VTT established the effects of limiting greenhouse gas emissions in Europe and Finland

In Finland the use of coal will diminish – the use of natural gas, bioenergy and wind power will increase

A new report has been published on the impacts of limiting greenhouse gas emissions proposed by the EU on the energy production structure in Europe and Finland. According to the calculations for Europe, limiting EU emissions by 20 per cent until the year 2020 from the 1990 level would focus the measures mainly on the production of electricity. According to VTT’s assessment, the use of coal will start to reduce in Finland regardless of the expected price level of emissions trading after 2010. The use of natural gas will increase. The use of renewable energy, such as wood based fuel and wind power will also strongly increase.

The EU has proposed a joint, serious limitation of emissions by the industrialised countries and is committed to limiting its emissions by 20 per cent until the year 2020 in order to reduce the effects of climate change. VTT has assessed the impacts of the limitation of greenhouse gas emissions, proposed unilaterally by the EU, on the structure of energy production in Europe and Finland using TIMES models. The models in question are techno-economic energy system models that have an extensive description of energy resources and technologies for energy production and use.

Focus in Europe is on the production of electricity

According to the results of the model calculations for Europe, limiting EU emissions by 20 per cent by the year 2020 from the 1990 level would be concentrated on the measures mainly on electricity production sector. The use of coal in the electricity production would be drastically reduced. In the longer term, some of the production based on natural gas would be connected to the capture and storage of carbon dioxide. The use of wind energy would be drastically increased. According to the model calculations, the price of an emissions allowance in 2020 would be at least EUR 25–30 per tonne of carbon dioxide. If the EU’s emissions limitation target in 2050 is 60 per cent, the price of an emissions unit would be approximately EUR 100, if emissions are limited without flexible mechanisms, such as emissions allowances that can be acquired from outside the EU.

Study for Finland is based on an economic scenario of the Ministry of Finance and the Government Institute for Economic Research

The studies on Finland are based on an assessment of the development of the national economy by the Ministry of Finance and the Government Institute for Economic Research. The optimal limitation of emissions was reviewed in the calculations, when the price of emissions trading was assumed to be EUR 20, 30, 40 and 50 per tonne of carbon dioxide, and emissions limitation measures equivalent to the same cost level were taken in the non-emissions trading sector. According to VTT’s calculations, the use of coal will start to fall in all price scenarios after 2010, and on the other hand, the use of natural gas will increase.

More bioenergy

The use of bioenergy is increasing considerably in the overall energy balance in Finland. In addition, the use of wind power is increasing drastically. The more effective use of energy will also have a considerable impact in terms of reducing emissions. Carbon dioxide recovery will start at higher price levels after the year 2020. The reductions in emissions will be largest in separate electricity production, where coal-fired production is considerably reduced.

Slight reduction in the consumption of heating energy

The building stock is growing significantly, but the consumption of heating energy will slightly reduce. The increase in the bio-share of fuels for transport will become more profitable as the price of emissions allowances goes up. In sectors remaining outside emissions trading, such as in buildings, traffic and agriculture, the reduction in emissions while the cost level of measures increases will be quite slow.

If Finland’s total emissions reduction target is 20 per cent in 2020, Finland would purchase emissions allowances at all the price levels in the study. 

 


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