New pathways towards a carbon-neutral Nordic energy system

The International Energy Agency (IEA) and Nordic Energy Research launched Nordic Energy Technology Perspectives 2016 in Stockholm on the 23rd of May followed by national launches in all other Nordic countries. A product of extensive research collaboration between IEA analysts and researchers from the five Nordic countries, the report presents a technological and economic pathway towards a carbon-neutral energy system in 2050. Electricity generation in the region is already 87% carbon-free, but transport and heavy industry represent greater challenges.

By Páll Tómas Finnsson

Detailed analysis based on a carbon-neutral scenario towards 2050
Each year, the IEA publishes Energy Technology Perspectives, which is a long-term analysis of global energy system trends and of technological developments that support the transition towards affordable, secure and low-carbon energy. Based on the Nordic countries’ progress in decarbonising their energy systems, the IEA and Nordic Energy Research entered into collaboration aimed at elaborating on the regional aspects of future energy systems. This collaboration resulted in the initial Nordic Energy Technology Perspectives (NETP), published in 2013.

“The Nordic countries have shown great political leadership in terms of integrating their different energy markets and demonstrating that the transition to low-carbon energy can take place,” says Jean François Gagné, head of the IEA’s Energy Technology Policy Division. “Many lessons can be learned from the Nordic experience.”

NETP 2016 combines the international energy scenarios developed by the IEA with comprehensive national Nordic energy data. It aims to envision the technology and policy development necessary for a cost-efficient transition to a near-carbon-neutral energy system. The five Nordic countries are committed to diverse, but ambitious national climate targets for 2050. These are represented in the analysis by an aggregate Nordic emissions reduction of 85% by 2050, relative to 1990 levels.

NETP 2016 is unique in that it provides detailed analysis of the Nordic energy systems, making it relevant for Nordic policy-makers, and it can be directly compared with the IEA’s global scenarios that shape the debate on energy issues,” says Benjamin Donald Smith, senior advisor at Nordic Energy Research and coordinator of the project.

“Our analysis includes all energy-related activities in the Nordic economies,” says Markus Wråke, head of the Energy unit at IVL – Swedish Environmental Research Institute and analytical project manager for NETP 2016. “We’ve studied energy supply, i.e. heat and power, and the use of energy in the buildings sector, industry and transport. These sectors account for two-thirds of all greenhouse-gas emissions in the region.”

Significant potential for exporting clean energy to Europe
The carbon intensity of Nordic electricity production is very low, at 59 grams of CO2 per kWh in 2013. This is the level the world needs to reach by 2045 in order to keep the global temperature rise below 2°C. According to NETP 2016, the Nordic power system is already 87% carbon-free, and could be fully decarbonised by 2045.

The Nordic carbon-neutral scenario (CNS) envisions, among other changes, a decline in nuclear power (from 22% of Nordic electricity in 2013 to 6% in 2050) and a significant build-out of wind power (from 7% in 2013 to 30% in 2050). One of the driving forces behind these changes will be increased demand for clean energy from the rest of Europe. In the CNS, the Nordic countries could export 53TWh per year and balance European variable renewables, provided that they reduce their own power demand via increased energy efficiency and further strengthen their grid connections.

“We believe that there’s great potential benefit for the Nordic countries to strengthen their position as leaders in clean energy by closer integration both within the region and with the European markets. This would enable the Nordics to be net exporters of clean energy to the EU,” says Gagné.

“This requires that we start incentivising and planning for a more broadly distributed production of heat and power,” Wråke adds. “If we want to replace nuclear and coal power with wind, we need an even more flexible and interconnected system than we have at present. Otherwise, it won’t work.”

Electrification of transport and biofuels for long-distance transport
The biggest source of greenhouse-gas emissions in the Nordic countries is transport, accounting for around 40%. Achieving the CNS would therefore require a drastic cut in emissions in this sector, from 80 million tons of CO2 p.a. to approximately 10 million tons by 2050. Hans Jørgen Koch, Director of Nordic Energy Research, explains that there are two main pathways to decarbonisation of the region’s transport.

“Firstly, there’s the electrification of private cars and lighter freight transport, in particular in the cities. Secondly, we need biofuels for long-distance transport at sea, on land and in the air. The carbon-neutral scenario requires that biofuels comprise nearly two-thirds of total final energy use in transport in 2050.”

Previous research supported by Nordic Energy Research has shown that if the entire Nordic private car fleet was electric, its energy demand could be met by only 7% of the power supply. Ongoing research also indicates that the production of biomass from Nordic forestry could be doubled without imposing major costs.

“The greatest emissions reductions are required in the transport sector, but almost all the pieces of the puzzle are already there,” says Smith. “We have good transport policies, and new technologies in sustainable transport are emerging at a rapid pace. Right now, there is much that can be done to speed up the transition, as Norway has demonstrated with electric vehicles.”

Industry needs new technologies
The region’s second-largest source of emissions is industry, at 28%. NETP 2016 highlights the need for innovation in technology and policy to meet the necessary 60% reduction in direct industrial CO2 intensity.

“Industry is the most worrisome sector, in the sense that we don’t see a clear technological pathway,” says Wråke. This is due to so-called process-related emissions, i.e. in sectors where the production processes themselves release CO2 and other greenhouse-gases. Process-related emissions from iron and steel, cement, aluminium and chemical industries contribute 19% of the Nordic region’s industrial CO2 – which is almost 50% higher than the OECD average.

“We need new technologies for carbon capture and storage in industry,” says Koch. “NETP 2016 identifies innovation in CCS as an important opportunity to address the process-related emissions from these industries, many of which are vital to the Nordic economies.”

Nordic cities to inspire national policy
According to Wråke, one key focus area in NETP 2016 is the role of cities in the transition to low-carbon, highly integrated and efficient energy systems.

“We expect that, between now and 2050, 200,000 people per year will move to Nordic urban areas. This presents an opportunity, because cities offer greater possibilities in terms of energy efficiency and decarbonisation, e.g. in buildings and transport. One overarching conclusion is that national policy should build on the experience of cities in order to realise national priorities and targets.”

Nordic Energy Technology Perspectives 2016 was launched in Stockholm on the 23rd of May 2016, followed by launch events in Oslo (26th of May), in Copenhagen (10th of June), in Reykjavik (13th of June) and Helsinki (16th of June). The report can be downloaded here.


“The Nordic countries have shown great political leadership in terms of integrating their different energy markets and demonstrating that the transition to low-carbon energy can take place”

Jean François Gagné, head of the IEA’s Energy Technology Policy Division

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