Energy Issues - Challenge for Physics

Presentations

Kauppa- ja teollisuusministeri Mauri Pekkarinen

Climate change is one of the greatest challenges of our time

Energy Issues - A Challenge for Physics, University of Helsinki, 31.08.2007

Fresh reports from the scientific community confirm that global warming is due to human agency. The threat which scientists have identified as being posed by climate change continuing at its current rate, and the consequences of such change, are terrifying.

We must turn this situation around. Scientists have also affirmed that continued climate change can be brought under control.

The general global view is crystallising around the aim of limiting global warming to 2 degrees compared to the pre-industrial era. However, even this will have dramatic effects on people’s lives on all continents and in all countries. In global terms, it remains very much an open question as to how much should be done to curtail emissions, and by whom. For its part, the European Union has declared itself ready to carry its share of responsibility.

A few months ago, EU heads of state agreed that the EU would reduce its CO2 emissions by at least 20% and the generation of renewable energy as a share of overall energy would be increased three-fold by 2020.

If significant numbers of non-EU countries join us in making cuts in emissions, the EU has undertaken to reduce its emissions by even 30% from the level of 1990. Furthermore, the EU has pencilled in an unofficial reduction figure of 60 to 80% by 2050.

In addition, heads of state have resolved to improve energy efficiency by 20 percent by 2020.

Within each country, by 2020 biofuels must constitute a minimum 10% share of transport fuels.

Throughout the world, the climate question is a question of energy, with the energy sector being responsible for around 80% of greenhouse gas emissions globally. This is also true of both the EU and Finland.

Even now, the EU is formulating proposals for the distribution of the emission reduction burden between member states and national obligations with respect to increasing the use of renewable energy.

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The Finnish government is committed to fulfilling its share of the responsibilities assumed by the EU. This will not be easy, requiring radical solutions which have their price in monetary terms. However, as Sir Nicholas Stern confirmed in his report, the faster we take significant steps, the cheaper – or perhaps I should say the less expensive – resolving the climate issue will be.

Last year, Finland’s carbon dioxide emissions totalled around 80 million tons. As early as 1998, Finland committed itself to reducing greenhouse gas emissions such that, during the so-called Kioto period of 2008 to 2012, they would at most reach only 1990 levels i.e. around 71 million tons of CO2. When we compare this to last year’s levels of around 80 million tons, we can see that a major reduction effort lies ahead. If Finland were to prove unable to reduce its emissions from their current level by 2020 – in line with the EU’s future targets for member states, whatever such targets may be – at today's prices this would probably mean an additional bill of many hundreds of millions of euros per year for the Finnish energy sector, ultimately being passed on to the economy in general and consumers.
Just over 50% of Finland’s greenhouse gas emissions, or over 20 MW within power generation and industry, are generated by the emissions trading sector. A little under 50% of emissions are generated outside the emissions trading sector.

If the obligation to reduce emissions were to rise to 50%, and this were achieved through the emissions trading sector, there would be no possibility whatever of distributing emissions rights to Finnish industry and the country’s energy sector. They would have to pay for all CO2 emissions they generate.

Among other things, the above demonstrates that greenhouse gas emissions must also be reduced outside the emissions trading sector, particularly with respect to transport, and even domestic energy use and agriculture.

Again, in view of the above, Finland is ready to reduce its greenhouse gas emissions. However, in the forthcoming division of the emissions reduction burden within the EU, we hope that our geographical location, long distances, cold climate and industrial structure will engender the understanding they deserve.
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An overwhelming majority of Finns too want to reduce greenhouse gas emissions and almost all support increased use of renewable energy. Many are also of the opinion, however, that energy prices should not increase.

Based on such variables, this equation simply does not compute.

While increased use of renewable energy costs money, in Finland’s case, it would also provide many positive opportunities.

Of the energy consumed by Finland, almost 25% is currently produced using renewable energy sources. Thus, we are already clearly above the EU objective for 2020. While the EU will, nevertheless, not spare us from new obligations we cannot, on the other hand, be subjected to an obligation to increase our levels three-fold.

According to calculations performed by the Ministry of Trade and Industry, an increase in the share of renewable energy by several per cent would be extraordinarily difficult and challenging for Finland. The 1,600 MW nuclear power station under construction may add to our woes if primary energy continues to form the basis for the calculation of the share of renewable energy. A new nuclear plant would add to our calculated energy consumption if it were to replace imported electricity and also, to some extent, if it were to replace coal-fired electricity generation. This would be due to the lower efficiency of a nuclear power station compared to coal-fired stations and because electricity imports are calculated as primary energy at a one hundred percent efficiency rate.

Thus, a significant increase in the share of renewable energy sources would, at worst, require the following:

• increased use of wood in energy production by around 15 million cubic metres per year, which would in turn require;
• major growth in the forest industry in Finland,
• a four-fold increase in the use of logging waste and wood from thinning
• The use of all available arable land for energy production

This would require measures including the following:
• the construction of all potential water power facilities in unprotected areas
• an increased windpower contribution by at least 20-fold compared to the current situation, from 100 MW to around 2,000 MW and
• the transfer to the use of renewable energy sources in a significant share of transport.
Such a formidable increase in the use of renewable energy would not be possible in market terms, based on these figures, since such an increase would require either massive investment support for renewable energy, the use of feed-in tariffs or the imposition of legislative requirements on transport and heating.
Even as I speak, the government is preparing a national energy and climate strategy, under my leadership, with the purpose of defining our measures in more detail for increasing the use of renewable energy and with respect to the related funding. An accompanying objective is to define goals and measures for the improvement of energy efficiency and promoting energy saving.

The above new climate and energy policy offers new opportunities to Finnish players in the industry, and the government has already initiated significant trade and industry programmes within this sector. Examples include the Biorefinery Programme, costing EUR 137 million over four years. The government has also set aside major funding support for demonstration projects within the industry.
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