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Nordic Energy in Europe – a way forward

Clean, Competitive and Connectedby

Nordic Action Group on Climate and Energy

European Climate Foundation24 September 2013

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Nordic Action Group on Climate and Energy

Hördur Arnarson CEO, Landsvirkjun, IcelandCarl Bennet Chairman, Getinge, SwedenIngrid Bonde CFO, deputy CEO Vattenfall , SwedenAnders Eldrup Former CEO DONG Energy, Chairman Copenhagen

Cleantech, Denmark Henrik Ehrnrooth Chairman, Caverio, Pöyry och YIT, FinlandUlrik Federspiel Executive Vice President Haldor Topsoe A/S,

Denmark Anders Olsson Deputy CEO E.ON Norden, Sweden

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Background and assumptions

• The Nordic countries are comparably far in transition to sustainable energy

• Nordic governments aim at Zero emission targets for 2050 (IEA interpretation)

• This will necessitate very large investments in renewables, transmission, energy efficiency and transport systems

• A proactive, bottom-up approach from Nordic Business can lead to competitive strength for the Nordic region

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Main message

• The Nordic countries have a story to tell in the EU– especially the trans boundary electricity market

• We can do more - and it is more efficient if cooperating closer

• There is a potential for further increase in renewable energy in the Nordics, at competitive prices – a portfolio with potential for net export and balancing electricity market in northern Europe

• The transition will need a gradually higher price on CO2

• Nordic Green Industrial Clusters can develop further and grow

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Content

1. A Nordic Energy Way2. A Nordic Energy Road Map – we can do more– High efficiency/Low Energy Economy– A Nordic Battery and Renewable Energy Hub– Nordpool 3.0

3. A Nordic Voice – there is a story to tell4. A Nordic Funding Model and Incentives5. Nordic Green Industrial Cluster

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2.1 High Efficiency EconomyHigh potential. Many measures already profitable but do not happen...• Transport sector• Housing sector• Industry and Service Sector

Recommendations• Take lead in early market for electric cars.• Pioneering region in electrification of roads.• Nordic building standards, gradually strengthened towards zero.• Use the EU compulsory energy declaration as a basis for targets

based on Nordic best practice.• Nordic voluntary scheme for energy improvements for industries,

including tax incentives and sharing of know-how.

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2.2 Nordic Battery and Renewable Energy Hub

Capacity to export renewable energy (electricity, maybe biofuels) as well as a balancing region on the European markets

Recommendations• Increase integration across Nordic renewable support

schemes• Utilize co-operation mechanism within the EU RES directive• Technology specific support only for non mature technologies• New transmission investments within Nordic counties and to

continental Europe

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A thought experiment

• Assume export of 50-100 TWh of renewable electricity (IEA/Nordic Energy Research.)

• Yearly export earnings of € 50-100 million.• Reducing European CO2 emissions by 40-90 million tonnes

(replacing coal condensing power)

• Reduced cost for European climate policy• Increase potential for wind and solar in northern Europe.• Direct yearly cost benefits for Nordic business and

households relative to continental Europe• Industrial development, improved investment climate,

innovation, jobs creation, stronger competitiveness etc. in the Nordic countries.

Export electricity price the lowest assumption among IEA main scenarios, USD 136/MWh

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2.3 Nordpool 3.0

The worlds first and most successful multinational power market. 3.0 comes with flexible supply, export of surplus and flexible demand in real time.

Recommendations• Design the Nordic market to retain and develop

flexibility.• Promote Nordic solutions for Europen market

design.• Strengthen R&D efforts to adapt Nordpool to the

emerging energy scene.

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3. A Nordic Voice

Nordic governments and business should join forces to develop a strong voice for

• …an open, single, interconnected European electricity market

• …the economic benefits for all by avoiding isolated, national capacity markets

• broader use of taxation on carbon and stricter application of the EU-ETS

• …Nordic market model design for use in the EU.

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4.1 Increased price on carbon

The key is carbon pricing.Recommendations:• A wider use of carbon taxation within the EU as

well as a stricter application of the EU ETS in order to raise the end price for using fossil fuels

• Nordic countries can show the way by pursuing a further shift to tax on energy and carbon emissions.

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4.2 Investment opportuntities

Recommendations• Bring together a large number of national and

Nordic entities under a “Nordic Energy Financing Center”, not to replace present institutions but to take a leading role in coordinating the present institutional set-up.

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4.3 Nordic Energy Research

• Bring together smaller actors under a common and strengthened head institution, for example Nordic Energy Research, which could then more effectively perform its tasks as a contributor and coordinator.

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5. Nordic Energy Green Clusters with potential

• Wind power - focus on cold climate, off shore and forested areas.

• Climate efficient biofuels from indigenous sources.• Electrification of transport including vehicles,

charging infrastructure and electrification of roads.• Combined operation of heat and electric power

systems, including efficient use of heat pumps.• Smart electrical grids combining IT with power.• Solar power solutions.

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Possible following steps

• Dialogue with governments and other stake holders

• Contribute to a (northern) European discussion

• Deepening of some proposals.– the industrial perspectives

• Studies of economic benefits, quantified?Possibly even modelling of connected grids (including heat grids)?

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Swedish Climate Policy Update

• On track to 2020 targets• Roadmap to zero net emissions 2050– not yet any targets between 2020 and 2050

• Vehicle fleet independent of fossil fuels by 2030 – proposed strategy in december

• International initiatives– short lived green house gases– climate economy – the benefit of action