The 'Roadmap 2050' report, published on 13 April, lays down pathways for decarbonising the EU's power sector in order to cut greenhouse gases by at least 80% by 2050.
It assessed the implications of scenarios where 40%, 60% and 80% of Europe's energy comes from renewable sources, complemented with nuclear and conventional power plants equipped with carbon capture and storage (CCS) facilities.
The study concluded that regardless of the renewables scenario, the future cost of electricity would not be more expensive in 2050 than under fossil fuel-based generation. Moreover, decarbonisation would be possible with technologies that are already available and domestic sources of renewable energy, including wind, solar, biomass and geothermal, it added.
The roadmap is the most comprehensive analysis to date on the cost of shifting to low-carbon power generation. It is based on economic, policy and technical analyses by leading consultancies and bodies, including McKinsey and Imperial College London, and has been prepared in consultation with major industrial players and NGOs.
The ECF also assessed the technical and economic feasibility of a 100% renewables scenario, factoring in additional help from solar power in North Africa and enhanced geothermal power as a breakthrough technology. While the reliability of supply was judged to be the same as under scenarios involving more modest shares of renewables, the cost of electricity is less certain, although it "does not appear to be dramatically more expensive," the report concluded.
Return on investments
The shift will require massive investment in the next 40 years to build low-carbon generation, transmission and back-up capacities. Crucially, this would require building a European supergrid in order to balance demand and supply across different parts of the continent, the study points out.
Around 52 billion euros, or 2.5% of total EU spending, would have to be redirected to pay for the 80% renewables scenario, according to the study.
Electricity prices would be about 10-15% higher under the low-carbon scenarios than they would be under a carbon-intensive power infrastructure, but the difference would be compensated for by carbon prices of €20-€30 per tonne, the study shows, arguing that the total impact on GDP would be negligible.
In the long term, the cost to the economy of a low-carbon shift would actually be lower, as shifting away from oil and gas as well as increased energy efficiency would reduce the cost of energy per unit of gross domestic product, reducing Europe's energy bill, the paper forecasts.
"The energy intensity of the economy will start to fall quite early, probably around 2020," said Tom Brookes, head of the Energy Strategy Centre at the European Climate Foundation.
However, action will need to begin within the next five years as much of the infrastructure investment will have to be made in the early years, the foundation said.
"Whichever direction you want to go, you probably need to start now," said Brookes. "Delays only make things much more expensive."
Contributing to EU strategy
The report comes as the European Commission is preparing its own paper on pathways to a low-carbon economy by 2050.
EU Energy Commissioner Günther Oettinger, speaking at the launch of the new report, said the European Commission would launch a broad consultation in June in the hope of presenting the strategy in early 2011. He added that this would coincide with the new Energy Action Plan.
The Commission is also set to present a comprehensive package addressing energy infrastructure in November, with a view to improving interconnections and promoting smart grids to improve efficiency and help connect renewables to the grid.
The European Climate Foundation urged the EU to review its budget allocation to allow for more investment in renewables, CCS, energy efficiency and network infrastructure.