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Energy in the EU
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Transcript of Energy in the EU
Presentation for Decision Making Energy in the EU
Antonio Merola Khaldon Evans Christopher Lipp
Specialist inEnergy trends & policyin the EU
Specialist inRenewable energy in the EU
Specialist inNuclear power in France & Germany
2
1. Introduction Kahneman & Heuristics European energy policy Electricity subsector
2. Nuclear power: the case of France & Germany Overview: Nuclear power in the EU Rise of nuclear power in France Germany’s nuclear power U-turn Influences in decision making
3. Renewable energy: Wind & Solar Power EU Investments in alternative energy A paradigm shift in Wind & Solar Power Factors influencing micro-level decisions
Overview
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IntroductionHeuristics & Energy in the EU
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• Kahneman demonstrates how easily statistics can be misinterpreted and explains the risk of using statistics as an attempt to assign greater meaning to something that occurred due to chance.
• Kahneman uses heuristics to assert that System 1 thinking involves associating new information with existing patterns, or thoughts, rather than creating new patterns for each new experience. In addition to offering an explanation for the statistical problem, the theory also offers an explanation for human biases
Overview
• Anchoring effect names our tendency to be influenced by irrelevant numbers.
• Availability Heuristic – we intuitively think the things we remember are more likely to happen again and that they are more important
• Representativeness Heuristic – we intuitively think that different events that seem similar to us have a similar likelihood of occurrence when often they do not
• Commitment Heuristic – we intuitively think that if we’ve already invested in a decision, we should continue to do so
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European Energy policies
The EU Treaty of Lisbon of 2007 legally includes solidarity in matters of energy supply and changes to the energy policy within the EU
The Energy Union Strategy is a project of the European Commission to coordinate the transformation of European energy supply. - It was launched in February 2015, with the aim of providing secure, sustainable, competitive, affordable energy
Strategic Energy Technology Plan
In 2003, the EU energy sector generated a turnover of about €535 billion. Moreover, it was the main activity of 16,000 enterprises, which employed slightly over a total of 1.1 million people.
Slovakia is by far the most specialised energy producer since the energy sector represents 14.8% of the added value and 3.4% of the employment of the country’s non-financial business economy.
Main contributors to the EU energy sector are France and Germany, respectively contributing 16% and 23% of the total added value, and together employing more than 30% of the sector’s total workforce in Europe
European Energy policies
Sector People employed No. of companies Value added (% of energy sector total)
Electricity 867,000 11,000 77
Gas 152,000 1,300 18
Steam and hot water
165,000 3,800 5
Table: Size of EU energy subsectors
Source: Eurostat, 2006 - 2007
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Electricity subsector
• The electricity subsector is the largest of the three subsectors within the EU energy sector.
• It is comprised of almost 11,000 companies, employs more than 867,000 people and accounts for 77% of the energy sector’s total added value (Eurostat 2012).
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Nuclear Power The case of France & Germany
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Overview: Nuclear Power in the EU
France is the 2nd biggest producer of nuclear power in the world after the United States (100 reactors) and before Russia (34 reactors)
China has 26 reactors in operation but 23 are under construction While Germany has planned a phase out by 2022, the UK signed
deals with China for a nuclear power cooperation (October 2015)
44%
12%8%
7%
5%
5%
5%
14%
Nuclear Power Plants in the EU
FranceUnited KingdomSweden Germany SpainBelgiumCzech RepublicOthers
10Overview: Nuclear Power – pros and
cons
Arguments against nuclear power
• High construction costs• High-known risks of accidents, &
unknown risks • Uranium just as finite as other
sources• Nuclear waste lasts 200-500 years
Nuclear power is highly controversial and there is no unified European policy (Euratom Treaty of 1957 has limited power, mainly regulates the market)
The case of France & Germany shows how the two main actors of the EU follow two entirely opposite strategies
Arguments for nuclear power
• Lower greenhouse gas emissions
• Relatively low operating costs• Large power-generating
capacity• Progress in recycling of nuclear
waste
11Rise of nuclear power in France
1973Oil prices quadrupled due to first majoroil crisis, when most of France’s electricity came from oil burning plants
France decides to become energyindependent
“No coal, no oil, no gas, no choice”
58 active nuclear power plants in France produce 75% of all electricity
Cultural, political & economic factorsinfluenced this decision
Two thirds of the French are highly in favor of this energy source Nuclear power as a solution to these problem ‘feels right’ to the French Currently there are 2 nuclear reactors under construction in France,
the expansion does not seem to be slowing down
Source: Eurostat. Table: Wikipedia
12Germany’s nuclear power U-turn
First nuclear power plant built in 1962
1970s Demonstration near Hamburg to stop construction of nuclear plant
Green party “Die Grünen” gets seats inBundestag, advocates against nuclear power
2011 Fukushima accident Germany closes eight nuclear reactors
Acceleration of phase-out: deadline 2022 instead of 2036
Studies by German insurance companies show that the cost of a potential nuclearaccident is impossible for them to bear
Phase-out is poised to push Germany to develop renewable energy sources
Short term effect: strong increase in coal and oil burning since 2011
Source: IAEA
13Influences in decision-making
Availabilty Heuristics
Law of Small numbers
Conjunction
fallacy
Intuitive Prediction Anchoring effect
Sunk cost fallacy
Despite the high risks and the problems of radioactive waste, France continues to expand and develop its nuclear power
France’s reaction after the accident of Three Mile Island
Occurrence of Fukushima made Germany accelerate its way out of nuclear power, as if the likeliness of such an accident had increased by the occurrence of the event itself
Germany may be mistaking plausible and probable. The conditions that lead to major nuclear accidents likeFukushima and Chernobylare unlikely to happen in Germany
The arguments that lead tothe beginning of the nuclear program in France made people feel right about it. It is now part of theday-to-day life on French. However conditions have changed, and it might be a mistake to invest more in this energy source.
France has not experienced any major nuclear accident, which may be comforting the French population in believing that it is a known and safe power source.
Arguments based on the statistics of the number of accidents are often raised, though the statistical significance can be seen as marginal, considering the small sample (amount of plants and duration)
14
Renewable energyWind & Solar Power
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Use of renewable energy (EU28 vs. 2020 target)
EU investments in renewable energy
• Increase renewable energy use 20% by 2020
• Creating more jobs• Having a carbon free economy• Cleaner energy
2011 – 2013 renewable energy use increased 2.1%. A 1% increase per year 2013 renewable energy was accounted for 1.2million jobs
EU unemployment crisis Carbon free economy - Global warming (climate change) effects
16
Energy sources in the EU
EU investments in renewable energy
• Increase renewable energy use 20% by 2020
• Creating more jobs• Having a carbon free economy• Cleaner energy
2011 – 2013 renewable energy use increased 2.1%. A 1% increase per year 2013 renewable energy was accounted for 1.2million jobs
EU unemployment crisis Carbon free economy - Global warming (climate change) effects
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Greenhouse gas emissions 1990 vs. 2012 in the EU
Greenhouse gas emissions
Reduce greenhouse gas 20% by 2020 compared to 1990 hence a 15.8% reduction from 2012 to 2020
A more realistic goal would be an increase would be approximately 3% reduction between 2012 & 2020
Raw statistics rather than past efforts should influence decision making
• Only reduced by 4.2 points from 1990 to 2012
• Increase in emissions from transportation 6.9 points
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Capacity factors of various energy sources
A paradigm shift in wind & solar power
Wind is the cheapest energy produced in UK & Germany
More solar and wind plants are being installed because of the capacity factor
• More wind & solar power installed leads to…
• Coal & gas plants sitting idle longer, leads to…
• Coal & gas power costs going up
H2 2014
H1 2015
H2 2015
Coal 86% 85% 85%
Natural Gas
70% 70% 62%
Wind 32% 35% 37%
Solar 16% 17% 20%
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Solar Panel Purchase vs. Price in the UK
Factors influencing micro-level decisions
People buy solar panels because of the price seem more reasonable to them and they will get a return on investment much quicker
Positive factors
• The decrease in cost of solar panel
• Increase in home purchase of solar panel
20
Example of Online Advertising for Solar Panels
Factors influencing micro-level decisions
People will buy only if the price is right not because they will save on the bill The negative effect of not using renewable energy is difficult to quantify Advertise more about environmental issues, people may react better and buy
Negative effects
• Advertisement telling you to buy solar panel because you will save money today
• People do not see the environmental need to buy it
21
We are ready to answer your questions.
Thank you for your attention
22Sources
• Braun, Jan Frederik (24 February 2012). "EU Energy Policy under the Treaty of Lisbon Rules: Between a new policy and business as usual". Politics and Institutions, EPIN Working Papers. p. 14. Retrieved 21 August 2012
• S. Andoura, L. Hancher, M. van der Woude: Towards a European energy community: a policy proposal by Jacques Delors Notre Europe – 2010
• Kahneman, D (2012). Thinking, Fast and Slow. Penguin. Part II.
• World Nuclear Association: Nuclear Power in the European Union (http://www.world-nuclear.org/info/Country-Profiles/Others/European-Union/) October 2015
• The Guardian: The UK’s deals worth billions with China: what do they really mean? October 24th, 2015
• PBS.org, Jon Palfreman. Why the French Like Nuclear Energy. http://www.pbs.org/wgbh/pages/frontline/shows/reaction/readings/french.html
• Triplepundit.com. Nuclear energy: Pros and Cons. http://www.triplepundit.com/special/energy-options-pros-and-cons/nuclear-energy-pros-and-cons/
• DW.com. The future of nuclear power in Europe. http://www.dw.com/en/the-future-of-nuclear-power-in-europe/a-16772616
• Europa.eu, Renewable Energy (https://ec.europa.eu/energy/en/topics/renewable-energy)
• Europa.eu, Energy Strategy (https://ec.europa.eu/energy/en/topics/energy-strategy)
• EPA, Overview of Greenhouse Gases (http://www3.epa.gov/climatechange/ghgemissions/gases/co2.html)
• Natural Resources Defense Council, Global Warming (http://www.nrdc.org/globalwarming/)
• Europa.eu, Greenhouse gas emissions by sector (http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Greenhouse_gas_emissions,_by_source_sector,_EU-28,_1990_and_2012.png)
• The Eco Experts, How much do solar panels cost (http://www.theecoexperts.co.uk/how-much-do-solar-panels-cost-uk)
• Bloomberg.com, Solar and Wind Just Passed Another Big Turning Point (http://www.bloomberg.com/news/articles/2015-10-06/solar-wind-reach-a-big-renewables-turning-point-bnef)
• RenewableEnergyWorld.com, Fact Sheet: Renewable Energy Job Numbers (http://www.renewableenergyworld.com/articles/2015/01/fact-sheet-renewable-energy-job-numbers.html)