Six sector-specific recommendations to accelerate Czechia's green transition

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Six sector-specific recommendations to accelerate Czechia’s green transition.

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6 FLAGSHIPS TO ACCELERATE CZECHIXS GREEN TRANSITION OUR APPROACH Analysis of investment barriers and opportunities in each sector Investment needs and gaps analysis Reforms and finance instruments to implement the flagship Accelerate deep renovation of single-family houses by Michaela Valentov6, Czech Technical University in Prague Decarbonize district heating by lowering the temperature in the system and using low-carbon technologies by Michaela Valentov6, Czech Technical University in Prague Electrify fleet vehicles to boost e-mobility by Amanda Schockling, Climate & Company Accelerate installation of rooftop PV and agrivoltaics by JiFi Bim, Czech Technical University in Prague Unleash system flexibility potential of the grid network by Simon Pfluger, Climate & Company Accelerate shift towards green steel by Boris Valach, Eclareon GmbH.

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BY 2030, 280,00 SINGLE-FAMILY HOUSES DEEPLY RENOVATED & RATE OF DEEP RENOVATIONS INCREASED TO 40,000 SINGLE-FAMILY HOUSES/YEAR Lead author: Michaela Valentovå Czech Technical University in Prague CURRENT BARRIERS OBJECTIVE OF THE pRopoSED TARGET PROPOSED REFORMS (EXAMPLES) • New Green Savings Programme is considered good practice example, but not taken up sufficiently (survey 2019: only 7% of private renovators used state subsidy scheme) Lack of deep renovations, DIY and self-financing dominate Agora climate & FACULTY OF ELECTRICAL ENCINEERINC CTu IN PRAGUE FACTOR 2-3 INCREASE C021YEAR €12-13 BN €3-5 BN NB: numerical values estimated. of the combined renovation rate and depth is necessary to achieve the flagship target within this decade C02 emission savings on average per year by 2030 Total investment needed for flagship target in 2021-2030 Public funding needed for flagship 2021-2030 Additional public funding for technical assistance & information campaigns 2021-30 Significantly scale up the existing New Green Savings programme to ensure combined renovation rate and depth (over 60% energy savings compared to pre-renovation levels) is improved by a factor 2-3, going beyond the medium level improvement agreed in recovery milestones/targets. Reform 1: Additional public funding of at least EUR 1 bn for single-family buildings (dedicated (soft) loans with public guarantee) using additional EU and national funding (e.g. ETS revenues) Reform 2: New technical assistance by independent expert, occurring at two steps (fully-funded initial energy assessment and partially-funded deeper consultation to decide on renovation measures) Reform 3: A targeted information campaign addressing home-owners promoting the Green Savings Programme and the benefits of deep renovations Get in touch:

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ILLUSTRATIVE CASE: INSTALLING HEAT PUMPS AT THE WASTEWATER TREATMENT PLANTS IN FOUR CITIES IN CZECHIA Lead author: Michaela Valentovå Czech Technical University in Prague Current district heating (DH) system is mostly reliant on coal (58%) and natural gas (29%), while renewable sources only play a minor role (<13%) Agora climate & FACULTY OF ELECTRICAL ENCINEERINC CTu IN PRAGUE 170,000 70,000 T C021YEAR €2.2- 4.2 BN €37 MLN NB: numerical values estimated. Private residences of which heat consumption could be decarbonized through flagship (illustrative case) C02 emission savings on average by 2030 Total investment needed to phase out coal from district heating sector in CZ by 2030 Public funding needed for flagship (illustrative case) CURRENT BARRIERS OBJECTIVE OF THE PROPOSED TARGET PROPOSED REFORMS (EXAMPLES) 85% of DH systems will phase out coal by 2030, but with the main solution currently being natural gas, carbon lock-in is a high risk Of the €1.32 bn invested in DH systems between 2014-2019, two-thirds funded fossil-fuel based systems A steady deployment of DH will allow for a faster and more cost-effective decarbonization of the energy system. Heat pumps are an efficient tech- nology to incorporate into the DH sector if a source of waste heat is already available, for example from wastewater already flowing throughout a city. Reform 1: Strategic planning of DH systems to emphasize the preference of renewable/low-carbon options and take full advantage of the natural re- investment cycle Reform 2: Enhance risk mitigation through the creation of a long-term strategic and legislative framework, better data, financing instruments, and technical assistance Reform 3: An awareness raising campaign to provide additional information to customers on the share of RES in their DH and to enhance citizen engagement in the energy transition Get in touch:

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BY 2030, OF ALL FLEET VEHICLES ARE ELECTRIFIED TO ENABLE 100% CORPORATE FLEET ELECTRIFICATION BY 2035. Lead author: Amanda Schockling 157% 11 MT C02 €12- 20 BN Climate & Company national GHG emissions from transport / transport emissions from passenger cars cumulative C02 emission savings until 2030 with flasghip total investment needed for flagship from 2021-2030 public funding needed for flagship from 2021-2030 CURRENT BARRIERS OBJECTIVE OF THE PROPOSED TARGET PROPOSED REFORMS (EXAMPLES) NB: numerical values estimated. Agora EV adoption is slow due to the high demand for used cars & the climate & high price parity between new EVs and combustion engines Charging infrastructure is underutilized & unprofitable, coverage is lacking in much of the country outside of Prague Unambitious targets for the uptake of fully electric vehicles in the NECP and other national action plans No subsidies for the purchase of EVs for non-public fleets or private persons Setting binding targets for corporate fleets to electrify first More effective use of public funding alongside policy reforms to maximize EV uptake & motivate private investment Reform 1: Establish a ZEV mandate for fleets and expand the Clean Vehicle Directive to cover all corporate and private fleets Reform 2: Utilize varying financial incentives to convince company fleets to increase their EV uptake (i.e., varying depreciation rates linked to C02 emissions, decreased benefit-in-kind tax for the private use of an electric company car, reduced VAT taxes on fully electric car purchases) Reform 3: Increase financial access for SMEs to replace their vehicles via financial guarantees or interest rate reductions for the purposes of replacing a business vehicle with an EV Get in touch:

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Agora climate & FACULTY OF ELECTRICAL ENGINEERING cru IN PRAGUE BY 2030, REACH 200,000 PV INSTALLATIONS (1.8 GW) ON ROOFTOPS AND 4,250 AGRIVOLTAICS INSTALLATIONS (0.45 CW). Lead author: JiFi Bim Czech Technical University in Prague Installations of solar PV has been largely static since 2014 due to the solar boom beginning in 2009 and subsequent public disapproval of fixed feed-in tariffs on solar PV due to mass fraud 1.8 GW 0.45 GW C02/YEAR €3.4 BN €1.6 BN NB: numerical values estimated. provided by 200,000 PV installations on rooftops on residential and non-residential buildings by 2030 provided by 4,250 agrivoltaic installations by 2030 C02 emission savings on average by 2030 total investment needed for flagship 2021-2030 public funding needed for flagship 2021-2030 CURRENT BARRIERS OBJECTIVE OF THE PROPOSED TARGET PROPOSED REFORMS (EXAMPLES) No public support options on PV installations larger than 10 kW Lengthy building permit requirements for small-scale rooftop solar PV Increase RES capacity and investments must be increased six-fold to meet 2030 renewable energy targets. Provide public support for agrivoltaics to take advantage of the many co- benefits of using the technology on agricultural lands. Reform 1: Improve the legislative environment regulating rooftop PV and agrivoltaics and enable auctions and bonuses for solar PV by amending the appropriate Laws and Amendments of 165/2012 Sb. Reform 2: Improve the reputation of solar PV as a reliable, trustworthy RES with an information campaign targeted at Czech citizens Reform 3: Provide a stable source of financing for solar PV by continuing to support the New Green Savings Programme and operationalize support for agrivoltaics through favorable financing terms and an auction system. Get in touch:

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7. Agora climate & UNLEASH SYSTEM FLEXIBILITY POTENTIAL OF CZECHIA'S GRID NETWORK BY 2030 Lead author: Simon Pfluger Climate & Company Total demand-side flexibility load estimation in Czechia by 2030. Industry flexibility load estimation that can be unleashed and utilized by 2025. C02 emission reduction potential: flexibility frees up grid connection capacity to accomodate more RES Total investment needed for flagship 2021-2030 CURRENT BARRIERS OBJECTIVE OF THE pRopoSED TARGET PROPOSED REFORMS (EXAMPLES) • • • • • Only generation-side flexibility services can participate so far - regulatory structures for demand-side participation are not adjusted 2.5 GW NB: numerical values estimated. Outdated metering system and no implementation plan for a comprehensive smart meter rollout, hindering grid flexbility developments and potential Low electricity price signal, unawareness and no market education of flexibility serives among the industry Lack of suitable legislation of larger battery storage systems for load-shifting Guarantee future national energy security by providing a cost- and emission- effective solution to operate the future grid in a decentralized energy system Free up currently installed grid capacity with demand-side flexibility services allowing more RES to be connected to the grid Reform 1: Establish a demand-side flexibility market design by setting up a legal framework as demanded in 2019/944/EC and elaborating a demand-side flexibility implementation timeline to derisk upfront private investments Reform 2: Accelerate the smart meter rollout to enable demand-side flexibility in the household sector to unleash 2.5 GW flexibility potential Reform 3: Create a level playing field for market participation of the industry sector to unleash 2.5 GW flexibility potential by 2025 Reform 4: Create suitable storage legislation and implement battery storage projects that are co-located with renewable energy plants Get in touch:

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BY 2030, MAXIMISED SECONDARY STEEL PRODUCTION COMBINED WITH ELECTRIFICATION (THROUGH ELECTRIC ARC FURNACES) LEADING TO 4.5 MT OF C02 MITIGATED ANNUALLY. Lead author: Boris Valach Agora Over half (58%) of steel scrap produced in Czechia is exported climate & Steel production via EAFs is understood as a threat to the current CURRENT BARRIERS OBJECTIVE OF THE pRopoSED TARGET PROPOSED REFORMS (EXAMPLES) • electricity transmission network Green steel production relies on the carbon footprint of the electricity mix eclareon C02 €540 MLN/ 4.1 MT NB: numerical values estimated. eclareon the amount of steel currently produced from scrap / recycled steel in Czechia steel production capacity slated for reinvestment by 2030 C02 emission savings on average per Mt of recycled steel produced instead of primary Additional investment costs (one-shot CAPEX investments compared to the needed brownfield retrofitting of BF-BOFs with crude steel capacity production totaling 4.1 Mt annually ) Large-scale low-carbon primary production through DRI-H-EAFs is not feasible without major RES-E deployment Target the 4.4 Mt blast furnace capacity in Czechia that is due for reinvestment by 2030 as candidates for low-carbon steelmaking Identify the transformation potential of recycling + steel scrap Reform 1: Provide funding for impact studies to be conducted and transformation plans to be drawn up. Implement integrated electricity & gas infrastructure planning Reform 2: Create conditions favourable to promote the enhancement of secondary flows of steel / recycling of steel within Czechia. Increase awareness of secondary steel with i.e. tax incentives for products manufactured from secondary materials, including steel or export tariffs on scrap steel. Promote green public procurement over lowest-bid wins criteria only Reform 3: Aim for more RES-E capacities as more renewable electricity will be needed for the low-carbon steel production driven by EAFs & green hydrogen Reform 4: Carbon Contracts for Difference (CCfDs) - a tool for helping European industry transformation during the first stages of the transition period towards a low-emission economy Get in touch:

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THANK YOU - PLEASE GET IN TOUCH! Project coordination Stefanie Berendsen Climate & Company climate & Stefanie Berendsen David Rusnok Oliver Herrmann Ingmar Jürgens Agpq@ Michaela Holl Michaela.Holl@agora- Claudio Baccianti Claudio.bacciant@agora- Matthias Buck Matthias.Buck@agora- eclareon Boris Valach Michaela Valentovå michaela.valentova@ JiFi Bim For more info, visit the project webpage via Climate & Company or Agora Energiewende Berlin - Amsterdam - Salzburg.