* Coal use could fall to a very low level
* Financing role of utilities could change
* Renewables would be cheaper in the longer term
(Adds detail, para 5, comment, para 7)
By Barbara Lewis
BRUSSELS, Oct 17 (Reuters) - The European Union must make a drastic shift from fossil fuels and derive more and more of its power from renewable sources, driving up electricity costs over the next two decades, according to a draft document seen by Reuters on Monday.
The 2050 energy road map to be published by the end of the year complements a 2050 low carbon road map released by the European Commission earlier this year, which seeks to chart a way to reducing carbon emissions by more than 80 percent by the middle of the century.
“Currently, Europe’s power system is based mostly on fossil fuels. This has to change,” the draft energy 2050 road map writes.
“Most scenarios suggest that electricity prices will rise to 2030, but fall thereafter,” it said.
The cost in energy-related expenditure could result in a rise to as much as 15 percent of a household’s income in 2030 and 16 percent in 2050, although this would include capital costs and transport fuel costs.
A spokeswoman said the Commission did not comment on leaked drafts.
Environmental groups argue renewable prices will become much cheaper relative to fossil fuels over time.
The road map lists a series of scenarios to take account of differing levels of energy efficiency, varying levels of renewable energy, a possible delay in implementation of carbon capture and storage technology and whether more or less nuclear energy is used.
Even without extra renewables investment, investment costs would rise, the draft notes. The EU has said elsewhere, infrastructure requires major upgrades. [ID:nL5E7LE0LK]
In addition, alternative energy has the advantage of curbing exposure to volatile fossil fuel prices and vulnerability to imported oil and gas, for instance from dominant natural gas supplier Russia.
Scientists have said carbon emissions need to fall by between 80 and 95 percent by 2050 to contain global warming within the limit of 2 degrees Celsius (3.6 degrees Fahrenheit) that scientists say is necessary to avoid the worst effects of climate change.
Electricity is the obvious way to decarbonise energy as transportation demand is relatively inelastic, although the draft sees an eventual shift towards electric vehicles.
Still, the road map sees a need for some precautionary oil investment, even in the European refineries many companies have been eager to divest because they have not been profitable enough.
“Maintaining a foot in the global oil market and keeping domestic refineries even when production and consumption is falling at home is important to the EU economy and security,” it said.
According to all scenarios, electricity will play a much greater role, almost doubling its share in final energy demand to 36-39 percent in 2050.
Renewable energy also rises significantly in all scenarios, achieving at least 55 percent in gross final energy consumption in 2050, up 45 percentage points from today’s level of 10 percent.
In a high renewables scenario, it would rise to 97 percent by 2050.
In contrast, coal use could fall to very low levels, while gas, which only emits around half as much carbon dioxide as coal when used for power generation, has a valid role as a bridging fuel until around 2030 or 2035.
The importance of shale gas, however, is unclear because it is still the early stage of exploration, the draft said.
EU member Poland is keen to develop its huge reserves of shale gas, but environmentalists have raised concern over the hydraulic fracturing, or fracking, process for extracting gas from shale rock.
The European Commission has ordered a legal study to assess whether EU legislation is adequate to cover any problems.
Much wider use of renewable energy could coincide with a change in the financing role of utilities, the draft said, following on from discussion into the possible using of financing bonds.
“Long-term investors need to be brought in. Institutional investors must become greater players in the financing of energy investments,” it said.
All scenarios depended on the conclusion of a global climate agreement, the draft said. EU environment ministers last week said the bloc was open to signing up to a new phase of the Kyoto climate change pact provided other nations signed up too. [ID:nL5E7LA2NT]
“If coordinated action on climate among the main global players fails to strengthen in the next few years, the question arises how far the EU should continue with an energy system transition orientated to decarbonisation,” it said.
It also noted, the EU’s 2020 goals have to be achieved on the way to 2050 scenarios.
The EU’s three 2020 targets are to cut carbon emissions by 20 percent, derive 20 percent of energy from renewable sources and a third target — which in contrast to the other two is not binding — of improving efficiency by 20 percent. (Editing by Marguerita Choy)