Steps Towards the 2000-Watt Society 070729

DISS. ETH NO. 17314

INTERMEDIATE STEPS TOWARDS THE 2000- WATT SOCIETY IN SWITZERLAND: AN ENERGY-ECONOMIC SCENARIO ANALYSIS

A dissertation submitted to ETH ZÜRICH

for the degree of Doctor of Science

presented by Thorsten Frank Schulz Dipl.-Ing., University of Stuttgart, Germany born 13.01.1977 citizen of Germany

accepted on recommendation of Prof. Dr. Alexander Wokaun, examiner Prof. Dr. Konrad Hungerbühler, co-examiner Mr. Socrates Kypreos, co-examiner

Zürich 2007

iii

What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so. Mark Twain

Acknowledgment

I want to thank all those people who have helped in achieving all that has been reflected in this thesis. I want to thank them for their direct and indirect support throughout my 3 ½ years stay that the Paul Scherrer Institute (PSI). For me it has been a privilege to be a member of the PSI Energy Economics Group. First of all, I would like to thank my direct supervisor and Head of the Energy Economics Group Socrates Kypreos for giving me the opportunity to join his group, for introducing me to the secrets of MARKAL and for sharing his enormous experience in the complex area of energy modelling. I am sincerely thankful to my doctoral advisor Prof. Dr. Alexander Wokaun, for accepting me as a PhD student, for valuable discussions, for his guidance and support to this work. I also want to thank Prof. Dr. Konrad Hungerbühler, who kindly agreed to co-examine this thesis and provided me with helpful suggestions and comments. My very special thanks goes to Dr. Leonardo Barreto for numerous fruitful discussions, for his feedbacks, directions, encouragements and his careful reading of various reports, papers as well as this work. I greatly benefited from inputs and discussions with Dr. Stefan Hirschberg, Head of the Laboratory for Energy Systems Analysis. I am deeply indebted to Dr. Martin Jakob from the Centre for Energy Policy and Economics (CEPE) for providing me detailed information on marginal-cost curves and reduction potentials of dwelling houses. I want to thank Dr. Nico Bauer, for his constructive critique and introduction to MATLAB and CPLEX. I also like to thank my friends as well as all present and past members of the Energy Economics Group who contributed in different ways to complete this work: Timur Gül, Dr. Daniel Krzyzanowski, Dr. Bertrand Magné, Dr. Peter Rafaj, Ulrich Reiter, Dr. Michael Spielmann. I am grateful to Pasquale Lauria, Ingo and Ulrich Löffler, Florian Nagel and Jürgen Schuol for being around when I needed them and for sharing the funnier moments of our lives. Finally I want to thank Dr. Mark Howells for advising me to join the Energy Economics Group. The financial support of the Swiss National Science Foundation in the context of the NCCR-Climate project is gratefully acknowledged.

I dedicate this work to my family. vi vii

Table of contents

Acknowledgment ...... v

Table of contents ...... vii

Nomenclature/abbreviations...... x

Abstract ...... xiii

Kurzfassung...... xv

1 Introduction ...... 1 1.1 Motivation ...... 1 1.2 Scope of the analysis...... 2 1.3 Methodology ...... 3 1.4 Structure of the thesis...... 4

2 The 2000-Watt society ...... 6 2.1 Description of the 2000-Watt society ...... 6 2.2 Literature review ...... 7 2.3 The 2000-Watt society from today’s perspective ...... 11 2.4 Some energy definitions ...... 11

3 Defining the baseline...... 13 3.1 Structure and main assumptions of the Swiss-MARKAL model (SMM)....13 3.2 Renewable energy potential and nuclear energy...... 15 3.3 Energy and emission balances of the baseline scenario ...... 18 3.3.1 Primary-energy balances ...... 18 3.3.2 Final-energy balances...... 20 3.3.3 Electricity production and consumption...... 22

3.3.4 CO 2 emissions...... 24 3.4 Description of the residential sector...... 25 3.4.1 Base year calibration...... 26 3.4.2 Future projection ...... 27 3.5 Description of the transportation sector ...... 48 3.5.1 Base year calibration...... 49 3.5.2 Future projection ...... 53 3.5.3 Detailed final-energy consumption ...... 56 viii

4 Evaluating intermediate steps towards the 2000-Watt society ...... 59 4.1 Primary-energy balances of the 3500-Watt society ...... 59 4.2 The role of end-use sectors in the 3500-Watt society...... 63

4.3 Importance of alternative future scenarios with carbon (CO 2) restrictions 74

4.4 Energy balances of the 3500-Watt society with a 10% per decade CO 2 restrictions ...... 79 4.5 Conclusions ...... 90

5 Complementary analyses...... 92 5.1 Sensitivity analysis on discount rates ...... 93 5.2 The influence of fuel-cells price and stack sizes on hydrogen cars ...... 94 5.3 The influence of renewable energy-conversion equivalents on the production of electricity ...... 95 5.4 Partial equilibrium with elastic demands ...... 98 5.5 Assessing wood-based synthetic-fuel technologies...... 101 5.5.1 Oil price sensitivity analysis...... 103 5.5.2 Oil price and subsidy sensitivity analysis of the methanation plant 107 5.5.3 Investment cost sensitivity analysis of the methanation plant ...... 108 5.5.4 The comparison of Fischer-Tropsch and methanation plants...... 110 5.5.5 Remarks on the methantion plant ...... 111

6 Conclusions and recommendations ...... 113 6.1 The 2000-Watt society: Results from the Swiss MARKAL model ...... 113 6.1.1 Primary energy consumption and final energy implications...... 114

6.1.2 Technological change and CO 2 emissions...... 116 6.1.3 Additional total system costs ...... 119 6.1.4 The influence of discount rates ...... 120 6.1.5 Partial equilibrium with elastic demands...... 121 6.2 Lessons learned ...... 121 6.3 Outlook on future research ...... 122

References ...... 124

List of figures ...... 133

List of tables ...... 137

Appendix 1: Technological description of room-heating technologies ...... 138 ix

Appendix 2: Technological description of passenger cars...... 139

Appendix 3: Biomass technology description ...... 140

Appendix 4: Final-energy calibration of the Swiss MARKAL model (SMM) to SFOE and IEA statistic of the year 2000...... 141

Appendix 5: Oil-price sensitivity...... 142

Appendix 5.1: Primary-energy balances...... 144

Appendix 5.2: Final-energy balances ...... 148

Appendix 5.3: Electricity balance...... 162

Appendix 5.4: Total system costs...... 164

Curriculum Vitae ...... 170 x

Nomenclature/abbreviations

Bio-SNG Synthetic natural gas from biomass (wood) bvkm Billion Vehicel Kilometres bvkm / a Billion Vehicle Kilometres per Year CEPE Centre for Energy Policy and Economy

CH 4 Methane CHP Combined heat and power CORE Federal Energy Research Commission

CO 2 Carbon Dioxide CRF Capital Recovery Factor DETEC Department of the Environment, Transport, Energy and Communications DMD Demand dr discount rate EAWAG Swiss Federal Institute of Aquatic Science and Technology EEG Energy Economics Group at the Paul Scherrer Institute EMPA Swiss Federal Laboratries for Materials Testing and Research eq. Equivalent ERFA Energy Reference Floor Area - Sum of the Heated Floor Areas ETH Swiss Federal Institute of Technology ETSAP Energy Technology Systems Analysis Programme FC Fuel Cell FE Final Energy FT Fischer-Tropsch GDP Gross Domestic Product GEST Swiss Overall Energy Statistics GHG Greenhouse Gas H2 Hydrogen ICE Internal Combustion Engine IEA International Energy Agency IPCC Intergovernmental Panel on Climate Change kW kilo-Watt (1000 Watt) Lt Litre m meter xi

MARKAL Market Allocation MC Marginal Cost MFH Multi-Family Houses Mt Million tones N2O Nitrous oxide O&M Operation and Maintenance P Power [W/s] PE Primary Energy PEC Primary Energy per Capita PJ Peta Joule PSI Paul Scherrer Institute RES Reference Energy System RC1 Residential Cooling RCD Residential Cloth Drying RCW Residential Cloth Washing RDW Residential Dish Washing REA Residential Other Electric RH Room Heating RH1 Room-Heating Single-Family Houses existing building RH2 Room-Heating Single-Family Houses new building RH3 Room-Heating Multi-Family Houses existing buildings RH4 Room-Heating Multi-Family Houses new buildings RHW Residential Hot Water RK1 Residential Cooking RL1 Residential Lighting RRF Residential Refrigeration s second SATW Swiss Academy of Engineering Science SFH Single-Family Houses SFOE Swiss Federal Office of Energy SMM Swiss MARKAL model TAD Domestic Aviation TAI International Aviation TP Time Period xii

TRB Bus TRM Trucks TRT Passenger Cars TRW Two Wheelers TTP Rail TWD Domestic Navigation TWI International Navigation UED Useful Energy Demand v velocity [m/s] W Watt W/Cap Watt per Capita WSL Swiss Federal Institute for Forest, Snow and Landscape Research xiii

Abstract

In future, the sustainable development of the Swiss energy sector under the umbrella of the 2000-Watt society is of major interest. Thereby the vision of a primary energy per capita (PEC) consumption of only 2000 Watts should ideally fulfil many targets such as improving the energy efficiency of the Swiss energy sector, reducing the dependency on fossil energy carriers, promoting renewable energies and contributing to the climate-change strategies. This dissertation aims at finding realistic targets for the vision of the 2000-Watt society until 2050. It looks at various combinations of

PEC and CO 2 targets and estimates the additional costs to be paid by the Swiss society. The assessment is conducted with the Swiss MARKAL (MARKet ALlocation) model. Swiss MARKAL represents a bottom-up energy-systems model that provides a detailed representation of energy supply and end-use technologies. It projects future technology investments and offers an integrated analysis of primary, secondary, final and end-use energy for Switzerland. The analysis reveals that the 2000-Watt society should be seen as a long-term goal. In the year 2000, the PEC consumption was about 5000 Watts per person with 44.4

Mt of energy-related CO 2 emissions. For all contemplated scenarios independent of the oil price, a PEC consumption of 3500 Watts per capita is feasible in the year

2050. However, strong PEC consumption targets can reduce CO 2 emissions to an equivalent of 5 % per decade at maximum. For stronger CO 2 emission-reduction goals, corresponding targets must be formulated explicitly. The opposite approach of tightening only CO 2 targets will reduce the PEC consumption to values between 4900 and 4500 Watts per capita, depending on the oil price in the year 2050. Therefore, a

CO 2 reduction alone does not sufficiently move into the direction of a 2000-Watt society. The major changes required concern energy-transformation and energy-demand technologies. Electricity will play, more than ever, an important role in a service- oriented society in the future. The production of electricity will increase from a today’s level of 57 TWh to at least 70 - 85 TWh in 2050. Dwelling houses and the vehicle fleet have to undergo a complete transformation until 2050 if we want to reduce energy consumption and lower CO 2 emissions. Less heat consumption and more heat pumps as well as natural gas and hydrogen engine drives for cars would be the choice in the future. xiv

Such a transformation comes at a cost; even intermediate steps are associated with sizeable expenses. At an oil price of 75 US$ 2000 /bbl in 2050, the additional costs to reach a 3500-Watt society amount to about 20 billion US$ 2000 (~33 billion CHF 2000 ). A

Kyoto-for-ever target (i.e. 5 % CO 2 reduction per decade) costs about 15 billion

US$ 2000 (~25 billion CHF 2000 ) or 5 billion US$2000 (~8 billion CHF 2000 ) less. If a 10 %

CO 2 reduction per decade is envisaged additional to the 3500 Watts per capita target, the extra costs amount to about 40 billion US$ 2000 (~67 billion CHF 2000 ), despite potentially associated technological and cost synergies. If the main argument in favour of the 3500-Watt society was CO 2 reduction, then the PEC target is questionable. By following pure energy-efficiency strategies with the only objective to reduce the PEC consumption, we do not meet up to possibly-desired climate-change strategies. A moderate fossil import dependency and the enhanced use of renewable energies are supported mainly by CO 2 reduction targets. Despite the fact that this study shows only potential cost-effective pathways but does not unfold necessary incentives of how to adopt these pathways, the study clearly shows: The transition of the current energy system is difficult and all targeted changes will not happen on their own. We need goal-oriented measures from decision-makers such that people change their behaviour and invest in more efficient and cleaner technologies rather sooner than later.

Keywords: 2000-Watt society, MARKAL, Switzerland, energy, economy xv

Kurzfassung

Eine nachhaltige Entwicklung des schweizerischen Energiesystems mit der Vision einer 2000-Watt Gesellschaft könnte in der Zukunft von grossem Interesse sein. Die Vision einer 2000-Watt Gesellschaft (also einer Gesellschaft mit einem Primärenergieverbrauch von 2000 Watt pro Kopf) sollte idealerweise der Erreichung mehrerer Ziele dienen: der Steigerung der Energieeffizienz des schweizerischen Energiesektors, der Minderung der Abhängigkeit von fossilen Energieträgern und der Unterstützung von erneuerbaren Energien und Klimaschutzzielen. Die vorliegende Studie versucht, realistische Ziele für die Vision der 2000-Watt Gesellschaft bis in das Jahr 2050 aufzuzeigen. Dazu werden verschiedene

Kombinationen von Primärenergie- und CO 2-Minderungszielen untersucht, sowie anfallende zusätzlichen Kosten berechnet, welche von der Gesellschaft für die Erreichung eines jeden Zieles getragen werden müssen. Die Ergebnisse der Dissertation wurden mit Hilfe des Energiesystemmodells Swiss MARKAL (MARKet ALLocation) erarbeitet. Swiss MARKAL ist ein bottom-up (von unten nach oben aufbauendes) Energiesystemmodell für die Schweiz. Es beinhaltet eine detaillierte Abbildung von Energiebereitstellungs- und Energieverbrauchstechnologien, so dass zukünftige Investitionen abgeschätzt werden können. Zudem bietet das Modell eine ganzheitliche Bilanzierung von Primär-, Sekundär-, End- und Nutzenergieverbräuchen für die gesamte Schweiz. Die Analyse verdeutlicht, dass die 2000-Watt Gesellschaft nur als ein Langzeitziel gesehen werden sollte. Im Jahr 2000 lag der Primärenergieverbrauch bei ca. 5000

Watt pro Person mit einem resultierenden energiebezogenen CO 2-Ausstoss von 44.4 Mt. Unabhängig vom Ölpreis ist für alle untersuchten Szenarien eine Verbrauchssenkung auf 3500 Watt möglich. Allerdings vermögen selbst starke

Primärenergieabsenkungen den CO 2-Ausstoss nur um maximal 5 % pro Dekade zu senken. Für stärkere CO 2-Minderungsziele müssen diese explizit vorgegeben werden. Wenn ausschliesslich CO 2-Minderung als Ziel vorgegeben wird, senkt sich der Primärenergieverbrauch, abhängig vom erwarteten Ölpreis im Jahr 2050, lediglich auf 4900 bis 4500 Watt pro Person. Die Verfolgung von strikten CO 2-Zielen allein führt nicht zu der Erreichung des Ziels einer 2000-Watt Gesellschaft. Die grössten Veränderungen in den untersuchten Szenarien betreffen sowohl Energieumwandlungs- als auch Nutzenergietechnologien. In der Zukunft wird xvi

Elektrizität eine immer wichtigere Rolle einnehmen. Die Produktion von Elektrizität wird sich vom heutigen Niveau von ca. 57 TWh auf mindestens 70 – 85 TWh steigern. Haushaltssektor und Fahrzeugflotte bedürfen einer vollständigen

Erneuerung, falls Energieverbrauch und CO 2-Emissionen merklich gesenkt werden sollen. Weiterhin sind die Reduzierung des Wärmebedarfs und der vermehrte Einsatz von Wärmepumpen nötig. Auch die Nutzung von Erdgas- and Wasserstoffautos wird in der Zukunft essentiell sein. Jede umfassende Änderung des Energiesystems ist verbunden mit Kosten. Dazu zählt auch eine schrittweise Annäherung an eine 2000-Watt Gesellschaft bis 2050.

Bei einem Ölpreis von 75 US$ 2000 /bbl in 2050 betragen die Kosten ca. 20 Milliarden

US$ 2000 (~33 Milliarden CHF 2000 ) um eine 3500-Watt Gesellschaft zu erzielen. Die

Kosten für ein Kyoto-für-immer Ziel (5 % CO 2-Minderung pro Dekade) betragen im

Vergleich dazu nur ca. 15 Milliarden US$ 2000 (~25 Milliarden CHF 2000 ), und sind damit um 5 Milliarden US$ 2000 (~8 Milliarden CHF 2000 ) geringer. Falls das übergreifende Ziel ist, die CO 2-Emissionen um 10 % pro Dekade zu senken und zudem eine 3500-Watt

Gesellschaft zu erreichen, liegen die Extrakosten bei ca. 40 Milliarden US$ 2000 (~67

Milliarden CHF 2000 ), trotz potenzieller Technologie- und Kostensynergien. Somit ist das Ziel der 3500-Watt Gesellschaft fragwürdig, falls das Hauptargument der

Primärenergiereduktion die Minimierung der CO 2-Emission sein sollte. Wenn Energieeffizienzmassenahmen mit dem alleinigem Ziel verbunden sind, die Primärenergie zu senken, kommen wahrscheinlich wünschenswerte Klimaschutzziele zu kurz. Moderate Importe von fossilen Energieträgern und die verstärkte Nutzung von erneuerbaren Energien unterstützen CO 2-Minderungsziele erheblich. Obwohl die Studie nur potenzielle kosteneffektive Wege aufzeigt, ohne nötige Anreize für diese Wege zu erörtern, wird dennoch ein Sachverhalt deutlich: die Umwandlung des existierenden Energiesystems ist mit grossen Herausforderungen verbunden. Zielgerichtete Umwandlungen werden nicht von alleine passieren. Die Schweiz braucht daher genau diese zielgerichteten Massnahmen ausgehend von Entscheidungsträgern, so dass die Bevölkerung Ihr (Kauf-)verhalten ändert und in effizientere und saubere Technologien investiert. Je früher Massnahmen in Angriff genommen werden, umso nachhaltiger werden die Ergebnisse sein.

Stichwörter: 2000-Watt Gesellschaft, MARKAL, Schweiz, Energieökonomie Introduction 1

1 Introduction

1.1 Motivation

In the last 50 years, an increasing demand for energy has boosted the consumption especially of oil, natural gas and electricity drastically.[1] Besides all economical benefits due to this high energy consumption, it also entailed several negative aspects. Today, Switzerland is strongly dependent on imported fuels, which are essential for today’s lifestyle. Many of those fuels are extracted in politically instable countries e.g. Iran, Iraq or Saudi Arabia. Looking at the proved oil reserves, by far most of them are located in Middle East countries.[2] Political tension could increase and the question “who is eligible to use these resources” could probably be raised.

In 2002, Switzerland ratified the Kyoto protocol and committed to reduce CO 2 emissions by 10 % of the 1990 levels by 2010.[3] Although the Swiss electricity sector is basically CO 2 free at the moment, other end-use sectors such as the residential and transportation sectors emit significant amounts of CO 2. Additionally, due to probable strong demand increase of electricity, Switzerland is heading towards an electricity gap around 2020.[4] If investments in fossil based electricity plants cover this gap, CO 2 is likely to increase further. If no measures are taken, fulfilling the Kyoto and additional CO 2 reduction targets will prove unlikely. The recent IPCC report on climate change impacts, adaptation and vulnerability attracts major international attention.[5] The report states: “Negative impacts [for Europe] will include increased risk of inland flash floods, and more frequent coastal flooding and increased erosion ... mountainous areas will face glacier retreat, reduced snow cover and winter tourism, and extensive species losses.” The effect for Switzerland could be dramatic if nothing will be done.[6] Besides possible political tension and climate-change issues, the main question of a globally fair-balanced energy consumption arises. Switzerland and to a large extend the whole western world, currently uses much more energy than the world average. On the one hand, the USA consume 12000 Watts per capita, Western-Europe 6000 Watts per capita and Switzerland still 5000 Watts per capita. On the other hand, in Africa and in some Asian countries the PE consumption is less than 650 Watts per capita.[7] Overall, 2000 Watts is the average world-wide energy consumption. Therefore, many people claim that a 2000-Watt society should be seen as the long- term goal to achieve a fair and sustainable development.[8] 2 Introduction

Controversial disputes will be ongoing. The focus could be on reducing energy consumption by increasing the overall energy efficiency. The focus could also be on lowering CO 2 emissions by investing into renewable-energy technologies and reducing the fossil import decency at the same time. It could also be on a combination of targets. However, one fact is clear: Concrete measures have to be taken if Switzerland wants to contribute to a clean and ecologically sustainable environment. The challenge is to combine measures with a financially-flourishing economy. Additional costs to undertake these measures need to be discussed openly.

1.2 Scope of the analysis

This dissertation primarily aims at evaluating intermediate steps towards the 2000- Watt society in Switzerland. The analysis quantifies possible reductions of primary- energy per capita (PEC) use until 2050 and estimates the costs of such reduction targets. Numerous energy balances and technological outlooks are documented:

• Primary energy per capita balances • Final energy consumption balances by fuel and sector • Residential heating technology projections • Passenger car projections • Electrical power station projections

• CO 2 emissions projections • Additional total system costs

Comprehensive sensitivity analyses has been performed to provide a full picture and to test the robustness of the obtained results. The tested sensitivities comprise:

• Crude oil prices of 50 to 125 US$ 2000 /bbl in the year 2050

• CO 2 emission reduction targets of 5 and 10 % per decade, starting from the Swiss-Kyoto target in 2010 • Discount rates of 3 and 5 % • The influence of fuel-cell prices and stack sizes on hydrogen cars • The influence of renewable energy-conversion equivalents on the production of electricity Introduction 3

• Comparison of the results to an analysis with an elastic demand responses • Influence of oil prices and subsidies on the production of synthetic natural gas (bio-SNG) from wood in a methanation plant

This dissertation conducts the first fully-integrated energy-system analysis (see chapter 2), linking all Swiss energy sectors (energy production and energy-demand sectors) in one modelling framework. Using this framework, the author analyses various PEC reduction targets (including a combination of CO 2 targets), derives all energy and emissions balances and calculates the additional costs necessary to change the structure and composition of the Swiss energy system.

1.3 Methodology

The questions surrounding the 2000-Watt society were addressed using a cost- optimization modelling framework. A MARKet ALlocation (MARKAL) model provides this framework. It represents a bottom-up energy-systems model that provides a detailed representation of energy supply and end-use technologies (see chapter 3). The family of MARKAL models has been developed by the Energy Technology Systems Analysis Programme (ETSAP) that was established as an Implementing Agreement of the International Energy Agency (IEA).[9] It is well documented and described by the following publications: [10-12]. MARKAL models have been applied for several national and multi-national case studies.[13,14] The original version of the Swiss MARKAL model (SMM) has first been developed as a joint effort between Energy Economics Group (EEG) at the Paul Scherrer Institute (PSI) and the University of Geneva. Afterwards a number of improvements were implemented at PSI. SMM has a time horizon of 50 years (from 2000 until 2050) with 5-year time steps. Due to the complexity of the task, the analysis was carried out step wise:

Step 1: Debugging and year-2000 calibration The model was debugged, which included eliminating infeasibilities, linking disconnected energy flows, removing non-existing energy flows and technologies, etc. Primary and final-energy balances were recalibrated to official year-2000 statistics. The year 2000 is the base year of SMM (the starting year of the modelling 4 Introduction framework). The year 2005, the second year of the modelling time horizon, has also been calibrated to official statistics where and so far it was possible.

Step 2: General assumptions General model assumptions were checked and overhauled where necessary. The main assumptions include amongst others: Discount rates, potentials of energy carriers, fuel and electricity imports and exports, population, GDP.

Step 3: Implementation of new biomass technologies New biomass technologies were implemented into the modelling framework. As a result, the assessment on the production of synthetic natural gas (bio-SNG) from wood in a methanation plant was conducted.

Step 4: Renewal of the transportation and residential sector The transportation and residential sectors were completely overhauled. In the first phase two stand-alone models were developed before embedding them into the SMM framework. The residential sector also includes demand reductions due to energy-saving options (i.e. improved insulation of houses). The energy-saving options were implemented in the model based on marginal-cost curves.

Step 5: Improved result evaluation A modelling framework has been developed in VEDA and MATLAB to guarantee a faster and more precise result evaluation.

Step 6: 2000-Watt society Analysis The 2000-Watt society has been evaluated as a full-scale energy-system analysis.

1.4 Structure of the thesis

The document has been organised as follows. At first we define the objective of the 2000-Watt society and present a literature overview, before providing technical background information. Afterwards we present all results of the analyses, and summarize conclusions.

Introduction 5

Chapter 2: The 2000-Watt society This chapter presents the definition and goals of the 2000-Watt society and explains the importance of the concept. After providing a literature review, the chapter rounds off by elaborating the 2000-Watt society from a today’s perspective.

Chapter 3: Defining the baseline This chapter defines and elaborates the assumption of the “business-as-usual” or baseline scenario. Additionally, it explains in detail how the transportation and residential sectors are modelled and how energy-saving options were implemented in

SMM. It also provides a detailed overview of all relevant energy balances and CO 2 emissions.

Chapter 4: Evaluating intermediate steps towards the 2000-Watt society This chapter illustrates the main results of the document. It explains the result of the 2000-Watt society analysis, suggests a future technology mix in the year 2050 and illustrates corresponding costs. The chapter contains an extensive sensitivity analysis on various oil prices and CO 2 targets.

Chapter 5: Complementary analyses This chapter analyzes additional scenarios not yet covered in chapter 4. It presents sensitivity analyses on discount rates, fuel cell prices and renewable energy- conversion equivalents and evaluates the results using an elastic demand approach. In that sense, the chapter fulfils the purpose of testing the robustness of the results. Additionally it depicts an analysis assessing the production of synthetic natural gas (bio-SNG) from wood in a methanation plant. The results of this analysis are published in the journal ENERGY.[15]

Chapter 6: Conclusions and recommendations This chapter draws conclusions based on all results evaluated within the scope of the analysis and gives recommendations for the future development of the Swiss energy system. 6 The 2000-Watt society

2 The 2000-Watt society

2.1 Description of the 2000-Watt society

In 1960, Switzerland was a 2000-Watt society. Today, more than four decades later, the consumption has increased drastically. Due to all ecological and possible economical (i.e. energy security) problems associated with a continuing increase of energy consumption, important questions arise such as: What is a sustainable energy consumption? How much energy should the developed world consume and how much should developing countries consume to achieve an ecologically and economically sustainable environment? One idea is to keep the total world wide average energy consumption constant by achieving a (strong) economic development at the same time. 2000 Watts is the average world-wide energy consumption.[16] The vision of a 2000-Watt society aims at consuming not more than 2000 Watts per capita of primary energy (PE). In physics Watt is the unit of power and corresponds to Joules (the SI unit 1 of energy) per second. Therefore, the 2000 Watts target can also be converted into an annual-energy consumption target or a consumption of energy in a specific year. Assuming 365.25 days per year (including the leap year), 2000 Watts corresponds to 63.1 GJ per capita and year. What are the implications of 2000 Watts from a Swiss perspective? Given a population of 7.2 million for Switzerland [18] and 366 days in the year 2000, 2000 Watts corresponded to 456 PJ (per year) of PE. The Swiss Federal Office of Energy (SOFE) states a PE consumption of 1132 PJ [1] (around 5000 Watts) in 2000. Therefore, for Switzerland a 2000-Watt society implies to reduce the PE consumption by a factor of 2.5. Figure 1 illustrates a possible pathway towards the 2000-Watt society in Switzerland (the figure fulfils just an illustrative purpose).[7] The x-axis shows the time scale and the y-axis the PE consumption per capita. In 2000, about 3000 Watts per capita originate from fossil energy sources and 2000 Watts per capita from hydro power and other renewable resources as well as nuclear fuels. From the middle of the last century until now a large increase in consumption was typical for Switzerland, comparable to the consumption of all developed countries. In the long-term the present consumption might be seen as a peaking consumption. The vision is that due

1 International System of Units (SI is addreviated from the French Système international d'unités).[17] The 2000-Watt society 7 to technological energy-efficiency improvements and fuel switching, the PE consumption and especially its fossil share reduces significantly.

Figure 1: A possible development towards the 2000-Watt society.[7]

2.2 Literature review

This section presents overview of the most important literature about the 2000-Watt society and closely related issues. Generally the present literature can be divided into technical-feasibility studies and political scenario outlooks. In 1985, Goldemberg et al. published a paper claiming that further living-standard improvements are possible without increasing the per-capita use of energy above present levels.[19] Having a focus on developing countries, they argued that for a PE consumption of 1000 to 1200 Watts per capita, the “physical quality of life” could reach the quality of industrialized countries if high-quality energy carriers and cost- opportunities of more efficient technologies would be exploited. Further increases would accomplish only marginal improvements of the quality. Compared to the general assumption that energy consumption is the prerequisite for economic and social development, Goldemberg opened ground for a highly controversial debated issue. In 1994 and 1995, Goldemberg and Johansson also published reports about “Energy as an Instrument for Socio-Economic Development” investigating “Energy Needs for Sustainable Human Development”. They indicated that the vision of a 8 The 2000-Watt society

2000-Watt per capita society is likely to be technically (and eventually economically) feasible.[20,21] In 1997, von Weizsäcker et al. developed the formula „Factor 4“ as a new direction for technological progress with the aim to double prosperity and to halve the resource consumption in Germany.[22] Thereby, the efficient use of resources is the most important instrument to achieve a sustainable development. This efficient use could also be profitable to society. The book contains a variety of examples on how to revolutionize productivity in the use of energy. It gives details how markets and taxes can be organized to remove perverse incentives and to reward efficiency. The benefits could be enormous. A first onset to quantify possible PE scenarios in Switzerland was done by Kesselring and Winter in 1994 taking up the term “2000-Watt society”.[23] They developed a first technical-feasibility study with means of an energy-efficient transmission, minimizing non-renewable and maximizing renewable energy sources. In 1998, the ETH-Rat 2 postulated the idea of the 2000-Watt society emphasizing that such a society could be achieved by the middle of the 21 st century in Switzerland.[24] This was the starting point for a number of analyses with a Swiss focus. The major analyses are briefly described in the following paragraphs. In 1999, the Swiss Academy of Engineering Science (SATW) analysed the possibility of reducing the fossil energy consumption by 50 % compared to 1990 levels.[25] The academy concluded that to reduce the consumption by 40 % until 2020 utilizing energy-efficiency improvements is feasible. The reduction by 50 % would be possible during the second half of the 21 st century. In 2001, Spreng and Semadeni highlighted the ecological and social aspects of a 2000-Watt society and defined the energyconsumption per capita to be an indicator of sustainability.[26,27] In 2002 and 2004 Jochem published two reports examining the question whether a reduction of the per capita energy demand in Europe by two thirds is technically feasible within 50 years, still achieving additional economic growth.[28,29] Enormous efforts in R&D and a total turnover of the existing capital stock would be needed. Technological progress and investments in low-energy houses, transportation and

2 The ETH Board is the strategic unit elected by the Swiss Federal Council to manage the ETH domain. It defines the domain's strategic direction and allocates the funding provided by the Swiss Confederation to the six institutions. The Swiss Federal Institutes of Technology Zurich and Lausanne (ETHZ and EPFL), The Paul Scherrer Insitute (PSI), the Swiss Federal Institute for Forest, Snow and Landscape Research (WSL), the Swiss Federal Laboratries for Materials Testing and Research (EMPA) and Swiss Federal Institute of Aquatic Science and Technology (Eawag) belong the the ETH domain. The 2000-Watt society 9 power systems and industrial processes seem to be of major importance. In 2004, other interesting studies were published in the context of a 2000-Watt society. Marechal et al. [30] scrutinized “Energy in the Perspectives of a Sustainable Development”, SATW [31] gave an outlook on renewable energy and EMPA on reduction potentials of dwelling houses.[32] In 2005, two important reports were published. In the energy-research strategy report from Boulouchos et al., the authors acknowledged the 2000-Watt society as a benchmark for sustainability. However, facing climate change, a per capita CO 2 emission-reduction target would be more meaningful.[33] Koschenz and Pfeiffer analysed the reduction potential in the residential sector in detail.[34] The authors distinguish between realistic, ambitious and maximum-possible reductions in the residential sector. While the total consumption by 2050 could be reduced by a factor of 1.8 (44 %), 2.2 (55 %) and 5.1 (80%), respectively, the fossil consumption could follow further reductions by a factor of 2.4 (85 %), 4.5 (78 %) and 14 (93 %), respectively. Remarkably, neither Boulouchos et al. nor Koschenz and Pfeiffer proposed specifically the year 2050 as the time horizon for the 2000-Watt society and therefore support less ambitious targets than Jochem. In the ETH annual report 2005 the 2000-Watt society is described as follows: “Sustainability is the strategic target of energy research, as defined in the article on energy in the Swiss Constitution. The associated vision of a 2000-Watt society symbolizes the aspiration of achieving economic growth as planned, while using distinctly less primary energy and clearly reducing CO 2 emissions .”[35] The ETH-Rat hopes that “the slogan of a 2000-Watt society ... will become engraved in people’s minds and win them over to the long-term goal of reducing per capita energy consumption to one third of today’s level, without lowering the standard of living .” In this report a particular target date when the 2000-Watt society should be achieved is not specified. Of special importance is the Federal Energy Research Commission (CORE) 3 roadmap from Bürer and Cremer. The report is a contribution to identifying promising technologies in order to achieve the four objectives formulated by the Roadmaps

3 The Federal Energy Research Commission (CORE) acts as consultative body for the Federal Council and the Department of the Environment, Transport, Energy and Communications (DETEC). It defines the federal energy research concept, reviews and supports Swiss energy research programmes, comments on other energy research activities by the federal government and provides information concerning findings and developments in the area of energy research.[36] 10 The 2000-Watt society

Working Group 4 in the context of the 2000-Watt society. It aims at supporting priority setting in energy-research programmes and defines various possible futures for the Swiss energy supply and demand by 2050.[37,38] In 2006, additional relevant studies have been published. Most of them focused on the residential sector. Worth mentioning are the dissertation from Kost about “Long- term energy consumption and CO 2 reduction potential in the Swiss residential sector” [39] and the “Guidepost towards the 2000-Watt society” from Ellipson.[40] Kost published his findings together with Siller and Imboden.[41] They conclude that ambitious targets are necessary to reach the 2000-Watt society by 2050. In the residential sector it is of foremost importance to reduce the specific heat demand of existing buildings and to substitute heating and hot water systems by less carbon intensive ones. Nevertheless, they argue that there might be more technical and economical flexibilities than the 2000-Watt society if the target is to stabilize global warming, due to greenhouse gas (GHG) emissions, at 2°C above pre-industrial temperatures. The question remains: What is the recommended approach of the Swiss Federal Offices? The Swiss Federal Office of Energy (SFOE) has been publishing energy perspectives in collaboration with external experts ever since the mid-1970s. Thereby the aim has been to list options for planning a long-term and sustainable energy policy that meets the principal requirements of supply security, protection of the environment, economic viability and social acceptance.[42] In 2004, work has been commenced on the preparation of so-called Energy Perspectives up to 2035. Detailed results were published in a Management Summary at the end of February 2007.[43] Several accompanying documents to the final report (Scenarios I to IV, economic impacts, analysis and evaluation of electricity supply and digressions) will be published in the course of spring 2007. In particular, Scenario IV “Towards a 2000-Watt society” aims at reducing the PE consumption and strives for a reduction of CO 2 emission by half.[8] The results will be a basis for political debate on the nature and content of Switzerland’s future energy and climate policies.[42]

4 The formulated objectives are a) no use of fossil fuels for heating requirements in the building sector b) a reduction of the energy consumption in the building sector by half c) an increase of the share of biomass in the energy supply while using its full ecological potential d) a reduction of the vehicle fleet’s average fossil fuel consumption down to 3 litres per 100 km.[37] The 2000-Watt society 11

2.3 The 2000-Watt society from today’s perspective

From today’s perspective, it is still uncertain until when the vision of the 2000-Watt society should be reached in Switzerland. However, it becomes more likely that the formulation of the 2000-Watt society will include a combination of other targets. The target of a 2000-Watt society alone probably comes too short when talking about climate-policy issues because it does not distinguish between fossil and renewable resources. In March 2007, the SFOE published the Swiss Federal Energy Research Master Plan for the years 2008 to 2011.[44] This Master Plan, which could be seen as the most prominent but non-binding energy plan, strives for the 2000-Watt society as a prospective target in the second half of this century. Beside the target 2000

Watts, the plan also aims at the reduction of CO 2 emission to an equivalent 1 ton per person and year, similarly to the latest Energy Perspectives report (synthesis report [45]) published in January 2007. In the context of the 2000 Watts debate, one important issue was missing and is addressed now. What are the additional costs to the society? Furthermore, all studies published before are energy-sector specific or a combination of energy-sector specific studies. This dissertation conducts a fully-integrated energy-system analysis for the first time. Thereby, the author links all energy sectors (energy-production and energy-demand sectors) using energy carriers (energy flows) in one modelling framework. The interlinked energy sectors depict the energy system. Using this framework, the author calculates concrete targets (including a combination of CO 2 targets) for the year 2050 and derives the additional costs necessary to change to structure and composition of the Swiss energy system. This way, the dissertation enriches the existing literature on the 2000-Watt society.

2.4 Some energy definitions

For information purposes, energy (stored in energy carriers) can be classified into different categories. The main categories are primary energy, final energy and useful energy and are defined in [46].

Energy: Energy can be defined as the ability of a physical system to do work. Energy can be stored in a system, transferred from one into another system or transformed from one into another form. Energy cannot be created and energy cannot be destroyed. The standard energy unit is Joule [J]. 12 The 2000-Watt society

Energy carrier: A substance is considered an energy carrier if it stores energy that can be used directly or after several conversion steps. For instance the energy carrier coal can be burnt and the released heat transformed into electricity, which is used in electrical devices.

Primary energy: The energy content of an energy carrier, which has not been transformed in any way, for instance the energy content of crude oil in the ground before any processing is done.

Final energy: The energy content an end-user obtains minus the non-energetic use, the conversion losses and the own use in the conversion sector is defined as final energy. In other words, it is the energy before the last transformation to its end use, for instance the electricity needed to heat a room.

Useful energy: It is the energy an end-user needs for a specific purpose, for instance the heat in a room or the lighting demand. Thus, it is the final energy minus the transformation losses of end-use devices. Useful energy is sometimes also called energy service.

Defining the baseline 13

3 Defining the baseline

3.1 Structure and main assumptions of the Swiss-MARKAL model (SMM)

This dissertation analyzes the Swiss energy-system for the 2000-Watt society using the Swiss-MARKAL model (SMM). SMM is a bottom-up energy-systems model that provides a detailed representation of energy supply and end-use technologies. In this section we describe the structure of the Swiss energy-system as it is modelled in SMM and elaborate the main assumption needed to understand the model results. Thereby, a special emphasis is put on the residential and transportation sector.

Oil Refinery T&D Residential (heating, lighting Biomass cooking, Heat Plants T&D appliances, etc)

Natural Gas Compressed T&D Nat. Gas Commercial/ Services Biomass T&D (heating, Fischer-Tropsch lighting, T&D appliances, etc) Methanation,etc T&D Industrial Hydro Power Plants Sector T&D Other Transport Renewables Nat. Gas (Cars, trucks, railways, Uranium aircraft,etc) Nat. Gas Hydrogen T&D Biomass Production Agriculture Sector

Coal T&D

Figure 2: A simplified version of the Reference Energy System (RES) used in the energy-system Swiss-MARKAL model. T&D is an abbreviation for transmission and distribution.

The backbone of the MARKAL modelling approach is the so-called Reference Energy System (RES). The RES represents currently available and possible future energy technologies and energy carriers. From the RES, the optimization model chooses the least-cost energy-system, representing energy technologies and flows for a given time horizon and given end-use energy demands. Figure 2 presents a simplified version of the RES used in the SMM model. It illustrates energy flows in Switzerland from production to the end-uses. Five main end-use sectors have been 14 Defining the baseline considered, namely agriculture, commercial, industrial, residential and transportation. All sectors are partitioned into sub-categories representing specific uses. The specific uses are for example heating, domestic appliances and transportation modes. For the purpose of simplicity, only the most relevant technologies and flows represented in the model are included in Figure 2. In following paragraphs we describe the main model assumptions. In this analysis, a time horizon of 50 years (from 2000 until 2050) with five-year time steps has been chosen. For the baseline scenario a discount rate of 3 % is used in all calculations (a discount-rate sensitivity analysis is conducted in an additional section). The currency units used in this report are US dollars of the year 2000 [US$ 2000 ]. Costs and potential of resources as well as costs, potential and technical characteristics of the technologies are time dependent. Overall, the base year of the model has been calibrated to officially published Swiss energy statistics [1,47,48] and to IEA statistics [49] of the year 2000, respectively. The statistics are choosen depending on the quality and the level of detail of the obtained data. The population projection used in our scenarios correspond to the scenario ‘A-Trend’ reported by [18]. It is based on a continuation of recent historical trends and middle values for fertility rates, immigration flows and life expectancy. In ‘A-Trend’ scenario, the population of Switzerland increases from about 7.2 million inhabitants in 2000 to about 7.4 million inhabitants in 2030. Afterwards, the population experiences a slight decline reaching about 7.1 million inhabitants in 2050. The GDP projection used here corresponds to the scenario reported by [50]. The GDP is assumed to increase by nearly 50 % from the year 2000 to the year 2050. Another important assumption concerns the prices of oil and natural gas resources for which moderate increments are assumed in the first half of the 21 st century in this scenario (see Table 1). The crude oil price is assumed to constantly increase from

4.6 US$ 2000 /GJ (equivalent to 29US$ 2000 /bbl) in the year 2000 to 8 US$ 2000 /GJ 5 (equivalent to 50 US$ 2000 /bbl) in the year 2050 . Natural gas is assumed to be linked to the crude oil price. Hence the price increases from 3.3 US$ 2000 /GJ in the year 2000 6 to 5.7 US$ 2000 /GJ in the year 2050 . Given the large uncertainty that surrounds the development of the price of fossil energy resources, a sensitivity analysis needs to be

5 In the model crude oil is refined among others to diesel, gasoline, kerosene, and heavy fuel oil. To calculate the end-user price for crude oil products additional variable cost for the operation of the refinery of 2.3 US$ 2000 /GJ and the distribution costs for diesel and gasoline of 1.23 US$ 2000 /GJ have to be added. 6 The transmission cost of natural gas are assumed to be 1.00 US$ 2000 /GJ. Defining the baseline 15 conducted for most results. Moreover, two important assumptions relate to the distribution of costs and taxes. The model includes distribution costs for all fossil recourses. However, the model does not contain taxes for any fuel use. The implication of this assumption is explained in chapter section 5.5 where subsidies are used as a policy measure.

Table 1: Prices for fossil energy resources as assumed in this study. For a better understanding, the oil price is given both in US$/GJ and in US$/bbl.

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Natural Gas 3.3 3.6 3.8 4.0 4.3 4.5 4.8 5.0 5.2 5.5 5.7 (US$/GJ) Crude Oil 4.6 5.0 5.3 5.6 6.0 6.3 6.7 7.0 7.3 7.7 8.0 (US$/GJ) Crude Oil 29 31 33 35 37 39 41 43 45 47 50 (US$/bbl)

3.2 Renewable energy potential and nuclear energy

When it comes to the projection of the future energy consumption, it is of major importance to define reliable renewable energy potentials. In 2005, the Paul Scherrer Institute (PSI) published a report for the Swiss Federal Office of Energy (SFOE), estimating cost and potentials of new renewable energies in Switzerland [51]. The renewable energy supply options 7 considered in the report were defined by SFOE according to their future importance. The renewable technologies and their corresponding potential investigated are: small hydro, wind energy, photovoltaics, solar thermal and solar chemical generation, geothermal and wave power. Generally speaking, the renewable potential in Switzerland is very large in comparison to the energy demand. However, this is rather based on theoretical (maximum available resources) than on technical and economical grounds. Therefore, in the following paragraphs we provide estimations on the technical potential of renewable energy sources. Electricity generation from small hydro power poses an economical and ecological interesting option. However, the questions about the maximum hydro-power potential is complex to answer. They comprise issues such as the physical potential along a river, hydro-power plants worthy to be upgraded, potential (but not yet built) power stations, etc. Presently about 3400 GWh/yr (12.2 PJ) electricity is generated from small hydro power stations (<10 MW). This could be raised to 5600 GWh/yr (20.2 PJ)

7 The options considered in the report refer to potential to produce electricity. However, especially the theoretical potential for biomass refers to the total potential, which can also be utilized by other non-electricity production options. 16 Defining the baseline in the year 2050 for an average generation cost of about 10-25 Rp/kWh (1 € = 155 Rp). The maximum technically realistic achievable potential for water purification and wastewater plants is fairly small. Their additional potential is around 155 GWh/yr (0.6 PJ). In recent decades there have been many studies about the total unused potentials of hydro power including large hydro power stations (>10 MW). The latest study was published by SFOE in 2004.[52] The study sees a total potential for additional expansion of 7570 GWh/yr, or about 14 % of the total present electricity production. The current use of wind power is negligible in Switzerland, about 2.98 GWh/yr (0.01 PJ) in 2000. However, various studies have shown that the realistic technical potential from wind parks is around 1150 GWh/yr (4.1 PJ) by 2050, divided into 96 locations. Additionally individual turbines could produce 2850 GWh/yr (10.3 PJ). Whereas present generation cost of wind power plants are between 12-15 Rp/kWh, a cost reduction to 11.6-13.8 Rp/kWh may be expected by 2050. Compared to other renewable energies wind power undergoes regular recurring objection based on protection of landscape and nature claims. The available wood potentials may be estimated in many ways, for example by establishing the theoretical 8 or ecological 9 potentials. In this report we have used the theoretical-potential approach corresponding to the ‘A’ category (natural-wood assortments from forestry including hedges and biomass from fruit-growing 10 ).[53] Hence, in the year 2000 we assume the total wood potential to be in the range of 96 PJ/year, and rising to about 103 PJ/year by the end of the analysis timeframe 2050 11 . In order to better represent the real market conditions, following literature source [53], we have assumed that the wood price is dependent on its availability. In SMM we modelled three price categories ‘high price’, ‘medium price’ and ‘low price’ In the year

2000 the medium price for wood is 5.23 US$ 2000 /GJ, the low and high price is respecticely 10 % lower and higher. Therefore, an increasing demand for wood consequently raises its price, as soon as the feedstock of e.g. low-priced wood is exhausted. Low price and high price biomass make up 40 % of wood available (equal

8 The theoretical potential is defined in [53] as ‘based on wood grown in productive land surfaces and residues from secondary production and human consumption that be reutilized’. 9 The ecological potential is defined in [53] as ‘ecological net-production potential respectively the share of biomass that can be used for energetic treatment without material utilization’. 10 In [53] natural wood assortments from forestry, including hedges and biomass from fruit-growing, are described in the category ‘Waldholz, Feldgehölze, Hecken’. 11 [54] considers the total energetic biomass potential to be 180 PJ in Switzerland. Hence the potential we use in this report is a rather conservative assumption. Defining the baseline 17 shares). The medium-priced wood is available for the remaining potentital of 60 % in Switzerland. In recent years the photovoltaic capacity has grown by 15.3 % per year. At the end of 2003, the total installed capacity was about 21 MW. However, in future times the potential will be limited by the availability of roof-surfaces and the increased construction times. Due to those two limitations, for the report we only assume the technical available potential for very well suited roofs (quality factor > 90 %), which adds up to a maximum of 13.7 TWh/yr (49.3 PJ). Switzerland has a large potential for geothermal energy from deep hot rock. However, to estimate the technical potential we need to reduce the uncertainties concerning the quality of the geothermal resource and the cost of drilling and the cost of generating electricity and heat. SFOE is currently developing a “Deep Heat Mining” in Basel with a thermal capacity of 20 MW, an annual electricity production of 20 GWh and an annual heat production of 80 GWh. A similar project is planned for Geneva but exact potential estimations do not exist so far. Therefore, in the course of this study we assume a conservative (and quite uncertain) potential of about 1388 GWh/a or about 5 PJ in 2050. However, possible earthquakes like in Basel may pose certain threads to geothermal projects in Switzerland.[55] Other important elements of our scenarios are related to the future role of nuclear power plants within the Swiss energy system and electricity imports. In this scenario, we have assumed that the electricity generation from nuclear power plants remains at maximum at its year-2000 levels for the entire time horizon. The generation of electricity could be lower but can not be higher. This presupposes a possible replacement of nuclear plants scheduled to be decommissioned in the next decades but it does not assume the introduction of any new nuclear power plants. It must be recognized, however, that the future role of nuclear energy in Switzerland will depend, among other factors, on addressing the issues of higher nuclear safety, disposal of nuclear waste, proliferation resistance of fuel and public acceptance and the related political decisions on these topics. As for the imports and exports of electricity, we have assumed that from the year 2010 onwards exports will become equal to imports. Under this assumption, Switzerland remains independent from neighbouring EU countries in terms of its electricity supply in the long-term. 18 Defining the baseline

3.3 Energy and emission balances of the baseline scenario

In order to give an adequate context to our analysis we describe the main characteristics of the baseline scenario in this section. Scenarios in general can be refered to as alternative images of how the future might unfold. They are an appropriate tool to analyze how driving forces may influence future outcomes and to assess the associated uncertainties.[56] The baseline scenario portrayed here depicts future trends in the energy system of Switzerland without any radical political, technical or social change. In this sense, it represents a plausible middle-of-the-road development of the Swiss energy system. In addition to the baseline scenario, we analyse complementary scenarios in the next chapters. In these complementary scenarios we assign different values for key variables such as oil and gas import prices and introduce CO 2 or primary energy constraints, among others. On the one hand, they help examining the impact of uncertainties in baseline assumptions and, one the other hand, they allow conducting what-if analysis. Hence, they give assistance to a decision-making process. In the following paragraphs we give insight to the trends in primary, final and electric-energy consumption and the CO 2 emissions in the baseline scenario.

3.3.1 Primary-energy balances

Figure 3 represents the primary energy consumption in Switzerland for the baseline scenario up to the year 2050. In the figure, the efficiency of a hydro power plant is assumed to be 80 % and the efficiency of a nuclear power plant is assumed to remain constant at 33 %. These values correspond to those used by the Swiss energy statistics for the computation of the primary-energy equivalent of the electricity generation of these two technologies.[1] Although electricity is not a primary-energy source, the graph includes the net imports (i.e. imports minus exports) of electricity to Switzerland to account for the completeness. Defining the baseline 19

1400

1200

1000 Energy carriers: Electricity 800 Renewables Hydro Power 600 Nuclear Power Gas 400 Oil Coal

200 Primary Energy Consumption Primary[PJ] EnergyConsumption 0

-200 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 3: Primary-energy consumption in the baseline scenario for the period 2000 to 2050.

In this baseline scenario, primary energy consumption remains relatively stable at around 1200 PJ over the time horizon, slightly decreasing towards the year 2050. Oil continues to hold an important share of the Swiss primary energy mix but its consumption experiences a sizeable decline due to the increasing oil price and efficiency improvements in the transportation sector. Natural gas, on the other hand, experiences a significant increase. The contribution of nuclear energy and hydro power remain approximately constant. Other renewable energy sources play only a modest role in this scenario. Figure 4 shows the primary energy per capita consumption. Literature values are presented for the years 1910 until 2000 and baseline projections for the years 2000 until 2050. Until the year 1950, the per capita consumption was very stable at around 1000 W/cap. From 1950 until 1985, we can see a strong increase in the per capita consumption to nearly 4700 W/cap. After the year 1985, a stabilisation of the strong increase is noticeable; the per capita consumption only increases moderately thereafter. This trend is confirmed by the baseline projection of SMM. In the year 2050, we reach a per capita consumption of about 5300 W/cap for the baseline- scenario projection. 20 Defining the baseline

6000 Literature values Baseline projection 5500

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

0 Primary Energy Consumption per Capita perCapita [Watt/Capita] Primary Energy Consumption 30 35 55 60 90 95 10 15 20 45 50 1910 1915 1920 1925 19 19 1940 1945 1950 19 19 1965 1970 1975 1980 1985 19 19 2000 2005 20 20 20 2025 2030 2035 2040 20 20

Figure 4: Primary-energy per capita consumption for the period 1910 to 2050. The figure shows literature values [18,57,58] for the time period 1910 until 2000 and values of the baseline projection for the time period 2000 until 2050.

3.3.2 Final-energy balances

The final-energy consumption of the base year has been calibrated to officially published Swiss energy statistics [1] and to IEA statistics [49] of the year 2000, respectively, depending on the quality of the obtained data. Relevant statistics as well as the model calibration for final-energy consumption of the year 2000 are presented in the appendix 4. Figure 5 and Figure 6 show the final-energy consumption by sectors and by energy carriers for the baseline scenario. 12 The total final-energy consumption increases only marginally from about 885 PJ in 2000 to about 925 PJ in 2050. Oil products, natural gas and electricity dominate the final-energy mix over the whole time horizon. While natural gas and electricity increase in absolute terms, the overall consumption of oil products reduces over time. The consumption of biomass and waste remains stable over the time horizon. Other energy carriers play a minor role in the primary energy mix. In terms of sectors, the largest consumer of final energy remains the transportation sector. The share of this sector in the final-energy consumption of

12 Final energy is defined as the energy that is available to the consumer. Defining the baseline 21

Switzerland amounts to approximately 32% in the year 2050. Overall the sector consumption remains at constant levels in the baseline scenario.

1000

900

800 Energy carriers: 700 Other Renwables Waste 600 District heat Wood 500 Coal 400 Gas Oil Products 300 Electricity

Final Energy Consumption [PJ] Consumption Energy Final 200

100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 5: Final-energy consumption by energy carriers in the baseline scenario for the period 2000 to 2050.

Note that in the figure Other Renewables refer to the use of solar energy, biogas and ambient heat following [1]. Non-energy use covers use of other petroleum products such as white spirit, paraffin waxes, lubricants, bitumen and other products. It also includes the non-energy use of coal (excluding peat). These products are shown separately in final consumption under the heading non-energy use. It is assumed that the use of these products is exclusively non-energy use. Other non-specified includes all fuel use not elsewhere specified (e.g. military fuel consumption with the exception of transport fuels in international marine bunkers and consumption in the above-designated categories for which separate figures have not been provided). [59] 22 Defining the baseline

1000

900

800

700 Sectors: Industry 600 Transportation Residential 500 Commercial Agriculture 400 Non-Energy Use Other non-specified 300

Final Energy Consumption [PJ] Consumption Energy Final 200

100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 6: Final-energy consumption by sectors in the baseline scenario for the period 2000 to 2050.

3.3.3 Electricity production and consumption

Figure 7 presents the electricity generation mix under the baseline scenario. 13 Net imports of electricity are included (negative values mean that Switzerland is exporting electricity). 14 With the assumptions made in this scenario, no major structural changes in electricity generation take place during the first half of the 21 st century.

Electricity generation grows gradually and remains largely CO 2-free. Conventional nuclear and hydro power plants provide the bulk share of production. Nuclear-based electricity production remains at the year-2000 levels over the whole time horizon. 15 This implies a replacement or life extension of the nuclear power plants expected to be decommissioned in the coming decades. Hydroelectric generation, on the other hand, experiences an increase, mainly due to the tapping of the available small hydro potential. 16 Natural gas-based cogeneration facilities and wind turbines make some

13 The category ‘Conventional Thermal and Others’ includes non-hydro electricity auto-production from the railways system and the industry.[60] Hydro-based auto-production from the railways system and the industry is included under the category “Hydro Power”.[60] 14 Our analysis assumes that in the long term net imports/exports of electricity are reduced to zero. 15 In this scenario, an upper bound on electricity generation from nuclear power has been imposed. At most, the electricity production levels of the year 2000 can be reached. 16 [51] estimates that the additional potential for small hydro power plants in Switzerland amounts to approximately 5.6 TWh/year. Defining the baseline 23 inroads towards the end of the time horizon but they remain minor contributors to the Swiss electricity generation mix.

60 Electricity production technologies: Wind Turbines 50 Biomass Cogeneration Natural Gas Cogeneration 40 Conventional Thermal and Others Hydro Power Nuclear Power 30 Net Imports

20 Electricity Production [TWh/year] Production Electricity

-10 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 7: Electricity production in the baseline scenario for the time period 2000 to 2050.

Figure 8 shows the correlation between electricity consumption and GDP for the time period from 1980 to 2050, whereby the time period from 1980 to 2000 reflects statistical values and the time period from 2000 to 2050 SMM values of the baseline scenario. This correlation is based on the assumption that the energy demand is equal to the GDP to the power of α . In a linearized form this can be expressed as ln( EnergyDema nd ) = α ⋅ ln( GDP ) or y = α ⋅ x + b . Thereby, α represents the gradient of slope or the income elasticity of demand (for electricity). If α is 1 GPD is directly proportional to the electricity consumption. If α greater than 1 the electricity demand increases faster than GPD and if it is smaller the electricity demand increases slower. The figure is divided into a left part, representing historic literature values, and a right part, representing the baseline energy consumption (baseline projection) of Switzerland. The historic as well as the projected GPD is taken from the Swiss Federal Statistical Office.[61] Having some fluctuations for the α values for certain time periods, overall the figure shows a relative constant slope. Despite an indicated decline of the slope after the year 2040, the income elasticity of electricity demand is around one. Note, that this fit is used as a qualitative trend assessment without considering price effects and price elasticises with natural gas and oil. 24 Defining the baseline

Literature values Baseline projection ln (electricity demand) 5.6 y = 0.3397x + 1.0283 Time periods: 5.5 y = 0.6141x - 2.6081 y = 1.2076x - 10.445 1980-1990 Literature values

5.4 1990-2000 y = 0.7938x - 5.0045 Literature values

5.3 2000-2010 y = 0.9948x - 7.6192 Baseline projection

y = 0.8847x - 6.2065 5.2 2010-2020 Baseline projection

5.1 2020-2030 Baseline projection

5.0 2030-2040 Baseline projection y = 1.2326x - 10.651

4.9 2040-2050 Baseline projection

4.8 12.5 12.6 12.7 12.8 12.9 13.0 13.1 13.2 13.3 13.4 ln (GDP)

Figure 8: Correlation between electricity consumption and GDP for the time period 1980 to 2050. The time period 1980 to 2000 reflects literature values [57,58,61] and the time period 2000 to 2050 SMM values of the baseline-scenario projection.

3.3.4 CO 2 emissions

In this baseline scenario, the total energy-related CO 2 emissions are reduced from about 44.8 million tons of CO 2 (Mt) in the year 2000 to 42.6 Mt of CO 2 in the year 2050 (see Figure 9). This small reduction is mainly due to changes in the Swiss energy system, triggered by the sustained increasing oil price signal. Note, however, that the effects of the oil price alone do not lead to any substantial reduction in CO 2 emissions. The emission shares of the various sectors stay relatively constant. The transportation sector is by far the largest CO 2 polluter, followed by the residential sector. The one sector with increasing CO 2 emissions is the electricity sector. Because of the cap on nuclear energy, increasing demand for electricity is covered by natural gas CHP plants. The Swiss CO 2 law and the achievement of the Swiss Kyoto targets have not been considered in this baseline scenario. Defining the baseline 25

40 Sectors: 35 Transport 30 Residential Industry 25 Commercial Agriculture 20 Upstream

CO2 Emission[Mt] CO2 Electricity 15

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 9: Energy-related CO 2 emissions per sector in Switzerland for the period 2000 to 2050 in the baseline scenario.

3.4 Description of the residential sector

The residential sector is a central end-use energy sector in Switzerland when it comes to final-energy consumption and energy-saving potentials. With a final-energy consumption of more than 230 PJ in the year 2000, the sector is the second largest energy consumer after the transportation sector. The biggest challenge in the residential sector is the long life-time of the building stock. Once a building has been refurbished or built, it takes several decades before new investments in refurbishment (e.g. advanced energy-saving insulation-measures or heating systems) will possibly be made. Therefore, when it comes to reducing energy consumption, it is most important to combine refurbishment actions with actions directly related to energy-saving measures. In total we distinguish 13 demand segments in the residential sector, see Table 2. The most important segment in terms of energy consumption is ‘Residential Heating’ (RH). RH is a special category due to the complexity of energy saving potentials. This is why we divided the segment into four separate demand segments: Single and Multi Family Houses (SFH and MFH) for existing and new buildings. In the model we refer to dwellings constructed before the year 2000 as existing buildings, and 26 Defining the baseline dwellings constructed after the year 2000 as new buildings. For our modelling exercise this differentiation provides a detailed representation of the RH sector. 17

Table 2: Demand segments of the residential sector.

Description Abbreviation Cooling RC1 Cloth Drying RCD Cloth Washing RCW Dish Washing RDW 18 Other Electric REA Room-Heating Single-Family Houses (SFH) existing building RH1 Room-Heating Single-Family Houses (SFH) new building RH2 Room-Heating Multi-Family Houses (MFH) existing buildings RH3 Room-Heating Multi-Family Houses (MFH) new buildings RH4 Hot Water RHW Cooking RK1 Lighting RL1 Refrigeration RRF

3.4.1 Base year calibration

Table 3 shows the final-energy consumption of each residential demand segment for the year 2000 as it is modelled in SMM and compares it to International Energy Agency (IEA) and the Swiss Overall Energy statistics (GEST) 19 . The model calculates a total final-energy consumption of 232.1 PJ. According to IEA statistics for the year 2000, 234.6 PJ of final energy was consumed in the residential sector of Switzerland. This value is of the same magnitude as the consumption in GEST. GEST state a final energy consumption of 230.6 PJ.20 Based on the total final-energy consumption and consumption shares taken from [62] and [63], the final-energy consumption of each demand segment is calculated.

Table 3: Final-energy consumption 2000 in [PJ] – split by demand segments and fuels.

Model Oil Other Description Coal Gas Biomass Electricity Heat Total Code Products Renewables Cooling RC1 1.8 1.8 Cloth Drying RCD 1.4 1.4 Cloth Washing RCW 4.6 4.6 Dish Washing RDW 1.7 1.7 Other Electric REA 11.5 11.5 Heating SFH exiting RH1 0.2 50.5 15.1 3.8 1.5 7.7 78.8

17 In reality existing buildings represent a manifold building stock with various insulation qualities (building code). For instance, dwellings constructed 50 years ago have less thermal insulation compared to dwellings constructed 10 years ago. New buildings in 10 years time will also be constructed with improved insulation thicknesses depending on the investor’s willingness and possibilities to pay. 18 The demand segment Other Electric represents devices such as television sets, computers, stereos sets, etc. 19 GEST is the abbreviation for Schweizerische Gesamtenergiestatik (Swiss Overall Energy Statistics). 20 This corresponds to 240 PJ with adjustments for heating degree days. Defining the baseline 27 buildings Heating MFH existing RH3 buildings 0.2 56.9 17.1 4.3 1.7 4.3 4.3 88.9 Hot Water RHW 14.0 5.1 0.4 0.2 6.9 0.8 27.4 Cooking RK1 0.6 0.1 5.3 6.0 Lighting RL1 5.6 5.6 Refrigeration RRF 4.4 4.4 MARKAL Total 0.4 121.5 37.9 8.5 3.5 55.1 5.1 232.1 GEST Total 0.1 121.0 36.3 8.6 3.4 56.6 4.6 230.6 IEA Total 0.4 124.3 36.3 8.8 3.5 56.6 4.6 234.6 References: [1], [62], [49], [63]

As can be seen in the table, space heating (Heating) is the sub-sector with the by far highest final-energy demand, consuming more than 70 % of the total final energy. The second largest sector is hot water, followed by other electrical devices. Looking at the fuel consumption, the residential sector is highly dependent on fossil fuels. Oil and gas products nearly provide 70 % of the total final-energy consumed. Space heating and hot water are the main consumers of fossil products, whereas all other demand segments mainly consume electricity. Looking at the 2000-Watt society, the main goal is to reduce the high dependency of oil and gas products and to install energy-saving measures to reduce the space heating demand.

3.4.2 Future projection

In this section, we illustrate information important to understand the future energy consumption of the residential sector. Special emphasis is put on the demand segment Residential Heating (RH). In detail, the section describes the future residential heating technologies, demand projections and the implementation of energy saving options. Additionally the section focuses on other than RH demand projections and provides a final-energy consumption overview.

3.4.2.1 Residential-heating technologies

Table 4 portrays all heating technologies optional in the model. We decided to provide an as large variety of heating technologies as possible. Table 4 shows the heating technologies available for every heating demand segment (RH1 to RH4 – see Table 3). Note that district-heating technologies are limited to MFH since their application to SFH in the Swiss context appears to be rather small. A detailed technology description can be found in the appendix 1.

28 Defining the baseline

Table 4: Future heating technologies.

RH1 RH2 RH3 RH4 21 Biomass (Wood) √ √ √ √ Oil √ √ √ √ Natural Gas √ √ √ √ Heat Pump – Sole √ √ √ √ Oil Solar √ √ √ √ Natural Gas Solar √ √ √ √ Pellets √ √ √ √ Heat Pump – Air √ √ √ √ Pellets – Solar √ √ √ √ Heat Pump – Water √ √ √ √ District Heat √ √

3.4.2.2 Demand projection of the residential-heating sector

As mentioned above, in SMM we distinguish 14 different demand segments. In this section we focus on the four most important demand segments, the RH demands. RH is separated into SFH and MFH as well as existing and new buildings. In the model we refer to dwellings constructed before the year 2000 as existing buildings and dwellings constructed after the year 2000 as new buildings. Assuming future specific RH demands and Energy Reference Floor Areas (ERFA)22 , the absolute demand values for space heating can be projected using the general formula:

Demand = Useful Energy [TJ / a] = Specific Room Heating Demand [MJ / m 2 a]⋅ ERFA [Mio m 2 ]

A first estimation of ERFA was done by Wüest & Partner in the year 1994 [65] (see [32]). In recent years this projection has been updated several times [32]. In order to estimate ERFA projections several sources tried to link construction investments with the economic situation and the population development [62,66]. Figure 10 shows the latest ERFA projection including extrapolations by the author (PSI Projection). The author’s projections were necessary because all literature references available only provide ERFA values up to the year 2035, while SMM analyses future scenarios until 2050.

21 Biomass (wood) is a aggregation for Chemineés fireplaces and other stoves, such as tiled stove. Residential heating systems based on pellet firing are aggregated in a separate category. 22 ERFA is defined in SIA 380/1 as the sum of all overground and subsurface floor areas subject to heating and air-conditioning.[64] Defining the baseline 29

700

600

500

400

[Mio [Mio m2] 300

200

100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Prognos 2005 PSI Projection BFE 2002

Figure 10: ERFA comparison.

References: [62], [66], [67], [68], author’s assumptions

Existing buildings:

As described above, the model defines four RH demands for existing and new buildings. In order to project the future ERFA for existing buildings, base year demand splits of SFH and MFH, specific RH demands and demolition rates are assumed. In the year 2000 we assume that 46 % of the total ERFA belongs to SFH and 54 % to MFH (based on [69]), which results in 187 [Mio m 2] ERFA for SFH and 222 [Mio m 2] for MFH. To calculate the energy demand of existing buildings, the ERFA of each house type (SFH and MFH) has to be multiplied with the specific RH demand [MJ/m 2]. [69] assumes a specific RH demand of 384 [MJ/m 2] for SFH and of 364 [MJ/m 2] for MFH in the year 2000. Taking these assumptions into account, we calculate an energy demand of 72 [PJ/a] for SFH and of 80 [PJ/a] for MFH in 2000. Furthermore, we assume that the specific RH demand of existing remains constant over the whole time horizon in the reference scenario. The model is then able to implement energetic improvements depending on the constrained scenarios. Hence, energetic improvements of the annual energy consumption of each house are fully covered by the energy-saving options described below. Due to the future demolition 30 Defining the baseline rates, the demand decreases to 70 [PJ/a] and 74 [PJ/a] respectively until 2050, see Figure 12. The splits and the demolition rates are assumed by [63] and [69]. The demolition rates and the resulting ERFA for exiting buildings are both depicted in Figure 11.

100% 250

95% 240

90% 230

85% 220

80% 210

75% 200

70% m2] [Mio 190

65% 180

60% 170

55% 160

50% 150 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 RH1 RH3 RH1 Projection RH3 Projection RH1 RH3

Demolition Rate of Existing Buildings. ERFA Existing Buildings. Reference: [69] and own calculations Reference: [69] and own calculations

Figure 11: Demolition rate and ERFA existing buildings. 23

100

50 [PJ/a] 40

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

RH1 RH3

Figure 12: Energy demand existing buildings SFH (RH1) and MFH (RH3).

23 RH1 refers to SFH and RH3 to MFH. Defining the baseline 31

New buildings

To estimate demand projections for new buildings, we need to predict ERFA values and specific RH demands for SFH and MFH new buildings. To calculate these values a different approach is required than it is used for existing buildings. A subtraction of the total ERFA (Figure 10) from the future ERFA for existing buildings (Figure 11) provides the ERFA of new buildings. The result of this calculation is displayed in Figure 13. For new buildings the demolition rate is very small, less than 1 % in 50 years. Hence, for simplification we assumed that all newly constructed buildings have a life time of at least 50 years. Considering the time horizon of 50 years of SMM, the error from this simplification is negligible.

120

100

60 [Mio m2] [Mio

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

RH2 RH4

Figure 13: ERFA new buildings SFH (RH2) and MFH (RH4).

Several references are available, which describe the development of specific RH demands [MJ/m 2] of new buildings ([62], [67], [32], [64], [70] and [71]). Following [62] with additional assumptions made by the author, we obtain average specific RH demands for SFH and MFH (see Figure 14) built in the future. The average specific RH demand in this figure relates to a newly constructed house at the period of time indicated in the figure. The values do not relate to the specific vintaged demand of all new buildings in a future period. The specific vintaged demand would refer to a 32 Defining the baseline mixture of new buildings constructed prior to a certain period of time t-1 and the newly constructed buildings at that period of time t.

300

250

200 RH2 RH2 Projection 150 RH4

[MJ/m2a] RH4 Projection 100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 14: Average specific room-heating demand of new buildings built in a future period of time.

References: [62], own assumptions

The energy demand of new buildings is calculated according to the following formula:

DMD t = SD t ⋅ (ERFA t − ERFA t−1 ) + DMD t−1∀2005 ≤ t ≤ 2050

DMD: Demand of New Buildings SD: Specific Room Heating Demand ERFA: Energy Reference Floor Area t: Time Period

Using this formula we estimate the room heating demand of new buildings, displayed in Figure 15 . Defining the baseline 33

15 [PJ/a] 10

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

RH2 RH4

Figure 15: Room-heating demand new buildings energy saving options.

3.4.2.3 Implementation of energy-saving measures

Marginal Conservation Cost curves for the Swiss RH sector were first developed by Jakob and Jochem [67,72] and made available to PSI for this study. Marginal Costs (MC) describe the additional prices for better sealed insulations and the unit of the corresponding energy efficiency yield. In other words, MC relate the additional annualized investment costs of an energy-efficiency measure (or a set of measures) to the energy-demand reduction of this measure. [72] explains the MC of an energy- saving measure using the formula below. For developing a cost curve, it is most important to define a reference development because all additional investments and their associated energy savings are based on this reference. For our analysis this reference development corresponds to the specific RH demand described in the previous chapter.

dCapCost ∆CapCost a InvCost − a InvCost mc = ≅ = n n n−1 n−1 EE dD ∆D D − D Energy Energy Energy ,n Energy ,n−1 ∀n 1( ... N)

mc EE : Marginal Cost of Energy Efficiency Conservations in Buildings CapCost: Capital Cost of Energy Efficiency Conservations in Buildings InvCost: Investment Cost of Energy Efficiency Conservations in Buildings 34 Defining the baseline

DEnergy : Energy Demand of a Building n and n-1: Energy Demand Level of the Building considered N: Maximum Number of Saving Measures Considered a: Annuity Factor

For the implementation we distinguish between existing buildings (RH1 and RH3) and new buildings (RH2 and RH4). For existing buildings we have assumed the specific RH demand of the year 2000 to be constant for the whole model horizon and included options to reduce this demand. In this case all conservation measures introduced are completely dependent on the model optimization results. The specific RH demand without reductions is called the reference specific RH demand. For new buildings we have assumed a constant building-code improvement for the whole time horizon (the energy efficiency of each house increase, therefore, the specific RH demand decrease). Hence, we implement two specific MC curves for existing buildings, one for SFH and another for MFH. For new buildings we additionally implement MC curves for each time period analysed in the model.

Existing buildings

Before being able to implement the MC curves for SFH and MFH in the model, each curve has to be calibrated to the starting year 2000. The basis for each existing building MC curve calibration is four separate curves reflecting the year of construction of existing buildings. We distinguish between houses being built before 1947 (type I), between 1947 and 1975 (type II), between 1975 and 1985 (type III) as well as between 1986 and 2000 (type IV). Note that buildings constructed after 2000 are referred to as new buildings in the model. Figure 16 depicts the reference MC curves for SFH and MFH. On the x-axis the specific RH demand in [MJ/m 2a] is portrayed and on the y-axis the MC in [CHF/kWh]. The graphs show that specific MC curves also include very low quality building codes, which are not relevant for the base year 2000. Hence, the starting point of the curve (conservation measures) had to be calibrated such that it corresponds to the specific energy of existing houses in the year 2000. For doing so, the ranked specific energy demand of each house type is multiplied with its ERFA (year 2000), see formula below. The resulting value is compared to the RH demand calculated in the Defining the baseline 35 previous section (72 PJ for SFH). Once the calculated value matches the RH demand, the starting point of the reference specific MC curve is obtained and can be used in our analysis. The same procedure is used to calculate the specific MC demand of SFH and MFH.

RH _ DMD t = ƒ EBF b,t ⋅Qh o o 0 b b RH _ DMD : RH demand for the time period t [PJ/a] to 0 EBF : Reference Energy Area [Mio m 2] b,t0 Qh : Specific energy demand of each house type [MJ/m 2a] for the baseline o b

to: First year of the time horizon (year 2000) b: Building category by construction period

Qhmin Qhmin 0.70 0.60

0.60 0.50

0.50 0.40

Before 1947 Before 1947 0.40 1947 -1975 1947 -1975 1976 - 1985 0.30 1976 - 1985 1986 - 2000 1986 - 2000 [CHF/kWh] [CHF/kWh] 0.30

0.20 0.20

0.10 0.10

0.00 0.00 0 100 200 300 400Qh0 500 600 0 100 200 300 400Qh0 500 600 [MJ/m2a] [MJ/m2a]

Figure 16: Marginal-cost curves for SFH (left) and MFH (right) existing buildings.

Each marginal cost curve has a highest value ( Qh o ), reflecting the ‘specific energy demand of each house type [MJ/m 2a] for the reference case’ and a lowest value 2 (Qh min ) reflecting the ‘specific energy demand of each house type [MJ/m a] for best possible renovation’. However, it can also adopt any value between the reference case and the best possible option ( Qh n ). Figure 16 shows the values Qh o and

Qh min for buildings constructed before 1947. Having this in mind, we can calculate the theoretical maximum demand reduction of each house type using the formula below. Note that the same calculation can be done for SFH and MFH.

RH _ DMD max_ red ,t = RH _ DMD t − ƒ ERFA b,t ⋅Qh min o o 0 b b RH _ DMD : Theoretical maximum reduced RH demand [PJ/a] max_ red ,to 36 Defining the baseline

With regards to the renovation procedure, in reality, houses can be grouped into three different house types: houses for renovation, houses for maintenance and (so- called) sleeping houses. Houses for renovation refer to houses, which, due to a renovation, increase their energy efficiency. This renovation is an energetic renovation. This means that the building code (e.g. the isolation of roofs, walls or windows) is improved. Once the building code is improved and a house demands less energy for heating, the building code remains untouched until a renovation is needed again (when the end of the building-code lifetime is reached). Houses for maintenance refer to those houses, which are renovated but not energetically improved. The building code remains the same and the consumption of the house remains constant. Sleeping houses refers to those houses which are not renovated at all. In this case the owner of the house could decide to invest into a renovation at any time. In the baseline scenario, we guarantee that only houses subject to renovation can improve their energy efficiency (the building code) and demand less energy for heating. Therefore, we assume a renovation cycle or renovation rate for existing buildings. In other words, we need to find the maximum share of houses to be renovated for every time period. This renovation rate also corrects the theoretical maximum reduced RH demand as calculated in the last section. Using the renovation rate (ren b,t ) we can calculate the cumulative reduced energy demand until 2050, using the formula below. In words, the renovation rates multiplied with total amount of ERFA give us the total amount of ERFA that can be renovated during each modelling period. Multiplying these values with the specific energy use (new specific energy use due to renovation subtracted from the reference case) reveals the cumulative energy savings in [PJ/a]. Table 5 depicts the renovation rate of existing buildings.

2050

RH _ DMD cum = ƒ ƒ ERFA b,t ⋅ ren b,t ⋅ (Qh 0 − Qh n ) b b t=2005 b

RH_DMD cum : Cumulative reduced energy demand [PJ/a]

ren b,t : Renovation rate [%]

Defining the baseline 37

Table 5: Five-year period renovation rates of existing buildings [%].

SFH –Existing Buildings [%] Before 1947 1947 – 1975 1975 - 1985 1985-2000 Year 4.0% 4.5% 4.0% 1.0% 2005 4.0% 4.5% 4.0% 1.0% 2010 3.5% 4.0% 5.0% 3.0% 2015 3.5% 4.0% 5.0% 3.0% 2020 3.0% 3.5% 4.5% 3.0% 2025 3.0% 3.5% 4.5% 3.0% 2030 2.5% 3.5% 3.5% 2.5% 2035 2.5% 3.5% 3.5% 2.5% 2040 2.5% 3.0% 2.0% 2.0% 2045 2.5% 3.0% 2.0% 2.0% 2050 MFH – Existing Buildings [%] Before 1947 1947 - 1975 1975 - 1985 1985-2000 Year 4.6% 6.6% 4.6% 1.2% 2005 4.6% 6.6% 4.6% 1.2% 2010 3.6% 5.0% 5.7% 3.2% 2015 3.6% 5.0% 5.7% 3.2% 2020 3.0% 4.0% 5.2% 3.7% 2025 3.0% 4.0% 5.2% 3.7% 2030 2.6% 3.5% 3.9% 3.3% 2035 2.6% 3.5% 3.9% 3.3% 2040 2.5% 3.4% 2.6% 2.1% 2045 2.5% 3.4% 2.6% 2.1% 2050

Reference: [69]

For the implementation in SMM, the MC curves were changed as follows. The implementation procedure is illustrated Figure 17. The picture on the top left represents a simplified MC curve as illustrated in Figure 16. The curve has three steps; hence it can be improved by energy reduction measures three times. The first step on the right-hand side represents the MC for the reference specific energy demand of 400 [MJ/m 2a]. This energy demand can be reduced to 300, 200 and 100, which results in higher marginal costs (climbing up the MC curve). Note that a MC curve, as depicted by the top left picture, exists for each of the four house types b. In a first conversion step, the values of the specific RH demand, Qh, were multiplied with the ERFA for each time period and with the corresponding renovation rates, see top left picture and equation below. Since the MC curves were multiplied with the ERFA of each time period, we obtained MC curves for time period. Each curve has the same MC.

Qh ' = ERFA ⋅ ren ⋅Qh nb,t b,t b,t nb 38 Defining the baseline

Qh 'n b,t : Energy demand of each house type for each Energy Demand Level in [PJ/a] Qh : Specific energy demand of each house type for each Energy Demand n b Level in [MJ/m 2a] n: Energy Demand Level of the Building considered

Afterwards, the MC curves were normalized by calculating the difference of each MC curve step; see lower picture of Figure 17 and equation below Figure 17. The MC curve represents the additional (to the marginal costs for providing residential heat) marginal costs MC b,n necessary to achieve a specific additional demand reduction. Hence, according to our example, if the marginal costs increase by 0.2, we achieve a demand reduction by 0.2 PJ/a.

1.2 1.2

1 1

0.8 0.8

0.6 0.6 MC MC 0.4 0.4

0.2 0.2

0 0 0 100 200 300 400 500 0 0.2 0.4 0.6 0.8 1 Qh' [PJ/a] Qh [MJ/m2a]

0.7 0.6 0.5 0.4

MC 0.3 0.2 0.1 0 0 0.2 0.4 0.6 0.8 1 Qh [PJ/a]

Figure 17: Marginal-cost curves implementation for SFH existing buildings used for the model implementation.

Qh n = Qh '0 − Qh 'n b,t b,t b,t MC = MC − MC b,n b,n ,0 n

Qh : Normalized energy demand n b,t Defining the baseline 39

MC b,n : Normalized marginal costs

So far we have obtained MC curves for each building type b and each five-year time period t. Each MC curve consists of steps representing a specific building code improvement. Once the MC curves are implemented into SMM, investments in building code improvement reduce the energy demand in the model. Taking into account the renovation rates, we keep in mind that only a certain percentage of not renovated ERFA can be renovated every five year time period. Thus, every five-year time period, a specific percentage of non-renovated ERFA can undergo renovation. 24 In SMM the implementation was realized using the so-called end-use process. An end-use process satisfies each demand for energy by providing useful energy. In case of an end-use process with an MC curve implementation, this demand is reduced. Therefore, the MC costs had to be converted into investment cost (see formula below). This guarantees that an investment in an improved building code remains over the full life time of this building code. Renovations for example made in period 2010-2015 prevail for the rest of the time horizon. In the following time periods the model can decide whether or not it wants to renovate more not yet renovated ERFA, which can again reduce the energy demand.

t MC 1( + dr ) ⋅ dr INV = CRF = t CRF , with 1( + dr ) −1

INV: Investment Costs MC: Marginal Costs dr: Discount Rate t: Life time

New buildings

With regards to new buildings we assume that only one specific average house type can be built in every future modelling period (t = 2005, 2010, … 2050). For this

24 Note that in reality the quality of each renovation differs from house to house. In MAKRAL, when we talk about renovation and resulting building code improvements consuming less energy, we refer to the average improvements valid for a specific house building stock. 40 Defining the baseline average house type we assume a constant improvement of energy demand over time (see Figure 14). For example, the average SFH build in the year 2005 demands 270 [MJ/m 2a] and in 2050 it demands 174 [MJ/m 2a] 25 . These specific RH demand values correspond to thick black line displayed in Figure 18. For the MC curve this implies that not all saving options, which were available in the year 2005, are still available in the year 2050. The options necessary for the reduction from 270 [MJ/m 2a] to 174 [MJ/m 2a] are already taken into consideration in the building code of future houses. Moreover, the MC of the first energy saving step of the future MC 2 curve (starting at 174 [MJ/m a]) has to begin at a new MC costs level (a nInvCostn – an-1InvCost n-1). This is due to the fact that the first MC step is the reduction from the 2 new reference consumption (DEnergy, n = 174 [MJ/m a]) to the first improved consumption (DEnergy, n - DEnergy, n-1). In other words, the MC curve of the year 2005 has to be cut horizontally (the MC have to be levelled to the reference value) and vertically (the already taken saving measures of the reference development have to be subtracted). This principle is shown in Figure 18 by the dotted MC curve.

Figure 18: Marginal-cost curve of new buildings SFH – sketch.

Reference: [69]

25 Values of the specific energy use corresponds to the PROGNOS assumptions of [62]. Defining the baseline 41

For implementation of the MC curves in SMM, the specific MC curve [MJ/m 2a] is converted to absolute values [TJ/a] by multiplying with the additional amount of ERFA [Mio m 2] built during each time period. In other words, for every time period t the new specific MC is multiplied with the ERFA constructed during that time period

(ERFA t – ERFA t-1). Note that the MC curve obtained by this calculation only corresponds to the dwelling constructed in the time period t. The following equation describes the MC curve calculation of new buildings.

2050

MCC t = ƒ SMMC t ⋅ (ERFA t − ERFA t−1 ) t=2005

MCC: Marginal Cost Curve [TJ/a] SMMC: Specific Marginal Cost Curve [MJ/m 2a] ERFA: Energy Reference Floor Area t: Time Period

The implementation in SMM is done using end-use demand processes just like it is done for existing buildings. Using this implementation the model can decide to either use the building code shown in Figure 18 (according to [62]) or invest in dwellings with an even more sophisticated building code. Once an investment is done, the building code of a house will remain as is until the end of the time horizon.

3.4.2.4 Growth rates

In MARKAL a growth rate reflects the maximum annual growth of total installed capacity in a period. The capacity growth is described by two parameters, GROWTH and GROWTH_TID. GROWTH is a decimal fraction representing the maximum annual growth. For example, a 10 % per annum growth rate is specified as 1.1. This parameter has to be specified for each modelling time period. The second parameter, GROWTH_TID, is the so-called seed value. It refers to the maximum amount of capacity, which can be built in the initial period (the period of the first possible investment). Usually GROWTH_TID corresponds to a very small capacity size. The formula below describes how growth rates are implemented in the model code.

CAP ,tet ≥ CAP t− ,1 te ⋅ (GROWTH ) + GROWTH _TID

42 Defining the baseline

GROWTH: Maxium Growth Rate GROWTH_TID: Seed Value

In SMM it was necessary to add growth constraints to new technologies for the heating sectors. Depending on the demand category, we define different technological growth rates. For the demand categories that represent existing buildings (RH1 and RH3) we define two growth rates. For technologies already existing in the base year we assumed a maximum annual growth rate of 5 %, while for new technologies we assumed a maximum annual growth rate of 10 % per year. For demand categories that represent new houses (RH2 and RH3) we assume one maximum annual growth rate of 10 % for all technologies.

3.4.2.5 Other residential-demand segments

The demand projection of Other residential demand segments (ORDS) were estimated based on the Trend Ia 26 scenario from PROGNOS.27 [62] Thereby, in a first step, we matched each SMM demand segment with the residential categories used in [62]. In a second step, we estimated the future energy demands (useful energy consumptions) based on the final-energy consumption of PROGNOS and the efficiencies of each technology.[62,63,74] Table 6 shows the estimated demand projections used in SMM. Table 2 enfolds all demand segments including residential heating: Cooling (RC1), Cloth Drying (RCD), Cloth Washing (RCW), Dish Washing (RDW), Other Electric (REA), Heating SFH Existing Buildings (RH1), Heating MFH Existing Buildings (RH2), Hot Water (RHW), Cooking (RK1), Lighting (RL1), Refrigeration (RRF), Heating SFH New Buildings (RH3) and Heating MFH New Buildings (RH4). As can be seen in the table, most demand segments increase slightly. The demand segment Other Electric (REA) experiences a steep increase up the 30 PJ, which reflects the increased use of devices such as computers, televisions sets, etc. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx x

26 The Swiss Federal Office of Energy has released Energy-Perspective (Energieperspektiven) reports with several different scenario trends.[73] The scenario Trend Ia represents a reference development without any additional implementation of the already adopted environmental and political measurements and instruments. PROGNOS is responsible for the Energy-Perspectives for the residential end-use sector.[62] 27 PROGNOS calculates energy demands based on an ex-post (buildings constructed between 1880 and 2000) and an ex-ante (buildings constructed between 2001 and 2050) analysis. Relevant assumptions for this analysis are population development, GDP, amount of households, etc. Defining the baseline 43

Table 6: End-use demand of residential demand segments [PJ].

28 Code 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 RC1 5.14 5.9 6.8 7.7 8.7 10.2 11.7 12.4 12.7 12.9 13.0 RCD 1.44 1.6 1.7 1.7 1.8 1.8 1.8 1.8 1.8 1.8 1.8 RCW 4.56 5.0 5.3 5.5 5.7 5.8 5.8 5.8 5.8 5.8 5.8 RDW 1.66 1.8 1.8 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 REA 11.51 13.3 15.2 17.3 19.5 22.9 26.2 27.8 29.1 29.8 30.1 RH1 71.41 71.8 71.6 71.6 71.4 71.3 71.0 70.9 70.8 70.6 70.5 RH3 80.19 80.6 80.1 79.6 79.0 78.2 77.0 76.4 75.8 75.2 74.6 RHW 18.73 18.7 18.4 18.1 17.9 17.7 17.4 17.1 16.9 16.7 16.4 RK1 6.01 6.4 6.7 6.8 6.9 6.9 6.9 6.9 6.9 6.9 6.9 RL1 10.23 11.0 11.8 12.4 12.5 12.4 12.1 11.3 10.5 9.7 8.6 RRF 4.43 4.5 4.6 4.5 4.4 4.2 4.1 3.8 3.6 3.5 3.4 RH2 0.00 3.9 7.3 10.0 12.4 14.6 16.4 18.0 18.8 19.6 20.2 RH4 0.00 3.3 6.1 9.4 12.5 15.2 17.7 19.5 20.6 21.5 22.3

3.4.2.6 Detailed final-energy consumption

This section describes the final-energy consumption over the whole time horizon. The final-energy consumption is a result of the base-year calibration and the demand projection elaborated earlier. However, it is also influenced by other factors, the so- called Adratios. Adratios are user-defined constraints between processes, such as 29 capacity, investment or activity relations, which are not directly coded in MARKAL. MARKAL provides the option to define maximum (UP), equality (FX) or minimum (LO) relations. For example, an adratio relation could define the maximum share of diesel for final-energy consumption that can be used in the residential heating sector. Generally speaking, they allow for a gradual transition between energy carriers in specific sectors. For more detailed information we refer to [10,11]. In SMM we defined adratio relations on the activity (fuel consumption) of various demand categories. Here, activity refers to the final-energy fuel-share of a set of technologies. These relations should be understood as estimates of future thresholds. Table 7 illustrates all adratios used in the model. The table defines two categories (I and II) for every demand segment (RHW, RK1, etc.). These categories represent either fuels (e.g diesel, electricity, etc.) or technology devices (Incandescent lighting, etc.). Looking at the adratios in SMM, category I is put in relation to category II. To give an example: In the demand segment RH1 Biomass is

28 The description of the acronyms is displayed in Table 3. 29 The activity of a process reflects how much fuel is either being consumed or produced by a process. If the activity of a process is put in relation to other processes, the modeler defines a relationship of fuel being produced or consumed by one technology or a set of technologies in comparison to a larger group of technologies. Thereby, the one technology or a set of technologies must be a part of the larger group of technologies. 44 Defining the baseline put into relation to all other fuels (All). Furthermore, biomass should have at least a (minimum) share of 4 %. In other cases, we also defined fixed or upper (maximum) shares as indicated in the column “Type”.

Table 7: Adratios residential sector.

Category I Category II Type 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Hot Water (RHW) Natural Gas All Maximum 0.20 0.23 0.26 0.30 0.35 0.41 0.47 0.54 0.63 0.73 Diesel All Minimum 0.46 0.36 0.26 0.16 0.06 0.00 0.00 0.00 0.00 0.00 Electricity All Maximum 0.23 0.27 0.31 0.36 0.42 0.48 0.56 0.64 0.75 0.86 Cooking (RK1) Electricity All Minimum 0.88 0.83 0.78 0.73 0.68 0.63 0.58 0.53 0.48 0.43 Lighting (RL1)

Incandescent All Minimum 0.70 0.65 0.55 0.45 0.35 0.25 0.15 0.05 0.00 0.00

Fluorescent All Maximum 0.08 0.10 0.13 0.17 0.21 0.27 0.35 0.44 0.56 0.72

Halogen All Maximum 0.08 0.10 0.13 0.17 0.21 0.27 0.35 0.44 0.56 0.72

Room-Heating Single-Family Houses Existing Building (RH1) Biomass All Minimum 0.04 0.04 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.03 Natural Gas All Maximum 0.20 0.23 0.27 0.31 0.36 0.42 0.49 0.56 0.65 0.75 Room-Heating Multi-Family Houses Existing Building (RH2) Diesel All Minimum 0.32 0.29 0.25 0.19 0.10 0.02 0.00 0.00 0.00 0.00 Electricity All Minimum 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.04 0.05 0.05 Biomass All Minimum 0.06 0.06 0.03 0.02 0.01 0.00 0.00 0.00 0.00 0.00 Room-Heating Single-Family Houses New Building (RH3) Biomass All Minimum 0.04 0.04 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.03 Natural Gas All Maximum 0.20 0.23 0.27 0.31 0.36 0.42 0.49 0.56 0.65 0.75 Room-Heating Multi-Family Houses New Building (RH4) Diesel All Minimum 0.25 0.20 0.15 0.10 0.50 0.00 0.00 0.00 0.00 0.00 Electricity All Minimum 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.04 0.05 0.05 Biomass All Minimum 0.05 0.04 0.03 0.02 0.01 0.00 0.00 0.00 0.00 0.00 Reference: [11,75], [62] own assumption

Section 3.3.2 already gave a general overview of the final energy consumption by fuel and sector. In this section we additionally provide a more detailed outlook of the final-energy consumption for every residential demand segment 30 . Figure 19 provides an overview of each demand segment and the corresponding fuel usage. For instance, the first demand segment, Cooling (RC1), shows a strong increase in the consumption of electricity. A more differentiated picture draws the segment Heating Single Family House New Buildings (RH1). The segment is dominated by (diesel heating) oil and natural gas. The use of oil decreases whereas the use of natural gas

30 Note that SMM is a cost-minimization model. When interpreting future results, the reader should keep in mind that future is not ‘simulated’ but that technologies are chosen based on the lowest total system-costs. Hence, SMM advices how the technology mix should look like in a cost-optimal solution. This also applies to the reference case displayed here. Defining the baseline 45 increases at the same time. Compared to RC1 where in fact electricity covers the total energy demand, in the RH1 segment many other fuels still play a significant role, namely biomass, electricity, etc. Note, the last picture on the right hand side of Figure 19 shows the total consumption by fuel of the residential heating sub-sector (it adds up RH1 to RH4).

Cooling (RC1) Cloth Drying (RCD)

5 2

4.5 1.8

4 1.6

3.5 1.4

3 1.2 Biomass 2.5 1 Electricity Electricity 2 0.8

1.5 0.6

1 0.4

0.5 0.2

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Cloth Washing (RCW) Dish Washing (RDW)

7 1.95

1.9 6 1.85 5 1.8

4 1.75 Electricity Electricity 3 1.7

1.65 2 1.6 1 1.55

0 1.5 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Other Electric (REA) Heating SFH Existing Buildings (RH1)

35 60

30 50

25 40 Biomass Coal 20 Electricity Electricity 30 Natural Gas 15 Oil 20 Other 10

10 5

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Heating MFH Existing Buildings (RH2) Heating SFH New Buildings (RH3)

16 70

14 60

12 50 Biomass 10 Biomass Coal Electricity 40 Electricity 8 Natural Gas Natural Gas Oil 30 District Heat 6 Other Oil 20 Other 4

2 10

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 46 Defining the baseline

Heating MFH New Buildings (RH4) Hot Water (RHW)

16 18

14 16

14 12 12 Biomass 10 Biomass Electricity Electricity 10 Natural Gas 8 Natural Gas District Heat District Heat 8 Oil 6 Oil 6 Other 4 4

2 2

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Cooking (RK1) Lighting (RL1)

7 10

9 6 8

5 7

6 4 Biomass Electricity 5 Electricity 3 Natural Gas 4

2 3 2 1 1

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Refrigeration (RRF) Total Residential Heating

5 140

4.5 120 4

3.5 100 Biomass Coal 3 80 Electricity 2.5 Electricity Natural Gas 60 District Heat 2 Oil 1.5 40 Other 1 20 0.5

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 19: Final-energy consumption of residential demand segments.

The following two figures show the detailed final-energy consumption of the residential heating sub-sector by technology and the total final-energy consumption of the residential sector. Figure 20 illustrates the final-energy consumption of the heating sector. The heating sector continues to be dominated by oil and gas heating systems. However, there is a strong tendency to switch from oil to gas heating systems after the year 2025. The electrical consumption does not play a major role in the heating sector. On the one hand this is due to a decreasing importance of electrical resistance technologies. On the other hand this is due to the high efficiencies of electrical heat pumps. All other heating technologies, especially biomass stoves and district heating systems, remain to have a comparatively small importance in the heating sector. Defining the baseline 47

Also shown in Figure 20 is the amount of saved energy due to a better isolation of roofs, windows, etc and the increase of the useful-energy demand. The energy savings increase constantly over time. In 2050, the final-energy consumption due to energy savings is lowered by 24 PJ or 15 %. Most saved energy originates from isolating existing houses, about 70 %. New houses already have well improved energy saving standards, hence additional savings play a smaller role. The increase of useful-energy demand is represented by the black line. The demand increases gradually by 24 %. Considering that the final-energy consumption remains about constant over whole the time horizon, the demand increase indirectly represents the energy-efficiency improvement of the baseline scenario due to improved heating technologies.

200 1.4 180 1.2 160 140 1

120 0.8 100 0.6 80 60 0.4 40 0.2 [per Unit] Demand Energy

Final-Energy Consumption [PJ] Consumption Final-Energy 20 0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Residential heating technologies (including saved energy & energy demand): Other Heating Biomass Stoves District Heating Electrical Resistance Heat Pump Electric Gas Heating Oil Heating Saved Energy Energy Demand

Figure 20: Detailed final-energy consumption of the residential heating sector [PJ]. Also depicted in the figure is the saved energy (grey area) due to improved insulation of roofs, windows, etc and the increase of the useful- energy demand. The energy demand (solid line) is illustrated in [per Unit], relative to the year 2000.31

Figure 21 illustrates the total final energy consumption by energy carriers, summed over all demand segments. We see that the residential sector remains to be dominated by fossil fuel and electricity. However, a fuel switch is taking place from diesel heating (oil) to natural gas. Other fuels, such as biomass, remain at small levels.

31 For the amount of final-energy saved, the author converted the useful-energy demand reduction to the final- energy equivalents. For the conversion an efficiency of 100 % is assumed. 48 Defining the baseline

300

250

Energy carriers: 200 Other Oil District Heat 150 Natural Gas Electricity Coal 100 Biomass Final-Energy Consumption [PJ] Consumption Final-Energy 50

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 21: Final-energy consumption of the residential sector [PJ] by energy carriers for all demand categories.

3.5 Description of the transportation sector

In this section we describe the base-year calibration and future projection of the transportation sector and provide a detailed outlook of the final-energy consumption by all transportation modes until 2050. Next to the residential sector described above, the transportation sector is of major importance when it comes to fuel (especially fossil fuel) consumption and energy-saving potentials. According to [1] the transportation sector is the largest energy consumer with about 303 PJ in 2000. This corresponds to 35 % of the total final-energy consumption in the sector. The main challenge for the future transportation sector is to switch firstly from today’s standard cars to highly efficient cars consuming 5lt/100 km or less. Secondly, a transformation from internal combustion engines (ICE) using gasoline and diesel to hybrid and fuel- cell (FC) cars using natural gas and eventually hydrogen must be realized. Next to the heating sectors, the transportation sector offers the second largest potential to reduce the energy consumption by introducing fuel switching and technological changes. In SMM, we distinguish between nine different demand segments for the transportation sector, see Table 8. The demand of each segment is either modelled Defining the baseline 49 in [PJ] or in [bvkm/a] 32 . Aviation and navigation transportation modes have the unit [PJ]. Road transportation modes have the energy-demand unit [bvkm/a].

Table 8: Demand segments of the transportation sector.

Description Abbreviation Demand Unit / a Domestic Aviation TAD PJ International Aviation TAI PJ Bus TRB Bvkm Trucks TRM Bvkm Passenger Cars TRT Bvkm Two Wheelers TRW bvkm Rail TTP PJ Domestic Navigation TWD PJ International Navigation TWI PJ

3.5.1 Base year calibration

In this section, we illustrate the base-year calibration of the year 2000. The statistical values of the base-year calibration is based on the Swiss Overall Energy statistic.[1] The statistic defines the total final-energy consumption of the transportation sector for the year 2000. However, this statistic has specific limitations because it does not elaborate on a consumption split between different transportation modes such as passenger car, busses, truck, etc. It only states the summation of the whole transportation sector. More detailed information can be found in the Swiss Federal Energy Perspectives, an analysis conducted by INFRAS.[76] INFRAS models the transportation sector with corresponding future scenarios until 2035. However, it is essential to note one important difference between the Swiss Overall Energy statistic and the Energy Perspectives. The Swiss Overall Energy statistic is balanced according to the Sales Principle whereas the Energy Perspectives determine and project energy consumptions based on the Territorial Principle (also called Consumption Principle). A third allocation method of importance is the so-called Inhabitant Principle . All three allocation principles can be described as follows:

• Sales Principle : This principle determines the amount of energy carriers (fuels) sold in a country and estimates the resulting emissions. All energy carriers and emission are allocated to this country. For instance, the emissions resulting from gasoline tanked in Switzerland but consumed in Germany are allocated to Swiss

32 [bvkm/a] is an abbreviation of billion vehicle kilometres per year. 50 Defining the baseline

emissions. The Swiss Overall Energy Statistic uses this principle to allocate all resources.[77] • Territorial or Consumption Principle : This principle determines the amount of energy carriers (fuels) which are consumed in Switzerland. According to this principle gasoline bought in Switzerland but consumed in Germany account to Germany. The resulting emissions are also allocated to Germany. INFRAS uses this principle to allocate resources.[78] • Inhabitant Principle : This principle distinguishes between Swiss inhabitants and foreigners. It determines the amount of energy carriers (fuels) consumed by Swiss inhabitants in Switzerland and abroad.[78]

In SMM, we use the sales principle based on Swiss Overall Energy Statistic. Because some statistical data for the model calibration originates from INFRAS, statistical adjustments are necessary to estimate the fuel-consumption shares of the road transportation sector. All principles define exactly who consumes which energy carriers and where those energy carriers are consumed, hence, we can also correlate the statistics to another. Using specific assumptions, we can convert statistics based on the territorial to statistics based on the sales principle. To obtain the statistical values for the sales principle from the territorial principle, we have to take into account the so-called ‘tank tourism’. Generally, because of differences in fuel prices, a recognizable amount of people from abroad travel to Switzerland to tank gasoline and a recognizable amount of Swiss inhabitants travel abroad to tank diesel. For the statistical conversion we have to subtract the amount of fuel tanked abroad but driven in Switzerland and add the amount of fuel tanked in Switzerland but driven abroad. The method applied in this context is explained below. For a first modal final-energy consumption split, we used the total final-energy consumption of the transportation sector as described by the Swiss Federal Office of Energy.[1,76] In total the transportation sector consumed 303 PJ in the year 2000. In a first step the total consumption was separated into Rail , Road , Air and Navigation modes using IEA statistics.[49] With a share of 74 % road transport is the major consumer followed by air traffic having a share of 23 %. In the statistics, air transport is determined using the sales principle and includes domestic and international aviation. Fuel consumption by international aviation refers to fuel tanked in Switzerland and used for international flight connections. Table 9 shows the final- Defining the baseline 51 energy fuel consumption of the transportation sector. It distinguishes transportation modes as well as fuels for the year 2000.

Table 9: Fuel consumption of the transportation sector in [PJ] in 2000.

Gasoline Kerosene Diesel Electricity Total Rail 0.6 9.5 10.1 Road 169.0 54.8 223.8 Air 0.3 68.0 68.2 Navigation 0.5 0.5 Total 169.3 68.0 55.9 9.5 302.6 References: [49,76,79]

Having obtained the total road-transport consumption, we split the consumption into four different modes: Cars (also referred to as Passenger Cars), Motorcycles , Buses and Freight . In SMM, the final-energy consumption estimates for every transportation mode and fuel underlies the equation below. Values for Stock of Vehicles , Kilometres per Vehicles Travelled per Annum and Average Efficiency of Vehicles in 2000 are mainly based on values from INFRAS, see Table 10, Table 12 and Table 13. As mentioned above, INFRAS uses the territorial principle to estimate fuel consumption whereas Swiss Overall Energy statistic uses the sales principle. Therefore, it was necessary to exogenously adjust the stock of vehicles. In the model we carried out stock changes as illustrated in Table 11. These changes guarantee the correct allocation of fuel tanked abroad but driven in Switzerland and fuel tanked in Switzerland but driven abroad. The Conversion Factors of the energy unit [PJ] to [Lt] of gasoline and diesel are depicted in Table 14. Finally, Table 15 shows the results of the obtained modal road split. The total road consumption adds up to 224 PJ. Cars, with a share of 75 %, are the largest consumer, followed by freight transport with a share of 23 %. Passenger-car transportation also constitutes the major consumer of the whole transportation sector having a share of 55 %.

FEC = SV ⋅ KVA ⋅ FC ⋅ CF ⋅10

FEC: Final Energy Consumption [PJ] SV: Stock of Vehicles [1000 cars] (adjusted by Tank Tourism) KVA: Kilometres per Vehicle per Annum [Vkm/a/car] FC: Fuel Consumption [Lt/100km] CF: Conversion Factor [PJ/Lt] 52 Defining the baseline

Table 10: Stock of vehicles [1000 Vehicles].

Cars Motorcycles Busses Freight Total Diesel 142 6.0 152 Gasoline 3402 731 0.4 160 LPG (not included) 1 Total 3545 731 6 312 4595 References: [76,80,81]

Table 11: Changes of stock of vehicles due to tank tourism [1000 Vehicles].

Cars Gasoline +10% Diesel -10% Trucks Gasoline +10% Diesel -30%

Table 12: Kilometres per vehicle travelled per annum [Vkm/ Vehicle / a].

Cars Motorcycles Busses Freight Diesel 18400 49000 25251 Gasoline 13900 2744 49000 14582 LPG (not included) 17500 References: [82]

Table 13: Average efficiency of vehicles 2000 [Lt/100km].

Cars Motorcycles Busses Freight Diesel 7.73 - 24.91 24.43 Gasoline 8.76 1.70 28.56 31.26 LPG (not included) 7.73 - - -

Total References: [76]

Table 14: Conversion factors PJ to Lt for different fuels.

Fuel PJ to Lt Diesel 26833603 Gasoline 28618008 LPG 38976268

Defining the baseline 53

Table 15: Total final-energy consumption vehicles in [PJ].

Gasoline Diesel Total Car 160.5 6.8 167.2 Motorcycles 1.2 0.0 1.2 Bus 0.2 2.7 3.0 Freight 7.2 45.2 52.4 Total 169.0 54.7 223.8

3.5.2 Future projection

For a better understanding of the future energy-demand projections in SMM, we provide relevant information about available future transportation modes and resulting future-demand projections.

3.5.2.1 Passenger cars

In the year 2000, passenger cars consist of two categories, gasoline cars and diesel cars. The two car modes were powered by internal combustion engines (ICE). In the last two years, alternatives engines drew increasing public attention, foremost the hybrid cars. New hybrid cars combine a gasoline ICE with an electric engine. While some car manufactures develop highly efficient ICE as a direct competitor to the hybrid cars, other manufactures develop revolutionary engine concepts with hydrogen fuel cells. Apparently, the future offers many plausible combinations of exciting engines and new concepts. In SMM we have included many of those options, which could be realistic from today’s perspective. Appendix 2 includes a list of all future passenger cars including a description of important cost and efficiency data. Future cars in SMM include:

Gasoline Cars: Internal Combustion Engine Electric Hybrid Hybrid Fuel Cell Diesel Cars: Internal Combustion Engine Electric Hybrid Compressed Natural Gas Cars: Internal Combustion Engine Electric Hybrid Hydrogen Cars: Internal Combustion Engine Electric Hybrid 54 Defining the baseline

Fuel Cell Hybrid Fuel Cell

150%

145%

140%

135%

130%

125%

120%

115%

110% Passenger Cars Demand CarsPassengerIncrease Demand [%] 105%

100% 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 22: Demand increase of passenger cars in [%].33

The demand projection of passenger cars is based on useful-energy demand [bvkm/a] of the calibration year 2000 multiplied with the demand projections form INFRAS [83] 34 . The useful-energy demand can be obtained by the average car efficiency of each diesel and gasoline cars [bvkm/PJ] and the corresponding final- energy consumption [PJ]. In the year 2000, the useful-energy demand was 58.8 [bvkm/a]. INFRAS projects the demand for passenger cars until 2035. From 2035 until 2050, the demand was projected using a logarithmic extrapolation. Over the whole time horizon the passenger car demand increases by 42 % (see Figure 22).

3.5.2.2 Other transportation modes

Besides passenger cars the SMM model has several additional transportation modes (demand categories) representing rail, road, air and navigation. The useful-energy demand of each transportation mode is calculated in the same way it was done for passenger cars, multiplying the average car efficiency and the corresponding final-

33 The value for the year 2005 has been adjusted slightly to better match the Swiss final-energy consumption statistics of the year 2005.[60] 34 INFRAS calculates future-energy demands based on bottom-up modeling and macro-economic assumptions such as GDP and population growth. Defining the baseline 55 energy consumption. Note that for road transport the useful-energy unit (demand unit) is [bvkm/a] while for all categories the demand unit is [PJ/a]. The demand driver for each category is either the GDP or the population development. Only for the category Two Wheeler, the demand projection was taken directly from INFRAS. Table 16 shows energy demand in the year 2000 and the basis for the demand projection. Figure 23 shows the demand projection for the transportation modes.

180%

170%

160%

150%

140%

130%

120%

110%

Other Transportation Model [%] Transportation Demand Increase Other 100% 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Population GDP GDP times Population INFRAS (2-Wheelers)

Figure 23: Demand increase of other transportation modes in [%].

Table 16: Demand segments of other transportation modes.

Demand Demand in 2000 Demand Unit / a Projection Basis Domestic Aviation 3.20 PJ GDP and Population International Aviation 64.76 PJ GDP and Population Buses 0.28 bvkm GDP and Population Trucks 4.38 bvkm GDP Two Wheeler 1.20 bvkm INFRAS [83] 35 Rail 10.13 PJ GDP Domestic Navigation 0.22 PJ Population International Navigation 0.29 PJ GDP and Population

35 INFRAS calculates future-energy demands based on bottom-up modeling and macro-economic assumptions such as GDP and population growth. 56 Defining the baseline

3.5.3 Detailed final-energy consumption

This section describes the final-energy consumption of the transportation sector over the whole time horizon. The section also elaborates on the so-called adratios. As mentioned above, adratios are user-defined constraints between processes, such as capacity, investment or activity 36 relations, which are not directly coded in MARKAL. Table 17 illustrates all adratios used in the transportation sector. Again, the table defines two categories (I and II) for every demand segment (TRT, TRB and TRM). Category I is put in relation to category II. To give an example: In the demand segment passenger cars (TRT), gasoline ICE cars are put into relation to diesel ICE cars. They show minimum share of 94 % for the year 2005. Note that only ICE cars are constrained by adratios. All other cars are not constrained; hence the choice of new car models is totally flexible.

Table 17: Adratios transportation sector.

Category I Category II Type 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Passenger Cars (TRT) Gasoline ICE Diesel ICE Minimum 0.94 0.89 0.84 0.79 0.74 0.70 0.66 0.62 0.58 0.54 Buses (TRB) Diesel ICE Gasoline ICE Minimum 0.81 0.79 0.77 0.75 0.73 0.71 0.69 0.67 0.65 0.63 Natural Gas ICE All Maximum 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 Trucks (TRM)

Gasoline ICE Diesel ICE Minimum 0.12 0.11 0.10 0.09 0.08 0.07 0.06 0.05 0.04 0.03

Natural Gas ICE All Maximum 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80

Reference: [63,83] own assumption 37

Figure 24 provides an overview of each demand segment and the corresponding fuel use in the transportation sector. For instance, the demand segment passenger cars shows a strong increase in the consumption of diesel. At the same time, the consumption of gasoline decreases and has a share of only 34 % in 2050. Apart from passenger cars, almost all transportation modes show a clear-cut final-energy consumption until 2050. Fuel switching to natural gas or even hydrogen does not take place in the baseline scenario. The aviation demand-segments are still

36 The activity of a process reflects how much fuel is either being consumed or produced by a process. If the activity of a process is put in relation to other processes, the modeler defines a relationship of fuel being produced or consumed by one technology or a set of technologies in comparison to a larger group of technologies. Thereby, the one technology or a set of technologies must be a part of the larger group of technologies. 37 ICE is the abbreviation for Internal Combustion Engine. Defining the baseline 57 dominated by aviation gasoline, rail by electricity and trucks by diesel (oil). Only buses show a doubling in the use of gasoline while diesel remains at constant levels.

Domestic Aviation (TAD) International Aviation (TAI)

4 90

3.5 80

70 3 60 2.5 50 Aviation Gasoline 2 Jet Kerosene Jet Kerosene 40 1.5 30 1 20

0.5 10

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Busses (TRB) Trucks (TRM)

3 70

60 2.5

50 2 40 Diesel Diesel 1.5 Gasoline Gasoline 30 1 20

0.5 10

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Passenger Cars (TRT) Two Wheelers (TRW)

180 2.5

160

140 2

120 1.5 100 Diesel Gasoline 80 Gasoline 1 60

40 0.5 20

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Rail (TTP) Domestic Navigation (TWD)

14 0.25

12 0.2 10

0.15 8 Diesel Diesel Electricity 6 0.1

4 0.05 2

0 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 58 Defining the baseline

International Navigation (TWI)

0.4

0.35

0.3

0.25

0.2 Diesel

0.15

0.1

0.05

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 24: Final-energy consumption of transportation demand segments.

350

300

250 Energy carriers: Electricity 200 Gasoline Diesel 150 Jet Kerosene Aviation Gasoline

100 Final-Energy Consumption [PJ] Consumption Final-Energy 50

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 25: Total final-energy consumption of the transportation sector.

Shown in Figure 25, the transportation sector remains to be dominated by oil products. However, fuel switching takes place. While the shares of gasoline decrease, the shares of diesel increase simultaneously. Electricity only has a little share and alternative fuels are not of importance in the baseline. Evaluating intermediate steps towards the 2000-Watt society 59

4 Evaluating intermediate steps towards the 2000-Watt society

This chapter describes the main results of the 2000-Watt society analysis. During the first half of the 21st century, only intermediate steps towards this goal can be achieved. Until 2050, a 3500-Watt Society can be reached at maximum under the assumption that end-use demands are inelastic to prices.38 Reaching already this intermediate step is associated with a considerable transformation of the Swiss energy system as we know it today and sizeable costs. Therefore, the 2000-Watt society should be seen as a long-term goal which could possibly be reached only during the second half of the century with radical technological changes and very efficient energy systems. Note that the unit [Watt] in this context refers to Watt per capita. In the following text use the abbreviation [kW/Cap], which refers to 1000 Watts per Capita. The chapter is divided into five sections. Section 4.1 illustrates overall results of primary-energy balances and highlights costs and CO2 emissions associated with achieving specific consumption targets. Section 4.2 elaborates final-energy consumption of the 3500-Watt society in detail. The section especially focuses on the residential and transportation sectors. Section 4.3 discusses the importance of additional scenarios with CO 2 restrictions as well as combined kW/Cap and CO 2 limiting scenarios. Section 4.4 scrutinizes in detail the effects of a combined scenario 39 targeting a 3.5 kW/Cap consumption in 2050 and a 10% CO 2 reduction per decade . The last section draw conclusion on the obtained results.

4.1 Primary-energy balances of the 3500-Watt society

This section illustrates the overall results using Primary Energy (PE) balances. In doing so, the author compares various scenarios using sensitivity analyses on Primary Energy per Capita (PEC) consumptions and oil prices in the year 2050. The sensitivity on PEC includes a non-limited PEC consumption and PEC consumption targets of 5.0, 4.5, 4.0 and 3.5. Note that all PEC targets are implemented specifically for the 2050. In order to avoids excess cost penalties at earlier time periods, in all other time periods before the year 2050 no kW/Cap targets are implemented. The

38 The evaluation of a partial equilibrium model allows further primary-energy per capita reductions as the consumer response to price changes is reflected. This is discussed in the next chapter. 39 See Figure 40: CO 2 emission targets for details. 60 Evaluating intermediate steps towards the 2000-Watt society model then is free to choose the investment level needed to reach the goal without any premature phasing-out of existing capacities. The sensitivity on oil prices comprises values of 50, 75, 100 and 125 US$ 2000 /bbl in the year 2050.

No kW/Cap target 5.0 kW/Cap target 3 4.5 kW/Cap target 4.0 kW/Cap target 3.5 kW/Cap target 2

1 Primary Energy per Capita [kW/Cap] Capita per Primary Energy

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 26: Primary energy per capita [kW/Cap] development for various kW/Cap targets in the year 2050 at an oil price of 75 US$2000/bbl in the year 2050.

Figure 26 shows the development of primary energy per capita (PEC) for various kW/Cap targets at on oil price of 75 US$ 2000 /bbl in 2050. The lowest consumption that can be reached until 2050 is a PEC of consumption of 3.5 kW/Cap. A more stringent target cannot be realized as of 2050. As depicted in the figure, the strongest technological changes occur towards the end of the time horizon. The figure can be separated into two time phases. The first phase starts in the year 2010 and lasts until 2040. The second phase mirrors the time period 2040 and 2050. In the first phase, initial technological change must be triggered. Compared to the first phase, the second phase is the more important one. In the second phase, profound chances 40 must be undertaken in order to realize substantial reduction targets. Results for other oil prices than 75 US$ 2000 /bbl are illustrated in the appendix 5.1. Increasing oil prices impact the PEC consumption only moderately to negligibly. For the non-kW/Cap- constrained scenarios, we can observe overall PEC reduction of about 10 %

40 The profound changes are due to strong efficiency gains in the end-use sector and the replacement of nuclear power stations. Evaluating intermediate steps towards the 2000-Watt society 61 depending on the oil prices. On the contrary, oil price changes have only a negligible impact on the PEC for all scenarios with a 3.5 kW/Cap target.

6.0

5.5

5.0

4.5 Energy carriers: 4.0 Renewables 3.5 Hydro Nuclear 3.0 Natural Gas 2.5 Oil Coal 2.0

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1.0

0.5

0.0 No kW/Cap target 5.0 kW/Cap target 4.5 kW/Cap target 4.0 kW/Cap target 3.5 kW/Cap target (5.17 kW/Cap)

Figure 27: Total primary-energy consumption for an oil price of 75 US$ 2000 /bbl in the year 2050.

41 Figure 27 depicts the PEC consumption for an oil price of 75 US$ 2000 /bbl in 2050. In 2050, the PEC consumption amounts to 5.17 kW/Cap for the non-constraint scenario. All other scenarios are bounded by kW/Cap targets. At maximum a reduction to 3.5 kW/Cap (32 %) can be achieved. Comparing the non-constraint scenario, with the increasingly constrained kW/Cap scenarios, we see a very small but gradual reduction of fossil energy (coal, oil and natural gas). The scenario which gets out of the line is the 4.0 kW/Cap scenario with a strong increase in fossil energy, especially natural gas, consumption. Even more striking is the decommissioning of nuclear-power plants. In 2045, the last power station, Beznau II, will be decommissioned without any nuclear replacement in the 4.0 and 3.5 kW/Cap scenarios.42 Due to this decommissioning of nuclear-power plants combined with investments in (high efficient) gas-turbines power stations, the overall efficiency of the Swiss energy system can be reduced significantly and PEC consumptions of 4.0 and even 3.5 are obtained. After all, this replacement is also one of the main reasons for the strong PEC reductions after 2040, as shown in the previous figure. The side-

41 The results for all other oil prices are shown in the appendix. 42 Nuclear power plants usually have an expected life time of 40 years. Decommissioning dates of Swiss nuclear plants and technical information about new nuclear power stations can be found in [4]. 62 Evaluating intermediate steps towards the 2000-Watt society

effect is raising CO 2 emissions for the 4.0 KW/Cap target, see Figure 28. Also note that we do not recognize an intensified use of renewable energies as they also assume low conversion efficiencies like nuclear.43

50 45 40 35 45-50 30 40-45 [Mt] 25 35-40 CO 2 30-35 20 25-30 15 20-25 10 15-20 5 10-15 050 0 5-10 075 [US$ /bbl] 0-5 No limit 2000 5 100 Oil price 2050 4.5 4 125 [kW/Cap] 3.5 Primary energy target 2050

Figure 28: CO 2 Emissions of different scenarios in the year 2050.

Figure 28 illustrates the CO 2 emissions of all contemplated scenarios. The x-axis depicts the kW/Cap target, the y-axis the oil price in the year 2050 and the z-axis the emissions in the year 2050. To understand the figure, we could for instance take the

‘not limited kW/Cap’ value at an oil price of 50 US$ 2000 /bbl as a starting point and look at various scenarios. The CO 2 emissions in the starting point are 42.6 Mt. Going along the x-axis we reach more stringent kW/Cap targets at an oil price of 50

US$ 2000 /bbl. Going along the y-axis we reach higher oil prices for ‘not limited kW/Cap’ values. We can also go along the x and the y-axis to reach combined kW/Cap targets for higher oil price. The point opposite to the starting point depicts a kW/Cap target of

3.5 for an oil price of 125 US$2000 /bbl. All points connected together produce an area as shown in the figure.

The figure shows that only for high oil prices (125 US$ 2000 /bbl) or strong kW/Cap constraints, a CO 2 emission reduction to about 31 to 33 Mt CO 2 can be reached in 2050. This reduction is approximately equivalent (little higher) compared to the 5 %

43 Renewable energies refer to biomass, wind, geothermal, solar, etc. Hydro power is not included in this category but listed separately. Evaluating intermediate steps towards the 2000-Watt society 63 per decade emission decrease (as illustrated in Figure 40, section 4.3). For all other oil prices and kW/Cap constraints, the emissions are higher. Moreover, to reach strong emission reductions, such as a 10 % per decade reduction, additional measures are needed.

4.2 The role of end-use sectors in the 3500-Watt society

In this section the technological options to achieve a 3500-Watt society are described. In doing so, we firstly look at the general transformations of all end-use sectors. Secondly we scrutinize the technological modification of the residential and transportation sectors in detail.

1000

900

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700

600 No kW/Cap target 5.0 kW/Cap target 500 4.5 kW/Cap target 4.0 kW/Cap target 400 3.5 kW/Cap target

300

Final-Energy Consumption [PJ] Consumption Final-Energy 200

100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 29: Total Final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of 75

US$ 2000 in 2050.

Figure 29 presents the development of total final-energy (FE) consumption for various kW/Cap PEC constraints. All trajectories account for an oil price of 75

US$ 2000 /bbl in the year 2050. Compared to the PEC consumption development, the FE consumption resembles a relatively smooth and constant transition over time. The stronger the PEC target, the more energy-efficiency measures are implemented in all end-use sectors. Especially for the 3.5 kW/Cap scenario drastic but gradual technological changes are undertaken. 64 Evaluating intermediate steps towards the 2000-Watt society

Buildings and transportation are the most energy consuming end-use sectors in Switzerland. Each of the sectors has a different reduction potential. All energy reductions added up attain the reduction displayed in the previous figure. The largest reduction experiences the residential sector, closely followed by the commercial sector. In both sectors the major reduction is accomplished by reducing heating losses. In the transportation sector we realize rather moderate but noteworthy efficiency gains. In the industrial and other sectors 44 rather small efficiency gains are estimated. Looking for instance at an oil price of 75 US$ 2000 /bbl and 3.5 kW PEC use, the residential sector reduces the final-energy consumption by 81 PJ (~ 9 % of the total FE consumption), the commercial sector by 63 PJ (~ 7 %), the transportation sector by 50 PJ (~ 6 %), the industrial sector by 25 PJ (~ 3 %) and all other sectors by 4 PJ (< 1 %) in relation to the non-kW/Cap constraint scenario. The PEC use shows rather modest oil-price sensitivities for strong kW/Cap targets. The same modest sensitivity accounts for the FE consumption. Looking at the FE consumption reduction over time, we recognize a maximum FE-consumption difference in the year 2030. However, this difference becomes increasingly smaller in time periods after 2030. In the year 2050, when the 3.5 kW/Cap target is reached, the oil price ceases to have influence on the energy and technology mix. A 3.5 kW/Cap target demands technologies of such high efficiencies that even high oil prices do not impact the mix further. Total FE consumption developments over time as well as detailed sectorial and fuel consumptions for other oil prices in 2050 are attached in the appendix 5.2. In the remaining part of this section we focus on the technological changes of the residential and transportation section. As mentioned above, these two sectors are of major importance when Switzerland targets the 3500-Watt society in the year 2050.

The residential sector

The residential sector has the largest energy saving potential of all end-use sectors in Switzerland. The consumption is heavily dependent on the oil price and on the kW/Cap target to be achieved. Figure 30 illustrated the final-energy consumption of the residential sector for different oil prices and the kW/Cap targets in 2050. The x- axis depicts the kW/Cap target, the y-axis the oil price in the year 2050 and the z-axis

44 Other Sectors comprice the agriculture, non-energy use and other non-specified energy sectors. Evaluating intermediate steps towards the 2000-Watt society 65 the total-FE consumption. To understand the figure, we could again exemplarily choose the ‘not limited kW/Cap’ value at an oil price of 50 US$ 2000 /bbl as our starting point and look at various scenarios. The final-energy consumption in the starting point is 237 PJ. Going along the x-axis we reach stronger kW/Cap targets at an oil price of 50 US$ 2000 /bbl. Going along the y-axis we reach higher oil prices for ‘not limited kW/Cap’ values. We can also go along the x and the y-axis to reach combined kW/Cap targets for higher oil price. The point opposite to the starting point depicts a kW/Cap target of 3.5 for an oil price of 125 US$ 2000 /bbl. All points connected together produce an area as shown in the figure. At maximum, the consumption can be reduced to about 102 PJ. This reduction is optimal for a high kW/Cap constraint of 3.5, independent of the oil price. Compared to a non-kW/Cap constrained future at an oil price of 75 US$ 2000 /bbl, this would imply a reduction of 80 PJ or 45 %. Note ‘the stronger the PEC reduction target the less dependent is the consumption on the oil price’ also accounts for the residential sector.

250

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225-250 175

200-225 150 175-200 125 150-175 100 125-150 100-125 75 75-100 50 50-75 25

Final-Energy Consumption [PJ] Consumption Final-Energy 50 25-50 0 75 0-25 No limit 5 100 4.5 4 125 [US$ 2000 /bbl] [kW/Cap] 3.5 Oil price 2050 Primary energy target 2050

Figure 30: Total final-energy consumption of the residential sector in 2050.

The residential sector consists of various demand segments as described in the chapter 3, heating, cooling, cooking etc. With regards to the utilization of energy- reduction potentials, the most important segment is residential heating (RH). The RH consumption for various oil prices and kW/Cap targets in the year 2050 is depicted in 66 Evaluating intermediate steps towards the 2000-Watt society

Figure 31. Again, the figure has three axes. The x-axis illustrates the kW/Cap target, the y-axis the oil price in the year 2050 and the z-axis the total-FE consumption. The maximum reduction at an oil price of 75 US$ 2000 /bbl is 70 PJ. At this oil price, this FE reduction of the RH sector corresponds to 85 % of the total FE reduction of the whole residential sector. As shown in the previous figure, the more stringent the kW/Cap targets, the less elastic is the final-energy consumption to the oil price. For a 3.5 kW/Cap target, the final-energy consumption of RH is about 43 PJ.

The reduction of FE is strongly correlated to the reduction of CO 2 emissions in the residential sector. Putting side by side the non-kW/Cap limited scenario and the 3.5 kW/Cap target scenario for an oil price of 75 US$ 2000 /bbl, we identify a CO 2 emission reduction of little more than 85 %. With CO 2 emissions of only 0.8 Mt in the 3.5 kW/Cap scenario, the residential sector is basically CO 2 free in 2050.

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120 140-160

120-140 100 100-120 80-100 80

60-80 60 40-60 20-40 40 0-20 20 Final-Energy Consumption [PJ] Consumption Final-Energy 50 0 75 No limit 5 100 4.5 [US$ 2000 /bbl] 4 125 Oil price 2050 [kW/Cap] 3.5 Primary energy target 2050

Figure 31: Total final-energy consumption of the residential heating sector.

Energy, specifically RH, can be reduced by switching to more efficient technologies or by investing into energy efficiency devices. For this purpose energy saving options, using the marginal abatement approach, were implemented in the model, see chapter 3. Figure 32 shows the total amount of saved energy coming from energy-saving measures for various scenarios. The figure has three axes. The x-axis illustrates the kW/Cap target, the y-axis the oil price in the year 2050 and the z-axis the total amount of useful energy saved. Note that kW/Cap targets and oil prices are Evaluating intermediate steps towards the 2000-Watt society 67

in reversed order compared to previous figures. At an oil price of 50 US$ 2000 /bbl without any kW/Cap constraints, the useful energy reduction amounts to 25 PJ or about 13% of the total useful-energy demand. This demand includes RH for new and existing buildings as well as SFH and MFH. In the most constrained scenarios, with a kW/Cap target of 3.5, the useful-energy reduction nearly doubles to more than 45 PJ. As can be seen in the figure an oil price increase alone already has a strong influence on the amount of energy reduced. In comparison, a significant kW/Cap target, impacts the amount of reduced energy due to the implementation of energy saving measure even more drastically.

45-50 35 40-45 30 35-40 30-35 25 25-30 20

20-25 15 15-20 10

10-15 [PJ] Savings Final-Energy 5 5-10 125 0 0-5 100 3.5 4 75 [US$ 2000 /bbl] 4.5 Oil price 2050 5 50 [kW/Cap] No limit Primary energy target 2050

Figure 32: Final-energy savings of the residential sector in 2050.

Using the following two figures, we elaborate in detail the structural changes necessary to achieve the energy saving reduction illustrated in the last figure. We choose an oil price of 75 US$ 2000 /bbl in the year 2050. Based on this oil price, we choose two scenarios, one without any kW/Cap target and one with a kW/Cap target of 3.5. Figure 33 and Figure 34 show the specific energy demand of all house types modelled for the two scenarios. Looking at the figure, we can identify two main results. Firstly, average new buildings consume much less energy than average existing buildings. The entire existing building stock in Switzerland encompasses a specific energy demand between 350 and 400 MJ/m 2, which improves gradually over time. On the contrary, new buildings should have high insulation standards. 68 Evaluating intermediate steps towards the 2000-Watt society

Depending on the scenario and the house type, the specific energy demand ranges between 140 and 200 MJ/m 2 in the year 2010. Note that due to modelling constraints, we consider house built in the year 2005 as new houses. 45 In our scenarios, an average new building should ideally demand less than half of the energy of the average existing building.

450

400 ] 2 350

300 Existing SFH 250 Existing MFH New SFH 200 New MFH 150

100 Specific Energy Demand SpecificDemand [MJ/m Energy 50

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 33: Specific-heating demand of an average residential house for an oil price of 75 US$ 2000 /bbl and without a primary energy constraint.

Secondly, we notice a major difference between the two scenarios with respect to possible demand reductions of the various house types. Whereas the average demand of existing buildings is additionally reduced by about 20 PJ (e.g. existing SFH reduces from 340 MJ/m 2 to 320 MJ/m 2), the average demand is additionally reduced by around 60 PJ for new buildings (e.g. new SFH reduces from more than 170 MJ/m 2 to less than 115 MJ/m 2). Yet, the additional reduction of 20 PJ implies a tremendous effort to improve the existing building stock insulation because, on the one hand, only about 30 % of the existing building stock can be renovated in 50 years and because, on the other hand, the absolute reduction is much higher (e.g for existing SFH of less than 400 MJ/m 2 to less than 320 MJ/m 2).

45 Note that due to modelling constraints, we consider houses built in the year 2005 as new houses. Evaluating intermediate steps towards the 2000-Watt society 69

450

400 ] 2 350

300 Existing SFH 250 Existing MFH New SFH 200 New MFH 150

100 Specific Energy Demand SpecificDemand [MJ/m Energy 50

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 34: Specific-heating demand of an average residential house for an oil price of 75 US$ 2000 /bbl and a primary energy constraint of 3.5 kW/Cap.

Figure 35 depicts the over-time final-energy consumption of the RH sector for an oil price of 75 US$ 2000 /bbl and a kW/Cap target of 3.5. The consumption reduces from nearly 168 PJ to 44 PJ, or about 74 %. While in the first 25 year fossil technologies still dominate the RH sector, in the second quarter of the century, fossil energy loses importance drastically. Heat pumps and district heating systems start to dominate the market more and more. In 2050, the penetration of these technologies is strong enough such that fossil based-technologies lose all their market shares. The RH sector is basically CO 2 free. In the figure, we can also see the amount of saved energy due to an increasing utilization of energy-saving option. Note that the depicted amount of saved energy just fulfils an illustrative purpose and is estimated using an useful to final energy conversion factor of 100%. 70 Evaluating intermediate steps towards the 2000-Watt society

180 160 140 120 100 80 60 40 20 Final-Energy Consumption [PJ] Consumption Final-Energy 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Residential heating technologies (including saved energy):

Other Heating Biomass Stoves District Heating Electrical Resistance

Heat Pump Electric Gas Heating Oil Heating Saved Energy

Figure 35: Detailed final-energy consumption of the residential heating sector [PJ] for an oil price of 75

US$2000 /bbl and a primary energy target of 3.5 kW/Cap in 2050.

Figure 36 compares the per unit increase/decrease of useful-energy demand (UED), final energy (FE) consumption and ERFA (Energy Reference Floor Area). In Switzerland a sizeable amount of new buildings will be constructed. As a result the ERFA constantly increases over time. On the contrary, we see the UED decreasing over time. Instalments of energy-saving measurements in Swiss households constantly rise. Each energy-saving instalment (energy conservation in buildings) reduces the specific energy demand, which in the end reduces the total UED. Without any installations of energy-saving measures, the energy demand would increase proportionally to the ERFA. At the same time, the final-energy consumption reduces drastically to about 25 % of the consumption in the year 2000. Additionally to the reduced demand, investments into high-efficient end-use technologies and fuel substitution show an effect here, see previous figure. Evaluating intermediate steps towards the 2000-Watt society 71

1.6

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per per Unit [%] 0.6

0.4

0.2

0.0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Energy Demand Final Energy Consumption ERFA

Figure 36: Comparison of energy demand, final energy consumption and ERFA for an oil price of 75

US$ 2000 /bbl and a primary energy target of 3.5 kW/Cap in 2050.

The transportation sector

The second end-use sector the author contemplates in detail is the transportation sector. Again, at first we illustrate a general consumption overview before going into details of the passenger car sector being the major energy consumer. Figure 37 shows the total final-energy consumption in the year 2050 for various oil prices and kW/Cap targets. For no kW/Cap target scenarios, the FE consumption remains relatively stable. Only for very high oil prices, we see a reduction of the total consumption. 46 Therefore, despite oil-price increases the total efficiency of the transportation sector does not improve significantly. The contrary effect is observed looking at severe kW/Cap targets. Reaching a FE consumption of about 250 PJ, the sector undergoes an energy-efficiency improvement of around 20 %. Note that in general we witness a notably lower energy reduction over time in the transportation sector compared to the residential sector.

46 Note that the price elasticity assumed to be zero for this particular analysis. 72 Evaluating intermediate steps towards the 2000-Watt society

320

300 300-320 280-300 280 260-280 240-260 260 220-240 200-220 240

220

Final-Energy Consumption [PJ] Consumption Final-Energy 200 50

No limit 75 5 100 [US$ 2000 /bbl] 4.5 Oil price 4 125 2050 [kW/Cap] 3.5 Primary energy target 2050

Figure 37: Final-energy consumption of the transport sector in 2050.

The same energy-reduction effect, we observe for the total FE consumption in the transportation sector, we also see looking at passenger cars, see Figure 38. For high oil prices, without any kW/Cap targets, the consumption reduced by only 10 PJ. Scenarios with (or combination with) high kW/Cap targets undergo consumption reductions to less than110 PJ. Reaching stringent kW/Cap targets imply on the one hand energy-consumption reductions and on the other hand a complete modernisation of the present passenger-car fleet. Figure 39 shows the detailed implication of a 3.5 KW/Cap target for an oil price of 75 US$ 2000 /bbl. Currently we see a domination of gasoline and partially diesel fuelled internal-combustion-engines (ICE) cars. Over time this domination declines and we can identify three distinct effects. Firstly, gasoline fuelled cars are reduced to marginal amounts. Secondly, ICE cars are replaced by the hybrid technology. Hybrid diesel and hybrid natural gas cars have the largest market shares in 2050. Gasoline hybrid cars only play a minor role due to the comparatively low efficiency. Thirdly, hydrogen cars start to take off, having an initial market penetration in 2045. Evaluating intermediate steps towards the 2000-Watt society 73

140

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120 130-140 120-130 110 110-120 100 100-110 90-100 90 80-90 80 70-80 60-70 70 Final-Energy Consumption [PJ] Consumption Final-Energy 60 50

No limit 75 5 100 [US$ 2000 /bbl] 4.5 Oil price 4 125 2050 [kW/Cap] 3.5 Primary energy target 2050

Figure 38: Final-energy consumption of passenger cars in 2050.

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120 Hydrogen Fuel Cell Hydrogen Hybrid 100 Natural Gas Hybrid Gasoline Hybrid 80 Gasoline ICE Diesel Hybrid 60 Diesel ICE

40 Final-Energy Consumption [PJ] Consumption Final-Energy

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 39: Detailed final-energy consumption of passenger cars [PJ] for an oil price of 75 US$2000 /bbl and a primary energy target of 3.5 kW/Cap in 2050. 47

47 ICE refers to Internal Combustion Engine. 74 Evaluating intermediate steps towards the 2000-Watt society

4.3 Importance of alternative future scenarios with carbon (CO 2) restrictions

The results presented so far emphasise on the evaluation of the intermediate steps towards the 2000-Watt society for various oil prices. The question remains how beneficial in terms of CO 2 emissions and costs the vision of a 2000-Watt society is for

Switzerland? Therefore, in this section we analyse alternative CO 2-restricting scenarios and compare these to the results presented above. These CO 2 restrictions are implemented in combination with kW/Cap restrictions as well as without a kW/Cap target (only CO 2 emissions are limited). In this section, the author elaborates and draws conclusions based on this all-embracing sensitivity analysis on kW/Cap 48 and CO 2 targets as well as based on costs to the society. Results are focused on selected but comprehensive PEC energy balances due the amount of data generated by the model. Detailed results can be found in the appendix 5.

40 Past emissions Baseline emissions 35 Kyoto target reduction 5% reduction constraint Swiss Kyoto target in 2010 10% reduction constraint 30 CO2 Emissions [Mt] Emissions CO2

5 5 0 0 0 0 9 2 3 4 990 005 01 025 035 05 1 19 2000 2 2010 2 20 2 20 2 20 2045 2

Figure 40: CO 2 emission targets.

48 Costs in this context refer to the discounted sum of the annual costs minus revenues. They are calculated as follows: Investment costs + Costs for sunk material during construction time + Variable costs + Fix operating and maintenance costs + Surveillance costs + Decommissioning costs + Taxes – Subsidies - Recuperation of sunk material - Salvage value. Evaluating intermediate steps towards the 2000-Watt society 75

49 Figure 40 depicts CO 2 emissions of the baseline scenario and of the CO 2 restricted scenarios. In the baseline scenario (‘Baseline Emissions’), the emissions increase to more than 45 Mt in 2005 and in 2010 and decrease thereafter. According to the baseline scenario, in the year 2050 Switzerland will reach the CO 2 emission level of the year 1990. However, even by reaching this target, Switzerland still fails to achieve the Swiss Kyoto commitments - a 10 % reduction of the 1990 levels by 2010.[3] Additionally, the figure illustrates two policy scenarios with constraints on

CO 2 emissions. In all scenarios, the author assumes that Switzerland meets the CO 2 Kyoto target in the year 2010. Afterwards, a reduction of 5 and 10 % per decade is assumed. The 5 % per decade reduction is comparable to a ‘Kyoto forever’ emission reduction. In the following paragraphs we refer to the scenarios as 5 % and 10 % reduction scenarios. Figure 41 shows on the left-hand side the baseline scenario with an oil price of 50

US$ 2000 /bbl in the year 2050. This scenario excludes any CO 2 and any kW/Cap constraints. The baseline is compared to two additional scenarios, the first with a 3.5 kW/Cap constraint, the second with a CO 2 reduction target (limit) of 5 %. The baseline PEC consumption is 5.34 kW/Cap. Switzerland is dominated by fossil fuels and nuclear as well as hydro power. Fossil fuels, with a total share of 55 %, are the largest contributor to the PEC consumption. Renewables only play a subordinate role with a share of less than 6 %.

The implementation of a 3.5 kW/Cap Society, without any CO 2 constraints, results in a PEC reduction of 35 %. However, this constraint (cost-optimally) shows only a moderate decrease of fossil fuels from 2.91 to 2.35 kW/Cap, or 19%. The energy system still largely depends of fossil fuels. Despite that the total amount of fossil- energy use slightly decreases, the share of fossil increases to 67 %. Neither renewable energies (renewables) nor nuclear power are supported by this target. Energy-efficiency improvements and the implementation of energy saving measures play an important role. A positive aspect is the obtained CO 2 emissions by reducing the PEC consumption to 3.5 kW/Cap. The emission reduction nearly corresponds to a 5 % reduction scenario.

49 In this context CO 2 emissions are energy-related CO 2 emissions as presented by the Swiss Federal Office of Energy [1]. The reader should bear in mind that the energy-related CO 2 emissions of the year 2000 have been calibrated to the figures reported by [1], i.e. 44.4 Mt CO 2. Therefore, they differ from the CO 2 emissions estimated by FOEN [3] following the principles of the CO 2 law and the Kyoto protocol. 76 Evaluating intermediate steps towards the 2000-Watt society

Targeting a CO 2 reduction of 5 % (per decade) leads to a much higher PEC consumption compared to the kW/Cap scenario. The consumption reduces only slightly from 5.34 to 4.88 kW/Cap. Thereby, the reduction of fossil fuels is similar to the 3.5 kW/Cap scenario. In comparison to the kW/Cap scenario, we see a larger use of oil products and a reduced use of natural gas. Furthermore, renewables are supported by this scenario to a large extent. The amount of renewable energies consumed nearly doubles compared to the baseline. This compensates for the higher use of oil and oil products. Nuclear energy remains constant like in the baseline scenario.

6.0 5.5 5.0

4.5 Energy carriers: 4.0 Other Renewables 3.5 Hydro Nuclear 3.0 Natural Gas 2.5 Oil 2.0 Coal 1.5 Primary Energy [kW/Capita] 1.0 0.5 0.0 No kW/Cap target 3.5 kW/Cap target No kW/Cap target (5.34 kW/Cap) (4.93 kW/Cap) No CO2 limit No CO2 limit CO2 reduction of 5% per decade

Figure 41: Primary energy per capita [kW/Capita] for an oil price of 50 US$ 2000 /bbl in 2050.

Looking at the illustrated scenarios, we come to the following conclusion. If the aim is to reduce emissions moderately (by 5 % per decade) and (by doing so) the dependency on fossil fuels, there are two options to accomplish this target. 50 The first option is to target a reduction of the PEC consumption. By increasing the overall efficiency of the energy system, the emissions obtained nearly correspond to the 5 % reduction scenario. In this scenario, the PEC consumption is lowered by about 35 % and the final-energy consumption by about 18 %. Note that the high PEC reduction levels are also due to switching from nuclear reactors to (high efficient) gas turbines.

50 This target also resembles a ‘starting point’ to become independent of fossil fuel. To achieve a noticeable independence more severe objectives must be targeted. Evaluating intermediate steps towards the 2000-Watt society 77

The second option is to enforce a CO 2 emission limits of 5 %. The effect is a stronger utilization of biomass technologies and the introduction of new nuclear-energy plants, provided there is an appropriate political support. The overall energy-efficiency of Switzerland must also be improved in this scenario; nevertheless, not to the same extend as in the 3.5kW/Cap scenario. An important question circles around the additional costs to achieve the energy consumption associated with the illustrated scenarios. In the model the additional cost is expressed as the ‘additional total discounted energy-system cost’. To achieve a CO 2 reduction as enforced by the 5 % reduction scenario is cheaper than to realize a 3.5 kW/Cap society in 2050, see appendix 5.4. If the two targets were to be combined (a 5 % CO 2 reduction and a 3.5 % kW/Cap society), the costs to reach this combined target is even higher. In fact it would be cheaper to reach a 10 % CO 2 reduction, without a kW/Cap target, than to reach the combined 5 % CO 2 and 3.5 kW/Cap target. 51 Therefore, by just looking at the costs a kW/Cap is questionable.

Influence of the oil price

In the following paragraphs, we look at the influence of oil prices on the results obtained so far. In order to get a clear picture, we compare several scenarios in Figure 42. On the one hand, we contrast the baseline scenario with a scenario having the same assumptions, except for a higher oil price. In other words, the two scenarios do not include CO 2 reductions and do not include kW/Cap targets. They can be referred to as the ‘no constraint’ scenarios. On the other hand, we contrast two ‘high constrained’ scenarios. These scenarios have both a strong CO 2 reduction target of 10 % as well as a 3.5 kW/Cap target. Again the difference between the two scenarios is the oil price of 50 and 100 US$ 2000 /bbl respectively. On the one hand, the ‘no constraint’ scenarios reveal an apparent difference when the results are compared to each other. When the oil price increases from 50 to 100

US$ 2000 /bbl we see a reduction of the primary-energy consumption of 7%. Especially, the fossil consumption reduces by 18% and use of the renewable energies increases by 46%. On the other hand, the ‘high constrained’ scenarios show only relative insignificant changes of the energy system when we compare these to the changes of the ‘no constraint’ scenarios. For an oil price increase from 50 to 100US$ 2000 /bbl,

51 This result is obtained independently of the oil price, as explained below. 78 Evaluating intermediate steps towards the 2000-Watt society we can identify an increase in the use of gas by 4% and a reduction of oil and oil products by 3%. Generally the conclusion can be drawn, the more constrained scenarios are (CO 2 and kW/Cap) the less influential is the oil price on the Swiss energy system.

6.0 5.5 5.0 4.5 Energy carriers: 4.0 Other Renewables 3.5 Hydro Nuclear 3.0 Natural Gas 2.5 Oil 2.0 Coal 1.5

Primary [kW/Capita] Energy 1.0 0.5 0.0 No kW/Cap target No kW/Cap target 3.5 kW/Cap target 3.5 kW/Cap target (5.34 kW/Cap) (4.95 kW/Cap) No CO2 limit No CO2 limit CO2 reduction of 10% CO2 reduction of 10% per decade per decade Oil Price of Oil Price of Oil Price of Oil Price of 50US$2000 100US$2000 50US$2000 100US$2000

Figure 42: Primary energy per capita [kW/Cap] consumption for oil prices of 50 and 100US$/bbl 2000 , no and

10% per decade CO 2 reductions as well as no and 3.5kW/Cap primary energy constraints.

Influence of the carbon (CO 2) constraint

As seen in Figure 41, the results augment an intensified use of renewables and a constant contribution of nuclear energy for moderate CO 2 constraints. On the contrary, kW/Cap targets rather favour energy-efficiency measures. The question remains, what is the influence of strong CO 2 constraints? This can be best explained by looking at combined CO 2 and kW/Cap targets, see Figure 43. The figure depicts 52 the PEC consumption for an oil price of 75 US$ 2000 /bbl , a 3.5 kW/Cap target and intensifying CO 2 limits. In the kW/Cap scenario without CO 2 limits, the results nearly reach a 5 % CO 2 reduction automatically as explained above. This is the reason why the first two scenarios on the left hand side of the figure show similar results. However, if Switzerland aims at more profound emission reductions in the 2050, we

52 For strong scenario constraints the obtained results are only little sensitive to the price of oil in the year 2050. Evaluating intermediate steps towards the 2000-Watt society 79

see substantial changes of the Swiss energy system. Compared to the non-CO 2 constrained scenario, in the 15 % CO 2 reduction scenario the amount of renewables increases by a factor of 3.5. Nuclear energy becomes increasingly indispensable. The use of fossil fuels, especially natural gas, reduces significantly. Fossil energies reduce from 2.35 to 1.36 kW/Cap, which is equivalent to a 42 % reduction. Thus, even at the kW/Cap constraint of 3.5, CO 2 emissions can still be reduced by switching to cleaner technologies. However, this is only possible at a sizeable cost (see total-system cost increase in appendix 5.4).

4.0

3.5

3.0 Energy carriers: 2.5 Other Renewables Hydro Nuclear 2.0 Natural Gas Oil 1.5 Coal

Primary Energy [kW/Capita] 1.0

0.5

0.0 No CO2 limit CO2 reduction of CO2 reduction of CO2 reduction of 5% per decade 10% per decade 15% per decade

Figure 43: Primary energy per capita [kW/Cap] consumption for an Oil Price of 75 US$/bbl 2000 , various CO 2 limits and a primary per capita constraint of 3.5kW/Cap.

4.4 Energy balances of the 3500-Watt society with a 10% per

decade CO 2 restrictions

In the last section we saw that PE fuel-consumption shares vary depending on the

CO 2-reduction target even if the total PE consumption is constrained to the same level. Therefore, in this section we examine the effects of combined kW/Cap and CO 2 targets in detail. For the analysis we exemplary choose an oil price of 75 US$ 2000 /bbl in the year 2050. Additionally we selected the strongest possible kW/Cap constraint in the year 2050 (3.5 kW/Cap) and a CO 2 target equivalent to a 10 % reduction (per 80 Evaluating intermediate steps towards the 2000-Watt society decade). The results obtained by this analysis are compared with scenario results of the previous sections.

Primary-energy balances

Figure 44 compares the over time PEC consumptions of the 3.5 kW/Cap and 10 %

CO 2-reduction scenarios to the reference case. The reference case has neither CO 2 nor kW/Cap targets. In 2050, the reference case has a PEC consumption of 5.32 kW/Cap, while both other scenarios reach 3.5 kW/Cap. Despite the fact that both kW/Cap limited scenarios have the same PEC consumptions in 2050, the PEC consumptions of the two scenarios vary significantly in earlier time periods. The 10 %

CO 2 reduction scenario has a lower consumption before 2050. Investments into more efficient technologies are necessary already during the first quarter of the century. Moreover, despite the equal amount of PEC consumption of the two kW/Cap target scenarios in the year 2050, the fuel consumption shares differ largely. In order to reach high CO 2 reductions and strong kW/Cap target, the energy mix consists of more renewable energies and nuclear power as well as less fossil fuels, see appendix 5.1. Oil products are substituted by natural gas to a large extent.

1 Primary-Energy Consumption [PJ] Consumption Primary-Energy 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

No CO2 limit and no No kW/Cap target "reference case" No CO2 limit with a 3.5 kW/Cap target CO2 reduction of 10% per decade with a 3.5 kW/Cap target

Figure 44: Primary energy per capita [kW/Cap] development for various kW/Cap and CO 2 targets in the year 2050 at an oil price of 75 US$2000/bbl in the year 2050. Evaluating intermediate steps towards the 2000-Watt society 81

Final-energy balances and the end-use sectors

The FE consumption development between 2000 and 2050 shows similar effects compared to the PEC consumption. In the year 2050 the FE consumption of both 3.5 kW/Cap scenarios is around 650 PJ. However in earlier time periods, the scenario with a 10 % CO 2 reduction target has a lower total FE consumption. Looking at the FE fuel share, we see a shift of fuels. Especially the use of oil products reduces, while the use of natural gas and renewable energies increases, see appendix 5.2. This is the direct consequence of technological changes in the end-use sectors, which can be best illustrated by looking at the residential and transportation sector and more specifically at the RH technologies and the passenger car modes. Figure 45 shows the FE consumption of the RH sector for the 3.5 kW/Cap and 10 %

CO 2 reduction scenario. Already during the first quarter of the century, we observe strong reductions of the FE consumption. Compared to the scenario without any CO 2 reduction targets (see previous section), in the year 2020 the consumption amounts to less than 100 PJ instead of 132 PJ. The amount of fossil-heating systems reduces drastically. Ten year later, the RH heating sector is independent of oil heating systems. The rising market penetration of heat pumps and district-heating systems is unavoidable. Additionally, the amount of saved energy originating from improved insulation standards is higher. Using a useful to final conversion efficiency of 100%, the amount of saved energy grows from 44 to 53 PJ in 2050. Figure 47 depicts the reduction of FE consumption and compares it to the per unit increase/decrease of energy demand and ERFA (Energy Reference Floor Area). While the ERFA constantly increases over time, the energy demand and the FE decrease remarkably. Compared to Figure 36 (an analysis of the scenario with a 3.5 kW/Cap target but without CO 2 reduction goals), the energy demand reduces further to 89% of the current (year 2000) energy demand. To reach this target, significant energy-saving measures must be taken as soon as possible in Switzerland. 82 Evaluating intermediate steps towards the 2000-Watt society

180

160

140

120

100

Final-Energy Consumption [PJ] Consumption Final-Energy 20

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Residential heating technologies (including saved energy): Other Heating Biomass Stoves District Heating Electrical Resistance

Heat Pump Electric Gas Heating Oil Heating Saved Energy

Figure 45: Detailed final-energy consumption of the residential heating sector [PJ] for an oil price of 75

US$ 2000 /bbl, a primary energy target of 3.5 kW/Cap in 2050 and a CO 2 reduction target of 10 %.

1.6

1.4

1.2

1.0

0.8

per Unit [%] Unit per 0.6

0.4

0.2

0.0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Energy Demand Final Energy Consumption Heated Surface

Figure 46: Comparison of energy demand, final energy consumption and ERFA for an oil price of 75

US$ 2000 /bbl, a primary energy target of 3.5 kW/Cap in 2050 and a CO 2 reduction target of 10 %.

Comparably to the changes in the RH sector, the passenger car sub-sector also undergoes structural changes when CO 2 emissions are limited additional to the 3.5 Evaluating intermediate steps towards the 2000-Watt society 83 kW/Cap target. As anticipated, we observe only small energy-efficiency gains of 3% in the year 2050 compared to the non-CO 2 limited scenario. The 3.5 kW/Cap already promotes high efficiency gain without CO 2 limits. Yet, the additional CO 2 restriction fosters an earlier and more profound readiness for marketing of natural gas and hydrogen cars. In the year 2020 natural gas (ICE and Hydrid) cars have a total share of 15 % consuming 24 PJ of FE in total. Simultaneously, the share of gasoline decreases. High efficient diesel ICE and hybrid cars increase their shares until 2040. Especially diesel and natural gas hybrid cars will play an important role in 2050. Knowing that cars fuelled by hydrogen largely represent a future technology for the second half of this century, the hybrid and fuel cell versions have a stronger and in addition earlier market penetration. Five year earlier than in the non-CO 2 limited scenario, in the year 2040, we view the first introduction of hydrogen cars.

180

160 Engine drives: 140 H2 Hybrid Fuel Cell 120 H2 Fuel Cell H2 Hybrid 100 Natural Gas Hybrid Natural Gas 80 Gasoline Hybrid Gasoline ICE 60 Diesel Hybrid Diesel ICE 40 Final-Energy Consumption [PJ] Consumption Final-Energy

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 47: Detailed final-energy consumption of passenger cars [PJ] for an oil price of 75 US$ 2000 /bbl and a 53 primary energy target of 3.5 kW/Cap in 2050 and a CO 2 reduction target of 10 %.

Electricity balances

A prime example for an efficient substitution of fossil energy with electricity is heat pumps. Also in industrial processes electricity can often substitute oil products and

53 ICE refers to Internal Combustion Engine. H2 refers to Hydrogen Cars. 84 Evaluating intermediate steps towards the 2000-Watt society

natural gas. As can be seen in Figure 48, strong CO2 reductions increase the electricity production and therefore the share of electricity in end-use sectors rises. A

CO 2 reduction equivalent to 10 % per decade results in an electricity production increase of more than 30 % compared to the year 2000. Excluding the amount of electricity which was exported in 2000, we observe an increase of more than 45 % by 2050. In any case, the electricity production will increase from a today’s level of 57 TWh to 70 -85 TWh in 2050 even with a PEC consumption reduction to 3.5 kW/Cap, which is mainly due to the extensive use of heat pumps in buildings (see Figure 46). Current debates on nuclear power increasingly rise public awareness of whether or not Switzerland should invest in new nuclear power station or alternative natural gas CHP plants.[84,85] Analyzing this aspect from a cost-optimal point of view, we obtain specific results. Without any CO 2 and PEC constraints, nuclear power is visibly the most competitive option for electricity production. The same results are attained by implementing CO 2 reduction targets. However, the option of nuclear power disappears for strong PEC constraints. The reason is the comparably low efficiency of nuclear power stations. Conventional and especially co-generation plants produce electricity (and heat) with much higher efficiencies. While co-generation plants can have an overall efficiency of up to 75 %, conventional electricity generation technologies have efficiency around 50 %. [86,87]. However, existing nuclear power stations have an efficiency of only 33% which might be increased to 44% in the future, depending on the reactor type.[51,88] The figure also shows that the technology mix for the production of electricity may be not only determined by defining a CO 2 reduction and PEC target separately. An effective measure against climate change is especially the 10 % CO 2 reduction combined with a PEC target. This target demands massive investments in renewable energies and a continuing reliance on nuclear energy. At the same time, the hydro power potential should be used to the full possible extent.

Evaluating intermediate steps towards the 2000-Watt society 85

CO2 reduction of CO2 reduction of Electricity production No CO2 limit 10% per decade No CO2 limit 10% per decade technologies: No kW/Cap target No kW/Cap target (5.17 kW/Cap) (4.83 kW/Cap) 3.5 kW/Cap target 3.5 kW/Cap target Solar Power Year 2000 Year 2050 Year 2050 Year 2050 Year 2050 90 Wind Turbines

80 Biomass Cogeneration 70 Natural Gas Cogeneration 60 Thermal 50 Cogeneration Biomass Thermal 40 Conventional 30 Thermal and Others 20 Nuclear Power

10 Hydro Power Electricity Production [TWh] Production Electricity

0 Net Imports -10

Figure 48: Electricity production [TWh] for an oil price of 75 US$ 2000 /bbl and various CO 2 emission and primary energy targets.

Renewable technologies 54

Sustainability is an attempt to provide the best outcomes for the human and natural environments both now and into the indefinite future.[90] In this context renewable energies and their conversion products are indispensable and should be used to the maximum possible extent. Nevertheless, sustainability does not include financial aspects; hence renewable-energies products generated in a sustainable manner are most often cost-effective only under a specific framework of regulations. From a macroeconomic cost-optimal point of view the exploitation of renewable energies in Switzerland varies strongly – with the exception of hydro power. Of all renewable technologies hydro power is the most cost-effective technology. In all scenarios the total additional hydro-power potential is fully used. Figure 49 illustrates the PE consumption of renewable energies for various oil prices and CO 2 emission reduction targets. The consumption of renewable energies rises in all scenarios compared to 2000 levels. Moderate increases of 32 % until 2050 are realized for the non CO 2 and non

54 Resources that are regenerative or for all practical purposes cannot be depleted.[89] 86 Evaluating intermediate steps towards the 2000-Watt society kW/Cap limited scenario, see column two. The strongest increase we observe for a

CO 2 limit of 10 %. In this scenario, the PE consumption of renewable energies rises by more than 75 % compared to 2000 levels. In total renewable energies add up to a PE-consumption share of more than 40 %. Major contributors responsible for this increase are wood (biomass) for the production of electricity and solar-thermal energy for the production of hot water in the residential sector. In essence, a PEC target corresponds to an energy-efficiency target. This energy- efficiency target also has an influence on the use of renewable energies, as can be seen by looking at column four. The PEC consumption target of 3.5 kW/Cap arguments only marginal renewable-energy increases compared to the year 2000. While we still observe a relatively small increase in the use of solar-thermal energy and hydro power, all other renewable energy technologies cannot gain any shares.

The combination of strong kW/Cap targets and strong CO 2 target fosters the utilization of renewable energy, especially wood. More than 45 % of PE has a renewable-energy origin. Therefore we identify a significant correlation between the use of renewable energies and CO 2 targets and virtually no correlation between the use of renewable energies and PEC targets.

450

400

350 Energy carriers: 300 Other Wind 250 Waste 200 Wood Solar Thermal 150 Hydro Power

100

Primary-Energy Consumption [PJ] Consumption Primary-Energy 50

0 No CO2 limit 10% CO2 limit No CO2 limit 10% CO2 limit No kW/Cap target No kW/Cap target 3.5 kW/Cap target 3.5 kW/Cap target (5.17 kW/Cap) (4.83 kW/Cap) Year 2000 Year 2050 Year 2050 Year 2050 Year 2050

Figure 49: Primary energy consumption [PJ] of renewable energy technologies for various CO 2 and kW/Cap limits and an oil price of 75 US$ 2000 /bbl. Evaluating intermediate steps towards the 2000-Watt society 87

As identified in the previous figure, wood (biomass) technologies are the major new- renewable-energy source. Hydropower by far still has the largest renewable shares but wood is the renewable energy fuel, which registers the largest increases. Figure 50 shows the PE consumption of biomass from 2000 to 2050 for an oil price of

75 US$ 2000 /bbl, a 3.5 kW/Cap as well as a 10 % CO 2 reduction target. The figure shows two peaks for the use of wood, the first in 2015 and the second in 2050.

According to the scenario assumption, in 2010 the Kyoto target (a CO 2 reduction of 10 % compared to 1990) must be met. This target can only be met with a drastic increase in the use of biomass to mainly satisfy the increasing electricity demand. A

CO 2 compensation in other sectors, such as the residential or transportation sector, are theoretically also possible but imply a too significant and too expensive replacement of already exiting technologies in a short period of time. After the peak consumption in 2015, the wood consumption declines because of investments in more cost-effective and more efficient technologies to satisfy the constantly increasing CO 2 reduction. A transition time until 2025 is sufficient for investments in less CO 2 consuming technologies available at lower costs. Towards the middle of the century the wood consumption peaks again due to the magnitude of CO 2 reduction of 10 % per decade. In 2050, the full wood potential in Switzerland is used.

120

100

20 Primary-Energy Consumption [PJ] Consumption Primary-Energy 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Technological Combustion uses: Room and Building Heating: Chimeny, stove, oven Room and Building Heating: Pellet Other Uses

Figure 50: Primary energy consumption [PJ] of wood technologies for an oil price of 75 US$ 2000 /bbl. A 3.5 kW/Cap target and 10 % CO 2 reduction are applied. 88 Evaluating intermediate steps towards the 2000-Watt society

Cost analysis

The cost analysis in MAKRAL type of model is based on total-system costs.[91] Total-system costs refer to the discounted sum of the annual costs minus revenues. In a simplified way, they are calculated as follows: Investment costs + Costs for sunk material during construction time + Variable costs + Fix operating and maintenance costs + Surveillance costs + Decommissioning costs + Taxes - Subsidies - Recuperation of sunk material - Salvage value ] 50 2000 45 40 35 30 25 20 15 10 5 0

Additional Total-System Costs [billion US$ [billion Costs Total-System Additional 5.2 kW (No 4.9 kW (No 4.8 kW (No 3.5 kW target 3.5 kW target 3.5 kW target Limit) Limit) Limit) No CO2 limit CO2 reduction CO2 reduction No CO2 limit CO2 reduction CO2 reduction of 5 % per of 10 % per of 5 % per of 10 % per decade decade decade decade

Figure 51: Total-system-costs increase for an Oil Price of 75US$ 2000 /bbl.

In the context of this analysis we show the additional total system-costs. Additional because the costs shown here refer to cost increases of each specifically constrained scenario (CO 2 or kW/Cap) compared to a reference case. The reference case Evaluating intermediate steps towards the 2000-Watt society 89

represents the non (CO 2 or kW/Cap) constrained scenario at a specific oil price. Figure 51 shows the total-system cost increases for various scenarios at an oil price of 75 US$ 2000 /bbl in 2050. The figure is separated into two parts. The columns on the left hand side show costs of the reference case and CO 2 constrained scenarios. The columns on the right hand side show costs of 3.5 kW/Cap constrained scenarios in combination with various CO 2 targets. Obviously structural changes of the energy system cost large amounts of money. A

CO 2 reduction of 5 % per decade involves costs of more than 15 billion US$ 2000 . To achieve more ambitious CO 2 targets result in a cost increase of nearly 25 billion

US$ 2000 . The same cost-increase effects can be also observed at higher oil prices, see appendix 5.4. However, for high oil prices more stringent CO 2 targets can be obtained at lower cost. More efficient (less CO 2 consuming technologies) already become competitive in the reference case without any specified CO 2 target. For instance at an oil price of 125 US$ 2000 /bbl, the costs to achieve a 10 % reduction amount to 16 billion US$ 2000 .

Scenarios with combined CO 2 and kW/Cap also show similar price increases but at a higher cost level. The combined scenario with a 5 % CO 2 reduction has higher costs than the 10 % CO 2 reduction of without any kW/Cap targets. Moreover to reach very high CO 2 targets in combination with a 3.5 kW/Cap target rises the costs in total to 40 billion US$ 2000 . Moreover, note also that the combined 3.5 kW/Cap and 10 % CO 2 reduction scenario costs less than the two signal constraint scenarios 3.5 kW/Cap and 10 % CO 2 added up - about 43 billion US$ 2000 . This difference is an indicator for technological synergies of combined-targets scenarios. When does Switzerland have to take action to achieve specific (political) targets? The answer to the question largely depends on the type of target. According to our definition of the CO 2 limits, Switzerland has to meet her voluntarily Kyoto commitments in 2010.[92] Therefore, strict CO 2 targets require taking action as soon as possible, which is reflected by high cost increases at the same time, see Figure 52. Surprisingly, these large investments pay out towards the middle of the century having even smaller costs than the reference case. On the contrary, a long term target such as the 3.5 kW/Cap society requires major investments towards the middle of the century. As mentioned above, the combined CO 2 and kW/Cap scenarios are the most expensive ones. Moreover, in order to reach these targets high investments are necessary in virtually all time periods. 90 Evaluating intermediate steps towards the 2000-Watt society

] 40 2000 35

Additional Total-System Costs [billion US$ [billion Costs Total-System Additional -5 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

No kW/Cap target and 10 % CO2 limit 3.5 kW/Cap target and no CO2 limit 3.5 kW/Cap target and 10 % CO2 limit

Figure 52: Annual total-system-costs increase for an oil price of 75US$ 2000 /bbl.

4.5 Conclusions

The vision of a 2000-Watt society should be seen as a long-term goal. During the first half of the century only intermediate steps towards the 2000-Watt society can be achieved. The analysis shows that until 2050, a 3500-Watt society can be reached at maximum. Even this intermediate step is associated with a considerable transformation of the Swiss energy system. The major transformation concerns energy-transformation and energy-demand technologies. With regards to energy- transformation technology the issue arises whether Switzerland should invest in nuclear energy or high-efficient gas-fired CHP plants. By merely looking at the PEC consumption target, CHP plants are favoured with the burden of increase of CO 2 emissions. With regards to energy-demand technologies drastic transformation are required. In detail we investigated transformation changes in two end-use sectors, the residential and transportation sector. The residential sector has the largest energy reduction potential. The total FE consumption of this sector could reduce to about

100 PJ in 2050. At an oil price of 75 US$ 2000 /bbl, this implies a reduction of 45 %. Major energy reductions are achieved in the RH sub-sector. Although this sub-sector remains to be the main consumer by looking at the consumption shares in 2050, RH Evaluating intermediate steps towards the 2000-Watt society 91 consumes only 43 PJ. This is only possible because of major investments in energy saving measures as well as fuel and technology switches to heat pumps and district heating systems. The transportation sector has a smaller but still remarkable energy reduction potential of 20 % in 2050. Passenger cars, which remain to be the largest consumers, undergo a sustainable fuel and technology transformation as well. While this sub-sector consumes more than 160 PJ FE in 2000, the consumption is reduced to around 110 PJ in 2050. Natural gas and diesel hybrid as well as high-efficient diesel ICE cars would be the technological choice of the future. Additionally, hydrogen cars would have an initial market penetration. Supporting a 3500-Watt society is an energy-efficiency target. This energy-efficiency target has restrictions in connection with CO 2 emissions reductions. A 3500-Watt society reduces CO 2 emissions by nearly (little less than) 5 % per decade. More stringent emission reductions require the formulation of extra CO 2 goals. Because of this reason, we investigated combined scenarios on CO 2 emissions and PEC consumption in more detail. These scenarios show that, as the constraints on PEC consumption and CO 2 emissions become more stringent, the contribution of nuclear and renewable energy become increasingly indispensable. Additionally, investments into high-efficient and at the same time less CO 2 consuming end-use technologies are necessary relatively soon from now. Such technologies are for instance fuel cells and solar-water heaters as well as excellent energy-saving measures. The transformation of the energy system is not cost-free. The additional costs to reach a 3500-Watt society, including CO 2 targets, amounts to 20 to 40 billion

US$ 2000 . If the main reason to reach a 3500-Watt society was CO 2 reduction, then the target is be questionable. The costs to reach significant CO 2 reductions (but excluding a PEC constraint) are with 15 to 25 billion US$ 2000 much cheaper. Switzerland has a multiple choice of future pathways. Depending on the target behind a political decision, each choice must be evaluated thoroughly. However, if the target is to aim at high CO 2 reduction, investments into clean technologies must be made rather sooner than later. 92 Complementary analyses

5 Complementary analyses

Although each policy instrument studied so far has been tested using a sensitivity analysis, a more extensive parametric analysis can provide insights into the robustness of the results. This is particularly important for key parameters that can significantly influence outcome of the model. Nevertheless, despite the fact that a full and comprehensive parametric analysis was beyond the scope of this thesis, a sensitivity study on the impacts of discount rates (dr) is analysed here. This analysis is done in section 5.1. The future costs of hydrogen fuel-cell cars are uncertain. The retail price of fuel-cells largely depends on the price of the fuel cells and their stack size. Therefore, we reassessed the passenger cars sector and especially the penetration of hydrogen fuel-cell cars using optimistic assumptions. This is done in section 5.2. The primary-energy content of most renewable energies can be defined in several ways and varies depending on the particular statistic. To overcome this dilemma, we investigated different energy-conversion equivalents for renewable energies. This analysis is done in section 5.3. The objective of the modelling approach so far was to find a least-cost solution by minimising the total system costs and to satisfy exogenously specified levels of energy-service demands. However, if the demands are inelastic, the model cannot capture the consumer’s price-induced feedbacks. From an all-embracing policy- making point of view it is desirable that the modelling framework captures both the flows and prices of energy commodities such that the amount of energy service demanded corresponds to the money the consumer would be willing to pay.[93] In a MARKAL-class model a feedback between prices and demand can be evaluated by a partial-equilibrium analysis with elastic demands. This analysis is done in section 5.4. In future, new biomass technologies can gain significant importance in the Swiss energy sector. The conversion of biomass into high quality, flexible final-energy carriers constitutes a convenient vehicle to add value to wood as an energy resource.

As a result of its neutral CO 2 emissions, biomass-based energy carriers can contribute to substitute carbon-intensive fossil fuels in the energy markets. At the same time, greenhouse gas emissions can be reduced and benefits in terms of security of energy supply can be achieved. Therefore, we assess the economic Complementary analyses 93 conditions under which new biomass technologies become competitive. The focus of this assessment is on the production of synthetic natural gas (bio-SNG) from wood in a methanation plant. This analysis is done in section 5.5.

5.1 Sensitivity analysis on discount rates

For long-term policy making the choice of discount rate (dr) determines the present value of these policy-induced costs (or benefits). In addition, a low dr decreases annualized payments of investments and therefore favours capital-intensive investments. Given the controversial issues about dr [94], we scrutinize a low dr of 3 % and a high dr of 5 %. The discount rate of 3 % is also used in the baseline scenario. Note that MARKAL class models define two types of dr, DISCOUNT and DISCRATE. DISCOUNT refers to the overall long-term dr for the whole economy and must be defined for all scenarios. It is mainly used to report the discounted costs (e.g. total system costs) to the base year. DISCRATE is associated with an individual technology (or all technologies in a sector) and is manly used for the calculation of the Capital Recovery Factor (CRF) 55 to determine the annual payments for investments.[96] The low and high dr values are used for both model parameters.

6.0

5.0 Energy carriers: 4.0 Renewables Hydro Nuclear 3.0 Natural Gas Oil 2.0 Coal

1.0 Primary Energy Consumption [kW/Capita] Consumption Energy Primary 0.0 dr 5 % dr 3 % dr 5 % dr 3 % No kW/Cap target No kW/Cap target 3.5 kW/Cap target 3.5 kW/Cap target (5.34 kW/Cap) (5.17 kW/Cap)

Figure 53: Primary energy per capita [kW/Cap] consumption for an oil price of 75 US$ 2000 /bbl with discount rates (dr) of 3 and 5 % as well as no kW/Cap target and a 3.5 kW/Cap target.

55 The CRF is the ratio of a constant annuity to the present value of receiving that annuity for a given length of time.[95] 94 Complementary analyses

Figure 53 illustrates the PE consumption of non kW/Cap constrained scenarios on the left-hand side and of 3.5 kW/Cap constraint scenarios on the right-hand side. The non-constrained scenarios show a relatively small but notable difference in the PE consumption. By decreasing the dr from 5 to 3 % the PE consumption reduces by little more than 3 %. At the same time the amount of oil and gas consumed in 2050 is less due to investments in more capital-intensive and energy-efficient technologies.

In turn, the total CO 2 emissions reduce by 7 % (from 40.3 to 37.7 Mt). On the contrary the 3.5 kW/Cap constraint scenarios show in essence no difference in total

PE consumption. This effect is nicely reflected by the CO 2 emissions in 2050. The emissions differ by less than 0.3%. A strong kW/Cap constraint already demands such capital-intensive technologies that a low dr does not show any effect. We conclude that the dr changes have only little effect on the PE consumption, hence on future-investment choices in Switzerland. This statement becomes even more valid for strong kW/Cap (and CO 2 targets). 3.5 kW/Cap scenarios have the same PE consumption shares in 2050, independent of the dr used.

5.2 The influence of fuel-cells price and stack sizes on hydrogen cars

The retail price of fuel-cells largely depends on the price of the fuel cells and their stack size. Considering the uncertainties in fuel-cell prizes and the variety of stack sizes, we analysed two different fuel-cell prices and stack sizes for hydrogen-driven passenger cars. In the baseline scenario, we assumed a fuel-cell price of around 700

US$ 2000 /kW (600 €2003 /kW) in 2010, which reduces to around 115 US$ 2000 /bbl (100

€2003 /kW) until 2050.[97,98] The stack size is 80 kW. For the sensitivity run, we assumed that the price reduces by half as well as a stack size of 50 kW. Additionally, for the sensitivity run we assumed a PEC target of 3.5 kW/Cap and a CO 2 reduction of 10 % per decade. The results of the baseline run are elaborated in section 4.4 in detail. In the beginning of the century, we observed a domination of gasoline and partially diesel fuelled internal-combustion-engines (ICE) cars. This domination declined over time, gasoline-fuelled cars reduced to marginal amounts and ICE engines were replaced by the hybrid technology. Hybrid diesel and hybrid natural gas cars had the largest market shares in 2050. However, although hydrogen cars started to penetrate in 2045, this penetration remained at rather marginal levels. On the contrary, when fuel- Complementary analyses 95 cells can be produced at lower costs the penetration of hydrogen cars increases. This effect is supported by installing smaller-sized engines in light-vehicle passenger cars, see Figure 54. Hydrogen fuel-cell cars reach readiness of marketing already in the year 2030. In 2050, hydrogen fuel-cell cars could have a share of up to 21% under these assumptions.

180

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 54: Final-energy consumption of passenger cars at an oil price of 75US2000/bbl, 3.5 kW/Cap primary energy and a CO 2 reduction constraint of 10 % per decade. Fuel stack price is assumed to be 300US$/kW in 2010 and the size of one fuel cell is 50 kW.

We can summarize that the market penetration and the readiness for marketing of hydrogen fuel-cell cars largely depends on the price of fuel cells and the size installed in each car. If it is possible to produce light-vehicles at low costs, hydrogen cars could reach significant market shares in the second quarter of the 21 st century.

5.3 The influence of renewable energy-conversion equivalents on the production of electricity

Primary energy is defined as the energy content of an energy carrier, which has not been transformed by any means. This definition causes a dilemma when looking at renewable energies. Most renewable energies such as wind, photovoltaic or hydropower are characterized by a substantial difference compared to all other fossil energy carriers (biomass being the only exception). While fossil energy carriers and 96 Complementary analyses

3 biomass have specific (measureable) energy contents, e.g. [MJ/ton coal ] or [MJ/m Gas ], other renewable energies are characterised by energy flows, e.g. wind velocity [m/s] 3 2 2 (P wind ~ v [99]) or solar radiation [kW/m ] (P solar = 1.366 kW/m [100] ). Therefore, to be mathematically correct, the primary-energy use of fossil energy carriers can not be added to the primary-energy use of renewable energy. To overcome this dilemma, primary-to-final energy-conversion equivalents are introduced for statistical purposes. These equivalents could for instance relate to the technical efficiency or to fossil or other equivalents 56 . The 2004 Swiss renewable energy statistics still defined various conversion factors for different renewable energy technologies (e.g. hydropower 80 %, photovoltaic 11 % and wind 41 %).[102] The 2005 Swiss renewable energy statistics have been changed to IEA regulation using an energy-conversion equivalent to 100 % for renewable energy technologies [59,103]. So far, in SMM, we have used the fossil equivalent for renewable energy technologies according to the standard MARKAL conversions.[101] Only for hydro power we used the conversion equivalent of 80 % according to the older SOFE accounting scheme. Because of various possible energy-conversion equivalents, which could be used for an analysis, in this section we studied the effects of a renewable energy-conversion equivalent of 100 % (including hydro power and excluding biomass) and compared the results to our previous scenarios. An energy-conversion equivalent of 100 % implies that the final use of energy is equivalent to the primary use of energy. The new scenario results are labeled ‘100 eq.’, while the previous results are labeled ‘fossil eq.’ and are shown in Figure 55. The figure depicts the production of electricity, comparing three scenario sets. The first set, depicted by the first two columns on the left-hand side, refers to a 10 % CO 2 reduction per decade limit. The second set, the two columns in the middle, reflects the 3.5 kW/Cap target. The third set, the two columns on the right-hand side, shows combined CO 2 reduction and kW/Cap targets. In all scenarios the demanded electricity and therefore the choice of technologies in the end-use sectors remain similar. The total production of electricity alters only by small amounts. The significant difference is the choice of electricity-production technologies to satisfy the demand for electricity.

56 The fossil-fuel equivalent for non-fossil sources is taken as the reciprocal of the average efficiency of the fossil fuel power plants, and is used for reporting the primary-energy equivalent of renewable and nuclear energy production of electricity.[101] Complementary analyses 97

In the first scenario set, switching from the fossil-equivalent scenario to the 100 % equivalent scenario decreases the attractiveness of biomass technologies in favour of wind turbines. In the second set, we observe a strong decrease in natural gas thermal production, which is replaced by solar and wind technologies. In the third scenario set both natural gas thermal and biomass are substituted by solar and wind technologies. Additionally, remarkable is the penetration of nuclear energy in this scenario set.

fossil eq. 100% eq. fossil eq. 100% eq. fossil eq. 100% eq. Electricity 10 % CO2 red. 10 % CO2 red. No CO2 limit No CO2 limit 10 % CO2 red. 10 % CO2 red. production No kW/Cap No kW/Cap 3.5 kW/Cap 3.5 kW/Cap 3.5 kW/Cap 3.5 kW/Cap technologies: target target target target target target 90 Solar Power 80 Wind 70 Turbines Biomass CHP 60 Natural Gas 50 CHP Thermal 40 Cogeneration Biomass 30 Thermal Natural Gas 20 Thermal Electricity Production [TWh] Production Electricity Nuclear 10 Power Hydro Power 0

Figure 55: Electricity production for a fossil equivalent and a 100% conversion equivalent of renewable energy technologies (expect for biomass technologies) at an oil price of 75US2000/bb in 2050. Various scenarios compare combinations of a 3.5 kW/Cap primary energy and a CO 2 reduction constraint of 10 % per decade.

The effect of switching from biomass and natural gas thermal technologies to solar and wind technologies directly relates to the higher energy-conversion equivalent of 100 % compared to the fossil equivalent of 33 %. The 100 % equivalent clearly argues in favour of the competitiveness of renewable energies. Fossil but also biomass technologies, with much lower efficiencies than 100 %, are disadvantaged. This is particularly illustrative in the second scenario set, i.e. the 3.5 kW/Cap scenarios.

The third scenario set, where both CO 2 and the kW/Cap targets have to be fulfilled at the same time, shows an additional effect. In the previous two scenario sets either biomass or natural gas was replaced. In the third set both technologies are replaced 98 Complementary analyses with renewable energy technologies, both having 100 % energy-conversions equivalents. Hence, for the same amount of final-energy less primary energy is consumed (note that also the energy-conversion equivalent for hydro was increased from 80 to 100 % as well). In turn this gives space for nuclear energy with a relative low energy-conversion equivalent of 33 %. Nuclear energy is also favoured by the strong CO 2 target of 10 % per decade.

5.4 Partial equilibrium with elastic demands

A partial equilibrium MARKAL model with elastic demands adopts a concept where end-use demands are not fixed but elastic to their own prices. The equation below illustrates this characteristic. D 0 and P0 refer to Demands and Prices in an initial scenario without elastic demands (the demands are exogenously defined). For a given price elasticity, the demand D t can be reduced when the corresponding price P t increases (scenario with elastic demands). Thereby the elasticity reflects the relationship between changes in quantity of a good demanded and changes in its price. In Swiss-MARKAL, we assume an elasticity of 0.3 for all demands.[104]

Figure 56: Partial equilibrium model with elastic demands (based on [101,104]).

≈ ’ ≈ ’α D0 P0 ∆ ÷ = ∆ ÷ « Dt ◊ « Pt ◊ Complementary analyses 99

D: Demand P: Price α : Elasiticity Index 0: Initial Scenario without elastic demands Index t: Scenario with elastic demands

This relationship can be also explained using Figure 56 illustrating the price and quantity (demand) relationship in a simplified manner. The initial equilibrium point Eq 0 reflects the optimal solution of an initial scenario without elastic demands. In the scenario with elastic demands the model can chose any (base on the elasticity) solution on the demand curve by reducing the quantity (demand for a good). As a result we obtain a new equilibrium point Eq t with the consumer surplus (B) and the producer surplus (A). Note that the Swiss-MARKAL model with elastic demands does not capture the entire macroeconomic feedback associated with the applied energy- policy instruments. This would require coupling of the model to a macro-economic model, (e.g., the MACRO module).[105] More information can be found in [93,104]. Figure 57 shows the PEC consumption of three scenarios with and without elastic demands for an oil price of 75 US$2000 /bbl in 2050. The first column on the left shows the PEC without elastic demands. As illustrated in Figure 27, in this scenario Switzerland mainly depends on fossil (natural gas and oil) fuels and hydro power. Evaluating the same scenario using an elastic demand approach (centre column), we attain different PEC consumption shares. The amount of fossil fuels reduces from 67 % to 53 %. Remarkable is also the utilization of nuclear energy with a share of 16 %. How can this change in the PEC consumption be explained? We firstly take a look at the demand reduction in the end-use markets. Exemplarily choose the residential heating (RH) and passenger car sectors. The demand reduction in the RH sector adds up to 8 % – 14 % compared to the demand in scenario without elastic demands. Thereby MFH reduce demand by 12 % - 14 % and SFH by 8 % - 10 %. The demand reduction in the passenger cars sector adds up to 7 %. These reductions lead to a lower consumption of fossil fuels, which is reflected in the PEC balance. Secondly, the demand reduction and consequently the consumption of less fossil fuels open the possibility for the production of energy with lower-efficient 100 Complementary analyses technologies. Note that the total PEC consumption is limited in all scenarios. Therefore, instead of producing electricity by high-efficient gas power stations, electricity is produced by less efficient but also less costly nuclear power stations.

4.0

3.5

3.0 Energy carriers: Other Renewables 2.5 Hydro Nuclear 2.0 Natural Gas Oil 1.5 Coal 1.0 Primary Energy [kW/Capita] Energy Primary

0.5

0.0 3.5 kW/Cap target 3.5 kW/Cap target 3.0 kW/Cap target no elastic demands elastic demands elastic demands

Figure 57: Primary energy per capita [kW/Cap] consumption for an oil price of 75 US$ 2000 /bbl with and with elastic demand calculations.

A second issue of interest would be to define the maximum possible PEC reduction taking into consideration specific price elasticities and resulting demand reductions. Obviously, although the demand for energy reduces due to high energy prices, there is still a limit to the possible demand reduction. This limit and the corresponding PEC fuel shares are illustrated by the third column in the figure. At maximum, we can reduce the PEC consumption to 3 kW/Cap. The PEC consumption cannot be reduced any further by 2050 57 . The 3 kW/Cap target can be obtained by reducing additional demand for electricity, which in turn lowers the PEC consumption of nuclear energy and natural gas. However, note that even by achieving a 3 kW/Cap using elastic demands, new investment in nuclear power station or the extension of their decommissioning time are favourable.

57 In the analysis we lowered the PEC consumption target step wise by 0.5 kW/Cap. A PEC consumption of 2.5 is not feasible. Complementary analyses 101

5.5 Assessing wood-based synthetic-fuel technologies

In future, new biomass technologies can gain significant importance in the Swiss energy sector. Therefore, this section assesses the economic conditions under which new biomass technologies become competitive. The focus of this assessment is on the production of synthetic natural gas (bio-SNG) from wood in a methanation plant. In addition to a reference scenario, the effects of increasing oil and gas prices, the effects of allocating subsidies to the methanation plant and the effects of competition between the methanation plant and a biomass-based Fischer-Tropsch (FT) synthesis are evaluated. An additional sensitivity analysis is performed by varying investment costs of the methanation plant. Note that this section of the dissertation was conducted with an older version of the Swiss-MARKAL model, status January 2005. The main difference between the latest version and the version January 2005 is the absence of energy-saving option in the residential heating sector. However, the scope of the thesis did not allow a new analysis with the latest version of the model. For this assessment, each wood-based energy process is embedded in a process chain that is linked to the energy production, transmission and distribution (T&D) systems of Switzerland. Figure 58 to Figure 60 depict three types of biomass-process chains examined in this paper. The first type includes processes that produce fuels for the transportation sector, namely bio-SNG and FT liquids (Figure 58). The second type includes processes related to combined heat and power (CHP) production from wood (Figure 59). The third type includes technologies that use wood to produce heat only (Figure 60). The technological data description is attached in appendix 3.

Natural Gas Methanation CNG ICE Car T&D Wood Chips Fischer-Tropsch Diesel Diesel ICE Car Synthesis T&D

Figure 58: Wood-based process chains for bio-fuel production from wood considered in the SWISS-MARKAL model. CNG stands for compressed natural gas and ICE stands for internal combustion engine.

102 Complementary analyses

Natural Gas Electricity Distributed CHP Methanation

Short-Distance Heat District Heating Electricity Wood CHP (<2 MW) Gasification Short-Distance Heat District Heating Wood Chips Wood CHP (<2 MW) Combustion Electricity

Electricity Wood CHP (>2 MW) Gasification Long-Distance Heat District Heating

Wood CHP (>2 MW) Combustion Electricity

Figure 59: Wood-based process chains for combined heat and power (CHP) production considered in the SWISS-MARKAL model. For simplicity, transmission and distribution processes are not shown in the diagram.

Gas Heating Methanation Heat SFH

Wood Chip Heating (50 kW)

Wood Chip Heating Short-Distance Heat (300 kW) District Heating Wood Chips

Wood Chip Heating (1000 kW)

Wood Pellets Wood Pellet Heating Heat Production SFH

Co-Combustion Heat Pump Heat in Gas Turbine SFH

Figure 60: Wood-based process chains for heat production considered in the SWISS-MARKAL model. The abbreviation SFH stands for Single Family Houses. For simplicity, transmission and distribution processes are not shown in the diagram. Complementary analyses 103

As mentioned above, a special attention is given to the wood-methanation technology to produce bio-SNG and the FT synthesis to produce FT liquids, some of which can be used in the same way as conventional diesel.[106,107] The specific costs of the methanation plant and FT synthesis technologies, especially the investment costs, strongly depend on the size of the plant. In this assessment the costs of the methanation plant are based on a plant size of 100 MW, whereas the costs of the FT synthesis are based on a plant size of 400 MW. Because of the differences in the economies of scale, the specific investment costs of the FT plant are slightly lower than those of the methanation plant. This in turn directly influences the generation costs of the energy carrier produced. Since Switzerland is a small country, we consider a 400 MW FT plant not as appropriate for Switzerland, but we include the FT facility to test the competitiveness in respect to the methanation plant in a separate section (section 5.5.4).

5.5.1 Oil price sensitivity analysis

Future oil prices are uncertain and difficult to predict.[108,109] Therefore, the price levels chosen in the scenarios analyzed here are illustrative and do not represent the endorsement of any particular oil price projection by the authors. Figure 61 shows the market share (primary energy use) of wood-based energy-technologies when oil and gas prices increase. In our scenarios the oil prices increase linearly from 28

US$ 2000 /bbl in 2000 to 100 US$ 2000 /bbl, 110 US$ 2000 /bbl, 120 US$ 2000 /bbl and 130

US$ 2000 /bbl in the year 2050 (OIL100 to OIL130 represents the oil prices 100

US$ 2000 /bbl to 130 US$ 2000 /bbl in 2050). The figure displays the primary-energy use of wood for the final year of the modelling horizon, 2050. The methanation plant produces heat with an efficiency of 10 % and bio-SNG with an efficiency of 55 %. In relation to that, the results indicate how much wood is used for the production of heat and bio-SNG. The figure also shows in which sectors the produced bio-SNG is used. 104 Complementary analyses

100 90 80 70 60 50 40 30 20 10 Primary Energy Consumption [PJ] Consumption Energy Primary 0 OIL 100 OIL 110 OIL 120 OIL 130 Biomass technologies: Methanation Plant (bio-SNG: Transportation Sector) Methanation Plant (bio-SNG: Residential Sector) Methanation Plant (Heat: All Sectors) Wood CHP (>2 MWel) Gasification

Figure 61: Primary-energy use of wood by different technologies for oil prices between 100 and 130 US$2000 /bbl in the year 2050. The Fischer-Tropsch synthesis is not included as an option.

Figure 61 labels the use of biomass by current technology standards as conventional technologies. In the year 2000, conventional technologies use biomass of 20 PJ (or about 20 % of the total theoretical wood potential) in Switzerland. 58 In our analysis these conventional technologies are limited by an upper ceiling of 20 PJ, i.e. as in the current use of wood. Hence, in this part of the analysis the technologies under investigation (Figure 58 to Figure 60) compete for the remaining amount of wood, which adds up to at least 80 PJ.

In Scenario OIL 100, where the oil price reaches 100 US$ 2000 /bbl in the year 2050, only the production of heat and electricity in a Combined Heat and Power (CHP) biomass plants is competitive in Switzerland. The first large (more than 2 MW) CHP gasification plant will be built in 2040. Thereafter the amount of wood converted to electricity and heat increases to about 6 PJ in 2050 (about 6 % of the total wood potential of Switzerland). In this scenario, neither the methanation plant nor any other biomass technology under investigation has the potential to penetrate the market. In the scenario OIL 110, the amount of wood used in CHP plants is much higher than in the previous case (about 25 PJ). The first investment will be made in the year

58 In the year 2000, the use of wood can be separated into single room heating systems (27 % of the total), building heating systems (25 %), automatic firing (38 %) and special firing (9%).[48,110] Complementary analyses 105

2030. Additionally to the CHP plant, the methanation plant becomes competitive. It should convert a total of 1.5 PJ wood into bio-SNG and heat carriers in 2050. In this case, wood is converted in the methanation plant into bio-SNG, which is used in the residential sector. In scenario OIL 120, four distinct effects take place. Firstly, CHP plants already start to be competitive in 2025 and methanation plants become competitive as of 2045. Secondly, the amount of wood converted in CHP plants to heat and electricity increases from 25 to about 29 US$/PJ. Thirdly, methanation plants increase their competitiveness on the Swiss market. By the year 2050, about 40 PJ of wood are converted to bio-SNG and heat. This time by far the largest share of bio-SNG is used in the transportation sector. Fourthly, the residential sector cannot solidify its importance. Moreover, if the oil price increases further to 130 US$ 2000 /bbl in the year 2050, the trends outlined in scenario OIL120 are in general terms confirmed. The results of the analysis suggest that methanation plants may become competitive at high prices of oil. Thus, provided that oil reaches a threshold price, favourable market conditions may appear for methanation plants to successfully penetrate the market. The threshold price of oil corresponds to the year in which the methanation plants start to penetrate the market and to the value of oil price at that year. This threshold is around the value of 110 US$ 2000 /bbl. Hence, the results from this part of the analysis indicate that if the oil price reaches 110 US$2000 /bbl or more, the methanation plants will be competitive enough to penetrate the market. However, if the oil price is below the threshold of 110 US$ 2000 /bbl, the methanation plants would require supporting policy measures to enter the market. Figure 62 shows the final-energy consumption by fuel in the transportation sector in the year 2050. We identify a clear shift from oil products to natural gas and bio-SNG. Oil products dominate the final-energy mix in the transportation sector in the baseline scenario and virtually no gaseous energy carriers (natural gas or bio-SNG) are consumed. In the scenarios OIL100 to OIL130, this has changed significantly. The share of natural gas and bio-SNG increased to about 19 to 37 %, depending on the scenario. 59 Generally speaking, under the assumption of increasing oil and gas prices, natural gas substantially increases its role in the transportation sector. With a high increase in oil and natural-gas prices in scenarios OIL120 to OIL130, a fraction

59 The increasing participation of natural gas and bio-SNG at the final-energy level is mainly driven by the introduction of gas-powered cars in the passenger car sub-sector. For an analysis of the conditions under which gas-powered vehicles can penetrate the Swiss market, see [111]. 106 Complementary analyses of this natural gas is replaced by bio-SNG. In the scenario OIL120 and OIL130, 5 % and 9 % of the gas transported in gas pipelines is bio-SNG.

450

400

350 Energy carriers: 300 bio-SNG Natural Gas 250 Electricity FT-Diesel 200 Diesel Gasoline 150 Avi. Gasoline

100 Final Energy Consumption [PJ] Consumption Energy Final

0 Basecase OIL 100 OIL 110 OIL 120 OIL 130

Figure 62: Final-energy consumption by fuel of the transport sector for oil prices between 100 and 130

US$ 2000 /bbl in the year 2050.

On average in the above described scenarios, the emissions are about 40.5 Mt CO 2 or 16 % lower than the emissions in the baseline scenario (oil price of 50 US$ 2000 /bbl in 2000). The reduction is influenced by two factors, namely fuel switching to cleaner fuels and investments in more efficient technologies. In total, the reduction amounts to 3.2 %, 6.3 %, 8.7 % and 9.3 % for the scenarios OIL100, OIL110, OIL120 and OIL130. A switch away from oil and gas production to electricity and heat is identified. These results illustrate the potential synergies that can exist between bio-SNG and natural gas. Specifically, the development of an infrastructure for transmission and distribution of natural gas and the promotion of gas-based technologies in the transportation sector can be beneficial for the introduction of bio-SNG. In its turn, bio- SNG can contribute to a hedging strategy against substantial oil and gas-price increases and to “greening” of natural gas by reducing CO 2 emissions. Complementary analyses 107

5.5.2 Oil price and subsidy sensitivity analysis of the methanation plant

In this section we analyse various subsidy levels to investigate an earlier market penetration of the methanation plant at less drastic increases in the fossil resource prices. Thereby, the focus is only on the penetration of the methanation plant – all other biomass technologies are not analysed in detail in this section. Figure 63 shows the result of this analysis. The three-dimensional graph shows the crude oil price in [US$/bbl] in the year 2050 on the x-axis, the level of subsidy in [US$/GJ] on the y-axis and the primary-energy consumption of biomass for the methanation plant in [PJ] on the z-axis. The primary consumption of biomass is the indicator for the competitiveness of the methanation plant. The graph can be read starting from the point representing an oil price of 50 US$ 2000 /bbl and a subsidy level of 0 US$ 2000 /GJ. This point represents the baseline described in the previous section. Starting from this point we could move along the x-axis and reach higher oil price keeping the subsidy level constant at 0 US$/GJ. At an oil price of 110 US$ 2000 /bbl we observe a first market penetration of the methanation plant. Increasing the oil price further results in a higher biomass consumption. In other words, the competitiveness of the methanation plant increases.

Additionally, we could keep the oil price constant at 50 US$ 2000 /bbl and increase the subsidy level, going along the y-axis, or we could choose any in-between scenario selecting a specific oil price and a specific level of subsidy. At an oil price of 50

US$ 2000 /bbl, the subsidy needs to reach 6 US$ 2000 /GJ (3.24 Rp/kWh) for the methanation plant to reach a competitive level. If, for example, the oil price is 80

US$ 2000 /bbl in 2050, the subsidy level must be 3 US$ 2000 /GJ. The competitiveness of all in-between scenarios for various oil prices is indicated by the ‘Market Penetration Threshold’-line in the figure. In other words, the ‘Market Penetration Threshold’ illustrates the oil price and the corresponding subsidies necessary for the methanation plant to be an economically attractive investment option in the energy sector. For all other combinations of oil prices and subsidy levels (e.g. 70 US$ 2000 /bbl and 2 US$ 2000 /PJ) below the ‘Market Penetration Threshold’, the plant is not an economically-viable option. The figure also shows an upper plain for very high oil prices and subsidies. This plain indicates that the maximum potential of biomass is used in Switzerland. 108 Complementary analyses

Baseline

Market Penetration Threshold 100

Primary Energy 60 Consumption [PJ] Biomass for Methanation 40 10 9 20 8 7 6 0 5 4 Subsidy 130 120 3 [US$ 2000 /GJ] 110 100 2 90 1 Oil price in 2050 80 70 0 [US$ 2000 /bbl] 60 50

Figure 63: Market penetration of the methanation plant for different oil prices and subsidies levels. The market penetration in the figure corresponds to the use of biomass for the Methanation processes expressed in [PJ].

As proven in this section, the introduction of subsidies helps to foster the market penetration of the methanation plant at oil prices below 110 US$ 2000 /bbl. Such subsidies directly support an earlier market penetration, while a carbon tax is an indirect support for the market penetration of the methanation plant. In a simplified form, the equation for the methanation plant to be competitive can be expressed as

Oil Price + Carbon Tax + Subsidies ≥ 110 US$ 2000 /bbl .

5.5.3 Investment cost sensitivity analysis of the methanation plant

The robustness of the result obtained so far can be analysed by conducting a sensitivity analysis on the investment costs for various oil prices. Figure 64 illustrates the results of the sensitivity analysis. The three-dimensional graph depicts the percent change of investment cost on the x-axis, the crude oil price in [US$ 2000 /bbl] in the year 2050 on the y-axis and the primary-energy consumption of biomass for the methanation plant in [PJ] on the z-axis. The percent investment cost changes are altered between -10 % and +10 % of the investment costs used for all other scenarios. The figure also illustrates the starting point of the analysis: 0 % in investment costs and an oil price of 110 US$ 2000 /bbl. This starting point corresponds to the same biomass consumption values shown in scenario OIL110 in Figure 61 and Complementary analyses 109 where the ‘Market Penetration Threshold’ line crosses the ‘Oil Price’ axis in Figure 63.

Starting Point 60

Primary Energy 30 Consumption [PJ] Biomass for Methanation 20

10 120 115 0 110 10 105 5 Oil Price 0 [US$ 2000 /bbl] -5 100 -10 Changes of Investment Costs [%]

Figure 64: Market penetration of the methanation plant for different investment cost (high, medium, low). The market penetration in the figure corresponds to the use of biomass for the Methanation processes expressed in [PJ].

The figure puts forwards the conclusion that changes in the oil price have a stronger effect than changes in investments costs. The change in investment costs only influences the results when the oil price is at 110 US$ 2000 /bbl. On the one hand, at an oil price of 110 US$ 2000 /bbl in 2050, the consumption of biomass (hence the market competitiveness) decreases when the investments cost become 5 % more expensive. On the other hand, when the investment cost decrease by 5 %, the consumption of biomass shows a large increase. For all other oil prices (100, 105,

115, 120 US$ 2000 /bbl) the investment-cost changes investigated here have no impact on the consumption of biomass. On the contrary, the oil-price changes in the year

2050 shows a differentiated result. When the oil price reaches 105 US$ 2000 /bbl, we do not observe any consumption of biomass, hence investment in the methanation plant is not economical, independent of the changes in investment costs. However, for an oil price of 115 US$ 2000 /bbl, we see biomass consumption of about 40 PJ for all assumed investment costs. Therefore, the threshold for the market penetration of the 110 Complementary analyses

methanation plant at around 110 US$ 2000 /bbl is confirmed, independent of the scrutinized investment-cost fluctuations.

5.5.4 The comparison of Fischer-Tropsch and methanation plants

In the last section we examined the competitiveness of the methanation plant and the FT Synthesis. For this analysis we assumed more moderate changes in the oil-price development and lower subsidies on methanation plants compared to the scenario sets described in the sections above. For all scenarios an oil price of 80 US$ 2000 /bbl in the year 2050 and a bio-SNG subsidy level of 4 US$/GJ (2.16 Rp/kWh) is chosen. Moreover, the analysis in this section also differs regarding the presence or absence of the modality (single product or co-production) of the FT facility. Figure 65 presents a summary of the primary-energy use of wood for the year 2050. As can be seen, when no investments can be made in the FT synthesis, the results clearly augment the production of bio-SNG. About 70 PJ of wood is converted to energy in methanation plants and about 84 % of the produced bio-SNG is used in the transportation sector. Bio-SNG in the transportation sector substitutes conventional- fuel cars such as diesel and gasoline cars whereas the amount of gas-driven cars increases proportionally. However, if investments in a FT facility are allowed and if this facility can co-produce electricity, it becomes more competitive than the bio-SNG plant 60 . It is important to note that this is only possible because the by-product electricity is dispatched to the Swiss electrical grid and can be sold to consumers. Electricity, compared to heat produced by the methanation plant, can be sold at higher prices and therefore the choice of investment is in favour of the FT synthesis. Because of the large amount of FT liquids, the amount of diesel cars in the transportation sector increases and the share of conventional gasoline cars drops significantly compared to the baseline scenario. Generally, these scenarios favour the FT synthesis, but the competitiveness of the FT synthesis plant is strongly dependent on the possibility of selling the co-product electricity and the creation of the infrastructure for a 400 MW plant.

60 The subsidies on bio-SNG remain at 5 US$/GJ (2.7 Rp/kWh). Complementary analyses 111

100 90 80 70 60 50 40 30 20 10

Primary Energy Consumption [PJ] Consumption Energy Primary 0 without Fischer-Tropsch with Fischer-Tropsch with Fischer-Tropsch as a co-production plant producing only FT diesel

Biomass technologies: Fischer-Tropsch Synthesis Methanation Plant (bio-SNG: Transportation Sector) Methanation Plant (bio-SNG: Residential Sector) Methanation Plant (Heat: All Sectors)

Figure 65: Primary-energy use of wood for an oil price of 80 US$ 2000 /bbl in 2050 and bio-SNG subsidies of 4 US$/GJ.

5.5.5 Remarks on the methantion plant

The scenarios examined the influence of such key factors as increases in the price of fossil fuels (oil and natural gas), introduction of subsidies for bio-SNG production and selected combinations of these factors. The results of our research suggest that with present cost estimates, bio-SNG is still not competitive when compared to currently dominating energy-generation technologies. In order to allow for a successful market penetration, cost reductions of methanation plants are required. Alternatively, high prices of oil and natural gas as well as subsidies for methanation plants would enable their introduction. The robustness of the results for the methanation plant was scrutinized using a sensitivity analysis for the methanation plant investments costs for various oil prices. Additionally we investigated the competition of methanation plants with Fischer-Tropsch (FT) installations. If no supporting policy measures are undertaken the oil price needs to reach about

110 US$ 2000 /bbl for bio-SNG to be competitive with conventional fuels. Using the sensitivity analysis for investment costs of the methanation plant confirms this result.

If oil is traded at 50 US$ 2000 /bbl in 2050, a subsidy of 6 US$/GJ is necessary to initialize a market penetration. Nonetheless, the most plausible scenario is reached 112 Complementary analyses by a combination of increasing oil prices and subsidies promoting the market penetration of bio-SNG. Thus, if the oil price reaches values around 80 US$ 2000 /bbl in 2050 and subsidies of 3 to 4 US$/GJ support the market penetration of bio-SNG, the fuel can have a significant impact on the Swiss energy system. The results of our analysis also suggest that a potential and very promising market for bio-SNG is the transportation sector. Unlike the residential sector where numerous alternative cost-effective technologies are already present, the transportation sector contains a vast market segment where bio-SNG technologies can take the leading role. Up to 37 % of the total fuel for transportation could be coming from a combination of natural gas and bio-SNG in 2050. At the same time, this scenario also introduces more efficient vehicle technologies. Hence, the synergetic use of natural gas and bio-SNG in the transportation sector can increase significantly and reduce the total final-energy consumption in this sector. The penetration of bio-SNG also depends on the competition with other alternative wood-based energy-technologies. Our analysis suggests that a biomass-fired facility, co-producing FT liquids and electricity, can be a more cost effective alternative than a facility co-producing bio-SNG and heat (not considering the logistic, environmental and public-acceptance issues that would be raised by a FT facility). The results of our analysis highlight the importance of exploring additional co-production strategies for bio-SNG, i.e. together with electricity. Conclusions and recommendations 113

6 Conclusions and recommendations

The overall goal of the dissertation was the assessment of intermediate steps towards the 2000-Watt society in Switzerland. The concept of a 2000-Watt society aims at consuming not more than 2000 Watts per capita (2 kW/Cap) of primary energy society. For the analysis the cost-optimization Swiss MARKAL model (SMM) is used. This energy-system model provides a detailed representation of all energy technologies and energy flows in Switzerland. In the course of the dissertation, the author provides insights into four main questions: 1) How much can the primary-energy per capita (PEC) consumption be lowered until 2050? We tried to find an upper reduction potential of the PEC consumption until 2050. 2) What are the cost-optimal technical choices until 2050? Each contemplated scenario suggests a set of technologies. In particular we analysed electricity- generation technologies, residential-heating systems (including energy saving measures) and the development of the Swiss car fleet.

3) Will energy-related CO 2 emissions reduce substantially? The emissions

reductions are compared to specific targets of only reducing CO 2 emissions as

well as combinations of PEC and CO 2 reduction targets. 4) What are the costs of reducing PEC consumption? By subtracting costs of each constrained scenario from the baseline scenario, we found the additional costs associated with each scenario policy.

6.1 The 2000-Watt society: Results from the Swiss MARKAL model

This section illustrates the results obtained from the modelling analysis. The four main results can be summarized as follows: 1) The PEC consumption target of 2000 Watts per capita should be seen as a long- term goal. During the first half of the century only intermediate steps towards the 2000-Watt society can be achieved (see section 6.1.1). 2) To achieve already intermediate steps requires a transformation of the energy use as we know it today. Thereby, the generation of electricity plays a key role. The contribution of nuclear energy and renewable energies is indispensable. In the residential sector the use of heat pumps and investments in energy-saving 114 Conclusions and recommendations

options will be necessary. In the transportation sector, hybrid diesel and natural gas cars will initiate important structural changes (see section 6.1.2).

3) All PEC consumption targets until 2050 can reduce CO 2 emissions to an equivalent of 5 % per decade at maximum. Less strong PEC targets have even

higher emissions. For significant CO 2-emission reductions, targets must be formulated explicitly (see section 6.1.2). 4) This transformation is associated with sizeable costs. Following PEC targets is

more expensive than following strict CO 2 reduction targets (see section 6.1.3).

6.1.1 Primary energy consumption and final energy implications

In the baseline scenario, without any limits on PEC consumption and an assumed oil price of 75 US$ 2000 /bbl, the consumption amounts to 5.2 kW/Cap in the year 2050. In comparison to today’s consumption of around 5.0 kW/Cap, we see a small consumption increase. Considering the strong demand increases in most energy sectors, this small increase in fact reflects large technological energy-efficiency improvements. However, these energy-efficiency improvements do not come close to what would be necessary under the umbrella of a 2000-Watt society. Without any political measures or incentives, the target of a 2000-Watt society is far away from reality. Before looking directly at the 2000-Watt society, a sensitivity analysis on oil prices is conducted. We investigate results for one case with a lower oil price of 50

US$ 2000 /bbl and two cases with higher oil prices of 100 and 125 US$ 2000 /bbl in 2050. At a lower oil price, the PEC consumption increases to 5.3 and at higher oil prices the PEC consumption decreases to 5.0 and 4.9 kW/Cap, respectively. The higher the oil price the more economical it is to invest in better energy-efficient technologies, the PEC (or kW/Cap) consumption decreases. However, even for expensive oil prices the PEC consumption remains at high levels. In order to find the maximum possible PEC reduction a detailed analysis is conducted. For all levels of oil prices, specific PEC reduction targets are implemented. Starting at 5.0 kW/Cap, the target is lowered stepwise by 0.5 kW/Cap until the possible maximum reduction is reached. For all scenarios, independent of the oil price, a PEC consumption of 3.5 kW/Cap could be achieved – the maximum reduction is confirmed. Conclusions and recommendations 115

Note that all PEC targets, such as the 3.5 kW/Cap target, are implemented only for the year 2050 without any intermediate targets. The model is then free to choose the investment level required to reach the goal without any premature phasing-out of existing capacities. This approach avoids excess cost penalties at earlier time periods. By looking at the PEC evolution over time, we can distinguish two development phases. The first phase starts in the year 2010 and lasts until 2040. The second phase mirrors the time period of 2040 until 2050. In the first phase, initial technological changes must be triggered. Compared to the first phase, the second phase is the more important one. In the second phase, profound changes must be undertaken in order to realize substantial reduction targets.

With respect to issues of global climate change, we investigate reasonable CO 2 emissions targets and combine them with the contemplated PEC objectives. The sensitivity analysis defines CO 2 reductions of 5 % and 10 % per decade, starting from the Swiss-Kyoto commitment in 2010. Compared to today’s energy-related CO 2 emissions, this implies a reduction of 30 and 45 % respectively. By tightening only

CO 2 targets, the PEC consumption reduces to values between 4.9 and 4.5 kW/Cap, depending on the oil price in the year 2050. Compared to present consumption, this implies a reduction of only 10 % at maximum. Hence, a CO 2 reduction alone does not sufficiently move into the direction of a 2000-Watt society. However, a combination of

CO 2 and PEC consumption targets is possible. Independent of the contemplated CO 2 reduction, a 3.5 kW/Cap target can be reached and still reflects the lower consumption limit in the year 2050. Considering that strong CO 2 targets can be reached without significantly lowering the consumption of energy, the goal of the 2000-Watt society remains a questionable instrument to achieve climate-change mitigation goals.

Implications for the final energy consumption

The energy-reduction constraints on PEC consumption influence the whole energy system of Switzerland. On the one hand, this is reflected by a reduction of the PEC. On the other hand, it is reflected by the final-energy (FE) consumption. In the baseline scenario, the FE consumption in the year 2050 amounts to 871 PJ. Again this consumption is highly dependent on the oil price if no additional CO 2 or kW/Cap goals are targeted. For the lower oil price of 50 US$ 2000 /bbl the consumption 116 Conclusions and recommendations

increases by 6 %, whereas for higher oil prices of 100 and 125 US$ 2000 /bbl the consumption reduces by 6 and 8 % respectively.

For combined CO 2 and PEC scenarios with strong targets, we also observe a decrease of FE consumption. Investments in energy-efficiency options in the FE sector take place to a large extend. Thereby, the highest investments in efficient technologies are made when these combined CO 2 and PEC targets are applied. For significant CO 2 reduction targets only, the FE consumption reduces by 16 % to about

735 PJ. For significant combined kW/Cap and CO 2 targets, the FE consumption reduces by more than 26 % to less than 650 PJ in 2050. The energy use of Switzerland is divided into five end-use sectors, each having several sub-sectors: Residential, transportation, industry, commercial and agriculture. All sectors have a different share of FE energy consumption and all sectors show different reduction levels. The most important sectors are the residential and the transportation sectors. These sectors are scrutinized in more detail within the scope of this analysis. The residential sector shows the highest energy reductions compared to all other sector. The total FE consumption of this sector is reduced to about 100 PJ in 2050. At an oil price of 75 US$ 2000 /bbl, this implies a reduction of 45 %. Major energy reductions are achieved in the residential heating (RH) sub- sector. Although this sub-sector remains to be the main consumer of energy, RH consumes only 43 PJ in 2050. The obtained reductions in the transportation sector are lower compared to the residential sector. Still, we observe significant reductions. Passenger cars remain to be the largest consumers in the transportation sector. While passenger cars use more than 160 PJ of FE in 2000, the consumption could reduce to around 110 PJ in 2050.

6.1.2 Technological change and CO 2 emissions

The analysis showed that during the first half of the century only intermediate steps towards the 2000-Watt society can be achieved. Even these intermediate steps are associated with a considerable transformation of the Swiss energy system in terms of both final-energy production and energy-demand technologies.

Conclusions and recommendations 117

Final energy production: Electricity

At the moment, the Swiss production of electricity is dominated by hydro und nuclear power and is nearly CO 2 free. In future, electricity will play an even more important role in a service-oriented society than today. Electricity can efficiently substitute other energy carriers, especially fossil energy carriers. Because of this, a CO 2 free electricity production will be of major concern for an overall effective reduction of CO 2 emissions in the future. A prime-example for an efficient substitution of fossil energy carriers with electricity is heat pumps. Electricity can also substitute for oil products and natural gas in many industrial processes. The question to be answered is: Should Switzerland invest in nuclear-energy technologies, highly-efficient gas-fired combined-heat-and-power (CHP) plants or renewable energies? Depending on the examined target, we observe different results.

Strong CO 2 reductions increase the electricity production and therefore the share of electricity in end-use sectors rises. A CO 2 reduction equivalent to 10 % per decade results in an electricity-production increase of more than 30 % in 2050 compared to the year 2000. Excluding the exported amount of electricity, we observe an increase of more than 45 % by 2050. For a 3500-Watt society in 2050, a large amount of energy-efficiency investments must be undertaken. Therefore, the increase in electricity production is not as strong as in the CO 2 reduction scenarios. In any case, the electricity production will increase from a today’s level of 57 TWh to 70 - 85 TWh in 2050, even with a PEC consumption reduction to 3.5 kW/Cap.

Without any CO 2 and PEC constraints, nuclear power is the most competitive option for the production of electricity. We attain the same results by implementing CO 2 reduction targets. However, the option of nuclear power disappears for strong PEC constraints. CHP plants are favoured taking into account an increase of CO 2 emissions. The reason is the comparably low efficiency of nuclear power stations. Of importance are also assumptions on primary-to-final energy-conversion equivalents of renewable energy technologies. Assuming an conversion equivalent of 100 %, such as in the newest SFOE statistics, the results favor renewable technologies compared to fossil-fuel technologies for PEC and combined PEC and CO 2 reduction targets. Nevertheless, the electricity-production structure is crucial for the CO 2 emission balance of Switzerland. All affordable and efficient measures against 118 Conclusions and recommendations climate change require the use of new renewable energies as well as nuclear power. At the same time the hydro-power potential must be used to its full extent.

Energy demand technologies: Residential heating and passenger cars

We investigated transformation changes in two end-use sectors, namely the residential and transportation sector. Especially dwelling houses and the vehicle fleet have to undergo significant transformations until 2050 if we want to reduce energy consumption and lower CO 2 emissions at the same time. Less heat consumption and more heat pumps as well as novel engine drives for cars would be the choice in the future. Today, more than 80 % of residential heat in private houses is generated by burning diesel and natural gas. We can largely avoid these heating systems even if the expected sum of the Heated Floor Areas (Energy Reference Floor Area - ERFA) increases by 40 % until 2050. Building energy-efficient houses and renovating houses based on the Swiss MINERGIE standards could reduce the energy demand to less than 40 % compared to today’s consumption. At the same time, by using heat pumps and district heat from centralised biomass and natural gas CHP plant, Switzerland would depend on fossil energy sources for room heating only to a very small degree. This would also lower the CO 2 emission in the residential sector by about 10 million tones, which is about 20 % of today’s Swiss CO 2 emissions. Buying more and more cars and driving more kilometres every year but at the same time wanting to reduce CO 2 emissions, the structure of today’s car fleet needs to change substantially. The car fleet would need to have drastically lower CO 2 emissions per driven vehicle-kilometre compared to today’s fleet. Hybrid engines could replace currently dominating gasoline and diesel internal-combustion engines.

They mark the most cost-effective replacement option, lowering CO 2 at the same time. Gasoline cars, with relative high fuel consumption, would have no future in a 3500-Watt society. Besides diesel cars, natural gas cars would penetrate the market as natural gas could be used in an efficient manner, also having lower CO 2 emissions. However, for a market penetration of natural gas cars, the development of an infrastructure supporting natural gas fuelling stations is indispensable.

For strong PEC and CO 2 reduction target, we also observe a first penetration of hydrogen cars (with hybrid and fuel-cell engines) in 2045. Even if the volume of traffic Conclusions and recommendations 119 increases by 40 % until 2050, we could achieve a FE reduction of one third and reduce CO 2 emissions by 5 million tones by following the technological pathway described before. However, the penetration of hydrogen fuel-cell cars largely depends on the price of fuel-cells and the stack size installed in passenger cars. The initial date for market penetration could already be around 2030 when the cost of fuel-cells is lower and light vehicles with an engine size of 50 kW are offered. In 2050, a market share of up to 21 % is possible.

6.1.3 Additional total system costs

The transformation of the energy system is not cost-free. Whereas less stringent PEC targets are still relatively cheap, strong targets are more expensive. At an oil price of 75 US$ 2000 /bbl in 2050, the additional costs to reach a 3500-Watt society 61 amount to about 20 billion US$ 2000 (~33 billion CHF 2000 ) . The costs are additional to the baseline costs at the same oil price and represent cumulative discounted costs.

These costs should be compared to a Kyoto-for-ever target (i.e. 5 % CO 2 reduction per decade), which has about the same CO 2 emissions in 2050. The costs to reach a

Kyoto-for-ever are about 15 billion US$ 2000 (~25 billion CHF 2000 ) or 5 billion US$ 2000

(~8 billion CHF 2000 ) less, see Figure 67. ] 50 2000 45 40 35 30 25 20 15 10 5 0

Figure 66: Total-system-costs increase for an Oil Price of 75US$ 2000 /bbl.

61 In the year 2000, the average exchange rate was 1.68846 CHF to 1 US$.[112] 120 Conclusions and recommendations

As mentioned above, strong CO 2 targets must be formulated explicitly. If a 10 % CO 2 reduction per decade is envisaged additional to the 3.5 kW/Cap target, the extra costs amount to about 40 billion US$ 2000 (~67 billion CHF 2000 ). The costs also highly depend on the oil price in the year 2050. Whereas for lower oil prices the additional costs increase to more than 45 billion US$ 2000 (~75 billion CHF 2000 ), for higher oil prices they reduce to about 35 billion US$ 2000 (~59 billion CHF 2000 ). However, despite of possible cost and technology synergies of combined PEC and CO 2 targets, to comply with strong CO 2 target is less expensive. A 10 % per decade CO 2 reduction costs between 15 and 30 billion US$ 2000 (~25 and 50 billion CHF 2000 ), depending on the oil price in 2050. Therefore, if the main argument in favour of the 3500-Watt society was CO 2 reduction, then the PEC target is questionable.

6.1.4 The influence of discount rates

For long-term policy making the choice of discount rates determines the present value of these policy-induced costs and benefits. Given controversial issues about discount rates, we study a low discount rate of 3 % (also used in the baseline scenario) and a high discount rate of 5 %. These different discount rates are applied to two scenario sets. The first scenario set represents non-constrained scenarios where neither PEC consumption nor CO 2 are limited. The second scenario set represents PEC constraint scenarios where a PEC consumption target of 3.5 kW/Cap is applied. The non-constrained scenarios show a relatively small but notable difference in the PE consumption. By decreasing the discount rate from 5 % to 3 % the PE consumption reduces by little more than 3 %. At the same time the amount of oil and gas consumed in 2050 is less due to investments in more capital-intensive and energy-efficient technologies. In turn, the total CO 2 emissions reduce by 7 % (from 40.3 to 37.7 Mt). On the contrary, the 3.5 kW/Cap constraint scenarios show in essence no difference in total PE consumption. This effect is reflected in the CO 2 emissions in 2050. The emissions differ by less than 0.3%. We can conclude that the discount-rate changes have only little effect on the PE consumption and on future- investment choices in Switzerland. Especially, a strong kW/Cap constraint already demands such capital-intensive technologies that a low discount does not show an additional effect in favour of these technologies. Conclusions and recommendations 121

6.1.5 Partial equilibrium with elastic demands

The partial equilibrium version of MARKAL assumes elastic end-use demands to their own prices. The core issue of this analysis is whether or how much more can the PEC consumption be reduced in comparison to the non-elastic demand evaluation? Evaluating the 3.5 kW/Cap PEC-consumption target using an elastic-demand approach, we attain different PEC consumption shares compared to the evaluation without elastic demands. The amount of fossil-fuel consumption reduces and nuclear energy gains share. For high oil prices, all energy demands, such as residential heating (RH) and driven kilometres of passenger cars, reduce. These reductions lead to a lower consumption of fossil fuels and are reflected in the PEC balance. As a result, the production of energy with lower-efficient technologies is possible. Note that the total PEC consumption is still limited to 3.5 kW/Cap. Therefore, instead of producing electricity by high-efficient gas power stations, electricity is produced by less efficient but also less costly nuclear power stations. Although the demand for energy reduces due to high energy prices, there is still a limit to the possible demand reduction. At maximum, we can reduce the PEC consumption to 3.0 kW/Cap in 2050. The 3.0 kW/Cap target can be obtained by reducing additional demand for electricity, which in turn lowers the PEC consumption However, note that even by achieving a 3.0 kW/Cap using elastic demands, new investment in nuclear power station or the extension of their decommissioning time is favoured.

6.2 Lessons learned

Even by following strict energy-efficiency strategies with the only objective to reduce the primary-energy per capita (PEC) consumption, a 2000-Watt society can only be achieved after the year 2050. At the moment one flight from Zürich to Los Angeles per person and year covers half the limit of a 2000-Watt society. Using the technologies at hand by the middle of the century, we could lower the primary-energy consumption to 3500 Watts per capita (or to 3000 Watts taking into account consumer’s behaviour to price changes) at maximum. The transition of the current energy system to a 2000-Watt society is highly ambitious. All targeted changes will not take place on their own. We would need goal-oriented measures from politics such that people change behaviour and invest in more efficient and cleaner 122 Conclusions and recommendations technologies. Already existing energy-efficiency labelling such as MINERGIE, energho or Eco-Driver® should be just a beginning. Additional labelling or even banning of inefficient technologies or subsidizing “intelligent technologies” (e.g. electronic control engineering in houses and for road and rail transportation) would be advantageous. At the same these measures would induce innovation from which the Swiss industry could profit. To consume less energy is surely important but does it make sense to put everything on one card: reduction of PEC consumption? By only reducing the PEC consumption, Switzerland does not reach the destination of a climate-friendly energy consumption and a sustainable reduction of CO 2 emissions in 2050. The import dependency on fossil-energy carriers and resulting CO 2 emissions remain critical. Renewable energies do not encounter a breakthrough. Therefore, it would be necessary to combine total PEC consumption targets with upper limits on CO 2 emissions. However, despite possible technological synergies, combined PEC and

CO 2 targets are available only at very high costs.

Reducing CO 2 emissions should actually be the overriding goal, although the energy consumption is higher. Due to climate political issues, CO 2 emissions should reduce by 50 % until 2050 at least. Therefore, the emissions must reduce by 10 % if not 15 % per decade, assuming that Switzerland reaches the Kyoto target in 2010. This overriding goal would also make the Swiss air cleaner, without penalizing renewable energies by a cap on the total energy consumption. Assuming that local pollutants are proportional to the consumption of fossil fuel, a CO 2 reduction by half also has significant co-benefit on local air quality without direct end-of pipe solutions. The earlier necessary changes are initiated the easier it will be to reach long-distance targets.

6.3 Outlook on future research

The results presented here have illustrated some guidelines on how to achieve intermediate steps towards the 2000-Watt society. For the analysis the cost- optimisation model Swiss MARKAL (SMM) is used and ready to answer further research questions. However, due to modelling and time limitations many aspects were generalized and based on assumption. Two areas of further research emerge from this study. The first area addresses issues relating to enhancing the modelling Conclusions and recommendations 123 framework. The second area addresses issues relating to extending the scope and profoundness of the selected policy-portfolio analysis. SMM could be coupled to a macro-economic model.[105] This way, the bottom-up representation of the energy system in SMM could better take into account parameters such as national income, unemployment, inflation, investment or international trade. Additionally, in view of the currently observed fluctuating energy prices, uncertainties of energy prices could be incorporated.[113] The impact of uncertain energy prices on the supply structures and the interaction with measures in the demand sectors could be of prime interest. The feedbacks from the behaviour of complex systems could be analysed using system dynamics models. For instance, the transportation sector is governed not only by most cost-effective options. Customer behaviour remains critical. Especially access to the fuelling network and available vehicle options are very important issues.[111] System dynamics models can help to analyze these important issues. Additional policy analysis could also offer numerous possibilities to verify and extend results and conclusions. Despite the variety of sensitivity analyses conducted here, an extended systematic sensitivity analysis might provide additional insights. The parameters which could be used for an additional sensitivity are: technology specific discount rates of future investments, price elasticises of demand sectors, efficiencies and costs of relevant future technologies and costs and potentials of energy carriers. Other areas of interest could be internalizing external costs or accounting for grey energy and other greenhouse gases (GHG). 124 References

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List of figures 133

List of figures

Figure 1: A possible development towards the 2000-Watt society [7] ...... 7 Figure 2: A simplified version of the Reference Energy System (RES) used in the energy-system Swiss-MARKAL model. T&D is an abbreviation for transmission and distribution...... 13 Figure 3: Primary-energy consumption in the baseline scenario for the period 2000 to 2050...... 19 Figure 4: Primary-energy per capita consumption for the period 1910 to 2050. The figure shows historic values for the time period 1910 until 2000 and values of the baseline projection for the time period 2000 until 2050. [17,55,56] ...... 20 Figure 5: Final-energy consumption by fuels in the baseline scenario for the period 2000 to 2050..... 21 Figure 6: Final-energy consumption by sectors in the baseline scenario for the period 2000 to 2050. 22 Figure 7: Electricity production in the baseline scenario for the time period 2000 to 2050...... 23 Figure 8: Correlation between electricity consumption and GDP for the time period 1980 to 2050. The time period 1980 to 2000 reflects statistical values and the time period 2000 to 2050 SMM values of the baseline scenario...... 24 Figure 9: Energy-related CO 2 emissions per sector in Switzerland for the period 2000 to 2050 in the baseline scenario...... 25 Figure 10: ERFA comparison ...... 29 Figure 11: Demolition rate and ERFA existing buildings...... 30 Figure 12: Energy demand existing buildings SFH (RH1) and MFH (RH3)...... 30 Figure 13: ERFA new buildings SFH (RH2) and MFH (RH4)...... 31 Figure 14: Average specific room-heating demand of new buildings built in a future period of time.... 32 Figure 15: Room-heating demand new buildings energy saving options ...... 33 Figure 16: Marginal-cost curves for SFH (left) and MFH (right) existing buildings ...... 35 Figure 17: Marginal-cost curves implementation for SFH existing buildings used for the model implementation...... 38 Figure 18: Marginal-cost curve of new buildings SFH – sketch ...... 40 Figure 19: Final-energy consumption of residential demand segments ...... 46 Figure 20: Detailed final-energy consumption of the residential heating sector [PJ]. Also depicted in the figure is the saved energy (grey area) due to improved insulation of roofs, windows, etc and the increase of the (useful-) energy demand. The energy demand (solid line) is illustrated in [per Unit], relative to the year 2000...... 47 Figure 21: Final-energy consumption of the residential sector [PJ] by fuel for all demand categories. 48 Figure 22: Demand increase of passenger cars in [%] ...... 54 Figure 23: Demand increase of other transportation modes in [%]...... 55 Figure 24: Final-energy consumption of transportation demand segments...... 58 Figure 25: Total final-energy consumption of the transportation sector...... 58 Figure 26: Primary energy per capita [kW/Cap] development for various kW/Cap targets in the year 2050 at an oil price of 75 US$2000/bbl in the year 2050...... 60 Figure 27: Total primary-energy consumption for an oil price of 75 US$ 2000 /bbl in the year 2050...... 61 Figure 28: CO 2 Emissions of different scenarios in the year 2050...... 62 Figure 29: Total Final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of 75 US$ 2000 in 2050 ...... 63 Figure 30: Total final-energy consumption of the residential sector in 2050...... 65 Figure 31: Total final-energy consumption of the residential heating sector...... 66 Figure 32: Final-energy savings of the residential sector in 2050...... 67 Figure 33: Specific-heating demand of an average residential house for an oil price of 75 US$ 2000 /bbl and without a primary energy constraint...... 68 Figure 34: Specific-heating demand of an average residential house for an oil price of 75 US$ 2000 /bbl and a primary energy constraint of 3.5 kW/Cap ...... 69 Figure 35: Detailed final-energy consumption of the residential heating sector [PJ] for an oil price of 75 US$ 2000 /bbl and a primary energy target of 3.5 kW/Cap in 2050...... 70 Figure 36: Comparison of energy demand, final energy consumption and ERFA for an oil price of 75 US$ 2000 /bbl and a primary energy target of 3.5 kW/Cap in 2050...... 71 Figure 37: Final-energy consumption of the transport sector in 2050...... 72 Figure 38: Final-energy consumption of passenger cars in 2050 ...... 73 Figure 39: Detailed final-energy consumption of passenger cars [PJ] for an oil price of 75 US$ 2000 /bbl and a primary energy target of 3.5 kW/Cap in 2050...... 73 Figure 40: CO 2 emission targets ...... 74 Figure 41: Primary energy per capita [kW/Capita] for an oil price of 50 US$ 2000 /bbl in 2050 ...... 76 134 List of figures

Figure 42: Primary energy per capita [kW/Cap] consumption for oil prices of 50 and 100US$/bbl 2000 , no and 10% per decade CO 2 reductions as well as no and 3.5kW/Cap primary energy constraints. 78 Figure 43: Primary energy per capita [kW/Cap] consumption for an Oil Price of 125 US$/bbl 2000 , various CO 2 limits and a primary per capita constraint of 3.5kW/Cap...... 79 Figure 44: Primary energy per capita [kW/Cap] development for various kW/Cap and CO 2 targets in the year 2050 at an oil price of 75 US$2000/bbl in the year 2050 ...... 80 Figure 45: Detailed final-energy consumption of the residential heating sector [PJ] for an oil price of 75 US$ 2000 /bbl, a primary energy target of 3.5 kW/Cap in 2050 and a CO 2 reduction target of 10 % 82 Figure 46: Comparison of energy demand, final energy consumption and ERFA for an oil price of 75 US$ 2000 /bbl, a primary energy target of 3.5 kW/Cap in 2050 and a CO 2 reduction target of 10 % 82 Figure 47: Detailed final-energy consumption of passenger cars [PJ] for an oil price of 75 US$ 2000 /bbl and a primary energy target of 3.5 kW/Cap in 2050 and a CO 2 reduction target of 10 %...... 83 Figure 48: Electricity production [TWh] for an oil price of 75 US$ 2000 /bbl and various CO 2 emission and primary energy targets...... 85 Figure 49: Primary energy consumption [PJ] of renewable energy technologies for various CO 2 and kW/Cap limits and an oil price of 75 US$ 2000 /bbl...... 86 Figure 50: Primary energy consumption [PJ] of wood technologies for an oil price of 75 US$ 2000 /bbl. A 3.5 kW/Cap target and 10 % CO 2 reduction are applied...... 87 Figure 51: Total-system-costs increase for an Oil Price of 75US$ 2000 /bbl ...... 88 Figure 52: Annual total-system-costs increase for an oil price of 75US$ 2000 /bbl ...... 90 Figure 53: Primary energy per capita [kW/Cap] consumption for an oil price of 75 US$ 2000 /bbl with discount rates (dr) of 3 and 5 % as well as no kW/Cap target and a 3.5 kW/Cap target ...... 93 Figure 54: Final-energy consumption of passenger cars at an oil price of 75US2000/bbl, 3.5 kW/Cap primary energy and a CO 2 reduction constraint of 10 % per decade. Fuel stack price is assumed to be 300US$/kW in 2010 and the size of one fuel cell is 50 kW...... 95 Figure 55: Partial equilibrium model with elastic demands (based on [98,99])...... 98 Figure 56: Primary energy per capita [kW/Cap] consumption for an oil price of 75 US$ 2000 /bbl with and with elastic demand calculations ...... 100 Figure 57: Wood-based process chains for bio-fuel production from wood considered in the SWISS- MARKAL model. CNG stands for compressed natural gas and ICE stands for internal combustion engine...... 101 Figure 58: Wood-based process chains for combined heat and power (CHP) production considered in the SWISS-MARKAL model. For simplicity, transmission and distribution processes are not shown in the diagram...... 102 Figure 59: Wood-based process chains for heat production considered in the SWISS-MARKAL model. The abbreviation SFH stands for Single Family Houses. For simplicity, transmission and distribution processes are not shown in the diagram...... 102 Figure 60: Primary-energy use of wood by different technologies for oil prices between 100 and 130 US$ 2000 /bbl in the year 2050. The Fischer-Tropsch synthesis is not included as an option...... 104 Figure 61: Final-energy consumption by fuel of the transport sector for oil prices between 100 and 130 US$ 2000 /bbl in the year 2050...... 106 Figure 62: Market penetration of the methanation plant for different oil prices and subsidies levels. The market penetration in the figure corresponds to the use of biomass for the Methanation processes expressed in [PJ]...... 108 Figure 63: Market penetration of the methanation plant for different investment cost (high, medium, low). The market penetration in the figure corresponds to the use of biomass for the Methanation processes expressed in [PJ]...... 109 Figure 64: Primary-energy use of wood for an oil price of 80 US$ 2000 /bbl in 2050 and bio-SNG subsidies of 4 US$/GJ...... 111 Figure 65: Total primary-energy consumption development for various kW/Cap targets and an oil price of 50 US$ 2000 /bbl...... 144 Figure 66: Total primary-energy consumption development for various kW/Cap targets and an oil price of 75 US$ 2000 /bbl...... 144 Figure 67: Total primary-energy consumption development for various kW/Cap targets and an oil price of 100 US$ 2000 /bbl...... 145 Figure 68: Total primary-energy consumption development for various kW/Cap targets and an oil price of 125 US$ 2000 /bbl...... 145 Figure 69: Primary-energy consumption per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 50US$ 2000 /bbl ...... 146 Figure 70: Primary-energy consumption per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl ...... 146 List of figures 135

Figure 71: Primary-energy consumption per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl ...... 147 Figure 72: Primary-energy consumption per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl ...... 147 Figure 73: Total final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of 50 US$ 2000 /bbl ...... 148 Figure 74: Total final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of 75 US$ 2000 /bbl ...... 148 Figure 75: Total final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of 100 US$ 2000 /bbl ...... 149 Figure 76: Total final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of 125 US$ 2000 /bbl ...... 149 Figure 77: Final-energy consumption per sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl ...... 150 Figure 78: Final-energy consumption per sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl ...... 150 Figure 79: Final-energy consumption per sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl ...... 151 Figure 80: Final-energy consumption per sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl ...... 151 Figure 81: Final-energy consumption per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl ...... 152 Figure 82: Final-energy consumption per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl ...... 152 Figure 83: Final-energy consumption per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl ...... 153 Figure 84: Final-energy consumption per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl ...... 153 Figure 85: Final-energy consumption residential sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl ...... 154 Figure 86: Final-energy consumption residential sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl ...... 154 Figure 87: Final-energy consumption residential sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl ...... 155 Figure 88: Final-energy consumption residential sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl ...... 155 Figure 89: Final-energy consumption residential heating in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl ...... 156 Figure 90: Final-energy consumption residential heating in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl ...... 156 Figure 91: Final-energy consumption residential heating in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl ...... 157 Figure 92: Final-energy consumption residential heating in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl ...... 157 Figure 93: Final-energy consumption transportation sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl ...... 158 Figure 94: Final-energy consumption transportation sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl ...... 158 Figure 95: Final-energy consumption transportation sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl ...... 159 Figure 96: Final-energy consumption transportation sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl ...... 159 Figure 97: Final-energy consumption passenger cars in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl ...... 160 Figure 98: Final-energy consumption passenger cars in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl ...... 160 Figure 99: Final-energy consumption passenger cars in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl ...... 161 Figure 100: Final-energy consumption passenger cars in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl ...... 161 Figure 101: Electricity production per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl...... 162 136 List of figures

Figure 102: Electricity production per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl...... 162 Figure 103: Electricity production per fuel in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl...... 163 Figure 104: Electricity production per fuel in 2050 for various kW/Cap and CO2 targets and an oil price of 125 US$2000/bbl ...... 163 Figure 105: Total system costs increase for an oil price of 50 US$ 2000 /bbl...... 164 Figure 106: Total system costs increase for an oil price of 75 US$ 2000 /bbl...... 164 Figure 107: Total system costs increase for an oil price of 100 US$ 2000 /bbl...... 165 Figure 108: Total system costs increase for an oil price of 125 US$ 2000 /bbl...... 165 Figure 109: Total system costs increase over time for various CO 2 targets and an oil price of 50 US$ 2000 /bbl ...... 166 Figure 110: Total system costs increase over time for various CO 2 targets and an oil price of 75 US$ 2000 /bbl ...... 166 Figure 111: Total system costs increase over time for various CO 2 targets and an oil price of 100 US$ 2000 /bbl ...... 167 Figure 112: Total system costs increase over time for various CO 2 targets and an oil price of 125 US$ 2000 /bbl ...... 167 Figure 113: Total system costs increase over time for various CO 2 targets, a 3.5 kW/Cap target and an oil price of 50 US$ 2000 /bbl ...... 168 Figure 114: Total system costs increase over time for various CO 2 targets, a 3.5 kW/Cap target and an oil price of 75 US$ 2000 /bb ...... 168 Figure 115: Total system costs increase over time for various CO 2 targets, a 3.5 kW/Cap target and an oil price of 100 US$ 2000 /bb ...... 169 Figure 116: Total system costs increase over time for various CO 2 targets, a 3.5 kW/Cap target and an oil price of 125 US$ 2000 /bbl ...... 169

List of tables 137

List of tables

Table 1: Prices for fossil energy resources as assumed in this study. For a better understanding, the oil price is given both in US$/GJ and in US$/bbl...... 15 Table 2: Demand segments of the residential sector...... 26 Table 3: Final-energy consumption 2000 – split by demand segments and fuels ...... 26 Table 4: Future heating technologies ...... 28 Table 5: Five-year period renovation rates of existing buildings [%]...... 37 Table 6: End-use demand of residential demand segments [PJ]...... 42 Table 7: Adratios residential sector ...... 44 Table 8: Demand segments of the transportation sector ...... 49 Table 9: Fuel consumption of the transportation sector in [PJ] in 2000 ...... 51 Table 10: Stock of vehicles [1000 Vehicels]...... 52 Table 11: Changes of stock of vehicles due to tank tourism [1000 Vehicles] ...... 52 Table 12: Kilometres per vehicle travelled per annum [Vkm/ Vehicle / a]...... 52 Table 13: Average efficiency of vehicles 2000 [Lt/100km] ...... 52 Table 14: Conversion factors PJ to Lt for different fuels ...... 52 Table 15: Total Final-energy consumption vehicles...... 53 Table 16: Demand segments of other transportation modes...... 55 Table 17: Adratios transportation sector ...... 56

138 Appendix

Appendix 1: Technological description of room-heating technologies

Oil Natural Gas Heat Pump Pellets Biomass Pellets / Oil / Natural Gas / District Heat Sole Air Water Solar Solar Solar Room-Heating Single-Family Houses Existing Building (RH1)

INVCOST [mUS$ 2000 /PJ/a] 297.0 288.6 412.6 334.9 438.4 379.9 424.5 475.5 410.0 364.1 -

FIXOM [mUS$ 2000 /PJ/a] 7.4 9.8 12.7 10.3 11.5 13.7 13.7 14.7 9.4 10.8 - η [%] 0.98 0.99 3.40 2.60 4.00 0.82 0.82 0.82 0.98 0.99 - Room-Heating Single-Family Houses New Building (RH2)

INVCOST [mUS$ 2000 /PJ/a] 298.9 295.4 422.6 342.7 441.2 389.0 427.2 487.0 419.9 372.9 -

FIXOM [mUS$ 2000 /PJ/a] 7.8 9.1 9.7 10.0 9.9 15.3 13.7 16.3 9.8 10.1 - η [%] 0.98 0.99 3.40 2.60 4.00 0.82 0.82 0.82 0.98 0.99 - Room-Heating Multi-Family Houses Existing Buildings (RH3)

INVCOST [mUS$ 2000 /PJ/a] 101.8 100.2 214.3 138.1 185.0 130.4 158.0 164.6 148.0 131.5 228.2

FIXOM [mUS$ 2000 /PJ/a] 2.1 4.5 6.4 4.8 5.6 9.8 9.8 10.8 3.1 5.5 4.1 η [%] 0.98 0.99 3.60 2.80 4.00 0.85 0.85 0.85 0.98 0.99 0.86 Room-Heating Multi-Family Houses New Buildings (RH4)

INVCOST [mUS$ 2000 /PJ/a] 103.4 101.6 217.3 140.0 187.8 132.2 160.4 166.9 150.1 133.3 231.7

FIXOM [mUS$ 2000/PJ/a] 2.6 4.5 6.4 5.0 5.6 10.9 10.9 11.9 3.6 5.5 4.1 η [%] 0.98 0.99 3.60 2.80 4.00 0.85 0.85 0.85 0.98 0.99 0.86

References: [114], [115], [116], [117], [69], own assumptions INVCOST: Investment Costs; FIXOM: Fixed Costs; η: Efficiency Appendix 139

Appendix 2: Technological description of passenger cars

Investment costs O&M Costs Efficiency Fuel Engine [mil. US$ 2000 /bil. v-km] [mil. US$ 2000 /bil. v-km] [bil. v-km/PJ] Gasoline Internal Combustion Engine 1292.2 25.8 0.53 Electric Hybrid 1410.3 28.2 0.61 Hybrid Fuel Cell 5297.3 105.9 0.62 Diesel Internal Combustion Engine 1053.2 21.1 0.56 Electric Hybrid 1135.3 22.7 0.68 Compressed Natural Internal Combustion Engine 1340.8 26.8 0.52 Gas Electric Hybrid 1401.6 28.0 0.68 Hydrogen Internal Combustion Engine 1551.5 31.0 0.60 Electric Hybrid 1595.8 31.9 0.67 Fuel Cell 4341.1 86.8 1.06 Hybrid Fuel Cell 4414.2 88.3 1.19

References: [97,98] bil.: billon mil.: million v-km: vehicle kilometers

140 Appendix

Appendix 3: Biomass technology description

Technology Electric Thermal Capacity Investment Fixed O&M Costs Variable O&M Plant Factor Efficiency [%] Efficiency [%] [MW] Costs [CHF/kW] Costs [Rp/kWh] [hours/year] [CHF/kW] Methanation 55 (bio-SNG) 10 100 1583 55.4 0.198 8000 10 45 (FT 400 1553 54.3 0.194 8000 Fischer-Tropsch (FT) Synthesis Diesel) Decentralized CHP 40 40 0.5 1500 52.5 0.375 4000 Wood CHP (<2MWe) Gasification 25 50 8 2000 70 0.5 4000 Wood CHP (<2MWe) Combustion 12 65.3 0.45 7815 273.5 1.95 4000 Wood CHP (>2MWe) Gasification 43.3 42.9 138.5 2200 77 0.55 4000 Wood CHP (>2MWe) Combustion 12.4 63.2 26.6 596 20.9 0.149 4000 Gas heating in SFH - 100 10 1500 52.5 0.75 2000 Wood chips heating (50 kWth) - 80 0.05 1700 59.5 0.85 2000 Wood chips heating (300 kWth) - 80 0.3 750 26.25 0.375 2000 Wood chips heating (1000 kWth) - 80 1.0 500 17.5 0.25 2000 Pellet heating in SFH - 95 0.01 2500 87.5 1.25 2000 Wood chips + Nat. Gas Combustion 45 - 75 2000 70 0.25 8000

References : [51,118-121]

Appendix 141

Appendix 4: Final-energy calibration of the Swiss MARKAL model (SMM) to SFOE and IEA statistic of the year 2000

SFOE [1] Oil Products Electricity Gas Coal Wood / Charcoal District heat Waste Other renewable energies Total Residential 121.0 56.6 36.3 0.1 8.6 4.6 0.0 3.4 230.6 Industry 41.5 65.1 31.9 5.6 7.0 5.6 11.4 0.4 168.5 Commerce 51.7 53.8 21.2 0.0 3.5 3.0 4.4 2.1 139.6 Transport 293.3 9.5 0.0 0.0 0.0 0.0 0.0 0.0 302.8 Non-Energy Use 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other non-specified 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Agriculture 3.0 3.6 5.8 0.1 0.9 0.1 0.0 0.4 13.9 Total 510.4 188.5 95.2 5.9 20.0 13.3 15.7 6.3 855.3 IEA [49] Oil Products Electricity Gas Coal Wood / Charcoal District heat Waste Other renewable energies Total Residential 124.3 56.6 36.3 0.5 8.9 4.6 0.0 3.5 234.6 Industry 42.5 65.1 37.5 10.1 6.8 5.6 11.3 0.3 179.3 Commerce 56.3 53.8 21.2 0.0 3.4 3.0 0.0 0.6 138.3 Transport 286.0 9.5 0.0 0.0 0.0 0.0 0.0 0.0 295.5 Non-Energy Use 18.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 18.1 Other non-specified 4.5 0.0 4.1 0.0 0.0 0.1 0.0 0.0 8.8 Agriculture 6.1 3.6 0.0 0.0 0.9 0.0 0.0 0.4 11.0 Total 537.8 188.6 99.1 10.6 20.0 13.3 11.3 4.8 885.5 SMM Calibration Oil Products Electricity Gas Coal Wood / Charcoal District heat Waste Other renewable energies Total Residential 121.5 55.1 37.9 0.4 8.5 5.1 0.0 3.5 232.1 Industry 44.8 63.9 36.9 5.7 7.4 5.3 12.3 0.0 176.3 Commerce 52.5 55.2 20.4 0.0 3.3 3.1 0.0 0.5 135.0 Transport 293.3 9.5 0.0 0.0 0.0 0.0 0.0 0.0 302.8 Non-Energy Use 16.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.4 Other non-specified 4.7 5.3 0.0 0.0 0.0 0.0 0.0 10.1 Agriculture 5.7 3.4 0.0 0.0 0.9 0.0 0.0 0.4 10.5 Total 538.9 187.2 100.6 6.2 20.1 13.5 12.3 4.4 883.2

Unit: [PJ] 142 Appendix

Appendix 5: Oil-price sensitivity

The results present here comprise various model results, including primary-energy consumption, final-energy consumption, electricity consumption and total-system costs. Each result is illustrated for oil prices of 50, 75, 100 and 125 US$ 2000 /bbl in the year 2050. In detail, the following results presented comprise:

Appendix 5.1: Primary Energy Balances • Total primary-energy consumption development for various kW/Cap targets • Primary-energy consumption per energy carrier in 2050 for various kW/Cap

and CO 2 targets

Appendix 5.2: Final Energy Balances • Total final-energy consumption developments for various kW/Cap targets

• Final-energy consumption per sectors in 2050 for various kW/Cap and CO 2 targets

• Final-energy consumption per energy carriers in 2050 for various kW/Cap and

CO 2 targets

• Final-energy consumption residential sector in 2050 for various kW/Cap and

CO 2 targets • Final-energy consumption residential heating in 2050 for various kW/Cap and

CO 2 targets • Final-energy consumption transportation sector in 2050 for various kW/Cap

and CO 2 • Final-energy consumption passenger cars in 2050 for various kW/Cap and

CO 2 targets

Appendix 5.3 Electricity Balance

• Electricity production in 2050 for various kW/Cap and CO 2 targets

Appendix 5.4: Total System Costs

• Total system costs increase for an oil price of 100US$ 2000 /bbl

• Total system costs increase over time for various CO 2 targets Appendix 143

• Total system costs increase over time for various CO 2 targets and a 3.5 kW/Cap target 144 Appendix

Appendix 5.1: Primary-energy balances

No kW/Cap target 5.0 kW/Cap target 3 4.5 kW/Cap target 4.0 kW/Cap target 3.5 kW/Cap target 2

1 Primary Energy per Capita [kW/Cap] Capita per Energy Primary

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 67: Total primary-energy consumption development for various kW/Cap targets and an oil price of 50

US$ 2000 /bbl.

No kW/Cap target 5.0 kW/Cap target 3 4.5 kW/Cap target 4.0 kW/Cap target 3.5 kW/Cap target 2

1 Primary Energy per Capita [kW/Cap] Capita per Energy Primary

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 68: Total primary-energy consumption development for various kW/Cap targets and an oil price of 75

US$ 2000 /bbl. Appendix 145

No kW/Cap target 5.0 kW/Cap target 3 4.5 kW/Cap target 4.0 kW/Cap target 3.5 kW/Cap target 2

1 Primary Energy per Capita [kW/Cap] Capita per Energy Primary

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 69: Total primary-energy consumption development for various kW/Cap targets and an oil price of 100

US$ 2000 /bbl.

No kW/Cap target 5.0 kW/Cap target 3 4.5 kW/Cap target 4.0 kW/Cap target 3.5 kW/Cap target 2

1 Primary Energy per Capita [kW/Cap] Capita per Energy Primary

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 70: Total primary-energy consumption development for various kW/Cap targets and an oil price of 125

US$ 2000 /bbl. 146 Appendix

6.0 5.5

5.0 Energy 4.5 carriers: 4.0 Renewables 3.5 Hydro Nuclear 3.0 Natural Gas 2.5 Oil 2.0 Coal 1.5

Primary [kW/Capita] Energy 1.0 0.5 0.0

PEC target 5.0 5.0 kW 5.0 kW 5.0 kW 4.5 kW 4.5 kW 4.5 kW 4.0 kW 4.0 kW 4.0 kW 3.5 kW 3.5 kW 3.5 kW 5.3 kW (No5.3Limit) kW (No4.9Limit) kW (No4.9Limit) kW 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 71: Primary-energy consumption per energy carriers in 2050 for various kW/Cap and CO 2 targets and an oil price of 50US$ 2000 /bbl.

6.0 5.5 5.0 Energy 4.5 carriers: 4.0 Renewables 3.5 Hydro Nuclear 3.0 Natural Gas 2.5 Oil 2.0 Coal 1.5

Primary [kW/Capita] Energy 1.0 0.5 0.0 PEC target 5.0 5.0 kW 5.0 kW 5.0 kW 4.5 kW 4.5 kW 4.5 kW 4.0 kW 4.0 kW 4.0 kW 3.5 kW 3.5 kW 3.5 kW 5.2 kW (No5.2Limit) kW (No4.9Limit) kW (No4.8Limit) kW 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 72: Primary-energy consumption per energy carriers in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl. Appendix 147

6.0 5.5

5.0 Energy 4.5 carriers: 4.0 Renewables 3.5 Hydro Nuclear 3.0 Natural Gas 2.5 Oil 2.0 Coal 1.5

Primary Energy [kW/Capita] EnergyPrimary 1.0 0.5 0.0 PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.0Limit) kW (No 4.9Limit) kW (No 4.7Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 73: Primary-energy consumption per energy carriers in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl.

6.0 5.5

5.0 Energy 4.5 carriers: 4.0 Renewables 3.5 Hydro Nuclear 3.0 Natural Gas 2.5 Oil 2.0 Coal 1.5

Primary Energy [kW/Capita] EnergyPrimary 1.0 0.5 0.0 PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 4.9Limit) kW (No 4.8Limit) kW (No 4.6Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 74: Primary-energy consumption per energy carriers in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl.

148 Appendix

Appendix 5.2: Final-energy balances

1000

900

800

700

600 No kW/Cap target 5.0 kW/Cap target 500 4.5 kW/Cap target 4.0 kW/Cap target 400 3.5 kW/Cap target

300

200 Total Final- Energy Consumption [PJ] Consumption Energy Final- Total 100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 75: Total final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of 50

US$ 2000 /bbl.

1000

900

800

700

600 No kW/Cap target 5.0 kW/Cap target 500 4.5 kW/Cap target 4.0 kW/Cap target 400 3.5 kW/Cap target

300

Final-Energy Consumption [PJ] Consumption Final-Energy 200

100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 76: Total final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of 75

US$ 2000 /bbl.

Appendix 149

1000

900

800

700

600 No kW/Cap target 5.0 kW/Cap target 500 4.5 kW/Cap target 4.0 kW/Cap target 400 3.5 kW/Cap target

300

Final-Energy Consumption [PJ] Consumption Final-Energy 200

100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 77: Total final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of

100 US$ 2000 /bbl.

1000

900

800

700

600 No kW/Cap target 5.0 kW/Cap target 500 4.5 kW/Cap target 4.0 kW/Cap target 400 3.5 kW/Cap target

300

Final-Energy Consumption [PJ] Consumption Final-Energy 200

100

0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 78: Total final-energy consumption [PJ] developments for various kW/Cap targets and an oil price of

125 US$ 2000 /bbl. 150 Appendix

1000

900

800 Sectors: 700 Industrial Transport 600 Residential 500 Commercial Agriculture 400 Other non-specified 300 Non-Energy Use

200 Final-Energy Consumption Final-Energy[PJ] Consumption 100

PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.3Limit) kW (No 4.9Limit) kW (No 4.9Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 79: Final-energy consumption per sectors in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl.

1000

900

800 Sectors: 700 Industrial Transport 600 Residential 500 Commercial Agriculture 400 Other non-specified 300 Non-Energy Use

200 Final-Energy Consumption Final-Energy[PJ] Consumption 100

PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.2Limit) kW (No 4.9Limit) kW (No 4.8Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 80: Final-energy consumption per sectors in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl. Appendix 151

1000

900

800 Sectors: 700 Industrial Transport 600 Residential 500 Commercial Agriculture 400 Other non-specified 300 Non-Energy Use

200 Final-Energy Consumption Final-Energy[PJ] Consumption 100

PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.0Limit) kW (No 4.9Limit) kW (No 4.7Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 81: Final-energy consumption per sectors in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl.

1000

900

800 Sectors: 700 Industrial Transport 600 Residential 500 Commercial Agriculture 400 Other non-specified 300 Non-Energy Use

200 Final-Energy Consumption Final-Energy[PJ] Consumption 100

PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 4.9Limit) kW (No 4.8Limit) kW (No 4.6Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 82: Final-energy consumption per sectors in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl. 152 Appendix

1000

900 Energy 800 carriers: Renewables 700 Wood 600 Coal Gas 500 Electricity 400 Oil Waste 300 Heat 200 Final-Energy Consumption Final-Energy[PJ] Consumption 100

PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.3Limit) kW (No 4.9Limit) kW (No 4.9Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 83: Final-energy consumption per energy carriers in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl.

1000

900 Energy 800 carriers: Renewables 700 Wood 600 Coal Gas 500 Electricity 400 Oil Waste 300 Heat 200 Final-Energy Consumption Final-Energy[PJ] Consumption 100

0 PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.2Limit) kW (No 4.9Limit) kW (No 4.8Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 84: Final-energy consumption per energy carriers in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl. Appendix 153

1000

900 Energy 800 carriers: Renewables 700 Wood 600 Coal Gas 500 Electricity 400 Oil Waste 300 Heat 200 Final-Energy Consumption Final-Energy[PJ] Consumption 100

0 PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.0Limit) kW (No 4.9Limit) kW (No 4.7Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 85: Final-energy consumption per energy carriers in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl.

1000

900 Energy 800 carriers: Renewables 700 Wood 600 Coal Gas 500 Electricity 400 Oil Waste 300 Heat 200 Final-Energy Consumption Final-Energy[PJ] Consumption 100

PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.2Limit) kW (No 4.9Limit) kW (No 4.8Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 86: Final-energy consumption per energy carriers in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl. 154 Appendix

300

250 Energy carriers & savings: Energy Savings 200 Renewables Heat 150 Wood Gas Electricity 100 Oil

50 Final Energy Consumption [PJ] ConsumptionEnergyFinal

PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.3Limit) kW (No 4.9Limit) kW (No 4.9Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 87: Final-energy consumption residential sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl.

300

250 Energy carriers & savings: Energy Savings 200 Renewables Heat 150 Wood Gas Electricity 100 Oil

50 Final Energy Consumption [PJ] Consumption Energy Final

0 PEC target 5.0 5.0 kW 5.0 kW 5.0 kW 4.5 kW 4.5 kW 4.5 kW 4.0 kW 4.0 kW 4.0 kW 3.5 kW 3.5 kW 3.5 kW 5.2 kW (No5.2Limit) kW (No4.9Limit) kW (No4.8Limit) kW 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 88: Final-energy consumption residential sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl. Appendix 155

300

250 Energy carriers & savings: Energy Savings 200 Renewables Heat 150 Wood Gas Electricity 100 Oil

50 Final Energy Consumption [PJ] ConsumptionEnergyFinal

0 PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 5.0Limit) kW (No 4.9Limit) kW (No 4.7Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 89: Final-energy consumption residential sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl.

300

250 Energy carriers & savings: Energy Savings 200 Renewables Heat 150 Wood Gas Electricity 100 Oil

50 Final Energy Consumption [PJ] ConsumptionEnergyFinal

0 PEC target 5.0kW 5.0kW 5.0kW 4.5kW 4.5kW 4.5kW 4.0kW 4.0kW 4.0kW 3.5kW 3.5kW 3.5kW 4.9Limit) kW (No 4.8Limit) kW (No 4.6Limit) kW (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 90: Final-energy consumption residential sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl. 156 Appendix

200

175 Energy 150 carriers:

Biomass 125 Other Oil 100 Heat Natural Gas 75 Electricity

50 Final [PJ] Consumption Energy 25

0 5.3 4.9 4.9 5.0 5.0 5.0 4.5 4.5 4.5 4.0 4.0 4.0 3.5 3.5 3.5 kW kW kW kW kW kW kW kW kW kW kW kW kW kW kW PEC target (No (No (No Limit) Limit) Limit) 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 91: Final-energy consumption residential heating in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl.

200

175 Energy 150 carriers:

Biomass 125 Other Oil 100 Heat Natural Gas 75 Electricity

50 Final Energy Consumption [PJ] Consumption Energy Final 25

0 5.2 4.9 4.8 5.0 5.0 5.0 4.5 4.5 4.5 4.0 4.0 4.0 3.5 3.5 3.5 kW kW kW kW kW kW kW kW kW kW kW kW kW kW kW PEC target (No (No (No Limit) Limit) Limit) 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 92: Final-energy consumption residential heating in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl. Appendix 157

200

175 Energy 150 carriers:

Biomass 125 Other Oil 100 Heat Natural Gas 75 Electricity

50 Final [PJ] Consumption Energy 25

0 5.0 4.9 4.7 5.0 5.0 5.0 4.5 4.5 4.5 4.0 4.0 4.0 3.5 3.5 3.5 kW kW kW kW kW kW kW kW kW kW kW kW kW kW kW PEC target (No (No (No Limit) Limit) Limit) 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 93: Final-energy consumption residential heating in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl.

200

175 Energy 150 carriers:

Biomass 125 Other Oil 100 Heat Natural Gas 75 Electricity

50 Final [PJ] Consumption Energy 25

0 4.9 4.8 4.6 5.0 5.0 5.0 4.5 4.5 4.5 4.0 4.0 4.0 3.5 3.5 3.5 kW kW kW kW kW kW kW kW kW kW kW kW kW kW kW PEC target (No (No (No Limit) Limit) Limit) 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 94: Final-energy consumption residential heating in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl. 158 Appendix

350

300

250 Energy carriers:

200 Hydrogen Gas Electricity 150 Oil

100

Final [PJ] Consumption Energy 50

0 5.3 4.9 4.9 5.0 5.0 5.0 4.5 4.5 4.5 4.0 4.0 4.0 3.5 3.5 3.5 PEC target kW kW kW kW kW kW kW kW kW kW kW kW kW kW kW (No (No (No Limit) Limit) Limit) CO2 limit 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10%

Figure 95: Final-energy consumption transportation sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl.

350

300

250 Energy carriers:

200 Hydrogen Gas Electricity 150 Oil

100

Final [PJ] Consumption Energy 50

0 5.2 4.9 4.8 5.0 5.0 5.0 4.5 4.5 4.5 4.0 4.0 4.0 3.5 3.5 3.5 PEC target kW kW kW kW kW kW kW kW kW kW kW kW kW kW kW (No (No (No Limit) Limit) Limit) CO2 limit 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10%

Figure 96: Final-energy consumption transportation sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl. Appendix 159

350

300

250 Energy carriers:

200 Hydrogen Gas Electricity 150 Oil

100

Final [PJ] Consumption Energy 50

Figure 97: Final-energy consumption transportation sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl.

350

300

250 Energy carriers:

200 Hydrogen Gas Electricity 150 Oil

100

Final [PJ] Consumption Energy 50

Figure 98: Final-energy consumption transportation sector in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl. 160 Appendix

150

125 Energy carriers: 100 Hydrogen Natural Gas 75 Gasoline Diesel 50

Final [PJ] Consumption Energy 25

Figure 99: Final-energy consumption passenger cars in 2050 for various kW/Cap and CO 2 targets and an oil price of 50 US$ 2000 /bbl.

150

125 Energy carriers: 100 Hydrogen Natural Gas 75 Gasoline Diesel 50

Final [PJ] Consumption Energy 25

Figure 100: Final-energy consumption passenger cars in 2050 for various kW/Cap and CO 2 targets and an oil price of 75 US$ 2000 /bbl. Appendix 161

150

125 Energy carriers: 100 Hydrogen Natural Gas 75 Gasoline Diesel 50

Final [PJ] Consumption Energy 25

Figure 101: Final-energy consumption passenger cars in 2050 for various kW/Cap and CO 2 targets and an oil price of 100 US$ 2000 /bbl.

150

125 Energy 100 carriers: Hydrogen Natural Gas 75 Gasoline Diesel 50

Final [PJ] Consumption Energy 25

Figure 102: Final-energy consumption passenger cars in 2050 for various kW/Cap and CO 2 targets and an oil price of 125 US$ 2000 /bbl. 162 Appendix

Appendix 5.3: Electricity balance

70 Electricity production technologies:

60 Biomass Cogeneration Natural Gas Cogeneration 50 Solar Power Wind Turbines Biomass Thermal 40 Conventional Thermal and Others Nuclear Power 30 Hydro Power Electricity Production [TWh] Production Electricity

PEC target 5.0 kW 5.0 kW 5.0 kW 5.0 kW 4.5 kW 4.5 kW 4.5 kW 4.0 kW 4.0 kW 4.0 kW 3.5 kW 3.5 kW 3.5 5.3 kW (No Limit) kW5.3 (No Limit) kW4.9 (No Limit) kW4.9 (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 103: Electricity production in 2050 for various kW/Cap and CO 2 targets and an oil price of 50

US$ 2000 /bbl.

70 Electricity production technologies:

PEC target 5.0 kW 5.0 kW 5.0 kW 5.0 kW 4.5 kW 4.5 kW 4.5 kW 4.0 kW 4.0 kW 4.0 kW 3.5 kW 3.5 kW 3.5 5.2 kW (No Limit) kW5.2 (No Limit) kW4.9 (No Limit) kW4.8 (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 104: Electricity production in 2050 for various kW/Cap and CO 2 targets and an oil price of 75

US$ 2000 /bbl. Appendix 163

70 Electricity production technologies:

PEC target 5.0 kW 5.0 kW 5.0 kW 5.0 kW 4.5 kW 4.5 kW 4.5 kW 4.0 kW 4.0 kW 4.0 kW 3.5 kW 3.5 kW 3.5 5.0 kW (No Limit) kW5.0 (No Limit) kW4.9 (No Limit) kW4.7 (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 105: Electricity production in 2050 for various kW/Cap and CO 2 targets and an oil price of 100

US$ 2000 /bbl.

70 Electricity production technologies:

PEC target 5.0 kW 5.0 kW 5.0 kW 5.0 kW 4.5 kW 4.5 kW 4.5 kW 4.0 kW 4.0 kW 4.0 kW 3.5 kW 3.5 kW 3.5 4.9 kW (No Limit) kW4.9 (No Limit) kW4.8 (No Limit) kW4.6 (No 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% CO2 limit

Figure 106: Electricity production in 2050 for various kW/Cap and CO2 targets and an oil price of 125 US$2000/bbl. 164 Appendix

Appendix 5.4: Total system costs ] 50 2000 45 40 35 30 25 Series1 20 15 10 5 0

PEC target Additional Total-System Costs [billion US$ [billion Costs Total-System Additional 5.0 5.0 target kW 5.0 target kW 5.0 target kW 4.5 target kW 4.5 target kW 4.5 target kW 4.0 target kW 4.0 target kW 4.0 target kW 3.5 target kW 3.5 target kW 3.5 target kW 5.3 kW (No Limit) 4.9 kW (No Limit) 4.9 kW (No Limit) 0% 5%10% 0% 5%10% 0% 5%10% 0% 5%10% 0% 5%10% CO2 limit

Figure 107: Total system costs increase for an oil price of 50 US$ 2000 /bbl.

] 50 2000 45 40 35 30 25 Series1 20 15 10 5 0

PEC target Additional Total-System Costs [billion US$ [billion Costs Total-System Additional 5.0 5.0 target kW 5.0 target kW 5.0 target kW 4.5 target kW 4.5 target kW 4.5 target kW 4.0 target kW 4.0 target kW 4.0 target kW 3.5 target kW 3.5 target kW 3.5 target kW 5.2 kW (No Limit) 4.9 kW (No Limit) 4.8 kW (No Limit) 0% 5%10% 0% 5%10% 0% 5%10% 0% 5%10% 0% 5%10% CO2 limit

Figure 108: Total system costs increase for an oil price of 75 US$ 2000 /bbl. Appendix 165 ] 50 2000 45 40 35 30 25 Series1 20 15 10 5 0

PEC target Additional Total-System Costs [billion US$ [billion Costs Total-System Additional 5.0 5.0 target kW 5.0 target kW 5.0 target kW 4.5 target kW 4.5 target kW 4.5 target kW 4.0 target kW 4.0 target kW 4.0 target kW 3.5 target kW 3.5 target kW 3.5 target kW 5.0 kW (No Limit) 4.9 kW (No Limit) 4.7 kW (No Limit) 0% 5%10% 0% 5%10% 0% 5%10% 0% 5%10% 0% 5%10% CO2 limit

Figure 109: Total system costs increase for an oil price of 100 US$ 2000 /bbl.

] 50 2000 45 40 35 30 25 Series1 20 15 10 5 0

PEC target Additional Total-System Costs [billion US$ [billion Costs Total-System Additional 5.0 5.0 target kW 5.0 target kW 5.0 target kW 4.5 target kW 4.5 target kW 4.5 target kW 4.0 target kW 4.0 target kW 4.0 target kW 3.5 target kW 3.5 target kW 3.5 target kW 4.9 kW (No Limit) 4.8 kW (No Limit) 4.6 kW (No Limit) 0% 5%10% 0% 5%10% 0% 5%10% 0% 5%10% 0% 5%10% CO2 limit

Figure 110: Total system costs increase for an oil price of 125 US$ 2000 /bbl. 166 Appendix

Additional Total-System Costs [billion US$2000] [billion Costs Total-System Additional -5 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

5 % CO2 limit 10 % CO2 limit

Figure 111: Total system costs increase over time for various CO 2 targets and an oil price of 50 US$ 2000 /bbl.

Additional Total-System Costs [billion US$2000] [billion Costs Total-System Additional -5 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

5 % CO2 limit 10 % CO2 limit

Figure 112: Total system costs increase over time for various CO 2 targets and an oil price of 75 US$ 2000 /bbl.

Appendix 167

Additional Total-System Costs [billion US$2000] [billion Costs Total-System Additional -5 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

5 % CO2 limit 10 % CO2 limit

Figure 113: Total system costs increase over time for various CO 2 targets and an oil price of 100 US$ 2000 /bbl.

Additional Total-System Costs [billion US$2000] [billion Costs Total-System Additional -5 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

5 % CO2 limit 10 % CO2 limit

Figure 114: Total system costs increase over time for various CO 2 targets and an oil price of 125 US$ 2000 /bbl.

168 Appendix

Additional Total-System Costs [billion US$2000] [billion Costs Total-System Additional -10 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

no CO2 limit 5 % CO2 limit 10 % CO2 limit

Figure 115: Total system costs increase over time for various CO 2 targets, a 3.5 kW/Cap target and an oil price of 50 US$ 2000 /bbl.

Additional Total-System Costs [billion US$2000] [billion Costs Total-System Additional -10 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

no CO2 limit 5 % CO2 limit 10 % CO2 limit

Figure 116: Total system costs increase over time for various CO 2 targets, a 3.5 kW/Cap target and an oil price of 75 US$ 2000 /bbl. Appendix 169

Additional Total-System Costs [billion US$2000] [billion Costs Total-System Additional -10 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

no CO2 limit 5 % CO2 limit 10 % CO2 limit

Figure 117: Total system costs increase over time for various CO 2 targets, a 3.5 kW/Cap target and an oil price of 100 US$ 2000 /bbl.

Additional Total-System Costs [billion US$2000] [billion Costs Total-System Additional -10 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total

no CO2 limit 5 % CO2 limit 10 % CO2 limit

Figure 118: Total system costs increase over time for various CO 2 targets, a 3.5 kW/Cap target and an oil price of 125 US$ 2000 /bbl. 170 Curriculum Vitae

Curriculum Vitae

Name: Thorsten Frank Schulz Date of birth: January 13th, 1977 Place of birth: Darmstadt, Germany Nationality: German

Academic qualifications

PhD studies in Energy Policy Assessment

Swiss Federal Institute of Technology (ETH) Zurich, Switzerland 01/2004 – 06/2007

• Degree: Dr. sc. ETH Zürich

• Topic: Intermediate Steps towards the 2000-Watt Society in Switzerland: An Energy-Economic Scenario Analysis

Graduate studies in Environmental Engineering

University of Stuttgart, Germany 10/1997 – 09/2003

• Degree: Dipl.-Ing.

• Topic: Integrated Environmental and Climatic Strategies for the South African Electricity Sector

Abitur

Justus-Liebig-School, Darmstadt, Germany 09/1995 – 06/1997

• German university entrance degree

High School Graduation Diploma

Crocus Plains Regional Secondary School, Brandon, Canada 08/1994 – 07/1995

• Year 12 certificate

Scholarships

Country-Foundation Baden-Württemberg Scholarship 04/2003 – 08/2003

• Research exchange to the Energy Research Centre (ERC), University of Cape Town (UCT), South Africa

German Academic Exchange Service (DAAD) Scholarship 02/2001 – 12/2001

• Academic student exchange to the Energy Research Centre (ERC), University of Cape Town (UCT), South Africa

Curriculum Vitae 171

Selected Publications and Technical Reports

Schulz T.F., Kypreos S. Barreto L., Wokaun A.: Intermediate Steps towards the 2000-Watt Society in Switzerland: An energy-economic scenario analysis . Energy Policy (2007), submitted, July 2007.

Bauer C., Schulz T.F., Hirschberg S., Jermann M., Wokaun A.: The 2000-Watt-Society: Standard or guidepost? . Energie-Spiegel, Facts for the Energy Decisions of Tomorrow, Nr. 18, ISSN 1661-5115, Paul Scherrer Institute, Villigen, Switzerland, April 2007.

Schulz T.F., Barreto L., Kypreos S. Sticki S.: Assessing wood-based synthetic natural gas technologies using the SWISS-MARKAL model. Energy (2007), doi:10.1016/j.energy.2007.03.006, March 2007.

Barreto L., Schulz T.F., Kypreos S.: Impact of CO 2 Constraints on the Swiss Energy System: A long- term Analysis with the Swiss-MARKAL Model. Contribution to the NCCR-Climate WP4 Report to the Swiss Federal Office for the Environment (FOEN) on "Climate Vulnerability and Policy in a Post-Kyoto World". Energy Economics Group, Laboratory for Energy Systems Analysis, The Energy Departments, Paul Scherrer Institute, Villigen, Switzerland, January 2007.

Schulz T.F., Kypreos S.: Country Report for Switzerland, Description of the Swiss-TIMES model for the New Energy Externatlities Development for Sustainability (NEEDS). Final Country Report for Research Stream 2a: Energy systems modelling and internalisation strategies, including scenario building. Energy Economics Group, Laboratory for Energy Systems Analysis, The Energy Departments, Paul Scherrer Institute, Villigen, Switzerland, December 2006.

Wokaun A., Kypreos S., Barreto L., Krzyzanowski D.A., Rafaj P., Schulz T.F.: Strategies for a Cost- Efficient Climate Protection Policy (in German). Boxenstopp – der Tagungsband, 17. May 2005. NFS Klima, Schweizer Klimaforschung, Bern, Switzerland, 2005.

Stucki S., Vogel F., Biollaz S., Schulz T.F., Bauer C.: SFOE Energy Perspectives Biomass, Renewable Energy, and new Nuclear Plants: Potentials and Costs, BFE Energieperspektiven Biomasse, Erneuerbare Energien und neue Nuklearanlagen: Potenziale und Kosten (in German). PSI Scientific Report Nr. 05-04, ISSN 1019-0643. Paul Scherrer Institute (PSI) for the Swiss Federal Office of Energy (SFOE), Villigen, Switzerland, May 2005.

Schulz T.F., Barreto L., Kypreos S., Wokaun A.: Steps Towards a 2000 Watt Society. PSI Scientific Report 2004, Volume V, ISSN 1423-7342. Energy Economics Group, General Energy Research Department, Paul Scherrer Institute (PSI), Villigen, Switzerland, March 2005.

Schulz T.F.: Integrated Environmental and Climatic Strategies for the South African Electricity Sector. Master Thesis, Diplomarbeit. Energy Research Centre (ERC), University of Cape Town (UCT), South Africa and Institute of Energy Economics and Rational Use of Energy (IER), University of Stuttgart, Germany, September 2003.

Selected Conference Proceedings

Schulz T.F., Barreto L., Kypreos S., Stucki S.: Assessing Wood-Based Synthetic Natural Gas (Bio- SNG) Technologies. Poster presentation at the NCCR Climate Summer School, Grindelwald, Switzerland, 27 August – 1 September 2006.

Schulz T.F, Barreto L., Kypreos S., Stucki S.: Assessing Wood-Based Synthetic Natural Gas Technologies using the Swiss-MARKAL model. International Energy Workshop organized by Research Centre (ERC) University of Cape Town, Energy Modeling Forum (EMF) Stanford University, International Energy Agency (IEA) and the International Institute for Applied System Analysis (IIASA), Cape Town, South Africa, 27-29 June 2006.

Schulz T.F., Kypreos S., Barreto L., Wokaun A.: Steps towards the 2000 Watt Society in Switzerland. Energy Technology System Analysis Programme (ETSAP) Workshop, Florence, Italy, 11. November 2004.