Final Report Summary - CASCADE MINTS (CAse Study Comparisons And Development of Energy Models for INtegrated Technology Systems)
The CASCADE MINTS was a project that deals explicitly with the role of technical change and policies designed to promote it in enabling the evolution of the energy system towards sustainable paths. It was a modelling project that delivers enhanced quantitative tools and quantitative analysis with a potential for policy support.
Fuel cells and the prospects for the transformation of the energy system by hydrogen as a carrier have in recent years attracted enormous interest from industry, policy makers and society at large. In many quarters, this technological nexus is viewed as a panacea for solving the widest range of problems characterising the energy system. The analysis of an eventual transition towards a hydrogen economy requires an integrated analytical framework. Part 1 of the project has undertaken the creation of such a framework that enables the analysis of the prospects of the hydrogen economy within the overall energy system in an unbiased fashion.
A wide range of problems characterise the present energy system, including global and local pollution, resource depletion, security of supply concerns and doubts concerning the sustainability of present options in electricity production. CO2 capture and storage, renewable and nuclear energy forms have been widely recognised as important options in promoting sustainability (especially tackling climate change and improving security of supply). Part 2 of the CASCADE MINTS project has brought together a number of the leading energy, economic and environmental modelling teams in Europe (together with some institutes in the United States and Japan that are associated more loosely) with the aim to inform the debate on the prospects of transformation of the European and world energy system towards sustainability, while providing important analytical background for the formulation of energy and environmental strategy.
The consensus of the CASCADE MINTS project indicates that a hydrogen based energy system offers the best prospects for overcoming petroleum dominance of road transport. This is a crucial segment of the energy market and a major source of security of supply concerns as well as environmental sustainability especially in the form of pernicious urban air pollution problems. Potential applications in other sectors also exist that could create a snowball effect facilitating production capacity and infrastructure development. A key feature of an eventual transition towards a hydrogen based economy is that on the one hand it constitutes a distinct and radically different technical economic energy system configuration but on the other does not imply a radical change in patterns of energy use. This latter feature means that there is a small likelihood of social (as opposed to technical and economic) barriers being encountered in the path to such a transition.
The prospects for the hydrogen economy will depend to a very large extent on technological developments concerning applications of fuel cells, production, conversion, delivery and storage of hydrogen. Considerable effort in the context of CASCADE MINTS has been devoted in developing, establishing and monitoring the technological background information to be used by partners in extending their models to describe all possible configurations of a hydrogen economy. To this end, a broad survey of fuel cell and hydrogen-related technologies and their applications has been undertaken, identifying the critical performance characteristics and indicating prospects for future improvement. While discarding the options that are most suitable for very small scale applications (with large potential markets but relatively small potential impact on the energy system) a wide range of options has been identified according to their suitability for conquering different segments of energy markets. The assessment of the technologies in terms of their prospects has been based on both the basic component performance (from the reformer or hydrogen storage point down to the energy service provided) and the overall system characteristics.
A future hydrogen-based energy system will not necessarily be a less energy intensive system. Gross inland consumption in general will not be greatly affected and will even increase in cases where stationary applications are promoted. This is the case because gains in efficiency arising from the use of fuel cells are counterbalanced by transformation losses in the production of hydrogen itself. The use of CCS in production means even lower conversion efficiencies. On the other hand, an eventual hydrogen based energy system would in general be environmentally friendly:
- It clearly reduces local atmospheric pollution strains. Concerns about the latter could even provide an impetus for hydrogen introduction even in cases where it is uneconomic.
- It would also be compatible with global climate mitigation, because of high efficiencies in final use combined with a wide spectrum of possibilities for very low carbon intensity in hydrogen production (e.g. CCS, biomass).
All model based scenario results have shown that a stronger climate policy favours the introduction of hydrogen without on the other hand being the decisive factor.
According to results from the CASCADE MINTS project hydrogen in general and fuel cells in the key road transport sector are unlikely to emerge before 2030, gain significant shares (e.g. 10 % of vehicle stock) before 2040 and be a dominant choice before 2050. Many scenarios produced conditions of take-off during the decade before 2050, suggesting that the prospects of a massive introduction improve beyond.
Extensive scenario analysis in CASCADE MINTS broadly indicates that supportive policies such as selective and discriminating taxation, subsidies on infrastructure even when applied in very strong doses are inadequate for producing drastic results in the absence of rapid technical progress. On the other hand, such measures would tend to be superfluous in the presence of such progress. At any rate, such policies would in general tend to be costly both in terms of the economy as a whole (diversion of investments towards hydrogen infrastructure) and on government budgets (loss of taxation revenue, subsidies).
In contrast to the above, additional R&D aimed at inducing technical change in demand technologies has been shown to accelerate developments at a considerably lower cost than other supportive policies. For example, a tenfold increase in R&D for fuel cells during the 2007-2015 period has been shown to bring forward developments by about 15 years. It can be reasonably assumed that large scale additions to R&D outlays will have to come from the private sector motivated by high expected sales. However, there are diminishing returns to such increases in R&D effort (the rate of return on R&D investment declines with its size). These diminishing returns notwithstanding, additional R&D tends to reduce the risk of failure. This could be an important consideration in view of the highly speculative nature of the effort undertaken.
The objectives of PART 2 of the project were:
- to address policy questions that are currently relevant to the main stakeholders, i.e. policymakers and their policy advisors, with emphasis on the EU and global level;
- to investigate the role of different policies fostering deployment of more advanced and climate-friendly or climate-neutral energy technologies in improving security of supply and reducing GHG emissions.
To achieve these objectives, a wide range of existing models has been applied to build scientific consensus on the impacts of policies aimed at promoting sustainable energy systems - in particular, through technological developments. The main objective of the approach chosen was to perform a synthesis of the policy cases analysed by various models. Some of these models have comparable methodologies and scope; others complement each other, such as economic models and energy system models. Next, consensus among the modellers has been sought concerning the results presented and the main policy messages.
The case studies have shown that high oil and gas prices induce a shift towards solid fuels, as coal is a cheaper and more abundant alternative to other fossil fuels (oil and gas), with more and more applications, not only for power generation, but through a gasification process also for synthetic fuels that can be used for transportation. The use of coal potentially is a threat to the environment, and it needs clean technologies such as CCS to prevent environmental drawbacks. Furthermore, coal mining is also not always done in a sustainable way.
The role of nuclear power largely depends on the public and political acceptance of this option. The scenarios analysed in this report have shown that, when this acceptance is no limiting factor, and investment costs drop with 25 %, nuclear energy could have a share up to 50 % in the European power generation mix, and 30 % in the global power mix, as it is attractive in terms of costs and hardly generates polluting emissions. Conditions for increased acceptance would therefore comprise the development of inherent safe reactor systems, better utilisation of fissile material and shortening of waste lifetime. The scenarios also show that a nuclear phase-out is feasible, even under a strong climate policy, but does increase dependency on natural gas, CCS, and renewables.
In many of the scenarios analysed, particularly those on renewables, the key role of biomass has become clear. An increasingly important trade-off will be where to apply the scarce biomass resources, in view of competing applications in the power, transport and heating sectors, apart from the non-energy uses such as food production. Security of supply might be a stronger driver than greenhouse gas emission reduction, because of the lack of alternatives for oil in transport sector, and because biomass is not carbon-free but rather carbon neutral.
From the range of fossil fuels, natural gas fits best in a carbon constrained world. Although in the baseline, gas demand grows faster than total consumption, this level is usually not achieved in the policy scenarios, where its prospects depend on the success of competitors such as renewables or nuclear in the power sector, or biofuels in the transport sector. Natural gas has a key role when it comes to security of supply. A strong climate policy may induce an increasing role for natural gas, which can further increase Europe's dependency on gas imports. However, in case of higher CO2 prices than the 100 EUR/ton CO2 assumed in this project, the role of natural gas will probably become more marginal.
Capture and storage (CCS) appears to be essential for the perspectives of hydrogen in a carbon-constrained world, while it is also vital for the prospects of coal. According to the scenarios assessed in this project, CCS on coal-based power plants, notably IGCC, is preferred over gas-fired plants. This implies that especially for countries with a booming demand for cheap (often coal-based) energy, CCS could still allow for a low-carbon energy supply. The application of CCS could lead to an increased reliance on coal, thus increasing security of energy supply. However, there is still a large uncertainty on the potential for CCS and when it will become available, while legal issues, risks and public acceptance also play a role.
The case study has shown that enhanced technological progress, which can be operationalised through R&D and increased deployment, can make a difference for wind and solar PV. Furthermore, a combination of high prices for oil and gas, and ambitious climate policy provides a strong incentive for renewable energy, although coal with CCS can be a serious competitor. A high penetration of renewables imposes additional challenges due to their intermittent nature, and may take time. A synergy can be found in policies targeting at the transport sector, as these can achieve both emission reduction and increased security of supply, when the dependence on oil is significantly reduced.
The case studies have shown that major shifts in the structure of the transport sector are technically possible, up to completely phasing out petroleum based fuels in Europe by 2050. However, is conditional on the success of the second generation of biofuels, as these have a larger energy density per hectare of land, and on a strong cost reduction of fuel cells.
Fuel cells and the prospects for the transformation of the energy system by hydrogen as a carrier have in recent years attracted enormous interest from industry, policy makers and society at large. In many quarters, this technological nexus is viewed as a panacea for solving the widest range of problems characterising the energy system. The analysis of an eventual transition towards a hydrogen economy requires an integrated analytical framework. Part 1 of the project has undertaken the creation of such a framework that enables the analysis of the prospects of the hydrogen economy within the overall energy system in an unbiased fashion.
A wide range of problems characterise the present energy system, including global and local pollution, resource depletion, security of supply concerns and doubts concerning the sustainability of present options in electricity production. CO2 capture and storage, renewable and nuclear energy forms have been widely recognised as important options in promoting sustainability (especially tackling climate change and improving security of supply). Part 2 of the CASCADE MINTS project has brought together a number of the leading energy, economic and environmental modelling teams in Europe (together with some institutes in the United States and Japan that are associated more loosely) with the aim to inform the debate on the prospects of transformation of the European and world energy system towards sustainability, while providing important analytical background for the formulation of energy and environmental strategy.
The consensus of the CASCADE MINTS project indicates that a hydrogen based energy system offers the best prospects for overcoming petroleum dominance of road transport. This is a crucial segment of the energy market and a major source of security of supply concerns as well as environmental sustainability especially in the form of pernicious urban air pollution problems. Potential applications in other sectors also exist that could create a snowball effect facilitating production capacity and infrastructure development. A key feature of an eventual transition towards a hydrogen based economy is that on the one hand it constitutes a distinct and radically different technical economic energy system configuration but on the other does not imply a radical change in patterns of energy use. This latter feature means that there is a small likelihood of social (as opposed to technical and economic) barriers being encountered in the path to such a transition.
The prospects for the hydrogen economy will depend to a very large extent on technological developments concerning applications of fuel cells, production, conversion, delivery and storage of hydrogen. Considerable effort in the context of CASCADE MINTS has been devoted in developing, establishing and monitoring the technological background information to be used by partners in extending their models to describe all possible configurations of a hydrogen economy. To this end, a broad survey of fuel cell and hydrogen-related technologies and their applications has been undertaken, identifying the critical performance characteristics and indicating prospects for future improvement. While discarding the options that are most suitable for very small scale applications (with large potential markets but relatively small potential impact on the energy system) a wide range of options has been identified according to their suitability for conquering different segments of energy markets. The assessment of the technologies in terms of their prospects has been based on both the basic component performance (from the reformer or hydrogen storage point down to the energy service provided) and the overall system characteristics.
A future hydrogen-based energy system will not necessarily be a less energy intensive system. Gross inland consumption in general will not be greatly affected and will even increase in cases where stationary applications are promoted. This is the case because gains in efficiency arising from the use of fuel cells are counterbalanced by transformation losses in the production of hydrogen itself. The use of CCS in production means even lower conversion efficiencies. On the other hand, an eventual hydrogen based energy system would in general be environmentally friendly:
- It clearly reduces local atmospheric pollution strains. Concerns about the latter could even provide an impetus for hydrogen introduction even in cases where it is uneconomic.
- It would also be compatible with global climate mitigation, because of high efficiencies in final use combined with a wide spectrum of possibilities for very low carbon intensity in hydrogen production (e.g. CCS, biomass).
All model based scenario results have shown that a stronger climate policy favours the introduction of hydrogen without on the other hand being the decisive factor.
According to results from the CASCADE MINTS project hydrogen in general and fuel cells in the key road transport sector are unlikely to emerge before 2030, gain significant shares (e.g. 10 % of vehicle stock) before 2040 and be a dominant choice before 2050. Many scenarios produced conditions of take-off during the decade before 2050, suggesting that the prospects of a massive introduction improve beyond.
Extensive scenario analysis in CASCADE MINTS broadly indicates that supportive policies such as selective and discriminating taxation, subsidies on infrastructure even when applied in very strong doses are inadequate for producing drastic results in the absence of rapid technical progress. On the other hand, such measures would tend to be superfluous in the presence of such progress. At any rate, such policies would in general tend to be costly both in terms of the economy as a whole (diversion of investments towards hydrogen infrastructure) and on government budgets (loss of taxation revenue, subsidies).
In contrast to the above, additional R&D aimed at inducing technical change in demand technologies has been shown to accelerate developments at a considerably lower cost than other supportive policies. For example, a tenfold increase in R&D for fuel cells during the 2007-2015 period has been shown to bring forward developments by about 15 years. It can be reasonably assumed that large scale additions to R&D outlays will have to come from the private sector motivated by high expected sales. However, there are diminishing returns to such increases in R&D effort (the rate of return on R&D investment declines with its size). These diminishing returns notwithstanding, additional R&D tends to reduce the risk of failure. This could be an important consideration in view of the highly speculative nature of the effort undertaken.
The objectives of PART 2 of the project were:
- to address policy questions that are currently relevant to the main stakeholders, i.e. policymakers and their policy advisors, with emphasis on the EU and global level;
- to investigate the role of different policies fostering deployment of more advanced and climate-friendly or climate-neutral energy technologies in improving security of supply and reducing GHG emissions.
To achieve these objectives, a wide range of existing models has been applied to build scientific consensus on the impacts of policies aimed at promoting sustainable energy systems - in particular, through technological developments. The main objective of the approach chosen was to perform a synthesis of the policy cases analysed by various models. Some of these models have comparable methodologies and scope; others complement each other, such as economic models and energy system models. Next, consensus among the modellers has been sought concerning the results presented and the main policy messages.
The case studies have shown that high oil and gas prices induce a shift towards solid fuels, as coal is a cheaper and more abundant alternative to other fossil fuels (oil and gas), with more and more applications, not only for power generation, but through a gasification process also for synthetic fuels that can be used for transportation. The use of coal potentially is a threat to the environment, and it needs clean technologies such as CCS to prevent environmental drawbacks. Furthermore, coal mining is also not always done in a sustainable way.
The role of nuclear power largely depends on the public and political acceptance of this option. The scenarios analysed in this report have shown that, when this acceptance is no limiting factor, and investment costs drop with 25 %, nuclear energy could have a share up to 50 % in the European power generation mix, and 30 % in the global power mix, as it is attractive in terms of costs and hardly generates polluting emissions. Conditions for increased acceptance would therefore comprise the development of inherent safe reactor systems, better utilisation of fissile material and shortening of waste lifetime. The scenarios also show that a nuclear phase-out is feasible, even under a strong climate policy, but does increase dependency on natural gas, CCS, and renewables.
In many of the scenarios analysed, particularly those on renewables, the key role of biomass has become clear. An increasingly important trade-off will be where to apply the scarce biomass resources, in view of competing applications in the power, transport and heating sectors, apart from the non-energy uses such as food production. Security of supply might be a stronger driver than greenhouse gas emission reduction, because of the lack of alternatives for oil in transport sector, and because biomass is not carbon-free but rather carbon neutral.
From the range of fossil fuels, natural gas fits best in a carbon constrained world. Although in the baseline, gas demand grows faster than total consumption, this level is usually not achieved in the policy scenarios, where its prospects depend on the success of competitors such as renewables or nuclear in the power sector, or biofuels in the transport sector. Natural gas has a key role when it comes to security of supply. A strong climate policy may induce an increasing role for natural gas, which can further increase Europe's dependency on gas imports. However, in case of higher CO2 prices than the 100 EUR/ton CO2 assumed in this project, the role of natural gas will probably become more marginal.
Capture and storage (CCS) appears to be essential for the perspectives of hydrogen in a carbon-constrained world, while it is also vital for the prospects of coal. According to the scenarios assessed in this project, CCS on coal-based power plants, notably IGCC, is preferred over gas-fired plants. This implies that especially for countries with a booming demand for cheap (often coal-based) energy, CCS could still allow for a low-carbon energy supply. The application of CCS could lead to an increased reliance on coal, thus increasing security of energy supply. However, there is still a large uncertainty on the potential for CCS and when it will become available, while legal issues, risks and public acceptance also play a role.
The case study has shown that enhanced technological progress, which can be operationalised through R&D and increased deployment, can make a difference for wind and solar PV. Furthermore, a combination of high prices for oil and gas, and ambitious climate policy provides a strong incentive for renewable energy, although coal with CCS can be a serious competitor. A high penetration of renewables imposes additional challenges due to their intermittent nature, and may take time. A synergy can be found in policies targeting at the transport sector, as these can achieve both emission reduction and increased security of supply, when the dependence on oil is significantly reduced.
The case studies have shown that major shifts in the structure of the transport sector are technically possible, up to completely phasing out petroleum based fuels in Europe by 2050. However, is conditional on the success of the second generation of biofuels, as these have a larger energy density per hectare of land, and on a strong cost reduction of fuel cells.
