Scenario Analysis Vincent Reulet Head of Advisory Services AGENDA - - PowerPoint PPT Presentation

Vincent Reulet – Head of Advisory Services

Carbonsink Climate-related Risks & Scenario Analysis

Carbonsink Carbonsink’s Methodology Case Study – Decarbonisation Scenarios Applied To Utilities Applications of carbonvista 1 2 3 4

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AGENDA

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Conclusion & Take-aways Q&A 5

Expertise

Carbonsink is a highly specialized consultancy company focused on the development of sustainability strategies and compensation of CO2 emissions.

Carbon Management Sustainability Solutions Carbon Finance Climate Mitigation

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About Us

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Our Services

Finance

the transition to a zero-carbon resilient economy investing in climate mitigation projects Reduce climate impacts in line with

science

Advocate for strong

policy

frameworks

Measure + disclose

climate impacts and risks

Tools:

CDP guidelines Science Based Target Carbon pricing Carbon finance

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Overall Carbonsink’s Approach

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Carbonsink’s Methodology

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Aligned with internationally recognised standards Integration within the business Data review & theoretical scenarios modelling Integration of financial KPIs – Realistic scenarios modelling 1 2 3 4

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Carbonsink’s Methodology

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Results 5

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IPCC Scenarios

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QUALITATIVE QUANTITATIVE CLIMATE GENERA L

storyline

Quantative scenarios narrative scenarios

SRES & POST – SRES SCENARIOS Section 2.5 GENERAL MITIGATION SCENARIOS Section 2.3 GENERAL FUTURES SCENARIOS Section 2.4

EPA: rapid changing & slow changing the world Beyond the limits: CO2 emissions scenarios Polestar: quantitative descriptions TARGETS: climate scenarios for each Utopia

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Analogy With TCFD Recommendations

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SBT Approach Towards Net-Zero

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Science Based Target – Below 2 Degrees Scenario

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global temperature increase

1.5˚C

Reducing to CO2 emissions

2050

By

Source: IPCC 1.5˚C report: Net zero emission 2050

How to limit to

Technology Operations

– Assessment of actual performances (vs. legislation & peers) – Feasibility of upcoming technologies

R&D

– Assessment & integration of new materials and/or technologies

Quality, Health & Safety

– Assessment & integration of new materials and/or technologies

Finance Finance

– Review of past and planned CAPEX – Incentive to drive toward a low- carbon economy

Legal & Compliance

– EU ETS – Fees associated to failure to comply

Sales & Marketing

– Brand image – Competitive advantage

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Relisation with Business Strategy

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INTEGRATION OF VARIOUS SYSTEM

Data Review & Scenario Modelling

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Case Study – Scenarios To Drive Decarbonisation Applied To Utilities

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• IEA 450
• 31% renewable in energy mix by 2030
• IEA 2DS (2030)
• 42% renewable in energy mix by 2030
• 57% renewable in energy mix by 2050
• 72% renewable in energy mix by 2060
• IRENA 2050
• 66% renewable in energy mix
• 85% CO2 emissions annually for Power sector vs.

2015

International Climate-Related Scenarios Related to Energy Sector

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• EU 2030
• 43% CO2 emissions vs. 2005 for sectors within EU-

ETS

• 32% renewable in energy mix
• SEN 2030
• 28% renewable share in the energy mix
• Coal phase out by 2025

European & National Decarbonization Scenarios

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EU Energy Mix Forecast

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SOURCE: A Clean Planet for all A European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy (28/11/2018)

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Net Zero by 2050

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Principal Assumptions

• Constant to slight

increased demand for electricity: 340TWh in 2030 - Terna

• Increases in electricity

prices (due to cost of gas and ETS)

• Role of CCGT still strategic

to respond to demand

• Installed capacity of

Renewable Energy

Business Plan

• 2021: Oil phase out
• 2025: Coal phase out
• Refurbishment of some old

CCGT

• Increase of Renewable (low)
• No consideration toward

price of Storage

• Low Carbon Pricing bracket

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Assumptions made for Business As Usual Scenario

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EU Energy Mix Forecast

BUSINESS AS USUAL CONSIDERATION CLIMATE CHANGE RELATED RISKS VARIOUS SCENARIOS

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Transition Risks

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POLICY & LEGAL TECHNOLOGY MARKET REPUTATION

Technology Risks

Decreasing cost of RES generation technology

• Energy storage - 49%

since 2015

• Photovoltaic and
• nshore wind -88%

and -69% since 2009

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Cost Of Storage

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Market Risks

Implementation Market Stability Reserve in the EU’s ETS in 2021 CO2 price to increase 8€ in 2008 vs. 28€ in 2019 RES to become cost- competitive vs CCGT

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Carbon Taxes

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2008 2018

Source: WORLD BANK, 2018

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EU ETS prices grapgh

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SOURCE: Carbon Tracker; Bloomberg

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Carbon Pricing Corridor for utility sector

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Marginal Cost

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Disregarded Carbon Capture & Storage: → Technology not cost effective Revamp of CCGT plants → Already highly efficient (best in class in EU), cost of €/tCO2 saved too high Fuel switch (coal to gas) → High CAPEX and push-back from investors Simulated Overall demand in Italy and Electrification → Source taken from IEA and Terna Increase of Renewable → XX% per year up to 2050 → Integration of storage cost Upgrade of strategic sites to class H → To improve CCGT efficiency

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Scenarios Taken In Consideration

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Application Of The Tool

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carbonvista Concept

www.carbonsink.it SCENARIO EU 2030 Energy Strategy SEN 2030 IRENA 2050 IEA EU ETS SBTi BUSINESS PLAN CORPORATE STRATEGY MATERIALITY ASSESSMENT KPIs REGULATIONS GUIDELINES

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Live Dashboard To Track Selected KPIs In Time

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Live Dashboard To Compare Scenarios

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S C E N A R I O “ A S I S ” S C E N A R I O “ C O N N U O V O C C G T ”

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Dashboard Benchmarking With International Scenarios & Legislations

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Conclusion

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• Understanding of their climate situation

regarding Climate Change exposure

• Developed an approach shared with all

departments

• Define the more realistic scenarios taking in

account financial, technological and policies constraints; not the “Perfect” one

• Learned to use the tool as an instrument in
• rder to embark the other departments

Results

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• A concrete tailor made approach
• Work with clients to define objects in order

to customize the tool (on going approach)

• Create a flexible approach that give the
• pportunity to play with numbers
• Be consistent with the corporate climate

strategy, constant update and changes in trends and methodologies

Conclusion

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• Consolidated with robust and trusted data
• Scalable
• Customisable
• Flexible
• Easy to understand and use
• Applicable to any industry sectors
• A tool that will seize the tangible aspects of

your corporate complexity

Take-aways

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www.carbonsink.it info@carbonsink.it

Thank You.