EnergyTransitionTrends 2018China, Europe, USAEnergy Transition Trends 2018Implementing UnitTechnical SupportFinancial SupportEnergy Transition Trends 2018Foreword 02International Trends in Energy Transition 031. China 05Economic Development Link with Ecological Civilization 05Development of Solar PV is Surging 05Policy Framework for Emission Reduction and Power System Re Established 08Transing from Subsidy Based to Marketised Alternatives 08Obstacles to Low-carbon Development 09Centralized Power of Policy Makers in the Future 092. European Union 11The EU’s Long-term Energy Targets for 2030/2050 11Current Developments in European Energy Policy The Winter Package 11Achievements and Challenges Measuring the Progress in the EU and A Look Ahead 133. Denmark 14Decoupling Economic Growth, Energy Consumption and GHG Emissions 14RE Integration the Danish Way – Flexibility and Open Energy Markets 15New Energy Agreement in the Making 154. Germany 17The “Energiewende” – Energy Transition Made in Germany 17Some Progress Made and Still Some Way to Go 17Outlook Increasing Flexibility and Digitization of the Energy System 18Market-based RE Integration as Cost-efficient Way to Deal with the Complexities of the Energy Transition 195. United States of America 20Dynamics of Energy Sector Evolution 20Outlook Energy Systems Integration and Market Modes 212Energy Transition Trends 2018ForewordChina National Renewable Energy Centre, The Danish Energy Agency and Energinet in Denmark, GIZ, the German Energy Agency dena and Agora Energiewende in Germany, and the US National Renewable Energy Laboratory NREL cooperate in a large program “Boosting RE in China”. The aim is to provide China with the most recent international experiences on energy transition and to develop long-term energy system scenarios for the transition to a low-carbon, clean and efficient energy system in China.This report is developed by the program partners to give a snapshot of the energy transition trends for three of the largest energy consumers in the world China, Europe and United States of America, to give the reader insight in the visions, possibilities and challenges in the on-going energy transition for the three regions. The challenges associated with a transition to a low-carbon energy sector are becoming better defined, with solutions for many already identified. While economic, political and social differences exist among all nations, core technical, physical and business-based solutions appear to be consistent and broadly applicable. Institutional coordination among countries to share these innovations and lessons learned can bolster global progress in the energy transition.More ination about the Boosting RE in China program and the energy transition in China is available at the web site rec.org.3Energy Transition Trends 2018International Trends in Energy TransitionGlobal warming affects all countries and can only be tackled in a conjoint international effort. The Paris agreement is considered to be a crucial milestone in the fight against climate change. For the first time, virtually all countries acknowledged that the threat of global warming is real and commonly agreed on “holding the increase in the global average temperature to well below 2C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5C above pre-industrial levels.” More and more countries have published their national GHG reduction targets in order to reach this goal.Figure 1The data shown in the graphic are based on either Nationally Determined Contributions NDCs ted to the United Nations UN or, in the case of Denmark and Germany, additional national targets. Unless stated otherwise, the base year for all targets is 1990. In order to allow for comparability, for the U.S., official NDC targets with base year 2005 have been converted to a base year 1990 using data from the Environmental Protection Agency EPA. The Danish GHG reduction target for 2030 is based upon the preliminary Danish non-ETS reduction target of 39 compared to the 2005 level and is not an official Danish target.Key Elements for A Successful Energy Transition Worldwide International exchange of experiences and mutual learning Clear long-term vision, elaborated and regularly revised mid-term targets and flexible mind-sets for short-term adjustmentsDenmark minus 48 by 2030 minus 80-95 by 2050Germany minus 55 by 2030 minus 80-95 by 2050EU28 minus 40 by 2030 minus 80-95 by 2050China peaking of CO2 emissions around 2030 lower CO2 emissions per unit of GDP by 60 to 65 from the 2005 levelUSA minus 4.6 by 2030 minus 14.9-17.3 by 2050Figure 1 Overview of key countries’ GHG reduction targets4Energy Transition Trends 2018In addition, in the past years many countries have initiated a transition of their energy systems towards a more sustainable energy supply based on renewable energies RE. The transition of the Chinese energy system should therefore be seen in the context of similar developments around the world. The paths all these countries have undertaken so far vary and depend on a number of variables, e.g. on their time and point of start, their geographical location or their political and societal setting. The following case studies shall illustrate this variety.The European Union as the world’s biggest market is a leading global player and a strong advocate for the fight against climate change. Denmark is widely considered a pioneer when it comes to RE, particularly wind energy, and the transition of its electricity and heating system. Germany, as Europe’s biggest economy and most populous country, is a particularly good example of a highly industrialised nation that aims at decarbonising its economy. Last but not least, the United States of America USA, being a vast territorial state with a complex political system, sets another example for the wide variety of the aforementioned variables.What they all have in common is the experience to be acting in a highly dynamic and internationally intertwined context while transing their energy systems from a rather centralised approach with continuous energy generation based on fossil fuels to a more decentralised system with fluctuating energy generation from thousands of energy production facilities wind, solar, biomass etc.. This requires that politics and regulation are governed by a clear long-term vision, with elaborated and regularly revised mid-term targets and continuous concrete adjustment steps on a short-term basis.5Energy Transition Trends 20181. ChinaEconomic Development Link with Ecological CivilizationChina continues to increase policy attention to environmental improvement and clean energy. During the 19thPartys Congress in October 2017, China announced a Two-Centenary-Goals, to finish building a moderately prosperous society in all aspects by 2035, and establish a Socialism Modernization Country which is prosperous, democratic, civilized and harmonious by 2050. The 13th Five-Year Plan for Economic and Social Development also emphasized a continued commitment to “the Four-Pronged-Comprehensive Strategy” and to promote balanced economic, political, cultural, social and ecological progress. In China, economic growth and energy development have been closely linked. Going forward, the country is shifting towards sustainable economic development patterns that include the concepts of energy system transation and building an ecological civilization. China’s overall energy strategy includes several elements. For industrial policy, the Made in China 2025 plan emphasizes green technology such as renewable energy, electric vehicles, and advanced power system equipment. In the near-term, China National Energy Administration NEA recently issued Work Guidance of Energy Sector 2018, also emphasizing shifting towards low-carbon, clean energy and clean heating supply while restricting coal consumption. In addition, the National People’s Congress just approved the Governmental Institutional Re Plan this March, according to which 2 newly established Ministries-Ministry of Natural Resources MNR and Ministry of Ecological Environment MEE-would also strengthen central government policies in these areas.Development of Solar PV is SurgingIn recent years China has begun to diversify its energy mix and turn to renewable energy. From 2005 to 2016, the share of renewable energy generation increased from 16 to 26. The transition to a cleaner energy system is driven by the need to improve air quality, combat climate change, and eventually reduce the dependency on fossil fuels. In recent years, the yearly added wind power installed capacity has declined while solar PV are surging. In 2017, on-grid wind additions amounted to 15.03 GW, down from a “Four-Pronged Comprehensive Strategy” refers to making comprehensive moves to finish building a moderately prosperous society in all aspects, deepen re, advance the law-based governance of China, and strengthen Party self-governance.6Energy Transition Trends 2018Figure 2 Key Perance Indicators for the Energy System Transition in ChinaRE Share in the Power Sector TargetsGDPTotal Energy Consumption PM2.5 Gross Electricity ConsumptionGHG Emissions without LULUCFEnergy Import Dependency2000100100090080070060050040030020010002000 2002 2004 2006 2008 2010 2012 2014 2016 2020 2030 205003060RE.Share in Figure 3 2050 China Total Primary Energy Supply Projectionunder Below 2C Scenario of China Renewable Energy Outlook 2017Mtce/year2016201820202024202620282030203220342036203820402042204420462048205020226,0005,0004,0003,0002,0001,0000CoalSolarCrude oilBio Solid, Liquid, GaseousNatural Gas NuclearGeothermalHydro WindOtherhigh of over 30 GW two years ago, whereas solar PV surged by over 53 GW which make acumulated capacity exceeds 24 of its 2020 minimum target of 105 GW. Based on the results of the Below 2C scenario in the China Renewable Energy Outlook 2017 CREO2017, the annual flagship publication of China National Renewable Energy Centre, the share of wind in total primary energy supply is expected to rise from 0.7 in 2016 to 4 by 2020, 12.5 by 2035 and 21.8 in 2050. Solar PV is expected to rise from 0.3 in 2016 to 1 in 2020, 6.5 in 2035 and 13.4 in 2050.Figure 2 Data SourceGDP, Energy, Electricity National Bureau of Statistics NBS; GHG Emission Climate Watch data; PM2.5 young-0; Energy Import China Statistical Yearbook 2004-2017, China Energy Statistical Yearbook 2017; Electricity 13th- Five-Year Development Plan for Electricity;RE Share in the Power Sector China Electricity Council CEC, NBS, National Energy Administration NEA and China National Renewable Energy Centre CNREC. 2020 Target for GDP based on annual growth rate 6.5; 2020 2020 target for electricity 13th- Five-Year Development Plan for Electricity; 2030 Target Outlook for the Development of Power Industry 2015-2030 by Jingru Wu.Figure 3 Data Source“China Renewable Energy Outlook 2017,” China National Renewable Energy Centre.7Energy Transition Trends 2018Table 1 Wind and Solar Power in Total Primary Energy Supply in 2025, 2030 ad 20502020 2035 2050TWh Mtce TWh Mtce TWh Mtce Wind 1451 178 4.0 4679 575 12.5 6963 855 21.8Solar 347 43 1.0 2428 298 6.5 4270 524 13.4Figure 4 2017 Newly Added Power Capacity GWBiomassHydroWindSolarFossilTotal Nuclear2.2132.71501209060300134435315Figure 5 2017 Newly Added Solar and Wind Capacity and Increase in Electricity Production04080Incremental Capacity GW Incremental Power Generation TWh51645315Solar Power Wind PowerTable 1“China Renewable Energy Outlook 2017,” China National Renewable Energy Centre.Figure 4Figures of total, thermal, nuclear and hydro power are based on China Electricity Council’s statistic data. Figures of wind, solar and biomass are based on China National Renewable Energy Centre’s statistic data. Figure 5China National Renewable Energy Centre8Energy Transition Trends 2018Figure 6 Timeline of Policies2005.02.28China RenewableEnergy Law2001.03.1510th FYP forEnvironmental Protection2011.10.29Pilot Carbon Market2002.02.10Power SystemRe First Round2015.03.15Power System ReSecond Round2017.07.01Green Certificate2017.12.18National Carbon Market2016.02.09RE Taget GuaidaceTransing from Subsidy Based to Marketised AlternativesChina is committed to deploying market mechanisms to accomplish its green and low-carbon energy transition. Whereas China from 2009 has relied on a feed-in tariff to boost wind and solar power, the country may shift towards a renewable energy quota mechanism as well as voluntary green certificates launched in 2017. By 2020, the national non-hydro renewable energy power consumption should reach 9 in total and all electricity generation companies are to produce 9 of energy from non-hydro renewables. In March 2018, the government started to collect opinions on a mandatory renewable power quota mechanism. The main responsible bodies proposed to include power grid enterprises, power distribution and electricity marketing enterprises, and Policy Framework for Emission Reduction and Power System Re EstablishedEmission reduction and institutional re are two of the focal points in energy sector development in the last two decades. Since the 10thFive-Year Plan for Environmental Protection in 2001, China established strict targets on environmental protection and set out practical measures to combat pollution. During the 12thFive-Year-Plan period 2011-2015, China established a 2020 greenhouse gas GHG emission intensity target, and proposed to reduce emissions intensity by a combination of market and administrative tools. China National Development and Re Commission NDRC announced to launch carbon market pilots in 2011.In institutional re, in 2015 China began a major effort to re the power sector, which will eventually include bilateral power trading, spot power markets, and ancillary services markets. Since the overall re began, six supporting polices have been issued covering transmission and distribution T transmitting power through reliable, physical infrastructure; and managing load, all in a secure and affordable way. The mass deployment of sensors and advanced metering provides significant new opportunities with big data not previously available. This digitization of the energy sector could create pathways for enhancements from artificial intelligence and machine learning that improve central power system management reducing losses for utilities and costs for consumers. Conversely, these advances may also have a significant impact on distributed energy systems for those customers who choose to take more control over their own energy production and consumption. Regulators and utilities have an important role to play in maintaining the technical and economic viability of the grid while enabling consumer