4. The energy sector

4. The energy sector

indicator	policy issue	DPSIR	assessment
thermal power plant energy efficiency	has the sector improved the overall efficiency of its main process?	driving force
energy sector emission intensity	has the sector succeeded in de-linking emissions from its economic activity?	pressure
electricity supply by source	has the sector become less dependent on fossil fuels?	driving force
renewables' share of electricity generation	... and increased the share of renewable energy?	driving force
CHP share in electricity generation	... and explored all possibilities for combined heat and power?	driving force

Fossil fuels (coal, oil, gas) are still the predominant energy source for electricity production. Nuclear power is an important source in a number of EEA countries. Despite recent high growth rates in wind and solar power in a few Member States, renewable energy sources contribute little to electricity generation. Hydro power (mostly large hydro plants) remains the main renewable energy source. Use of combined heat and power (CHP), despite significant developments in a small number of Member States, remains low compared to the EU target.

Electricity generation is the energy sector's main activity, with almost half the electricity produced in thermal power plants using fossil fuels. The overriding driver in the sector is EU and national policy to liberalise energy markets and to encourage competition. Increased competition could result in more efficient generating technologies. However, any environmental benefits associated with this development could be offset as increased competition may reduce energy prices. This, in turn, may increase the demand for energy and thus increase emissions. Within these macro developments, and given the current growth in energy consumption, an important internal aim for the sector is to increase the environmental efficiency of its own production.

4.1. Energy sector eco-efficiency

The efficiency of conventional thermal electricity generation showed only a gradual improvement from 36 % in 1985 to 39 % in 1996, mainly due to `business-as-usual' improvement and replacement of installa tions (Figure 4.1). In other words, about 60 % of energy input is `lost' as heat during the process of producing electricity. Not all the heat produced is wasted, as some waste heat is used in local applications. Additionally a few countries have invested in combined heat and power plants for district heating and industrial use (see Figure 4.6). Given the limited size of these applications, the order of magnitude of energy losses in the EU does not change much. Limited efficiency improvements mean that end-of-pipe treatment and process changes (including fuel switching) have produced most of the reduction in the sector's environmental impact. Until now, this approach has proved successful for most traditional air pollutants, but not for carbon dioxide (Figure 4.2). The energy sector has an important role to play in solving climate change and acid rain issues as it is the main source of sulphur dioxide emissions and a significant source of carbon dioxide and nitrogen oxide emissions (Figure 4.3).

Figure 4.1. Thermal power plant energy efficiency in EU Member States

Source: Eurostat
Notes: Thermal power generation is defined as the process of electricity production using combustible fuel sources (coal, natural gas, oil, waste or biomass) or existing heat sources (geothermal energy).

The average efficiency of thermal power plants is increasing steadily, but slowly.

Figure 4.2. Energy sector eco-efficiency, EU Member States

Source: EEA-ETC/AE; NTUA
Notes: Emissions from public electricity and heat production, petroleum refining and the manufacture of solid fuels. This definition of the energy sector corresponds to the 1A1 energy industries category under the IPCC reporting framework. As defined here, the energy sector does not include fugitive emissions. When fugitive emissions from the exploration, production, storage and transport of fuels are taken into the account, methane levels fall both relative to gross value added and in absolute terms.

Although the link between acid gas emissions (sulphur dioxide and nitrogen oxide) and the energy sector's economic and electricity outputs has been broken, greenhouse gas emissions from the sector have at most fallen only slightly.

The decline in sulphur dioxide emissions (Figure 4.2) has been partly due to the Large Combustion Plant Directive, which sets limits on emissions of sulphur dioxide, nitrogen oxides and particulates from power stations and has led to a number of technical improvements. In addition, the shift from coal to gas for electricity production contributed to the reduction in carbon dioxide emissions and also the reduction in acid gas emissions. The shift from coal to gas was due to the increased availability of gas supplies, legislative changes in the EU and in some Member States to allow gas to be used for electricity generation, the reduction of coal subsidies in a number of Member States, and the liberalisation of EU electricity and gas markets. Restructuring of the power sector in the former east Germany also contributed to reductions in carbon dioxide and acid gas emissions.

The Integrated Pollution Prevention and Control (IPPC) Directive requires plants to use Best Available Techniques (BAT) to tackle pollution, and thus may help to further reduce emissions from the sector. However, the Directive has just come into force for new plants, and will take effect for existing plants only in 2007.

Figure 4.3. Energy sector's share of total emissions in EU Member States, 1996

Source: EEA-ETC/AE
Notes: Emissions from public electricity and heat production, petroleum refining and the manufacture of solid fuels. This definition of the energy sector corresponds to the 1A1 energy industries category under the IPCC reporting framework. As defined here, the energy sector does not include fugitive emissions. Fugitive emissions include here emissions from the exploration, production, storage and transport of fuels.

The energy sector also produces significant amounts of waste, and past activities have resulted in soil contamination. The sector is a major user of natural resources: the fossil fuels themselves, water for cooling (see Figure 12.3), hydro power, land and raw materials. Nuclear power plants have the risk of nuclear accidents and subsequent radioactive releases, and also generate radioactive waste. Water pollution and wastewater discharges are other issues for the sector.

Figure 4.4. Electricity supply in EEA member countries

Source: DG Energy
Notes: Fossil fuels are the main fuels for thermal production of electricity. Less than 5 % of thermal electricity is produced from biomass and geothermal sources.

Fossil fuels remain the predominant source of fuel for thermal power. Nuclear power, with its particular environmental impacts and risks, has become an increasingly important source of electricity in a number of EEA member countries.

4.2. Trends in the electricity sector

In 1996, 48 % of the electricity in EEA member countries was generated by thermal power (mainly using fossil fuels), 34 % by nuclear power and the remainder by hydro and wind power (mostly hydro) (Figure 4.4). The figures for the EU are 52 % and 35 % respectively.

Austria, Portugal and Sweden have the highest contribution of renewables in their electricity generation (Figure 4.5), while Sweden, France and Italy contribute the greatest share to total EU generation of electricity from renewable energy sources. Hydro power is by far the largest renewable energy source for electricity generation in the EU. Most hydro power is produced in large plants, which can have considerable impacts on ecosystems.

Significant progress in the production of electricity from wind and solar sources has been made, such as wind power in Denmark and Germany. However, the actual contribution of `green' electricity remains far short of its potential and more could be done in the renewables electricity sector to help reach the EU target of 12 % of gross inland energy consumption produced by renewable energies by 2010.

Figure 4.5. Renewables' share of electricity generation in EU Member States, 1996

Source: DG Energy

Renewable energy sources generate significant quantities of electricity in only a few EU Member States. Wind power, despite recent high growth rates, contributes only marginally in a few Member States. Solar power contributes even less.

CHP generated only 10 % of the electricity in EU Member States in 1996. Targets for increasing combined heat and power (CHP) generation have been set by the EU and some Member States; the EU target for 2010 is an 18 % share for CHP in EU electricity production. Several Member States use CHP extensively — notably Denmark, Finland and the Netherlands, and to a lesser extent Austria (Figure 4.6).

Figure 4.6. CHP's share of electricity generation in EU Member States, 1996

Source: Eurostat

The use of combined heat and power (CHP) is significant in a few EU Member States, but for the EU as a whole it is still low compared with the EU target.

4.3. Indicator development

This chapter focuses mainly on power generation. Analysis of refineries, an important part of the sector, would provide a more complete overview of the energy sector. While data availability is generally good, the response indicators for combined heat and power, renewable energies, use of price mechanisms and energy efficiency, and analysis of their effectiveness in reducing environmental impacts need further attention.

For the future, indicators on the sector's generation of waste, use of natural resources, water pollution and wastewater discharges also need to be considered.

4.4. References and further reading

European Commission, DG Energy (1998). Energy in Europe, 1998 annual energy review, special issue. European Commission, Brussels.

European Commission (1997). A Community strategy to promote combined heat and power (CHP) and to dismantle barriers to its development. COM (97)514 final. European Commission, Brussels.

IEA/OECD (1999). International Energy Agency/OECD balances 1996-97. International Energy Agency/OECD, Paris.