.Another impor-tant criterion for photovoltaics is security of rawmaterial supply.

In addition to the development of actual solarcells and modules, photovoltaic systems technologyshould be considered more strongly in the allocationof research projects. For concentrator power plants,this also includes optical components. In order toachieve further strong cost degression in system tech-nology, highly integrated power electronics and digi-tal control technology as well as new network moni-toring techniques are required. Significant progress is

203Technology research and development 6.3

also required in terms of integration into buildings, sothat in future solar technology will become an inte-gral component of the building envelope, rather thanmerely being an add-on.

Solar thermal power plantsFor the long term, solar thermal power plants with

optical concentration are the second important cor-nerstone of a solar power supply in the exemplarytransformation path, along with photovoltaics (Sec-tions 3.2.6 and 4.4). For large plants, developmentsconcentrate on tower and trough power plants. Bothapproaches are promising, and potential forimprovements should continue to be opened upthrough research and development. Current activi-ties inadequately reflect the importance of this tech-nology in the Council’s exemplary transformationpath, and they should therefore be strengthened sig-nificantly. For power plants based on optical linearconcentration, new optical concentration concepts(e.g. Fresnel concentrators) should be investigated,not least from a cost reduction point of view. More-over, particular emphasis should be placed on mate-rials research for optical and thermal components(mirrors, selective optical absorbers, etc.) and processtechnology, e.g. for direct water evaporation. Powertowers, which can achieve higher temperatures andtherefore higher efficiency compared with linearconcentration plants, should be developed further.

For cost reduction and for operation during thehours of darkness, the further development of hybridpower plants combining solar and fossil technologiesand of large heat stores for high temperatures isimportant. In view of the large proportion of globalprimary energy derived from solar-electric energyconversion, as envisaged from the middle of this cen-tury within the Council’s exemplary transformationpath, advanced concepts for the smooth integrationof such power plants into energy supply systemsshould be developed.

Solar thermal energy conversion (solarcollectors) Solar heat can be used for space heating, water heat-ing, cooling and process heat applications (e.g. in thefood processing industry) (Section 3.2.6). Its sustain-able potential is largely determined by the localdemand for heat and not by the supply. If the aimsformulated in the Council’s exemplary transforma-tion path are to be achieved, research should alsofocus on solar technologies for the cooling of build-ings. For water heating and space heating applica-tions, the further development of heat stores withhigh energy density and low heat losses should havepriority. For tapping new areas of application forsolar heat, process heat collectors in the temperature

range 100–200°C should be developed further. Theapplication of solar process heat for water desalina-tion and purification and for food cooling is particu-larly relevant for global sustainability. For these var-ied applications, system technology, including associ-ated control techniques, should not be neglected.

Wind power plantsAfter solar energy, the utilization of wind power isthe second most important renewable energy sourcein the Council’s exemplary transformation path (Sec-tion 3.2.5). For the further rapid tapping of the sus-tainable wind energy potential, particular emphasisshould be placed on the development of the offshoresector, where specific questions relating to installa-tion at sea and the development of systems withlarger capacity need to be addressed. The WBGUwelcomes the current environmental research associ-ated with offshore wind power (BMU, 2002c), sincesuch research is an important prerequisite for thesustainable large-scale utilization of wind energy.Further improvements in rotor blade quality and theapplication of reusable materials should be amongstthe aims, with emphasis on improved stability andself-cleaning surfaces. The assured duration of plantoperation for wind energy conversion plants shouldbe increased. System management strategies for inte-gration into the grid, associated grid control and thecontrol behaviour and early detection of faultsshould be developed further. With regard to futureexport markets and in addition to innovative areas ofapplication (e.g. water desalination), the integrationof wind power plants into weak grids under differentclimatic conditions requires further research.

HydropowerDue to increased requirements in terms of environ-mental and social acceptability, the WBGU views thesustainable potential of hydropower cautiously, withonly 15EJ per year being considered in the exem-plary transformation path for the year 2100 (Section3.2.3). An important prerequisite for a sustainableexpansion of this order of magnitude is a significantimprovement of the scientific database over the next5–15 years. Currently, there is a lack of ecological andsocio-economic regional data for the sustainabilityanalysis of the socio-economic, landscape, ecologicaland health impacts of large hydropower projects.Regional studies are also a prerequisite for compar-ing alternative design options as required by interna-tional guidelines. This database cannot be developedshort-term and simultaneously with the preparationof project-specific environmental impact studies.Further important research questions include the dif-ferences in social and environmental consequencesbetween large and small hydropower installations in


developing countries and associated research for thepractical implementation of the proposals of theWorld Commission on Dams.

Geothermal energy conversionIn the long term, geothermal energy conversionshould be able to contribute to a demand-orientedand location-independent energy supply system, pro-viding a complement to supply from other renewableenergy sources that is independent of weather andseasons. Notwithstanding the possible benefits ofgeothermal heat utilization, the Council has identi-fied a large number of unresolved questions regard-ing the technological implementation and varioussustainability aspects, so that in the exemplary trans-formation path the realistic sustainable potential for2100 is estimated cautiously as 30EJ per year (Sec-tion 3.2.7). Utilization of the potential initiallyrequires cost reductions for deep drilling operations.New, yet to be developed stimulation techniques ofhot rocks in the ground will be able to increase theproductivity of hot deep water and therefore theyield of geothermal systems. The development ofsuitable and cost-effective district heat networks isan important prerequisite for the application of geo-thermal energy for heating purposes. However, fur-ther research effort is needed for the efficient con-version of heat from deep water (including low-tem-perature water) into electricity, so that power plantssuitable for covering base loads can be developed.

In order to avoid environmental damage throughbrine or gases at the earth’s surface, the compatiblereintroduction of the extracted water into the groundshould be examined further. Moreover, ecologicalmanagement of the large quantities of waste heatthat are generated due to comparatively lowerprocess efficiencies is required for geothermal powerplants.

Utilization of biomass for energygenerationThe exemplary transformation path (Section 4.4)envisages an expansion of modern biomass utiliza-tion for energy generation to approximately 100EJper year by 2040, i.e. five times the current value(Section 3.2.4). In view of this ambitious target,research activities should initially concentrate onoptimum land use, given the competing requirementsof food production, energy generation and carbonstorage. The structures for transporting the raw bio-mass to the associated conversion plants should beexamined and improved. For combustion technolo-gies, further research should focus on cost reductionand emission reduction. Since the Council’s exem-plary transformation path points towards a hydrogeneconomy, further research should focus on technolo-

gies for the efficient gasification of biomass, the pro-duction of fuels from biomass and for associated dis-tribution and utilization structures.The production ofhydrogen from biomass should be further developed,using fermentation and reforming techniques on theone hand, and also through direct production of syn-thesis gas. Since many of these technologies can alsobe realized modularly, they are suitable for both cen-tralized and distributed applications. The latter maybe particularly appropriate for application in devel-oping countries. Appropriate production methodsfor biogenic liquefied gas from bio-energy should bedeveloped.

Innovative conversion technologiesIn future, unforeseen technological developmentsare expected to lead to better tapping of renewableenergy sources or to innovative conversion technolo-gies. Therefore, application-oriented, customizedbasic research should be increased significantly. Thiswould include scientific studies with particularlyuncertain outcomes and ‘speculative’ research (seealso examples in the photovoltaic power generationsection). Some examples are listed here.• Photochemistry: membrane structures similar to

those in photosynthesis, hydrogen generation viaphoto-electrochemical techniques;

• Solar chemistry: synthesis of storable energy carri-ers, synthesis techniques that simultaneously usethermal, optical and electrical energy;

• Biotechnology: microbial hydrogen generation.

6.3.2System technology for sustainable energy supply

The special features of fluctuating energy sourcesmake research and development for system tech-nologies a basic prerequisite for the transformationof energy systems (Section 3.4) since renewableenergy sources have to be integrated in global energysupply structures without disturbing them. In addi-tion to adaptation of the structures of global electric-ity supply, the further development of the technolog-ical basis for a hydrogen economy (Section 3.4.4) is akey part of such a transformation in accordance withthe Council’s exemplary path.

Electricity transport and storageThe generation of electricity from renewable sourcesis not only possible in mid latitudes, but particularlyeffective in arid, sunny areas. Hence, transportinglarge amounts of electricity across long distances athigh capacity with little loss is a key technologytowards matching the supply of and demand forpower on a continental scale.

205Technology research and development 6.3

High-voltage direct current transport and – in thelong term – high-temperature superconducting thusshould be stepped up. In the long run, strong inter-continental, bi-directional power grids up to the levelof a ‘global link’ are to be developed for virtual elec-tricity storage or to compensate for fluctuations (inconnection with dispatchable power plants) (Section3.4.3). The design and management of power grids isto be improved to accommodate for the large-scaleinclusion of fluctuating renewable energy sources.Alternative concepts for the storage of electricityand other types of energy should be furtherresearched (such as compressed air, centrifugalmasses, superconducting magnets). Electrochemicalstorage for distributed applications should be furtherdeveloped for use in automobiles, off-grid solarpower systems, etc.

Distributed generation in electricity gridsThe use of renewable energy sources in the exem-plary transformation path (Section 4.4) can bedivided into distributed, off-grid applications (suchas Solar Home Systems), centrally connected powerplants (such as geothermal electricity generation)and distributed generation within grids (such as fuel-cell combined heat and power plants; Section 3.4). Inparticular, distributed generation in power gridsposes a great challenge to future grid control strate-gies. Communications technologies for distributedpower generators and the overriding grid should befurther developed to accommodate for these trends(such as controls, log-in and log-out of generators asin the Internet, etc.). In addition, strategies for opti-mal electricity and (distributed) heat use along withcustomized bidirectional grid architectures andsafety systems are on the research agenda. The fur-ther development of power generators adapted tothis purpose (fuel cell systems, microturbines, etc.) isindispensable as a basis. Power electronics will alsoact as an important interface between distributedgenerators and the grids, handling many additionalfunctions (improvements in voltage quality, etc.).Finally, the development of heat accumulators withgreat storage density and negligible heat loss shouldbe stepped up as this is especially promising withregard to decoupling the generation of electricity andheating needs in homes. Intelligent control technol-ogy can minimize losses here.

Hydrogen generation, transport andstorageHydrogen is an essential element both as a secondaryenergy source and as an energy storage medium in asustainable energy system such as the one designedin the Council’s exemplary path (Sections 3.4.4 and4.4). Many of the technologies needed are not, how-

ever, ready for the market so that broad research anddevelopment remains necessary. In producing hydro-gen, research should take account both of the variouselectrolysis methods using electricity and differentkinds of thermochemical methods based on hydro-carbons (such as biomass). Hydrogen storage sys-tems for distributed applications (such as cars) andthe large-scale, central storage of hydrogen must befurther developed in combination with gas transport,with globally relevant leaks in hydrogen systems keptto a minimum (Section 3.4.4.5). Technologies for theuse of hydrogen in engines and turbines – especiallythe important field of fuel cell technology – requirefurther technological progress.

Energy meteorologyInformation about the potential of solar and windenergy fluxes are of great global interest for the reli-able, large-scale use of renewable, fluctuating energysources, especially in developing countries. Forecastsof local energy fluxes (such as wind speeds near theground in the range of minutes to days) via remotesensing (earth observation satellites) should be fur-ther developed.

Appropriate system technology fordistributed, off-grid applicationsWhen technically useful distributed energy fromrenewable energy sources is available (Section 3.4.2),related energy service technologies will have to be(further) developed. Some examples are off-gridwater purification technologies and communicationtechnologies (Internet access, etc.). In addition, elec-tric systems technology, power electronics, and con-trol technology will have to be optimized for use withspecial applications in everything from individualsolar power supply (Solar Home Systems) overmicrogrids (for villages) through to integration inlarger networks.

6.3.3Development of techniques for more efficientenergy use

More efficient energy utilization along the completechain of the energy system (from the conversion ofprimary energy, for example in power plants, to thesupply of energy services through technologies suchas domestic appliances, thermal building insulationor lighting systems) is a significant aspect of thetransformation of energy systems (Sections 3.5 and4.4). The analysis of potentials and barriers to theirimplementation (UNDP et al., 2000) clearly showsthat further research is required, not only in terms oftechnology and development in the narrower sense,


but also in terms of accompanying and supplemen-tary socio-economic research with a view to breakingdown barriers and to creating appropriate incentivestructures and energy policy frameworks. Questionsof the social acceptance of modified user behaviour,the application of more efficient technologies, themore intense use of consumer goods (e.g. car sharing)and the development of settlements and transportstructures that aim to reduce overall energy con-sumption require intensified research (Sections 3.5,6.2).

Combined heat and power (CHP)The main individual technology for efficiencyimprovements on the supply side is combined heatand power (Section 3.3). In particular, researchefforts for the expansion of decentralized applica-tions should be intensified (engines, gas and microgas turbines, fuel cells, micro-cogeneration units, Stir-ling engines).

Solar and energy-efficient buildingsThe utilization of solar energy in the building sector(Section 3.5.2) leads to a reduction in primary energyuse and is therefore frequently included in energyefficiency measures. Since a large proportion of totalenergy requirements is consumed in the building sec-tor, this is an essential element of the transformationpath (Section 4.4). It includes the following areas:solar-optimized windows with optical switchingproperties, solar-active opaque façade elements (e.g.translucent insulation), development of new thermalinsulation systems (e.g. vacuum insulation), thedevelopment of flat heat stores with high energy den-sity for surface implementation in walls and ceilings,and the development of central, compact heat storeswith low heat losses. In tandem with solar buildingtechnology, appropriate building services have to bedeveloped, including new air conditioning technolo-gies for the low-energy building of the future, verysmall heating and refrigeration units, heat pumps,components for distributed electricity and heat pro-duction, etc. Daylighting systems for the internal illu-mination of buildings should also be developed fur-ther, e.g. light guidance and distribution systems withintegrated switching properties. The integration ofsolar energy technologies into the building envelopeshould also be optimized in terms of aesthetic andcost considerations. Another important aspect is thedevelopment of urban planning procedures thatenable optimum solar energy utilization in buildings.

Efficient energy utilization in industryResearch efforts are currently directed more towardsenergy converter technologies, with the improve-ment of energy efficiency at the user energy level

being rather neglected. Government support forresearch projects should address these issues. Signifi-cant potential exists for the replacement of thermalproduction processes by physical-chemical orbiotechnological processes, the recovery and storageof kinetic energy, increased material efficiency, therecycling of energy-intensive materials and their sub-stitution by less energy-intensive materials. Appro-priate research in these areas is therefore recom-mended. For more efficient industrial electricity uti-lization, research efforts should concentrate onindustries with very high electricity demand (e.g. alu-minium plants and metal smelting plants).

Efficiency improvements in the transportsectorWhilst in the long term the application of new tech-nologies will be an important component of energysystem transformation, particularly in road transport,in the short and medium term research efforts forhigher efficiency in road and rail transport shouldcontinue and indeed be intensified. Examples areincreased efficiency of combustion processes andweight reductions through new materials. Otheraspects are the development of multi-modal infra-structures and the application of information tech-nology (e.g. telematics). Finally, research regardingmodern concepts of regional, urban and transportplanning with the aim of reducing transport demandand energy use should be supported.

7

7.1From vision to implementation: Using theopportunities of the next 10–20 years

Building upon the analysis of long-term energy sce-narios in Chapter 4 and the options for action set outin Chapter 5, the present chapter proposes key policyobjectives and activities, with time frames for theirimplementation (Fig. 7-1). These objectives andactivities aim to prevent ecological and socio-eco-nomic guard rails being overstepped, and to returnany non-sustainable state beyond the guard rails to astate within them (Fig. 7-2). The objectives and activ-ities recommended here by the German AdvisoryCouncil on Global Change (WBGU) point to thedirection that needs to be taken to permit a globaltransformation of energy systems towards sustain-ability. In view of the uncertainties that attach to allassessments of future developments, it will remainessential to continuously review the objectives, takeinto consideration new scientific findings and tech-nological advances, and adjust the objectives andactivities accordingly.The goals and measures set outhere constitute key elements of the World EnergyCharter proposed by the Council (Section 5.3.2).There is a particular need for action in the coming10–20 years.That period presents the main window ofopportunity to transform global energy systems. Theintended effects will only occur with a certain timelag. This lag makes swift action all the more urgent.The German federal government should make use ofits international weight, taking all steps to vigorouslyadvance the transformation of energy systems withinthe context of global governance.

7.2Protecting natural life-support systems

One of the two overarching objectives of the WBGUtransformation strategy is to protect natural life-sup-port systems; the other is to eradicate energy poverty(Section 7.3).

7.2.1Reducing greenhouse gas emissions drastically

To keep global warming within tolerable limits,global carbon dioxide emissions need to be reducedby at least 30 per cent from 1990 levels by the year2050 (Chapter 4). This concerns above all the CO2

emissions from fossil fuels used to produce heat andpower and the emissions of the transport sector;taken together, these account for some 85 per cent ofall CO2 emissions worldwide today. For industrial-ized countries, this means a reduction by some 80 percent, while the emissions of developing and newlyindustrializing countries are allowed to rise by atmost 30 per cent. Developing and newly industrializ-ing country emissions should peak earlier, between2020 and 2030 (Chapter 4). Without a fundamentalreconfiguration of energy systems, emissions must beexpected to double or even quadruple in developingand newly industrializing countries over that period.This is why in these countries, too, a rapid redirectionof energy production and utilization towards analternative technology path is essential. The focus ofsuch activities needs to be placed on promotingrenewables and enhancing efficiency. Further supple-mentary measures need to be taken in the agricul-tural and forestry sectors. In particular, the stocks ofcarbon stored in vegetation and soils must be pro-tected.

In view of the considerable uncertainties, e.g.regarding climate sensitivity, these emissions reduc-tion goals are minimum requirements. To this end,the WBGU recommends• adopting a pioneer role in the implementation of

Article 3.2 of the Kyoto Protocol (demonstrableprogress) at the national and European level inthe period up to 2005. This would strengthen con-fidence in the process and would create a basis forintegrating the developing and newly industrializ-ing countries.

• updating, by 2008, the Kyoto Protocol’s reductiongoals for industrialized countries (agreed in a step-by-step process in further commitment periods)

Milestones on the WBGU transformationroadmap: Policy objectives, time framesand activities

208 7 Milestones on the WBGU transformation roadmap

Oil

Coal

Gas

Nuclear powerHydroelectricityBiomass (traditional)Biomass (modern)Wind

Solar power (photovoltaics and solarthermal generation)

Solar thermal (heat only)Other renewablesGeothermal

200

400

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800

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0

2003 2010 2020 2030 2040 2050Kyoto-1 Kyoto-2 Year

Global: Ensure expenditure to meet the most elementary energyrequirements is no more than 10 per cent of household income

OECD: Raise ODA to 0.5 per cent of GDP, and to 1 per cent of GDP over the long term

EU: Raise CHP share in electricity production to 20 per cent

Global: Integrate energy supply issues into PRSP processes

OECD: Launch new debt relief initiatives

Global: Establish new GEF window for sustainable energy systems

Global: Adopt Energy Charter and establish Global Ministerial Forum for Sustainable Energy

OECD: Introduce emissions-based user charge on international aviation

OECD: Increase funding for energy research to 10 per cent of overall research expenditure

OECD: Implement ecological financial reform at OECD level, and at global level over the long term

Global: Adopt Multilateral Energy Subsidization Agreement

Global: Set standards for CDM projects

Global: Found International Sustainable Energy Agency, as well as IPSE and WERCP

Global: Build capacities in developingcountries and transfer technologies

Global: Secure minimum supply of 500kWh per capita and year,rising to more than 700kWh by 2050

Global: Safeguard access to modern energy for all

Kyoto parties: Update emissions reduction targets for industrialized countries up to 2008,involve developing countries in emissions reduction regime by 2020

Global: Phase out nuclear energy

Global: Raise share of renewables in energy mix to 20 per cent, and to 50 per cent by 2050

Global: Treble energy productivity

Kyoto Annex B countries: Reduce greenhouse gas emissions by 40 per cent, and by 80 per cent by the year 2050 (1990 baseline)

Developing countries: Limit growth of greenhouse gas emissions to a maximum of 30 per cent from 1990 baseline

Obj

ectiv

es M

easu

res

Prim

ary

ener

gy u

se e

xem

plar

y tra

nsfo

rmat

ion

path

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Global: Introduce renewable energy quotas

Figure 7-1The transformation roadmap of the German Advisory Council on Global Change (WBGU). CDM Clean DevelopmentMechanism, CHP Combined Heat and Power, GDP Gross Domstic Product, GEF Global Environment Facility, IPSEIntergovernmental Panel on Sustainable Energy, ODA Official Development Assistance, OECD Organisation for EconomicCo-operation and Development, PRSP Poverty Reduction Strategy Papers, WERCP World Energy Research CoordinationProgramme.Source: WBGU

and introducing emissions control requirementsfor developing countries by 2020 at the latest.Newly industrialized countries should accept firstquantified requirements at an even earlier date.Furthermore, by 2005, Article 2 UNFCCC (pre-vention of greenhouse gas concentrations thatlead to ‘dangerous’ climate change) should be con-cretized.

• taking up in international climate protection pol-icy the issue of effective preservation of biosphericcarbon stocks.

• tapping emissions reductions potentials in devel-oping and newly industrializing countries bymeans of intensified cooperation with industrial-ized countries.This can be done through voluntarypartnerships, through promoting the Clean Devel-opment Mechanism and through technologytransfer above and beyond the CDM.

• swiftly integrating into the Kyoto Protocol quanti-fied reduction commitments for aviation and ship-ping emissions.

• giving particular attention to emissions from agri-culture and land-use changes. The importance ofthese is expected to grow in the future. Specificemissions reduction potentials should thereforebe researched.

• completely removing all subsidies for fossil energycarriers and nuclear power in industrialized andtransition countries by 2020, and worldwide by

2030. Moreover, subsidies for fossil energy carriersshould be removed in developing countries by2020 (Section 7.7.2)

7.2.2Improving energy productivity

In order to minimize resource consumption, globalenergy productivity (the ratio of gross domesticproduct to energy input) needs to be improved by 1.4per cent every year initially, and then by at least 1.6per cent as soon as possible. Energy productivityneeds to be doubled by the year 2030 from 1990 lev-els. This increase involves higher efficiencies in theconversion of primary to final energy, demand-sideefficiency improvements as well as structural changesin national economies. There are various suitableforums and starting points for the political imple-mentation of these goals: EU directives, a GlobalMinisterial Forum for Sustainable Energy yet to beestablished or, if necessary, an International Sustain-able Energy Agency (ISEA), also yet to be estab-lished (Section 7.5). Moreover, minimum efficienciesof more than 60 per cent should be aimed at by 2050for large fossil-fuel power plants. To this end, theWBGU recommends• establishing international standards prescribing

minimum efficiencies for fossil-fuelled power

209Protecting natural life-supporting systems 7.2

Non-sustainable area

Guard rail

Currentstate

Currentstate

Mea

sure

Goal: To prevent non-sustainable trajectories

Goal: To steer the system out of the non-sustainable area

Mea

sure

Mea

sure

Boundary zone

Mea

sure

Sustainable area

Figure 7-2 Connection between guardrails, measures and futuresystem development.The figure shows possiblestates of a system in terms ofits sustainability, plotted overtime. The current state of asystem relative to the guardrail can be in the green area(the ‘sustainable area’according to best availableknowledge) or in the redarea (the ‘non-sustainablearea’). If a system is in thenon-sustainable area, it mustbe steered by appropriatemeasures in such a way thatit moves ‘through’ the guardrail into the sustainable area.The guard rail is thuspermeable from the non-sustainable side. If a system isin the sustainable area, thereare no further requirementsupon it at first. The systemcan develop in the freeinterplay of forces. Only ifthe system, moving within the sustainable area, is on course for collision with a guard rail, must measures be taken to prevent itcrossing the rail. The guard rail is thus impermeable from the sustainable side. As guard rails can shift due to future advances inknowledge, compliance with present guard rails is only a necessary criterion of sustainability, but not a sufficient one.Source: WBGU


plants in a stepwise process from 2005 onwards,based on the European Union (EU) directive con-cerning integrated pollution prevention and con-trol (IPPC Directive).

• generating, by 2012, 20 per cent of electricity inthe EU through combined heat and power (CHP)production (EU target: 18 per cent by 2012). Topromote this, the German federal governmentshould argue within the ongoing negotiations onan EU CHP Directive for a challenging definitionof ‘quality CHP’ and for the swift setting of bind-ing national CHP quotas.

• initiating ecological financial reforms as a key toolby which to create incentives for more efficiency.This includes measures to internalize externalcosts (e.g. CO2 taxation, certificate trading) andthe removal of subsidies for fossil and nuclearenergy.

• improving the information provided to end users,in order to promote energy efficiency, e.g. bymeans of mandatory labelling for all energy-inten-sive goods, buildings and services. In the case ofgoods traded internationally, cross-national har-monization of efficiency standards and labels isrecommendable.

• exploiting the major efficiency potentials in theuse of energy for heating and cooling throughinstruments of regulatory law targeting the ther-mal insulation and performance of buildings.

7.2.3Expanding renewables substantially

In order to safeguard the protection of the naturalenvironment despite growing worldwide demand forenergy services, and in order to reduce to an accept-able level the risks associated with energy produc-tion, the proportion of renewable energies in theglobal energy mix should be raised from its currentlevel of 12.7 per cent to 20 per cent by 2020 (of whichat most 2 percentage points come from traditionalbiomass), with the long-term goal of reaching morethan 50 per cent by 2050 (of which at most 0.5 per-centage points come from traditional biomass). Eco-logical financial reforms will make fossil and nuclearsources more expensive and will thus reduce theirshare in the global energy mix. Consequently, theproportion of renewables will rise. However, this risewill remain well below the envisaged increase to 20per cent and, respectively, 50 per cent. The WBGUtherefore urges that renewables be expandedactively. For nature conservation reasons, hydro-power should not be used to its full potential. In par-ticular, the WBGU recommends

• that countries agree upon national renewableenergy quotas. In order to minimize costs withinsuch a scheme, a worldwide system of internation-ally tradable renewable energy credits should beaimed at by 2030. Its flexibility notwithstanding,such a system should commit each country to meeta substantial part of its quota through domesticgeneration.

• continuing and broadening market penetrationstrategies (e.g. subsidy schemes over limited peri-ods, fixed rates for power sold to the grid, renew-able energy quota schemes). Until significant mar-ket volume has been achieved, fixed rates forpower sold to the grid with tapering paymentsover time are a particularly expedient option.When a sufficiently large market volume of indi-vidual energy sources has been reached, assistanceshould be transformed into a system of tradablerenewable energy credits or green energy certifi-cates.

• further intensifying investment in research anddevelopment in the energy sector, building uponthe existing basis. Investment needs to grow atleast ten-fold from present levels by 2020. Thefocus needs to be shifted to renewables andenergy efficiency (Chapter 6).

• upgrading energy systems to permit the large-scale deployment of fluctuating renewablesources. This includes in particular enhancing gridcontrol, implementing appropriate control strate-gies for distributed generators, upgrading grids topermit strong penetration by distributed genera-tors as well as expanding grids to form interna-tional energy transport structures (‘global link’).This should be followed later by the establishmentof an infrastructure for hydrogen storage and dis-tribution, using natural gas as a bridging technol-ogy.

• building and strengthening human-resource andinstitutional capacities in developing countries(e.g. through partnerships between German anddeveloping-country institutions) and intensifyingtechnology transfer.

• setting, within export credit systems, progressiveminimum requirements for the permissible car-bon intensity of energy production projects from2005 onwards.

• providing vigorous support to disseminate andfurther develop the technologies involved in solarand energy-efficient construction.

211Eradicating energy poverty worldwide 7.3

7.2.4Phasing out nuclear power

The use of nuclear energy has proven non-sustain-able in the past, above all because of the risks associ-ated with final storage, reprocessing, proliferationand terrorism (Section 3.2.2). For this reason, no newnuclear power plants should be given planning per-mission, nor be built.The goal should be to phase outthe use of nuclear power worldwide by 2050. To thisend, the WBGU recommends• seeking to launch international negotiations on

the phase-out of nuclear power.This process couldbegin with an amendment to the statutes of theInternational Atomic Energy Agency (IAEA).

• establishing by 2005 new, stricter IAEA safetystandards for all sites at which plutonium is stored,as well as expanded monitoring and action-takingcompetencies of the IAEA in the field of safe-guards relating to terrorism and proliferation.

• permitting nuclear power plant operation from2010 onwards only if proof is furnished that thereis a disposal path for nuclear fuel rods; a processneeds to be initiated within the IAEA in this con-text.

• reviewing by 2010 EU moratoriums for the repro-cessing plants in Sellafield and La Hague. Thiscould take as a starting point the Convention forthe Protection of the Marine Environment of theNorth-east Atlantic (OSPAR).

• harmonizing safety standards at an internationallevel by 2010, with significantly increased levels ofmandatory insurance cover for nuclear powerplants; the goal would be for mandatory insuranceschemes to operate entirely without state cover.Moreover, tax concessions should be removed.Points of departure here include the planned EUdirective on safety standards for nuclear powerplants, as well as IAEA’s new anti-terrorism pro-gramme.

7.3Eradicating energy poverty worldwide

The second overarching goal of the WBGU transfor-mation strategy is to safeguard and expand access tomodern forms of energy in developing countries andthus to eradicate energy poverty worldwide. This is afundamental contribution to poverty reduction –attainment of the Millennium Development Goals isdetermined critically by questions of energy supply.To overcome energy poverty, in the age of globaliza-tion developments must be put on track not only

through measures within the affected countries, butalso by creating an appropriate international setting.

7.3.1Aiming towards minimum levels of supplyworldwide

Improving access to modern forms of energy2,400 million people still lack access to modern formsof energy. The poor in the Least Developed Coun-tries are those most affected. Particular challengesare presented by the switch from health-endangeringbiomass use for cooking and heating to modernenergy carriers, and the provision of energy servicesthat depend upon access to electricity. The WBGUrecommends, as an international goal, that everyoneshould have access to the following per-capita annualquantities of modern energy forms in order to meetthe most elementary energy needs: At least 500kWhfrom 2020 onwards, 700kWh from 2050 and1,000kWh by 2100.

All measures undertaken to transform energy sys-tems should take care to reduce regional and socio-economic disparities. Disadvantaged groups need tobe supported particularly, and special cultural or gen-der-specific aspects observed.

The WBGU considers it only just acceptable ifpoor households must spend at most one tenth oftheir income to meet their most elementary energyservice needs (500kWh per person and year). Insome cases, this may require cross-subsidies or socialtransfers (state support for electricity and heating). Itshould be ensured by 2050 at the latest that no house-hold is forced to spend more than 10 per cent of itsincome to meet its most elementary energy require-ments.

Implementing the Millennium DevelopmentGoalsAccess to modern energy is a key contribution toattainment of the development goals adopted in theUnited Nations Millennium Declaration. Particularimportance attaches to reducing indoor air pollutionin view of the major health hazards that this repre-sents.This is joined by ambient air pollution in urbanareas. In order to prevent respiratory diseases,health-endangering forms of traditional biomass useneed to be phased out (Sections 3.2.4, 4.3.2.7).


7.3.2Focussing international cooperation onsustainable development

Implementing new World Bank policy inassistance delivery practiceThe WBGU takes the view that the World Bank,which supports countries in efforts to expand theirenergy systems, should also regard itself as a bankdelivering assistance for sustainable energy in orderto facilitate leapfrogging. In efforts to promote thereconfiguration of energy systems, the World Bankhas not yet moved sufficiently from the conceptual tothe operational level.An urgent need thus remains toredirect its assistance delivery procedures, whichuntil now have predominantly financed fossil fuelsaccording to the least-cost principle. This has meantthat micro-economically profitable forms of energyhave been supported without ensuring the internal-ization of negative externalities. In a transitionalphase, bridging technologies such as modern gas-fired power plants, together with their associatedinfrastructure, deserve support. However, for theleast-cost principle to be accorded less weight, itwould be necessary for the financial resources avail-able for multilateral development financing to beincreased substantially. The Council recommendsthat• the new assistance delivery approach of the World

Bank is implemented swiftly in practice. The Ger-man federal government should use its member-ship on the Board of Governors of the WorldBank to work towards this.

Integrating sustainable energy supplywithin poverty reduction strategiesSustainable energy supply needs to be integrated suf-ficiently within the poverty reduction strategies ofmultilateral organizations such as the IMF and WorldBank.These began in late 1999 to focus their policiesvis-à-vis Least Developed Countries upon povertyreduction. Poverty Reduction Strategy Papers(PRSPs) serve to steer the medium-term develop-ment of countries and provide a basis for elicitinginternational support (Section 5.3.3.3). Eradicatingenergy poverty is not among the issues being negoti-ated within the current PRSP process. The WBGUrecommends• integrating sustainable energy supply within

PRSPs in order to raise the profile of energy-related issues in development cooperation. Thiswould ensure that, within a development coopera-tion context, energy policy is linked even moreconsistently with poverty reduction policy.

Strengthening the role of regionaldevelopment banksThe role of regional development banks should bestrengthened. These have good regional connectionsand intimate knowledge of local problems. They cantherefore be important partners in overcomingenergy poverty in low-income countries.As a prereq-uisite to this, however, the management capacities ofthe development banks first need to be strengthenedand expanded in a step-wise process.The WBGU rec-ommends that• Germany, in connection with its involvement in

these banks and within the EU context, workstowards ensuring that the regional developmentfunds administered by the development bankspromote energy supply in low-income countries.

• the EU makes targeted use of the EuropeanDevelopment Fund to promote renewables in theACP (African, Caribbean, Pacific) states. Thesecountries generally lack the resources to ensurethe supply of their population with modern formsof energy.

7.3.3Strengthening the capabilities of developingcountries

Promoting economic and social developmentin low-income countriesTo turn energy systems towards sustainability, a min-imum degree of economic development is a precon-dition. Many countries fall far short of the per-capitaincome required for this (Section 4.3.2.5). TheWBGU therefore recommends not only intensifyingdevelopment cooperation in the field of basic ser-vices and for sustainable energy supply, but alsointensifying cooperation with low-income countriesin particular, in both quantitative and qualitativeterms. Furthermore, within the context of the WTO‘Development Round’, improved access for goodsfrom all low-income countries to the markets ofindustrialized and newly industrializing countriesshould be urged.

Launching new debt relief initiativesIn general, heavily indebted developing countrieshave little scope to cope with price fluctuations onworld energy markets. Their ability to financeimprovements to the efficiency of their energy sup-ply systems and to advance the deployment of renew-able energy technologies is similarly limited. Toembark on transformation, wide-ranging debt reliefis needed. The WBGU recommends that• the German federal government argues for new

debt relief initiatives within the G7/G8 context.

213Mobilizing financial resources for the global transformation of energy systems 7.4

7.3.4 Combining regulatory and private-sector elements

It is essential to embark upon activities on both thesupply and demand side in order to improve access toadvanced low-emission energy forms and to renew-able energy sources, and to improve the efficiency ofenergy use in developing, newly industrializing andtransition countries.

Supply side: Combining liberalization andprivatization with regulatory interventionsOn the supply side, privatization and liberalizationneed to be combined with regulatory interventionsundertaken by the state. The mix of these threespheres will need to vary depending upon the specificcircumstances of a region. Liberalization and privati-zation require attractive framework conditions forprivate-sector investors and the tapping of interna-tional sources of capital. Stronger state interventionrequires the setting of standards, and also an expan-sion of public-private partnerships, possibly sup-ported by bilateral and multilateral developmentcooperation activities.

Demand side: Increasing the purchasingpower of the poorOn the demand side, the aim must be to increase pur-chasing power in relation to energy, particularly ofthe poor. This can be done by target-group specificsubsidies, or by expanding micro-finance systems. Toincrease not only purchasing power but also the will-ingness to use energy more sustainably, measurestaken on the demand side need to give considerationto culture-specific and gender-specific frameworkconditions.

7.4Mobilizing financial resources for the globaltransformation of energy systems

To finance the global transformation of energy sys-tems towards sustainability, there is an urgent need tomobilize additional financial resources, as well as tocreate new transfer mechanisms or strengthen exist-ing ones in order to support economically weakercountries in this transformation process. The WBGUwelcomes the programme on ‘Sustainable energy fordevelopment’ geared to establishing strategic part-nerships announced in 2002 at the World Summit onSustainable Development. Over the next five years, atotal of €1,000 million will be budgeted for this pro-gramme by the German government: 500 million forrenewables and 500 million for energy efficiency.

Mobilizing private-sector capitalIt is desirable for efficiency reasons that a consider-able part of the requisite investment is provided bythe private sector. To mobilize private-sector capitalfor the global transformation of energy systems, theWBGU recommends • intensifying policy advice within the context of

development cooperation activities, in order toplace partner countries in a position to createframework conditions conducive to investment.

• facilitating access to developing country marketsfor small and medium-sized suppliers of renew-able energy technologies within the context ofpublic-private partnerships.

• establishing by 2010 a German and, if possible, EUstandard for the CDM. This standard should per-mit exclusively, with exceptions to be substanti-ated in each case, projects that promote renew-ables (excluding large hydropower), improve theenergy efficiency of existing facilities or engage indemand-side management.

Boosting development cooperation fundingAt 0.27 per cent of GDP in 2001, German officialdevelopment assistance (ODA) funding is farremoved from the internationally agreed target –reaffirmed at the 2002 UN Conference on Financingfor Development (UNFfD) – of 0.7 per cent. It is alsoat the lower end of the European range. Even anincrease of these contributions to some 1 per cent ofGDP would be commensurate to the severity of theproblems prevailing. Germany committed itself atUNFfD to raise ODA funding to a level of 0.33 percent of GDP by 2006.• The WBGU recommends, as a matter of urgency,

raising ODA funding beyond the level of 0.33 percent announced for 2006, and proposes allocating,as a first step, at least 0.5 per cent of GDP forODA by 2010.

Harnessing innovative financing toolsTo implement the global transformation of energysystems, it will be essential to tap new sources offinance. In particular, the potential of raising chargesfor the use of global commons deserves examination.The WBGU recommends • raising from 2008 onwards an emissions-based

user charge on international aviation, to the extentthat this sector is not yet subject by then to inter-national emissions reduction commitments.

• that the initial allocation of emission certificates,with a time horizon of 20–30 years, is oriented to amodified per-capita approach. While complyingwith the WBGU climate guard rails, this could(depending upon system design) trigger an esti-mated transfer of financial resources in the order


of several hundred thousand million euro fromindustrialized to developing countries.

Strengthening the Global EnvironmentFacility as an international financinginstitutionThe Global Environment Facility (GEF) is a key cat-alyst for global environmental protection measures.It has proven its usefulness and should be furtherstrengthened. The GEF only meets the incrementalcosts of projects of global benefit. The WBGU rec-ommends • concentrating by 2005 the financial assistance pro-

vided for efficiency technologies and renewableresources in a newly created GEF window (‘win-dow for sustainable energy systems’). In order tobe able to give greater consideration to develop-ment policy aspects in the deployment of funds, asimplification of the incremental costs approachshould be considered. With a view to the high lev-els of funding required to promote the globaltransformation of energy systems, GEF resources(currently US$3,000 million for the third phasefrom 2002 to 2006) need to be expanded consider-ably.

7.5Using model projects for strategic leverage, andforging energy partnerships

Sending out signals through model projectsThe WBGU argues in favour of using model projectsto introduce new renewables on a large scale todeliver strategic leverage for a global transformationof energy systems towards sustainability. Such modelprojects could have global knock-on effects. Theywould showcase how technology leaps can be imple-mented in energy projects. The WBGU recommendsinitiating the following model projects (Section5.3.8):• Energy partnership between the European Union

and North Africa: The EU should establish astrategic energy partnership with North Africa.Such a strategy would involve: building large-scalepower plants for renewable electricity productionin North Africa; creating capacities for transmis-sion to the European interconnected power grid;and setting up a European focal point for NorthAfrican project partners and European investors.

• Distributed energy supply through liquefied gas: Indeveloping countries, traditional biomass usecauses substantial health impacts. These could beaverted by the step-wise substitution of three-stone hearths through liquefied gas cookers. Itwould be beneficial to base the production of liq-

uefied gas – or of a similar energy carrier – onmodern biomass.

• Energy-efficient buildings in the low-cost sector,piloted by South African townships: Within thecontext of development cooperation activities,projects demonstrating energy-efficient and low-cost building techniques should be implementedin cooperation with South African partners. Toproduce a multiplier effect, such projects shouldbe located in the vicinity of frequently visitedplaces.

• Improving the power quality in weak electric gridsin rural African regions: Within the context ofdevelopment cooperation activities, a sufficientlydensely populated rural region should be electri-fied, in cooperation with a major African energysupplier. In order to improve power quality ingrids technologies should be deployed that arecurrently being developed in connection with dis-tributed generation strategies.

• 1 million huts programme for developing coun-tries: To promote rural electrification in develop-ing countries, not only the expansion of grids intosufficiently densely populated areas is important,but also distributed approaches and micro grids.This programme needs a certain volume and dura-tion, and should also involve a new dimension ofin-process socio-economic support.

Forging strategic partnerships to turnenergy systems towards sustainabilityPolicy initiatives – existing or emergent – promotinga global transformation of energy systems towardssustainability provide a framework for action. In par-ticular, the International Conference for RenewableEnergies in Bonn 2004, announced by German Chan-cellor Gerhard Schröder at the World Summit onSustainable Development (WSSD), is an importantcontribution to advancing this theme at the interna-tional level. The WBGU recommends that, in thiscontext, the following policy processes in particularare used as catalysts to promote the transformationprocess:• The initiatives adopted at the WSSD (Box 5.3-1),

e.g.:– the Energy Initiative for Poverty Eradication

and Sustainable Development, a strategicenergy partnership between the EU and devel-oping countries,

– the Global Village Energy Partnership, involv-ing, among others, the United Nations Devel-opment Programme (UNDP), the World Bankand the private sector,

– the Global Network on Energy for SustainableDevelopment, involving, among others, theUnited Nations Environment Programme

215Drawing together and strengthening global energy policy institutions 7.7

(UNEP), energy institutions, the World Bankand the private sector.

• The economic partnership agreement currentlybeing negotiated between the EU and the ACPstates.

Following the new OECD Development AssistanceCommittee guidelines adopted in 2001, the principlesof coherence, convergence and complementarityneed to be observed. It follows that the energy strate-gies to be developed within the context of the aboveinitiatives should be suitable for integration into thenumerous already existing structures and pro-grammes of the partner countries. In particular, theCouncil takes the view that overcoming energypoverty should become a constituent part of the‘basic social services’ promotion focus within Ger-man development cooperation, and of the 20:20 ini-tiative agreed at the 1995 World Summit for SocialDevelopment.

7.6Advancing research and development

Turning energy systems towards sustainability is amajor technological and social challenge on a scalecomparable to that of a new industrial revolution.For it to succeed, a major research and developmenteffort is a prerequisite. This concerns renewableenergy sources, infrastructure, end-use efficiencytechnologies as well as the provision of knowledge onthe conservation and expansion of natural carbonstocks and sinks.The social sciences also need to con-tribute, by researching the individual and institu-tional barriers to this transformation process, anddeveloping and assessing strategies to overcomethese barriers.

To develop the necessary diversity of options, itwill be essential to promote a broad range ofresearch activities (Chapter 6). This challenge is notcurrently being tackled. Expenditure for researchand development in the energy sector has beendeclining for many years: At present, across theOECD only some 0.5 per cent of turnover in theenergy sector is devoted to research and develop-ment activities, and the percentage is dropping.With-out research and development, it will be impossibleto achieve e.g. the high growth rates for renewableenergy sources that are envisaged in the exemplarytransformation path. This applies to all spheres: fromprivate companies through to state support, fromrenewable energy innovation through to fossil bridg-ing technologies. Only if there is sustained, highinvestment in research and development can therebe a prospect of renewable-energy technologies andefficiency-enhancing measures coming into wide-

spread use over the medium and long term at lowcost. The WBGU recommends• increasing direct state expenditure for research

and development in the energy sector in industri-alized countries at least ten-fold by 2020 from itscurrent level of about US$1,300 million annually(average across the OECD for the 1990–1995period), above all through re-allocation ofresources from other areas. This will be essentialto tackle the tasks set out here. This level ofresource allocation corresponds roughly to theaverage expenditure undertaken in the EUthroughout the 1980s for research on energy pro-duction by means of nuclear fission alone. Thefocus needs to be shifted rapidly away from fossiland nuclear energy towards renewables and effi-ciency.

• establishing within the UN system a World EnergyResearch Coordination Programme (WERCP) todraw together the various strands of national-levelenergy research activities, in analogy to the WorldClimate Research Programme (WCRP).

7.7Drawing together and strengthening globalenergy policy institutions

7.7.1Negotiating a World Energy Charter andestablishing coordinating bodies

Integrating the two objectives – to conserve naturallife-support systems and eradicate energy poverty –requires a coordinated approach at the global level.To do this, international institutions and actors needto be drawn together. The WBGU recommendsstrengthening and expanding the institutional archi-tecture of global energy policy in a stepwise process,building upon existing organizations:• As a first step, a World Energy Charter should be

agreed or negotiated at the International Confer-ence for Renewable Energies in 2004. This shouldcontain the key elements of global energy policy(targets, time frames and key measures) and pro-vide a joint basis for action by the relevant actorsat global level.

• Moreover, this conference should decide upon –or better still establish – a Global MinisterialForum for Sustainable Energy responsible forcoordinating and determining the strategic direc-tion of the relevant actors and programmes.

• In parallel, a Multilateral Energy SubsidizationAgreement (MESA) should be negotiated by2008. This agreement could provide for the step-


wise removal of subsidies for fossil and nuclearenergy, and could establish rules for subsidizingrenewable energy and energy efficiency technolo-gies.

• In support of these activities, a group of like-minded, advanced states should adopt a pioneer-ing role on the path towards sustainable energypolicies. The European Union would be a suitablecandidate for such a leadership role.

• Building upon the above, the institutional founda-tions of sustainable energy policy could be furtherstrengthened by concentrating competencies atglobal level.To this end, the role of the MinisterialForum could be further expanded.

• Using the experience gained until that date, byabout 2010 the establishment of an InternationalSustainable Energy Agency (ISEA) should beexamined.

7.7.2Enhancing policy advice at the international level

It is important that the political implementation of aglobal transformation of energy systems towards sus-tainability receives continuous support through inde-pendent scientific input, as is currently the case in cli-mate protection policy. To this end, the WBGU rec-ommends• establishing an Intergovernmental Panel on Sus-

tainable Energy (IPSE) charged with assessingglobal energy trends and identifying options foraction.

7.8Conclusion: Political action is needed now

As this report has shown, to protect humankind’snatural life-support systems and eradicate energypoverty in developing countries it will be essential totransform energy systems worldwide.A global transi-tion to renewable energy sources would have theadded benefit of yielding a peace dividend: For onething, energy poverty in low-income countries wouldbe reduced. For another, the geostrategic importanceof oil reserves would decline significantly over thelong term.

This transformation of energy systems will be fea-sible without severe interventions in the societal andeconomic systems of industrialized and transitioncountries if policy-makers grasp the opportunity toshape this process over the next two decades. Thecosts of inaction would be much higher over the longterm than the costs of initiating this transformation.

Every delay will make it more difficult to changecourse.

The direction of transformation is clear: The effi-ciency with which fossil fuels are used must beincreased, and massive support must be provided tolaunch systems using renewables. It will be particu-larly important in this endeavour to swiftly reducepath dependency on fossil fuels.The long-term objec-tive is to break the ground for a solar age. Both dis-tributed solutions and the establishment of interna-tional energy transport structures should receivesupport in equal measure.

In the view of the WBGU, the transformation isfeasible. It is also financeable if, in addition to inten-sified use of existing mechanisms (e.g. GEF, ODA,World Bank and regional development bank loans)and enhanced incentives for private-sector investors(e.g. through public-private partnerships), innovativefinancing avenues (such as user charges for globalcommons) are pursued. This is the message of thepresent report which highlights the key opportunitiesto steer energy systems towards sustainability, guidedby a transformation roadmap.

The transformation of energy systems towardssustainability will not be achieved through any singlestrategy defined today. For worldwide transforma-tion to succeed, it will need to be shaped in a stepwiseand dynamic manner, for no one can predict todaywith sufficient certainty the technological, economicand social developments over the next 50–100 years.Long-term energy policy is thus also a searchingprocess. It is the task of policy-makers to shape thisdifficult searching process vigorously and bring it tofruition.

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1 joule = 1J • is the energy needed by a bee to fly 120m,• is the amount of electrical energy needed by a

pocket calculator to carry out 50 multiplica-tions.

1 kilojoule = 1kJ (103J)• is the energy needed by a person to swim 1m,

walk 5m, cycle 12m or go up 8 steps.1 megajoule = 1MJ (106J)

• is enough to watch about 2 football matches ona colour TV,

• is consumed by a person doing nothing at all for3.5 hours (basal metabolic rate).

1 gigajoule = 1GJ (109J)• meets the washing and drying requirements of

a 4-person household for 3 months, or lightingneeds for 8 months.

1 terajoule = 1TJ (1012J)• is the content of 31,000l petrol, enough to travel

8 times around the world by car,• is the amount wasted by a poorly insulated sin-

gle-family house in 7 years.1 petajoule = 1PJ (1015J)

• represents a 6 m high pile of hard coal coveringan entire football field.

1 exajoule = 1EJ (1018J)• is the amount of energy received by the Earth

from the sun in 6 seconds,• is the worldwide consumption of primary

energy in 21 hours (in the year 2000).

Source: Ott, 2002

Annex B countries: Group of countries listed inAnnex B to the ↑Kyoto Protocol that have com-mitted themselves to limit or reduce their green-house gas emissions. These include all Annex Icountries except Turkey and Belarus.

Annex I countries: Group of countries listed inAnnex I to the ↑United Nations Framework Con-vention on Climate Change (UNFCCC). Includesall developed countries in the OECD, as well ascountries undergoing the process of transition to amarket economy in eastern Europe and the CISstates. All other countries are automaticallytermed non-Annex I countries. In Articles 4.2 (a)and 4.2 (b) UNFCCC, Annex I countries specifi-cally commit themselves to return their green-house gas emissions to 1990 levels individually orjointly by the year 2000.

Annex II countries: Group of countries listed inAnnex II to the ↑United Nations FrameworkConvention on Climate Change (UNFCCC).Comprises all developed countries in the OECD,being a subset of the ↑Annex I country group.Article 4.3 UNFCCC obligates these countries toprovide financial resources in order to assistdeveloping countries in meeting their commit-ments, such as the preparation of national reports.It also obligates Annex II countries to support thetransfer of environmentally sound technologies todeveloping countries.

baseline scenario: A ↑scenario that characterizes thedevelopment of the economy and of other driversof emissions (such as population, technologies)that is to be expected without policy interventions,in particular without explicit climate policy mea-sures. It serves in, for instance, economic cost-ben-efit analysis as a basis on which to develop climatechange mitigation scenarios that take climate pol-icy measures into account.

biofuels: Liquid fuels such as biodiesel and bio-ethanol that result from the conversion of ↑bio-mass.

biogas: Generic term referring to gases from whichenergy can be recovered and that are created

Glossary

232 9 Glossary

when ↑biomass decomposes under anaerobic con-ditions. In decomposition, about two-thirdsmethane (CH4) and one-third carbon dioxide(CO2) are released. The methane gas is the frac-tion of the biogas that can be utilized for energyrecovery. Biogas has a high calorific value (25MJper cubic metre).

biomass: The total organic mass of the biotic envi-ronment, either as living or dead biomass (e.g.fuelwood, charcoal and dung). Important conver-sion products of biomass include ↑biogas and↑biofuel. In developing countries, ↑traditionalbiomass use is the dominant form.

capacity utilization: A measure of the differencebetween peak demand on the electricity marketand overall installed power plant capacity.

capacity: Capacity is energy per unit of time. Electriccapacity is measured in watts (W), kilowatts (kW),megawatts (MW), etc.

carbon dioxide (CO2): A naturally occurring gas, andalso a by-product of burning fossil fuels and bio-mass. CO2 is also emitted as a result of deforesta-tion and other land-use changes, as well as fromindustrial processes such as cement production.

carbon intensity: Carbon dioxide emissions per unitprimary energy input.

Clean Development Mechanism (CDM): One of the↑Kyoto mechanisms introduced by the ↑KyotoProtocol, that permits an industrialized-countryinvestor to carry out emissions-reducing projectsin a developing or newly industrializing country.The greenhouse gas reduction attributable to theproject is credited to the industrialized country.

climate change: A statistically significant variation ineither the mean state of the climate or in its vari-ability, persisting for an extended period (typicallydecades).

climate sensitivity: The °C rise in surface tempera-ture that results if the pre-industrial CO2 concen-tration in the atmosphere doubles from 280 to 560ppm.The ↑IPCC states a range of climate sensitiv-ity of 1.5–4.5°C, without stating a best estimate.

CO2 storage (or sequestration): Storage, by humanaction, of atmospheric carbon in terrestrial ecosys-tems, geological formations or the oceans. Forinstance, through new technologies the ↑carbondioxide resulting from combustion processes canbe captured, possibly liquefied and then pumpedinto underground repositories such as depletedgas and oil fields. In addition, natural carbon stor-age takes place in vegetation, in which carbondioxide is bound as ↑biomass over lengthier peri-ods.

cogeneration (combined heat and power, CHP):Facilities with combined heat and power produc-tion not only generate electricity from the fuel

consumed, but also make use of the waste heat atthe same time. For instance, this heat can be usedfor space heating purposes (as in district heatingsystems). In industry, it can be used for heat-dependent production processes.

Commission on Sustainable Development (CSD): Acommission of the Economic and Social Council(ECOSOC) of the United Nations established in1992 as the key forum for the Rio follow-upprocess. It monitors and supports implementationof the AGENDA 21 adopted at the UnitedNations Conference on Environment and Devel-opment (UNCED) held in Rio de Janeiro in 1992.The annual meetings of the CSD are attended bygovernments and international organizations, butalso by more than 1,000 non-governmental orga-nizations.

contracting: A financing model under which theinvestment costs of energy-saving measures ornew energy-generating plant are refinanced fromthe energy costs saved. The contractor, e.g. a pri-vate-sector company or a municipal energy sup-plier, implements measures that reduce the energyrequirement of a building or installation.To do so,the contractor invests in new technology or, forinstance, insulates a building. The host institution,such as a local authority that does not itself com-mand over the necessary capital or knowledge, isguaranteed by contract a certain percentage of theenergy savings and thus cost savings. The remain-ing savings are the profit that goes to the contrac-tor. In energy equipment contracting arrange-ments, the contractor also operates and maintainsthe equipment.

Demand Side Management (DSM): A voluntarycontrol and planning instrument to tap efficiencypotentials on the demand side, by means of eco-nomic incentives (e.g. in the form of load manage-ment making use of variable tariff structures).

deregulation: Reduction of ↑regulation.development partnerships (PPP: Public-Private

Partnerships): In development partnerships, pri-vate companies cooperate with state developmentcooperation agencies in implementing projectsthat pursue development policy goals and at thesame time yield micro-economic benefit for theparticipating companies. The advantage of thistype of cooperation with industry from a develop-ment cooperation perspective is that the partici-pation of private companies ensures that activitiesare cost-effective, efficient and have sustainedimpact.

Disability Adjusted Life Years (DALYs): An indica-tor of the overall disease burden of a population,integrating premature death, disease and disabil-ity.

233Glossary 9

efficiency: Measure of the effectiveness of an energyconversion process. The efficiency of a system isthe ratio of energy output to energy input, and isstated as a percentage.

electricity-to-heat ratio: The ratio of electricity out-put to utilizable heat of a ↑cogeneration process.

emissions trading (or certificate trading): Economicinstrument for the cost-efficient limitation orreduction of environmentally harmful emissions.Generators of emissions are subject to reductiongoals that they must either meet themselves or canhave met in part or in whole by other generators.To that end, reduction commitments can be tradedamong the participants in a trading system, whichproduces a cost-optimal allocation of the set over-all reduction.The ↑Kyoto Protocol introduces thisinstrument as one of the ↑Kyoto mechanisms atstate level for ↑Annex B countries. The Protocolalso sets out the specific emissions reduction com-mitments. A transfer of reduction commitmentsfrom countries to companies is possible.

energy carriers: Substances or media which containenergy that can be utilized in a cost-effective man-ner.A distinction is made between e.g. fossil (coal,mineral oil, natural gas), renewable (biomass,geothermal, solar, wind, hydro) and nuclear (ura-nium) ↑primary energy carriers.

Energy Charter Treaty (ECT): The Treaty evolvedfrom the 1991 European Energy Charter. Itentered into force in 1998. 46 states, mainly inEurope and Central Asia, have ratified the Treaty(as at 11.09.2002). The aim of the ECT is to pro-mote economic growth by liberalizing investmentand trade. In addition, it establishes minimumstandards with respect to foreign investment andenergy transport. The environmental aspects ofenergy policy have been set out in greater detail ina legally non-binding protocol (Protocol onEnergy Efficiency and Related EnvironmentalAspects, PEEREA).

energy efficiency: The technical efficiency of end-useequipment (such as household appliances) or sys-tems (such as power plants), usually quantified interms of their efficiency in converting energy.

energy input: This corresponds to the frequently usedterm ‘energy consumption’, the latter being,strictly speaking, incorrect, and means the amountof energy deployed.

energy intensity: The ratio of energy input to ↑grossdomestic product generated by that input (inverseof ↑energy productivity).

energy mix: Combination of different energy carriersfor energy supply.

energy poverty: Energy poverty refers to the lack ofsufficient access to energy services, in order tomeet basic needs, that are affordable, reliable,

high-quality and safe, and cause no undue healthor environmental impacts. Countries whereenergy poverty is widespread are generally char-acterized by major development problems.Energy poverty affects some 2,400 million people,who are dependent upon traditional biomass use.1,600 million people have no access to electricity.

energy productivity: The ratio of ↑gross domesticproduct to ↑energy input required to produce thatproduct. In contrast to ↑energy efficiency, energyproductivity can be improved not only throughtechnological efficiency, but also through struc-tural changes in energy systems (such as a transi-tion from coal power plants to more efficient gas-fired plants), economic structural changes towardsless energy-intensive products and services,altered patterns of energy use or changes inlifestyles.

energy service: The actual utility gained by using↑useful energy: a brightly illuminated workingspace, refrigerated food, clean laundry, transporta-tion of goods from one place to another, etc. Thequantity of energy used is irrelevant to the valueof the energy service (e.g. the quality of lighting isimportant, not the electricity consumed, trans-portation to the destination is decisive, not thepetrol consumed).

energy: Energy is the capacity of a system to do work.A distinction is made between e.g. chemical,mechanical and electrical energy, as well as heat.

final energy: Energy that is available in a utilizableform after conversion of ↑primary energy to ↑sec-ondary energy and after transportation and distri-bution to the final consumer (e.g. briquettes, elec-tricity from the socket, or petrol at the petrolpump). Final energy is the third stage in the energyflow chain from ↑primary over ↑secondary to↑useful energy.

fossil fuels: Carbon-based fuels from fossil carbondeposits, including coal, oil and natural gas. Theircombustion releases carbon dioxide, which is themain driver of human-induced global warming.

fuel cell: Fuel cells convert chemical energy directlyinto electrical energy, i.e. without an intermediatethermal phase. The ideal energy carrier is hydro-gen, which can be produced from e.g. green elec-tricity or by reforming fossil energy carriers, butalso from biomass. Electric efficiencies of 30–50per cent are currently achieved. Efficiencies of upto 60 per cent are anticipated for the future.Watervapour is the sole emission. There are variousdesigns of fuel cells, e.g. polymer electrolyte mem-brane fuel cells (PEMFC) operating in the low-temperature range of 50–100°C, which are partic-ularly suitable for mobile applications, molten car-bonate fuel cells (MCFC) for the medium-tem-

234 9 Glossary

perature range around 650°C and solid oxide fuelcells (SOFC) which operate in the high-tempera-ture range of 800–1000°C.

geothermal energy: Heat from the Earth’s core thatreaches the Earth’s surface or can be utilizedthere.

global change: Refers to the interlinkages amongglobal environmental changes, economic global-ization and cultural transformation.

Global Environment Facility (GEF): A multilateralfinancing mechanism established in 1991. TheGEF is implemented jointly by UNDP, UNEP andthe World Bank. It provides grants and low-inter-est loans to developing countries and easternEuropean transition countries to help them carryout projects and measures to relieve pressures onglobal ecosystems.The focal areas are climate pro-tection, biodiversity conservation, ozone layerprotection and the protection of internationalwaters. Soil conservation measures in arid zonesand forest conservation measures also receivesupport if they have links to one of the four focalareas.

global radiation: Direct and diffuse solar irradiationincident upon a horizontal surface. The level ofglobal radiation depends upon the position of thesun (in turn dependent upon latitude and time ofyear) and atmospheric conditions (cloud cover,atmospheric particles).

green electricity: A common term for electricity pro-duced from ↑renewable sources. It also embracespower produced through ↑cogeneration.

Green Energy Certificates: This is a further develop-ment of flexible, tradable ↑quotas. Producers of↑green electricity receive these certificates from astate-controlled issuing body as verification thatthey have produced a certain amount of electricity(such as 1MWh). Besides energy suppliers andgenerators, final consumers can also participate ina system of tradable Green Energy Certificates.

greenhouse gases: Greenhouse gases are thosegaseous constituents of the atmosphere that, dueto their selective absorption of thermal radiation,cause a warming of the lower atmosphere.The pri-mary anthropogenic greenhouse gases are ↑car-bon dioxide, ↑nitrous oxide and ↑methane. Theyalso include industrial gases such as hydrofluoro-carbons (HFCs), perfluorocarbons (PFCs) andsulphur hexafluoride (SF6).

gross domestic product (GDP): Equals the total ofall income from employment plus unearnedincome in the reporting period generated in thecourse of production in a country, to which areadded depreciation, and levies on production andimports (reduced by subsidies).

guard rail: Guard rails demarcate the domain of freeaction for the people-environment system fromthose domains which represent undesirable oreven catastrophic developments and which there-fore must be avoided. Pathways for sustainabledevelopment run within the corridor defined bythese guard rails.

heat pump: Heat pumps raise heat from a low tem-perature level to a higher, more useful tempera-ture level, using external energy input. All heatpumps need external energy to drive the process;it is essential to take this into account in anenergy-balance assessment.

hydrogen economy: An economy based upon hydro-gen as energy storage medium. In this technologysystem, at first the ↑primary energy of solar radia-tion or of wind is converted into electricity. Elec-tricity from e.g. ↑renewable sources can be used toproduce hydrogen through electrolytic separationfrom water. Alternatively, hydrogen can also beproduced from ↑biomass or ↑fossil fuels. It canserve as a distributed storage medium for electric-ity, for instance in periods of surplus power pro-duction, or can be used to operate ↑fuel cells inbuildings and vehicles.

IAEA: The International Atomic Energy Agencywas founded in 1957 as a specialized agency of theUnited Nations with seat in Vienna, and has 123member states. Its tasks include reviewing compli-ance with the Non-Proliferation Treaty and theworldwide monitoring of nuclear facilities. It pro-motes the civilian use of nuclear energy, coopera-tion in nuclear engineering and research, and theexchange of scientific-technical experiencethrough support programmes.

IEA: The International Energy Agency was estab-lished in 1974 as an autonomous organizationwithin the OECD framework in Paris, with theaim of ensuring the security of primary energysupply. The 26 member states have agreed toreduce dependency upon oil imports through pro-moting the use of fossil and also renewable ener-gies, to exchange key energy information, to coor-dinate their energy policies and to collaborate inprogrammes for the efficient use of energy. TheIEA regularly publishes the World Energy Out-look, the most important source worldwide forenergy statistics and analyses of the energy sector.

Intergovernmental Panel on Climate Change(IPCC): The Panel was founded in 1988 and is oneof the most influential international scientificinstitutions for climate policy. The IPCC laid thescientific foundation for negotiations on the↑United Nations Framework Convention on Cli-mate Change, and publishes regular assessmentreports on global climate change. The Third

235Glossary 9

Assessment Report (TAR), published in 2001, wasauthored by more than 3,000 scientists from allaround the world.

international regimes: International regimes areinstitutions by which a group of states addresses atransboundary problem – in the environmentalsphere e.g. climate change. They comprise princi-ples, norms, rules and decision-making proce-dures, and are based upon formal or informalintergovernmental agreements. A conference ofthe parties meeting periodically generally formsthe core of the decision-making process of aregime. Although they do often have small secre-tariats, regimes are not autonomous actors, in con-trast to international organizations.

Joint Implementation (JI): One of the flexible mech-anisms of the ↑Kyoto Protocol (↑Kyoto mecha-nisms), that permits developed countries (↑AnnexI countries) to carry out climate change mitigationprojects jointly with another Annex I country.Theproject (e.g. the erection of a wind turbine) is car-ried out in country A, but financed by country B.The emissions thus prevented in country A can beemitted additionally by country B within the com-mitment period, or country B can have them cred-ited to its account. A corresponding quantity ofemission rights is deducted from country A’saccount.

joule (J): Unit of energy.1J = 1Nm = 1Ws = 1kg m2 s-2

1kWh = 3,600,000Jkilowatt peak (kWp): Output of a photovoltaic mod-

ule under standard test conditions, i.e. global radi-ation 1000 W/m2, cell temperature 25°C and thespectrum of sunlight in central Europe.

kilowatt-hour (kWh): Commonly used measure ofenergy. For larger installations, energy is oftenstated in megawatt-hours (MWh) per year.

Kyoto mechanisms: ‘Flexible’ mechanisms envisagedin the ↑Kyoto Protocol, such as ↑emissions trad-ing, ↑Clean Development Mechanism (CDM) and↑Joint Implementation (JI). These permit thecrediting of emissions reductions achieved outsideof a country that has adopted commitments.

Kyoto Protocol to the United Nations FrameworkConvention on Climate Change: Agreementunder international law that sets out greenhousegas emissions reduction targets for developedcountries, as well as key implementation modali-ties. The Protocol was adopted in 1997 at the 3rd

Conference of the Parties to the ↑United NationsFramework Convention on Climate Change(UNFCCC) in Kyoto, Japan. It commits ↑Annex Bcountries to reduce emissions of certain ↑green-house gases by around 5 per cent from the baseyear 1990 in the commitment period 2008–2012.

The Kyoto Protocol has not yet entered into forcebecause Russia, which has announced its intentionto ratify, has not yet actually done so. The USAdeclared in March 2003 that it does not intend toratify the Protocol.

learning curve: The drop in specific production costsin step with growing cumulative production.

liberalization: A general term referring to the disso-lution of formerly monopolistic structures and theintroduction of market-based conditions, i.e. com-petition. In Germany, the Energy Industry Act(Energiewirtschaftsgesetz) adopted in April 1998led to the removal of the territorial monopoliespreviously held by the power suppliers. Since then,consumers are free to choose their power supplier.

methane (CH4): Greenhouse gas emitted above allfrom rice cultivation, livestock breeding, the com-bustion of biomass and the extraction and com-bustion of fossil fuels.

microgrid: Is a closed, spatially discrete power supplynetwork that is not connected to further (includ-ing public) networks.

modern biomass use: ↑Biomass from which energycan be recovered (e.g. agricultural residues,forestry residues and small-diameter wood, indus-trial wood waste and discarded timber, as well asannual or perennial energy crops cultivatedspecifically for energy production) which, givingdue regard to ecological and health restrictions, isused to produce heat and/or power, as well as bio-gas (cf. ↑traditional biomass use).

net metering: Fixed rates received by electricity gen-erators for power sold to the public grid, producedfrom e.g. ↑renewables. The rates paid for powersold to the grid are a key determinant of the cost-effectiveness of power-generating installations.They generally taper over time.

new renewables: These include those ↑renewablesthat still have a major expansion potential becausetheir use is presently in the initial phase of tech-nology development, e.g. solar, wind and modernbiomass. They do not include hydropower.

nitrous oxide (N2O): A persistent greenhouse gasreleased above all through the use of nitrogen fer-tilizers in agriculture, and through the combustionof biomass and fossil fuels.

OPEC: The Organization of Petroleum ExportingCountries was founded in 1960 by Saudi Arabia,Venezuela, Iraq, Iran and Kuwait. Qatar (1961),Indonesia (1962), Libya (1962), the United ArabEmirates (1967), Algeria (1969) and Nigeria(1971) joined later. Today OPEC is a powerfulalliance of newly industrializing economies oper-ating on the international energy market.

236 9 Glossary

overall efficiency: In contrast to momentaneous↑efficiency, which is the ratio of output to inputunder defined momentaneous conditions, overallefficiency is this ratio across a certain period.

path dependency (or lock-in effects): The limitationsimposed upon policy options to steer technologies,as a result of historical developments (lock-in).For instance, that a technology prevails overanother on the market is not necessarily due to itssuperiority, but can be the outcome of chance his-torical events and a self-amplifying process: Thecosts of the ‘traditional’ technology are low com-pared to the initial investment associated with anew technology, as learning effects have been usedin the traditional technology’s application andcompatible techniques and standards are avail-able.

portfolio approach: The requirement upon actorssubject to quota commitments to use a certainproportion of renewables for electricity produc-tion.

primary energy: The energy content of naturalenergy carriers such as coal, oil, natural gas or nat-ural uranium. It is the input parameter of energyflows, which characterize energy use byhumankind. Primary energy is the first link in theenergy flow chain and is converted, e.g. in powerplants, into ↑secondary energy.

Public-Private Partnership (PPP): Longer-termcooperation between the state and the private sec-tor to pursue a common goal (such as develop-ment partnerships). Both sides bring their ownspecific resources (assistance measures, know-how, etc.) to the cooperation.

Purchasing Power Parity (PPP): A special measureof ↑gross domestic product permitting compar-isons of purchasing power among countries. PPPrelates to a ‘shopping basket’ in which currentexchange rates have no influence.Thus one kilo ofrice receives the same value in Japan as in Indone-sia, even though its dollar value is about 7 timeshigher. PPP tends to reduce the difference in GDPper capita between industrialized and developingcountries.

quantitative approach: Generic term applying to thepromotion of renewables through quantitativestipulations set by the state (minimum quantity orminimum proportion of renewable energies thatmust be implemented within a certain period).Quantitative instruments include the variousforms of ↑quotas, as well as ↑tendering proce-dures.

quotas: An instrument to promote the deployment ofrenewable energy sources in energy supply. Aquantitative goal is set at the policy level – usuallya national-level minimum target for energy pro-

duction from renewable sources within a certainperiod and/or for specific technology realms. Theoverall quota is broken down into sub-quotas forenergy producers or suppliers.To improve flexibil-ity and thus economic efficiency, it is conceivableto establish a quota trading system and to furtherdevelop the approach towards ↑Green EnergyCertificates.

regime: ↑international regimeregulation: Statutory standards established by a

state, regulating markets.The intervention in mar-ket processes that these standards produce can bemore or less deep. The energy sector generallyrequires a certain degree of regulation becausetransmission and distribution networks representnatural monopolies.

renewables: These include the energy of the sun,water, wind, tides, modern biomass and geother-mal energy. Their overall potential is in principleunlimited or renewable, and is CO2-free or -neu-tral.

re-regulation: The renewed ↑regulation of marketsthat were previously liberalized (deregulated).

scenario: A plausible description of how the futuremay develop, based on analysis of a coherent andinternally consistent set of assumptions, trends,relationships and driving forces.

secondary energy: Readily storable and/or trans-portable forms of energy (e.g. electricity, fuels,hydrogen), produced from ↑primary energy carri-ers in e.g. power plants or refineries. Secondaryenergy is the second stage in the energy flow chainthat begins with ↑primary energy. It is transportedthrough e.g. the electricity grid to consumers,where it is available as ↑final energy.

sequestration: ↑CO2 storage.shadow subsidies: Non-accounting of the costs of

external effects, for instance of conventionalenergy production, whose exact quantitative cal-culation is extremely difficult.

solar thermal power plants: In solar thermal powerplants, direct sunlight is concentrated by means ofoptical elements onto an absorber. The radiationenergy thus absorbed heats a heat transfermedium. This heat energy is subsequently used todrive largely conventional prime movers, such assteam turbines or ↑Stirling engines.

Stirling engine: Is a cyclically operating thermody-namic machine that converts external heat inputsinto mechanical energy.

sustainable development: This term is mostly under-stood as a concept of environment and develop-ment policy that was formulated by the Brundt-land Report and further refined at the UnitedNations Conference on Environment and Devel-opment in Rio de Janeiro in 1992. The concept

237Glossary 9

implies that democratic decision-making andimplementation processes should promote devel-opment that is ecologically, economically andsocially sustainable, and should take into accountthe needs of future generations.

technology transfer: The set of processes relating tothe exchange of knowledge, money and goodsamong different stakeholders that leads to thespreading of use of technologies, e.g. for mitigatingclimate change or securing sustainable energydevelopment. Transfer often has two meanings:Diffusion of technologies and technological coop-eration across and within countries.

tendering procedure: An approach towards provid-ing support for renewables. In this procedure, thestate calls for tenders for precisely stipulated gen-eration capacities or grid feed-in quantities fromcertain energy sources. Contracts are generallyawarded to those investors who make the cheap-est bid.

traditional biomass use: Form of energy productionfrom ↑biomass, such as wood, dung, harvestresidues, etc., above all for cooking and heating.Worldwide about 2,400 million people, predomi-nantly in developing countries, are dependentupon traditional biomass and are thus oftenexposed to emission-related health hazards due toinadequate combustion technologies.

United Nations Framework Convention on ClimateChange (UNFCCC): The Convention wasadopted in 1992 and entered into force in 1994. Itsultimate objective is “Stabilization of greenhousegas concentrations in the atmosphere at a levelthat would prevent dangerous anthropogenicinterference with the climate system. Such a levelshould be achieved within a time-frame sufficientto allow ecosystems to adapt naturally to climatechange, to ensure that food production is notthreatened and to enable economic developmentto proceed in a sustainable manner.” The ↑KyotoProtocol, adopted in 1997, sets out binding com-mitments to reduce greenhouse gas emissions.

United Nations Millennium Declaration: In the UNMillennium Declaration adopted in 2000, the sign-ing states committed themselves to contribute toovercoming extreme poverty. To this end, theyagreed eight international development goals,most of which are to be attained by the year 2015:1. Eradicate extreme poverty and hunger2. Achieve universal primary education3. Promote gender equality and empower women4. Reduce child mortality5. Improve maternal health6. Combat HIV/AIDS, malaria and other diseases7. Ensure environmental sustainability8. Develop a global partnership for development

useful energy: Is the energy actually utilized to per-form a certain task. It is the last link in the energyflow chain that begins with ↑primary energy.

watt (W): Unit of energy output.World Bank: Founded in 1944, the World Bank is

today the largest source of development assis-tance finance. The objective of the Bank is toreduce poverty in developing countries. The Bankgrants loans and provides policy advice, technicalassistance and, increasingly, services for knowl-edge exchange. The priorities in granting loansare: Health and education, environmental protec-tion, supporting private-sector economic develop-ment, strengthening the capability of governmentsto provide services efficiently and transparently,supporting reforms to attain stable economic con-ditions, and social development and povertyreduction.

World Energy Council (WEC): The World EnergyCouncil was founded in 1924 with seat in London.Its work is supported by member committees in 90countries. The objective of these non-governmen-tal organizations is to promote sustainable energypolicy by means of research, analysis, policy adviceand cooperation. WEC published a World EnergyAssessment in 2000 together with the UnitedNations.

Index

Aability to pay principle 166, 174-175; see also financingACP states 181, 194, 212, 215actors 32, 139, 144, 168, 175, 197, 215Adaptation Fund; cf fundsAfrica 30, 56, 60-61, 114, 124, 158, 161, 172, 194, 214agreements 34, 108-109, 117, 155, 183, 186, 190agriculture 25, 58, 60, 63, 91, 114, 165air pollution 22, 47, 61, 92, 108, 116, 124, 211Air Quality Guidelines 126appliances 77, 79, 87-88Asia 24, 60-61, 64, 113, 124

– Central Asia 30, 34, 201aviation 93, 112, 177-178, 213; see also transport

Bbehaviour-modifying effects 145, 177benefit principle of taxation 174-175, 179; see also

financingbioenergy; cf biomassbiomass 23, 44, 53, 56, 58-60, 61-62, 80, 90, 94, 113, 127-128,

195, 204; see also energy carriers– bioenergy crops 58, 108, 113– modern biomass 94, 114, 127– traditional biomass 22, 24, 56, 61, 94, 117-118, 127, 152,

160, 199biosphere 91, 107-108, 116

– biosphere conservation 115biosphere reserves 56building services 206buildings 27, 71, 75, 85-87, 154, 195, 206

Ccapacity-building 115, 169, 180, 186carbon equivalent 58-59carbon intensity 140, 159, 210carbon sequestration; cf CO2 sequestrationcarbon-based global financial compensation 179cars 16, 27, 92, 164-165; see also transportcertificate trading 134, 152, 163, 198certificates 150-151, 156, 164, 186

– emission credits 36, 164– emissions trading 35, 145, 163-166, 179– green energy certificates 150, 153, 166, 210

China 22, 31, 54, 118Clean Development Mechanism (CDM); cf Kyoto

Protocolclimate change 38, 46, 48, 53, 108, 110-111, 138, 144, 198Climate Change Convention; cf United Nations

Framework Convention on Climate Change (UNFCCC) climate guard rail; cf climate windowclimate impacts 46, 90, 97, 109climate policy 35-36, 46, 109, 143, 145, 147, 163, 167, 179;

see also policyclimate sensitivity 101, 111-112, 136, 198, 207climate window 98, 101-102, 106-108, 110, 112, 126, 128,

133-136, 180, 198; see also guard railsCO2 capture/removal 88; see also CO2

sequestration/storageCO2 emissions 46, 64, 75, 93, 101, 128-129, 134, 140, 164,

207; see also emissionsCO2 reduction 35, 75, 146CO2 sequestration/storage 36, 43, 88-91, 103, 136-137, 141

– geological CO2 sequestration 91, 107, 112– iron fertilization of oceans 91, 116

coal 18, 21, 25-26, 44, 89, 102, 140, 146-147, 152, 188; seealso energy carriers

cogeneration 43, 74, 82, 153-155, 206collectors; cf solar energycombined heat and power (CHP); cf cogenerationCommission on Sustainable Development (CSD) 32Commonwealth of Independent States (CIS) 26-28, 152,

201compensation/rates for power sold to the grid 150-151,

201, 210; see also subsidiescontracts 148, 155, 161

– pay-for-service contracts 161conventions; cf agreementscookers 87, 120, 194, 214, 61-62cooling/refrigeration 29, 71, 73, 87, 157, 210coral reefs 110; see also ecosystemscosts 34, 43, 46, 75, 77, 103, 138, 145-146, 153, 178, 180

– internalization 144-145, 153, 166, 181, 212crystalline silicon; cf silicon

Ddams 52-53, 115; see also hydropowerdebt relief 177, 182, 193, 212

239Index 10

– debt relief initiative; cf HIPC initiativedebts 177, 182; see also debt reliefDemand Side Management (DSM) 155-156developing countries 22, 24, 31, 35, 39-42, 50, 111, 158-159,

192, 212development aid/assistance; cf development cooperationDevelopment Assistance Committee (DAC) 193, 215

– DAC Guidelines 193development banks 38, 175, 180-182, 212development cooperation 39, 55, 107, 151-152, 154, 157-

158, 161, 164, 172, 176, 180, 193, 195, 212-214development policy; cf development cooperationdirect investment 29, 39, 158, 175, 190disability adjusted life years (DALYs) 124-126, 200disparities 42, 120, 160district heat 71, 73, 154, 204drought 46-47

EEconomic Partnership Agreements (EPAs) 194ecosystems 46, 53, 59, 90-91, 108-111, 114, 116, 198education 22, 100, 156, 172, 180efficiency 45, 50, 69, 72, 81, 128, 154, 209-210

– efficiency improvement 85-86, 92-94, 100, 206– efficiency potential 74, 93, 140, 153, 156, 210

El Niño-Southern Oscillation (ENSO) 110electric grids 53, 195, 214electricity 20, 22, 25, 37, 42, 49, 118, 150, 153, 211electricity-to-heat ratio 74-75electrification 87, 120, 214electrolysis 80, 83, 92, 205emission credits; cf certificatesemissions 16, 47, 53, 90, 93, 101, 152, 164, 177-179, 182, 207emissions trading; cf certificatesenergy carrier mix 14, 101, 126, 129, 133, 143, 210energy carriers 14, 17, 34, 44, 95

– fossil energy 39, 42-43, 48, 73, 102, 133– new renewables 14, 133, 139, 214– nuclear energy 42, 147– renewable energy 19, 22, 34, 36, 70, 73, 92, 105, 123, 127,

129, 135, 140, 143, 176, 178, 189, 194, 201, 210Energy Charter Treaty (ECT) 34, 190energy conversion 74, 84, 159, 173, 202-204energy efficiency 24, 38, 84-85, 139, 154, 177-178, 194, 200,

206; see also energy productivityenergy industry 27, 38, 83, 174, 181, 191

– restructuring process 28, 39, 161energy input 44, 59, 84, 86, 123, 128, 156, 200, 209energy paths 138, 158energy poverty 22, 152, 181, 193, 207, 211-212, 215, 216; see

also povertyenergy productivity 27, 100-103, 128-129, 138, 140, 209energy sector 18, 21, 23, 26, 38, 172, 175, 181, 184, 186, 199,

215– re-regulation 20, 28– regulation 19-20, 34, 152, 166

energy services 24, 32, 83, 102, 120-121, 160-161, 181, 199energy sources 73, 79, 83, 94, 148, 204energy supply 17, 21, 41, 76, 79, 117, 120, 155, 159, 161, 182,

190-194, 204, 212energy system transformation 107, 138-139, 144, 146, 167,

170, 172, 174, 177, 180-181, 192-193, 197, 200environmental impact assessments (EIAs) 55, 191environmental levies 144-145, 177, 186environmental policy; cf politicsenvironmental standards 48, 108, 117, 184, 190Euratom Treaty 192European Investment Bank (EIB) 181European Science Foundation (ESF) 168European Union (EU) 21, 37, 113, 150, 190, 194, 210, 214exemplary transformation path 12, 44, 98, 126, 129, 138,

202-204, 215Export Credit and Investment Insurance Agencies

(ECAs) 39export promotion 39, 159, 190

FFederal Energy Technology Center (FETC) 89final energy 17, 25, 77, 84, 87, 103, 108, 127, 133final storage 147, 173, 191-192, 211; see also nuclear powerfinancial reform 144, 146, 166, 210; see also financingfinancing 38-39, 54, 157, 161-162, 174, 178, 180, 213

– financing instruments 38, 177, 179, 213– financing mechanism; cf Global Environment Facility

(GEF)– financing structures 38, 157, 161-162, 195– least-cost principle 181, 212– sources of funding/finance 36-37, 163, 174, 213

financing requirements 200Food and Agriculture Organization of the United Nations

(FAO) 37, 60food 54, 109, 113; see also food securityfood security 108, 111, 113forestry 36, 56, 59, 114forests 36, 53, 61, 90, 114, 198fossil energy; cf energy carriersfuel cells 74, 82, 92fuels 18, 43, 93, 164, 204; see also energy carriersfunds 28, 38, 146, 161, 174, 178, 180

– Adaptation Fund 38, 109, 178– development funds 182, 212– Kyoto Fund 38– patent fund 188

fusion power plants; cf power plants

GG8 countries 51, 158, 212General Agreement on Tariffs and Trade (GATT) 34, 184-

185, 187, 189geopolitics 29, 201geothermal energy 72, 94, 123, 204; see also energy carriersGerman Federal Ministry for Economic Co-operation and

240 10 Index

Development (BMZ) 177, 182Germany 18, 21, 30, 45, 56, 58, 70, 75, 77, 147, 149, 153, 163,

177, 182, 201Global Environment Facility (GEF) 38, 180, 214Global Renewable Energy Education and Training

(GREET) 37globalization 29, 199goods 93, 121, 143, 154, 177, 185, 212

– consumer goods 155-156, 206– energy goods 32, 41– global commons 213, 216

green energy/green power 150, 153, 189; see alsocertificates

greenhouse gases 35, 53, 91, 94, 133, 178, 179; see alsoclimate change

ground water table 47guard rails 97, 107, 109, 120, 124, 143, 197; see also climate

window– ecological guard rails 108, 126– socio-economic guard rails 106-107, 135

guiding principles 143-144Gulf region 30

Hhealth 22, 47, 54, 61, 97, 111, 124

– health damage 108, 124, 138– health guard rails 124– health impacts 108, 200; see also DALYs– health risks 42, 54, 62, 94, 117, 124, 191, 211

heat pumps 72-73, 79, 86, 206heating 16, 70, 86-87high-voltage, direct-current lines 79, 81, 188, 205; see also

power supplyHIPC Initiative (Highly Indebted Poor Countries

Initiative) 177, 182, 193hot dry rock technique 72; see also geothermal energyhuman rights 54, 117-118, 191hydrogen 74, 79-81, 83, 92, 205

– production 73, 92, 204– storage 92, 205

hydrogen economy 56, 81, 95, 103, 140, 204hydropower 21, 26, 53, 55, 78, 94, 115, 127, 203; see also

damshydrothermal systems 72; see also geothermal energyincentive systems 86, 139-140, 145, 153, 155-156, 179, 188,

200industrialized countries 16-17, 23, 35-36, 47, 84, 109, 140,

144, 148, 153, 158, 164, 174, 179, 182, 207, 209infectious diseases 54, 111-112; see also healthinstitutional design 25institutions 32, 151, 168-170, 172, 193, 200, 215instrument mix 21, 139, 145instruments 39, 109, 139, 149, 152, 156, 167, 201Intergovernmental Panel on Climate Change (IPCC) 32,

60-61, 98, 101, 110, 112, 137, 167, 198Intergovernmental Panel on Sustainable Energy (IPSE)

168, 174, 216International Atomic Energy Agency (IAEA) 37, 51, 173,

192, 211International Bank for Reconstruction and Development

(IBRD) 39international community of states 109, 169, 174, 184International Covenant on Economic, Social, and Cultural

Rights Special Report on Emission Scenarios (SRES); cfIPCC scenarios

International Development Association (IDA – part ofthe World Bank Group) 39, 182

International Energy Agency (IEA) 14, 17-18, 22, 27, 32,127, 146, 157, 172

International Finance Corporation (IFC) 40International Fund for Agricultural Development (IFAD)

181international law 109, 117-118, 190International Monetary Fund (IMF) 181-182, 212International Renewable Energy Information and

Communication System (IREICS) 37International Sustainable Energy Agency (ISEA) 168,

170, 174, 184-185, 209investment costs 50, 68, 88, 105, 139, 157, 161, 174IPCC scenarios; cf scenariosiron fertilization; cf CO2 sequestration/storageirrigation 52-53, 165

JJapan 14, 17-18, 100, 163, 178Joint Implementation (JI); cf Kyoto Protocol

Kknowledge transfer 37, 173, 190; see also technology

transferKyoto Funds; cf fundsKyoto Protocol; see also United Nations Framework

Convention on Climate Change (UNFCCC) 28, 35-36,38, 109, 112, 152, 163-164, 178, 182, 187– Clean Development Mechanism (CDM) 35-36, 152,

164, 187, 213– Joint Implementation (JI) 35

Llabelling 153, 155, 166, 210land use 56, 60, 64, 90, 108, 113, 204learning curves 76, 132, 135, 138Least Developed Countries (LDCs) 144, 187-188, 192,

211-212least-cost principle; cf financinglevies 145, 147; see also environmental leviesliability 109, 146, 191liberalization 19,-21, 25, 28, 144, 153, 159, 165, 176, 186, 188,

190, 199, 213lifestyles 14, 16, 29, 42, 107, 115, 156, 200lighting 87, 118-119, 155, 205local public transport 27, 93, 165

241Index 10

Mmarkets 20, 29, 37, 50, 144, 153, 159, 189microfinance 162; see also financingmicrogrids 76, 157, 161, 195MIND model; cf modelsmineral oil 17-19, 24, 26-27, 30-31, 47, 89, 102, 164, 188; see

also energy carriersminimum energy requirement 120; see also guard railsmobility 16, 85, 92, 120; see also transportmodels 98, 111, 197

– MESSAGE model 102, 132– MIND model 132, 136, 138

Multilateral Agreement on Energy Subsidies (MESA)147, 183, 185, 200, 216

Nnatural gas 14, 17-18, 43, 75, 80-81, 92, 152; see also energy

carriersnature conservation 54-55, 65, 108, 115-116, 210

– protected areas 55, 60, 113newly industrializing countries 23-24, 31, 39, 157, 160, 182,

207non-governmental organizations (NGOs) 158, 162-163,

173nuclear power 21, 37, 50, 103, 191; see also energy carriers

Ooceans 89, 91, 108, 110, 116, 141Official Development Assistance (ODA) 23, 39, 174, 177,

213offshore systems; cf wind energyoil; cf mineral oilOne Million Huts’ programme 195Organization for Economic Co-operation and

Development (OECD) 17, 50, 105, 121, 146, 159, 164,185, 193

Organization of the Petroleum Exporting Countries(OPEC) 30, 31

Pperformance contracting 155, 189; see also climate policyphotovoltaics; cf solar energypipelines 29, 31, 81, 103, 188policy advice 173, 176, 197, 213politics 29, 35, 134, 139, 145, 151, 159, 163, 167, 173, 175,

185, 190, 192, 216polluter pays principle 174-175, 177, 179; see also financingpopulation growth 23, 41, 101, 113, 179, 200potential maps 65, 71; see also energy carriers, renewable

energy sourcesPoverty Reduction Strategy Papers (PRSP) 182, 212; see

also World Bankpoverty 25, 120-121, 181; see also energy poverty

– poverty reduction 177, 182, 193, 211power 22, 45, 64, 76-77, 79, 118, 151-152, 159, 161, 194, 204,

214

power plants 25, 39, 50, 73, 77, 102, 128, 153, 201– CHP plants 79, 154, 157– combination power plants 74, 82– fusion power plants 50, 52– nuclear power plants 48, 50-51, 123, 192, 211– photovoltaic power plants 65– solar thermal power plants 69-70, 78, 203– steam power plants 45– wind power plants 64, 203

power supply 21, 25-28, 76, 152-153, 161, 203; see alsomicrogrids, electric grids

primary energy 14, 17, 19, 22, 43, 102, 123, 127, 140, 188, 190privatization 28, 39, 157, 161, 213proliferation 49, 51, 124, 192; see also nuclear powerprotected areas; cf nature conservation

Qquotas 143, 148, 150-151, 154, 159, 178; see also subsidies

– portfolio model 150

Rradiation damage 123; see also healthrecycling 65, 71, 85, 114regional planning 165regulation; cf energy sectorRenewable Energy Certification System (RECS) 151, 166renewables; cf energy carriersreprocessing 49, 51, 123, 191-192, 211; see also nuclear

powerresearch 19, 32, 69, 92, 104-105, 115, 147, 151, 167-168, 170,

197respiratory diseases 47, 61, 124, 211; see also healthRio Conference; cf United Nations Conference on

Environment and Development (UNCED)risks 51, 53, 61-62, 94, 108, 123, 192rivers 53, 73, 115Russia 27-28, 30, 36, 152, 157, 189

Sscenarios 97-98, 100-101, 126, 198

– IPCC scenarios 98, 101, 107, 117, 127– SRES scenarios 98, 101

sea-level rise 46, 110-111; see also climate changeseas; cf oceanssecondary energy 80, 205; see also energy carrierssequestration; cf CO2 sequestrationshipping 65, 116, 209silicon 65, 68, 202soils 45, 59, 90, 114, 198solar energy 65, 71, 78, 87, 102, 130, 140, 202, 206

– photovoltaics 65, 70, 77, 158, 202– solar chemistry 128, 204– solar collectors 65, 70-71, 203– solar heat 70, 203– Solar Home Systems 77, 162, 205– solar thermal 65, 69-70, 127, 195, 203

242Index 10

spatial planning 93standards 34, 126, 154, 159, 164, 187, 190, 209

– CDM standard 163stoves; cf cookerssubsidies 18, 27, 35, 144, 146, 148, 159, 161, 184, 193; see also

incentive systems– removing subsidies 146, 152, 166, 176, 183, 216– report on subsidies 147– target-group specific subsidies 163, 213

sufficiency 85, 200; see also lifestylessupply strategies 76-77, 79supply systems/networks 75, 86, 203, 212; see also power

supplysustainable development 85, 92, 101, 107, 115, 143, 168, 193

Ttariffs 35, 158, 186, 190taxation 144-145, 164; see also financingtechnology risks; cf riskstechnology transfer 38, 173, 178, 183, 187, 209; see also

knowledge transferterrorism 51, 53, 124, 192, 211thermal insulation 86, 206thermohaline circulation 110; see also climate changetourism 23, 110trade 29, 35, 40, 158, 186, 188-189Trade-Related Aspects of Intellectual Property Rights

(TRIPS) 35, 186, 188transformation path; cf exemplary transformation pathtransformation strategy 139, 143-144, 166, 207; see also

exemplary transformation pathtransition countries 26, 42, 111, 146, 151, 154, 157, 163transport 14, 16-17, 25-28, 92, 120, 164, 206; see also

mobilityinformation systems 93, 165turbines 14, 52, 64, 73-74, 154

UUnited Nations (UN) 32-33, 37, 41, 201United Nations Conference on Environment and

Development (UNCED) 32, 176, 200United Nations Development Programme (UNDP) 32, 37,

122, 135, 171, 173United Nations Educational Scientific and Cultural

Organization (UNESCO) 37, 172United Nations Environment Programme (UNEP) 32, 34,

37, 170, 173, 185, 215United Nations Framework Convention on Climate

Change (UNFCCC) 35, 38, 41, 48, 109, 166, 178, 182; seealso climate policy, agreements– Conference of the Parties 35, 37, 178

United Nations Industrial Development Organization(UNIDO) 37, 180

urbanization 16, 23, 42, 87, 100USA 21, 30, 34, 112, 114, 138, 170, 178, 198, 201useful energy 43, 83, 85, 185; see also energy

user charges 183, 216; see also financing

Vvegetation 90, 198, 207

Wwind energy 63-64, 68, 94, 127, 194, 203; see also energy

carriers– offshore systems 63-65, 116, 203

women 22, 61-62, 117, 162World Bank 38-39, 54, 173, 175, 181-182, 212World Commission on Dams (WCD) 54, 115, 159, 204; see

also damsWorld Energy Assessment (WEA) 32, 128, 135, 167, 168World Energy Charter 109, 167, 169-170, 172, 184, 207, 215World Energy Council (WEC) 32, 118-119World Energy Outlook (WEO) 32, 199; see also

International Energy Agency (IEA)World Energy Research Coordination Programme

(WERCP) 168, 174, 215World Health Organization (WHO) 22, 37, 47, 124World Meteorological Organization (WMO) 32, 37World Solar Programme 37; see also solar energyWorld Summit on Sustainable Development (WSSD) 34,

169, 183, 213, 214World Trade Organization (WTO) 28, 34, 146, 185

"The publication of 'World in Transition: Towards Sustainable Energy Systems' is timely indeed. The World Summit on Sustainable Development gave great prominence to this challenge, but failed to agree on a quantitative, time-bound target for the introduction of renewable energy sources. The German Advisory Council on Global Change (WBGU) has now produced a report with a global focus, which is essential in view of the global impacts of climatic changes. The report provides a convincing long-term analysis, which is also essential. Global energy policies have to take a long-term perspective, over the next 50 to 100 years, while providing concrete guidance for decision makers to implement now. There is an urgent need to secure energy supplies for the 2.4 billion people who still depend upon traditional biomass, while avoiding dangerous climatic changes. Our one world must close the gap between industrialized countries’ surfeit and developing countries’ poverty. Policies will need to consider both the broader environmental and specific climate constraints. I recommend this book very warmly to everyone concerned with global energy issues."

Klaus Töpfer, Executive Director, United Nations Environment Programme

World in Transition 3: Towards Sustaible Energy Systems underscores the urgent need to transform global energy systems so that the world’s population has access to energy based on renewable sources. This is necessary to protect the global climate and to free those in developing countries trapped by energy poverty. Such an approach would also yield a peace dividend by reducing dependence upon regionally concentrated oil reserves. The authors stress that such a reconfiguration of energy systems is both feasible and fundable if rapid and resolute action is taken in the coming two decades. To this end, they propose a roadmap with specific milestones.

German Advisory Councilon Global Change(WBGU)www.wbgu.de

ISBN 1-84407-882-9

www.earthscan.co.ukEARTHSCAN

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World in Transition 3 - Towards Sustainable Energy Systems · 2019-05-24 · Energy in transition countries 26 Economic and geopolitical framework conditions 28 The institutional