Publishable Executive Summary
Objectives of the NEEDS Integrated Project
The NEEDS IP addresses Priority 6.1 of the 6th RTD Framework Programme of the EU: Sustainable Energy Systems and, more specifically, Sub-priority 6.1.3.2.5:Socio-economic tools and concepts for energy strategy.
The ultimate objective of NEEDS is to evaluate the full costs and benefits (i.e. direct + external) of energy policies and of future energy systems, both at the level of individual countries and for the enlarged EU as a whole.
From the scientific and technological viewpoint, this entails major advancements in the current state of knowledge in the following main areas of:
- Life Cycle Assessment (LCA) of energy technologies
- Monetary valuation of externalities associated to energy production, transport, conversion and use
- Integration of LCA and externalities information into policy formulation and scenario building
An additional, important goal is to increase awareness, acceptability and actual use of externality data in policy formulation, calling for dedicated efforts in assessing stakeholders perceptions, facilitating the access to usable externality data, disseminating and communicating results to all involved stakeholders.
The NEEDS consortium
The consortium includes 65 partners (of which some 15% are SMEs), representing 26 Countries (12 EU Member States, 9 NAS, 3 Mediterranean Countries, and 2 Countries from other parts of the World). It presents a balanced mix of Universities, Research Institutions (both public and private), Industry, NGOs. Most leading institutions in the area of energy externalities research are represented.
NEEDS is coordinated by the Italian research and consultancy firm ISIS (Istituto di Studi per l’Integrazione dei Sistemi - Rome, Italy – Mr Andrea Ricci is the IP coordinator ().
The IP is built as a series of “streams”, each addressing a specific area of research. Innovation and S&T advancements lie both within each stream and in their overall integration. According to their specific objectives and area of research, the streams can be grouped in three main “blocks”.
The first block corresponds to new developments, updating, enhancement of the current state of the art in the field of energy externalities and includes the following research streams (RS):
1aLCA of new energy technologies
1bNew and improved methods to estimate the external costs of energy conversion
1cExternalities associated to the extraction and transport of energy
1dExtension of the geographical coverage of the current knowledge of energy externalities
The second block addresses long term strategies and includes the two following streams:
2aModelling internalisation strategies, including scenario building
2bEnergy Technology Roadmap and Stakeholder Perspectives
The third block focuses on providing input to policy making, dissemination and other communication issues, and includes the following two streams:
3aTransferability and generalisation
3bDissemination/communication
As for the Integration Stream, it ensures that all interlinkages between research activities are fully recognised, their design continuously validated and enhanced, and their implementation appropriately carried out.
The IP management is ensured through a multi layered organisational structure, featuring (i) the IP Coordinator, (ii) the Project Management Committee (regrouping all Stream leaders), and (iii) 9 Stream Management Committees (regrouping all contractors involved in each stream)
Work performed during the first year and results achieved
As per the original work programme, 7 of the 9 Streams have been active during the entire second period, while Streams 1d (Extension of the geographical coverage of the current knowledge of energy externalities) and 3a (Transferability and generalisation) started their work on months 19 (March 2006).
A summary of the work performed in the first period by the 9 active Streams is provided below.
Stream 1a: LCA
Specification of interfaces to the assessment of externalities and energy modelling: The LCA methodology has been further refined where necessary. This specification is provided with the first deliverable (D.1.1).
Technology foresight in LCA: a scheme for reporting key drivers on technology development, leading to the specification of long term future technology configurations for each technology cluster has been adopted
Experience curves: the experience curves for the reference technologies have been finalised
Space and time dependencies in LCI: development of a preliminary methodological concept for the parameterisation (identification of key parameters for each system; representation and modelling; quantification of the parameterisation; operationalisation in LCA and LCIA/external costs modelling)
LCI/cost database: The LCA database system was established. The LCI data interfaces was implemented and refinements included that facilitate the work. Test runs with datasets from RS1a partners were successfully carried out.
Assessment of individual energy technologies the assessment has notably advanced (Submitted Technical Papers from T7.1 T7.2 to T14.1 T14.2, two papers per each WO )
Stream 1b: External costs of energy conversion
Atmospheric modelling: input have been provided and SR-matrices for the regional modelling have been calculated
Water and soil modelling: the basic methodology for estimating concentration degradation in animal tissue has been improved and, in some cases, modelled and tested.
Exposure response relations: Transferability of study results, and especially from the US cohort studies to case studies in Europe, has been found as justified. A case study on the externalities of the use of indoor combustion sources, raised particular interest from stakeholders.
Assessment of biodiversity: A methodology for the estimation of external costs of biodiversity losses due to land use changes and emissions of air-borne pollutants has been developed. (Submitted Deliverable D4.2)
Assessment of climate change: The FUND model and the European Agricultural Sector Model were further developed.
Morbidity and mortality valuation: A questionnaire on the valuation of mortality and morbidity risks due to pollution was developed
Improvement of Methodology and Tools for the Impact Pathway Assessment: The implementation of the new tools for external costs assessment has been started. Moreover, in this WP consistency between the developments within the different workpackages and outside this stream was analysed and discussed
Linking external cost estimation with economic/energy/environmental modelling and life cycle analysis: the methodology of interfaces between external cost estimation and life cycle assessment as well as economic/energy/environmental modelling has been further developed in collaboration with WP4 of RS Integration
Stream 1c: Externalities associated to the extraction and transport of energy
Oil and gas: a comprehensive supply flow scenario (for 2004, 2010, 2020, and 2030), on which the externality assessment will be based on, has been carried out..
Electricity: the work is in advanced stage. The backbone of the accounting framework to be developed has been The main technical reports (T3.1,3,2 and 3.3) are completed.
Hydrogen: the work is well advanced. A detailed analysis of possible burdens generated during the transportation phase of the selected energy vectors (hydrogen, biofuels ethanol and biomass) has been carried out. The main technical reports (T4.3 and T4.5) are completed.
Stream 1d –Extension of geographical coverage
The RS started the 1st of March 2006. Data requirement templates have been developed and the national data availability investigation for reference energy technologies is started. External costs for Polish, Slovakian and Czech reference technologies were recalculated by revised EcoSense version 4.0
Stream 2a Modelling internalisation strategies, including scenario building
Model Design and Interfaces: the essential tools for acquiring the basic data and for constructing the 28 country models have been all developed or adapted in a first working version.
Country specific models implementation: A list of reference technologies was established and approved by the entire stream, as well as the characterisation of technologies. A draft of a first scenario hypotheses was presented and discussed at the 2a meetings (and during the RS 3b Policy Workshop). A number of possible scenario variant cases had been also outlined
Pan-European Model Implementation: test runs and calibration of country models are in progress and a first document describing the structure of the Pan-European trade variables and trade structure for RPPs has been circulated.
Full Cost Interactive Analyses: this WP is at its beginning. The integration of Pan-European model with ExternE/LCA and the implementation of scenarios policies will be conducted during the next working period
Training, documentation and reporting: training activities have been conducted throughout the entire 12-month period to install, experiment and update the software. A comprehensive documentation on the Templates and interfaces has been released.
Stream 2b Energy Technology Roadmap and Stakeholder Perspectives
Examination of the candidate set of social criteria and indicators.: the initial set of criteria and indicators was re-examined and recommendations for further use of social criteria and indicators were formulated.
Establishment of a preliminary full set of criteria and indicators. A preliminary full set of criteria and indicators, covering economy, environment and social aspects was proposed. Practical constraints were taken into account, including prospects for successful quantification in view of expected inputs from other streams.
Initiation of indicator quantification tasks. Most quantification tasks are in the initial phase but some are more advanced. For economic indicators the focus has been on the examination of proposed indicators and establishment of contacts with relevant WPs in streams 1a and 2a. For environmental indicators the feasibility of country-specific adjustments of generic LCA-indicators to be generated within RS1a was addressed and elaborated; such adjustments are considered to be feasible. Extensive Internet and literature searches were made for social indicators demonstrating the very limited availability of relevant data. Thus, most of the social indicators will have to be measured by conducting expert interviews.
Definition of requirements and selection of suitable method(s) and tool(s) for multi-criteria decision analysis (MCDA). An extensive review of candidate methods for MCDA was carried out taking into account the requirements. The methodology has already been specified but some further research is necessary. Due to uncertainties involved in such a development process the possibility of using an existing method in parallel or as an alternative is kept open.
Case-study based exploration of the acceptability of monetary valuation methods and their potential role in the energy policy making process. The WP has been successfully carried out. Several interviews were made with US and UK industry representatives. The report shows quite a large variation between the considered countries in the uses of externality valuation in the policy. The existence of official requirements to consider full costs and benefits of proposed regulations and/or official guidelines appears to be crucial to explain this pattern.
Preparation of Survey 1 on externalities and stakeholder database development. A draft of a survey questionnaire on the externality concept, results and uses has been prepared and intensely discussed. A stakeholder database has been established. Further extensions are desirable, in particular for France, Germany and Italy, in order to enable elicitation of inputs relevant for MCDA. The corresponding, adequate stakeholder database has been established for Switzerland.
Stream 3a Transferability and generalisation
The RS started the 1st of March 2006. There have not been any technical reports or deliverables for RS3a for this period, and the main work load will be during the two last working periods. Two WP started working during the past 6 months:
Generalisation model: development of basic methodology for Model Preparation, Methodology and Calculations for Toxic substances in Air, Water and Soil / Effect modelling
Value Transfer Technique: development of valid transfer units and procedures
Stream 3b Dissemination/communication
Organisation of the first policy workshop (Brussels – Early spring 2006) on Models scenarios and related policy issues
Upgrading of the NEEDS website and publication of the 1st NEEDS newsletter.
Further development of the internal communication website with the adding of an online cost statement procedure
Integration Stream
Integrated interface management: design, development and continuous updating of detailed Input/Output tables representing the flow of information between research streams (Submitted Technical Papers T2.3-T2.4).
Submission of the 1st integrated report highlighting the main integration issues faced in NEEDS, the tasks carried out to address them and the achievements so far.
Preparation of the full set of reporting documents associated to the first annual review (including the DoW for the third 18-month period submitted with this Activity Report).
Expected end results
Quantification of energy externalities
More and better data on energy externalities
Methodological developments
Better methods and tools for the valuation of mortality and morbidity, the estimation of uncertainties, accounting for the precautionary principle, the dynamic valuation of externalities, etc. Enhancement and improvement of existing methods. in the valuation of health effects from air pollution, the transport and chemical conversion of pollutants, the updating and improvement of Exposure/Response functions, etc.
Coverage of new energy technologies
New and emerging energy technologies, notably: fuel cells and other hydrogen-based technologies, advanced fossil fuels, advanced nuclear, etc., and, in general, renewable energy technologies for which the current knowledge is insufficient (e.g. offshore wind, photovoltaics, bioelectricity, etc.)
Coverage of new categories of socio-environmental costs
New cost categories and impact pathways (e.g. loss of biodiversity, water and soil pathways, indoor combustion sources, etc.), establishment of the most appropriate valuation methods and calculation of the corresponding monetary values. Calculation of the external costs associated to the transport of energy, with particular regard to oil spills.
Inputs to long term strategies for internalisation
Long term scenarios incorporating internalisation strategies for Europe, and their potential effects on energy demand and supply, environmental performances, and sustainability of the economy at large, feeding directly into policy formulation.
Better forecasting methods
Energy Technology Roadmap, mainly based on stakeholders assessment and on the deployment of a Multi Criteria Decision Analysis, to supplement the analytical (modelling) platform and provide additional insights on how to cope with the uncertainties and differences in perception.
Increased acceptability
Assessment of stakeholders and users acceptability.
Harmonisation at EU level
Common modelling platform, consistently documented and used across EU Member States, NAS and Mediterranean Countries, and systematic assessment of the terms, conditions, methods and tools to ensure transferability of external cost data from one context to another, and the paths to generalisation.
Coverage of New Accession States, Mediterranean area, developing countries
Extension of the knowledge base on energy externalities to countries for which current knowledge is under developed.
Expected impacts and use of results
Reduction of energy external costs
Externalities of energy will be reduced, both as a result of increased awareness, and as a result of the generalised application of the users pay principle (through internalisation policies). In particular, environmental damages, negative impacts on human health, global warming will be reduced.
Security of supply
Through the systematic incorporation of externalities associated to security of energy supply, it will be possible to re-orient supply policies towards those energy carriers that minimise vulnerability of the energy systems.
Enlargement and harmonisation
In the perspective of a single, enlarged European energy market, harmonisation of taxation, and of energy pricing policies in general, is a prerequisite to avoid distortions and to guarantee that a level playing field is achieved in energy trade. NEEDS will make this possible, for what concerns both the valuation inputs to policy formulation and the consistency of energy strategies at large.
Equity
Internalising external costs is the a prerequisite for the systematic application of the users pay principle, which in turn will yield increased social equity.
Market efficiency
Setting the prices right (through appropriate externality accounting and internalisation) will lead to increased efficiency of the energy market. Energy supply policies will also benefit from accurate cost/benefit analyses, leading to optimal allocation of resources.
Awareness and acceptability
As previously mentioned, awareness and acceptability are essential on behalf of both policy makers and users, in order to ensure the success of pricing reforms and other externality-driven energy policies.
RTD priorities orientation
The extensive comparison of the socio-economic performances of alternative energy technology options will lead to a more reliable prioritisation of RTD in the energy area.