EN    EN EN
 
EN    EN  EUROPEAN COMMISSION 
Brussels, 8.3.2011 
SEC(2011) 288 final 
COMMISSION STAFF WORKING DOCUMENT 
IMPACT ASSESSMENT  
 
 
Accompanying document to the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT , THE COUNCIL, THE EUROPEAN 
ECONOMIC AND SOCIAL COMMI TTEE AND THE COMMITTEE OF THE 
REGIONS 
 
A Roadmap for moving to a compet itive low carbon economy in 2050 
   
{COM(2011) 112 final} 
{SEC(2011) 289 final} 
 
EN 2   EN Table of content  
1. Procedural issues and consulta tion of interested parties.............................................. 8 
1.1. Policy context............................................................................................................ ... 8 
1.2. Organisation .............................................................................................................. ... 9 
1.3. Response to the opinion of the Impact Assessment Board .......................................... 9 1.4. Stakeholder consultation ............................................................................................ 10 1.4.1. Stakeholder reports on decar bonisation of the Economy........................................... 10 
1.4.2. Results from the online questionnaire........................................................................ 14 2. Problem Definition..................................................................................................... 16 2.1. Impacts of climate change, the costs of inaction........................................................ 16 2.2. Avoiding dangerous climate change .......................................................................... 19 2.3. Growing energy resource and security concerns ....................................................... 21 2.4. Making growth and jobs sustainable by ove rcoming barriers to the development and 
deployment of low carbon technologies .................................................................... 24 
2.5. Sustainable shift towards a low carbon economy ...................................................... 24 3. Objectives.................................................................................................................. . 25 
3.1. General objectives...................................................................................................... 25  
3.2. Specific objectives ..................................................................................................... 25  
3.3. Operational Objectives............................................................................................... 25 4. Scenarios to decarbonise the EU in  line with the 2ºC objective ................................ 26 
4.1. Methodology .............................................................................................................. 2 6 
4.2. Action in a global context .......................................................................................... 28 4.2.1. EU internal action in th e context of global action...................................................... 28 
4.2.2. Fossil Fuel Prices and how they relate to global and EU action................................ 28 
4.2.3. Macro economic impacts ........................................................................................... 29 4.2.4. The missing global link, agricultu re, forestry and energy ......................................... 29 
4.2.5. EU action and global action, the like lihood of meeting the 2ºC objective ................ 30 
4.3. The EU perspective towards a low carbon economy and society by 2050................ 30 
4.3.1. Reference scenario: wh ere do current policies le ad us to by 2050? .......................... 32 
4.3.2. Decarbonisation scenarios in the cont ext of Global Climate Action ......................... 32 
4.3.3. Decarbonisation in the context of  Fragmented Climate Action................................. 34 
 
EN 3   EN 5. Analysing the impact of different scenarios............................................................... 36 
5.1. Action in a global context .......................................................................................... 36 5.1.1. EU internal action in th e context of global action...................................................... 36 
5.1.2. Fossil Fuel Prices and Global Action......................................................................... 39 5.1.3. Marco-economic impact............................................................................................. 42 5.1.4. Interaction between energy, agriculture and land use emi ssions on a global scale ... 45 
5.1.5. EU action and global action, the like lihood of meeting the 2ºC objective ................ 49 
5.2. Analysis of the EU perspective towards a low carbon economy by 2050................. 51 5.2.1. Greenhouse gas emission reductions over time and sectoral split ............................. 51 
5.2.2. Greenhouse gas emission reductions in ETS and Non ETS ...................................... 54 5.2.3. Energy resources and security of fossil fuel supply................................................... 55 5.2.4. System costs: Investments, foss il fuel expenses and carbon prices........................... 57 
5.2.5. Sector specific impacts: power................................................................................... 61 5.2.6. Sector specific impacts: transport .............................................................................. 65 5.2.7. Sector specific impacts: industry ............................................................................... 71 5.2.8. Sector specific impacts: the built environment .......................................................... 74 5.2.9. Sector specific impacts: Agricu lture and other Non CO2 emissions......................... 76 
5.2.10. Sector specific impacts: Land Use, Land Use Change and Forestry ......................... 80 
5.2.11. Social impacts for households.................................................................................... 85 5.2.12. Leveraging finance..................................................................................................... 88 
5.2.13. Employment impacts.................................................................................................. 90 
5.2.14. Co-benefits in terms of air pollution .......................................................................... 91 6. Conclusions................................................................................................................ 9 4 
7. ANNEXES ................................................................................................................. 98 7.1. 2010 Global Climate Highlights ................................................................................ 98 7.2. Overview of studies that  look into impacts of climate change in the EU.................. 99 
7.3. Analysis of global emission pathways towards achieving the 2ºC objective .......... 100 
7.4. Economic modelling tools used ............................................................................... 101 7.5. Drivers assumed in the POLES scenarios................................................................ 103 7.6. EU sectoral GHG reductions in  case of global action.............................................. 104 
 
EN 4   EN 7.7. Assessing global GHG emissions using the POLES, GLOBIOM and G4M models
............................................................................................................................... ... 104 
7.7.1. Methodology of the integrated PO LES, GLOBIOM and G4M scenarios............... 104 
7.7.2. Sensitivity analysis - exogenous productivity in crop and livestock sectors ........... 105 7.8. Projections of impact on oil and gas impor ts into the EU of Fragmented and Global 
Action using the POLES model ............................................................................... 107 
7.9. Further information on the main assumpti ons and drivers of the PRIMES scenarios
............................................................................................................................... ... 109 
7.9.1. Assumptions in relation to all scenar ios for the EU in the PRIMES – GAINS 
modelling setup ........................................................................................................ 109 
7.9.2. Specific assumptions in rela tion to the referenc e scenario for the EU in the PRIMES 
– GAINS modelling setup........................................................................................ 111 
7.9.3. Detailed description of the diffe rent decarbonisation scenarios .............................. 114 
7.10. Overall Carbon price and GHG profile of the different re ference and decarbonisation 
scenarios................................................................................................................... 117  
7.11. Sectoral changes in average yearly total investments and fuel expenses................. 120 
7.12. Further information on the main assumptions  and drivers of the agriculture scenarios 
for the EU................................................................................................................. 126 
7.13. Examples of innovative policy schemes to spur energy related investments for 
households................................................................................................................ 128 
8. Bibliography............................................................................................................. 130  
List of figures
 
Figure 1: Received responses from stakeholders by affiliation ............................................... 14 
Figure 2: Weather catastrophes globally 1980 – 2009............................................................. 16 Figure 3: Key impacts as a function of increasing temperature change................................... 19 
Figure 4: GHG emissions in the EU under current trends and policies ................................... 21 Figure 5: GHG emission profile EU27, per sector................................................................... 21 Figure 6: Incremental prim ary energy demand, 2008-2035..................................................... 22 
Figure 7: World oil production................................................................................................. 23 
Figure 8: Incremental oi l production by country ..................................................................... 23 
Figure 9: International energy pri ces in reference and in the context of global climate action33 
Figure 10: ETS carbon price differentia ls between regions over time..................................... 37 
 
EN 5   EN Figure 11: Per capita GHG emissions in  the Global action scenario....................................... 38 
Figure 12: Average annual OPEC oil export revenues per scenario........................................ 41 Figure 13: World oil production up  to2035 in case of the new en ergy policies scenario of 
WEO 2010, compared to POLES projection oil production fragmented action.............. 42 
Figure 14: GHG emissions from Agriculture and gross deforestation in baseline and Global 
Action Case .................................................................................................................... .. 47 
Figure 15: Impact yield improvements on overall costs agricultural goods. ........................... 48 
Figure 16: GHG emission pathway in case of Global Action, all sectors and gases ............... 50 
Figure 17: Temperature increases asso ciated with emission pathways ................................... 51 
Figure 18: EU GHG emissions over time for selected scenarios............................................. 53 Figure 19: Gross energy consumption in  relevant scenarios over time ................................... 56 
Figure 20: Carbon price evolution ........................................................................................... 58 Figure 21: Gross electricity consumption in relevant scenarios .............................................. 61 Figure 22: CO2 emissions from power and st eam generation and district heating.................. 62 
Figure 23: Share of low carbon tech nologies in power generation.......................................... 63 
Figure 24: Power investments over time.................................................................................. 64 Figure 25: CO
2 emissions from transport................................................................................. 66 
Figure 26: Energy carriers in  the transport sector .................................................................... 68 
Figure 27: CO 2 emissions from transport, impact of an oil shock ........................................... 69 
Figure 28: CO 2 emissions from road transport and the power sector in case of decarbonisation
............................................................................................................................... ........... 71 
Figure 29: Energy-related inve stments, fuel and electrici ty costs and industrial CCS 
expenditures ................................................................................................................... .. 73 
Figure 30: Residential emissions over time ............................................................................. 75 Figure 31 Non-CO2 GHG emissions in the refe rence and effective technologies case .......... 78 
Figure 32: Demand for energy wood in the EU....................................................................... 81 Figure 33: Changes in wood production in the EU.................................................................. 83 Figure 34: Impact on LULUCF of di fferent wood production levels ...................................... 84 
Figure 35: Expenditure of households on energy re lated equipment, fuels and electricity ..... 86 
 
EN 6   EN Figure 36 : Transport co sts per household ............................................................................... 87 
Figure 37: Emissions pathways compatible with a 2°C limit ................................................ 101 Figure 38: Historic annual rate of yield cha nge (%) compared to the applied on in GLOBIOM
............................................................................................................................... ......... 106 
Figure 39: Animal numbers per producti on system in Baseline in Globiom......................... 107 
List of tables
 
Table 1: Overview of all EU level scenarios............................................................................ 31 
Table 2: Greenhouse gas emissions in the Baseline and Global action scenario..................... 37 
Table 3: Primary energy demand in the Base line, Global action an d Fragmented action 
scenario....................................................................................................................... ...... 39 
Table 4: Global oil prices in different scenarios ...................................................................... 40 Table 5: GDP impacts fragmented action ................................................................................ 44 Table 6: Employment impacts fragmented action.................................................................... 44 Table 7: Impacts on energy intensive industr ial sectors from fragmented action.................... 45 
Table 8: EU Greenhouse gas emission reductions ove rall and in different economic sectors in 
different decarbonisation scenarios.................................................................................. 52 
Table 9: Emissions in ET S and Non ETS sectors .................................................................... 54 
Table 10: Fuel import dependency across scenarios................................................................ 56 
Table 11: Imports of oil and gas an d corresponding expenses in 2050 ................................... 57 
Table 12: Average yearly total investments and fuel expenses ............................................... 59 Table 13: Average yearly total investments and fuel  expenses in scenarios with an oil shock or 
high fossil fuel prices ....................................................................................................... 6 0 
Table 14: CO2 emission reductions in ener gy intensive industries in 2030 and 2050 ............ 72 
Table 15: Useful energy requi rements across scenarios .......................................................... 76 
Table 16: EU GHG share CO
2 – Non-CO 2, 1990-2005........................................................... 76 
Table 17: Non -CO2 emissions  total in 2030 (MtCO2eq.) ...................................................... 78 
Table 18: Non -CO2 emissions  total in 2050 (MtCO2eq.) ...................................................... 79 
Table 19: CO2 and Non CO2 emissions .................................................................................. 79 Table 20: Bio-mass production requirements in reference case for energy use....................... 80 
 
EN 7   EN Table 21: Bio-mass production requirements in  effective technologies decarbonisation case 
for energy use ................................................................................................................. .. 81 
Table 22: Cohesion Policy 2007-13 allocations contributing to sustainable growth............... 89 
Table 23: Impacts on air pollution and air pollu tion control costs (change compared to the 
reference)..................................................................................................................... ..... 92 
Table 24: Impacts on sensitive ecosystem ............................................................................... 94 Table 25: GDP and population assumptions in POLES: yearly growth rates (%)................. 103 Table 26: EU-27 Greenhouse gas emissions by s ector in the Global action scenario, .......... 104 
Table 27: Import dependency Oil and Gas............................................................................. 108 Table 28: Oil consumption, expenses and import in the EU.................................................. 108 Table 29: Gas consumption, expenses and import in the EU................................................. 108 Table 30: Policy drivers in the reference scenario ................................................................. 112 Table 31Carbon price evoluti on different scenarios .............................................................. 117 
Table 32 GHG emission profile per sector diffe rent reference and decarbonisation scenarios
............................................................................................................................... ......... 117 
Table 33: Average yearly total investments in  energy related capital goods, CCS expenditures 
and fuel expenses in industry ......................................................................................... 121 
Table 34: Average yearly total investments in  energy related capital goods, CCS expenditures 
and fuel expenses in industry in case of an oil shock or high fossil fuel prices............. 121 
Table 35: Average yearly total investments in energy related goods  and fuel expenses in the 
residential and tertiary sector ......................................................................................... 122 
Table 36: Average yearly total investments in energy related goods  and fuel expenses in the 
residential and tertiary sector in scenarios with an oil shoc k or high fossil fuel prices . 123 
Table 37: Average yearly total investment s and fuel expenses in transport .......................... 123 
Table 38: Average yearly total investments and fuel  expenses in transport in scenarios with an 
oil shock or high fossil fuel prices ................................................................................. 124 
Table 39: Average yearly total investments and fuel expenses in the power sector (includes 
steam) ......................................................................................................................... .... 125 
Table 40: Average yearly total investments and fuel expenses in the power sector (includes 
steam) in scenarios with an oil sh ock or high fossil fuel prices..................................... 125 
Table 41: Core policy assumptions fo r the August 2009 CAPRI baseline ............................ 126 
Table 42 Core market assumptions for the August 2009 CAPRI baseline ............................ 127 
 
EN 8   EN  
1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
1.1. Policy context 
The EU has a binding legal framework in pl ace to reduce greenhouse gas (GHG) emissions 
for the period after 2012, when the first commitment period of the Kyoto Protocol ends. The Climate and Energy Package sets an EU wide cap for the EU emission trading system (EU 
ETS)
1 and national targets for the se ctors not covered by the EU ETS2. The time horizon of 
the Climate and Energy Package focuses on 2020, even though the ETS cap continues to strengthen after 2020.  
The Copenhagen Accord
3 underlined that low-emission development strategies are 
indispensable to sustainable developm ent. This was confirmed at the 16th Session of the 
Conference of the Parties to the UNFCCC that decided that developed countries should 
develop low-carbon development strategies or plans4. 
The European Council supports an EU objective,  in the context of necessary reductions 
according to the IPCC by developed countries as a group, to reduce emissions by 80-95% by 2050 compared to 1990 levels
5. The European Parliament simila rly endorsed the need to set a 
long-term reduction target of at least 80% by 2050 for the EU and the other developed 
countries6. 
At present, beyond the existing requirements in the Climate and Energy Package, no vision, 
strategy or roadmap exists in the EU on how to  achieve such levels of reductions beyond 2020 
up to 2050.  
The Communication that this impact assessmen t accompanies has the intention to develop a 
roadmap to achieve such reduc tions in the EU up to 2050. Th is impact assessment gives 
information on the overall and sectoral pathways , the underlying technolog ical and structural 
changes required, the investment and cost pattern s and other impacts, synergies and trade-offs 
related to the broader sustainabi lity and resource efficiency ag enda. This is done for a broad 
range of sectors that cove r the whole eco nomy and all types of GHG emissions. This 
information will give insights in ambition require d in different sectors and could be used as 
guidance when further developing policies and sp ecific sectoral roadmaps for these sectors. 
The EU Environment Council has indicated to look forward to the Co mmission’s roadmap for 
a safe and sustainabl e low-carbon economy by 20507. The European Council confirmed this 
                                                 
1 Directive 2009/29/EC 
2 Decision No 406/2009/EC 
3 UNFCCC, 2010, Decision 2/CP.15, Copenhagen Accord. 
4 UNFCCC, 2010, Decision -/CP.16, Outcome of the work of the Ad Hoc Working Group on long-term 
Cooperative Action under the Convention. 
5 European Council, Brussels, 29/30 October 2009, Presidency conclusions. 15265/1/09 
6 European Parliament resolution of 4 February 2009 on "2050: The future begins today – 
Recommendations for the EU's future integrated po licy on climate change; resolution of 11 March 2009 
on an EU strategy for a comprehensive climate change agreement in Copenhagen and the adequate provision of financing for climate change policy; resolution of 25 November 2009 on the EU strategy 
for the Copenhagen Conference on Climate Change (COP 15) 
7 3036th Environment Council meeting, Luxembourg, 14 October 2010 
 
EN 9   EN and indicated that due consideration should be given to fixing intermediary stages towards 
reaching the 2050 objective8. Also the European Parliament supports the establishment of 
action plans for achieving emission reductions in the period up to 2050 consistent with the 
2°C limit9. 
Furthermore this roadmap is a key part of th e initiatives to deliver on a Resource Efficient 
Europe, one of the 7 flagships of the Europe 2020 strategy10, which aim is to support the shift 
towards a resource efficient and low-carbon economy  that is efficient in  the way it uses all 
resources, decoupling economic growth from  resource and energy use, reducing CO2 
emissions, enhancing competitiveness a nd promoting greater energy security. 
1.2. Organisation  
The impact assessment was elaborated by DG CLIMA in collaboration with DG ENER and 
DG MOVE. A joint analytical framework was elaborated between the three DGs and consulted as part of inter-service meetings on the Resource Efficient Europe Flagship. DG 
MOVE coordinated its modelling projections for the impact as sessment of the 'White Paper 
on the future of transport' with those presen ted in this impact assessment. DG ENER will 
build further on the results presented here when elaborating their 'Energy roadmap 2050' 
planned for later in 2011. Ot her DGs were informed and consulted through inter-service 
consultations. A common EU reference scen ario 2050 and a global 2ºC scenario were 
elaborated and consulted as part of inte r-service consultations  on the Energy Roadmap 
between April and September 2010. Further specifi c inter-service meetings to prepare this 
impact assessment and the one accompanying the Wh ite Paper on the future of transport were 
held on 21 October, 25 November and 14 December 2010
11. 
1.3. Response to the opinion of the Impact Assessment Board  
The impact assessment was presented to the Impact Assessment Board on 26 January. The 
board gave a positive opinion on the impact assessment and acknowledged that the submitted 
report provides modelling results that can be used as an e ssential input for the impact 
assessment work of related deca rbonisation initiatives explori ng concrete policy actions. It 
will help ensure coherence between these init iatives on the basis of a common analytical 
basis. While the Board acknowledged the analyti cal work carried out, it also recommended to 
improve it further.  
Firstly, the board recommended to complement the modelling work with more qualitative 
analysis using other available information that  goes beyond the insights that the modelling is 
capable of supplying. For employment impacts th is was addressed with a more qualitative 
discussion of the issues at stake. The problem  analysis and the motiv ation of the different 
scenarios has been extended and the limits of model analysis and related uncertainties have 
been better indicated. Text was improved to expl ain some of the limitations of the assessment 
on analysing social and environmental imp acts and where further work is needed. 
                                                 
8 European Council, Brussels, 4 February 2010, Presidency conclusions, EUCO 2/11 
9 European Parliament resolution of 25 November 2009 on the EU strategy for the Copenhagen 
Conference on Climate Change (COP 15) 
10 COM(2010) 2020, EUROPE 2020 - A strategy for smart, sustainable and inclusive growth 
11 Participating DG's following broad invitation include AGRI, COMP, ECFI N, EMPL, ENER, ENTR, 
ENV, INFSO, MARE, REGIO, RTD, SG and TAXUD. 
 
EN 10   EN Secondly, the board recommended to provide gr eater clarity on any action in addition to 
policies already agreed that wi ll be needed by 2020 to deliver on the de carbonisation target 
required by 2050. Therefore conclusi ons were added that have fo cus on the near term policy 
relevant implications of the assessment. 
Thirdly, the board recommended to asses key macro-economic effects, such as GDP and 
employment impacts. The Staff worki ng document accompanying the Communication 
'Analysis of options to move beyond 20% gr eenhouse gas emission reductions and assessing 
the risk of carbon leakage' of 26 May 2010 alre ady addressed the macro economic impact of 
more ambitious action up to 2020. After the opini on of the board this modelling was revisited 
and refined up to 2030. It was not possible to project macr o-economic impacts up to 2050. 
This work also addresses the issue of co mpetitiveness which was listed as a fourth 
recommendation. But is was not pos sible to address distributive impacts in more depth due to 
a macro economic modelling set up that ha s the EU as one region in the world. 
Fifthly, the board recommended that the report  should clarify a number of methodological 
points including e.g. assumptions on technolog y, carbon and oil prices. The chapter that 
addresses methodology, modelling set up and scen ario description was further refined. 
The board also asked to give more key data an d replace charts rather w ith tables, while also 
shortening the report by moving some detailed data  to the annex. Summary tables per scenario 
on carbon prices and GHG emissions per sector  were added in annex 7.10 and also the 
specific impacts on investment, fu el and electricity costs was put in tables rather than figures 
in chapter 5.2.4 and annex 7.11. The sectoral deta il of this assessment of investments and 
costs as well as the technical detail of the scenario description was put in annex and the detailed assessment of the stakeholder cons ultation was put in se parate Staff Working 
Document. The Board also advised to indica te, where possible, follow-up analysis and 
planned impact assessment work. This was addr essed in the text in the relevant sectoral 
chapters. 
Finally the board noted that this is not a st andard impact assessmen t. It has a specific 
analytical focus that does not assess and co mpare policy options that  could deliver on the 
overall policy goal.  
1.4. Stakeholder consultation 
Extensive reports have been recently publishe d by stakeholders on the issue of how to 
decarbonise both our economy and society. To prep are this impact assessment a review was 
made of the reports available at the end of 2010. For a summar y of these reports see chapter 
1.4.1. Furthermore, the Commission consulted individuals and st akeholders on their vision 
and opinion regarding an EU low-carbon ec onomy by 2050 through an online questionnaire 
"Roadmap for a low-carbon economy by 2050"
12. For summary results see chapter 1.4.2. The 
wide range of views on how the EU can d ecarbonise its economy have been taken into 
account in the context of this impact assessment.  
1.4.1.  Stakeholder reports on deca rbonisation of the Economy 
A number of stakeholders has recently publicised  reports that elaborate their thinking on how 
to significantly reduce EU gr eenhouse gas emissions in the coming decades, often focussing 
                                                 
12 http://ec.europa.eu/clima/consultations/0005/index_en.htm  
 
EN 11   EN on the energy sector (see bibliogr aphy in chapter 8 for list of reports analysed). There is 
limited attention amongst the published reports for other sectors such as  the agriculture and 
LULUCF (Land Use, Land Use Change and Forestry ) sectors. This chapter tries to give an 
overview of the main elements of these report s, what they have in common and where the 
differences exist. 
All stakeholders agree on the n eed for action on climate change . Most endorse explicitly the 
need to reduce emissions in 2050 by 80 to 95% co mpared to 1990 levels. Eurelectric slightly 
differs from the EU's reduction target – in their "Power choices" scenario they set an aim of a 
75% CO 2 emissions reduction via domes tic action against 1990 levels.13 In their position 
papers business associations refer to global targets and do not explicitly state concrete 
numbers for GHG reduction at the EU level. Business Europe confirms that global GHG 
emissions need to be at least ha lved by 2050 compared to 1990 levels.14 Whereas WBCSD 
states that carbon emissions should be halv ed worldwide by 2050, compared to 2005 levels.15 
According to most stakeholders the achie vement of an EU low-carbon economy would 
require an increase in electricity use, the deca rbonisation of power generation as well as fuel 
shifts in transport and buildings. Furthermor e, improving energy efficiency is regarded 
essential.16 Stakeholders underline the linkages between  increased electrification and energy 
efficiency gains and think these will benefit both the environment and consumers, because of 
lower energy costs. Moreover, most of the stake holders tend to agree on  key technologies and 
measures that should be implemented: a shift towards renewable energy sources (largely wind 
and photovoltaic), roll-out of el ectric vehicles as well as the commercialisation of carbon 
capture and storage (CCS).  
All stakeholders recognise that  reducing emissions will bring a dditional benefits for the EU 
such as enhanced security of energy supply17. The shift towards decarbonised and more 
efficient electricity use in buildings and trans port is expected to lower energy costs and bring 
more stable and predictable energy prices18. Investments in new energy efficiency measures, 
clean technology and new infrastr ucture are also expected to create new jobs and economic 
growth.19 Some stakeholders additionally point to the reduced costs for climate change 
adaptation as well as better health conditions fo r European citizens, resulting from increased 
mitigation efforts.  
Although stakeholders agree on a shift towards renewable ener gy, accelerated reduction of 
fossil fuels consumption and improvement of en ergy efficiency, opinions differ on the extent 
to which specific energy sources and technolog ies should be deployed. There is no uniform 
pathway leading to a low-carbon economy by 2050 and positions diverge on the share of renewables in the EU's energy mix in 2050. The European Renewable Energy Council and 
environmental NGOs favour a more than 90% sh are of renewables in EU's final energy 
consumption
20, while business associations refer to less ambitious levels of renewables in the 
                                                 
13 Eurelectric (2010), p. 6 
14 Business Europe (2010), p. 1 
15 World Business Council for Sustainable Development (2010) 
16 Business Europe (2010), p. 5 
17 European Climate Foundation (2010), p. 12 
18 European Climate Foundation (2010), p. 12 
19 European Climate Foundation (2010), p. 6 
20 European Renewable Energy Council (2010),  p. 2-3, Greenpeace & EREC (2010), p. 7 
 
EN 12   EN energy mix.21 As to the share of re newable energy sources in electricity production, the 
number stated by Greenpeace and EREC  is around 97% by 2050 in the EU 27.22 The 
Eurelectric's "power choices" scenario for 2050 assumes about 40% renewables in the power 
generation mix.23 The European Climate Foundation asse ssed pathways with 40%, 60%, 80% 
and 100% renewables in power generation and concluded that an 80% renewables share 
would be possible without paying more for electricity.  
Some stakeholders support the phase-out of nuclear power plants24 whereas others consider 
nuclear power to be a key instrument for decarbonising the economy.25 Regarding biomass 
some favour its rapid expansion in all sectors.26 Others project that the future development of 
biofuels will be limited because of their impact on land use.27 Regarding fossil fuels some 
foresee the complete abandonme nt of coal and oil consumption by 2050 (except for some key 
transport sectors).28 Most of the stakeholders see a continued future for fossil fuels using 
CCS.29 While CCS contributes to the decarbonisation of the industry sector in the long-term, 
COGEN underlines that combined heat and power provides the most cost effective and 
reliable solution in the short and near term for the sector.30 
Business associations are genera lly concerned about the risk of carbon and job leakage and 
advocate low-carbon solutions where a ll energy sources play a role.31 Positions differ also 
with respect to the EU Emissions Trading Sc heme (EU ETS). Some stakeholders underline 
that European industry should receive the maxi mum amount of free allo wances to guarantee 
the competitiveness of European industry32. Others argue that all EU  ETS allowances must be 
auctioned and part of the revenues should financ e the further development and deployment of 
low-carbon technologies.33 
Policy recommendations expressed by stakeholders  
Stakeholders would like to see a strong, consistent policy framework for achieving a low-
carbon economy by 2050. This should provide the n ecessary certainty to make upfront capital 
investments and open up the implem entation of low-carbon technologies.34 Depending on the 
view of the stakeholder, the policy recomme ndations refer to the large-scale uptake of 
renewables, the fast deployment of CCS by 2025 and the promotion of new generation 
nuclear power plants. Most stakeholders want to see investments in a better, smarter grid.35 . 
Energy efficiency and distributed power is al so highlighted as policy recommendations and 
would be achieved through invest ments in better, smarter grid 36. Measures encouraging the 
                                                 
21 World Business Council for Sustainable Development (2010), p. 24 
22 Greenpeace & EREC (2010), p. 7 
23 Eurelectric (2010), p. 61 
24 WWF (2007), p.4, Stockholm Environment Institute (2009), p. 2 
25 World Business Council for Sustainable Development, (2010), p.6 
26 WWF (2007), p.2 
27 Eurelectric (2010), p. 43 
28 Stockholm Environment Institute (2009), p. 2 
29 World Business Council for Sustainable Development (2010), p. 4 
30 COGEN (2010), p. 8 
31 Business Europe (2010), p. 6 
32 Business Europe(2010), p. 10 
33 Climate Action Network Europe (2010), p. 3 
34 Eurelectric (2010), p. 85, European Climate Foundation (2010), p. 4 
35 European Climate Foundation (2010), p. 11, European Renewable Energy Council (2010), p. 7 
36 European Climate Foundation (2010), p. 11, European Renewable Energy Council (2010), p. 7 
 
EN 13   EN electrification of road trans port and efficient electro-technol ogies for heating and cooling 
should also be adopted.37 
Some stakeholders propose th e introduction of annual targets for emissions reduction to 
facilitate progress towards medium and long  term. In addition, th e establishment of 
EU/national compliance mechanism is recommended in order to impose sanctions on countries, regions and se ctors that failed to  meet their targets.
38 Others favour the introduction 
of an EU-wide carbon tax to accelerate investments in renewable energy development and infrastructure.
39  
Several stakeholders underline th at an international agreement on climate change would foster 
the EU's transition to a low-carbon economy and e fforts to conclude an international climate 
negotiations should continue.40 Some stakeholders openly oppos e unilateral trade measures as 
a way to enforce non-trade objectiv es and consider them ineffective given the EU's reliance 
on open markets.41  
Stakeholders have different views on the timing of measures. Some emphasise that the first 
EU goal should be to achieve its 20-20-20 targets laid down  in the EU 2020 Climate and 
Energy Package, adopted in 2008.42 Business Europe advises against an increase of the 20% 
emission reduction target until the international conditions are fulfilled.43 WBCSD assumes 
that the "transformation time" will happen after 2020, while the next decade defined as 
"Turbulent Teens" would be marked by ideas gathering and establis hing of relationships.44 
Also the "Power choices" scenario of Eurel ectric considers 20% reduction target by 2020 and 
an interim goal of 40% emissions reduction by 2030.45 Environmental NGOs on the other 
hand argue for moving to 30% binding emissions reduction target by 202046 and underline the 
urgency of taking action as soon as possible.47  
Some stakeholders would like  to see further energy effici ency improvements across the 
economy, improvements in existin g technologies such as th e CCS, PV, offshore wind and 
electric vehicles as well as fuel  shifts in energy use for trans port and buildings for the next 5 
to 10 years.48 Others see a great potential in CCS and stress the need for fast investments so 
that it can become commercial in the next 10-15 years.49 Many stakeholders focus on the 
immediate need for additional investments in renewable energy sources.50 They insist on 
binding renewable ener gy targets for 203051 and the need to develop smart grids and to ensure 
transmission and distribution capacity. 52 
                                                 
37 Eurelectric (2010), p. 86 
38 Stockholm Environment Institute (2009), p. 4 
39 Climate Action Network Europe, (2010), p.7 
40 Eurelectric (2010), p. 85 
41 Business Europe (2010), p. 11 
42 Eurelectric (2010), p. 35 
43 Business Europe (2010), p. 1 
44 World Business Council for Sustainable Development (2010), p. 10 
45 Eurelectric (2010), p. 35 
46 Greenpeace & EREC (2010), p. 9 
47 WWF (2007), p.21 
48 European Climate Foundation (2010), p. 11 
49 Eurelectric (2010), p. 85 
50 European Renewable Energy Council (2010), p.4, Eurelectric (2010), p. 85 
51 European Renewable Energy Council (2010), p.7 
52 Business Europe (2010), p. 8, European Climate Foundation (2010), p. 11 
 
EN 14   EN 1.4.2.  Results from the online questionnaire  
For a detailed summary and further information on the answers supplied by the citizens and 
organised stakeholders see the public consultation website53. 
In total, 281 responses have been submitted via the online questionnaire and 7 additional 
answers have been sent by e-mail. Out of th e 288 evaluated responses, there are 132 responses 
from citizens. The fact that the online consulta tion was available only in English did not limit 
the diversity of countries of or igin of the respondents . Most answers have been received from 
France, followed by Poland and the UK. From all responses, 156 have been submitted from 
organized stakeholders, with very active participation from companies and professional 
associations - 96 in total, as well as from NGOs and associati ons of NGOs – 32 responses in 
total (see figure below).  
Figure 1: Received responses from  stakeholders by affiliation 
0102030405060708090100
academic
organisation /
association of
academic
organisations
company /
professional
association
non-
governmental
organisation /
association of
NGOs
public authority /
public
administration
think-tank
trade union
other type of
organisation
 
The daily choices that consumers make have impact on the greenhouse gases emitted. 
Changing some habits and preferences could lead to reducing GHG emissions. According to 
the results of the online consultation, all respond ents are willing to reduce waste, recycle and 
reuse as well as buy locally produced food. The least popular options ar e to buy carbon offsets 
and to use biofuels-blended petr ol and diesel. Most of the res pondents indicated that they are 
ready to pay even more than 12€ on a m onthly basis to address climate change. 
The main obstacles to reducing the EU's gr eenhouse gas emissions identified by respondents 
are the subsidies that support the production and consumption of fossil fuels such as mining. 
Furthermore many organised stakeholders claim that we still do not have the technologies 
ready to reduce emissions in all sectors and that it is too risky to invest a lot of money in new 
low-carbon technologies that may not work or may not pay off in the long run.  
                                                 
53 http://ec.europa.eu/clima/consultations/0005/index_en.htm 
 
EN 15   EN In the context of helping developing countries  to cope with the challenges resulting from 
climate change, most of the organised stakehol ders prioritise supporting the countries that 
generate the most pollution, while individuals bring forward the need to support countries 
most likely to suffer from climate change. Most  of the organised stakeholders choose the ETS 
as the most effective EU legislation in te rms of delivering emission reductions by 2020 and 
beyond, although it has been also exte nsively criticized by others.  
The answers from organised stakeholders overlap to a great extent with the views represented 
in position papers published on the topic a nd discussed in chapte r 1.4.1. Nevertheless the 
range of organisations who sh ared their positions  through the online questionnaire was much 
broader. Some stakeholders upda ted their positions or  provided more detailed information on 
their stance. For example Business Europe stated that it is still premature to set targets for 
2050, although they indicate some support for the idea for intermediate targets, such as a 
target for 2030. 54 They underline that the EU will become a leader in fighting climate change 
only if it proves that reducing emissions and se curing energy supply can be reconciled with 
economic development. Therefore according to Business Europe priority should be given to 
implementing cost-efficient measures, ensuring global competitiveness of EU industry and 
improving the framework for investment in lo w-carbon technologies next  to fostering the 
cooperation on EU level.55  
For the European Trade Union Confederation (ETUC) the key to low-carbon economy is to 
introduce competitive energy bills through regulated  prices and through policies and measures 
that improve energy efficienc y. ETUC urges the EU to provide the right economic signals 
which could take the form of a CO 2 tax for example. Furthermore ETUC calls for a binding 
energy saving target for each member state, sh ift of structural EU funds towards climate 
action and use of revenues from auctioned emi ssion allowances as a financial basis for energy 
savings56.  
WWF proposed to adjust the EU 2020 objective to a 40% reduction target. This reiterated the 
position of many environmental NGOs, including the European Environmental Bureau (EEB). At the same time a minimum of three-quarters of this target should be achieved within the EU and not through offset mechanisms.
57 Furthermore WWF pr oposes that once the 
emissions reduction target for 2050 is set, m ilestones for every decade can be established58, 
while Greenpeace opposes targets for 2030 becaus e it would take focus away off 2020 and 
2050 targets. Greenpeace favours the implementati on of stronger carbon and energy taxation 
as a means to achieve energy security and reduce the use of  natural resources59. Also the EEB 
puts the focus away from technologies that  support unsustainable and growing energy 
consumption and underlines that policy measures should address consumption also60. 
Some public authorities within the EU (UK, Czech Republic, Spain, Sweden, the Netherlands 
and France) and beyond (Norway) have also shared their view s on the EU's Roadmap towards 
                                                 
54 "BUSINESS EUROPE's Preliminary Views on the Roadmap for a Low Carbon Economy by 2050", 
Position Paper, 15 December 2010, p. 2. 
55 "BUSINESS EUROPE's Preliminary Views on the Roadmap for a Low Carbon Economy by 2050", 
Positio Paper, 15 December 2010, p. 3. 
56 ETUC, "Resolution on Energy Strategy for Europe 2010-2020", 1 December 2010, p. 2. 
57 WWF, Answer to the Online Questionnaire 
58 WWF, Answer to the Online Questionnaire 
59 Greenpeace, Answer to the Online Questionnaire 
60 EEB, Answer to the Online Questionnaire 
 
EN 16   EN a 2050 low-carbon economy. The UK consider movi ng to a 30% emissions reduction target 
by 2020 as the best means to demonstrate the EU's commitment, to create incentives for 
investment in low-carbon tec hnology and to unlock greater ambition in the international 
negotiations. Furthermore the UK supports the creation of new la rge scale sectoral market 
mechanisms to promote net emission reductions in developing countries61. The Czech 
Ministry of the Environment and the Department Environment and Housing of the Government of Catalonia also support the deployment of sectoral crediting
62. In addition, the 
Czech Environmental Ministry highlights the need of increased investments in the infrastructure and smart grid technologies and mid-term obj ectives which should lie on the 
linear trajectory between the targets for 2020 (as set by the Climate and Energy Package) and 
2050
63. The French authorities argue that th e EU's future climate action should be 
accompanied by the creation of new jobs and accelerated innovation. In addition, investments 
should prioritise technologies identified in th e Strategic Energy Technology Plan (SET Plan) 
of the European Commission64. 
2. PROBLEM DEFINITION  
2.1. Impacts of climate change, the costs of inaction  
Whereas temperatures were exce ptionally low in December in la rge parts of Europe, globally 
records were broken in the opposite directi on during 2010. Global temperatures for 2010 tied 
with 2005 and 199865. The first ten years of this millenni um where the highest ever recorded, 
confirming the finding of the IPCC that total temperature increased already with 0.76°C from 
the period 1850–1899 to the period 2001–200566. Annex 7.1 gives a further overview of some 
of the weather related global climate highlights in 201167. 
Such weather anomalies seem to result more frequently in weather related catastrophes. 
Munich Re68, one of the world's leading reinsurers, estimated that 2010 was the year with the 
second-highest number of natura l catastrophes since 1980, i.e. 950 (nine-tenths of these were 
weather-related), markedly exceeding the annual av erage for the last ten years (785 events per 
year). Two major weather relate d catastrophes stood out with a he at wave in Russia (July to 
September) and major flooding in Pakist an (also July to September).  
Figure 2: Weather catastrophes globally 1980 – 2009 
                                                 
61 UK Government, Department of Energy and Climate Change, Answer to the Online Questionnaire 
62 Government of Catalonia, Department of Environment and Housing, Answer to the Online 
Questionnaire & Czech Ministry  of the Environment, Answer  to the Online Questionnaire 
63 Czech Ministry of the Environment,  Answer to the Online Questionnaire 
64 The Permanent Representation of France to the Eu ropean Union, Answer to the Online Questionnaire 
65 World Meteorological Organization, press release nr 906,  
 http://www.wmo.in t/pages/mediacentre/ press_releases/pr_906_en.html  
66 IPCC, 4th Assessment Report, Climate Change 2007: Working Group I, Summary for Policymakers 
67 Source: National Oceanic and Atmospheric Administration. 
68 Munich, 3 January 2011, Press release Munich Re : Overall picture of natural catastrophes in 2010, 
http://www.munichre.com/en/media_relations/press _releases/2011/2011_01_03_press_release.aspx  
 
EN 17   EN  
 
 
Source: NatCatSERVICE, Geo Risks Research, Munich Re (July 2010) 
According to the European insuranc e and reinsurance federation (CEA)69 the World-wide the 
average number of major weat her-related natural catastrophes has increased significantly, 
from about 1.5 in the 1950s to 4.5 in recent years.  Apart from the increase in the frequency of 
weather-related natural catastrophes, the global economic imp act of these events has also 
increased significantly, with a re cord high cost of weather re lated catastrophes of US$ 228 
billion in 2005, which included Katrina, the costliest hurricane of all time.  
Whereas in 2010 the US coast was not affect ed majorly by hurricanes  in 2010, the number 
and intensity of the storms was one of the se verest hurricane seasons of the past 100 years 
with 19 named tropical cyclones70, equalling the number recorded in 1995 and putting 2010 in 
joint third place after 2005 (28) and 1933 (21). Also  in China severe weather events have been 
reported hitting the country with a frequency and intensity rarely seen, with areas severely 
affected by drought, with other experiencing exceptional rain71. 
Also 2011 started with major cat astrophes, associated with a strong La Niña, such as the 
floods affecting large areas of Australia and Sri Lanka.  
Munich Re concluded that "the high number of weather related na tural catastrophes and 
record temperatures both globa lly and in different regions provide furt her indications of 
advancing climate change". 
The consequent economic and social impacts can be large. For instance the World Bank and 
Asian Development Bank72 estimated that the Pakistani fl ood, in terms of the likely economic 
impact, is the worst natural disaster in Pakistan 's history. Overall damage is estimated at the 
                                                 
69 CEA, Brussels, June 2007: Reducing the Social a nd Economic Impact of Climate Change and Natural 
Catastrophes - Insurance Solutions and Public-Private Partnerships 
70 National Hurricane Center, 2010 Atlantic Hurri cane Season, http://www.nhc.noaa.gov/2010atlan.shtml 
71 http://www.cma.gov.cn/en/news/201101/t20110113_84904.html 
72 World Bank, Asian Development Bank: Pakistan Floods 2010 - Preliminary Damage and Needs 
Assessment, November 2010, Islamabad, Pakistan 
 
EN 18   EN equivalent of 5.8% of GDP, re sulting in likely substantial adverse impacts on economic 
growth.  
According to Munich Re, less than one third of global losses related to natural catastrophes 
were insured. This also affects high income regions such as the EU. For instance the most expensive individual event in the EU was winter  storm Xynthia, which mainly affected Spain 
and France and caused overall losses of € 4.5 b illion, of which only little more than 50 % was 
insured.  
But social impacts can also be dire. The Russian drought and subs equent fire were estimated 
by Munich Re to have led to 56000 dead as a result of heat and air pollution, making it the second biggest deadly natural disaster last y ear after the earthquake in Haiti. The Russian 
drought has been generally also indentified as one of the elem ents that contributed to the 
increasing global food prices over the last year . Climate change will have impacts on the long 
term on food production. As the IPCC indicated, the potential for food pr oduction is projected 
to decrease globally with increases in local  average temperature over a range of 1-3°C
73. 
Without taking additional action, temperatures are expected to rise well above 2ºC already 
this century (see also  chapter 5.1.5) leading to more weat her anomalies and catastrophes. In 
2007 the IPCC collated current scientific research in its 4th Assessment Report (AR4) on the 
potentially dramatic impacts of temperature increases (see Figure  3) showing potentially large 
scale impacts if temperatures indeed increase beyond 2ºC.  
As the Stern Review pointed out, this could have significant economic impacts with GDP per 
capita losses ranging from 1 to 8% (taking into account market, non-market impacts, risks of 
catastrophes and climate feedbacks) by the end of his century and 2.9 to 35.2 % by 220074. 
This could disproportionally affect the poorest, who are also the least capable of adapting to 
the impacts of climate change. 
But the largest impacts can be expected from potentially large scale irreversible impacts, 
including potential tipping points75 in our earth climate system with potential dramatic 
impacts. It is the magnitude and implications of such potential large scale events that are particularly difficult to capture in a quantitative analysis.  
                                                
 
73 IPCC, 4th Assessment Report, Climate Change 2007: Working Group Working Group II to the 
 Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Summary for Policy 
Makers. 
74 Stern (2007) The economics of climate change , Cambridge University Press, pp. 177-179. 
75 Lenton et al., 2008 
 
EN 19   EN Figure 3: Key impacts as a function of increasing temperature change 
Global mean temperature change of 2ºC 
relative to pre-industrial times 
 
Source: Adapted from 'IPCC, Contribution of Working Group II to the Fourth Assessment Report of the 
Intergovernmental Panel on Climate Change, Summary for Policymakers, Figure SPM.2, 2007  
For Europe similar effects can be expected of  climate change, with significant differences 
between regions. For a review of  recent findings, see annex 7.2. 
2.2. Avoiding dangerous climate change 
To avoid dangerous impacts, the EU has a st ated objective of limiting global climate change 
to a temperature increase of  2ºC. The Copenhagen Accord76 included reference to this 
objective. It was further confirmed within  the UNFCCC in the decision of the 16th Session of 
the Conference of the Parties to the UNFCCC that77 recognised that deep cuts in global 
greenhouse gas emissions are required according to science with a view to reducing global 
                                                 
76 UNFCCC, 2010, Decision 2/CP.15, Copenhagen Accord. 
77 UNFCCC, 2010, Decision -/CP.16, Outcome of the work of the Ad Hoc Working Group on long-term 
Cooperative Action under the Convention. 
 
EN 20   EN greenhouse gas emissions so as to hold the incr ease in global averag e temperature below 2°C 
above pre-industrial levels78.  
In order to have a likely chance to limit long te rm global average temperature increase to 2°C 
or less compared to pre-industrial levels, gl obal emissions need to peak by 2020 and be 
reduced by at least 50% globally by 2050 compar ed to 1990. The EU has endorsed this GHG 
emission reduction objective79. Annex 7.3 gives an overview of th e science that translates the 
2ºC objective into this ambiti on level of global GHG reductions. The Intergovernmental Panel 
on Climate Change (IPCC) reported in 2007 that the ex isting science indicat ed that developed 
countries would need to take a target within  the range of 80 to 95%  below 1990 emissions by 
2050 to limit global climate change to a temperature increase of 2ºC compared to pre-industrial levels
80. The European Council and Parliament  have endorsed this as an EU 
objective, in the context of necessary reductions according to the IPCC by developed countries as a group (see chapter 1.1).  
Whereas the EU as a whole has seen its GHG emissions (without LULU CF) decrease over the 
last 2 decades, the EU GHG emi ssions are not on a path in lin e with an 80 to 95% reduction 
below 1990 levels by 2050.  
In 2008 GHG emissions where estimated to be 11% below 1990 levels
81. For 2009 the EEA 
estimates even significantly lo wer emissions levels of 17% be low 1990, in part due to the 
impact of the economic crisis 82. Including aviation this re duction would be around 16% 
below 1990 levels. Currently implemented policies such as the EU emi ssions trading system 
(ETS) or the legally binding re newable energy and non-ETS targets would lead at best to 20% 
reductions by 2020 and provide an important basi s to decarbonise further. Decreases by 29% 
in 2030 and by 39% in 2050 compared to 1990 are projected (see Figure 4) mainly delivered 
by ETS sectors, with em issions nearly 50% lowe r than 1990, due to its linearly decreasing cap 
also beyond 2020. 
                                                 
78 It also includes the need to consider in the context of a periodical review the strengthening of the long-
term global goal on the basis of the best available scientific knowledge, including in relation to 
temperature rises of 1.5°C. 
79 The EU has expressed itself as preferring the option of global peaking by 2020 and to have global GHG 
emissions reduced at least with 50% compared to 1990 levels by 2050. See Council conclusions on 
Climate change, Follow-up to the Copenhagen Conference, 3002nd Environment Council meeting, Brussels, 15 March 2010; European Council Conclusions, 29/30 October 2009,  
80 IPCC, 4th Assessment Report, Climate Change 20 07: Working Group III: Mitigation of Climate 
Change, chapter 13.3.3 Proposals fo r climate change agreements, box 13.7. Scenario category for GHG 
concentration levels of 450 ppmv CO 2-eq. 
81 Source: Annual inventory submissions to the UNFCCC, 2010. This excludes bunker fuel GHG 
emissions. If emissions from aviation fuels sold in the EU would be included, the level of emissions 
would rather be around -10% compared to 1990 in 2008. 
82 EEA 2010a, this does not include the emissions from aviation, nor other bunker fuels. 
 
EN 21   EN Figure 4: GHG emissions in the EU under current trends and policies 
GHG emissions in the EU in reference case
0%20%40%60%80%100%
1990 2000 2010 2020 2030 2040 20501990 EU27 GHG (incl. aviation) = 100%
Total ETS Non ETS 
Source: PRIMES, GAINS (reference scenario) 
The energy system remains th e single largest source of emissions in the EU producing around 
80% of GHG emissions, with the energy sector itself taking the largest share (31% of all emissions) followed by transport (22%), industr y (11%) and heating for housing (11%). Most 
of the energy emissions are CO2 emissions, in total representing 83% of the EU's emissions, 
including certain CO
2 emissions from certain oxid ation processes in industry. 
Figure 5: GHG emission profile EU27, per sector 
Other
0.2% Agriculture
9.6%
Industrial 
process 
emissions
8.3%
Energy
79.1%Waste
2.8% N2O
7.4%F-gasses
1.4%
CH4
8.4%
CO 2
82.9%Other
0.2% Agriculture
9.6%
Industrial 
process 
emissions
8.3%
Energy
79.1%Waste
2.8% N2O
7.4%F-gasses
1.4%
CH4
8.4%
CO 2
82.9%
Source: Annual inventory submissions EU Member States to the UNFCCC, 2010, GHG emissions 2008 
excluding emissions and absorption from Land Use, Land Use Change and Forestry  
All sectors need to contribute to limitin g GHG emissions, but it  is clear that CO 2 will be the 
single largest gas contributing to any GHG emission reductions total. Therefore the term 
'decarbonisation' is used when referring to th e need to achieve very  large greenhouse gas 
emission reductions, whether or not thos e reductions are take the form of CO 2 or other GHGs. 
2.3. Growing energy resource and security concerns  
 
EN 22   EN Today, some 55% of Europe's primary energy is  imported. With reduced oil and gas output in 
the North Sea, this is expected to in crease to 57% by 2030 and 58% by 2050, despite 
increasing contributions from renewables (achievement of 20%  target by 2020). For oil and 
gas this is even higher, with import depende ncy of over 60% for gas and 80% for oil today 
already, increasing to over 80% and 90% in 2030 and to over 90% (gas) and close to 100% 
(oil) in 2050 in the worst case if no action is taken. While energy depe ndence in itself does 
not constitute an economic problem per se, ther e are several energy deve lopments that require 
careful attention.  
First, increasing energy consumption in emer ging economies will continue to push up demand 
and competition for gas and oil, requiring the exploration of less accessible and more expensive resources. Already t oday oil prices exceed 100$ despit e the economic crisis. As an 
example of increasing demand in emerging econom ies, the IEA projects passenger vehicles to 
double from 800 million vehicles today to 1.6 billion in 2035, with the increase coming 
almost exclusively from non OECD countries.  
Figure 6: Incremental primary energy demand, 2008-2035 
 
Source: IEA, WEO 2010 
Secondly, IEA data suggest that supply side investments are not in -line with increasing 
demand and with the declining prod uction of depleting oil fields. It projects that conventional 
crude oil production will plateau for the next 25 years with additional demand being met by 
unconventional sources. By 2035 it is estimated that some 75% of co nventional crude oil 
production will have to come from fi elds yet to be developed or found. 
 
EN 23   EN Figure 7: World oil production  
 
Source: IEA, WEO 2010 
Thirdly, global reserves are often localised in geo-politically unstabl e regions, and are in 
many cases owned by state-run companies that ar e not always reacting ad equately to market 
forces. Additional supply would need to be deli vered to a large extent by the Gulf region.  
Figure 8: Incremental oil production by country 
 
Source: adapted from IEA, WEO 2010 
While the overall dependency of the economy on oil has decreased significantly, transport 
still remains for more than 90% dependent on oil.  
Unless significant increases in resource efficiency are achieved, the European economy will 
continue to be exposed to serious risks relate d to energy prices, includ ing potential oil shocks 
or gas shortages. 2010 is an example of this volatility. The IEA estimated that the EU oil 
import bill has increased in 2010 alone with $ 70 billion, and is estimated to represent in 2011 
2.1% of its GDP83. As experienced in the 70s and early 80s , oil price shocks can again lead to 
                                                 
83 Financial Times, interview chief economist F. Birol of the International Energy Agency, 05/01/2010. 
 
EN 24   EN deep recessions, reduced competitiveness and rising unemployment. Household incomes and 
transport dependent industries will suffer from in creasing oil prices, resulting in inflation as 
well as budgetary and trade deficits. 
2.4. Making growth and jobs sustainable by overcoming barriers to the development 
and deployment of low carbon technologies 
Today, the EU faces the most serious economic and financial crisis in decades. There is a 
need to get out of this crisis , and to create new jobs as qu ickly as possible. Beyond this 
timeframe, further efforts are needed to turn th e EU into an economy delivering high levels of 
employment, productivity, competitiveness, sustai nability and social cohesion. The Europe 
2020 strategy sets the framework for delivering smart, sustainable and inclusive growth and 
jobs. To become a resource efficient, carbon low economy the way energy is produced and 
consumed will need to under go fundamental changes with a ra nge of low carbon  technologies 
deployed at a much wider scale than today. These technologies will be one of the key growth sectors of the future and a source of competitiv e advantage for a wide range of manufacturing 
industries in a world that will goes towards low carbon development, and their widespread deployment is considered one of the ke y domains of sustainable job creation. 
However, low carbon technology development is  not only hampered by market failures 
related to the non inclusion of GHG externalities. There is al so the well known problem of 
uncertainty and knowledge spill-over in general,  which may lead to lower investment in R&D 
as optimal from a societal perspective. In a ddition, there is a commercialisation problem for 
capital intensive technologies in  sectors and markets in which investments are marked by long 
lead times. Energy technologies are a prime example of such problems
84. It will hence be 
critical to foster low carbon technology deve lopment and accelerate the learning curve as 
cost-effective as possible. The wide scale a pplication of low carbon technologies, replacing 
today's mainstream technologies, and often tran sforming the required skills, presents both a 
major challenge and an opportunity fo r European businesses and employees. 
How the EU develops its R&D, demonstratio n and innovation policies, creates framework 
conditions inducing technological change and fosters the competitiveness of a wide range of 
key manufacturing industries of the EU is an essential consideration in the overall 
development of a low carbon economy roadmap.  
2.5. Sustainable shift toward s a low carbon economy 
The transition towards a low a carbon economy has important implications for the sustainable 
use of resources beyond energy resources, and hence on other elements of the Europe 2020 Resource Efficient Europe Flagship. Reducing em issions from fossil fuels tends to coincide 
with significant reducti ons in pollutants other than GHGs . This reduction in local air 
pollutants has significant co-benefits; not only impacting positively human health, but also reducing pressures on our ecosystems and additi onally decreasing the costs of air pollution 
specific polices.  
The roadmap also needs to consider land use and agricultural and forestry practices and the 
use of the available land for different servi ces: the production of sufficient food and the 
                                                
 
84 See analyses for the SET Plan Communication on Investing in the Development of Low Carbon 
Technologies, SEC(2009) 1297. 
 
EN 25   EN enhancement of food security, the production of  feed, fibre (timber, pulp & paper) and the 
maintenance of essential ecosystem services (s oil quality, water availa bility, biodiversity). 
Whilst individual assessments of these change s would go beyond this impact assessment, the 
most relevant element to the low carbon econo my roadmap is the role of bio-energy. Bio-
energy could be a significant element in the shif t away from fossil fuels, however its use must 
be considered as part of wide r sustainability view of land us e, within the EU and globally. 
This requires careful analysis to identify the conditions under which different needs can be 
made compatible. In this regard, changes towa rds more sustainable agricultural and forestry 
practices including potential produc tivity increases are important  parameters to consider. 
3. OBJECTIVES  
3.1. General objectives  
Shape a vision and strategy of how the EU can  become a low carbon economy by 2050 and in 
doing so make its contribution to the global cha llenge to keep climate change below 2°C, to 
prevent severe and irreversible impacts of  climate change on the global economy and 
ecosystems. 
3.2. Specific objectives  
The specific of this roadmap objective is to  develop give insight on how the EU policy 
framework should develop in the next 10 years and beyond to (1) enable deep reductions of 
greenhouse gas emissions consistent with scie nce while at the same time (2) reducing 
vulnerability to oil shocks and other energy se curity concern, and (3) reaping opportunities for 
sustainable growth and jobs (related to ne w low carbon technologies), while taking into 
account wider sustainability and reso urce efficiency considerations. 
3.3. Operational Objectives  
This impact assessment has the intention to give information on the overall and sectoral 
pathways, the underlying technological and stru ctural changes required, the investment and 
cost patterns, impacts on energy security and othe r impacts, synergies and trade-offs related to 
the broader sustainability and resource efficiency  agenda that would need to be associated 
with a economy that decarbonises by 2050.  
In developing these insights, it is important to take into account:  
(1) the specificities of sectors, and the interaction between them; 
(2) risks and uncertainties related to clim ate and energy actions by third countries, 
subsequent energy price developments  and technological developments;  
(3) synergies with other policy objectives, co-benefits and potential trade-offs. 
The insights from this impacts assessment can be used as guidance when further developing 
climate policies and specific sectoral roadmaps at sectoral detail (e.g. the Transport White 
Paper and the Energy Roadmap 2050). Such policies can include: 
 
EN 26   EN (1) to set more clearly sectoral milestones or potential targets to mobilise stakeholders, 
benchmark progress and give certai nty to the business community;  
(2) to develop policy instruments that provide  the specific required economic stimuli 
towards low carbon investments, such as the ETS; 
(3) to develop a broader policy framework co mprising regulatory, sectoral, budgetary and 
financial measures to enable  the low carbon transformation. 
4. SCENARIOS TO DECARBONISE THE EU IN LINE WITH THE 2ºC OBJECTIVE  
4.1. Methodology 
This impact assessment is not a traditional impact  assessment that lists policy options to meet 
a certain policy goal and that then assesses thes e policy options to determine a preferable one. 
It assesses rather a set of possible future 'decarbonisation' scenarios to get more robust 
information on how the EU economy could decarbonise by 2050 in line with the 2ºC objective and compares this to a re ference scenario that projects existing policies. It does this 
at two levels, the global level, because clim ate change and energy security are to a great 
extent global problems and cannot be addresse d by looking at the EU only, and, as primary 
focus of the analysis, at EU level, but consistent with the different global settings. 
Projecting sectoral developments up to 2050 is a long time from today. If ones looks back 
forty years, for instance in the field of energy, one sees fundamental changes that might have 
been difficult to project exactly  in 1970. Commercial nuclear wa s still tiny, North Sea oil and 
gas exploration were not yet developed and re newables other than hydro were not used on a 
large scale commercial basis. On the other hand, these technologies were already proven 
technologies in the 1970s, but still required further innovation to make them widely 
commercially available. The incentives to do so were provided by the numerous oil crises 
since the 1970s, in combination to policy initia tives that reacted on th ese crises and later on 
policies to achieve the Kyoto Protocol climate ta rgets, as in part was demonstrated with the 
huge surge in renewable technologies that came to  market in the last 5 years. Hence also 
important long term regularit ies and stable causal relati ons can be observed on which 
quantitative modelling can build for scenarios extending in the future. 
The methodology applied uses energy system mode lling tools that project the evolution in 
supply and demand sectors in a coherent manner,  without looking at any sector in isolation. 
This coherent modelling set also allows to take into account resulting changes in energy prices, an important driver for change in th e energy system. The models used are POLES for 
the global energy system modelling and PRIM ES for the EU energy system modelling.  
This modelling framework is expanded with spec ific modelling tools that  address sectors that 
emit greenhouse gases that are not directly related to th e energy system. The Non CO2 
emissions from agriculture and industry are asse ssed with the GAINS model, with input from 
the CAPRI agricultu ral model to assess production from ag riculture and subsequent emissions 
(e.g. livestock emissions, emissions from fertiliser use). The land use, land use change and forestry emissions and removals are assessed with the G4M and GLOBIOM. These modelling 
tools are used in a coherent manner with the energy system models. For instance the land use 
and agriculture models require to foresee, where possible, sufficient supply of natural 
 
EN 27   EN resources to correspond to the demand for bio- energy and biofuels from the energy system 
models. 
Not all aspects could be modelled. Significa nt environmental impacts that go beyond 
greenhouse gas emissions, such as on biodivers ity, were not assessed  quantitatively. The 
exception is air pollution, for which the impact  through climate action was assessed using the 
GAINS model.  
GDP and overall employment impacts, as we ll as competitiveness impacts for energy 
intensive industries were assessed using the GE M E3 model. It was not possible to assess 
impacts on different household in come levels, neither distributio nal impacts at Member State 
level. The global version of GEM E3 that wa s used does not have Member States detail. 
Thus a quantitative methodology is the core of this assessment,  supplemented by qualitative 
considerations where appropriate . It is applied in a way that factors in uncertainties but 
ensures for a coherent approach based on proven technologies, applying the following 
principles and limitations:  
• Take into account existing capital infrastruc ture and limitations regarding capital stock 
turn-over; 
• It is not possible to predict one future. Un certainties and different options must be 
recognised. In this impact assessment the focus is on the major technological and energy 
price drivers. The level of the energy price is  driven predominantly by the level or not of 
global action on climate change; 
• Only by looking at different scenarios is it  possible to draw more robust conclusions; 
• Limitations of modelling long term horizons must be considered. Technological progress 
over time is assumed as typical in long term  modelling (see also annex 7.9.1).Potential 
break-through technologies depending or unfores eeable structural change have not been 
taken into account. A particular example is  the limitations in terms of modelling energy 
storage and smart grid solutions that woul d enable very wide scale deployment of 
distributed generation.  
• Similarly, major lifestyle changes, beyond demand side effects of carbon pricing on 
behaviour, have not been taken into account in  quantitative terms, as  this goes beyond the 
capabilities of the quant itative modelling tools. 
• The modelling also could not take into account effects of the changing climate itself on 
GHG emissions and potential reductions. These will have an impact on the energy system 
and the agriculture sector. Effects can go in  different directions and will depend on how 
climate changes in different parts of the EU (e.g. more demand for cooling, less demand 
for heating, impact on water availability fo r power plant cooling or hydroelectricity 
production,, changing agricultura l patterns). These impacts can also be more or less 
outspoken depending on fragmented or global ac tion to mitigate climate change. Research 
on these aspects is ongoing (see for example the ClimateCost project85). 
                                                 
85 http://www.climatecost.cc/ 
 
EN 28   EN By comparing results from different decarbonisati on scenarios, it is possi ble to extract more 
robust conclusions, how key parameters influenc e the results and how va rious parts interact 
with each other. The impact assessment hence considers what it would require for the EU to 
achieve very large emissions reductions in line with the 2ºC obj ective under different 
alternative scenarios ("decarbonisation scenario s", instead of policy options) which vary in 
terms of key parameters, e.g. in terms of th e global conditions in which decarbonisation 
would need to materialise, in terms of the ke y energy developments (most notably fossil fuel 
prices), and in terms of key te chnological changes over time. Ch apters 4.2 and 4.3 will outline 
the different scenario options assessed and e xplain the quantitative methodology at global and 
EU level in more detail.  
4.2. Action in a global context 
4.2.1.  EU internal action in th e context of global action 
To achieve the stabilisation of  GHG concentrations at a suffici ently low level to be in line 
with the 2ºC objective, IPCC AR4 concluded that the existing science estimated that 
developed countries would need to take a GHG emission reduction target within the range of 
80 to 95%, below 1990 levels by 205086. The IPCC was not explicit about what the level of 
internal reductions would need to be to achieve  this target of 80% to  95%, and how much of 
this could be achieved via the international car bon market.  
To assess the order of magnitude of the requi red EU's own internal GHG emission reductions 
by 2050, a review of recent science is presente d in chapter 5.1.1. Additionally, specifically for 
this impact assessment, the POLES model87 was used to assess a mitigation scenario that 
reduces global emissions by 50% by 2050 compared to 199088.  
4.2.2.  Fossil Fuel Prices and how they re late to global and EU action  
Fossil fuel prices matter when one needs to assess required efforts and impacts of reducing 
GHG reductions in the EU. But fossil fuel prices are not determined by the EU but are to a large extent set in the global market. At the same time global action on climate change can 
impact the price level of these fossil fuels due to the impact in reduced global energy demand and changes in the type of energy sources used.  
To assess this potential interaction of climate action on a global level and fossil fuel prices 3 
scenario's are compared in ch apter 5.1.2, using the POLES model: 
– Global baseline: globally no a dditional climate actio n is undertaken up to 2050. The EU 
implements the climate and energy package bu t nothing additional is undertaken (for the 
EU this is actually similar to the so called reference case). 
                                                
 
86 IPCC, 4th Assessment Report, Climate Change 20 07: Working Group III: Mitigation of Climate 
Change, chapter 13.3.3 Proposals for climate change agreements, box 13.7. 
87 For a description of the major drivers in the global POLES scenarios (i.e. global GDP and population 
growth) see annex 7.5. 
88 Preliminary results that looked at the required EU internal effort were alr eady presented in the Staff 
Working Paper, Part II, Chapter 4, accompanying the Communication "Analysis of options to move 
beyond 20% greenhouse gas emission reductions and assessing the risk of carbon leakage" (SEC(2010) 
650). 
 
EN 29   EN – Global Action: global action th at leads to a reduction of global emissions of 50% by 2050 
compared to 1990 (same scenario as the one presented in chapter 4.2.1) 
– Fragmented Action: EU pursues an ambitious  reduction strategy (represented by the same 
carbon price signal as in the Gl obal action scenario up to 2050).  But other countries do not 
follow the Global action scenario. They only comply with the lower end of the Copenhagen Accord pledges until 2020
89. After 2020 these countries are assumed not to 
increase their effort (represe nted by assuming constant a ca rbon price signal after 2020 in 
line with the required  carbon price that achieves thei r Copenhagen pledge in 2020). 
Countries with no Copenhagen pledge are assumed to follow baseline.  
This analysis will give informa tion of potential price impacts on fossil fuel prices of global or 
fragmented climate action. This information w ill be used to determine fossil fuel price 
assumptions in subsequent scenarios that model ambitious EU climate action in more detail (see chapter 5.2)
90.  
4.2.3.  Macro economic impacts 
EU action on GHG emissions does not only have  direct impacts through changing production 
and consumption patterns in fore most the energy sector, but it al so has indirect effects on the 
economy on a wider scale. To as sess these, a macro economic m odel is used, i. e. the GEM-E3 
model, that can also look at th e indirect effects of interconnecti ons between sectors with in the 
EU and third countries with home EU sectors compete.  
The impact of scaling up EU action up to 2020 beyond the present 20 % target was already 
assessed for the Communication 'Analysis of options to move beyond 20% greenhouse gas 
emission reductions and assessi ng the risk of carbon leakage'91. The Staff Working Document 
assessed emission reduction levels by 2020 similar to those assessed in this impact assessment, with internal reduction by 2020 in the range of 20 to 25%.  
This Macro economic modelling was revisited and extended to the 2030 time horizon, with a 
focus on the impact of ambitious EU action wi thout other regions going beyond the pledges of 
the Copenhagen Accord after 2020. 
For a more detailed description of the scenar ios assessed and the impact on GDP, employment 
and production in the energy intensive industries exposed to international competition see chapter 5.1.3.  
4.2.4.  The missing global link, agricul ture, forestry and energy  
Most models only address emissions from en ergy and industry. But a significant amount of 
global emissions comes from the agriculture a nd forestry sector (typi cally deforestation), 
                                                
 
89 Under the Copenhagen Accord the largest global emitters have pledged action to mitigate emissions. 
This is estimated not to be sufficient to be on track to achieve the 2ºC objective. See for instance: 
Chapter 2.4, Staff Working Paper, Part II, accomp anying the Communication "Analysis of options to 
move beyond 20% greenhouse gas emission reductions  and assessing the risk  of carbon leakage" 
(SEC(2010) 650) or UNEP: The Emissions Gap Report: Are the Copenhagen Accord pledges sufficient 
to limit global warming to 2 or 1.5°C?, 9 November 2010. 
90 The analysis presented in chap ter 5.2 is done by the PRIMES – GAINS modelling tools. These tools 
focus on the EU and have fossil fuel  prices as an exogenous variable. 
91 COM(2010) 265 final, SEC(2010) 650 
 
EN 30   EN representing around 30% of global emissions92. At the same time, remaining forest act as a 
carbon sink. Climate change policies in the energy sector will have an impact on those emissions and removals through increased dema nd for bio-energy. This cannot be seen in 
isolation. Production and trade of agriculture a nd forestry products will be influenced by 
climate action, both directly and indirectly.  
At the same time in order to achieve a 50% GHG reduction globally, also these sectors should 
actually contribute considerably to global em issions reductions by 2050. To achieve the most 
efficient outcome, the sink function and compet ing uses (such as for materials and energy) 
should be balanced. Important que stions can be raised regardi ng the impact of these opposing 
forces on the agricultural and forestry sector on  a global scale, sectors that are crucial for 
global sustainable development (i.e. food suppl y, biodiversity, etc.). Chapter 5.1.4 assesses 
this in more detail. 
4.2.5.  EU action and global action, the like lihood of meeting the 2ºC objective 
Meeting the 2ºC objective requires the halvi ng of global emissions by 2050 (see also annex 
7.3 for more background). EU actio n alone cannot achieve  this objective, given that the EU 
represents only a bit more than 10% of globa l emissions, a share that  continues to decrease
93. 
Chapter 5.1.5 assesses the likelihood of achie ving the 2ºC objective in  the three different 
action cases as examined in chapter 5.1.2, i.e.  the global baseline, fragmented action and 
global action scenarios. 
4.3. The EU perspective towards a low carbon economy and society by 2050  
Whereas chapter 4.2 introduced scen arios that look at impacts of action on a global scale, this 
chapter will focus on EU action,  using an EU quantitative mode lling approach, looking at the 
different actions and investments that can over time lead to large scale reduction of GHG emissions in the EU. 
To do so, the PRIMES energy sy stem model covering all EU CO
2 emissions is used in 
combination with the GAINS emissions model for projections of EU  Non CO2 emissions, 
using also the agriculture EU production projections from the CAPRI agricultural model. See 
annex 7.4 for more background information on the modelling tools used and annex 7.9.1 for an overview of assumptions used in all s cenarios with PRIMES – GAINS modelling.  
A common feature of EU-level models is that va riables mainly determined at the global level 
(e.g. fossil fuel prices) are exogenous, i.e. have  to be defined by assumptions. Therefore some 
results of the analysis  with the POLES model looking at the global scenarios presented in 
chapter 4.2 and assessed in deta il in chapter 5.1 are important  inputs into the scenario 
development at the EU level. 
Foremost there is the EU in ternal reduction effort require d by 2050. As chapter 5.1.1 points 
out, internal reductions in the order of magn itude of 75%, 80% or more are projected as 
appropriate for the required EU internal re duction in the contex t of achieving the 2ºC 
objective. In line with these results a decarboni sation challenge of -80% domestic reductions 
of GHG below 1990 by 2050 is used as key constr aint for the EU decarbonisation scenarios. 
                                                
 
92 IPCC, 4th Assessment Report, Climate Change 20 07: Working Group III: Mitigation of Climate 
Change, Technical Summary, figure TS.2b: GHG emissions by sector in 2004. 
93 EEA 2009 
 
EN 31   EN Furthermore as chapter 5.1.2 demonstrates, the EU  could be confronted with considerably 
different fossil fuel prices depending on what level of climate action others do. In case of 
fragmented action fossil fuel prices seem likel y to remain high even if the EU takes action 
itself, with a remaining risk of future oil shocks  and high fossil fuel prices. In the case of true 
global action these risks on oil shocks or high fossil fuel prices reduce, actually showing a 
considerable reduction of fossil fuel prices co mpared to the baseline price development. 
Hence low import fossil fuel prices are introdu ced to reflect significant impacts on global 
fossil fuel prices in case of Global action on climate change while fossil fuel prices are 
assumed to increase in the reference scenario, which projects current trends and policies, as 
well as in the Fragmented action scenarios,  which models fragmented global action on 
climate, fossil fuel prices are assumed to in crease over time. Additionally a high fossil fuel 
price scenario and an oil shock scenario are m odelled to reflect the remaining risk of such 
events in case of only fragme nted action at global level. 
The developments in the decarbonisation scenarios to meet the -80% constraint are driven by 
carbon prices relating to CO 2 and Non CO 2 emissions. This is in line with approaches used in 
climate mitigation science94 and differs from the approa ch of some stakeholder 2050 
scenarios which start with a predefin ed target for the energy mix in 205095. A common carbon 
price across all sectors and gases is assumed. This reflects economic cost-effectiveness 
considerations, because it ensure s that in all sectors the same level of economic effort is 
applied to reach the target.  
Chapters 4.3.1 to 4.3.3 explain ke y features of the different EU scenario types, e.g. the 
reference scenario, decarbonisation scenar ios in the context of global action and 
decarbonisation scenarios in the context of fragmented action. The table below gives an 
overview of the detailed EU scenarios assessed. 
Table 1: Overview of all EU level scenarios 
SCENARIO KEY ASSUMPTION 
REFERENCE  ONLY CURRENT TRENDS AND 
POLICIES 
GLOBAL CLIMATE ACTION  -80% GHG IN EU, GLOBAL ACTION 
RESULTING IN REDUCED ENERGY 
IMPORT PRICES COMPARED TO 
REFERENCE 
Effective and widely accepted technology Enabling framework for all technologies 
Delayed CCS – higher efficiency Lower contribution CCS (timing and costs) 
Delayed electrification  Lower contribution electrification of transport 
(timing and costs) 
Delayed climate action  Reinfor ced action only from 2030 onwards 
FRAGMENTED ACTION  ONLY FRAGMENTED ACTION 
                                                 
94 See for instance work done in the context of the ADAM FP7 project (Schade et al., 2010) or the 2050 
EU vision report of the Netherla nds Environmental Agency and the Stockholm Resilience Centre (PBL, 
2009). 
95 E.g. European Climate Foundation: Roadmap 2050. A practical guide to a prosperous, low-carbon 
Europe. Technical Analysis, 2010; European Renewable Energy Council: Re-thinking 2050 – a 100% Renewable Energy Version for the European Union, 2010. A mixed approach of emission constraints 
and predefined technological choices is taken by th e Stockholm Environmental Institute: Europe's share 
of the Climate Challenge. Domestic Actions and International Obligations to Protect the Planet, 2009.  
 
EN 32   EN GLOBALLY, NOT RESULTING IN 
REDUCED IMPORT ENERGY PRICES 
COMPARED TO REFERENCE 
Effective and widely accepted technology Enabling framework for all technologies, -
80% GHG target maintained 
Specific measures for sectors exposed to global competition (2 variants) a) As Effective and widely accepted 
technology, but society compensating additional costs energy intensive industry b) carbon prices for energy intensive industries only as in reference scen ario and thus resulting 
in lower emission reductions in this sector 
High fossil fuel price variants a) Oil shock occurring 2030 with prices 
returning close to reference afterwards b) Structural increase of fossil fuel prices from 
2030 onwards 
Delayed climate action  Reinfor ced action only from 2030 onwards 
 
4.3.1.  Reference scenario: where do current policies lead us to by 2050? 
The aim of the reference scenario is to project trends up to 2050 based on already 
implemented EU and national policies96. A common reference scenario has been defined 
between different Commission services for this pu rpose. It also include s those policies agreed 
in the Climate and Energy package for which national measures have not yet been fully 
implemented, i.e. the legally binding targets fo r renewables to achiev e a 20% overall share 
and a specific 10% share in transport and the legally bi nding targets for non-ETS GHG 
emissions and the ETS target to achieve the 20 % reduction target in 2020 compared to 2005. 
Current policies, includ ing the achievement of the legally  binding renewables and greenhouse 
gas target do not result in the full achie vement the 20% energy savings target by 2020, 
compared to the 2007 baseline, but would only realise half of this. 
See annex 7.9.2 for more details on the specific policy assumptions  for the reference scenario. 
See Figure 4 in chapter 2.2 for the overall emission profile in the reference case. 
It provides a long term baseline or benchmark with which the results of the decarbonisation 
scenarios can be compared. It is a projection of  developments in the absence of new policies 
which will be decided at the EU and national le vel. It is not a forecast but a benchmark for 
evaluating new policy measures against develo pments under current trends and policies.  
International fossil fuel price  assumptions do not presuppose si gnificant global climate action 
and thus follow global baseline projections. En ergy import prices follow a rising trend with 
oil prices increasing to 127 $(08)/barrel in 2050. Gas pric es follow oil prices reaching 98 
$(08)/boe in 2050 whereas coal prices remain much lower at 30 $(08)/boe97 (see Figure 9).  
4.3.2.  Decarbonisation scenarios in the co ntext of Global Climate Action  
                                                 
96 The agreed cut-off date for policies which could be taken into account is March 2010.  
97 Baseline global fossil fuel prices were calculated based on the stochastic PROMETHEUS world energy 
market model. These price developments are comp arable with the IEA World Energy Outlook 2009. 
 
EN 33   EN An internal greenhouse gas emission reduction c ontribution of around 80% in 2050 is taken as 
key constraint for exploring different scen arios on how such a decarbonisation would be 
possible in the EU.  
To ensure that decarbonisation efforts are comparable across options and scenarios, the 
equalisation of cumulative emissions across scen arios is used as an additional constraint, 
underlining the importance of the climate impa cts of cumulative emissions over the whole 
period until 2050 (and beyond)98.  
Common carbon values applied to  all sectors and greenhouse gas emissions, covering ETS 
and Non ETS sectors, are used as key driver  to reach the GHG emission reductions and to 
ensure cost efficient reductions across sectors. As economic drivers, they influence technology choices and demand behaviour. Their re spective level is not an assumption but a 
result of the modelling. 
A second driver are international energy prices . Given that these scenarios assume global 
action, significantly lower fossil fuel prices are assumed than those in the reference scenario. 
Their order of magnitude has been set at a similar level as the results of the global analysis in 
chapter 5.1.2 and recent IEA projections which assessed the impacts of ambitious climate 
policies
99. 
Figure 9: International energy prices in referen ce and in the context of global climate action 
020406080100120140
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050$08/boeOil reference
Oil global action
Gas reference
Gas global
action
Coal reference
Coal global
action
 
Starting from these common assumptions, diff erent decarbonisation opti ons are defined to 
reflect uncertainty and the role and impact of potential key drivers to decarbonise. In 
particular, different assumpti ons on technological progress a nd diffusion speed of key low 
                                                 
98 Meinshausen et al. 2009  
99 International Energy Agency, World Energy Outlook 2009, Energy Technology Perspectives 2010 
 
EN 34   EN carbon technologies have been specified to assess the impact  of remaining barriers to 
technology development (for those technology assumptions which remain constant across 
scenarios see annex 7.9.1, for a description of the technology assumptions that differ across 
the scenarios see annex 7.9.3):  
• Effective and widely accep ted technology scenario: An Effective and widely accepted 
technology scenario assumes that climate polic ies provide a sufficiently enabling context 
which overcomes barriers to the commercial  deployment of low carbon technologies, such 
as energy efficiency and renewables, car bon capture and storage (CCS), nuclear and 
electrification of transport. 
• Delayed CCS scenario:  Carbon Capture and Storage has the potential to  become a key 
low carbon technology which a llows continued use of fossi l fuels (coal and gas) for 
electricity supply even under a strict carbon  constraint and enab les radical emission 
reductions of industrial processes. Howeve r, the commercialisation of the technology 
presupposes continued improvement of capture technologies and the availability and public 
acceptance of a new transport and storage infr astructure for CCS. A Delayed CCS scenario 
explores the consequences if CCS is enabled less successfully and to which extent other 
low carbon power technologies and increas ed energy efficiency can step in.  
• Delayed electrification scenario: Electrification of transport is currently widely regarded 
as promising a decarbonisati on technology in the transport s ector. These expectations are 
underpinned in particular by recent technological  progress in battery development and an 
increasing offer of electric vehicles on the mark et. However, it is uncertain if the current 
speed of development and cost reductions continues and how quick a corresponding 
fuelling infrastructure will be developed. A delayed electrification scenario  explores the 
consequences for abatement in other sector s and technologies if further innovation and 
large scale deployment is delayed. To enable  a meaningful analysis of the impacts of 
technology failure, it is not assumed that another possible future key transport decarbonisation technology, e.g. hydrogen and fuel cells, could easily step in. 
Delayed climate action scenario:  In addition to these technol ogy variations, the impacts of a 
10 year delay to further climate action beyond the current Climate and Energy package are 
explored in a delayed climate action scenario. Is  it still feasible to achieve deep carbonisation 
levels in 2050 under these conditions, and what  would be the economic impacts of such a 
delay?  
4.3.3.  Decarbonisation in the context of Fragmented Climate Action  
The scenarios grouped under fragmented clim ate action explore the important possible 
consequences if the world did not act in line wi th the 2ºC target, but the EU would maintain 
its policy of climate leadership and act consisten tly with available scientific evidence of what 
the required reduction effort shoul d be. Such scenarios would be  characterised by two main 
differences with regard to global climate acti on as described in chapter 4.3.2 (for a technical 
description of the different  scenarios see annex 7.9.3):  
World energy prices would be not as low as in case of a Global Climate Action scenario, but 
correspond rather to those in th e context of a fragmented action globally. As can be seen from 
the analysis in chapter 5.1.2 this  results in a significantly lo wer reduction in global energy 
prices and continued risks regard ing long term energy security.  
 
EN 35   EN This is reflected in the detailed EU projections by assuming the same fossil fuel import price 
level as in the reference scenario. The impact of a fossil fuel prices that continue to increase 
over time is explored only in the 'Effective and widely accepted technology scenario' variant 
for the EU. Furthermore 2 high oil price scenarios are projected using this scenario variant. As 
such it isolates the effects of different fo ssil fuel prices and allows for meaningful 
comparisons of the impact on EU decarbonisation efforts between the contexts of global and fragmented climate action.  
The 2 high oil price scenarios reflect the remaini ng realistic risk of oil price development in a 
world that does not act globally on climate change. The exact probability and extent of 
impacts of such risks cannot be predicted. To appropriately take rela ted uncertainties into 
account, two different scen arios are developed:  
• Oil Shock  scenario : This  explores the impacts of a temporary oil price increase, assumed 
to double prices around 2030.  
• High Oil Price scenario : This explores a world where demand side reactions are not 
sufficient to counterbalance problems related to supply
100. It assumes that prices remain at 
a continuously high level after the pr ice increase in the period around 2030. 
Both scenarios are also assessed in the contex t of the reference case in the EU with no 
additional climate action beyond the existing policie s to see by comparison what the impact is 
of fossil fuel price risks on the EU with or without additional climate policies in place. 
Specific measures  for sectors exposed to global competition: 
Furthermore in the context of fragmented acti on in which the EU acts more strongly than 
other countries in the world ca rbon leakage may become a problem. An assessment of impact 
of this is on the EU economy overall and more  specific on the energy intensive industries up 
to 2030 was carried out using a macro-economic model, GEM E3, in chapter 5.1.3. 
But also more specific measures in the EU fo r sectors exposed to global competition after 
2030 up to 2050 are considered, a timeframe where CCS becomes important to reduce industrial emissions in the energy intensive s ectors. These scenarios explore either what 
compensation energy-intensive industries w ould require for the deployment of such 
technologies or what the impact would be of  not requiring additi onal emission reductions 
compared to the reference scenario for such industries. The EU internal efforts in power 
generation, land transport, heat ing and cooling and agriculture  are, however, assumed to 
remain similar to those in the global climate action scenario. Again this scenario was only modelled using the 'Effective and widely accep ted technology scenario ' variant for the EU. 
Finally also in the context of fragmented action, a delayed climate action  scenario is 
explored. What are the impacts of such a delay if energy prices re main at the higher levels of 
the reference scenario?  
                                                
 
100 For instance due to underinvestment in new capacity, problems related to unconventional oil sources, 
problems with deep sea exploration or simply political insecurity in key exporting countries) 
 
EN 36   EN 5. ANALYSING THE IMPACT OF DIFFERENT SCENARIOS  
5.1. Action in a global context 
5.1.1.  EU internal action in th e context of global action 
The 22nd Energy Modelling Forum exercise (EMF 22)101 compared the results of a set GHG 
mitigation scenarios modelled with different tool s at a global scale. It looked at different 
combinations of GHG concentration stabilizatio n cases with ten integrated assessment models 
(IAMs) or energy models. Fifteen projections  saw emissions reduc e globally in 2050 by 
around 50% or more compared to 2000 levels. Twelve out of 15 of these projections saw 
internal emissions in the EU reduce by around 80% or more compared to 2000.  
The IEA in its WEO2010 publication also as sessed the required emissions reductions for 
achieving low GHG concentration levels in  the longer term, stabilising at 450 CO 2-eq. ppmv. It 
projected CO 2 emissions from the energy system up to 2035. For the EU, this resulted in a 
reduction of energy CO2 emissions by 54% over the period 1990 – 2035102.  
The Final Report of the ADAM project103 concluded that Europe can make its proportionate 
contribution to achieving the ‘two-degree target’ by reducing greenhouse gas emissions by between 60 and 80 per cent by 2050. The ADAM  project also assessed actions and 
technologies, at sectoral level, that co uld result in EU GHG reductions of 80% by 2050
104. 
Specifically for this impact assessment, th e POLES model by JRC, IPTS, was used to 
estimate emissions from energy and industry on  a global scale and th e resulting necessary 
reductions in the EU. Emissions from international bunkers (international maritime and air transport)
105 are included but not disagg regated by country or region.  
The global action scenario projected by POLES, is  a policy case in wh ich global emissions 
are reduced by around 50% with re spect to 1990 levels by im plementing energy efficiency 
policies and the introduction of a global carbon price incentive. It is assumed that there is 
gradual participation of the diffe rent areas in the global effort and in the international carbon 
market, resulting in a gradual equalisation of carbon price incentiv e across regions and 
sectors106. According to this scheme, a carbon price is first established in the EU ETS sectors. 
                                                 
101 Clarke et al 2009 
102 Annex A, WEO 2010, IEA 
103 http://adamproject.info/index.php/Download-d ocument/456-Adam-Final- Report-revised-June-
2009.html 
104 See Schade et al. 2010. 
105 The POLES model estimates international maritime and aviation emissions to represent 0.76 and 0.44 
Gt CO 2 in 2010. Furthermore this underestimates th e relative impact on the climate of aviation 
emissions which has been estimated by the IPCC as being two to four times higher than the effect of 
CO 2 emissions alone due to releases of nitrogen oxides, water vapour and sulphate and soot particles 
(excluding cirrus cloud effects) (see Summary for Policy Makers IPCC Special Report on Aviation and 
the Global Atmosphere, 1999). 
106 The methodology, with global climate goals achieved through the gradual development of carbon 
markets was first presented in the impact a ssessment accompanying the Communication 'Limiting 
Global Climate Change to 2 degr ees Celsius- The way ahead for 2020' (COM(2007) 2 final), adopted 
on 10/01/2007, which formed the basis for the Commission's proposal to adopt a 20% unilateral 
greenhouse gas target for the EU and a 30% conditional target. The methodology also formed the basis 
for the information on global efforts and mitigation costs as presented in the staff working document 
 
EN 37   EN In other regions the carbon price for the ETS sect ors gradually catches up with the EU price. 
For the sectors outside the ETS, energy efficiency policies are first implemented and subsequently carbon prices are introduced. By  2030, carbon prices are equal to the ETS 
sectors in all countries except low income de veloping countries including India. By 2050, all 
sectors and countries globally ex perience the same carbon price. 
Figure 10: ETS carbon price differentials between regions over time 
ETS Carbon price differentials between regions over time
0%50%100%150%200%250%
2015 2020 2025 2030100% = EU carbon price in 2012EU and other
developed countries
Economies intransition
High income DCs
Developing
countries
Low income DCs
 
Source, POLES, JRC, IPTS 
Results of the global GHG emissions pr ojections using the POLES model: 
Globally, greenhouse gas emissions from the ener gy sector and industry in the Global action 
scenario peak between 2010 and 2020. By 2050 emissions return to a level that represents a 49% reduction with respect to the 1990 level (a 55% reduction if international bunkers are not 
included). This reduction corresponds to a 77% reduction with respect to the baseline in 2050 
(-79% if international bunkers are not included). The reducti on in emissions for developed 
countries is 80% with respect to 1990 and 76% with respect to baseline in 2050. Developing 
countries emissions keep growing until 2020 bu t reduce significantly by 2050, down to a level 
of about 5% below 1990 levels or 80% below baseline. This latter figure should give an 
appreciation of the level of action requ ired also by developing countries.  
Table 2: Greenhouse gas emissions in the Baseline and Global action scenario 
Region  1990 2000 2005 2010 2020 2030 2040 2050 
1990 = 100%          
World Global baseline 100 112 128 140 160 180 201 220 
 Global action 100 112 128 139 139 109 75 51 
          
Developed Global baseline 100 95 96 91 88 86 85 82 
 Global action 100 95 96 91 72 51 33 20 
          
Developing Global baseline 100 143 190 232 296 354 414 477 
                                                                                                                                                         
accompanying the Communications 'Towards a comprehensive climate change agreement in 
Copenhagen '(SEC(2009) 101) and 'Stepping up international climate finance: A European blueprint for 
the Copenhagen deal' (SEC(2009) 1172/2). 
 
EN 38   EN  Global action 100 143 190 232 265 211 141 95 
          
EU27 Global baseline 100 93 95 88 82 77 71 66 
 Global action 100 93 95 86 73 55 36 22 
Source: POLES, JRC, IPTS 
For the EU, emissions in 2020, 2030 and 2050 respectively are 28, 45 and 78% below 1990 
levels (about 66% less than in the POLES baseline by 2050) . There is in principle no 
economic incentive to do fewer reductions internally through the acquisition of international carbon credits, given that carbon prices are equal globally. No cheap reduction options remain 
available in other regi ons outside the EU.  
Thus in order to meet the 2ºC objective, th e EU is bound to make very large reductions 
internally, in the POLES  model resulting in reductions or 78% in the EU by 2050 compared to 
1990. Taking into account the lower reduction potential in agriculture, not going beyond halving of GHG emissions by 2050 compared to 1990 (see chapters 5.1.4 and 5.2.9), which is the major sector not included in the POLES reductions, total internal reductions are around 
75% in the EU. 
This confirms the results of the other global  GHG projections discussed above, with similar 
internal reductions for the EU or even higher ones of 80% and more.  
For a sectoral differentiation of global and EU  reductions between sector see annex 7.6. The 
results of the split in EU sectoral reductions are in line with those projected for the detailed EU analysis presented in chapter 5.2.1. 
Emissions per capita would conve rge over time. Developed countri es emissions continue to 
decline, but at a higher rate from 2010 onwar ds. Developing country emissions per capita 
peak sooner than total emissions, due to con tinued population growth. Notable is also that 
Chinese and EU emissions per capita are si milar from 2020 onwards in a Global Action 
Scenario. By 2050 absolute differences are significantly smaller, even though per capita 
emissions remain higher in developed countries. 
Figure 11: Per capita GHG emissions in the Global action scenario 
0246810121416
1990 2010 2030 2050World
Developed
Countries
Developing
Countries
EU 27
China
 
Source: POLES, JRC, IPTS (excludes emissions from land use, deforestation and agriculture) 
 
EN 39   EN 5.1.2.  Fossil Fuel Prices and Global Action 
Global fossil fuel prices are driven by suppl y and demand. The POLES model projects both 
endogenously, representing a global market for oil and linked regional markets for gas and 
coal. As such it is an ideal tool to assess im pact from global climate change action on fossil 
fuel prices. This impact would primarily be driven through the impact of climate change 
policies on demand for energy and a shift in  the type of energy resource used. 
The POLES model is used to assess the imp act of baseline, global action and fragmented 
action as described in chapter 4.2.2. 
The energy projections underpinning the Global action scenario project a 38% increase in 
world primary energy demand by 2050. But this incr ease is significantly smaller than in the 
baseline (149%). The Fragmented action scen ario has a global energy demand increase of 
124%, which is not very different from the Ba seline case. All of the growth in demand, as 
could be expected, takes place in developi ng countries (+171% and +370% by 2050 compared 
to 1990 in the Global action and the Fragmented  action scenarios, re spectively, but 395% in 
the Baseline), while developed countries have a slight increase over the baseline and a more 
or less pronounced energy demand reduction in the policy scenarios. In the Fragmented action 
scenario the global energy dema nd increase is so strong that world energy prices are pushed 
up to a level very close to t hose in the baseline scenario. 
In the EU, energy demand in th e policy cases return s to 1990 levels by 2020 and falls by 33-
35% by 2050 compared to the base year. This corresponds to a 38-40% reduction with respect 
to baseline. While such reductions are not  spectacular overall, by 2050 they become 
significant for fossil fuels: -60% to  -63% for oil, -31 to -41% fo r gas, -87% to -88% for coal 
(smaller absolute figures correspond to the global action case). Given that  in the Fragmented 
action scenario global oil prices (as well as th ose of the other fossil fuels) are projected to 
increase substantially, this energy frugality could provide a valuable shield against price shocks for the EU energy system.  
Table 3: Primary energy demand in the Baseline, Global action and Fragmented action scenario 
Region Scenario 1990 2000 2005 2010 2020 2030 2040 2050 
  % 
World Global baseline 100 115 130 139 164 190 218 249 
 Global action 100 115 130 139 155 153 145 138 
 Fragmented action 100 115 130 139 158 177 199 224 
          
Developed Global baseline 100 102 105 100 105 107 111 113 
 Global action 100 102 105 100 96 86 75 65 
 Fragmented action 100 102 105 100 98 95 93 91 
          
Developing Global baseline 100 139 178 211 273 340 411 495 
 Global action 100 139 178 211 265 275 271 271 
 Fragmented action 100 139 178 211 268 327 393 470 
          
EU27 Global baseline 100 104 110 105 107 107 107 108 
 Global action 100 104 110 105 100 90 78 67 
 Fragmented action 100 104 110 104 99 89 76 65 
Source: POLES, JRC, IPTS 
 
EN 40   EN On top on this reduction in energy demand, clim ate change policies also are a driver that 
shifts energy demand away from fossil fuels towards low carbon energy  sources. Whereas in 
baseline in 2050 73% of primary energy demand is met with fossil fuels, this reduces to 70% 
in the fragmented action scenario and even  45% in case of Global action on climate. 
The combined effect of reducing energy de mand and reducing the fossil fuel share in 
supplying this demand has an impact on oil pric es. Whilst in the Baseline scenario the oil 
price grows, to 138 $/barrel in 2050, due to st ringent energy efficiency and carbon mitigation 
policies in the Global climate action case it has a more mode rate growth until 2030 and 
declines to 69$/ba rrel in 2050 (see table be low). On the other hand, in  the Fragmented climate 
action case, the oil price trajectory follows just below the baseline case, as it continues growing until 2050, when it reaches 117$/barrel. W ith global climate action, oil prices are 
projected to halve by 2050 compared to baseline , while with fragmented action, even if the 
EU continues to decarbonise in line with th e 2ºC objective, oil prices reduce by only 15% 
compared to baseline, or less than a third of the reduction projected in case of global action.  
Table 4: Global oil prices  in different scenarios 
Oil Prices (2005$/barrel)  2005 2010 2020 2030 2040 2050 
Global baseline 55 70 78 96 115 138 
Global action 55 70 74 77 76 69 
Fragmented action 55 70 75 88 102 117 
Source: POLES, JRC, IPTS 
In conclusion, the Global action scenario result s in a major divergence in global demand for 
fossil fuels, with consequential impacts on pr ojected world energy prices. Global Action leads 
a reduction of fossil fuel demand compared to ba seline, leading to significantly lower prices. 
On the other hand, Fragmented Action mean s that world demand keeps on growing fast, 
leading to higher prices close to those in base line. For a discussion on what this could mean 
for expenses on imports of oil and gas, see annex 7.8). 
Changes in prices for energy sources  will results in chan ges in income of c ountries that export 
these goods. But these impacts are manageable. Hi storically OPEC has earned annually a bit 
less than $ 300 billion from oil exports (see figu re below, all prices are expressed in 2005 $). 
This is projected to triple in the coming two d ecades, with not that large a difference between 
the Baseline and the Global action scenario. Only  after 2020 this stagna tes in case of global 
action, with earnings being stable, but still 3 times higher than the hi storical average. In 
baseline or in the Fragmented action scenario  without global action on climate change these 
would have continued to increase.  
 
EN 41   EN Figure 12: Average annual OPEC o il export revenues per scenario  
0300600900120015001800
1989-2009
2010-2030 (Baseline)
2010-2030 (Global Action)
2010-2050 (Baseline)
2010-2050 (Global Action)Billions 2005$/year
  
Source: POLES, JRC, IPTS 
Not acting on global climate change will result in continued high risks for high oil prices or 
temporary shocks. This risk remains high in th e Fragmented action scenario. For illustration 
see Figure 13, comparing the oil production proj ections in POLES for the Fragmented action 
case with the projections made by the IEA in th e New Policies Scenario of the World Energy 
Outlook 2010, which incorporates the Copenhagen  pledges (see also Fi gure 7, chapter 2.3). 
The projections are very si milar in total quantity. 
As shown in the IEA graph, global oil productio n in the coming decades would become more 
and more reliant on oil fields still to be de veloped or yet to be found and on unconventional 
oil (see Figure 13). Oil wells in production today by 2035 will pr oduce only a quarter of their 
current output, making the energy system highly reliant on new investments in OPEC 
countries and deepwater wells107. This further highlights the f act that the supply remains a 
considerable source of uncertainty  and risk regarding future pri ce in case of fragmented action 
on climate change. 
                                                 
107 See also IEA, WEO 2010, Figure 3.21. 
 
EN 42   EN Figure 13: World oil production up to2035 in case of the new energy policies scenario of WEO 2010, 
compared to POLES projection oil production fragmented action 
 
Source: Adapted from IEA, WEO 2010, Figure 3.19 + Oil production in the fragmented action scenario from POLES (JRC, IPTS) 
Instead Global action on climate change would greatly mitigate the risk on oil shocks and 
continuously high oil prices. It would require mu ch less investments in unconventional oil and 
it would ensure for a more stable economic environment with being detrimental for the 
revenues of oil exporting countries. 
5.1.3.  Marco-economic impact 
In order to assess the macro economic impact with the GEM E3 model, 2 scenarios, the 
Reference and the Fragmented action scenarios, where assessed and compared.  
The following assumptions were applied for the two scenarios: For the EU: – In the Reference scenario the EU achie ves its 20% GHG reducti on target by 2020 
internally, and keeps th is level of emissions constant up to 2030.  
– In the Fragmented action scenario, the EU is assumed to achieve a 25% GHG reduction 
internally by 2020, increasing to 40% by 2030.  
For the other regions: – In the Reference scenario other regions are assumed not to implement specific policies.  
 
EN 43   EN – In the Fragmented action scenario other regi ons implement the low end ambition level of 
the Copenhagen pledges up to  2020, afterwards the ple dges are assumed to stay 
constant108. 
For the Non ETS sectors 2 varian ts are assessed: one where a ca rbon tax is introduced and one 
without a carbon tax. In the ETS  only the power sector is assu med to have auctioning, other 
sectors get a fixed amou nt of free allocation.  
One additional variant was introduced in GEM E3  scenarios with respect to how companies 
define their product price in  case of free allocation.  
Normally the GEM E3 model assumes that the ETS companies fully take into account the 
opportunity cost of thos e allowances when setting its pr ices of the goods they sell. The 
product price thus includes the carbon price even for those allowances that  they have received 
for free.  
In sectors without international competition, that can fully pass on the opportunity  costs of the 
allowance, this inclusion of the opportunity co st can lead to a corresponding increase in the 
price of the good sold, and to si gnificant windfall prof its in case of free allocation. The power 
sector has often been associated with such be haviour. At the other extreme, there could be 
sectors that simply cannot raise the price of th eir goods due to internat ional competition (this 
could only happen for sectors that have no product differentiation at all). In these sectors full 
inclusion of the oppo rtunity cost of allowan ces would in principle le ad to companies reducing 
some of their production109. This behaviour is identical for allowances being auctioned or 
allocated for free to these sectors and is optimal behaviour in systems where the fixed 
allocation (be it free allocation or auctioning) is determined  for an indefinite period. 
But not all industries agree that  this behaviour correctly desc ribes what takes place. Some, 
certainly the energy intensive sectors exposed to outside competition, claim that they do not 
engage in such type of price-setting, when they  receive allowances for free. They claim they 
see free allocation rather as a compensation for the costs of the introduction of a carbon price 
on emissions which they will not include in the pricing of thei r goods. This type of behaviour 
rather focuses on keeping production volumes and market share high, results in principle in a 
lower production loss but also  lower profits than the prof it maximising behaviour that 
includes opportunity costs of all allowances in the production and pricing decisions of 
companies. It is also associated with alloca tion systems for free allowances where allocation 
in future periods is dependent on previ ous periods of producti on as the benchmarking 
approach does. In such systems companies may have an incentive to maintain production in 
order to have sufficient access to free allocated  allowances in the next period. Here, the 
product price does not include the opportunity cost  of the allowances that were received for 
free (but still does include the cost of the additional allowances that were bought on the 
secondary carbon market). 
                                                 
108 See chapter 5.4.1 of SEC(2010) 650 (Part 2) for further description of how the pledges of other 
countries are modelled. It is assumed that their 2020 pledge can be met in part (up to 1/3rd of the effort) 
through international credits. After 2020 it is assume d that countries with pl edges that are absolute 
targets by 2020, keep emissions stable after 2020. Countries whose pledges are relative target by 2020, can see emissions increase again. 
109 Companies reduce production as long as the opportunity cost for the allowances associated with this 
reduced production are higher than the reduction in revenue from the lower production itself. 
 
EN 44   EN As a sensitivity analysis also  this incentive-based price-setting was assesse d for the industrial 
sectors in the ETS that receive a fixed amount of free allocation, keeping allocation fixed over 
time but not including the opportun ity costs of the free ly allocated allowances in the price 
setting mechanism. 
Table 5 gives the GDP results for the 4 fragment ed action scenarios compared to the reference 
scenario. The impact on GDP is limited, even with a 40% reduction, and confirms previous 
results that higher reduction ta rgets, achieved through taxation and smart revenue recycling, 
could even have a positive impact on GDP development110. 
No inclusion of opportunity costs of free allocation in industrial pr ice setting leads to slightly 
better GDP results as inclusion of opportunity co sts. No inclusion of opportunity costs of 
freely allocated allowances result s in higher emissions in those industrial sector s that get free 
allocation (even if the amount of  free allocation is the same) and thus pushes up carbon prices 
in the ETS because others need to reduce more. The indirect positive effect of this increased 
revenue recycling from auctioni ng compensates the negative impact of suboptimal reductions 
in industrial sectors with free a llocation compared to the projectio ns that assume full inclusion 
of opportunity costs.  
Table 5: GDP impacts fragmented action 
GDP 
Tax non 
ETS Industry in ETS price-setting strategy: 
Include opportunity costs free allocation Vs reference in 
2020 Vs reference in 
2030 
Yes -0.18% -0.89% Yes 
No -0.09% -0.74% 
Yes -0.97% -1.95% No 
No -0.93% -1.86% 
Source: GEM E3, JRC, IPTS 
The overall employment effects are represented in  Table 6, gives a similar results as the GDP 
impacts, with a positive imp act from recycling policies111 and slightly better overall impacts if 
industrial companies would follow a price-settin g strategy that does not include opportunity 
costs of free allocation. The net impact on jobs can be an increase by 0.7% compared to 
reference, or an increase with a bit more than 1.5 million jobs by 2020. 
Table 6: Employment impacts fragmented action 
Employment 
Tax non 
ETS Industry in ETS price-setting strategy: 
Include opportunity costs free allocation Vs reference in 
2020 Vs reference in 
2030 
Yes 0.57% 0.22% Yes No 0.68% 0.38% 
Yes -0.11% -0.62% No No -0.04% -0.49% 
Source: GEM E3, JRC, IPTS 
                                                 
110 Revenue recycling is assumed to lead to lower labour costs. See SEC(2010) 650 (Part 2), chapter 5.4.2, 
table 20. 
111 Lowering labour costs through recycling makes labour relatively cheaper to capital goods in the 
production process, increasing overall employment  compared to scenarios where other forms of 
recycling are applied. 
 
EN 45   EN The impacts on energy intensive sectors are repr esented in Table 7, giving similar results as 
presented in previous assessments112. Production decreases are very limited in 2020. By 2030 
the impacts are more outspoken, when the EU would reduce emissions internally with 40%. 
In the worst case, production decreases with 2.7 to 4.3 % by 2030 compared to reference. But 
this depends to a large extent  on the optimisation strategy by industry itself. If they would 
apply a price-setting strategy that does not in clude the opportunity costs of free allocation 
then impacts are much less outspok en. Together with the benefits from increased recycling in 
the whole economy, and thus slightly higher overall GDP growth, impacts are limited to a 
decrease in production between 1.5 and 2.9%. Fr ee allocation thus prot ect energy intensive 
industry in the ETS, even if the EU would impl ement more ambitious targets in a world where 
other regions have more limited ambition. 
Table 7: Impacts on energy intensive industrial sectors from fragmented action 
Production Other Energy Intensive Industries  
Tax non 
ETS Industry in ETS price-setting strategy: 
Include opportunity costs free allocation Vs reference in 
2020 Vs reference in 
2030 
Yes -0.27% -2.70% Yes No 0.21% -1.78% 
Yes -1.03% -3.62% No No -0.61% -2.78% 
Production Chemicals  
Tax non 
ETS Industry in ETS price-setting strategy: 
Include opportunity costs free allocation Vs reference in 
2020 Vs reference in 
2030 
Yes Yes -0.81% -3.77% 
Yes No 0.03% -2.29% 
No Yes -1.36% -4.34% 
No No -0.57% -2.91% 
Production Ferrous and Non Ferrous  
Tax non 
ETS Industry in ETS price-setting strategy: 
Include opportunity costs free allocation Vs reference in 
2020 Vs reference in 
2030 
Yes Yes -0.91% -3.22% 
Yes No -0.29% -1.69% 
No Yes -0.94% -3.24% 
No No -0.37% -1.77% 
Source: GEM E3, JRC, IPTS 
5.1.4.  Interaction between energy, agriculture and land use emissions on a global scale 
The POLES model was linked to the GLOBIOM and G4M model113 to assess global GHG 
emissions from agriculture and forestry (inclu ding the impact of land use changes) in a 
consistent manner. The POLES model itself does not estimate emissions in land use and 
agriculture sectors but iterative runs are carri ed out with GLOBIOM and G4M in a consistent 
manner with the POLES results to achieve a global reduction of around 50% for all GHG 
emissions (see annex 7.7.1 for more detail ed information on the methodology applied).  
Global population is estimated to increase from a bit more than 5 billion people in 1990 to 
over 9 billion by 2050, who are estimated to see their welfare on averag e, expressed in GDP 
per capita, increase by a factor of 3 or more. This  increase in income will cause dietary habits 
                                                 
112 See SEC(2010) 650 (Part 2), chapter 6.1, table 20. 
113 Both the G4M and GLOBIOM models are maintained by IIASA. 
 
EN 46   EN to change, with more meat consumed pe r capita. As a result, global non-energy GHG  
emissions of agriculture increase in the ba seline significantly over tim e, nearly doubling over 
the period 1990 to 2050 from 4.8 to 9.1 Giga ton CO 2-eq.  
Instead, gross deforestation globall y is estimated to decrease th rough efforts to reduce the rate 
of forest loss, predominantly in developing coun tries. Emissions from gross deforestation in 
the baseline decrease fr om around 4.9 Giga ton CO 2-eq. in 2010, down to 2.2 Giga ton CO 2-
eq. in 2050. 
It should be stressed that the order of magnitude of uncertainty  is large with deforestation 
emissions. Furthermore, this estimate only addr esses emissions from gross deforestation and 
not absorptions from afforestation114. Finally this analysis does not take into account possible 
impacts from global warming itself over the period on agricultural production. 
Emissions in agriculture are predicted to increa se and those in deforest ation are estimated to 
decrease. The exact outcome of  the opposing trends in agriculture and deforestation is 
uncertain, but projections includi ng the effects of the increasing bio-energy requirements from 
POLES in baseline, with GLOBIOM and G4M, resu lt in relatively stable  aggregate emissions. 
To consider the reduction potential in the agricu ltural and forestry sectors, the global action 
scenario takes into account the following requirements:  
(1) The need to ensure food security  to feed the global population.  
(2) The EU stated objective of reducing deforestati on as part of a co-ordinated global 
action, in particular with in developing countries. 
(3) Efforts to reduce agricultural emissions , or rather limit the increase of these 
(4) Increased biomass use for energy as a re sult of global action on climate change 
(5) Dietary habits remain the same as in the baseline (i.e. changes towards more carbon 
intensive food linked to welfare increases).  
In the global action case, carbon pr ice incentives are intr oduced to meet these 5 requirements.  
Total aggregate emissions of agriculture and deforestation reduce by 48% compared to 1990 
levels. Gross deforestation is very small by 2030, but the figures show  continued emissions 
from soils and degradation of dead wood post-2 030. Note that in this scenario whilst food 
demand increases in-line with the baseline, defo restation needs to be halted, emissions from 
agriculture need to be stabilised and at the same  time an increased demand of biomass for bio-
energy production has to be satisfied. 
                                                 
114 Note that for instance recent preparatory work for the IPCC 5th assessment report in the context of the 
representative concentration pathways, when addressing  emissions from deforestation actually looks at 
net deforestation and thus includes absorptions from afforestation. 
 
EN 47   EN Figure 14: GHG emissions from Agricu lture and gross deforestation in baseline and Global Action Case 
Baseline
02468101214
1990 2000
2010 2020 2030
2040
2050Gt CO2-eq
Gross Deforestation Non CO2 AgricultureGlobal Action case
02468101214
1990 2000
2010
2020
2030 2040 2050Gt CO2-eq
Gross Deforestation Non CO2 Agriculture
 
Source: IIASA, GLOBIOM + G4M 
The impact on agricultural products' prices resul ting from this policy scenario is moderate. 
While in the baseline, by 2050 prices of agricu ltural crops on a global scale are projected to 
reduce by 15% compared to 2000, in the reduc tion case the reverse is true, with prices 
actually increasing by 28% in the same period.  
This result of the global action case (modera te food price increases compared to present 
levels, combined with eliminating deforest ation, increasing food pr oduction, increasing bio-
energy use) is critically depe ndent on productivity increases  in the agricultural sector. 
The scenarios in the GLOBIOM model assume in 3 ways that yields can be improved (see 
annex 7.7.2 for more information on the scenar io description and yield assumptions): 
– Switches are possible between producti on systems, for instance for a switch 
from purely grassland based cattle sy stems to more intensive production 
systems is feasible. 
– Furthermore, crop and livestock producti on could be geographically shifted to 
areas where the natural resources  allow for higher productivity 
– Finally, exogenous yield growths have  been assumed within crop production 
systems at 0.5% a year. For livestock no such assumption has been made. 
It is crucially important that these yield increas es are actually realise d. In Figure 15 the results 
of a sensitivity analysis are s hown projecting the impact on pri ces of agricultural crops of a 
scenario with lower and higher exogenous yield improvements than  those assumed in baseline 
and global action case (see annex 7.7.2 for more information on the scenario description and 
yield assumptions).  
Having no yield improvement in ag ricultural production systems would have adverse effects. 
If there are no yield improvement s, prices would increase in baseline by 24% over the period 
1990 to 2050 and by 156% in the Global action case. This situation seems unlikely; both from 
looking at historical yield impr ovements and given that it woul d result in increasing prices 
 
EN 48   EN which in turn will be a strong incentive to allow farmers to increase agricultural productivity. 
On the other hand, there is increasing soil degrad ation globally (thus lower soil fertility), 
depletion of water resources fo r irrigation and the potential imp act from climate change itself 
that could lower yields115. 
Figure 15: Impact yield improvements on overall costs agricultural goods. 
Crop Commodity Price Index
Baseline
0%20%40%60%80%100%120%140%
2000 2010 2020 2030 2040 2050 No yield improvement
B ase case
Higher Yield improvement for livestockCrop Commodity Price Index
Global Action case
0%50%100%150%200%250%300%
2000 2010 2020 2030 2040 2050No yield improvement
B ase case
Higher Yield improvement for livestock 
Source:  IIASA, GLOBIOM + G4M 
Achieving such yield increases requires speci alisation and improveme nt of agricultural 
practices, often implying intensif ication of farming, with certain  crops or livestock production 
activities "migrating" to those regions where soil, climatic and other resources (including 
capital) give them a comparative advantage relative to others. Examples of improved 
agricultural practices and intensification include: 
(1) Shifts from traditional grassland based livestock production systems to more intensive 
ones requiring less land area, th ese would need important ch anges in the diet of the 
cattle, but would require no additional deforestation an d may even free up land for 
forest-based biomass production.  But care should be taken that conversion of existing 
grassland to other land use activities doe s not lead to higher net emissions.  
(2) Shifts from low input and rain-fed agricultural practices towards high input and 
irrigated crop production systems. However, the feasibility of this option would need 
to be assessed in specific site-conditions according to the projected evolution of water 
availability and other environmental impacts. 
(3) Improvement of soil management practices to  increase soil fertility and to recover 
degraded farmland soils.  
These are processes underlying the increase in ag ricultural outputs the world has seen in the 
past 50 years. But in the global action case the improvement in efficiency and yields is on a 
truly global scale and is crucial to deliver th e combination of often competing requirements. 
Such changes will require support from R&D,  capacity building in improved agricultural 
practices, investment in agricultural and ru ral infrastructure and sometimes institutional 
changes, all implying strong domestic land use policies. Also development aid policies by the 
EU will need to further address this issue in both tropical and temperate developing countries. 
                                                 
115 Moriando M. (2011)  
 
EN 49   EN In conclusion, agriculture and forestry can ma ke a substantial contri bution to halving global 
emissions by 2050 by improving agricultural practi ces and eliminating deforestation, whilst 
also ensuring food supply and provide bioma ss for energy purposes. But delivering on the 
goals to reduce GHG emissions and increa se biomass for energy and food requires 
continuously improving agricultural productivity. Otherwise not all goals can be met. The 
sector can also provide biomass for energy pur poses, but the development of land based bio-
energy options needs to be checked in terms of the compatibility within a wider sustainability 
agenda of food security and climate change mitigation.  
Biomass can also contribute to mitigation if us ed to substitute materials that are more GHG 
intensive to produce. This was not assessed in this analysis. 
Global action towards a 2ºC target  will be beneficial for biodiversity since it limits the 
negative impacts of temperature increases to which natural systems would have to adapt, 
therefore reducing the stress on living systems. In addition, tropical deforestation is halted with clear benefits for preserving biodiversity. On the other hand this will require higher agricultural productivity on a global scale and afforestation on marginal lands which in itself 
could lead to negative impacts on biodiversity.  
A worse outcome would be a world that doe s not undertake global action and where EU 
action and the resulting increase in bio-energy  needs would lead to negative impacts from 
indirect land use change in othe r parts of the world, due to EU bio-energy imports. In part this 
will require monitoring of imports of bio-energy and their corresponding impacts. An important element of the solution would be a global mechanism to reduce emissions from 
deforestation and forest degradation, as bein g discussed in the ongoing international climate 
negotiations. 
Finally, reversing trends away  from more carbon intensive f ood consumption, such as meat 
consumption, can also contribute, but this has not  been analysed in this impact assessment. 
5.1.5.  EU action and global action, the like lihood of meeting the 2ºC objective 
The figure below combines the global mitigatio n scenarios from the POLES model for energy 
and industry scenarios (chapter 5.1.2) with those for agriculture  and land use (chapter 5.1.4). 
Global GHG emissions peak between 2010 and 2020 and reduce by -49% by 2050
116. 
                                                 
116 If the absorptions from additional afforestation in GLOBIOM and G4M would be included then total 
net emissions and absorptions would see a de crease greater than 50% below 1990 levels. 
 
EN 50   EN Figure 16: GHG emission pathway in case of Global Action, all sectors and gases 
05101520253035404550
1990 2000 2010 2020 2030 2040 2050Gt CO 2-eq.
Energy and Industry Agriculture Deforestation 
Source: POLES, G4M, GLOBIOM  
Likelihood of achieving the 2ºC objective 
Figure 17 compares the emission pathways of th is Global action scenario for all sectors with 
coloured bands that show emission pathwa ys modelled by other In tegrated Assessment 
Models that correspond to differe nt temperature increases. It doe s so also for the Fragmented 
action and Baseline scenarios. It demonstrates that the Global action emission pathway, which sees global emissions halve by 2050, is in line with the 2ºC objective
117. But the Fragmented 
action scenario (with the EU th e only large region taking action in line wit the 2ºC objective) 
sees temperatures already by the end of this  century increase with 3ºC or more and the 
Baseline even with 4ºC or more. This actual ly would represent a si tuation where the 2ºC 
objective is already crossed by 2050. 
                                                 
117 This is also confirmed using the tool '2ºC Check', see http://www.primap.org/primap2Ccode/ , the 
emission pathway is indicated to have a likelihood of around 60% to meet the 2ºC objective. 
 
EN 51   EN Figure 17: Temperature increases asso ciated with emission pathways 
Global Action Case
Fragmented Action
Baseline
 
Source: Adapted from 'UNEP, The Emissions Gap Report: Are the Copenhagen Accord pledges sufficient to 
limit global warming to 2 or 1.5°C?, Technical Summary, November 2010, figure 2 + total GHG emission pathways of Baseline, Fragmented Action and Gl obal Action cases of the POLES + GLOBIOM + G4M 
modelling setup (JRC, IPTS, IIASA)
  
The current 2020 mitigation pledges, as represen ted in the Fragmented action scenario, do not 
meet the 2ºC objective. This is  confirmed by a recent UNEP report118 analysing the existing 
pledges under the Copenhagen Accord and conclu ding that these pledges represent 60% of the 
required reduction by 2020 to be in  line with the 2° C objective119. 
5.2. Analysis of the EU perspective to wards a low carbon economy by 2050 
The different scenarios to achieve GHG emissions  as described in chap ter 4.3 are assessed in 
this chapter. This is done by looking at the diffe rent topics or sectors at a time, assessing 
impacts across projected scenarios.  
5.2.1.  Greenhouse gas emission reductions over time and sectoral split 
Decarbonisation scenarios 
The decarbonisation scenarios show that EU in ternal emission reductions of 80% by 2050 are 
feasible, if sufficiently string ent carbon price incentiv es across sectors can be put in place. 
Most of the emission reductions are enabled by changes in technology. Price-induced changes 
of behaviour also make a modest contribution.  
                                                 
118 UNEP 2010 
119 Assessing the high end pledges which are often conditional and assuming that no “lenient” accounting 
rules are applied to land use sectors, surplus emission units (AAUs) and there is no “double counting” 
of pledges through offset credits. 
 
EN 52   EN Cost-effective emissions reductions alone are around 40% by 2030, except in the case of an 
oil price shock which would see reductions of up  to 45%. Stepping up to a low cost pathway 
would see decreases by 25 to 26% by 2020 and 59 to 62% by 2040. 
The contributions of different sectors, in scen arios with equal carbon prices across sectors and 
with emissions reductions lead ing towards an 80% trajectory120 is represented in the table 
below. For an overview of the results pe r sector in each scenario see annex 7.10. 
Table 8: EU Greenhouse gas emission reductions overa ll and in different economic  sectors in different 
decarbonisation scenarios 
GHG reductions compared to 1990 in % 2005 2030 2050 
Total -7% -40 to -44% -79 to -82%
Sectors   
Power (CO2) -7% -54 to -68% -93 to -99%
Industry (CO2) -20% -34 to -40% -83 to -87%
Transport (incl. aviation, excl. maritime)121 (CO2) +30% +20 to -9% -54 to -67%
Transport (excl. aviation, excl. mariti me) +25% +8 to -17% -61 to -74%
Residential and services (CO2) -12% -37 to -53% -88 to-91% 
Agriculture (Non CO2) -20% -36 to -37% -42 to -49%
Other Non CO2 emissions  -30% -71.5 to -72.5% -70 to -78%
Source: PRIMES, GAINS 
The highest absolute and rela tive reductions come from th e power sector. Under similar 
carbon price incentives across sectors, it decarb onises fast, reaching usually well above 60% 
emission reductions by 2030 (except in the high foss il fuel price or oil shock scenarios, which 
see sectors that consume a lot of oil and gas contribute more to to tal reductions). By 2050, 
decarbonisation of the power sector is practically  complete (for further analysis see chapter 
5.2.5).  
Above average contributions in the medium and long term are achieved by the residential and 
service sectors, due to signifi cant reductions in requi red heating from improved insulation and 
greater use of electricity and renewables for building heating as well more energy efficient 
appliances. Industry decarbonises slightly less than the overall economy in the medium term. 
However industry CCS opens significant further reduction options, although later than in the 
power sector, which in the context of global cl imate action are economically viable (see also 
chapter 5.2.7).  
Transport and agriculture are the main sectors where no full carbonisati on in the longer term 
is achieved. In transport, the in creasing trend of the last 20 year s is reversed, with emissions 
(excluding aviation and maritime transport) by 2030 getting back to levels below 1990 in 
most scenarios. It has also the largest range  of potential reduction by 2050, depending on the 
degree of electrification and the level of oil pric es (for further analysis see chapter 5.2.6). For 
agriculture the pattern is invert ed. Its contributions by 2030 are significant, but then further 
decarbonisation steps are more difficult (see chapter 5.2.9).  
                                                 
120 i.e. covering both contexts of global and fragmented climate action but excluding scenarios with 
delayed action and specific treatment for industry exposed to global competition 
121 Excludes international maritime bunker fuels, includes inland navigation in the EU 
 
EN 53   EN With global action, energy import prices are lowe r and carbon prices n eed to be higher to 
achieve the required decarbonisation. The reverse is the case for fragmented action that requires more moderate carbon prices to decarbonise because of higher energy prices (see chapter 5.2.4). However this only has a limite d relevance for the sectoral split of 
contributions
122. Some meaningful differences exist for those sectors that use relatively large 
amounts of oil and gas, like tran sport and buildings. With higher energy prices these sectors 
contribute more in the fragment ed action scenarios,  with corresponding lower contributions 
by the power sector. 
Even if important mitigation options such as CCS or electric cars contributed less (delayed 
CCS and delayed Electrification), an EU emissi ons pathway leading to -80% by 2050 is still 
achievable. However, if several important m itigation options fail to materialise it would 
become very difficult to reach such low emission levels.  
Figure 18 represents total GHG emissions over time  for scenarios with specific pathways that 
differentiate from the Effective Technologies Sc enario and the Reference scenario for reasons 
other than a different enabling for a certain t echnology such as the delayed electrification and 
delayed CCS scenarios. 
As to be expected, compared to the reference case, high fossil fuel prices or an oil shock 
decreases emissions. But this does not decarbonise the economy to the extent seen in the 
effective technologies scenario. If further emission reduction policies were delayed until 
2030, stronger mitigation efforts would be required  to catch up afterwards . Finally, if there is 
special treatment for industry in  the context of fragmented ac tion, emissions are higher than 
the effective technologies scenario (f or more details see chapter 5.2.7).  
Figure 18: EU GHG emissions over time for selected scenarios 
0%25%50%75%100%
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050GHG emissions in Mt
Reference (frag. action, ref. fossil f. prices)
Reference (frag. action, high fossil f. prices)
Reference (frag. action, oil shock)
Effect. Techn. (glob. action, low fossil f. prices)
Effect. Techn. (frag. Action, high fossil f. prices)
Effect. Techn. + lower EII effort (frag. action, ref. fossil f. prices)
Delay. Clim. Act.  (glob. action, low fossil f. prices) 
Source: PRIMES, GAINS 
                                                 
122 Of course this is not the case for the option with  specific treatment for energy intensive industries, 
requiring less reductions from this sector in case of fragmented action. 
 
EN 54   EN The reduction in GHG emissions is in part ach ieved through the increased use of bio-energy 
(biomass and biofuels). In the PRIMES – GAINS  model setup bio-energy is assumed to be 
neutral in carbon content. But bio-energy produc tion can have an impact on the emissions or 
absorptions of the land use sector, typically putting pressure on the net sink that Land Use, 
Land Use Change and Forestry (LULUCF) is at present in the EU. For a more detailed 
analysis see chapter 5.2.10. 
5.2.2.  Greenhouse gas emission reductions in ETS and Non ETS  
If currently implemented ETS and Non ETS po licies are projected until 2050, sectors covered 
by the EU emissions trading system would provi de the bulk of the emissions reductions in 
line with the agreed continuously decreasing em issions cap. With the applied assumptions on 
additional use of international credits, a sign ificant emission reduction of nearly 50% is 
achieved between 2005 and 2050. Without additional policies, oil shocks or high fossil fuel 
prices, Non ETS sectors would only reduce slightly more than  20% compared to 2005, with 
contributions beyond the implementation of the existing -10% non-ETS target (by 2020) 
driven by the impacts of current energy efficien cy and renewable heat and transport policies, 
continued impact of water and waste policie s, as well as existing F-Gas measures.  
In a decarbonised EU, with equal economic incen tives across sectors, a larger contribution by 
the sectors covered by the ETS would continue to  be cost-effective. With emission reductions 
of already around 45% by 2030 and around 90% compared to 2005 in 2050 in the ETS, except if high fossil fuel prices or a significan t oil shock would occur which would result in 
less reductions in the ETS by 2050, and more in  Non ETS sectors (transport, heating). 
The range of the contribution in the GHG reduction scenarios
123 which lead towards -80% is 
shown in the following table:  
Table 9: Emissions in ETS and Non ETS sectors 
Reductions compared to 2005 2030 2050 
Overall -35 to -40% -77 to -81%
ETS sectors -43 to -48% -88 to -92%
Non ETS sectors -24 to -36% -66 to -71%
Source: PRIMES, GAINS 
Non ETS sectors would also contribute signifi cantly and reduce their emissions by nearly 
70% emissions compared to 2005 in 2050. By 2030 the Non ETS sector's contribution would 
be between 24% and 36%. After 2030 further emissi on reductions are in line with those of the 
ETS sectors. This pattern is mainly due to the limited number of short-term cost-effective reduction options in transport, wh ile in the long term the smaller reductions are related to the 
limited potentials for Non CO2 emissions, in par ticular of agriculture  (see chapter 5.2.9). 
In the medium term, more than in the long term , also the relative level of oil and gas prices 
compared to other energy sources plays a role for the ETS/Non ETS split. For example, comparing the Effective Technologies scenarios with different oil prices, the ETS/ Non ETS 
contributions in 2030 are; 45%/27% in the contex t of global climate action with low oil prices 
                                                
 
123 Covering both contexts of global and fragmented climate action but excluding scenarios with delayed 
climate action and specific treatment for industry exposed to global competition 
 
EN 55   EN and 44%/29% in case of fragmented action w ith reference energy prices. However, they 
change to 43%/36% with an oil shock or  high fossil fuel prices occurring in 2030. 
5.2.3.  Energy resources and security  of fossil fuel supply 
Implemented policies already reflected in the re ference scenario halt th e trend of an ever 
increasing gross energy demand and lead to a slightly decreasing overall use of energy 
resources. The projected gross inland c onsumption is around 1770 Mtoe in 2020, around 1720 
Mtoe in 2030 and around 1750 Mtoe  in 2050 compared to 1826 Mtoe in 2005. This is brought 
about by significant increases in energy efficien cy. This means that en ergy intensity of GDP 
would reduce significantly, by more than 50% in 2050 compared to 2005, but absolute 
primary energy savings remain limited.  
In a decarbonised EU, energy consumption woul d change substantially. The overall use of 
energy resources would decrease significantly acro ss all scenarios, reducing to 1740 Mtoe in 
2020 and going to around 1650 Mtoe by 2030. Decreas es would be even steeper after 2030, 
resulting in a projected gro ss inland energy consumption of between 1300 and 1350 Mtoe by 
2050. 
According to the impact assessment for the Energy Efficiency Plan, the effects of the crisis 
and implemented policies until December 2009 will deliver 164 Mtoe of energy savings 
compared to the 2007 Baseline, whereas full im plementation of the energy savings objective 
would require a reduction of primary energy use by 368 Mtoe in 2020. Thus, the remaining 
gap to achieve the 20% energy efficiency targ et in 2020 is a further reduction of primary 
energy use equivalent to around 200 Mtoe. Translating this into additional GHG emissions 
reductions indicates that around a further 400 Mt CO 2 would be reduced in  2020 if the energy 
efficiency target is fully achieved124, or the equivalent of a fu rther 7% reductions of GHG 
emissions compared to 1990. If this is achieve d on top of the GHG reductions in reference by 
2020, this would enable the EU to reduce internal emissions by 25% or more by 2020. 
It is important to note that these levels of  reduced primary energy demand do not come from 
reduced activity levels. Instead  they are mainly the result of technological changes on the 
demand side: firstly from more efficient buildings, heating syst ems and vehicles and secondly 
(most prominently in the last 2 decades to 205 0) by electrification in transport and heating, 
which combines very efficient demand side tech nologies (plug-in hybrids,  electric vehicles 
and heat pumps) with a largel y decarbonised power sector. Energy intensity of GDP reduces 
by around 65%, resulting in significant absolute energy savings of around 30% compared to 2005.  
Energy resource use is qu ite similar across scenarios in the context of global climate action. If 
important technological mitigation options like CCS or electrification cont ribute less, this is 
compensated by higher energy efficiency gains and hence still slightly lower resource use. As 
to be expected this effect is strongly correlate d to fossil fuel prices and is enhanced in the 
context of fragmented climate action, in particul ar during oil shocks or high fossil fuel prices. 
                                                
 
124 2 tCO2/toe (based on general CO2 intensity in 202 0, PRIMES 2009 energy efficiency scenario, see 
impact assessment of the Energy Efficiency Plan, SEC(2011) 277). 
 
EN 56   EN Figure 19: Gross energy consumption in relevant scenarios over time 
1 2001 3001 4001 5001 6001 7001 8001 900
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Gross energy consumption (Mtoe)
Reference (frag. action, re f. fossil f. prices) Reference (frag. action, high fossil f. prices)
Reference (frag. ac tion, oil shock) Effect. Techn. (glob. acti on, low fossil f. prices)
Effect. Techn. (frag. action, high fossil f. prices) Effect. Techn. (frag. action, ref. fossil f. prices)
Delay. CCS (glob. action, low fossil f. prices) Delay. Electr. (glob. action, low fossil f. prices) 
Source: PRIMES 
Not only the amount, but also the composition of energy resource use would be very different 
in a decarbonised world. If the current ener gy policies are implemented and maintained net 
energy imports (mainly oil and gas) would co ntinue to increase over time, reaching around 
1050 Mtoe in 2050. They would need to cover an  increasing share of total energy supply and 
the already high fuel import dependency of th e EU (55% in 2008) would reach 58% in 2050.  
In a decarbonised EU, security of fossil fuel  supply, which is a key dimension of energy 
security concerns125, would improve substantially. More  domestic energy resources would be 
used, in particular renewables, total energy im ports would more than halve compared to 2005 
and be around 60% lower in 2050 than in the re ference scenario. From 2025, there would be a 
complete reversal of the trend of fuel import dependency increases, decr easing significantly to 
less than 35% by 2050 (see Table 10). Of course, higher fossil fuel prices  or oil shocks, as 
probable in the context of frag mented action, would make this pattern even more pronounced. 
Table 10: Fuel import dependency across scenarios 
Fuel import dependency (in %)  2030 2050 
Reference (frag. action, ref. fossil f. prices) 57% 58% 
                                                 
125 It should be noted that a transition to a low carbon economy, while significantly mitigating energy 
security issues related to oil and gas supply, may give  higher profile to energy security issues related to 
electricity. Demand for electricity increases, which needs to be available in exactly the demanded 
quantity at any time. Having much more dispersed so urces of supply – also geographically - requires 
grid expansion, building of smart grids, demand side management, energy storage and back-up. Moreover, new forms of waste management related to remaining CO
2 emissions (CCS) need to be 
ensured. However, these issues are more under EU control as the oil and gas supply. The 2050 Energy 
Roadmap will address these issues in more detail. 
 
EN 57   EN Reference (frag. action, high fossil f.  prices / oil shock) 52.5% 49 / 53% 
Effect. Techn. (glob. action, low fossil f. prices) 52% 33% 
Delay. CCS (glob. action, low fossil f. prices) 52.5% 31% 
Delay. Electr. (glob. action, low fossil f. prices) 53% 34% 
Effect. Techn. (frag. action, ref. fossil f. prices) 50.5% 31% 
Effect. Techn. (frag. action, high fossil f. prices / oil shock) 47% 29 / 30.5% 
Source: PRIMES 
This changing pattern in decarbonisation scenario s is the result of a combination of energy 
efficiency initiatives, the use of a wide ra nge of domestic low ca rbon options in power 
generation and the move away from fossil fu els in transport, heating and industry. For 
example, across the different decarbonisation sc enarios renewables cover more than 50% of 
final energy demand in 2050. The import of o il would reduce between 65 and 70% compared 
to reference in 2050, while gas imports would be  36 to 43% lower. Total imports of oil and 
gas would decline by more than ha lf compared to today. With an  oil shock or high fossil fuel 
prices, oil import reductions by 205 0 would still be more pronounced. 
In the global action scenarios, the combined impact of lower oil and gas imports and the 
reduced oil and gas price would reduce our oil import bill by around 400bn € (2008) and our 
gas import bill by more than 120bn € (2008) compared to the reference in 2050 (see Table 
11), representing together more than 2% of EU GDP in 2050, and more than halve expenses 
for oil imports compared to today. This is broa dly in line with the findings of the POLES 
model (see also annex 7.8 for the POLES results). 
Table 11: Imports of oil and gas an d corresponding expenses in 2050126 
Oil and gas imports in 
2050 Reference Scenarios in the context 
of global climate action Change vs 
reference (%) 
Net oil imports (Mtoe) 547 163-193 -65% to -70% 
Net gas imports (Mtoe) 340 196-217 -36% to -42% 
Expenses for oil imports 
(€bn 2008) 474 78-92 -81% to -84% 
Expense for gas imports 
(€bn 2008) 224 65-71 -68% to -71% 
Source: PRIMES 
Decarbonisation will significantly reduce fossil fuel security risks. But large scale 
electrification combined  with more decentralised generati on from variable sources involves 
other challenges and oppor tunities for providing high quality energy services at any time. The 
2050 Energy Roadmap will address these issues in more detail.  
5.2.4.  System costs: Investments, fossil fuel expenses and carbon prices  
Carbon prices in the reference scen ario are around 50 € per ton of CO 2-eq. from 2030 onwards. 
Of course to achieve reductions well beyond the reference level, high er carbon prices are 
required with a range of around € 100 to €370 per ton of CO 2-eq. by 2050 (see figure below, 
                                                 
126 For reasons of consistency with the POLES based gl obal analysis of the im pacts on EU oil and gas 
imports of global action (see annex 7.8) and the scope of the EU level analysis which excludes maritime 
bunkers, the latter are not included in the presented results. The decarbonisation scenarios covered are 
Effective Technology, Delayed CCS and Delayed Electrification. 
 
EN 58   EN for table with carbon prices see annex 7.10). In  particular delayed action increases carbon 
prices later on, as well as those scenarios th at foresee the delayed deployment of a key 
technology, with the delayed CCS s cenario being most outspoken. 
There is a clear inverse corre lation between energy prices a nd carbon prices. Higher energy 
prices require lower carbon prices for decarbon isation. With fragmented action, which means 
energy prices roughly equivalent to those found in the reference scenar io, the carbon prices 
remain around 20% below the le vel required for global action. 
Figure 20: Carbon price evolution  
Carbon price* 
0.050.0100.0150.0200.0250.0300.0
2020 2025 2030 2035 2040 2045 2050€ per ton CO2-eq.
Reference (frag. action, ref. fossil f. prices) Effect. Techn. (glob. action, low fossil f. prices)
Effect. Techn. (frag. action, ref. fossil f. prices) Effect. Techn. (frag. action, oil shock)
Effect. Techn. (frag. action, high fossil f. prices) Delay. Electr. (glob. action, low fossil f. prices)
Delay. CCS (glob. action, low fossil f. prices) Delay. Clim. Act. (frag. action, ref. fossil f. prices) 
*For reference only ETS carbon price is represented  
Source: PRIMES, GAINS 
The lowest carbon price needed to achieve reduc tions is those needed within the scenarios 
which include an oil crisis or high fossil fuel prices. Of course this points to the fact that pricing in general, be it through the carbon pric e or through energy prices themselves is an 
important driver to reduce emissions due to its impact on energy demand and energy 
efficiency. The benefit of carbon pricing clearly is that it a ffects those inputs and processes 
more which are most carbon intensive. Furtherm ore revenues are recycled within the EU 
economy. With high energy prices th is is not always the case, ce rtainly not if the high energy 
price is due to high import pri ces. If certain key technologi es are delayed carbon prices 
increase significantly. Similarl y carbon prices increase signi ficantly if climate action is 
delayed by 10 years. 
The combined effect of carbon pri ces and energy costs, including changes in fossil fuel prices, 
is a major driver for the type of investments that will be undertaken in  the coming decades. In 
 
EN 59   EN the reference scenario average yearly investments in all sectors127 increase from around € 800 
billion in the peri od 2010-2020 to around € 1000 billion in the period 2040-2050 (see Table 
12). For the decarbonisation scenario this inve stment expenditure actually increases by 60% 
to an annual average just under €1600 billion in  the period 2040-2050, which is an increase of 
just over €550 billion co mpared with the reference case. Cumu latively over th e 40 year period 
this increase in investment expenditure compar ed to reference is le ss pronounced, with an 
average annual increase of around € 270 billio n, for both the global and fragmented action 
scenarios, without delays in technology penetration. 
Taking action on climate change di rectly impacts fuel consumpti on. In the reference scenario 
fuel costs increase from around € 900 billion on average per annum in the period 2010-2020 
to almost € 1400 billion for the period 2040-2050. Fuel costs decrease significantly when action on climate change is taken. In a fragme nted world, but with action in the EU, the 
reduction in fuel costs is around € 350 b illion per annum in the 2040-2050. With global 
action, the reduction in fuel costs compared to  reference is even larger, amounting to € 600 
billion saved per annum in the period 2040-2050. Over the whole 40 year period average fuel 
costs decrease compared to reference ar e between € 175 and € 320 billion per annum, 
depending on whether fragmented or global acti on is realised, and prov ided that technology 
penetration is not delayed compared with the effective and widely accepted technology cases. 
Under delayed electricity pene tration in transport average fuel cost savings would be 
considerably smaller. 
Delaying climate action causes investment e xpenditure to increase by around €100 billion per 
annum for the 20 year period from 2030 to  2050, without comparably decreasing the 
investment needs before 2030. Also fuel savings  are lower over time compared the effective 
technology scenarios, making the scen ario considerably costlier.  
Table 12: Average yearly total investments and fuel expenses 
Total average yearly investments 2011-20 2021-30 2031-40  2041-50  Average
Reference (frag. action, ref. fossil f. prices) 816 916 969 1014 929 
Effect. Techn. (frag. action, ref. fossil f. prices) 863 1040 1299 1589 1198 
Effect. Techn. (glob. action, low fossil f. prices) 858 1040 1309 1592 1200 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  845 1011 1392 1689 1234 
Total average yearly fuel expenses 2011-20 2021-30 2031-40  2041-50  Average
Reference (frag. action, ref. fossil f. prices) 930 1170 1259 1376 1184 
Effect. Techn. (frag. action, ref. fossil f. prices) 911 1067 1034 1019 1008 
Effect. Techn. (glob. action, low fossil f. prices) 892 968 834 760 863 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  922 1118 1061 993 1023 
 Source: PRIMES, GAINS 
An oil shock or high energy prices result in a si milar absolute increase in fuel expenses in 
case of decarbonisation or no action. But of course this price increase in case of 
decarbonisation starts from a significantly lower level of fuel expenses than the case where no action was undertaken. This resu lts in fuel expenses over th e period after 2020 in case of 
decarbonisation that remain on average at the levels below or a bit above the original 
                                                
 
127 For all sectors except transport an d the power sector, the investments relate to energy part of the 
investment, not the capital good as a whole. For transport and power the investment is related to the 
whole capital good. Transport as such represents by far the largest part of investments. 
 
EN 60   EN reference case, whereas in case of no climat e action these average annual fuel expense 
increase in a range € 100 (oil shock) to 300 billion (long lasting high prices) on average. 
An oil shock or high fossil fuel prices increas e the required average investment expenditure 
after 2020 on average by about € 100 billion per year in case of no action on climate change, however in the decarbonisation scenarios this ad ditional increase is not detectable (see Table 
13).  
Table 13: Average yearly total investments and fuel expenses in scenarios with an oil shock or high fossil 
fuel prices 
Total average yearly investments 2011-20 2021-30 2031-40  2041-50  Average
Reference (frag. action, ref. fossil f. prices) 816 916 969 1014 929 
Reference (frag. action, oil shock) 813 983 1012 1207 1004 
Reference (frag. action, high fossil f. prices) 813 981 1029 1213 1009 
Effect. Techn. (frag. action, ref. fossil f. prices) 863 1040 1299 1589 1198 
Effect. Techn. (frag. action, oil shock) 863 1119 1258 1538 1194 
Effect. Techn. (frag. action, high fossil f. prices) 863 1116 1295 1559 1208 
Total average yearly fuel expenses 2011-20 2021-30 2031-40  2041-50  Average
Reference (frag. action, ref. fossil f. prices) 930 1170 1259 1376 1184 
Reference (frag. action, oil shock) 930 1323 1510 1360 1281 
Reference (frag. action, high fossil f. prices) 930 1323 1700 1735 1422 
Effect. Techn. (frag. action, ref. fossil f. prices) 911 1067 1034 1019 1008 
Effect. Techn. (frag. action, oil shock) 911 1204 1281 1087 1121 
Effect. Techn. (frag. action, high fossil f. prices) 911 1205 1421 1325 1215 
 Source: PRIMES, GAINS 
Taking action on climate change results in sign ificantly lower fuel expenses compared to 
investment cost increases in cas e of global action. This is not th e case with only fragmented 
action globally where more limited reductions in fossil fuel expenses do not fully compensate the investment increases. But this reverses with an oil shock. In case of permanently high oil prices, increases in investment expenditure fo r climate action are more than compensated for 
by the reduction in fuel costs over later periods compared to a situation that no action was 
undertaken. 
Costs are thus highest in the case of no action and with high fossil fuel prices and costs are 
lowest in case of global action on climate change. In contrast to taking no additional action, 
investing in for instance carbon low buildings an d transport in the EU can shield the economy 
against the worst effects of high energy prices with significantly less costs related to fossil 
fuel imports.  
Costs can increase also if certain technologies  are not sufficiently available at competitive 
costs or if action it self is delayed.  
For a more detailed discussion on the separate sectors, see annex 7.11. It is of particular 
interest to see the relative differences within ea ch sector, that are often more pronounced than 
 
EN 61   EN the total aggregate data128. For more detail on the energy inte nsive industrial sectors see also 
chapter 5.2.7. 
5.2.5.  Sector specific impacts: power  
Gross electricity consumption shows a different pattern to the describe d evolution of gross 
energy consumption (see chapter 5.2.3). It is project ed to continue to incr ease in all scenarios, 
albeit for partly different reasons. Hence the importance of the power sector for achieving 
emission reductions becomes even mo re important than it is today.  
Figure 21 below gives an over view of electricity consump tion over time for different 
scenarios.  
Figure 21: Gross electricity consumption in relevant scenarios 
2 000 0002 500 0003 000 0003 500 0004 000 0004 500 0005 000 0005 500 0006 000 000
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Gross electricity generation in GWh
Reference (frag. action, ref. fossil f. prices) Effect. Techn. (glob. action, low fossil f. prices)
Delay. CCS (glob. action, low fossil f. prices) Delay. Electr. (glob. action, low fossil f. prices)
Reference (frag. action, oil shock) Effect. Techn. (frag. action, oil shock) 
Source: PRIMES 
In the reference scenario elec tricity consumption increases by  50% in 2050 compared to 2005, 
continuing trends observed in the past decades , due to increasing wealth, demand for comfort 
and more use of electricity in transport (e.g. hybrid car s, electrified railwa ys and metros) and 
buildings. In the decarbonisation scenarios, carbon pricing leads to higher incentives for 
electricity savings. However th is electricity saving element is overcompensated by: 
• Incentives to further electrify demand sector s to reach ambitious emission reductions. For 
example, gross electricity consumption in 2050 in the Effective Technologies scenario than 
in the Delayed Electrification scenario and is around 850 TWh higher than in the reference 
scenario. Plug-in hybrid cars, el ectric cars and greater use of h eat pumps drive this increase 
                                                 
128 Normally the investments relate to energy part of the investment, not the capital good as a whole. This 
is not the case for transport and power where the given investment projections relate to the whole 
capital good. Transport as such  represents by far the largest part of investments. 
 
EN 62   EN in electricity demand. Delays in transport el ectrification would resu lt in only moderate 
electricity demand increase over reference (about 150 TWh) in 2050. 
• The higher electricity use of some low car bon technologies (e.g. CCS). For example, the 
Delayed CCS scenario requires in 2050 around 200 TWh less electricity than the Effective 
Technologies scenario that has more CCS.  
All scenarios project that the power sector is  able to cope with ambitious decarbonisation 
requirements even under conditions of incr easing power demand, as Figure 22 shows.  
Figure 22: CO2 emissions from power and steam generation and district heating 
02004006008001 0001 2001 4001 600
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050CO 2 emissions in Mt
Reference (frag. action, ref. fossil f. prices) Effect. Techn. (glob. action, low fossil f. prices)
Delay. CCS (glob. action, low fossil f. prices) Delay. Electr. (glob. action, low fossil f. prices)
Reference (frag. action, oil shock) Effect. Techn. (frag. action, oil shock) 
Source: PRIMES 
The cost effective redu ction contribution of the power se ctor exceeds 95% compared to 1990 
in most scenarios, hence a more or less complete decarbonisation takes place. For the 
intermediate time horizon of 2030, this translates into reductions of more than 60% (except in 
the cases of oil shocks or high fossil fuel prices, resulting in reductions a bit above 50%). Emissions of power plants and district hea ting are down -64% compared to 1990 in the 
Effective Technology scenario and -68% lower in  the case of delayed electrification due to 
lower electricity demand from transport and ther efore higher emissions in that sector. Under 
the current trends of the reference case, em issions in 2030 would decrease by less than 40%. 
This high rate of decarbonisation of power genera tion is also the most important driver for the 
higher reductions in the ETS compared to the Non ETS (see also chapter 5.2.2) and an 
important driver for improvements in air qual ity (see also chapter 5.2.14 ). Furthermore there 
is a linkage between emissions le vels in the transpor t and power sector fo r the decarbonisation 
of the economy. To achieve 80% GHG emissi on reductions, higher electrification of the 
transport sector reduces emissions in transpor t and allows less absolute emission reduction in 
the power sector and vice versa. Se e chapter 5.2.6 for further information. 
 
EN 63   EN The three main low carbon technolog ies in the power sector are  
– Renewables 
– Nuclear  
– CCS equipped fossil fuel plants 
Near complete decarbonisation is mainly achie ved by the combination of these different low 
carbon technologies, which mainly driven by increasing carbon prices togeth er increase their 
share in total electricity production from around 45% in 2005 via 75 to 80% in 2030 to 
practically 100% in 2050 in al l scenarios (see Figure 23). Of these three technologies, 
renewables become the largest source of electr icity, seeing its share increase from 15% of 
electricity production in 2005 to around 50 to 55% 2050, which represents an absolute growth 
of around 500% reaching 2.7 to 3.0 TWh by 2050. Ho wever, the projected shares of single 
low-carbon technologies should be taken with  some caution, in particular given the 
uncertainty of individual tec hnological progress ra tes and the difficulty in instigating a 
possible complete change of the organisation of  the power network, which would also enable 
higher renewable shares than those represented in the modelling129. 
Figure 23: Share of low carbon t echnologies in power generation 
405060708090100
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050% of electricity generation
Reference (frag. action, ref. fossil f. prices) Reference (frag. action, high fossil f. prices)
Effect. Techn. (glob. action, low fossil f. prices) Delay. CCS (glob. action, low fossil f. prices)
Delay. Electr. (glob. action, low fossil f. prices) Effect. Techn. (frag. action, high fossil f. prices) 
Source: PRIMES 
Another difference between the decarbonisation s cenarios in the context of global climate 
action relates to the role of CCS. If the contri bution of CCS is lower and comes later, the cost-
                                                 
129 Further developments of the PRIMES model should enable an improved simulation of how grid 
capacity issues relate to deep decarbonisation scenarios. 
 
EN 64   EN effective contributions of other sectors are higher along th e pathway. However, carbon prices 
become significantly higher towards 2050 in this cas e. This illustrates also the important role 
of R&D and innovation for a shift towards low ca rbon technologies at lowest possible costs. 
But even in the delayed CCS scenario decarb onisation is near complete by 2050 due to the 
availability of other cost-eff ective low carbon options in combination with a delayed but still 
significant CCS contribution 
In the context of fragmented act ion with higher fossil fuel prices or even oil shocks, power 
demand remains very similar. The corres ponding CO2 emissions reduction contribution 
required by the power sector would then be slig htly lower, as shown in Figure 24. The reason 
for this is that higher fossil fuel prices or o il shocks induce higher contributions from transport 
and heating.  
This significant decarbonisation of the power sector would be achieved with continuously 
increasing investment expenditu res. However, as pointed out in chapter 5.2.4 th is increase is 
less in absolute terms than for instance in the tr ansport, residential and tertiary sectors. The 
pattern also differs over time for grid invest ments and power plant in vestments (see figure 
below).  
Figure 24: Power investments over time  
0%100%200%300%400%500%
2010 2015 2020 2025 2030 2035 2040 2045 20502005=100%
Power grid in Reference (frag. action, ref. fossil f. prices)
Power grid in Effect. Techn. (glob. action, low fossil f. prices)
Power plant in Reference (frag. action, ref. fossil f. prices)
Power plant in Effect. Techn. (glob. action, low fossil f. prices)
Power plant in Delay. CCS (glob. action, low fossil f. prices)
Power plant in Delay. Electr. (glob. action, low fossil f. prices) 
Source: PRIMES 
Cumulative investment into the grid from now until 2050 in the reference scenario is 
projected to be €1.3 trillion and would need to increase to between €1.6 and 2 trillion in the decarbonisation scenarios. The steady increase s needed up to 2020 in the reference scenario 
would need to continue in th e decarbonisation scenarios, w ith this value tripling by 2040 
(when compared to 2005), when grid investme nts would eventually start to decrease and 
move towards reference levels.  
 
EN 65   EN Additional electricity generation plant investme nts will be needed in the decarbonisation 
scenarios compared to the reference scen ario, reaching cumulatively €2.2 to 2.6 trillion 
compared to €1.7 trillion in the reference case (excluding CHP). The pattern is similar as for grid investments up until 2040, reaching triple th e investment level of 2005, but investments 
needs further increase after 2040 to 400-450% of  2005 value. As to be expected, delayed 
electrification re quires the lowest amount of power pl ant investments, while delayed CCS 
requires the highest cumulative amount. 
The impact of decarbonisation in the Power sector  will be further assessed in detail for the 
'Energy roadmap 2050' which is planne d by the Commission for later in 2011. 
5.2.6.  Sector specific impacts: transport  
In the reference scenario the total transport CO
2 emissions (excluding maritime bunkers) peak 
in 2015, decrease to the level of year 2000 by 2030 and stay roughly constant afterwards (see 
Figure 25 for details on road and aviation). In creased transport activity in the reference 
scenario is mainly offset by improvements in effi ciency. This is in large due to the effect of 
currently implemented policies on vehicle efficiency (for road transport the CO 2 and Cars 
Regulation, for aviation the ca rbon price signal due to th e inclusion in the ETS). 
In the decarbonisation scenarios analyzed CO 2 emissions reduce significantly in total 
transport emissions (including aviation, exclud ing maritime bunkers), in the range of 54 to 
70% in 2050 compared to 1990. This translates to the reduction of 65 to 77% in 2050 when 
compared to 2005. 
In 2030 transport emissions (road, rail and inland navigation) are reduced below 1990 levels 
for all scenarios except those with delayed elec trification or delayed action. Emissions from 
transport (road, rail and inland navigation) reduc e back to levels below 1990 with a range of 
+8% to -17%, with the effective technology scen ario at reference pr ices achieving -5% and 
the effective technology scenario with low energy prices -2%. %.  Including aviation 
emissions, the reductions would result in emissi on levels in a range of +20% to -9% by 2030, 
relative to 1990. 
 
EN 66   EN Figure 25: CO 2 emissions from transport 
 
Aviation
050100150200250
1990 2010 2030 2050Mt CO 2Road
02004006008001 000
1990 2010 2030 2050Mt CO 2
Reference (frag. action, ref. fossil f. prices)
Effect. Techn. (glob. action, low fossil f. prices)
Delay. Electr. (glob. action, low fossil f. prices)
 
Source: PRIMES 
Energy efficiency is one of the major contri butors to decarbonisation of transport. For 
instance the average energy e fficiency of passenger cars in 1990 was 43.9 toe/Mpkm. By 
2050 this improves to 23.9 in the reference scenario and in th e Effective Technology scenario 
it further goes down to 13.6 toe/Mpkm. This is achieved through gradual efficiency 
improvements of internal com bustion engines and subsequently  gradual hybridis ation leading 
eventually to high penetration ra tes for electric propulsion vehi cles (such as for example plug-
in hybrids and electric vehicles).  
The extent of the contribution of electric vehi cles, which would have important co-benefits 
with regard to air po llution (see chapter 5.2.14) is  of course dependent on a quick overcoming 
of barriers to the further development and cost reduction in particular of battery technology. It 
also assumes availability of th e necessary rare materials.  
In case of delayed and less widespread electrifi cation, the specific fuel consumption in 2050 is 
higher (lower efficiency), 19.2 toe/Mpkm, due to a higher remaining share of internal combustion engines. Moreover, carbon prices necessary to achieve decarbonisation are 
significantly higher. This shows the importa nce of R&D and innovation in key low carbon 
technologies for a low cost pathway. 
Biofuels are also important to further decarbo nise transport but do not result in similar 
efficiency improvements to electrification.  
Growth of biofuels for road transport in the e ffective technologies scenario is largest before 
2020 due to the 20% overall renewa bles target and the specific  10% renewables target for 
transport, but after 2020 growth stagnates co mpared to reference (see Figure 26). In 2050 
around 46 Mtoe of biofuels would be used for road transport in case of decarbonisation 
compared to 37 Mtoe in the reference scenario. In creases are mainly due to an increase in the 
use of biofuels for heavy duty vehicles. If elec trification of road tran sport is delayed this 
 
EN 67   EN modest growth after 2020 cannot be kept because biofuels would also be used much more in 
passenger road transport. This would result in total consumption of biofuel in road transport 
by 2050 equal to 92 Mtoe. 
In the aviation sector electrifi cation is not an option, resulting in all decarbonisation scenarios 
in high growth of biofuel use after 2030 w ith consumption in 2050 at around 25 Mtoe. 
It should also be noted that the modelling did not include the possibili ty of hydrogen and fuel 
cells to step in for instance in  heavy duty vehicle transport. 
This shift translates into an increasing share of aviation in the transport CO 2 emissions. In the 
reference scenario, the share of road tr ansport sector on the total transport CO 2 emissions 
decreased from 84% in 2005 to 77% in 2050 and in scenarios with d ecarbonisation this 
decreases further to around 65% in 2050 (with exception of delayed electrification where it is 
around 76%). The share of aviation increases from 14% in 2005 to 20% in 2050 in reference 
scenarios, but in the decarbonisation scenarios the share of aviation in creases to around 31%. 
In all scenarios, the combined  share of aviation and road transport accounts for more than 
95% of CO 2 emissions from transport (total excludi ng maritime bunker fuels). Rail transport 
is almost totally decarbonised by 2035 (via electrification). 
Passenger transport can decarbonise more than freight transport, with passenger transport 
reductions in the range 69 to 76% compared to  the reference scenario, whilst for freight 
transport reductions are only 54 to 65 % compared to the reference scenario. 
 
EN 68   EN Figure 26: Energy carriers in the transport sector 
 
Aviation Energy Mix [Mtoe]
Decarbonisation scenario under effective technologies
 and global climate action
01020304050607080
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Mtoe
100%
58%42%Aviation Energy Mix [Mtoe]
Reference Scenario
01020304050607080
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Mtoe
100%100%Road Transport Energy Mix [Mtoe]
Reference Scenario
050100150200250300350
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050MtoeOther
Electricity
Biofuels
Oil100% 87%13%
Road Transport Energy Mix [Mtoe]
Decarbonisation scenario under effective technologies
 and global climate action
050100150200250300350
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050MtoeOther
Electricity
Biofuels
Oil100%
36%13%
25%39%
Road Transport Energy Mix [Mtoe]
Decarbonisation scenario under delayed electrification
and global climate action
050100150200250300350
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050MtoeOther
Electricity
Biofuels
Oil100%
44%13%
43%13%Aviation Energy Mix [Mtoe]
Decarbonisation scenario under delayed electrification
and global climate action
01020304050607080
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050Mtoe
100%
49%51%
 
Source: PRIMES 
The impact of an oil shock or high fossil fuel  price scenario on tran sportation emissions is 
much more pronounced in the reference scenarios than it is in the decarbonisation scenarios. 
Decarbonisation reduces dependenc y on oil in transport and thus makes the system more 
robust to changes in oil price. 
With an oil shock or high fossil fuel prices road transport reduces CO 2 emissions between 32 
and 35% by 2050 compared to the reference scenario without an oil shock or high fossil fuel prices. In the scenario with decarbonisation th e impact of an oil shock or high fossil fuel 
prices is however limited.  
 
EN 69   EN Figure 27: CO 2 emissions from transport, impact of an oil shock 
Road
02004006008001,000
1990 2010 2030 2050Mt CO2Reference (frag. action,
ref. fossil f. prices)
Reference (frag. action, oilshock)
Reference (frag. action,
high fossil f. prices)
Effect. Techn. (frag.action, ref. fossil f. prices)
Effect. Techn. (frag.action, oil shock)
Effect. Techn. (frag.
action, high fossil f.prices)
 
Source: PRIMES, GAINS 
There are only minimal impacts in all the scen arios analysed on the to tal passenger transport 
activity in the EU27, measured in  passenger-kilometres (pkm). Th is is in part due to the 
modelling framework that focuses on GHG reducti ons and does not include specific transport 
polices to reduce different kinds  of externalities, such as congestion and air pollution which 
can have effects on demand and produce modal shifts that can lead to additional co-benefits in terms of emission reductions. These aspects are dealt with in more detail in the impact assessment of the White Paper on Transport.  
Passenger transport increases in the refe rence scenario by 94%  between 1990 and 2050, 
decarbonisation causes limited reduction in this increase. In the worst case, the scenario with decarbonisation and a high fossil fuel prices at the same time passenger transport activity increases by 82% by 2050 compared to 1990, only slightly lower than the increase in the 
reference scenario with the high fo ssil fuel prices (84% increase). 
In a world with global action and low energy pr ices, activity might even increase slightly 
more by 99% compared to 1990. By then, the fuel  costs represent relati vely a lower share of 
passenger transport costs, while capital costs for electrified cars themselves are higher. 
Public road and rail transport is projected to have higher passenger act ivity in all scenarios 
compared to reference scenario. P ublic road transport in referen ce scenario sees an increase of 
26% compared to 1990, while this increase is  around 57% with decarbonisation. For rail the 
increases are 62% and around 114% respectively. 
But even these high increases do not signi ficantly change the overall share of cars in 
passenger transport compared to the reference scenario. Passenger cars reduce their share 
from 73% in 2005 to around 64% in decarbonisation scenarios. 
 
EN 70   EN The average annual distance travelled per pe rson in the EU27 increases from around 10 000 
km in 1990 to just below 13 000 km in 2005 and to more than 18 000 km in 2050, with very 
small variance between scenario s in 2050 (range -3% to +3% diffe rence); with exception of 
the oil shock or high fossil fuel price scen arios, where it decreases by 5% to 6%.  
The total freight transport activity, measured in tonne-kilometres (tkm) in 2050 decreases by 
1% to 7% in scenarios compared to the refe rence case, however it still grows by 93% to 106% 
when compared to 1990 levels (+109% in th e reference case). When the scenarios are 
compared to the reference case in 2050, frei ght activity on rail is higher by around 28%, on 
inland waterways is increased by around 14% a nd freight transport on road decreases by 10% 
to 15% (in cases with higher oil prices by up to 20%).  
There is a strong correlation be tween what can or should be done  in the transport sector, and 
what can or should be done in the power sector  if the economy is to be decarbonised, i.e. 
reduce GHG emissions with around 80%. 
In the case where emissions are highest in the road transport s ector (i.e. delayed 
electrification) emissions  in the power sector are at their lowest. And conversely in scenarios 
where emissions are lowest in the road transport sector (i.e. effective technologies with an oil 
shock or high fossil fuel prices), emissions in the power sector are at their highest (see Figure 
28). This is due to the impact of electrificatio n itself on both the emissions in the transport 
sector (a lowering effect on emi ssions) as well as the power se ctor (an increasing effect on 
emissions due to the increased demand for electricity). 
The sum of emissions from both sectors fo llows a rather consistent path towards 
decarbonisation, independent of the scenario chos en. This has implications for the ETS. The 
ETS sets a fixed reduction ta rget over time for the sector s involved and includes most 
emissions of the power sector. However in the future all ETS sectors will be impacted by 
developments in the transport sector, such as el ectrification, even if the road transport sector 
is not part of the ETS. 
 
EN 71   EN Figure 28: CO 2 emissions from road transport and the power sector in case of decarbonisation 
 
Road transport
0%20%40%60%80%100%
2020 2030 2040 20502005 = 100%
Effect. Techn. (frag. action, ref. fossil f. prices) Effect. Techn. (glob. action, low fossil f. prices)
Effect. Techn. (frag. action, high fossil f. prices) Delay. Electr. (glob. action, low fossil f. prices)GHG emissions
Power generation
0%20%40%60%80%100%
2020 2030 2040 2050Road trans. + Power gener.
0%20%40%60%80%100%
2020 2030 2040 2050
 
Source: PRIMES 
5.2.7.  Sector specific impacts: industry  
Energy intensive sectors 
Industry emitted 20% of the EU's CO 2 emissions and 18% of the EU's GHG emissions in 
2005. Of this, 80% were emitted by the 5 energy inte nsive industries represented separately in 
the PRIMES model. These are iron and steel, non-ferrous metals, chemicals, non-metallic minerals and the paper and pulp industries. 
These 5 industrial sectors contributed 5% to the total value added of  the EU economy. They 
are projected to continue to grow in the reference and deca rbonisation scenarios, although in 
line with historical tren ds at slightly lower rates than ot her industrial sectors. Nearly two 
thirds of their CO
2 emissions are related to energy combustion and a bit more than one third is 
generated as by-product of various  non-energy-related industrial processes (i n particular iron 
and steel, cement and some chemicals). 
In addition there are also industrial non-CO 2 process emissions which will be covered to a 
large extent by the EU ETS from 20 13 (see also chapter 5.2.9). These non-CO 2 emissions are 
expected to reduce rapidly when they are in troduced to the ETS, because cheap abatement 
technology is available, leading to a reduc tion of some 50Mt of emissions by 2020, reducing 
them to very low amounts (see also Figure 31 in chapter 5.2.9)130. Therefore the focus for 
further decarbonisation in these sectors remains the industrial CO2 emissions. 
                                                 
130 For a more detailed analysis see Höglund-Isaksson et al. (2010). 
 
EN 72   EN Energy intensive industries are covered by the EU ETS, but a large ra nge of sectors and 
subsectors currently benefits from free allocation. This is reflected in the reference scenario 
reflecting current tr ends and policies. 
The main projected results for the reference scenario are significant increases in energy 
efficiency per GDP and significant decreases in CO2 emissions of energy intensive industries, 
continuing the historically obser ved trends. Energy intensity (e nergy demand per value added) 
decreased by 32% by 2005 compared to 1990 and is projected to decrease by 53% by 2030 
and by 62% by 2050 compared to 1990. In trends consistent with thes e energy efficiency 
increases the CO2 emissions of energy intensiv e industries already decreased by 18% in 2005 
compared to 1990 and are projected to decrease in the reference scenar io by 30% in 2030 and 
by 33% in 2050 compared to 1990. 
In the decarbonisation scenarios the cost-effectiv e contribution of energy intensive industries 
in the Effective Technology scenario would increase to around 35% emission reductions in 
2030 and between 85 and 90% in 2050, indicating very similar reduction potentials as for 
overall CO2 emission reductions (see also ch apter 5.2.1 on the contributions of different 
sectors and Table 14 below). These potentials ar e a combination of further energy intensity 
decreases, nearly 75% in 2050 compared to 1990, and the application of CCS for the 
remaining energy intensiv e industrial CO2 emissions from 2035 onwards.  
Table 14: CO2 emission reductions in ener gy intensive industries in 2030 and 2050 
Effective Technologies scenarios  
Fragmented action, reference 
fossil fuel prices  % emission reduction in 2030/ 2050 compared to 1990 Reference 
global action, 
low fossil fuel 
prices No special 
treatment EII Lower EII 
effort  
Total CO2 emissions all sectors -24/-37% -36/-85% -37/-86% -37/-78% 
CO2 emissions Energy 
intensive industries -30/-33% -34/-88% -34/-87% -31/-51% 
Source: PRIMES, GAINS 
In the fragmented action scenario with the EU reducing emissions si gnificantly more than 
other countries, certain indus tries supplying low carbon technol ogies will benefit from 
improved competitiveness due to higher internal demand and first mover advantages in low carbon technologies to the extent that other world regions will follow climate action or further 
invest in their energy security. However, for energy intensive industries it would be difficult 
to realise the described reducti on potentials without affecting the economic competitiveness 
of a large part of these subsector s, in particular if reductions would need to be achieved with 
CCS, which is a technology that has no other real benefits than reduced GHG emissions. 
An alternative scenario is therefore analys ed where energy intensiv e industries would be 
subject to lower emission reduction requirement s. This is simulated by keeping the same 
carbon prices as in the reference case. This scenar io is referred to as the 'Effective Technology 
with reference energy prices and less efforts for industry' (for results see last column Table 
14). In this case industry emissions stay closer to the reference scenario results, producing emissions reductions of around 50% compared to  the 86% reductions without the exemptions, 
mainly because CCS would then not become a mainstream technology for process related 
emissions. 
 
EN 73   EN Results of this scenario for investments in the energy intensive sector, fuel and electricity 
expenses and CCS expenses are shown in the figures below and compared with Reference and with the Effective technologies  Scenarios (with Global Action)
131.  
Figure 29: Energy-related investments, fuel and el ectricity costs and industrial CCS expenditures  
 Energy-related
investment expenditures
02468101214161820
10-20 20-30 30-40 40-50Yearly average (€bn)
Reference (frag. action, ref. fossil f. prices)
Effect. Techn. (glob. action, low fossil f. prices)
Effect. Techn. + lower EII effort (frag. action, ref. fossil f. prices)Fuel and electricity costs
050100150200250
10-20 20-30 30-40 40-50Industrial CCS
expenditures
02468101214161820
10-20 20-30 30-40 40-50  
Source: PRIMES, GAINS 
In the Effective Technology scenario with globa l action CCS costs are a significant factor, as 
this is the key technology to achieve very low emissions fo r certain process related CO 2 
emissions. These investments would be driven  by a high carbon price. As demonstrated in 
chapter 5.1.1, global action would mean that other regions would also be subject to similar 
carbon prices, therefore carbon leakage is not likely to be a problem. 
It is however unlikely that these high costs c ould be borne in a world of 'Fragmented Action', 
even more so because CCS does not have im portant co-benefits such as efficiency 
improvements and reduced fuel costs. In the 'Effective Technology with reference energy 
prices and less efforts for industry' scenario  these investments woul d not happen. Fuel and 
electricity costs are reduced compared to the re ference scenario but are much higher than in 
the effective technologies scenarios with globa l action because of higher energy prices in 
fragmented action. Fuel and electricity cost in creases in the reference and decarbonisation 
scenarios over the period 2010 - 2050 but remain between 1 to 3 percent of total value added 
of the energy intensive sectors. 
An alternative to this approach would be to k eep emission reductions at the same level and to 
protect energy intensive industries by other mean s. This would imply that energy-intensive 
industries would require support to compensate  for additional costs incurred. After 2030, 
these annual costs would quickly entail several € billions per year, up to more than € 10 
billion on average in the last decade. 
                                                 
131 New investments in combined heat and power are included in the power sector. 
 
EN 74   EN Impacts on production of energy intensive i ndustries compared to reference of more 
ambitious action, even if other don't do more th an their Copenhagen pledges, up to 2030 were 
estimated using a macro-economic modelling t ool as discussed in chapter 5.1.3 on the macro-
economic impacts. For detailed results see Ta ble 7. Overall impacts are limited in 2020, and 
become a bit larger by 2030 when  the EU would reduce emissions  by 40%. The results also 
confirm that free allocation prot ects energy intensive industry in the ETS, even if the EU 
would implement more ambitious targets in a world where other regions have more limited 
ambition. 
Impact on total industry  
The 5 energy intensive sectors de scribed above take a large part of invest ments and costs of 
industry as a whole related to energy. Roughly half of the 2/3rd of investments in energy 
related capital comes from these 5 industries. Fo r a description of the impact on investments, 
fuel and electricity expenses of industry as a whole, see annex 7.11. 
5.2.8.  Sector specific impacts : the built environment 
The residential and service sect ors contribute above average to emission reductions, as shown 
in Table 8, chapter 5.2.1. More  than 70% of those emissions  come currently from the 
residential sector, and this proportion is projected to be  rather stable until 2050.  
Figure 30 shows residential em issions over time across a sel ection of scenarios. In the 
reference scenario, residential CO2 emissions decrease in 2030 by 25% and in 2050 by nearly 40% compared to 2005 (exactly 40% compared to 1990). These decreases are to a significant extent driven by EU and national energy effi ciency legislation. In the decarbonisation 
scenarios, residential emissions  decrease by nearly 90% across all scenarios in 2050 compared 
to 2005. Clearly higher fossil fuel prices in the context of fragmented climate action lead to 
higher emission reductions by 2030 in this sector.  
 
EN 75   EN Figure 30: Residential emissions over time 
050100150200250300350400450500
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050CO 2 emissions in Mt
Reference (frag. action, ref. fossil f. prices) Reference (frag. action, high fossil f. prices)
Effect. Techn. (glob. action, low fossil f. prices) Effect. Techn. (frag. action, ref. fossil f. prices)
Effect. Techn. (frag. action,high fossil f. prices) Delay. CCS (glob. action, low fossil f. prices) 
Source: PRIMES, GAINS 
Currently, two third of the energy use in the residential sector is related to building heating 
and cooling, more than 20% to water heati ng and cooking and slightly  more than 10% to 
electrical appliances and ligh ting. Heating and cooling remains the most important component 
but its share decreases  to less than 60% of residentia l energy use by 2050. Electrical 
appliances and lighting, despite significant efficiency improvemen ts, are projected to at least 
double their share to nearly 25%. 
Water heating and cooking energy use is currently  marked by a diverse mi x of fuels. In the 
reference scenario, this diversity is projected to pertain, with some composition changes, until 
2050. However, in the decarbonisation scenarios it is  projected that more than two thirds of 
final energy demand for water heating and cooking will come from emission free solar heating or from decarbonised electricit y, the rest from gas and biomass.  
For space heating and cooling,  emission trends are determined by the space demand, the 
efficiency of energy use and by the fuel mix. The modelling assumes an increase in space 
demand
132 kept constant across scenarios. Emissions thus have to be saved through changes in 
energy efficiency of the building itself, in pa rticular by improved thermal insulation, and in 
the efficiency and fuel mix of the heating and cooling equipment for housing. 
Table 15 shows results of different scenarios regarding the useful en ergy requirements of 
housing over time. While the reference scenario shows continuous increases of useful energy 
requirements for space heating and cooling compar ed to 2005, this trend is slowed down and 
                                                 
132 In line with current trends household size is assumed to decrease, from 2.4 inhabitants per household in 
2005 to 2.0 in 2050 while space per household is assumed to increase from 87 m2 in 2005 to 113 m2 in 
2050.  
 
EN 76   EN after 2040 even reversed in the decarbonisation scenar ios. This reversal is mainly the result of 
a significantly better th ermal insulation of buildings driv en by high carbon prices, leading 
gradually to a replacement of the housing stock with passive housing. 
Table 15: Useful energy requirements across scenarios 
Compared to 2005 in % 2030 2050 
Reference (frag. action, ref. fossil f. prices) 13.4% 30.7% 
Reference (frag. action, high fossil f. prices) 7.0% 23.9% 
Effect. Techn. (glob. action, low fossil f. prices) 7.0% -16.5% 
Delay. CCS (glob. action, low fossil f. prices) 6.6% -21.2% 
Effect. Techn. (frag. action, ref. fossil f. prices) 5.9% -17.6% 
Effect. Techn. (frag. action, high fossil f. prices) 1.4% -18.2% 
Source: PRIMES 
The other main explanatory factor is a more gradual shift in fuel use towards more energy 
efficient and less carbon intensive fuels. Effici ent heat pumps play an important role by 
allowing both to increase end-use efficiency of heating and the reduction of the carbon 
intensity of the energy mix by using geothermal  energy and electricity.  Renewables are the 
other important driver. 
Currently coal and oil hold still a share of around 25% of final ener gy used for heating and 
cooling. Already in the refere nce scenario this decreases to around 15% in 2050 and would 
practically disappear in the d ecarbonisation scenarios. Gas would see a decrease from around 
45% today to around 30% by 2050 in the decarboni sation scenarios in the context of global 
climate action. The share of elec tricity would increase from currently less than 10% to more 
than 20% in the decarbonisation scenarios, and the share of biomass from currently over 10% 
to over 25%. It should be noted th at due to the effici ency gains the latter increase corresponds 
more or less to a stagnation of biomass use for space heati ng in absolute terms. Finally, 
distributed heat would maintain its current share of under 10% by 2050. 
5.2.9.  Sector specific impacts: Agricult ure and other Non CO2 emissions  
Non-CO 2 emissions represent around 20% of curre nt EU GHG emissions. In 1990 they were 
around 1175 MtCO2eq and declined to 887 Mt CO2eq in 2005. Non-CO2 emissions have 
historically reduced much faster than CO 2 emissions. In the period 1990-2005 they reduced by 
almost a quarter, compared to only a 2% reduction in CO 2. In 2005 non-CO 2 emissions 
represented 17% of total GHG emissions in the EU, with agriculture representing more than 
half of these, around 9% of EU GHG emissions were agricultural Non-CO 2 emissions. 
Table 16: EU GHG share CO 2 – Non-CO 2, 1990-2005 
EU 27 GHG 
emissions (including 
aviation) 1990 20051990-
2005 
CO2 4467 4368 -2.2%
Non CO2 1175 887 -24.5%
Total 5642 5255 -6.9%
Source: Annual inventory submissions EU Member States to the UNFCCC, 2010, GHG emissions 2008 
Reference case 
 
EN 77   EN In the reference case, these emissions conti nue to decrease until 2030, the main reasons for 
this are:  
• Prevailing carbon prices in the ETS, re ducing industrial non-CO2 emissions. 
• Waste and waste water treatment legislation (e .g. the reduction of me thane emissions from 
landfill sites).  
• The Nitrates Directive (on the reduction of N2O emissions).  
• F-gas regulation and Di rective on air conditioning systems for motor vehicles (contributing 
to the reduction of F-gas emissions). 
• Underlying trends in the CAP (e.g. the d ecline of livestock numbers EU wide). 
• Methane emissions decrease from gas transmissions due to the improvement of 
infrastructure and from the decline of the coal mining i ndustry. Abatement technologies 
have also been implemented such as the improved recovery of coal mine gas and 
reductions in gas transmission losses th at come at relative low costs. 
After 2030, the reference scenario emissions show a slightly increasing trend. The effects of 
existing legislation are fadi ng. A second notable effect is the stagnation of non-CO2 
emissions in agriculture. In the years up to  2020 the evolution of  agricultural production 
typically stagnates or even declines (in so me sectors), however gl obal growth of demand 
linked to population growth stimulates EU pr oduction in the long run. In several cases this 
implies a turning point in terms of assumed supply and activity levels after 2020 in the agricultural sector. For more details on the model used and the assumptions regarding 
agriculture production and GHG emissions see annex 7.12. 
Summarising, in the reference scenario non-CO 2 GHG emissions are expected to decline 
considerably by one third compared to 2005 in 2030 but then remain more or less stable 
between 2030 and 2050. 
Developments in the effec tive technology scenario 
The figure below shows the possible reductions  in non-CO2 greenhouse gas emissions in the 
effective technology decarbonisation case compared to  the reference case. Most notable is that 
in the effective technology decarbonisation case the largest contribution in emission 
reductions stems from agriculture. In 2020 non- CO2 greenhouse gases could be cut by some 
20 Mt CO
2-eq compared to the reference scenario. 60% of this reduction would come from 
agriculture. Overall (from 2020 to  2050) 50 to 60% of the emissions reductions between the 
decarbonisation case and the reference case could come from agriculture. The majority of 
these reductions could come from  investments in farm scale an aerobic digestion, mixes of 
feed changes, the reduced and improved timi ng of fertilizer use and precision farming. 
The air conditioning and refrigeration sector (F -gas emissions) could make the second biggest 
contribution to further emission reductions ov er the period 2020 to 2050. At least some 20% 
of the additional reduction of non-CO2 greenhouse gases between the reference and 
decarbonisation scenarios could come from this sector. The reductions would be due to using alternative refrigerants and a va riety of process modifications. 
 
EN 78   EN The remaining emission reductions would come  from the waste sector (some 10%), energy 
(around 7%) and industry outside the ETS. Optim ized solid waste treatment systems and 
anaerobic digestion with biogas recovery could further reduce me thane from the waste sector.  
In the energy sector mine gas recovery, doublin g leak control frequencies and replacement of 
grey cast iron gas distribution networks c ould further reduce meth ane losses. Non-CO2 
emissions from industry in ETS and the waste wa ter treatment sector are already significantly 
reduced due to the carbon prices in the refere nce scenario and additio nal potential appears 
limited. 
Figure 31 Non-CO2 GHG emissions in the ref erence and effective technologies case  
 
Source: adapted from IIASA (Hoglund et al, 2010).  
Developments in other scenarios 
Reductions in non-CO 2 emissions do not differ substantially between the effective 
technologies and the delayed CCS  and delayed electr ification scenarios in 2030, both in the 
agricultural and non-agricu ltural sectors. Differences in carbon prices between these reduction 
scenarios are not significan t enough to see large changes in emissions reductions. 
Table 17: Non -CO2 emissions total in 2030 (MtCO2eq.) 
2030 
Mio ton CO2-
eq. 2005 Ref Eff. 
Tech Delayed
CCS Delayed 
ElectrificationEff. 
Tech 
+ Oil 
shock 
Total  879 600 535 535 537 545 
Non 
Agriculture 408 191 160 160 162 164 
 
EN 79   EN Agriculture 471 409 375 375 375 380 
vs 2005   
Total  0% -32% -39% -39% -39% -38% 
Non 
Agriculture 0% -53% -61% -61% -60% -60% 
Agriculture 0% -13% -20% -20% -20% -19% 
Source: GAINS 
Table 18 shows that by 2050 the differences ar e more pronounced. In the effective technology 
case emission reductions from Non CO2 emi ssions are 46% in 2050 compared to 2005. 
Delayed CCS increases carbon prices since more  expensive technologi es are needed. This 
increases the cost-effective reductions delivered  from Non CO2 emissions; to a level of 51% 
below 2005 levels. Delayed electrification woul d have a similar impact. In the oil shock 
decarbonisation scenario emissions are reduc ed only by 41% compared to 2005 instead of 
46% in the effective technologies scenario. The higher oil price implies lower carbon prices to 
meet the emission reduction targets. This re duces the need to redu ce Non CO2 greenhouse 
gases (41% in 2005 instead of 46% in 2050 compared to 2005.  
Table 18: Non -CO2 emissions total in 2050 (MtCO2eq.) 
2050 
Mio ton CO2-
eq. 2005 Ref Eff. 
Tech Delayed
CCS Delayed 
ElectrificationEff. 
Tech 
+ Oil 
shock 
Total  879 625 475 428 442 520 
Non 
Agriculture 408 216 144 125 133 174 
Agriculture 471 410 331 303 309 346 
vs 2005   
Total  0% -29% -46% -51% -50% -41% 
Non 
Agriculture 0% -47% -65% -69% -67% -57% 
Agriculture 0% -13% -30% -36% -34% -27% 
Source: GAINS 
Overall, this results in Non CO 2 emissions reductions contribu ting significantly more than 
CO 2 to the 40% reduction milestone in 2030 co mpared to 1990. This reverses by 2050 with 
CO 2 reducing more compared to 1990 than Non CO 2. 
Table 19: CO2 and Non CO2 emissions 
Reductions compared to 1990 2005 2030 2050 
Overall -7% -40 to -44%  -79 to -82% 
CO2 -3% -36 to -42% -85 to -87%
Non-CO2  -25% -53.5 to -54% -56 to -63% 
Source: PRIMES, GAINS 
With emissions levels at around 330 MtCO2eq. agriculture represents  around a third of the 
remaining total GHG emissions in 2050, tripling in share from 2005.  
 
EN 80   EN This points to the important role of agricu lture in achieving decarbonisation. If emissions 
would not continue to decrease  by a third by 2050 compared to 2005, then the energy sector 
would have to reduce even more.  
Again, similar to the analysis in chapters 5.2.10 and 5.1.4 this points to the important role of 
yield improvement in agriculture. The above an alysis does not include the feedback effects 
that abatement costs might have on agricultural prices, yields and dema nd. It neither assessed 
potential impact on carbon leakage in this sect or. A potentially important element that is 
neither included in the assessment is the possibl e impacts of behavioural  changes in affecting 
food consumption patterns.  
A transition to more healthy, less fat and m eat based diet could re duce methane and nitrous 
oxides emissions substantially at relatively low cost133. Reducing food waste would also 
improve resource efficiency and reduce greenho use gas emissions. Such behavioural changes 
would reduce decarbonisation costs allowing more emissions in other sectors and avoiding the 
need to use the most expensive options. 
Finally, the analysis did not consider alterna tive, not yet proven, options for the use of F-
gases. If by 2050 it has been possible to develop and deploy such alternative gases with much 
smaller global warming potential, that can re place the F-gases in the air conditioning and 
refrigeration sector, then that would to a larg e extent eliminate this sector as a source for 
greenhouse gases in the long term134. 
5.2.10.  Sector specific impacts: Land Use, Land Use Change and Forestry 
This chapter addresses the potential impacts of the different scen arios on some land use 
activities and related greenhouse gas emissions. However, it should be mentioned that this 
impact analysis is subject to high uncertainti es, as land use statisti cs, land market mapping, 
land use related greenhouse gas emission accounting, and respec tive model based quantitative 
analysis face significant  gaps and uncertainties. 
Bio-mass is projected to be an  important component of the increase in renewable energy 
projected over the coming decades. In the re ference case bio-mass production more than 
doubles by 2050 (see Table 20). In the decarbonisation case th e production of bio mass more 
than triples in the same period (see Table 21) . The sources of this increased bio-mass 
production would be crucial in assessing the direct and indi rect impacts on GHG emissions. 
Table 20: Bio-mass production requirement s in reference case for energy use 
Bio-energy production requirements (Mio toe) 
Domestic production for biomass 2005 2030 2050 
Crops 5 76 80 
Of which 2nd generation crops 0 57 79 
Agricultural residues (including black 
liquor) 17 31 36 
Forestry 40 51 42 
Waste 25 63 60 
Import 2 9 9 
                                                 
133 Stehfest et al., 2009, Popp et al., 2010  
134 In the context of the ongoing review of the F-Gas regulation, a more detailed analysis on the reduction 
potentials and mitigation options in the F-Gas sector is being carried out.  
 
EN 81   EN Total 90 231 228 
Source: PRIMES 
Table 21: Bio-mass production requireme nts in effective technologies d ecarbonisation case for energy use 
Bio-energy production requirements (Mio toe) 
Domestic production for biomass 2005 2030 2050 
Crops 5 53 134 
Of which 2nd generation crops 0 40 127 
Agricultural residues (including black 
liquor) 17 32 49 
Forestry 40 51 59 
Waste 25 63 87 
Import 2 12 26 
Total 90 212 356 
Source: PRIMES 
In the reference the increased biomass demand mainly comes to be used to meet increased 
biofuel production from agricultural crops (incr ease from 5 to 80 Mtoe). The largest part of 
this increase happens already in the period 2010 -2020 to fulfil the 10% EU renewables target 
in transport. In the decarbonisation case, a fu rther increase in bio-ma ss supply of 56% (or 128 
Mtoe) is needed by 2050 compared to the referen ce case. Part of this increase is met through 
increased imports but the largest absolute increa se comes again from crops for biofuels. Table 
21 shows that significant increases also occur in  residues from the agriculture sector and the 
waste sector in general. Both  increase production of bio-en ergy by a factor 3 from 2005 to 
2050 in the decarbonisation case. 
Figure 32 presents impact on demand for wood used for bio-energy as projected by PRIMES 
and the GLOBIOM model (excl uding impact of demand from aviation). It confirms the 
limited increase forestry products  demand for energy purposes over time (see Table 20 and 
Table 21). By 2050, the projected dema nd for energy wood from fellings in the 
decarbonisation scenario is about 35% higher than the demand in the reference scenario. 
Notable is also the increase in demand for fellings as bio-energy in the coming decade due to the achievement of the 20% renewables target by 2020. 
Figure 32: Demand for en ergy wood in the EU 
Demand for logs for energy wood 
80%100%120%140%
2010 2020 2030 2040 2050Baseline Reference Decarbonisation
 
 
EN 82   EN Source: PRIMES, G4M + GLOBIOM  
In other words, modest growth is projected in the long term demand for wood for bio-energy, 
although in the short term increases are expected to be more considerable.  
Still large uncertainties remain. The required inputs in agriculture to  produce the crops for 
biofuel production could increase emissions thr ough for instance increased fertiliser use in 
agriculture unless substantial progress will be made also in fertilizer efficiency. The agriculture projections presen ted in chapter 5.2.9 already incorporated the impacts of 
increases in bio-energy demand in the referen ce case. But this feedback mechanism was not 
examined for the decarbonisation scenario.  
Furthermore the significant increase in producti on of crops for biofuels could increase the 
area used for crop prod uction, which could resu lt in conversion of gras sland or even forests 
into cropland or reduce the expansion of forest  that could otherwise occur. This potential 
impact could not be estimated, neither the pot ential impact of regulatory provisions that 
would limit grassland conversion.  
Finally the demand for wood could be considerab ly different in 2050 than represented in 
Figure 32. Firstly, higher or lower renewables sh ares would matter. Seco ndly if other forms of 
bio mass supply for energy use do not materia lise as represented in Table 21, then wood 
demand could increase with more. Thirdly de mand for wood is not only dependent on wood 
demand for energy use alone, but also on chan ges in demand of other type of wood uses
135 
such as paper, pulp, construction materials a nd bio-plastics. For instance, the EUwood study 
has projected that wood demand for other uses th an energy will increase with a range of 15 to 
35% over the period 2010-2030. This is not unimpor tant given that today the share of wood 
felling used for energy production is limited. In  the GLOBIOM model around a third of wood 
production is used for energy purposes whereas the EUwood136 study seems to indicate that 
this use might even be lower at present.  
The extent to which increased wood demand, both for energy and other purposes, will be met 
through increased imports or no t matters also for the amount of wood production in the EU 
itself. 
Thus large uncertainty remains regarding the magnitude of demand for wood and the related 
impacts on wood production. To assess the possible impacts on emissions and removals in the Land Use, Land Use Change and Forestry activities (LULUCF)  sector, two scenarios were 
assessed with the GLOBIOM and G4M model
137.  
                                                 
135 The analysis did not look at the impact on greenhouse gas emissions of using wood products that 
replace more energy intensive alternatives for instan ce in construction, that can lower overall lifetime 
emissions. 
136 See for instance Mantau, U. et al. 2010: EUwood - Real potential for changes in growth and use of EU 
forests. Final report. Hamburg/Germany, June 2010. 160 p 
137 This are results of ongoing work. First results we re reported in chapter 5.3 of the Staff Working 
Document, Part II, accompanying the Communication 'Analysis of options to move beyond 20% greenhouse gas emission reductions and assessing the risk of carbon leakage' (SEC(2010) 650/2). The 
projection represented builds on work by the G4M + EUFASOM models as presented in SEC(2010) 
650/2, but extends the time horizon to 2050.  
 
EN 83   EN In one scenario, the "low w ood production" scenario, increas es in EU wood production were 
assumed to be very limited. The other scenario  sees higher overall wood production increases, 
of around 20% by 2030 and 40% by 2050 compared to 2010. 
Figure 33: Changes in wood production in the EU 
Wood production in the EU
450500550600650700750800
2010 2020 2030 2040 2050Mio m3
High wood production increase
Low wood production increase
 
Source: IIASA, G4M + GLOBIOM 
Figure 34 gives an overview of the impacts on th e different LULUCF activities from these 2 
different wood production levels.  
Overall the net sink from LU LUCF activities decr eases over time, even in the low wood 
production scenario that sees al most no increase in wood produc tion. This is predominantly 
due to reduced removals in forest management as a result of maturing European forests. 
Increased wood demand in the high wood produc tion scenario would however significantly 
affect the overall LULUCF sink. By 2030 this could result in removals of around 50 million 
ton CO2 less than in the low wood production scen ario. This is equivalent to around 1% of 
the EU's 1990 GHG emissions.  
The largest reduction can be seen in forest mana gement. Instead of a sink, forest management 
would become a source of CO 2 emissions by 2040. This is mainly due to changes in 
harvesting cycles and practi ces to supply more wood.  
The other pronounced difference between the 2 wood production scenarios is the impact on 
afforestation. Afforestation is projected to increase significantly in  the high wood production 
scenario to accommodate increased wood demand . This would actually gradually compensate 
the loss in sink from changes in forest manage ment. By 2050 this would fully compensate the 
loss from forest management, bringing net LULUCF removals in the high wood production 
scenario back to similar levels as the low wood production scenario, al beit at lower levels 
than at present. This underlines the potential fo r afforestation as an activity that can increase 
the sink in the longer term. 
Net emissions from deforestation decline to almo st zero in both scenarios. They start from a 
low base (from around 30 Million ton CO 2 in 2010). Overall gr assland and cropland 
management seem more or less stable as a sink and a source of CO 2 but the uncertainty in this 
area is particularly high, also because the imp acts of increased crop production for bio-energy 
is not estimated with respect to c onversion of grassland into cropland.  
 
EN 84   EN Figure 34: Impact on LULUCF of different wood production levels 
LULUCF net sink (= A + B +C)
-200-150-100-500
2010 2020 2030 2040 2050Mio ton CO2
High wood production increase
Low wood production increase(A) Forest Management
-250-200-150-100-50050
2010 2020 2030 2040 2050Mio ton CO2
Forest Management (high wood production)
Forest Management (low wood production)
(B) Afforestation and Deforestation
-200-150-100-50050
2010 2020 2030 2040 2050Mio ton CO2
Afforestation (high wood production)
Afforestation (low wood production)
Deforestation (high wood production)
Deforestation (low wood production)(C) Cropland and Grassland 
Management
-100-50050100
2010 2020 2030 2040 2050Mio ton CO2
Cropland Manag. (high wood production)
Cropland Manag. (low wood production)
Grassland Manag. (high wood production)
Grassland Manag. (low wood production) 
Source: IIASA, G4M 
Uncertainties are thus large. The evolution of the LULUCF sink in the EU depends on several 
elements: 
– whether there will be a significant increased demand for wood for bio energy 
use or not in case of decarbonisation. Th is depends in part on the development 
of other sources of bio-energy such as  waste and other sources of renewable 
energy such as hydro, wind and solar.  
– the extent to which other wood uses will also grow (note that this demand will 
be negatively affected if increased w ood demand for bio-energy would result in 
higher overall wood prices). Improving res ource efficiency in general through 
increased recycling rates can also contri bute to limit the growth in demand of 
virgin wood. 
– the extent that any of this demand grow th will be met by in ternal production or 
increased imports. If the la tter is the case, attenti on should be paid whether 
these imports come from sustainable sources or not and the impact in terms of net GHG emissions. 
– the extent that increased production is achieved through changes in forest 
management or rather through increas ed afforestation. The most negative 
impact on the sink would occur if the increased wood production would be met 
through simple deforestation. 
– Increased afforestation can compensate  over time the loss of the sink due to 
increased wood production. Even if wood production would not go up, 
 
EN 85   EN increased afforestation could compensate  in part the reduction in the net sink 
due to the ageing of EU forests.  
Furthermore uncertainty relates to the manner in which these emissions and removals are 
accounted for and the inherent uncertainty rela ted to the data. Hist orical estimates of 
LULUCF by the models used show large diff erences with the data provided by Member 
States. Member States report LULUCF net re movals of around 400 Mio ton CO2 in 2000 and 
stable levels in the period 2000-2008138. The G4M and GLOBIOM models estimate this to be 
lower, at around 250 Mio ton CO 2 in 2000, with decreasing trends  already in the period up to 
2010. Differences are due to the large uncerta inties involved, differe nt methodologies and 
sources used (such as forest inventories, timb er supply models and extrapolations), different 
land coverage, and the fact that reported emissi ons and harvesting data are incomplete (not all 
countries report on all types of land uses a nd carbon pools). Further wo rk to accommodate 
some of these differences is ongoing. 
Chapter 5.1.4 assessed these interrelationships on  a global scale; looking at what conditions 
need to be met in order to deliver increases in bio-energy, reduced defo restation and increased 
food production. 
It is clear that this issue of  LULUCF in the EU requires fu rther attention and examination. 
The Commission will revisit th is issue in the context of the assessment regarding the 
modalities for the inclusion of emissions and re movals from activities related to LULUCF in 
the Community reduction commitment as fo reseen under the 2011 Work Programme. 
Furthermore agricultural policies will also need to give the appropriate incentives to maintain 
the grassland sinks, tackle emissions from cr op land by allowing restoration of wetlands and 
peat lands and adapting tillage practices, and reduce soil erosion that releases carbon. 
5.2.11.  Social impacts for households 
The overall economic impacts show on the one hand a substantial incr ease in investment 
expenditure, also for households in sectors such as transport, energy efficiency in buildings 
and appliances, and on the other a substantial decreas es of overall fuel and electricity costs. It 
is useful to consider how decarbonisation w ill influence the yearly costs for energy and 
transport services for households. 
Energy expenditure per household other than transport 
Figure 35 shows the expenditure of an averag e EU household for energy. The costs included 
are annualised capital139 and fuel costs related to heating and cooling, insulation of buildings, 
electricity costs, as well as energy using e quipment and appliances. When considering these 
costs the following elemen ts are of relevance:  
– investment costs for energy using equipment over time  
– changes in per unit co sts of energy input  
– overall energy use due to increasing efficiency  
                                                 
138 EEA 2010b, Table ES.6  
139 All annualised cost s include the return necessary on private s ector investments in the housing sector. No 
social discount rate is applied which would result in lower costs. 
 
EN 86   EN Results are displayed in Figure 35. The fo llowing conclusions can be drawn:  
– Until 2025, increased investments outweigh energy savings 
– After 2025, the share of energy expe nditures starts to decrease, with fuel savings as a result 
of energy efficiency investments overcompensa ting the equipment costs. This leads to a 
marginally lower annual costs in the decarb onisation scenarios with reference energy 
prices compared to the reference scenario and a cost well below reference for the global 
action scenario with low energy prices.  
– After 2040 this trend of a lowering share of household income reverses, bringing 
expenditures in case of decarbonisation back  to 2025 levels and above reference levels. 
This is mainly driven by additional expenditures for thermal insulation in response to further increasing carbon prices, i.e. the shift towards passive housing and similar 
standards also in refurbishments. Many of th e additional energy savings induced by these 
expenditures will only be reaped after 2050 which is beyond the projection period.  
– The impact of international fuel prices is clearly visible when comparing the different 
decarbonisation scenarios. Household costs ar e lower in the context of global climate 
action.  
Figure 35: Expenditure of households on energ y related equipment, fuels and electricity 
5%6%7%8%9%10%
2010 2015 2020 2025 2030 2035 2040 2045 2050Energy expenditures as % of household income
Reference (frag. action, ref. fossil f. prices) Effect. Techn. (glob. action, low fossil f. prices)
Effect. Techn. (frag. action, ref. fossil f. prices) 
Source: PRIMES, GAINS 
Overall, it can be concluded th at energy expenditures as percen tage of household income will 
increase somewhat compared to today. 
Transport expenditure per household  
Figure 36 shows the expenditure  of an average EU household for transport. The costs 
included are fuel and electricity costs as we ll as the annualised tota l transport equipment 
 
EN 87   EN costs140 (e.g. full costs for cars, not only energy-rel ated parts). When c onsidering these costs 
the following elements are of relevance:  
– increased transport activity over time 
– investment costs for transport 
– changes in per unit co sts of energy input  
– overall energy use due to increasing efficiency  
Results are displayed in Figure 36. The fo llowing conclusions can be drawn:  
– Until 2030, increased investment expenditure, increased annual mileage, and increasing 
CO2, fuel and electricity prices outweigh energy savings, after 2030, the energy savings 
dominate, leading to a situati on that overall transport cost s per household in 2050 are less 
important than today.  
– Especially after 2020, increased investments costs in the deca rbonisation s cenarios keep 
overall transport costs per household above reference levels. This is mainly due to the cost for electrification of road transport, wh ich outweighs the fuel cost savings.  
– The impact of different oil prices in the decarbonisation scenarios is counter intuitive. 
Lower oil prices in the global action scenar io leads to higher mileage compared to 
reference. Instead decarbonisation with referen ce oil prices leads to lower mileage as the 
reference case (see also chapter 5.2.6). As a consequence of these effects on mileage the 
decarbonisation scenario with reference oil pr ices leads to a lower overall expenditure 
compared to the decarbonisation scenario with low oil prices. 
Figure 36 : Transport costs per household  
25%26%27%28%29%30%31%32%
2010 2015 2020 2025 2030 2035 2040 2045 2050Passenger transport cost as % of household income
Reference (frag. action, ref. fossil f. prices) Effect. Techn. (glob. action, low fossil f. prices)
Effect. Techn. (frag. action, ref. fossil f. prices) 
                                                 
140 All annualised costs incl ude the return necessary on  private sector investment s in the transport sector. 
No social discount rate is applied which would result in lower costs. 
 
EN 88   EN Source: PRIMES, GAINS 
Overall, it can be concluded that transport expenditures as percentage of household income 
will decrease somewhat compared to today, despite the continuously increasing transport 
services and mileage that the av erage household is experiencing.  
Overall, the household costs for transport and energy in a decarbonised EU are moderately 
higher than in the reference sc enario, but their combined shar e in household income in 2050 is 
not higher than today, with hous ehold income projected to increa se on average with 90% over 
the period 2010-2050.  
However, in particular the n eed for high investments upfront to benefit from the fuel and 
electricity cost savings later on may pose a ch allenge for households, even more so for the 
most vulnerable households with lower income which cannot afford increased investment, 
even if over time compensated by energy savings . Households are not the same, and some 
might have problems mobilising the necessary re sources for the upfront costs. This impact on 
different types of households was not assessed in this Impact Assessment. 
5.2.12.  Leveraging finance 
Total annual investments over the next 40 year s related to the decarbonisation of the economy 
are projected to be around € 270 billion, for both the global and fragmented action scenarios 
(see chapter 5.2.4). 
Mobilising on average an additi onal € 270 billion a year in the coming 40 years will require 
specific attention from a policy perspective. Th is projected to repres ents on average 1.5% of 
our GDP over that period. To put this investme nt increase in perspective: in 2008 the EU 
invested141 21.1% of its GDP, in 2009 this was re duced to 19.1%. In th is context, it is 
interesting to take note that ot her economies invest a much larg er shares of GDP (e.g. China: 
48%, India: 35% and Korea: 26% in 2009)142. 
Given the scarcity of public funds and magnit ude of the transition challenge towards a 2050 
low-carbon economy, a key question is how to ach ieve the required level of funding. As the 
vast majority of financial investments will have to come from the private sector, the role of public funding is to generate the enabling environment for private sector financing to leverage 
investments into low carbon investments that of ten will increase long term productivity and to 
create new markets. Investors might otherwis e choose to fund opportunities with the lowest 
capital intensity rather than the ones with the lo west cost over time. The challenge is to find 
effective ways to incentivise and finance the additional upfront expenditure and the necessary research and demonstration. It becomes clear  that the cheapest ab atement opportunities are 
not always those with the lowe st capital spend or the highest  productivity increase over the 
longer time. 
This will often involve ensuring access to info rmation on the real cost s and benefits of the 
investments made. This will allow private sector  investors to judge better the real long term 
impact of their investment, thereby indirectly lowering the private discount rate closer to the 
                                                
 
141 Eurostat, National accounts, Gross fixed cap ital formation (investments), % of GDP:  
 http://epp.eurostat.ec.europa .eu/portal/page/portal/nati onal_accounts/data/main_tables 
142 World Bank, Indicators, Gross capital formation (% of GDP):
 http://data.worldbank.org/indi cator/NE.GDI.TOT L.ZS/countries 
 
EN 89   EN social optimum. An important element is not  only information on the technology itself, but 
also a sufficiently strong long term carbon pric e signal that gives investment certainty. 
But another important tool will be ensuring better access to financing itself. To be equitable it 
will also be important to ensure that poorer households, that often only have access to high 
cost credit, can mobilise the resources upfront at  more reasonable prices to invest in carbon 
low investments.  
Public funding should only support  those investments that are economically efficient but not 
financially viable. Public fundi ng should not crowd out private in vestments. Rather, the role 
of public spending is to "c rowd in" investments.  
Realising investment can be constrained by prac tical factors as well, like in the case of the 
housing sector: While builders and owners refr ain from making investment into energy 
efficiency because they do not benefit from the financial savings, tenants are equally reluctant 
when they are not certain to stay lo ng enough to get back their investment. 
To tackle these barriers to investments, financ ial and fiscal instruments are part of a policy 
package, which should include regulatory, f acilitation and communication elements. The 
finance and fiscal instruments essentially fall into different categories: preferential loans, grants that pay back part of a low-energy inve stment and tax rebates. Different public funding 
instruments have been introduced along the inn ovation chain in EU Member States to crowd 
in private investments and crea te a leverage effect. See anne x 7.13 for a list of examples of 
such policies. 
To achieve this level of leverage, a larger  share of regional fundi ng within the EU budget 
would need to go to low carbon related investme nts and different policy instruments will need 
to be applied, with more focus on how this fundi ng can really lead to leverage of national and 
private sector resources.  
At present 30% of the total € 344 billion Re gional funding over 2007-2 013 is available for 
activities with a particular impact on sustainabl e growth, or an averag e annual amount of €15 
Billion of which at this point in time not all investments go to low carbon technologies. By 
the end of 2009, 22% of this funding for sustaina ble growth had been allocated to specific 
projects compared to 27% for the total of Regional funding. In particul ar, investments for 
energy-related and environmental programmes we re below average, which points out that 
scope improve the implementation of financing instruments for low carbon development. 
Table 22: Cohesion Policy 2007-13 allocations contributing to sustainable growth 
Cohesion Policy 2007-13 allocations contributing to sustainable growth 
  Amount of adopted 
Operational Programs Amount allocated to selected 
operations by end 2009 % 
  Bn € ( rounding) Bn € (rounding)  
DIRECT  45.5 9.9 22%
Water supply  8.1 1.7 21%
Waste water  13.9 3.8 27%
Waste 7 1.1 16%
Air quality 1 0.1 6% 
Nature protection  5.2 1 19%
Climate change adaptation 7.8 1.8 23%
 
EN 90   EN Eco-innovation in SMEs  2.5 0.5 20%
INDIRECT 59.5 13.4 23% 23%
Rail  23.9 5.4 23%
Urban transport 7.8 2.2 28%
Other sustainable transport  4.6 1 22%
Electricity 0.6 0.02 4% 
Sustainable energy 9 1.4 15%
Urban & rural regeneration 13.6 3.4 25%
TOTAL  105 23.3 22%
Source: COM(2011) 17 final, Communication 'Regional policy contributing to sustainable growth in EUROPE 
2020, Member States Strategic Reports, September 2009 – January 2010. 
5.2.13.  Employment impacts 
The transition towards a low-carbon economy w ill have a significant impact on the structure 
of the economy since it will a ffect the demand and supply of energy goods and services and 
will have an impact in the behaviour of c onsumers, employees and employers and public 
authorities. Deep emission reductions have mark ed effects that redirect investments and 
impact employment. For instance the renewables sector has already seen a job increase from 
230000 in 2005 to 550000 in 2009143. Also investments in residential and commercial 
buildings are projected to increase by around 30%  compared to the reference scenario in the 
next 2 decades, reaching nearly € 70 billion annually instead of nearly € 50 billion annually 
expected in the reference scenario (see table Ta ble 35). Beyond that they will be even larger. 
It is clear such addi tional investments in a labour intens ive sector, curren tly employing around 
15 million people144, will have beneficial impacts on empl oyment. A number of studies have 
calculated employment effects of green or ener gy saving building investments in the EU and 
its Member States145. Based on their results, it can be estimated that these additional € 20 
billion investment annually in the coming d ecade lead annually to 150.000 to 500.000 direct 
construction jobs being created or maintained, and to 250.000 to 750.000 jobs if also indirect 
employment effects in other sectors are taken into account. The upper range estimates come 
from studies on investments taking place in ne w Member States due to their significantly 
higher labour intensity.  
Also investments in the power  sector, both for grids and pow er plants, are projected to 
increase by more than €30 bil lion annually in the decarbonisat ion scenarios compared to the 
reference scenario by 2020-2030 (see Table 39 ). A recent study with the macroeconomic 
E3ME model for the European Commission has estimated, that additional €50 billion investment in this sector over the coming decade would lead cumulatively to around 400 000 
additional jobs, if indirect a nd induced effects are included
146.  
                                                 
143 Source: European Renewable Energy Council,  http://www.erec.org/statistics/jobs.html 
144 Eurostat: The EU-27 construction sector: from boom to gloom - Issue number 7/2010, Catalogue 
number: KS-SF-10-007-EN-N 
145 See e.g. Ürge-Vorsatz, Diana et al. (2010), Clau snitzer, Klaus-Dieter et al. (2010), Klinckenberg 
Consultants (2010) and European Commission (2008): Summary of the impact assessment of the 
proposal for a recast of the energy perform ance of buildings dir ective, SEC( 2008)2865. 
146 European Commission (2010): Impact assessmen t for the Communication Energy infrastructure 
priorities for 2020 and beyond - A Blueprint for an integrated European energy network. SEC(2010) 
1395 final. 
 
EN 91   EN But impacts on employment are not only driven by direct impacts in the concerned sectors. 
There are indirect effects economy-wide that to  a large extent depend on the type of policy 
implemented to achieve the emission reducti on. The Staff Working Do cument accompanying 
the COM (2010) 265 'Analysis of options to move beyond 20% GHG emission reductions'147 
underlined already that different mitiga tion policies can have different impact on 
employment. For example raising revenue thro ugh carbon pricing (auctioning in the ETS or 
taxation in the non-ETS) and directing this to lowering taxation on labour can have positive effects, most notably for employment. This analysis was revisited and extended to the 2030 
time horizon for this impact assessment (see chap ter 5.1.3), confirming that full recycling of 
revenues to reduce the costs of labour potentially could increas e employment in the EU with 
around 0.7% by 2020 compared to reference, or  around 1.5 million jobs (see Table 6).  
Even if impacts can be positive overall, significant shifts in employment among or within 
sectors are expected
148. The development of accommodati ng policies will matter a lot to 
ensure for an orderly transiti on of job prospects between sect ors. This is particularly 
significant in the energy sector with sectors that  experience growth and decline as a result of 
major shifts in investments and changes in pr oduction and consumptions patterns. The main 
need will be to revise and upgrade the 'green' skills  of existing workers in all sectors. This is 
the case even where there have  been major increases in demand, such as workers in the 
building renovation sector to improve energy effici ency and in sectors th at are only indirectly 
involved such as the banking s ector that needs to approve the loans for the relevant 
investments149.  
Beyond specific 'green' know how, there is a need  to reinforce human capital in general 
because of the changes in production methods and adoption of new business models in a 
resource constrained world. Skills needs are also compounded by general weaknesses in the 
labour force and in particular the lack of inte rest in science and engineering, leading to a 
deficit in available technical sk ills. The issue is further tack led in the Europe 2020 flagship 
initiative ‘An Agenda for new skills and jobs’150. 
But not only re-skilling will be important, main streaming climate change objectives in the 
overall policy framework will be beneficial fo r overall employment. For instance, according 
to recent estimates, achieving the EU target of spending 3% of EU GDP on R&D by 2020 could create 3.7 million jobs and increase annual GDP by close to €800 billion by 2025
151. As 
such there is a particular need to lift barriers on R&D on climate issues, and when accompanied with a long term carbon price signa l, giving investors more certainty, and 
improved framework conditions for R&D, this can results in net benefits in job creation and 
welfare
152. 
5.2.14.  Co-benefits in terms of air pollution 
                                                 
147 SEC(2010) 65 
148 Employment in Europe Report 2009, ISSN 1016-5444 
149 European Centre for the Development of Vocati onal Training, Thessaloniki , Greece, 2010: Skills for 
green jobs – European Synthesis Report 
150 COM(2010) 682 final. 
151 P. Zagamé, (2010) The cost of a non-innovative Europe,  
 http://ec.europa.eu/research/socialsciences /policybriefsresearchachievements_en.html 
152 European Economy. Economic Papers. 413. June 2010. Brussels, Andrea Conte, Ariane Labat, János 
Varga and Žiga Žarni ć: What is the Growth Potential of Green Innovation? An Assessment of EU 
Climate Change Policies.  
 
EN 92   EN The reductions in GHG emissions of differen t decarbonisation scenarios also have positive 
impacts on air pollution. This is so because of the reduction in energy consumption and a shift 
to renewable energy sources. For this analysis  the same methodology (the GAINS model) was 
as in the "Analysis of options to move beyond 20% greenhouse gas emissions reductions"153. 
This permits a broad estimation of the changes in air pollution impacts,  including air pollution 
control costs and physical health impacts. The analysis was carried out for the reference 
scenario, the effective technology scenario and th e delayed action scenario. Both the effective 
technology and the delayed action s cenario assume global action and thus low energy prices.  
Table 23 shows that reducing GHG emissions in 2020, 2030 and 2050 will further reduce 
emissions of PM 2.5, SO 2 and NO X in the EU compared to the reference case154. The reductions 
are more pronounced for SO2 and NOx. Looking at the sum for the three pollutants the 
effective technologies case reduces air polluti on by nearly 10% in 2030 and some 29% in 
2050 compared to reference. Compared to 2005 this would represent a reduction of 68% in 
2030 and 67% in 2050. In the delayed action th e reductions in 2020 and 2030 are smaller but 
bigger in 2050.  
The reduction in air pollution has positive imp acts on human health. The table shows the 
impacts on mortality. Effective decarbonisation w ill reduce the number of life year lost due to 
PM 2.5 by 2.6 million in 2020, 6.3 million in 2030 a nd 14.3 million in 2050. Delayed action 
will have smaller positive effects in 2020 and 2030 and larger positive impacts in 2050. With effective decarbonisation the number of premat ure deaths due to ground level ozone drops by 
174 in 2020, 415 in 2030 and 846 in 2050. With de layed action these nu mber are lower in 
2020 and 2030 but higher in 2050.  
This reduction in emissions can also be expect ed to further reduce the costs of controlling 
traditional air pollutants. Table 23 shows that th e effective decarbonisation case also cuts the 
costs of controlling air pollution by €3.6 b illion in 2020, nearly €13 billion in 2030 and €46 
billion in 2050. With delayed action cost savi ngs are initially lowe r but higher in 2050.  
The reduction in mortality can al so be valued economically. Th e table shows that effective 
decarbonisation reduces this type of health damage due to air pollution by €3 to 7 billion in 2020 compared to the reference. The largest part comes from PM
2.5. In 2030 the damage 
reduction increases to around €7-17 billion and in 2050 to €17-38 bi llion. Delayed action will 
lead to smaller reductions in damage in 2020 (€1 to 2 billion) a nd 2030 and more pronounced 
impacts in 2050 (around €18 to 42 billion/year).  
Table 23 shows that effective decarbonisation can reduce air pollution cost (of both damage 
and air pollution control) by some €11 billi on in 2020, €29 billion in 2030 and €85 billion in 
2050. With delayed action the savings are sm aller in 2020 (€3 - €4 billion) and 2030 and 
higher later (€66-89 billion in 2050).  
Table 23: Impacts on air pollution and air pollution control costs (c hange compared to the reference) 
2020 2030 2050 Change compared to the 
reference Effective Delayed Effective Delayed Effective Delayed 
                                                 
153 SEC (210)650 
154 Note that the reference scenario on air emissions (i n particular NOx) from the transport sector has some 
uncertainties due to the difference between "real world emissions" and estimated emissions and the 
assumptions regarding fleet turnover These eff ects may influence the air pollution benefits  
 
EN 93   EN SO 2 emission (1000t) -106 -3 -314 -159 -877 -944 
NOx emission (1000t) -161 -48 -369 -222 -1089 -1155 
PM 2.5 emissions (1000t) -19 -6 -36 -29 -43 -54 
Air pollution reduction 
(%)(sum SO 2, NO X, 
PM2.5) -3.2 -0.6 -9.8 -5.6 -28.5 -30.5 
Reduction in health 
impacts (million life years lost due to PM
2.5) 2.6 0.8 6.3 4.5 14.3 15.6 
Reduction in premature 
deaths ozone (cases/year) 174 53 415 288 846 870 
ECONOMIC 
IMPLICATIONS       
Reduced air pollution 
control cost (€billion/year)  3.6 1.9 12.6 8.1 46.3 48.0 
Reduced damage health 
PM2.5 (billion €/yr).  2.9-6.6 0.9-2 6.9-15.9 5-11.4 15.7-
36.3 17.1-
39.5 
Reduced damage health ozone (€billion/year) 0.2-0.4 0.1-0.1 0.4-0.9 0.3-0.6 0.9-1.8 0.9-1.8 
SUM of reduced health 
damage (€billion/year) 3-7 0.9-2.1 7.3-16.8 5.3-12 16.6-
38.1 18-41.4 
SUM of reduced control 
costs & damage savings (billion/yr) 6.6-10.6 2.8-4.0 20-29.4 13.8-
20.6 62.9-
84.4 66-89.4 
Source: IIASA (2011) based on GAINS for emissions, health impacts and air pollution control costs (in €2008). 
Benefit valuation uses valuation of mortality used for the Climate and Energy package.155 
The reduction in greenhouse gas emissions will  also reduce morbidity. A recent study shows 
that a reduction of the EU's GHG emissions by 25% (in 2020 compared to 1990) could have 
significant health implications: it would re duce chronic bronchitis , hospital admissions, 
restricted activity days, medi cations use, days with lower respiratory symptoms and 
consultations for asthma and breathing problems156. The study valued the benefits of these 
improvements at around €1.5 billion per year in 2020. Given the more si gnificant reduction in 
emissions of air pollution in 2030 (6 to 10%) and 2050 with decarbonisation, morbidity 
benefits can be higher in  2030 and 2050 than in 2020.  
These gains will be important also in the light of the comprehensive review of the EU Air 
Quality Policy foreseen for 2013 at the latest wh ere the aim is to maximise co-benefits with 
climate policy and minimise trade-offs. 
Furthermore, damage to materials, crops and sensitive ecosystems (due to acidification, 
excess nitrogen deposition and ground level ozone)  can be expected to be reduced. Table 24 
shows the reduction in ecosystem areas in th e EU27 were acidificati on and euthrophication 
exceed critical loads. I.e. in 2050 the impact s of effective and delayed decarbonisation are 
significant.  
                                                 
155 Commission Staff Working Document, Part II (SEC(2010) 650. 
156 Holland, M. (2010) 
 
EN 94   EN Table 24: Impacts on sensitive ecosystem  
Reduction compared to the 
reference 2020 2030 2050 
 Effective Delayed Effective Delayed Effective Delayed 
Acidification - Forest area 
exceeded (1000 km2) 4 1 9 6 22 24 
Acidification - Catchment area 
exceeded (1000 km2) 1 0 1 1 3 3 
Eutrophication - Ecosystems area 
exceeded (1000 km2) 11 4 17 10 63 67 
Source: IIASA (2011). 
6. CONCLUSIONS  
The European Council and Parliament have en dorsed a target of 80 to 95% greenhouse gas 
emission reductions below 1990 by 2050 in the cont ext of necessary redu ctions by developed 
countries as a group according to the IPCC to limit global climate change to a temperature 
increase of 2ºC. The global an alysis has shown that for cost -effectiveness reasons the EU 
would need to achieve most of  these emission reductions intern ally by 2050, and can thus not 
expect to reach this target range by 2050 usi ng a large amount of inte rnational credits.  
With no global action on climate change but rather  fragmented action future fossil fuel prices 
are expected to continue to increase significan tly and the risk for oil crisis or permanently 
high oil prices remains. Instead with global act ion in line with the 2ºC target much lower 
fossil fuel prices are projected, with pr ices in 2050 roughly similar to today.  
In all EU decarbonisation scenarios, the EU 's energy resource efficiency would improve 
substantially. More domestic ener gy resources would be used, in  particular renewables, and 
total energy imports would more than halve co mpared to 2005. Thus the policy objectives of 
reaching long term climate targets and increasi ng energy supply security go hand in hand, also 
if other regions in the world would not fully d ecarbonise and the risk of oil crises remain.  
The assessment shows that by 2050, a 80% EU  internal reduction compared to 1990 is 
technically feasible w ith proven technologies if  a sufficiently strong ca rbon price incentive is 
applied across all sectors. Despite significant va riations in technological and fossil fuel price 
assumptions, results are quite robust in term s of the speed and magnitude of emission 
reductions over time. 
Milestones of a cost effectiv e path towards -80% by 2050 are emission reductions by around 
25% in 2020, around 40% in 2030 and around 60% in 2040. Reaching these emission levels will require further action, given that our current  policies are projected to reduce emissions to 
-20% in 2020, -30% in 2030 and around -40% in  2050. Given that inve stments often have 
long lead times, delaying climate action would l ead to significantly hi gher needed reduction 
steps later and significantly hi gher carbon prices and costs. Cu rrent policies in place (20% 
GHG target by 2020, 20% renewables target, a nu mber of EU energy efficiency measures) 
would lead to reductions of -20% by 2020. To increase reductions to -2 5% additional energy 
 
EN 95   EN efficiency policies are important. Full achie vement the 20% energy savings target by 2020 
would enable the EU to reduce internally emissions by 25% or more. 
Shifting towards a low carbon path way leads to a massive shif t from fuel expenses to 
investment expenditure. Averaged out over the 40 year period, this in crease in investment 
expenditure amounts to around € 270 billion annuall y, both in case of global and fragmented 
action. This represents on average 1.5% of our  GDP over that period. These costs are largely 
compensated by reduced fuel costs over time, with  largest cost reducti ons in case of global 
action that sees the costs for remaini ng fossil fuel imports also decrease.  
As shown this offers opportunities for sustainabl e growth and jobs give n that investments are 
to a large extent expenditures in the domestic  economy, requiring incr eased added value and 
output from a wide range of manufacturing in dustries as well as the construction sector, 
whereas no action would continue to see increasing import expenses flowing to third countries 
considering the EU's strong reliance of foss il fuel imports. Furthermore, policies that 
introduce a carbon price signal thro ugh taxation or auctioning can  allow for revenue recycling 
that can increase economic growth and employment.  
Climate and energy policies in the coming decade  will thus require a combination of smart 
pricing policies as well as inst ruments that can unlock private investment. Given the scarcity 
of public funds and the magnitude of the transition challenge towards a 2050 low-carbon 
economy, the role of public policy is to generate  the enabling environment for private sector 
financing to leverage investments into low ca rbon investments that often will increase long 
term productivity and to create new markets. This will involve im proving the access to 
information for private investors on the real cost s and benefits of the investments made on the 
longer term but also ensuring be tter access to financing itself . Member States have already 
introduced policies such as preferential loans schemes, grants that pay back part of a low-energy investment and tax rebates, with the a im to unlock private investment in low carbon 
technologies. These type of po licies will need to continue and be expa nded. Also a larger 
share of regional funding within the EU budget would need to go to policy instruments that leverage private sector resources.  
Currently, the EU Emissions Trading System ( ETS) is the main policy instrument setting 
carbon price incentives. A larger  contribution by the sector s covered by the ETS would 
continue to be cost-effective. Emission reduc tions of already nearly 50% by 2030 and around 
90% compared to 2005 in 2050 would be achieved. The highest reductions  would occur in the 
power sector, but in the longer term also th e industry sector would provide above average 
contributions. The existing ETS target, even th ough continuing after 2020, will not lead to the 
level of reductions projected for 2030 or afterw ards. Current prices in the ETS seem not 
sufficient to see large scale de ployment of CCS in the power sector from 2020 onwards. A 
delay in the deployment of CCS could see costs increase later on to reduce emissions. 
But also the non-ETS sectors woul d reduce their emissions with mo re than the current target 
of -10% by 2020 compared to 2005. By 2030 em issions would be at around -30% and by 
2050 nearly at -70% compared to 2005. All sector s would contribute, but to a varying degree. 
Above average contributions can also be achieve d by the residential and service sector, while 
transport and agriculture are the main sectors where no full decarbonisation in the longer term 
is achieved. Electrification can play an importa nt role in making transport and heating low 
carbon, reducing emissions of land based transp ort back to or below 1990 levels by 2030.  
The agriculture sector continues to decrease  its emissions, but after 2030 reductions slow 
down. By 2050 it reduces emissions  by up to 50% compared to 1990. It then would represent 
 
EN 96   EN a third of total EU emissions, tripling its share compared to today. Its importance in terms of 
climate policy is therefore bound to increase: if it does not achieve the projected emissions, other sectors would need to re duce even more, which would come  at a high cost. Given that 
changes in this sector are gradual, with no majo r technological solutions available, it is crucial 
that European agricultural policies focus on furthe r efficiency gains, such as more efficient 
fertiliser use, improved manure management  and improved livestock  productivity. Globally, 
increases in productivity of agri culture to meet a number of competing goals (increased food 
and bio-energy demand, the need to reduce deforest ation) will be crucia l. Reversing existing 
global trends by reducing food waste and re -orienting consumpti on towards less carbon 
intensive food could also contribute. 
The forestry sector and land use sectors are e xpected to see their sink function decrease over 
time, in part due to increased bio-energy an d other wood demand. Over time this can be 
compensated through afforestation. Also import s could in part compensate for any wood 
demand increase, but of course this should not lead to carbon leak age in to form of 
unsustainable forestry practices in third coun tries. Furthermore other land uses can also 
contribute such as the maintaining of grasslan ds, the restoration of wetlands and peat lands 
and the reduction of soil erosi on. This underscores the need to consider all land use in a 
holistic manner, and the importance to address Land Use, Land Use Change and Forestry in 
EU climate policy in a holistic manner, r ecognising that uncertain ties remain high and 
improved monitoring and reporting of emi ssions and absorptions are crucial.  
An EU internal reduction of -80% will require  continued innovation in technologies through 
efficiency and cost improvements, and the provi sion of the corresponding infrastructure. This 
can benefit from demonstration at industrial sc ale of key technologies, also to improve public 
acceptability. Effective R&D and infrastructure  policies for key low carbon technologies can 
facilitate this innovation proces s. The SET plan has the objective to addr ess this and should 
thus be fully executed. R&D and innovation can al so further spur job growth in the overall 
economy. 
The shift towards investments and the decrease in  household fuel expenditures result in costs 
for households for transport and energy to moderately increases in a decarbonised EU compared to the reference scenario. But their combined share in household income in 2050 is 
not higher as today. To be equitable it will also be important to ensure that poorer households, 
that often only have access to high cost credit, can mobilise the resources upfront at more reasonable prices to in vest in carbon low investments. Government policies that try to 
leverage finance should address this. 
Employment effects are estimated to be ove rall positive due to the increased focus on 
investments often associated with production industries and se rvices localised in the EU. 
Furthermore pricing policies can allow for sm art recycling of revenues, with employment 
benefiting most from reductions in labour cost s. Even if impacts can be positive overall, 
significant shifts in employmen t among or within sectors are expected. The development of 
accommodating policies will matter. The main need  will be to revise and upgrade the 'green' 
skills of existing workers in all sectors. This is not only limited to sectors that see growth 
decrease or increase but also in sectors that are indirectly involved such  as the banking sector. 
Overall action on climate change is expected to  drive innovation in th e EU and improve the 
competitive position of EU manufacturing industry . The impact of a more ambitious climate 
policy on energy intensive industries was also assessed. The results of the macro-economic 
modelling presented in the Staff Working Document accompanying the Communication 
 
EN 97   EN 'Analysis of options to move beyond 20% gr eenhouse gas emission reductions and assessing 
the risk of carbon leakage' of 26 May 2010 was revisited and refined up to 2030. It confirmed 
that the impact on the production levels of en ergy intensive industries were limited and that 
free allocation protects energy inte nsive industry in the ETS, even  if the EU would implement 
more ambitious targets in a world where ot her regions have more limited ambition. But 
climate action would not only require the appli cation of more advanced industrial processes 
and equipment, that results in fuel cost reduc tions. Also carbon capture and storage would be 
needed on a broad scale as an end-of the-pi pe technology after 203 5, notably to capture 
industrial process emissions (e.g. in the cement and steel sector).  This would entail an annual 
investment of more than € 10 billion. In a worl d of global climate actio n, this would not raise 
competitiveness concerns. But if the EU's main competitors would not engage in a similar manner, the EU would need to consider how  to address the risks for carbon leakage. 
 
EN 98   EN  
7. ANNEXES 
7.1. 2010 Global Climate Highlights 
The US National Oceanic and Atmospheric Admi nistration, National Climatic Data Center, 
listed to following highlights for 2010 in  relationship to the global climate157:  
– Combined global land and ocean annual surfa ce temperatures for 2010 tied with 2005 as 
the warmest such period on record at 0.62 ºC above the 20th century average. The range of 
confidence (to the 95 percent level) associated  with the combined surface temperature is 
+/- 0.07 ºC.  
– The global land surface temperatures for 2010 were tied for the second warmest on record 
at 0.96 ºC above the 20th century average. Th e range of confidence associated with the 
land surface temperature is +/- 0.11 ºC.  
– Global ocean surface temperatures for 2010 tied with 2005 as the third warmest on record, 
at 0.49 ºC above the 20th century average. Th e range of confidence associated with the 
ocean surface temperat ure is +/- 0.06 ºC.  
– In 2010 there was a dramatic shift in the El Niño-Southern Oscillation, which influences 
global temperature and precipitation pattern s — when a moderate-to-strong El Niño 
transitioned to La Niña conditions by Jul y. At the end of Nove mber, La Niña was 
moderate-to-strong.  
– According to the Global Hi storical Climatology Network, 2010 was the wettest year on 
record, in terms of global average precipitati on. As with any year, precipitation patterns 
were highly variable from region to region. 
– The 2010 Pacific hurricane season had seven named storms and three hurricanes, the 
fewest on record since the mid-1960s when scie ntists started using sa tellite observations. 
By contrast, the Atlantic season was extremely active, with 19 named storms and 12 hurricanes. The year tied for third- and second-most storms and hurricanes on record, 
respectively. 
– The Arctic sea ice extent had a record l ong growing season, w ith the annual maximum 
occurring at the latest date, March 31, sinc e records began in 1979. Despite the shorter-
than-normal melting season, the Arctic still reached its third smallest annual sea ice 
minimum on record behind 2007 and 2008. The Anta rctic sea ice extent  reached its eighth 
smallest annual maximum extent in March, wh ile in September, the Antarctic sea ice 
rapidly expanded to its thir d largest extent on record. 
– A negative Arctic Oscillation in January and February helped us her in very cold Arctic air 
to much of the Northern Hemisphere. Reco rd cold and major snowstorms with heavy 
accumulations occurred across much of eastern North America, Europe and Asia. The 
                                                
 
157 http://www.noaanews.noaa.gov/stories2011/20110112_globalstats.html 
 
EN 99   EN February Arctic Oscillation index reached  -4.266, the largest negative anomaly since 
records began in 1950. 
– From mid-June to mid-August, an unusually st rong jet stream shifted northward of western 
Russia while plunging southward into Pakistan. The jet stream remained locked in place 
for weeks, bringing an unprecedented two-mont h heat wave to Russia and contributing to 
devastating floods in Pakist an at the end of July.  
7.2. Overview of studies that look into im pacts of climate change in the EU  
IPCC AR4 results for Europe158 show that with increasing temperatures water availability 
becomes the critical factor in southern Eur ope and EU-wide both droughts and flood events 
will occur far more frequently than at presen t. Changes to both temperature and precipitation 
rates are estimated to decrease the snow cover an d as a consequence the ski season in the Alps 
will shorten. A reduction in heating demand fo r buildings coupled with a decrease in cold 
weather deaths is predicted for northern Europe; however this is counter to the predictions for 
southern Europe where increase s in cooling demand are paired with increases in heat-related 
deaths.  
The IPCC study also predicted th at European flora species would be come increasingly 
vulnerable, with up to 20% b ecoming critical endangered and some extinctions. Within the 
agricultural sector crop yield losses are also pr edicted to far exceed the temperature-related 
gains. 
The PESETA study159 contains a spatially disaggregated, detailed assessment of the potential 
impacts of climate change in Europe (with temp erature increases in the EU in the range of 
2.5ºC and 5.4ºC) for a nu mber of sectors. The research pr oject evaluates the economic effects 
of the 2080s climate on the current economy160. Impacts assessed include the effects of 
changing temperature and precip itation levels in agriculture, changed in the frequency and 
severity of river floods, sea level rise in co astal systems as well as impacts on tourism and 
human health. For agriculture, rivers floods, co astal systems and tourism the study finds total 
welfare losses in these sectors for the EU  that range from 0.2 to 1.0%, depending on the 
climate scenario. The study does not examine all potential climate losses, e.g. for transport, 
energy, forest (i.e. biodiversit y), winter tourism and catast rophic events. The PESETA study 
has the benefit of examining specific impact s on the whole economy but it underestimates 
potentially the impacts of climate change in Eu rope because it does not assess all impacts; e.g. 
impact of climate change on transport, ener gy, forestry, winter to urism and catastrophic 
events are not considered. In particular this la st category is difficult to assess but may lead to 
high impacts. 
The ongoing EU-funded ClimateCost project161 will add further details to impacts per sector 
in the EU. The ClimateCost project also es timated that by 2080 between 0.3 and 1.3 million 
                                                 
158 IPCC, Europe. Climate Change 2007: Impacts, Adaptation and vulnerability. Contribution of Working 
Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. 
159 Ciscar et al. (2011) and JRC, Final repo rt of the PESETA research project, 2009. 
160 A comparative statics analysis is performed, co mparing the economy as of today with the economy as 
of today subject to the 2080s climate. The analysis of potential impacts, defined as impacts that might 
occur without considering public adaptation, can a llow the identification of priorities in adaptation 
policies across impact categories and regional areas. 
161 http://www.climatecost.cc/ 
 
EN 100   EN additional people in Europe would experi ence flooding due to sea-level rise if no 
improvements are undertaken in coastal defences. 
7.3. Analysis of global emission pathways  towards achieving the 2ºC objective  
As the climate system is complex, the answer  to which GHG emission pathways will achieve 
the 2ºC objective depend on the value taken by a number of parameters which are uncertain. 
One of the most important of them is the clim ate sensitivity parameter, which links the level 
of GHG concentrations in the atmosphere with the change in temperature. The parameter is 
defined as the increase in average temper ature corresponding to a doubling of emissions 
concentrations relative to pr e industrial levels. However its value cannot be defined in a 
laboratory setting and is estimated based on pa st observations as well as on atmospheric and 
ocean circulation models. Therefore we are con fronted with a range of expected outcomes.  
The Intergovernmental Panel on Climate Chan ge's Fourth Assessment Report (IPCC AR4) 
concluded that based on available informa tion, the equilibrium climate sensitivity 
(temperature increase as a resu lt of a doubling of GHG concentrati ons) is likely to be in the 
range 2°C to 4.5°C, with a best es timate value of about 3°C. It is  very unlikely to be less than 
1.5°C. Values which are substantially higher th an 4.5°C cannot be ruled out, but are unlikely. 
This implies that stabilizing GHG emissions concentrations at a level of 550 ppmv CO 2-eq. 
(equal to double the preindustrial level) would lead to an incr ease in temperature around 3°C 
as best estimate. Stabilizing GHG emissions  concentrations at around 450 ppmv CO 2-eq. 
increases temperature by 2.1°C as best estim ate with a likely range between 1.4 and 3.1°C162.  
The IPCC AR4 on Climate Change Mitigation assessed a large number163 of long term 
emission pathways resulting in stabilization scenar ios with different levels of stringency in 
terms of GHG concentrations (in CO2 equivale nt). At that time a limited number of 6 
scenarios had looked at low stab ilisation levels of GHG emissions  concentrations in the order 
of 450 CO2-eq.  
Since the release of the IPCC AR4, researchers have made additional projections looking at 
emission reductions that achie ve low stabilisation GHG emi ssion concentrations. A recent 
review for UNEP164 looked at the results of a set of recent scenarios that assessed low 
stabilisation GHG emission concentrations. The exercise included both Integrated Assessment 
Modelling (IAM) results that look at the ec onomic and technical ch allenges of emission 
reduction scenarios across all sectors and gases,  and approaches that used climate modelling 
to see the impacts of stylised emission patterns.  
Figure 37 gives an overview of the scenarios pr ojected by the IAMs. The left hand side shows 
GHG emissions scenarios that have a "likely ch ance" (i.e. more than 66% chance) of not 
overshooting the 2ºC temperature increase compar ed to pre-industrial levels during the 21st 
century. The right hand side re presents the scenarios that ha ve a medium chance (from 50 to 
66% chance) of achieving the same outcome. The red lines represent GHG emission reductions of around 50% compared to 1990 by 2050. 
                                                
 
162 IPCC, 4th Assessment Report, Climate Change 2007: Working Group I: The Physical Science Basis, 
Technical Summary, chapter 4.5 Climat e Response to Radiative Forcing. 
163 IPCC, 4th Assessment Report, Climate Change 20 07: Working Group III: Mitigation of Climate 
Change, chapter 3.3.5 Long-term st abilization scenarios, table 3.5. 
164 UNEP: The Emissions Gap Report: Are the Copenhagen Accord pledges sufficient to limit global 
warming to 2 or 1.5°C?, Full Report, 9 November 2010  
 
EN 101   EN Scenarios with relatively late or exte nded global peaking beyond  2020 typically have 
emissions still well above half of the 1990 le vel by 2050 (see scenarios right hand side of 
Figure 37). They typically requir e near zero or even negative global emissions during the 
second half of this century to  achieve a medium likelihood of  keeping within the 2ºC limit 
during this century.  
Instead, scenarios that see their emissions peak before 2020 and then reduce by around 50% 
or more compared to 1990 by 2050 typically have  a "likely chance" (> 66%) meeting the 2ºC 
limit and require no negative emissions dur ing the second half of this century. 
All scenarios see an overshoot of GHG concentration levels above the 450 CO 2-eq., with 
significantly higher peak ing in those with a late global GHG peak. 
Figure 37: Emissions pathways compatible with a 2°C limit 
 
Source: Adapted from 'UNEP, The Emissions Gap Report: Are the Copenhagen Accord pledges sufficient to 
limit global warming to 2 or 1.5°C?, 8 November 2010,  
Not reaching the global GHG emissions peak s oon, clearly increases the risk of seeing 
temperature increases above the 2ºC limit, and at the same time requires more challenging 
emission reductions later on in the century or ev en significant negative emissions on a global 
scale.  
The EU ambition of seeing global emissions peak by 2020 and the reducing by at least 50% 
by 2050 compared to 1990, is estimated to have a likely chance of limiting global climate change to a 2ºC temperature incr ease or less compared to pre-i ndustrial levels and to ensure 
its technical feasibility over th e longer term (by lowering the probability that net negative 
emissions will be required). 
7.4. Economic modelling tools used  
POLES 
The POLES (Prospective Outlook for the Long  term Energy System) model is a global 
sectoral simulation model for the developm ent of energy scenarios until 2050. The dynamics 
of the model is based on a recursive (year by  year) simulation process of energy demand and 
supply with lagged adjustments to prices and a feedback l oop through international energy 
price. The model is developed in the framework of a hierarchical stru cture of interconnected 
modules at the international, re gional and national level. It contains technologically-detailed 
 
EN 102   EN modules for energy-intensive sect ors, including power generation, iron and steel, the chemical 
sector, aluminium production, cement making, non-fe rrous minerals and modal transportation 
sectors (including aviation). 
The world is broken down into 47 regions, fo r which the model delivers detailed energy 
balances. Emissions of all Kyoto gases are cal culated for the sectors covered by the model. 
PRIMES 
Primes simulates the response of energy consum ers and the energy supply systems to different 
pathways of economic development and exogenous constraints. It is a modelling system that 
simulates a market equilibrium solution in the European Union and its member states. The model determines the equilibrium by finding the prices of each energy form such that the 
quantity producers find best to supply match the quantity consumers wish to use. The 
equilibrium is static (within each time period) but  repeated in a ti me-forward path, under 
dynamic relationships. The model is  behavioural but also represen t in an explicit and detailed 
way the available energy demand and suppl y technologies and pollution abatement 
technologies. The system reflects considerations  about market economics, industry structure, 
energy /environmental policies and regulation. Thes e are conceived so as to influence market 
behaviour of energy system agents. The modular  structure of PRIMES reflects a distribution 
of decision making among agents that decide  individually about their supply, demand, 
combined supply and demand, and prices. Then the market integrating part of PRIMES 
simulates market clearing. For further information see  
http://www.e3mlab.ntua.gr/models_menu.php?title=primes
. 
GAINS 
The GAINS model explores cost-effective multi- pollutant emission control strategies that 
meet environmental objectives on air quality impacts (on human health  and ecosystems) and 
greenhouse gases. It is an integrated assessment model that brings together information on the 
sources and impacts of air pollutant and gr eenhouse gas emissions and their interactions. 
GAINS brings together data on economic development, the st ructure, control potential and 
costs of emission sources, the formation and disp ersion of pollutants in the atmosphere and an 
assessment of environmental impacts of po llution. For further information on the GAINS 
Europe model which has been used for this anal ysis, as well as acce ss to background data, see 
http://gains.iiasa.ac.at/g ains/EU/index.login?logout=1 . 
CAPRI 
CAPRI models the response of the European ag ricultural system towards a range of policy 
interventions. It is a comparative static equ ilibrium global agricultural sector model with 
focus on EU27 and Norway. It is solved by ite rating supply and market modules. Its supply 
module consists of separate, regional, non-linea r programming models which cover about 250 
regions (NUTS 2 level) or even up to six farm types for each region (in total 1000 farm-regional models). Its market module is a spatial, global multi-commodity model for 
agricultural products, 40 product, and 40 countries in 18 trad e blocks. For further information 
see http://www.capri-model.org/
. 
GLOBIOM 
 
EN 103   EN The Global Bio-mass Optimization Model (GLOBI OM) is a global recursive dynamic partial 
equilibrium model integrating the agricultural, bio-energy and fore stry sectors with the aim to 
provide policy analysis on global issues concerning land use competition between the major land-based production sectors. The global agricu ltural and forest market equilibrium is 
computed by choosing land use and processing  activities to maximize the sum of producer 
and consumer surplus subject to  resource, technological, and po licy constraints. Prices and 
international trade flows are endogenously de termined for respective aggregated world 
regions. It covers 28 regions, representing a disa ggregation of the eleven regions adapted to 
enable linkage with the POLES model. 
The market is represented by implicit pro duct supply functions based on detailed, 
geographically explicit, Leontief production functions, referring to the supply of agriculture 
and forestry production and explic it, constant elasticity, produc t demand functions Explicit 
resource supply functions, i.e.  supply function for other in puts than land in the production 
process of agricultural and forestry pr oducts, are used only for water supply. 
GLOBIOM can be used to estimate the role of cropland, grassland, an d short rotation tree 
plantations expansion in global land use change projections including forests. 
www.globiom.org
 
G4M 
The Global Forest Model (G4M) provides spatially explicit es timates of annual bio-mass 
increment, development of fore st bio-mass and costs of forest ry options such as forest 
management, afforestation and deforestation by  comparing the income of alternative land 
uses. The model is spatially explicit (currently  on a 0.5°x0.5° grid). Increment is determined 
by a global map of potential net primary produc tion (NPP). Such a map shows the biophysical 
potential of tree growth  depending on climate cond itions but independently of land cover, i.e. 
the current presence of forests. At present th is NPP map is static but  can be changed to a 
dynamic NPP model which reacts to changes of temperature, precipitation, radiation or CO 2 
concentration. Main forest management options  are application of thinning and choice of 
rotation time. The rotation time can be individua lly chosen but the model can estimate optimal 
rotation times to maximize increment, maximi ze stocking bio-mass or maximal bio-mass at 
harvest time. The model handles also ag e class dynamics of managed forests. 
Calibrated to historic data G4M picks up the la nd use change trends of the past and projects 
its future development without explicitly modelling single land use change drivers.  
7.5. Drivers assumed in the POLES scenarios 
GDP and population assumptions   
Main assumptions concerning GDP  and population growth  by region/country are shown in the 
table below. These assumptions are mainta ined across the three scenarios examined. 
Table 25: GDP and population assumptions in POLES: yearly growth rates (%) 
 
2010/2005 2020/2010 2030/2020 2040/2030 2050/2040 Average 
2050/2005 
World       
GDP (B$2005 in PPP) 3,0 3,5 2,8 2,4 2,2 2,8 
Population (Mcap) 1,2 1,1 0,8 0,6 0,4 0,8 
 
EN 104   EN Annex I       
GDP (B$2005 in PPP) 0,9 2,5 2,1 1,7 1,5 1,8 
Population (Mcap) 0,4 0,3 0,1 0,0 0,0 0,1 
N-Annex I       
GDP (B$2005 in PPP) 5,9 4,7 3,6 3,0 2,8 3,8 
Population (Mcap) 1,4 1,2 0,9 0,7 0,5 0,9 
EU27       
GDP (B$2005 in PPP) 0,7 2,1 1,6 1,3 1,3 1,5 
Population (Mcap) 0,3 0,2 0,0 -0,1 -0,1 0,0 
7.6. EU sectoral GHG reductions in  case of global action 
The POLES model project in case of the Global ac tion scenario that in the EU, emissions in 
the power sector fall 93% by 2050 compared to 1990, while important reductions are achieved 
in the residential (-79%) and th e industrial sector (-72%). As demand for mobility is still 
growing and decarbonisation options are more lim ited in the transport sector, the emissions 
reduction is only 52% with resp ect to 1990. This resu lt is made possible by higher penetration 
of hybrid and electric vehicles, as well as by larg er use of bio-fuels. Em issions in this sector 
peak by 2010 and by 2030 are already reduced by about 6% compared to 1990. An important 
caveat is that figures for transp ort do not include international aviation or international marine 
bunkers. 
An important role in achieving the results in  power generation is played by the increasing 
contribution of renewables, nu clear and carbon capture and storage (CCS). In the Global 
action scenario by 2050 the 81% of remaining CO 2 emissions in the power  sector is captured 
worldwide and 76% in the EU. It should be kept in mind that a large share of power 
generation is provided by non-fossil fuel sources . CCS, however, represents a very important 
source of abatement also in the industrial sector. Renewables re present 50% of power 
generation worldwide and 44% in the EU, while nuclear provides 22% of total power 
generation worldwide and 29% in the EU.  
Table 26: EU-27 Greenhouse ga s emissions by sector in th e Global action scenario, 
Variable 1990 2000 2005 2010 2020 2030 2040 2050 
1990 = 100%         
GHG Total  100 93 95 86 73 55 36 22 
GHG Power Sector 100 89 95 82 61 40 20 7 
GHG industry 100 89 87 79 65 57 41 28 
GHG transport 100 111 118 120 117 94 71 48 
GHG residential services 100 90 91 81 77 54 33 21 
Source: POLES, JRC, IPTS 
7.7. Assessing global GHG emissions using the POLES, GLOBIOM and G4M 
models  
7.7.1.  Methodology of the integrated POLES, GLOBIOM and G4M scenarios 
The POLES model was used to estimate the supply and demand for energy goods, including 
bio-energy (both bio-mass and bio- fuels) on a global scale. It di d so both for the baseline as 
well as the Global Action Scenar io that sees global GHG emi ssions from energy and industry 
reduce by around 50% by 2050 compared to 1990. 
 
EN 105   EN The GLOBIOM model (see annex 7.4 for a brief desc ription) was then used to assess what the 
impact would be on agricultu ral and forestry production, in cluding land use changes, and 
subsequent GHG emissions to meet this bio- energy demand together with the demand for 
food and wood165.  
Subsequently for the Global action case policies were introduced to limit GHG emissions in 
all sectors, including agriculture and forestr y. This reduction scenario in GLOBIOM differs 
from the baseline through: 
– modified bio-energy demand coming from  the POLES Global Action Scenario 
– introduction of a reduction ta rget for emissions from gro ss deforestation with the aim 
to reduce it by half by 2020 and limit it to a minimum by 2030.  
– introduction of a reduction ta rget for Non CO2 emissions166 from agriculture with the 
aim to stabilise emissions globally  
The deforestation rate that is projected in baseline in GLOBIOM is lower than recent historic 
deforestation rates, indicating that deforest ation is happening not only due to permanent 
replacement by cropland and grassland but also due to other reasons, with significant amounts 
of deforested land remaining idle and unproductive.  
G4M was used to estimate the deforestation in baseline and then the impact of a carbon price 
on deforestation in the reduction case, taking into account historic  deforestation rates. It was 
ensured that sufficient land for cropland and gras s land remains available in G4M to meet the 
required cropland and grassland need s from the GLOBIOM projections. 
As in GLOBIOM, in G4M the target for the Global action case was to reduce gross 
deforestation by half by 2020 and limit it to a minimum by 2030 through the introduction of a 
carbon price. Contrary to the proj ections with GLOBIOM, this ca rbon price is also a driver 
for further afforestation. 
7.7.2.  Sensitivity analysis - exogenous prod uctivity in crop and livestock sectors 
Agricultural productivity changes in the future are one of the most important and at the same 
time the most uncertain parameters.  
There may be reasons for optimism. Historically , productivity increases have been higher than 
expected leading to a steady decrease in real ag ricultural commodity pr ices. Significant yield 
gaps exist still between regions globally. If the institutional framework is properly set up, just 
catching up of these regions  with the rest of the world would lead to considerable productivity 
increases.  
                                                 
165 GLOBIOM operates in partial equilibrium, with wood and food demand driven by gross domestic 
product (GDP) and population changes. In addition, food demand must meet minimum per capita 
calorie intake criteria, which are differentiated with respect to the source between crop and livestock 
calories. Demand is calculated for the different regions on the basis of projections of regional per capita 
calorie consumption presented in FAO (2006a). The regional population, GDP development and bio-energy demand is the same as the one used for POLES.  
166 The non-CO2 emissions calculated in Globiom have been calibrated to ensure a perfect match with the 
EPA (2006) numbers for the year 2000. 
 
EN 106   EN On the other hand there are also reasons for pessimism in the Malthusian tradition. Some 
indication exists of a recent deceleration of the productivity gains in developed countries, 
even though it is unclear to what  extent this might be due to economic rather than biophysical 
drivers. Furthermore, resource (soil and water) depletion and its  negative effects on 
productivity might be of concern in some regions  and also climate change could contribute in 
some regions to negative impacts on yields already in the coming decades.  
In the GLOBIOM model three fact ors influence overall yields: 
1. Exogenous yield growth representing improvements in yield because of 
technological changes or more efficien t management practices within a given 
production system  
2. A pure yield effect when crops are produ ced using another type of production 
system. For instance when intensificati on is applied, leading usually to higher 
productivity. 
3. An aggregation effect when the production of  a specific crop is shifted to more or 
less fertile soils and climate – with eff ects that can be positive or negative on 
productivity 
Many models cover quite well the first two eff ects. Because of GLOBIOM's detailed spatial 
resolution, the model also can represent the 3rd e ffect. This in turn gives the model substantial 
flexibility. 
The exogenous yield growth in GLOBIOM for crops is set at 0.5% pa. See figure below 
comparing historic yield improvements to the “total” yield changes resulting from 
GLOBIOM. The reasonable match of the two de monstrates that the applied exogenous yield 
growth in GLOBIOM is in lin e with historic yield growt h, even though historic yield 
improvements will to some extent also ha ve been influenced by the pure yield and 
aggregation effects. 
Figure 38: Historic annual rate of yield change (%) compared to the applied on in GLOBIOM 
 
Source: FAO (faostat.fao.org, download 18/11/2010), historic periods assessed are 1962-2008, 1988-2008, 1998-
2008. 
Livestock production in GLOBIOM is repres ented through 14 production systems between 
which the model can endogenously choose. For the baseline, zero exogenous yield growth 
was assumed but full flexibility across production systems. As a result, the purely grassland 
based cattle systems nearly disappear by 2050, mixed extensive systems remain stable and 
there is an important increase in  the mixed intensive systems. 
 
EN 107   EN Figure 39: Animal numbers per producti on system in Baseline in Globiom 
 
Source: IIASA, Globiom  
Two sensitivity scenarios were assesse d regarding the exogenous yield growth: 
– A low technological progress scenario with  no exogenous crop yield growth (instead 
of 0.5% pa in the base case). Yield growth for livestock is  kept the same as in the 
base case, at zero % pa 
– A high technological progress scenario with yi eld growth for crops kept the same as 
in the base case at 0.5% pa  but also applying an exogenous yield growth for livestock 
corresponding to the productivity increases applied with the IMPACT model for the 
report 'Agriculture at Crossroads' for the International Assessment of Agricultural Knowledge, Science and Technology fo r Development (Rosegrant 2009).  
7.8. Projections of impact on oil and gas im ports into the EU of Fragmented and 
Global Action using the POLES model  
Chapter 5.1.2 discusses the re sults of projections by the POLES model on global and 
fragmented action, indicating that oil prices will be significantly lower in case of global action 
by 2050 compared to baseline (69$/barrel in 2050 instead of  138 $/barrel) with a less 
pronounced impact on oil prices in case of the Fragmented climate action(117$/barrel). 
In baseline oil imports in stagnate over tim e, even though import dependency continues to 
increases over time, from 74% in 2010, to 84% and almost 90% by 2030 and 2050. At the same time oil prices increase from the assumed 70 $/barrel in 2010 to 138 $/barrel. This 
results overall in an almost doubling of the oil import bill in the EU.  
Taking action on climate change has significant im plications for the EU fossil fuel imports 
and the related bill. The Global action scenario results in 51% lower oil consumption than the baseline level in 2050. In the fragmented acti on case this reduction in consumption is even 
more outspoken due to the remaining high oil price in this scenario. Resulting decreases in oil imports are more than 50%, even higher in cas e of fragmented action because the remaining 
 
EN 108   EN high oil price keeps some EU oil production ong oing. The cost on the o il import reduces with 
more than 66% compared to the baseline in 2050,  and in case of global action the reduction is 
even higher (-73%) due to the lower resulting oil prices.  
In absolute value the reduction in oil consumption in the global action case translates into $ 
337 billion of avoided expenditure s compared to baseline by 2050.  
Table 27: Import dependency Oil and Gas 
Oil imports, change vs 2010 2020 2030 2040 2050 
Baseline 8% 6% -2% -9% 
Global -3% -15% -36% -56% 
Fragmented -2% -17% -42% -63% 
Gas imports, change vs 2010 2020 2030 2040 2050 
Baseline 9% 18% 25% 23% 
Global 0% -8% -33% -52% 
Fragmented 0% -18% -49% -79% 
Source: JRC, IPTS, POLES 
Table 28: Oil consumption, expenses and import in the EU 
Oil - 2050 Consum
ption 
Mtoe Change 
vs 
baseline Expense 
in 
B$2005 Change 
vs 
baseline Imports 
Mtoe167 Change 
vs 
baseline Expense 
B$2005 Change 
vs 
baseline 
Baseline  503 0% 512 0% 437 0% 445 0% 
Global  248 -51% 126 -75% 211 -52% 107 -76% 
Fragmented  234 -54% 202 -61% 175 -60% 151 -66% 
Source: JRC, IPTS, POLES 
Similarly, for natural gas the Global action scen ario would result in halving gas consumption 
and reducing gas imports about 83% by 2050 co mpared to baseline or more than 50% 
compared to today. With gas prices reduced by 63% these reductions translate into reduction 
of the gas expenditures of up to  82 % compared to baseline, or $ 205 Billion. The import bill 
would have a more substantial reduction, as some domestic gas production still remains. 
Table 29: Gas consumption, expenses and import in the EU 
Gas – 2050 Consum
ption 
Mtoe Change 
vs 
baseline Expense 
in 
B$2005 Change 
vs 
baseline Imports 
Mtoe Change 
vs 
baseline Expense 
B$2005 Change 
vs 
baseline 
Baseline  405 0% 251 0% 276 0% 171 0% 
Global  201 -50% 46 -82% 111 -60% 25 -85% 
Fragmented  173 -57% 97 -61% 47 -83% 26 -85% 
Source: JRC, IPTS, POLES 
While oil and gas savings are most significant in 2050, their magnitude is projected to be 
substantial already by 2030. On top of the direct  reductions from reduced volumes of oil and 
gas, there would be indirect cost reductions in  the oil and gas sector due to lower need for 
capital investments in energy production and transport infrastructure within the EU. 
                                                 
167 The POLES projections assume higher remaining potentials for domestic oil and gas production by 
2050 as PRIMES, resulting in lower relatively im ports in baseline in POLES than in PRIMES. 
 
EN 109   EN 7.9. Further information on the main assumptions and drivers of the PRIMES 
scenarios  
7.9.1.  Assumptions in relation to all scenar ios for the EU in the PRIMES – GAINS 
modelling setup 
The following drivers remain c onstant across all scenarios: 
The Gross Domestic Product  (GDP) increases in line with the 2009 Ageing Report 
developments; depicting declining growth rate s over time as well as great variation among 
Member States168. Recovering from the crisis  (fully reflected in the scenarios by only 0.6% pa 
GDP growth in 2005-2010 and slowly recovering growth 2010-15169), EU-27 GDP is 
expected to rise by 1.7% pa from 2010 to 2050, 2.0% up to 2030 and only 1.5% after 2030. 
Over time, labour productivity will  become the only driver of gr owth in the EU. Nonetheless, 
given the recent juncture there remain considerable uncertainty concerning the medium-term economic developments.  
These GDP assumptions have been used to project sectoral activity data , e.g. sectoral value 
added, with the help of GEM E3 multi-sector modelling.  
The population  projections for EU27 are based on the EUROPOP2008 convergence scenario 
from Eurostat, which is also the basis fo r the 2009 Ageing Report. The key drivers for 
demographic change are higher life expectancy, low fertility and inward migration. The EU-
27 population is expected to grow by 0.2% per year by until 2035 and slightly decline 
afterwards, remaining fairly stable in numb er at around 500 million in the next 40 years. 
The PRIMES model includes details on a great number of technologies both for energy 
demand and energy supply sectors. The technological representation is particularly rich for 
the power sector (more than 150 technologies represented) , for which data on future 
investment costs, efficiencies, operation and maintenance costs are included, so that power 
plant investments can be determined endogenously  on the basis of long run marginal costs. 
The model includes all technologi es that are relevant for the energy system, including main 
demand side technology options and carbon capture and storage. Technology features in the 
model draw on energy technology related work from JRC-IPTS  and other sources having 
benefited from support by e.g. DG RTD over many years. Technology  cost assumptions have 
been compared with assumptions of other projections, in particular the IEA Energy Technology Perspectives 2010. Overa ll, cost assumptions can be  described as moderate.  
The technical-economic characteristics of exis ting and new energy technologies used in the 
demand and the supply sectors evolve over time and improve according to exogenously specified trends in line with li terature results. These take into  account public policies (through 
campaigns, industrial policy, R&D support and other means) that  aim at pushing more rapid 
                                                
 
168 European Commission, DG Economic and Financial Affairs: 2009 Ageing Report: Economic and 
budgetary projections for the EU-27 Member States (2008-2060). EUROPEAN ECONOMY 2|2009, 
http://ec.europa.eu/economy_finance/publications/publication14992_en.pdf . The "baseline" scenario of 
this report has been established by the DG Economic and Financial Affairs, the Economic Policy 
Committee, with the support of Memb er States experts, an d has been endorsed by the ECOFIN Council. 
169 The short to medium growth pattern of the reference scenario is hence consistent with the intermediate 
scenario 2 "sluggish recovery" presented in the Europe 2020 strategy: Communication from the 
Commission: Europe 2020. A strategy for smart, sustainable and inclusive growth. COM(2010)2020, 
Brussels, 3.3.2010. 
 
EN 110   EN adoption of new technologies by removing uncerta inties associated with their use. Non-
maturity of technologies is re flected by temporary risk premiu m. Overall, technical progress 
assumptions can be described as moderately op timistic. For example, capital costs of already 
mature technologies decrease by 3% be tween 2010 and 2050, capita l costs of new 
technologies decrease be tween 30% and 70% between  2010 and 2050 depending on 
technological potential and expected use. Also  solar PV investment costs are projected to 
decrease by 60% in 2030 and by 70% in 2050 fr om today’s levels as a result of strong 
learning by doing associated with strong RES supporting policies. Resource and other 
availability constraints are reflected by non linea r potential cost curves (e.g. renewable source 
availability, nuclear site availabi lity, CCS storage availability). 
Consumers and suppliers are generally hesitant to  adopt new technologies before they become 
sufficiently mature. They behave as if they pe rceive a high cost (h igher than engineering 
estimations) when deciding upon adoption of new technologies. Agents decisions on trade-
offs between capital and variable costs depend  on weighted average costs of capital rates 
which vary between 17.5% for households and cars , 12% for other private transport, industry 
and services and 8% in  public transport.  
Nuclear investment in the longer te rm is endogenous, but Member  State restrictions are 
respected where applicable. Nuclear investments are determined on economic grounds in the 
PRIMES model unless a country excludes the us e of nuclear (e.g. Austria and Ireland) or 
there are other restrictions on nuclear use. Costs of nuclear waste are taken into account in the 
variable costs. 
CCS  penetration is determined on economic gr ounds and depend on ETS prices (apart from 
EU funding for demonstration plants). It is generally assumed that CCS infrastructure, 
regulation and legislation develops in all countries in a synchronous manner as CCS 
competitiveness vis-à-vis other power sources, assuming (except in the delayed CCS scenario) that there are no regulatory and accep tance issues, especially on transport and 
storage. Costs of infrastructure are recovere d as variable payment by power producers for 
transportation and storage. For capture technol ogies significant potenti al for technological 
progress is assumed, leading to capital cost  reductions per kW by 40 to 50% until 2050, 
depending on the capture technology. CO2 trans portation and storage infrastructure is 
assumed to develop under public regulation. Da ta on CO2 storage and transportation were 
compiled from various research projects. To tal EU potential storage capacity is roughly 
250,000 million tCO2. This compares to 190,000 million tCO2 cumulative emissions until 
2050 in the worst CO2 projecti on. Transportation and storag e services are priced by 
regulation reflecting total long-term average costs.  Storage prices increase significantly with 
total cumulative volume of CO2 to be stored.  
Renewables  are represented in significant detail and for various categories of renewable 
source intensity (for interm ittent sources). Technological progress assumptions differ 
according to maturity, ranging between 10% (e.g. offshore wind, geothermal) and 70% (PV) 
capital cost reduction per KW between 2010 a nd 2050, It should be noted that these costs 
include standardized grid c onnection costs (including for ex ample costs of DC links for 
offshore wind farms). Grid parity for PV is exp ected before 2030 in southern part of Europe. 
With respect to grids , 250 interconnectors (existing and new) are modelled. Costs increase 
nonlinearly with the share of intermittent RES. Smart grid effects are represented to some 
extent, covering smart metering enabling effici ency, flexible controls preventing problems 
from variable RES operations, enabling deployme nt of small scale RE S in low voltage and 
 
EN 111   EN smart metering for electro mobility. However,  the HV-MV-LV hierarchy of the grid is 
maintained but auto-production is included in the modelling. The power sector model includes 
a detailed representati on of cogeneration. 
The demand side  sub-models of PRIMES decompose en ergy consumption in nine industrial 
sectors, five types of households, four tertiary  sectors and transport by type of transportation 
mode. Each sector is decompos ed in sub-sectors, further mo re in energy uses and energy 
processes. At the bottom level of this decomposition tree a speci fic generic technology  
operates and consumes energy forms. The technol ogies are represented as vintages and their 
characteristics change over time. The consum er may change energy mix for a technology, or 
change technology mix across the future vintages  or change energy process mix, depending 
on costs, technical possibilities and useful  energy requirements. Energy consumption is 
reduced through increased energy efficiency  as a result of adopting more advanced 
technology vintages, investing in  overall energy savings (e.g. th ermal integrity of buildings) 
and/or reducing useful energy requirements, th e latter being in competition with non energy 
uses and materials.  
The technologies represented are identifiable, including a se ries of electric a ppliances used by 
households, specific furnaces and kilns in industr y, motors, air compressors, drying systems, 
buildings (in categories), houses (in categorie s), renewable production devices (e.g. thermal 
solar collectors), heat pumps, etc. Industrial boilers and CHP by sector are also represented 
and are included in th e power/steam sub-model which al so represents steam and heat 
distribution networks in a simplified way. The industrial sub-models represent the production 
of most basic processing ma terials and include endogenous choices about recycling. The 
transport model represents a series of technologi es for the various transport means, including 
electric cars, plug-in hybrids, simple hybrids, fu el cells. The transport model also keeps track 
of technology vintages for all transportation m eans. The technological detail in the demand 
sector models of PRIMES is sufficient to a ssociate information on possible policy measures 
for energy efficiency (e.g. eco-design) and standards. 
The PRIMES model is based on individual  decision making of agents demanding or 
supplying energy and on price-driven inte ractions in markets. Correspondingly, discount 
rates  pertaining to individual agents play an important role in th eir decision behaviour. 
Agents’ economic decisions are usually based on the concept of cost of capital, which is de-
pending on the sector - weighted av erage cost of capital (for firm s) or subjective discount rate 
(for individuals). In both cases, the rate used  to discount future costs and revenues involves a 
risk premium which reflects business practices, vari ous risk factors or ev en the perceived cost 
of lending. The discount rate for in dividuals also reflects an elem ent of risk averseness. For a 
more detailed background, see chapter 2 of  'EU energy trends to 2030 — UPDATE 2009'. 
7.9.2.  Specific assumptions in relation to the refe rence scenario for the EU in the PRIMES 
– GAINS modelling setup 
The reference scenario for 2050 is consistent with the reference scenario until 2030 published 
in September 2010170 (which has been used, amongst others, in the analysis of implications of 
                                                 
170 European Commission, DG Energy: EU energy trends to 2030 - UPDATE 2009, September 2010. 
http://ec.europa.eu/energy/observatory/trends_2030/doc/trends_to_2030_update_2009.pdf  , Member 
States have been consulted during preparation of this 2009 energy trends baseline that include 
projections for all GHG emissions. 
 
EN 112   EN a move beyond 20% greenhouse gas emission reductions171). The detailed macroeconomic 
assumptions on GDP and population are c onsistent with the 2009 Ageing Report172. 
A key policy that is assumed to be implemented is the amended EU Emission Trading System 
(ETS)173. The ETS cap continues to decline by  the adopted linear factor after 2020174, 
resulting in a cap of nearly  70% below 2005 emission levels by 2050 (except for aviation, 
where the default reduction beyond 2020 continues to  be 5% below 2004-6 levels). But given 
the agreed review of the linear factor after 2025 as well as the unspecified use of international 
credits after 2020, it is assumed to result only in a 50% intern al reduction of ETS emissions 
by 2050 compared to 1990. This may be interprete d as a generous assumption of the use of 
international credits given that at present the legislation only foresees a certain amount of 
international credits up to 2020.  
ETS prices are derived endogenously on the basi s of the above defined domestic emission 
constraint, while taking account of existing ETS flexibility, in particular with regard to 
banking. The ETS carbon price need ed to comply with the ETS directive rises from 36 € per 
ton CO2 in 2030 (in constant prices of 2008) to 51.5 € in 2040 and flattens out to 50 € in 
2050175.  
Non ETS and renewable energy legislations176 have set legally binding national targets for 
2020, of which full implementation is assumed. There is no assumption on specific targets for 
later years, but rather a conti nuation of a policy incentive of si milar strength for the Non ETS 
sectors177 and similar facilitation but declining subs idy intensity for rene wables, expressed in 
a Renewables (RES) values as shown in the Table 30 below.  
Table 30: Policy drivers in the reference scenario 
 2020 2030 2040 2050
ETS carbon price (€/tCO2eq) 16.5 36 51.5 50 
Non ETS carbon value (€/tCO2eq) 5 5 5 5 
RES value (€/MWh) 49.5 35 35 35 
                                                 
171 European Commission: Communication 'Analysis of options to move beyond 20% greenhouse gas 
emission reductions and assessing the risk of carbon leakage' (COM(2010) 265 final). Background information and analysis, Part II (SEC(2010) 650).
 http://ec.europa.eu/clima/documentation/international/docs/26-05-2010working_doc2_en.pdf 
172 European Commission, DG Economic and Financial Affairs: 2009 Ageing Report: Economic and 
budgetary projections for the EU-27 Member States (2008-2060). EUROPEAN ECONOMY 2|2009, 
http://ec.europa.eu/economy_finance/publications/publication14992_en.pdf . The "baseline" scenario of 
this report has been established by the DG Economic and Financial Affairs, the Economic Policy Committee, with the support of Memb er States experts, an d has been endorsed by the ECOFIN Council. 
173 Directive 2009/29/EC amendi ng Directive 2003/87/EC. 
174 The ETS cap decrease at a rate equal to a linear fact or of 1,74 % compared to the average annual total 
quantity of allowances issued by Member States in accordance with the Commission Decisions on their 
national allocation plans for the period from 2008 to 2012 
175 The ETS price in 2030 in this reference scenario going up to 2050 is significantly higher than carbon 
price for 2030 in the referen ce case presented in the staff working document accompanying the 
Communication 'Analysis of options to move beyond 20% greenhouse gas emission reductions and 
assessing the risk of carbon leakage' (SEC(2010) 650}. The main cause is additional action and banking 
over a longer period of time motivated by expectations  on increases of allowan ce prices in the future 
due to the continuously decreasing ETS cap after 2030 up to 2050. 
176 Effort Sharing Decision 406-2009-EC, Directive 2009/28/EC 
177 By holding the non-ETS carbon value needed to achieve the EU non-ETS target in 2020 constant from 
2020 onwards. 
 
EN 113   EN Source: PRIMES, GAINS 
Non ETS and renewable energy legislations to  achieve the binding national targets for 2020 
give considerable freedom to Member States on how they can achieve them, allowing for transfers between Member States if so me overachieve the national targets.  
For the achievement of the Non ETS emission targets
178, it is assumed that this flexibility is 
fully used. Consequently, a uniform Non ETS carbon value across the EU is used. The policy 
impulse needed to reach the 2020 EU non-ETS ta rget of a 10% emission reduction compared 
to 2005 equals a carbon value of 5 Euro per to n of CO2, as the reference scenario until 2030 
has shown. There is no assumption on targets for la ter years. Instead it is assumed that the 
policy impulse will continue at the same strength, represented by constant non-ETS carbon 
values of 5 Euro per ton of CO 2 after 2020, and that at least - 10% is maintained as minimum 
reduction for the whole period until 2050.  
For the achievement of the renewable energy targets179, only limited trade is assumed in 
2020 for those Member States that have indicated that they plan to make  use of the so called 
co-operation mechanisms that allows for such  transfers to achieve the renewable energy 
targets. National support measures are assumed to  be of similar level in all renewable energy 
sectors within a country, provided that the transport sp ecific target is met. For reaching the 
targets, on average a renewable energy incentive of around €50 per MWh and a biofuel support of €55 per MWh in 2020 are necessary, with considerable differences between 
countries. With a 20% average renewable energy sh are for the EU as a whole, average shares 
are around 32% in the electricity sector, 20% in heating and c ooling and 10% in transport. 
There is no assumption on targets for later year s. RES subsidies decline after 2020 starting 
with the phasing out of opera tional aid to new onshore wind by 2025; Also other RES aids 
declines substantially by 2050 at different rate s according to technology. For example, aid to 
solar PV remains important unt il 2035 and becomes insignifican t for new installations in a 
great number of Member States from 2040 onwa rds. Increasing use of RES co-operation 
mechanisms will also help to reduce RES costs.  Policies on facilitating RES penetration will 
continue at an average level of €35/MWh, refl ecting greater use of trade between Member 
States after 2020. Decarbonisation s cenarios see the same phase- out of operational aids to 
renewables, but an intensifi cation of enabling policies (e.g. quicker authorisation). 
National nuclear policies  as of mid 2010 are assumed to con tinue. Member States that have 
no nuclear power production rema in so, except for Italy and Poland where national plans 
envision nuclear use. Nuclear in  Belgium and Germany is phased out according to legislation 
as of mid 2010. Sweden continues to use and invest in nuclear. 
Other policy assumptions  are identical to those described for the reference scenario until 
2030 in the 2009 update of the European Energy Trends until 2030
180. Notably the reference 
scenario includes the Regulation on CO 2 emissions of new passenger cars, the implementing 
measures of the Eco-Design and Labelling Di rectives (e.g. energy services, stand-by, 
lighting), the CCS demonstration plants which are part of the European Energy Programme 
for Recovery (EEPR), and the recast of the Energy Performance in Buildings Directive. For consistency reasons to appropr iately represent the integrated approach taken by the 
                                                
 
178 Effort Sharing Decision 406-2009-EC. 
179 Directive 2009/28/EC. 
180 European Commission, DG Energy: EU energy trends to 2030 - UPDATE 2009, September 2010. 
http://ec.europa.eu/energy/observatory/trends_2030/doc/trends_to_2030_update_2009.pdf 
 
EN 114   EN Commission on CO2 emissions from  vehicles, also the draft le gislative proposal to reduce 
CO2 emissions from light commercial vehicles  (vans) is included, which was adopted on 28 
October 2009 by the European Commission and politically agreed between Parliament and Council in December 2010. 
For Non CO2 emissions, the projections assume full compliance with existing EU Directives 
as well as national legislati on. The EU-wide Directives in clude the Landfill Directive 
(1999/31/EC), the Waste Directive (2006/12 /EC), the Waste Management Framework 
Directive (2008/98/EC), the Nitrate Directive (1991/676/EEC) , Common Agricultural Policy 
(CAP) Reform and the CAP Hea lth Check, the F-gas Directive (2006/842/EC) and the Motor 
vehicles Directive (2006/40/EC). 
7.9.3.  Detailed description of the diff erent decarbonisation scenarios 
Scenarios in the context of Global Climate Action 
Effective and widely accepted technology scenario   
This option represents a policy environment that enables all mayor low carbon technologies, 
such as energy efficiency and renewables, carbon capture and storage (CCS), nuclear and 
electrification of transport. This is reflected by the following additional but realistic assumptions compared to current policies: 
• All renewable technologies ar e facilitated to a larger extent (e.g. by planning and 
infrastructures, expressed in higher rene wable values). The ex tent of cost saving 
technological progress in solar techno logies is assumed to be larger. 
• Energy intensity improvements are brought about in the cont ext of high ETS prices and 
demand side policies are mirrored through high carbon values; in addition greater 
penetration of renewables increases the conve rsion efficiency and hence improves energy 
intensity. 
• It is assumed that CCS is successfully demons trated and is commercially available after 
2020, benefiting from cost improvements driven by carbon prices; it also assumed that 
there is public acceptance for the technology 
• It is assumed that current national nuclear policies are implemented as planned. Nuclear 
energy is assumed to be en abled by increased public accep tance and higher safety of 
nuclear waste operations. However, no new nuclear will be built in countries which 
continue to exclude this.  
• Electrification of transport is enabled by R& D and other policies pr omoting progress in 
battery-driven vehicles. A decr ease of battery costs (EUR/kWh ) by a factor of 4 in 30years 
is in line with current optimistic expectations. Lighter batteries, faster charging and higher power densities are also assumed. An infrastr ucture enabling full electrification including 
smart grids is built up so that from 2030 a transition to electric cars can take place. 
Constraints to electrification on ly remain in certain parts fo r non urban long-distance road 
transport, especially for trucks and busses.  
In this enabling context, carbon price equalisation  across sectors works as key driver to ensure 
a cost-effective decarbonisation approach in cluding the selection of technologies and 
 
EN 115   EN fostering of demand-side energy efficiency. Also additional renewables incentives are 
assumed but no further specific energy efficien cy policies are assumed beyond those driven 
by the pricing signal  
Delayed CCS 
This option explores the consequences if CCS  as a potential impo rtant new low carbon 
technology is not enabled as successfully as under the “Effective and widely accepted 
technology” scenario. If effective, CCS allows continued significant use of fossil fuels (coal 
and gas) for electricity supply even under a st rict carbon constraint  and enables radical 
emission reductions of industrial processes. Howe ver, the successful deployment presupposes 
the availability and public acceptance of a new transport and storage infrastructure for CCS. 
The delayed CCS scenario refl ects potential problems in this regard in particular by 
significant upward shifts in cost curves for CCS transport and storage as well as by more 
conservative assumptions on related cost improvements over time.  
In particular, issues with pub lic acceptance of transporting an d storage of substantial amounts 
of CO2 would impede CCS deployment in this sc enario, delaying its eff ective deployment by 
10 to 15 years. As a result of non acceptance issues regarding storage, manufacturers 
anticipate smaller market for CCS. This caus es lower technology learning due to slower 
development of mass production of the capture technologies, which in  turn contributes to such 
delays. The cost improvement ra tes catch up partly after 2040. However storage cost effects 
remain after 2040 in comparison with the eff ective and widely accepted technology scenario, 
which is more optimistic on CCS. 
Delayed electrification scenario  
This option explores the consequences if th e currently widely regarded promising key 
decarbonisation technology in the tr ansport sector, i.e. electrifi cation of transport, is not 
enabled as successfully as under “Effective and widely accepted technology”. As a result of 
delay in R&D, battery costs remain much higher, reflected by using the lower bound for 
battery cost improvements estimated by the IEA181, and the range autonomy of pure electric 
vehicles develops in a slower pace comp ared to the “Effective and widely accepted 
technology” case. This causes a delay of 15 to 20 years in th e effective deployment of 
electrification in transport and in the preparation of the infrastructure needed. Alongside, 
slower development of mass production for elec tric vehicles leads to lower technology 
learning with cost improvement rates of batt eries only partly catc hing up beyond 2040. It is 
assumed that during the delay period the ch arging infrastructure  develops partially. 
Delayed climate action scenario  
The scenario assumes the achievement of the climate change and energy package by 2020 
(the 20% GHG reduction target and the 20% renewables targets by 2020). Between 2020 and 
2030 action is no more ambitious than for the refe rence scenario, with carbon prices equal to 
the reference scenario (this thus includes the impact of a continued decrease in the ETS cap 
according to existing legislation). Action is re sumed in 2030, after 10 years of delay, with 
increasing carbon prices at le vels that would caus e the cumulative EU carbon emissions over 
                                                 
181 International Energy Agency (IEA) 2009, Transpor t, Energy and CO2: Moving Toward Sustainability,  
 
EN 116   EN the full period 2010 to 2050 to equalise with t hose of the “Effective and widely accepted 
technology” scenario. 
Technological change for electrif ication is assumed to come at  a higher cost than in the 
“Effective and widely accepted technology” s cenario due to a corresponding delay in 
development and deployment, but other technol ogies are for simplicity assumed to come at 
same cost.  
Scenarios in the context of Fragmented Climate Action 
Effective and widely accepted te chnology scenario in the EU 
This scenario explores the eff ects if the EU would continue its action towards an emissions 
reduction of 80% in a world were others don' t act beyond the Fragmented Climate Action 
scenario. Hence global fossil fuel prices are assumed not to deviate from the reference 
scenario. All other assumptions  are equal to those in the Effective and widely accepted 
technology scenario in the EU in the contex t of global action.  
Technology assumptions are kept similar as in the same scenario in the context of global 
action. This can be justified methodologically by th e interest to isolate price effects. However, 
given the size and in many areas also techno logy leadership of the EU, and the already 
existing technology efforts in ot her countries, it is also not obvious that low carbon 
technology development would be  significantly slower in a world in which only the EU 
increases its actions.  
Specific measures  for sectors exposed to global competition 
Scenarios are considered that can give insights into specific measures for sectors exposed to 
global competition, given that a level playing field at globa l level would not exist. The 
consequences of two possible options with re gard to specific m easures are explored: 
• One option would be to implem ent exactly the same reduction as the effective and widely 
accepted technology scenario. But it should then be  explored what this means for industry, 
what type of investment costs would they  experience, what kind and extent of R&D 
support or what level of direct support woul d be necessary to compensate industry for 
relevant additional costs incurred that industri es in third countries would not or to a lesser 
extent face? 
• Another option would be to have special prov isions to allow indus try exposed to global 
competition to reduce less, for instance to stay at the level of the reductions as experienced 
in the reference scenario. This could for in stance be achieved by allowing them increased 
access to international credits, which might be available at lower pri ces in such a world. 
The scenario tries to reflect this by appl ying reference scenario  ETS carbon prices to 
industrial installations and industrial process emissions of  energy intens ive industries 
exposed to global competition. As a direct resu lt of this the overall EU emission reductions 
effort would be lower. 
Oil shock scenario  
To assess the impact of an oil shock in case of fragmented action, a scenario is developed that 
sees the doubling of oil prices in 2030, with lo wer increases for gas (initially by 50%) and less 
severe increases for coal. Due to the reaction of  demand and/or supply to higher prices, this 
 
EN 117   EN scenario includes a gradual redu ction of high oil prices over time coming rather close to 
reference case levels by 2050. 
High fossil fuel price scenario  
Furthermore an even more bleak scenario is a ssessed that would see continued high fossil fuel 
prices. It also assumes doubling of prices in 2030 but in this scenario these high oil prices 
remain at that level over the full period 2030-2 050. This scenario is similar as the high oil 
price scenarios of US EIA182 which assume that structural changes in the energy markets 
result in long term high fossil fuel energy prices.  
Delayed EU climate action in a worl d of fragmented climate action  
What are the impacts of delay if energy prices re main at levels of the reference scenario? The 
scenario assumptions to implemen t the delay are similar as in the above scenario of delayed 
climate action in a world of global climate action. 
7.10. Overall Carbon price and GHG profile of the different reference and 
decarbonisation scenarios 
Table 31Carbon price evol ution different scenarios 
Carbon price evolution*  2020 2025 2030 2035 2040 2045 2050 
Reference 
(frag. action, ref. fossil f. prices) 16.5 20 36 50 52 51 50 
Effect. Techn.  
(glob. action, low fossil f. prices) 25 38 60 64 78 115 190 
Effect. Techn.  
(frag. action, ref. fossil f. prices) 25 34 51 53 64 92 147 
Effect. Techn.  
(frag. action, oil shock) 25 32 45 47 55 75 117 
Effect. Techn.  
(frag. action, high fossil f. prices) 25 31 42 43 50 68 104 
Delay. Electr.  
(glob. action, low fossil f. prices) 25 42 57 62 92 136 245 
Delay. CCS  
(glob. action, low fossil f. prices) 25 39 62 69 100 218 370 
Delay. Clim. Act.  
(frag. action, ref. fossil f. prices)  16.5 20 36 65 131 207 250 
* For reference only ETS carbon price is represented  
Source: PRIMES, GAINS  
Table 32 GHG emission profile per sector di fferent reference and decarbonisation scenarios 
Reference (frag. action, ref. fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -22% -29% -36% -39% 
Sectors           
Power (CO2) -7% -27% -39% -61% -69% 
Industry (CO2) -20% -31% -33% -35% -34% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 31% 24% 24% 24% 
                                                 
182 US EIA: Annual Energy Outlook 2010 
 
EN 118   EN Transport (excl. aviation, excl. maritime) (CO2) 25% 20% 12% 11% 10% 
Residential and services (CO2) -6% -20% -33% -39% -45% 
Non CO2 emissions  -25% -45% -49% -47% -47% 
Effect. Techn. (glob. action, low fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -25% -40% -62% -80% 
Sectors           
Power (CO2) -7% -34% -64% -87% -98% 
Industry (CO2) -20% -32% -35% -59% -84% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 28% 12% -31% -61% 
Transport (excl. aviation, excl. maritime)  25% 16% -2% -45% -70% 
Residential and services (CO2) -6% -24% -37% -62% -88% 
Non CO2 emissions  -25% -47% -54% -55% -60% 
Effect. Techn. (frag. action, ref. fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -26% -41% -61% -80% 
Sectors           
Power (CO2) -7% -34% -61% -82% -97% 
Industry (CO2) -20% -32% -36% -55% -84% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 25% 7% -36% -64% 
Transport (excl. aviation, excl. maritime)  25% 15% -5% -47% -71% 
Residential and services (CO2) -6% -25% -42% -67% -90% 
Non CO2 emissions  -25% -47% -54% -53% -58% 
Delay. CCS (glob. action, low fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -25% -40% -61% -82% 
Sectors           
Power (CO2) -7% -34% -63% -76% -99% 
Industry (CO2) -20% -32% -34% -67% -87% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 28% 12% -33% -64% 
Transport (excl. aviation, excl. maritime)  25% 16% -2% -46% -74% 
Residential and services (CO2) -6% -24% -37% -63% -90% 
Non CO2 emissions  -25% -47% -54% -56% -63% 
Delay. Electr. (glob. action, low fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -26% -40% -62% -80% 
Sectors           
Power (CO2) -7% -36% -68% -92% -99% 
Industry (CO2) -20% -32% -35% -65% -85% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 29% 20% -17% -54% 
Transport (excl. aviation, excl. maritime)  25% 18% 8% -28% -61% 
Residential and services (CO2) -6% -24% -37% -62% -89% 
 
EN 119   EN Non CO2 emissions  -25% -47% -54% -56% -62% 
Effect. Techn. + lower EII effort (frag. action, ref. fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -25% -40% -59% -74% 
Sectors           
Power (CO2) -7% -34% -62% -83% -98% 
Industry (CO2) -20% -31% -33% -44% -54% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 25% 7% -35% -64% 
Transport (excl. aviation, excl. maritime)  25% 15% -5% -47% -71% 
Residential and services (CO2) -6% -25% -42% -67% -90% 
Non CO2 emissions  -25% -47% -54% -53% -58% 
Reference (frag. action, high fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -22% -34% -41% -46% 
Sectors           
Power (CO2) -7% -27% -33% -50% -61% 
Industry (CO2) -20% -31% -37% -38% -36% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 31% 6% -9% -19% 
Transport (excl. aviation, excl. maritime) (CO2) 25% 20% 0% -16% -28% 
Residential and services (CO2) -6% -20% -47% -53% -57% 
Non CO2 emissions  -25% -45% -49% -47% -47% 
Effect. Techn. (frag. action, high fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -26% -44% -60% -79% 
Sectors           
Power (CO2) -7% -34% -54% -74% -93% 
Industry (CO2) -20% -32% -39% -51% -84% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 25% -9% -45% -67% 
Transport (excl. aviation, excl. maritime)  25% 15% -17% -54% -74% 
Residential and services (CO2) -6% -25% -53% -73% -91% 
Non CO2 emissions  -25% -47% -54% -53% -56% 
Reference (frag. action, oil shock) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -22% -34% -38% -44% 
Sectors           
Power (CO2) -7% -27% -34% -49% -62% 
Industry (CO2) -20% -31% -37% -34% -33% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 31% 6% -3% -14% 
Transport (excl. aviation, excl. maritime)  25% 20% -1% -10% -24% 
Residential and services (CO2) -6% -20% -47% -44% -48% 
Non CO2 emissions  -25% -45% -49% -47% -47% 
Effect. Techn. (frag. action, oil shock) 
 
EN 120   EN GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -26% -44% -59% -79% 
Sectors           
Power (CO2) -7% -34% -55% -76% -95% 
Industry (CO2) -20% -32% -40% -50% -83% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 25% -9% -41% -66% 
Transport (excl. aviation, excl. maritime)  25% 15% -17% -50% -73% 
Residential and services (CO2) -6% -25% -53% -69% -90% 
Non CO2 emissions  -25% -47% -54% -53% -56% 
Delay. Clim. Act. (glob. ac tion, low fossil f. prices) 
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -23% -33% -71% -83% 
Sectors           
Power (CO2) 
-7% -30% -53% -97% -
100% 
Industry (CO2) -20% -31% -31% -74% -88% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 30% 16% -39% -70% 
Transport (excl. aviation, excl. maritime)  25% 18% 2% -51% -76% 
Residential and services (CO2) -6% -20% -27% -68% -90% 
Non CO2 emissions  -25% -45% -49% -59% -63% 
Delay. Clim. Act. (frag. action , ref. fossil f. prices)  
GHG vs 1990 2005 2020 2030 2040 2050 
Total -7% -23% -35% -70% -83% 
Sectors           
Power (CO2) -7% -30% -52% -94% -99% 
Industry (CO2) -20% -31% -33% -74% -87% 
Transport (incl. aviation, excl. maritime) (CO2) 30% 27% 14% -38% -70% 
Transport (excl. aviation, excl. maritime)  25% 16% 2% -48% -76% 
Residential and services (CO2) -6% -21% -34% -71% -91% 
Non CO2 emissions  -25% -45% -49% -57% -62% 
Source: PRIMES, GAINS  
7.11. Sectoral changes in average yearly to tal investments and fuel expenses  
Industry The 5 energy intensive sectors, as described in chapter 5.2.7 take 2/3
rd of investments in 
energy related capital come from these 5 indu stries. In total, inve stments for the whole 
industry increase in the effective technologies scenarios with less than the achiev ed reductions 
through fuel and electricity expenses, certainly  in case of global action and low fossil fuel 
prices. When CCS is included this picture b ecomes more balanced but on average fuel and 
electricity expense reductions  are higher than investment and CCS expenditures increases.  
 
EN 121   EN Table 33: Average yearly total investments in energy  related capital goods, CCS expenditures and fuel 
expenses in industry  
Total average yearly energy investments 
Industry 11-20  21-30  31-40  41-50  Average 
Reference (frag. action, ref. fossil f. prices) 19 19 19 20 19 
Effect. Techn. (frag. action, ref. fossil f. prices) 19 19 22 31 23 
Effect. Techn. (glob. action, low fossil f. prices) 19 18 19 28 21 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  18 19 25 32 23 
Total average yearly fuel and electricity 
expenses Industry 11-20  21-30  31-40  41-50  Average 
Reference (frag. action, ref. fossil f. prices) 209 276 311 356 288 
Effect. Techn. (frag. action, ref. fossil f. prices) 210 274 286 338 277 
Effect. Techn. (glob. action, low fossil f. prices) 207 255 246 275 246 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  209 272 286 334 275 
Total average yearly CCS expenses Indus try 11-20  21-30  31-40  41-50  Average 
Reference (frag. action, ref. fossil f. prices) 0 0 0 0 0 
Effect. Techn. (frag. action, ref. fossil f. prices) 0 0 1 9 3 
Effect. Techn. (glob. action, low fossil f. prices) 0 0 3 12 4 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  0 0 7 14 5 
Source: PRIMES, GAINS 
With an oil crisis, energy related investment s in both reference and decarbonisation scenarios 
increase sharply by 2030. With th e temporary oil shock they decrease later to slightly below 
reference levels, however in case of remaining high fossil fuel prices they remain higher for 
the reference case. Relative fu el and electricity savings fr om decarbonisation become higher 
in case of an oil shock or high  fossil fuel prices compared to  the reference case. Finally CCS 
penetration and related costs are lower due to increased re ductions in other fossil fuel 
intensive sectors which reduce th e need for additional reductions in for instance the industry 
sectors. 
Table 34: Average yearly total investments in ener gy related capital goods, CCS expenditures and fuel 
expenses in industry in case of an oil shock or high fossil fuel prices 
Total average yearly energy investments 
Industry 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 19 19 19 20 19 
Reference (frag. action, oil shock) 19 29 18 19 21 
Reference (frag. action, high fossil f. prices) 19 29 20 21 22 
Effect. Techn. (frag. action, ref. fossil f. prices) 19 19 22 31 23 
Effect. Techn. (frag. action, oil shock) 19 29 19 28 24 
Effect. Techn. (frag. action, high fossil f. prices) 19 28 22 32 25 
Total average yearly fuel and electricity 
expenses Industry 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 209 276 311 356 288 
Reference (frag. action, oil shock) 209 304 363 363 310 
Reference (frag. action, high fossil f. prices) 209 303 403 445 340 
Effect. Techn. (frag. action, ref. fossil f. prices) 210 274 286 338 277 
Effect. Techn. (frag. action, oil shock) 210 301 332 343 296 
Effect. Techn. (frag. action, high fossil f. prices) 210 300 362 397 317 
Total average yearly CCS expenses Indus try 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 0 0 0 0 0 
Reference (frag. action, oil shock) 0 0 0 0 0 
 
EN 122   EN Reference (frag. action, high fossil f. prices) 0 0 0 0 0 
Effect. Techn. (frag. action, ref. fossil f. prices) 0 0 1 9 3 
Effect. Techn. (frag. action, oil shock) 0 0 0 7 2 
Effect. Techn. (frag. action, high fossil f. prices) 0 0 0 5 1 
Source: PRIMES, GAINS  
Residential (households) and tertiary 
Investments in energy related cap ital (e.g. boilers and electric appliances) are more or less 
stable for the reference scenarios, with some increases by the end of the modelled period (see 
Table 35). This changes dramatically for th e effective technology cas es, with investment 
needs increasing by around 30% over the next ten years compared to reference case or almost 
200 billion €, and then further multiplying over the period 2020 – 2050 by a factor of 4. In 
total, the investments required for the effec tive technology scenarios in crease to around € 200 
billion per year by 2050 compared to the refere nce scenario. On average annual investments 
in this sector over the whole period are around € 80 billion higher than the reference case. 
But this in turn drives significant reductions fo r the expenses of fuel and electricity, by about 
€ 70 to 100 billion for fuels by 2050 and around € 90 to 120 billion for electricity. On average 
the annual fuel and electricity expenses decr ease in the effective t echnology scenarios over 
the whole period with ar ound € 70 to 105 billion. 
Table 35: Average yearly total investments in energy related goods and fuel expenses in the residential 
and tertiary sector 
Total average yearly energy related investments 
Residential + Tertiary 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 47 48 47 67 52 
Effect. Techn. (frag. action, ref. fossil f. prices) 66 68 123 269 131 
Effect. Techn. (glob. action, low fossil f. prices) 65 64 111 263 126 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  50 48 196 258 138 
Total average yearly fuel expenses Residential 
+ Tertiary 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 229 275 283 293 270 
Effect. Techn. (frag. action, ref. fossil f. prices) 222 253 246 223 236 
Effect. Techn. (glob. action, low fossil f. prices) 220 236 211 189 214 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  228 272 243 200 236 
Total average yearly electricity expenses 
Residential + Tertiary 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 294 377 423 459 388 
Effect. Techn. (frag. action, ref. fossil f. prices) 291 369 387 368 354 
Effect. Techn. (glob. action, low fossil f. prices) 291 361 366 336 339 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  292 371 386 358 352 
 Source: PRIMES, GAINS 
Additional investments due to an oil shock or hi gh fossil fuel prices compared to the reference 
are similar to the additional investments undertak en in case of climate action with reference 
fossil fuel prices (see figure below). This of course means that total investments remain 
significantly higher in ca se of action on climate change. For fuel and electricity expenses, the 
increases in the absolute amount of  the oil bill on average are si milar in case of  action or no 
action no climate on climate change, but remain  on average significantly below the reference 
 
EN 123   EN level in case of action on climate change even with high energy fossil fuel prices, whereas in 
case of no action they increase significantl y above this original reference level. 
Table 36: Average yearly total investments in energy related goods and fuel expenses in the residential 
and tertiary sector in scenarios with an oil shock or high fossil fuel prices 
Total average yearly energy related investments 
Residential + Tertiary 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 47 48 47 67 52 
Reference (frag. action, oil shock) 47 80 42 63 58 
Reference (frag. action, high fossil f. prices) 47 80 49 71 62 
Effect. Techn. (frag. action, ref. fossil f. prices) 66 68 123 269 131 
Effect. Techn. (frag. action, oil shock) 66 97 106 255 131 
Effect. Techn. (frag. action, high fossil f. prices) 66 94 122 256 135 
Total average yearly fuel expenses Residential + Tertiary 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 229 275 283 293 270 
Reference (frag. action, oil shock) 229 292 311 292 281 
Reference (frag. action, high fossil f. prices) 229 292 339 344 301 
Effect. Techn. (frag. action, ref. fossil f. prices) 222 253 246 223 236 
Effect. Techn. (frag. action, oil shock) 222 270 274 226 248 
Effect. Techn. (frag. action, high fossil f. prices) 222 271 292 245 257 
Total average yearly electricity expenses Residential + Tertiary 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 294 377 423 459 388 
Reference (frag. action, oil shock) 293 389 439 451 393 
Reference (frag. action, high fossil f. prices) 294 389 459 492 408 
Effect. Techn. (frag. action, ref. fossil f. prices) 291 369 387 368 354 
Effect. Techn. (frag. action, oil shock) 292 379 406 371 362 
Effect. Techn. (frag. action, high fossil f. prices) 292 379 420 393 371 
 Source: PRIMES, GAINS 
Transport 
Yearly average transport investments increase s ubstantially for the reference case, from less 
than € 700 billion to more than € 800 billi on by 2050. But this increase is magnified for the 
decarbonisation scenario; with yearly investme nt requirements upwards of € 1100 billion, or 
around € 300 billion more than in the reference s cenario in 2050. 
There are significantly higher reductions in fuel b ills compared to the increase in investments 
within the effective technology decarbonisation scenarios wi th global action, of around € 430 
billion and there are similar reductions in fuel bills compared to the increase in investments 
for the effective technology decarbonisation s cenarios with fragmented action scenarios. 
However the electricity bill rises for transpor t after 2030 due to electrification, adding less 
than € 100 billion per year in the period 2030-2040 and around € 150 b illion in the period 
2040-2050. 
Table 37: Average yearly total investments and fuel expenses in transport 
Total average yearly investments Transport 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 669 774 819 830 773 
Effect. Techn. (frag. action, ref. fossil f. prices) 693 843 1022 1140 924 
 
EN 124   EN Effect. Techn. (glob. action, low fossil f. prices) 690 849 1048 1152 935 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  693 843 1027 1251 953 
Total average yearly fuel expenses Transport 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 497 619 667 728 628 
Effect. Techn. (frag. action, ref. fossil f. prices) 487 546 493 435 490 
Effect. Techn. (glob. action, low fossil f. prices) 473 488 383 296 410 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  491 573 528 444 509 
Total average yearly electricity expenses 
Transport 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 9 10 11 11 10 
Effect. Techn. (frag. action, ref. fossil f. prices) 12 46 108 168 84 
Effect. Techn. (glob. action, low fossil f. prices) 12 46 103 156 79 
Delay. Clim. Act. (frag. action, ref. fossil f. prices)  10 30 90 166 74 
 Source: PRIMES, GAINS 
Investments in the effective technology decarboni sation scenarios do not change significantly 
when comparing the scenarios with and without an  oil shock or high fossil fuel prices. This is 
not true for the reference scenarios with the oi l shock or high fossil fuel prices which incur 
significant additional investment requirements,  amounting to around 170 billion in the period 
2040 – 2050, or more than half of what by the woul d need to be invested additionally in the 
effective technology scenarios.  
Combined fuel and electricity bills increase sign ificantly with an oil shock or high fossil fuel 
price scenario. In case of no action and high fossil fuel prices, the combined fuel and 
electricity bill would have increase by the pe riod 2040 – 2050 with more than € 250 billion 
compared to the reference situation. In case ac tion on climate change would have been taken, 
this increase compared to reference would have  been limited to a bit more than € 80 billion.  
Table 38: Average yearly total investments and fuel expenses in transport in scenarios with an oil shock or 
high fossil fuel prices 
Total average yearly investments Transport 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 669 774 819 830 773 
Reference (frag. action, oil shock) 666 792 863 1006 832 
Reference (frag. action, high fossil f. prices) 666 789 856 999 828 
Effect. Techn. (frag. action, ref. fossil f. prices) 693 843 1022 1140 924 
Effect. Techn. (frag. action, oil shock) 693 880 1005 1107 921 
Effect. Techn. (frag. action, high fossil f. prices) 693 879 1018 1125 929 
Total average yearly fuel expenses Transport 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 497 619 667 728 628 
Reference (frag. action, oil shock) 497 721 826 693 684 
Reference (frag. action, high fossil f. prices) 497 722 945 925 772 
Effect. Techn. (frag. action, ref. fossil f. prices) 487 546 493 435 490 
Effect. Techn. (frag. action, oil shock) 487 633 656 492 567 
Effect. Techn. (frag. action, high fossil f. prices) 487 633 741 647 627 
Total average yearly electricity expenses 
Transport 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 9 10 11 11 10 
Reference (frag. action, oil shock) 9 12 32 67 30 
Reference (frag. action, high fossil f. prices) 9 12 33 70 31 
Effect. Techn. (frag. action, ref. fossil f. prices) 12 46 108 168 84 
Effect. Techn. (frag. action, oil shock) 12 47 111 170 85 
 
EN 125   EN Effect. Techn. (frag. action, high fossil f. prices) 12 47 114 177 87 
 Source: PRIMES, GAINS 
Power Sector 
What is probably most notable from the investme nts in the power sector is that they are lower 
than the additional investment requirements in th e transport, residential and tertiary sectors. 
This underlines the crucial importance of ener gy efficiency measures and fuel switching in 
these sectors, not just the power sector. Noneth eless investments are still significant, increases 
of around 40% compared to reference scenario  over the whole period or around € 40 billion 
more by 2050. 
By 2050, fuel expenses have decreased by ar ound € 60 billion in the effective technology 
scenario with global action and by about € 25 b illion in the effective t echnology scenario with 
fragmented action.  
Table 39: Average yearly total investments and fuel expenses in the power sector (includes steam)  
Total average yearly investments Power 
Sector 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 81 75 85 98 85 
Effect. Techn. (frag. action, ref. fossil f. prices) 85 110 131 140 116 
Effect. Techn. (glob. action, low fossil f. prices) 84 108 128 137 114 
Delay. Clim. Act. (frag. action, ref. fossil f. prices) 84 101 140 135 115 
Total average yearly fuel expenses Power 
Sector 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 126 163 178 202 167 
Effect. Techn. (frag. action, ref. fossil f. prices) 124 157 165 176 155 
Effect. Techn. (glob. action, low fossil f. prices) 124 147 143 141 139 
Delay. Clim. Act. (frag. action, ref. fossil f. prices) 125 160 160 167 153 
Source: PRIMES, GAINS 
Investments are resilient in the effective technology scenario with  oil shock or high fossil fuel 
price scenarios, while they increase in the refe rence cases with oil shoc k or high fossil fuel 
price scenarios. Fuel costs also increase less in the eff ective technology decarbonisation 
scenarios than they do in case of no action. Compar ed to reference, fuel costs remain lower in 
the effective technology scenarios, even with an oil shock or high fossil fuel price scenarios. 
This is not the case with no action.  
Table 40: Average yearly total investments and fuel expenses in the power sector (includes steam) in 
scenarios with an oil shock or high fossil fuel prices 
Total average yearly investments Power 
Sector 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 81 75 85 98 85 
Reference (frag. action, oil shock) 81 82 89 118 93 
Reference (frag. action, high fossil f. prices) 81 83 103 122 98 
Effect. Techn. (frag. action, ref. fossil f. prices) 85 110 131 140 116 
Effect. Techn. (frag. action, oil shock) 85 113 128 141 117 
Effect. Techn. (frag. action, high fossil f. prices) 85 114 133 141 118 
Total average yearly fuel expenses Power 
Sector 11-20  21-30  31-40  41-50  Average
Reference (frag. action, ref. fossil f. prices) 126 163 178 202 167 
 
EN 126   EN Reference (frag. action, oil shock) 126 176 201 211 179 
Reference (frag. action, high fossil f. prices) 126 175 215 240 189 
Effect. Techn. (frag. action, ref. fossil f. prices) 124 157 165 176 155 
Effect. Techn. (frag. action, oil shock) 124 169 183 178 164 
Effect. Techn. (frag. action, high fossil f. prices) 124 169 195 197 171 
Source: PRIMES, GAINS  
7.12. Further information on the main assumptions and drivers of the agriculture 
scenarios for the EU 
The CAPRI model is used to estimate agricu lture production. For the purpose of the 2050 
roadmap the baseline methodology was revised a nd specific assumptions were made. As far 
as the Common Agriculture Policy (CAP) is con cerned, the policy tools ta ken into account are 
limited to those of the curr ent regime (including change s from 2008 health check), 
consequently the future changes in the CAP to be introduced and their potential positive impact are not assessed in this modelling exerci se. The key revisions comp ared to the baseline 
delivered in 2009 were:  
• Use of long run expert proj ections from FAO and IFPRI
183 on the agricultural markets up 
to 2050  
• Extrapolation of fertiliser projections from EFMA up to 2050 and merge of these 
extrapolations with the information included in  historic trends. In EU15 these trends tend 
to point downwards, reflecting increasing environmental awareness and efficiency 
improvements. In the New MS, these trends of ten slope upwards, refl ecting the catching up 
process after the transition phase.  
Other changes were a greater weight for nationa l expert information as it was put forward in 
the consultation process from a s ubset of MS (all from EU15).  
In addition, specific assumptions were made in terms of policy and market assumptions. The 
most important changes from the CAP Health Check were implemented: abandonment of set 
aside, expiry of the milk quota in 2015, modifi cations to pillar 1 payments (increased 
modulation, further decoupling). The possible pr emium reallocations acco rding to Article 69 
and national preferences have not been implem ented (presumably less important). The table 
below summarizes the policy assumptions  are the following: 
Table 41: Core policy assumptions for the August 2009 CAPRI baseline  
Instrument Base year Baseline 
Direct payments EU-15 As defined in agenda 2000 Health check implemented 
Direct payments EU-10 Partly Health check implemented  
Direct payments BUR None Health check implemented  
Set aside EU-15 10% Abolished (Health Check) 
Set-aside EU-10 and BUR None Abolished (Health Check) 
Article 69 payments None Implemented 
Modulation None Health check implemented  
Decoupling Yes Health check implemented  
                                                 
183 FAO (2006) World agriculture: towards 2030/2050, Global Prospective Unit, Rome. IFPRI (2009) 
Agriculture at a Crossroads, IAASTD global report,. 
 
EN 127   EN Sugar Quotas Yes Reform 2006 implemented 
Dairy quotas Yes Expiry 2015 (Health 
Check)  
Tariffs, Tariff Rate Quotas Yes Maintained 
Export Subsidies Yes Maintained  
Market assumptions  are exogenous macroeconomic developments, but also specific 
assumptions on biofuel production from agricultural feed stocks or on mi neral fertiliser use. 
Furthermore, the CAPRI baseline tries to stay close to the percentage changes of 
corresponding variables from exte rnal sources of information.  
1. External projections on agricultural mark ets and activities as prepared by various 
agencies: 
a) Most important are for the medium r un perspective (up to 2020) the projections 
from a baseline prepared with the AGL INK model. The CAPRI baseline of 
September 2010 uses the AGLINK baseline of 2009. 
b) This is supplemented, again for th e horizon up to 2020, with projections from 
FAPRI (also prepared in 2009)  
c) For the long run perspective (up to 2050) increasing weight is given to the 
projections by FAO (World ag riculture: towards 2030/2050, Global 
Prospective Unit, 2006) and IFPRI (Agr iculture at a Crossroads, IAASTD 
global report, 2009). Whereas the medium  run evolution of agriculture was 
typically stagnating or even  declining in some sectors, in the long run the 
global growth of demand would also stimulate EU production according to FAO and IFPRI. In several cases this im plies a turning point in terms of supply 
and activity levels after 2020. 
2. National expert information on animal numbers of several MS (all from EU15) has 
been considered suitable to supplement the AGLINK projections. 
3. Fertiliser projections for the medium run have been aligned with 2009 EFMA 
projections. These have been extrapolated  after 2018 with a logi stic extrapolation 
formula to obtain a historical projecti on. However, projections after 2020 were 
increasingly relying on the historical e volution of summary CAPRI indicators for 
farmers’ behaviour (over-fertilisation factor and organic availability factor). It was 
assumed that underlying efficiency im provements and catching up processes for 
mineral fertiliser use in the new MS would continue within some limits (minimal 
efficiency improvement everywhere but not beyond technical frontiers.  
4. The PRIMES baseline (the reference pr ojection up to 2050) is the source for 
macroeconomic assumptions, and biofuel feed stock evolutions. Of these the former 
only add a small modification to the CAPRI baseline. 
The key assumptions under the ‘market assu mptions’ heading are in the table below 
Table 42 Core market assumptions fo r the August 2009 CAPRI baseline  
Variable  Source  Determines… 
Macroeconomics PRIMES for EU, Adjustments of demand 
 
EN 128   EN (inflation, GDP) FAO/IFPRI elsewhere  relative to external 
forecasts  
Demographics PRIMES for EU, 
FAO/IFPRI elsewhere Adjustments of demand 
relative to external 
forecasts 
EU market information 
available from DG Agri 
(Aglink) or national 
experts  Aglink / national expert 
projections  … target values for 
CAPRI estimator (e.g. 
beef supply)  
EU market information unavailable from DG Agri (Aglink) Constrained trends  … related variables (e.g. 
suckler cow herd)  
World markets  FAO/IFPRI FAPRI plus 
data consolidation … international market 
variables, position of 
behavioural functions, 
starting point for 
simulations 
Yields  Aglink or international 
agencies merged with 
historical trends  …market results, position 
of behavioural functions, 
starting point for 
simulations  
Fertiliser use  EFMA projections and 
historical trends  … environmental 
indicators, farm income 
 
7.13. Examples of innovative policy schemes to  spur energy related investments for 
households184 
– In France, a 0% interest rate loan for home re trofitting energy efficiency projects up to € 
30,000 have been introduced and low VAT rates supported the refurbishments. The ' Green loan for social housing' aims to improve th e energy performance of the social housing. 
From 2009 to 2020 € 1.2 billion of loans with a fixed rate of 1.9% on 15 years is available 
to finance the restoration of the first 100,000 social housing units. To accelerate the 
development of the renewable energy market in France, the FIDEME scheme launched in 
2003 foresees a €45m public-private fund, addressi ng the debt-equity gap in the sector to 
attract lenders. The leverage structure mobilised 20 times the public funding.  
– The German public bank KfW operates th e German CO2 Building Rehabilitation 
Programme (1996 – ongoing). The objective is to  support investment in building energy 
renovation. Preferential loans ar e provided for refurbishment measures aimed at reducing 
energy consumption, via local commercial banks. An additional repayment grant is given if a more ambitious efficiency standard is  achieved. Between 1996 a nd 2004, € 6bn in loans 
were provided; 57 million m2 floor area in existing buildings renovated; The budget was € 
4bn (in loans) from 2006 to 2009,  increasing to € 2bn per year in the 2010-11. Through the 
implementation of the programme, around 220,000 ne w jobs were created. It was further 
estimated that the various KfW programmes for buildings had a combined impact of 
emission reductions of around 1 Mt CO2 emi ssion reduction per year. From 2007 to 2009 
                                                
 
184 Sources: UNEP & SEFI (2008), SEF Alliance and Bloomberg New Energy Finance (2010), BASE - 
Basel Agency for Sustainable Energy (2006), Clausnit zer et al (2010), Klinckenberg Consultants (2010) 
 
EN 129   EN the KfW grants offered grants as an alternative to the loans. The support varied between 
5% and 17.5% of the renovation costs.  
– The Carbon Trust, a not for dividend comp any created by the UK government, helps 
businesses and public organisations to reduce their greenhouse gas emissions and to support low carbon technologies. Its Incubator Programme runs technology accelerators 
through a £20m Carbon Trust Ve nture Capital Fund that leverages private sector 
investments. In terms of leverage, 11 comp anies have raised £14.6 million private sector 
investment since joining the in cubators, two of which are vent ure capital investments. In 
total, the Carbon Trust has invested £26.8 million in early stage UK clean energy 
businesses and has leveraged £138.9 million of pr ivate sector investment. This implies a 
leverage ratio of 1 to 5. A planned UK Green Investment Bank could play a significant role 
in unlocking further private cap ital through equity and debt finance. With a capital base of 
£100-400 million, an additional £3 billion of finance can be unlocked. The Chancellor 
announced in November 2010 in the spending re view that the green investment bank will 
be funded with £1 billion. 
– In the Czech Republic, the Green Savings Programme support equipment installed in 
250,000 residential houses. The programme is e xpected to cost a pprox. € 1bn over the 
programme lifetime. By 2012, 250,000 houses s hould have been improved, 1.1 Mt CO2 
emission annually reduced and 30,0 00 jobs created or retained. The cost effectiveness is 
expected to be € 20/tCO2. 
– In Belgium, energy efficiency measures of  private households ar e supported through a 
combination of reduced VAT rates, subsidie s and income tax reduc tions. Since 2000, the 
VAT rate for restoring works and transformation works for all dwellings has been reduced from 21 to 6% for dwellings older than 5 y ears. This measure may be cumulated with 
significant yearly the tax reductions of up to  40% of the investment in energy related 
improvements in housing, with a maximum tax reduction per year of € 2770 in 2010. This 
is further accommodated with several spec ific limited subsidies for energy saving 
investments.  
– Bulgaria has introduced a building tax exemption for up to 10 years to owners of buildings 
who have obtained energy perf ormance certificates of a highe r class. The Bulgarian Energy 
Efficiency and Renewable Energy Credit Line (BEERECL) is an EBRD facility helping seven Bulgarian banks to lend to private sect or industrial energy effi ciency and renewable 
energy projects. Besides the credit line, developm ent assistance is also provided for project 
development services including energy auditi ng, financial analysis, risk assessment, 
formulation of loan applications and deal structuring, The facility is partly supported by the nuclear power plant Kozloduy International Decommissioning Support Fund (KIDSF). An 
innovative component is that the project spon sors (borrowers) receive an incentive grant 
from the KIDSF upon successful project commi ssioning, 15% of the loan for efficiency 
projects and 20% for renewables. 
– The Slovenian financial stimulation for en ergy efficiency renova tion and sustainable 
buildings of new buildings (2008-2016) promotes the implementation of energy audits, feasibility studies, investment  and project documentation for energy efficiency and 
renewable energy. The subsidy is limited to 2.5% of the proposed investment.  
– The $163m funds provided by the Global Enviro nmental Facility (G EF) between 2003 and 
2006 are estimated to have leveraged seven times more investment through co-financing. 
 
EN 130   EN 8. BIBLIOGRAPHY  
Studies of stakeholders analysed in chapter 1.4.1:  
Business Europe (2010): "European Business Recommendations on EU Policies for Climate 
and Energy", Position Paper, 2010185; 
Climate Action Network Europe (2010), "Horiz on 2050. Steel, Cement & Paper. Identifying 
the breakthrough technologies th at will lead to dramatic greenhouse gas reductions by 2050", 
2010186; 
COGEN Europe (2010), "Cogenera tion as the foundation of Europe's 2050 low carbon energy 
policy", Report, 2010, Brussels.187 
Eurelectric (2010), "Power Choices. Pathways to carbon-neutral electricity in Europe by 
2050", Full report, 2010188; 
European Climate Foundation (2010), "Roadmap  2050. A practical guide to a prosperous, 
low-carbon Europe", Technical analysis, 2010189; 
European Renewable Energy Council (2010), "Re-thinking 2050. A 100% Renewable Energy 
Vision for the European Union", Executive Summary, 2010190; 
Greenpeace & European Renewable Energy C ouncil (2010), "Energy (R)evolution. Towards 
a Fully Renewable Energy Supply in the EU 27, 2010191 
Holland, M. (2010) The benefits fo r public health in Eu rope of moving to a 30% target for EU 
climate policy. In Jensen, G. and A Leetz (eds .) Acting now for better health: a 30% reduction 
target for EU climate policy, Health &Envir onment Alliance/Health  Care Without Harm 
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