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Europe’s future energy Scenarios

Discussions derived from scenarios on the future of energy development are as varied as the conclusions derived from them. One of the aims of the scenarios in the ReRisk project was to illustrate some of the likely impacts of rising energy prices as well as identifying the various policies available to cope with this challenge. What seems to be consistently expressed in most of the available scenarios is the notion that energy is a limited resource. Energy shortage not only will, but is already, having an impact on the global economy and on people's everyday lives. In what follows we set out the four scenarios that the ReRisk project, ultimately, produced.

1 Green high-tech

In scenario 1, international agreements on more ambitious Greenhouse Gas (GHG) quotas have been reached and emissions trading schemes are operational worldwide. Demand for renewable energy has increased significantly while the demand for nuclear energy and especially for fossil fuels has been reduced. Europe has also witnessed a new balance between centralised and decentralised solutions, in which large and small-scale renewable energy installations are interconnected by a new network of ocean and land-based power grids.

While the overall level of innovation capacity in Europe has increased over the last 20 years, the European economy continues to be characterised by growth dominated by the knowledge and service industries. New economic activities have appeared in some rural areas, especially in relation to renewable energy production, while urban areas continued to witness population and economic growth. A more polycentric organisation in urban areas has characterised the development of many European cities over the last two decades. The share of public transport in terms of total journeys, especially railways, trams and metros has increased and private car transportation has declined.

2 Energy efficiency

This scenario presupposes a decline in the total level of energy demand. Demand for coal and oil has been almost excluded from the industrial and residential sector while an increase in the demand for natural gas has been accompanied by phasing-out programmes for nuclear reactors. Energy efficiency has become the main mitigation measure against climate change in Europe. Consumption patterns have changed towards the rational use of energy and natural resources based on the increasingly easy availability of clean energy technologies for producers, new policies and information campaigns. Prices for fossil fuels are now very high thus making clean energy technologies much more competitive.

Europe is moving towards a more regionalised and balanced economy. Higher prices for raw materials and transportation have created new markets favouring some primary industries. Economic and social growth is evident in both urban and rural areas. Hybrid and electric private cars are affordable and therefore favoured as the mode of transport especially in rural areas where investment in public transport has not been sufficient.

3 Nuclear energy but only for "big" regions

In this scenario nuclear energy is the main priority for energy development in Europe. Renewable energy deployment has witnessed significant growth, but not to the same degree as nuclear. The energy demand for fossil fuels had decreased as electricity replaced coal and oil in the industrial and residential sectors. Priorities on climate change policies prevail in Europe despite the fact that the most energy-intensive countries have not signed global agreements on GHG emissions.

The dominance of nuclear energy has resulted in a centralised energy sector where only a few large actors have been able to invest. The development of small-scale energy solutions has been largely restricted to remote and isolated areas which are not connected to central grids. The initial substantial increase in energy generation from nuclear reactors in the 2020s resulted in an increase in energy demand and with renewable and energy efficiency technologies becoming less competitive. Europe's innovation capacity has been moderated. The economy is characterised by major economic growth in the manufacturing and primary industries, though these sectors have gone through a process of modernisation. Due to the growth of manufacturing, primary industries and in overall population, energy consumption in Europe has increased. Urban areas continue to witness major social and economic growth dominated by the service sector, while industries will proliferate especially in the urban outskirts and nearby regions. Investments in both public and private transport have been significant as progressive efforts to electrify the transport system have been made but the balance between public transit and private car use from the early 2000s has been maintained.

4 Business as usual

Scenario 4 is characterised by a significant demand for coal and natural gas and a limited increase in renewable energy. Production from nuclear sources has been reduced. The lack of technological advances in terms of renewable energy and energy efficiency, in combination with a lack of appropriate energy policies, has led to increased energy demand. Globally, energy-intensive countries are not part of the agreements on GHG-reductions. Clean energy technologies are expensive and thus only available for large energy producers. Economic growth has been negative due to a slowing of the rate of innovation, higher energy prices, a lack of capital and a lack of the appropriate policy instrument to foster the necessary adaptation capacity to the new market conditions. All sectors of the economy are present, though the most energy-intensive industries have been modernised while others have disappeared. Urban areas are still the only centres of economic and population growth while depopulation has continued to affect rural regions. Poverty and social problems have increased due to rising unemployment and higher prices for basic products. Further, private car transportation has increased due to declining investment in the public transport infrastructure. Old cars predominate on the roads as new energy-efficient ones are too expensive for average consumers.

Patrick Galera Lindblom

Research Fellow