Summary report: “SET‐Nav - Integrative policy recommendations” Decarbonization the EU’s Energy System

Abstract

What next steps and priorities for the SET Plan?

In October 2018, the Intergovernmental Panel on Climate Change (IPCC) published its special report on the impacts of global warming of 1.5°C above pre‐industrial levels and related global greenhouse gas emission pathways (IPCC, 2018), putting even stronger urgency on climate and energy policies to address this issue. As Europe’s answer to this, the European Commission (EC) published its long‐term strategy “A Clean Planet for all” (EC, 2018a) in November 2018. This strategy presents the EC’s long‐term vision on how “Europe can lead the way to climate neutrality by investing into realistic technological solutions, empowering citizens, and aligning action in key areas such as industrial policy, finance, or research – while ensuring social fairness for a just transition.” (EC, 2018b). In the SET‐Nav project, we conducted our own independent analysis of possible pathways for a deep decarbonisation for Europe until 2050, assessing a broad portfolio of options under distinct framework conditions. Following a large‐scale modelling effort, we offer a bandwidth of solutions and provide key insights based on the main modelling perspectives of SET‐Nav: demand side, energy supply and infrastructure, and the macroeconomic effects. In this policy brief, we focus on the specific energy transition questions addressed by the SET Nav pathways and on the implications and recommendations for research and innovation. In this context, the European Strategic Energy Technology Plan (SET Plan) is a central element in Europe’s approach to combat climate change. It has aimed at accelerating the development and deployment of low‐carbon technologies for the past decade, seeking to improve new energy technologies and bring down costs by coordinating national research efforts and helping to finance projects. Within SET‐Nav we conducted a reflection of the related activities and recommend to strengthen the following key priorities in the SET‐Plan: - Directed innovation efforts within the SET Plan portfolio should be more balanced across the full portfolio of priority areas. Currently the portfolio is weighted towards renewable energy, energy efficiency and sustainable transport. Greater consistency is also needed among the different innovation activities supported by the SET Plan to ensure the innovation system works effectively. Currently sustainable transport‐related activities strongly emphasise international knowledge flows but only weakly generate and codify knowledge within the EU; the opposite is the case for energy‐efficiency related activities. - Regarding the different sectors, the main priorities for further research and public support on the demand side are decentralised heat supply and heat pumps. Furthermore, to decarbonise industry, extending the ETS with a minimum price as well as expanding public RD&I (research, development and innovation) funding are important measures. A CO2 tax as the central element of a broader energy tax reform could provide the incentives needed for fuel switching. Policies to overcome barriers to energy efficiency are also crucial, as is pushing sales of electric vehicles and inducing a modal shift from cars to public transport, car‐sharing, cycling and walking. - In terms of energy infrastructure, electricity network development for integrating new renewables generation is a prerequisite, as is preparing grids for the integration of large volumes of distributed energy resources and for new forms of energy storage. From the supply perspective, our analysis shows that direct electrification should be favoured whereverreasonable as itis more efficient and leads to fewer requirements on energy infrastructures. - The final takeaway is that efficient decarbonisation via direct or indirect electrification requires efficient linkages between the energy markets by monitoring close to real‐time carbon content of energy carriers and emissions.