Good Morning Ladies & Gentlemen, I am delighted to unveil Energy Technology Perspectives 2012 today.The IEA is launching this report at a critical time for the world’s energy system.Midway through 2012, the challenges are clear:Energy demand and prices are rising steadily.Energy-related carbon dioxide (CO2)emissions have hit record highs.Energy security concerns are at the forefront of the world’s political agenda.The political landscape is different today compared to when the first edition of ETP was launched in 2006. Evidence of climate change, if anything, have got strongerAt the same time it has fallen further down the political agendaETP 2012 contains both good news and bad news - for governments, industry and citizens. The bad news is that The world is failing to tap technology’s potential to create a clean energy future. But the good news is that We can turn affordable clean energy from aspiration into reality by tapping technology’s full potential.
ANIMATED SLIDEETP 2012 looks ahead to 2050. It maps out a viable, affordable and efficient path towards a clean energy future. It lets us choose three dramatically different futures: [CLICK]a rise in global temperatures of 2°C, [CLICK]4°C [CLICK] and a potentially devastating 6°C. It charts the course for each. Crucially, it offers the prospect of attaining the international goal of limiting the long-term increase of the global mean temperature to 2°C: the pathway to sustainability. To give us an 80% chance of reaching this target, energy-related CO2 emissions must be cut by more than half between 2009 and 2050.It outlines policies, technologies and financing required to reach this goal. It examines the crucial interplay between policy, pricing and technology. And it provides tools and roadmaps, which we hope can serve as a valuable guide for policy makers to a sustainable future.But a sustainable future is not just about low-carbon. ETP 2012 shows that the cost of creating a low-carbon energy system now will be outweighed by the potential fuel savings enjoyed by future generations. Indeed, the biggest challenge to achieving a low-carbon future is not absolute cost or technological constraints……but agreement on how to share uneven costs and benefits of clean energy technology across generations and countries.
ANIMATED SLIDE[CLICK]Are we on track to reach our 2°C goal? The simple answer is, No.Under current policies, energy use and CO2 emissions would increase by a third by 2020, and almost double by 2050. Our failure to realise the full potential of clean energy technology and tapping energy efficiency is alarming. Progress in rolling out clean technologies has been too slow and piecemeal Investment in fossil-fuel technologies continues to outpace investment in clean energy alternatives.Too little is being spent on clean energy technology.And the share of energy-related investment in public research, development and demonstration (RD&D) has fallen by two-thirds since the 1980s.And yet, there is still time to achieve a low-carbon energy system – one that is likely to enhance energy security, underpin stable economic growth and safeguard the environment.[CLICK]Decisive, efficient and effective policies can still unleash the full power of technology to create a sustainable future. [CLICK]But the need for action is urgent.
ETP 2012 makes clear that investing in a transition to a clean energy future will pay off.Let me offer three key recommendations to policy makers from ETP 2012 to turn a clean energy future from aspiration into reality.[CLICK]First, we need to ensure that energy prices reflect the ‘true cost’ of energy. That means pricing carbon and abolishing fossil fuel subsidies - fossil fuel subsidies which in 2011 were almost seven times higher than support for renewables. We must level the playing field for clean energy technology.[CLICK]Second, governments can unlock the incredible potential of energy efficiency by adopting the IEA’s 25 energy efficiency recommendations.[CLICK]And third, we must accelerate energy innovation and public support for research, development and demonstration (RD&D) to encourage private sector investment and more widespread commercial use.In this way, we can turn affordable clean energy from aspiration into reality by tapping technology’s full potential. Let me now turn to Bo Diczfalusy who will elaborate on ETP 2012, and the pathway to reach our goal.
Where is the renewable coming from in buildings
Several factors explain the absolute increase in losses:Electricity generation doubles from 2009 to 2050; in 2009 around 60% of the fuel input in the power sector is lost, in 2050 it is reduced to 54%. So, actually power generation is more efficient in 2050. Though it depends also on the balancing conventions, 100% efficiency for wind, solar PV, hydro, which helps to increase the efficiency; on the other hand, using 33% for nuclear in combination with an increasing share from nuclear 13% to 19% reduces the average efficiency.In addition, CCS has some efficiency losses.Losses in fuel transformation increase by 30 EJ due to biofuel and H2 production. General, when we talk about energy efficiency in ETP, the largest improvements are seen in the end-use sectors, not in the supply side, though there improvements in fossil power generation, but fossil generation plays a less dominant role in the 2DS.
DaveAchieving the 2DS requires a collective effort of all sectors at varying degrees:In this chart you can see the share that all sectors could play in achieving a transition from 4 degree to 2 degree scenario by 2050. The largest contributor, 42%, is the power generation sector, which is the backbone of a clean energy system as laid out in the 2DS.Clean electricity is an important fuel for all end-use sectors and has thus implications on the whole economy.
DAveTo achieve this transition - a portfolio of technologies needs to be applied across all sectors to achieve the 2DSThe three largest technology groups represent 81% perfect of CO2-emission reductions by 2050:End-use fuel and electricity efficiencyEnergy efficiency is a hidden fuel that reduces vulnerability to all the things that might go wrong across the value chain and also contributes to achieving climate change goals.RenewablesBy 2050, bioenergy is the major primary energy source and renewables are the dominant fuel for power generation.CCSAbout half of the total volume of carbon captured by 2050 comes from the industry and transformation sectors.Heavy industries like iron and steel and cement rely entirely on CCS to make prevent substantial emissions.In the power sector, about 60% of coal-fired generating capacity will be equipped with CCS units by 2050.
[ANIMATED SLIDE]So how do we clear the obstacles on the road towards a clean energy future?ETP 2012 has some key recommendations on ways to transform our energy system. One key conclusion is that:A sustainable energy system is a smarter, more unified and integrated energy system. [KEY MESSAGE]Today’s system is centralised and one directional.[CLICK]Tomorrow’s system will be decentralised and multi directionalComplex and diverse individual technologies will need to work as one.Technologies must be deployed together rather than in isolation. Policies should address the energy system as a whole rather than individual technologies.Success will hinge on Systems Thinking:It’s more efficient because it identifies synergies across sectors and applications.It limits fossil fuel consumption to parts of the economy with the highest levels of intensive energy use.It focuses on the efficiency of the service provided rather than the energy delivered.
We are not on a clean energy pathway and we need to get on track.Progress in rolling out clean energy has been too slow and piecemeal. [KEY MESSAGE]In ETP 2012, we’ve divided technologies into three groups to assess their performance: Some are on track; some require more effort and the majority are off track.Mature renewable technologies like hydro, biomass, onshore wind and solar photovoltaic (PV) are on track. We have seen a 42% average annual growth in Solar PV and 27% annual growth in wind.Fuel economy, electric vehicles and industry are improving but more effort is needed.Cleaner coal, nuclear power, carbon capture and storage (CCS), buildings and biofuels for transport are all off track.Let’s be straight: While ambitious, a clean energy transition is still possible. [KEY MESSAGE]However:Action in all sectors is necessary to reach the 2DS target. [KEY MESSAGE]
Using best-available technologies will play a crucial role in helping industry to reduce its carbon emissions through greater energy efficiency. [KEY MESSAGE]All industrysectors must contribute to enhancing energy efficiency. [KEY MESSAGE] Governments need to:1. Support R&D for novel technologies to accelerate their development and commercial deployment. 2. Promote standards, incentives and regulatory reforms to ensure the best available technology is used in new plants – in non-OECD countries -- and when plants are refurbished in OECD countries.Looking ahead to 2050:Industry must cut direct emissions by 20% to help reach the global target of halving energy-related emissions by 2050.CCS is the most critical technology option for reducing direct emissions in industry.Reaching the 2DS target requires industry to spend more than $10 trillion between 2010-2050.Efficiency alone will not be sufficient to offset strong growth in materials demand and new technologies will be needed to help industry cut its emissions. [KEY MESSAGE]IF NEEDED, example novel techs: Iron & steel: natural gas to replace coal in direct reduced iron, smelting technologies, hydrogen as a reducing agent to replace coke, CCSCement: clinker substitution, CCSChemicals: Better catalysis (we have roadmap under way), better membrane separation techs, bio based polymers, increased use of hydrogenPulp and paper: black liquor gasification (already being deployed), advanced water removal technologiesAluminium: inert anodes, carbothermic reduction
Carbon capture and storage (CCS) -- one of the areas with the greatest potential for reducing carbon emissions – is one of the technologies making the slowest progress. [KEY MESSAGE]Carbon capture and storage (CCS) needs to be deployed in both power and industry. [KEY MESSAGE]The reality is that CCS remains in its commercial infancy. Some CO2 capture technologies are commercially available today and the majority can be applied across different sectors today. Storage, however, remains an issue.CCS needs to be deployed rapidly to reach 2DS.There are no large-scale CCS demonstrations in electricity generation and few in industry.CCS has the potential to contribute one-fifth of emissions reductions worldwide by 2050 and would allow industries like steel and cement to make deep emissions cuts.Lack of progress is CCS – given its huge potential -- is worrying. [KEY MESSAGE]Abandoning CCS as a mitigation option would significantly increase the cost of achieving 2DS.Additional investment in electricity to reach 2DS – without CCS – would be $2 trillion over 40 years.Without CCS, the pressure on other emissions reduction options would be higher.IF NEEDED: Total cumulative mass of 123 GtCO2 captured between 2015 and 2050, the majority of which comes from power generation; in some regions, however, CO2 captured from industrial applications dominates
When it comes to our heavy reliance on fossil fuels, we need look no further than the transport sector.The world’s transport oil addiction is getting worse. To reach the 2DS, all vehicle technologies will be needed.Though the Internal combustion engine will remain dominant in the next 2 decades, the electric motor will take over from 2030 to achieve a cleaner future. [KEY MESSAGE]Technology has significant potential to change the transport picture. Pushing technology to its maximum potential is not enough to reach 2DS. [KEY MESSAGE]We need to: Avoid high-carbon transport/ Shift to low-carbon alternatives/ Improve the fuel efficiency of transport.New infrastructure, for example charging stations, must also be developed to enable people to choose new vehicles. [KEY MESSAGE]The light duty vehicle market is expected to be big enough for several powertrain technologies to co-exist globally, depending on local policies in place, and other drivers such as cultural and behavioural habits.
We will need to significantly reduce the energy intensity of our homes, offices, factories, hospital and schools to achieve the 2DS goal.1. The buildings sector must cut its total emissions by over 60% by 2050.2. That means an additional investment of $11.5 trillion to reach that goal.3. Half of all buildings today are expected to still be standing in 2050.It will be vital to improve energy efficiency in new and old buildings to secure a clean energy future. [KEY MESSAGE]To achieve this we will need to:Develop and enforce stringent building codes.Apply minimum performance standards for equipment and appliances.Define and enforce compliance.Much will need to change in our homes. About 70% of buildings’ potential energy savings between the 4DS and 2DS are in the residential sector.Retrofitting residential buildings, for example, has huge potential and action is urgent.
Buildings sector is two-speed: buildings shell versus appliances and OECD vs Non-OECDOECD characterised by old stock, cold climate and slow growth. Retrofits will be critical to reduce energy demand and emissions in OECD [Key Message]Non-OECD is growing rapidly with less old stockIn non OECD the rapid growth of new build offers opportunities to avoid lock-in of poor performing stock [Key Message]But common challenges: electricity supply security, costs and environmental impacts need to be addressed.
With the world’s population, urbanisation and greenhouse gas emissions (GGH) increasing, the way we heat and cool our buildings will be of mounting importance to the world’s energy system. Heating and Cooling accounts for almost half – around 46% -- of global final energy consumption worldwide.Decarbonising heating & cooling has huge potential to cut carbon emissions but is neglected. [KEY MESSAGE]Currently, large amounts of heat is wasted in power stations and industry: a problem that can only increase as emerging economies industrialise further.The environmental and financial costs of cooling are overlooked despite rapid urbanisation and decreasing household size.Efficiency, innovation and energy sharing will be critical to reducing our emissions of CO2 . Better operation of existing heating technologies could save up to 25% of peak electricity demand from heating by 2050.ETP 2012’s recommendations on heating and cooling include:1. To redistribute and share heat. District heating and cooling networks offer great potential for decarbonising urban areas. 2. Heat pumps offer great potential under the right conditions.3. Integrating heat within the energy system can lower costs and decarbonise other sectors.
The power sector is responsible for almost 40% of global primary energy use. Large part of the energy used for electricity generation is based on fossil fuels (78% in 2009). Generation of electricity leads to energy losses.Only less than half of the energy going into power plants is converted into electricity or district heat.As a result, production of electricity was responsible for almost 40% of the energy-related CO2 emissions (including process emissions in industry) in 2009.
Compared with the 4DS, cumulative CO2 emissions from the power sector in the 2DS between 2009 and 2050 fall by 258 Gt. This represents 42% of the reductions in the global energy system needed to achieve the 2DS. In addition, increased electrification of the end-use sectors, especially buildings and transport, accounts for further 6% of the cumulative reductions.Around one-quarter of this reduction is not achieved directly in the power sector itself, but from electricity savings in the end uses through more efficient use of electricity or a switch to renewable energy sources, e.g. solar water heating. (The cumulative abatement actually realised in the power sector, excluding these savings, is around 187 Gt.) Renewables provide more than 30% of the reduction from 4DS to 2DS.The deployment of coal and natural gas plants equipped with CO2 capture leads to cumulative reductions of 18%. Nuclear power is responsible for 14% of the emissions savings. Already in the 4DS, electricity generation from renewables increases markedly by 2050 compared with today, meaning renewables provide significant CO2 reductions over time in this scenario. Indeed, major contributors to the CO2 reductions between the 6DS and the 4DS are electricity savings in the end uses, which alone is responsible for around half of the cumulative reductions, and renewables, which account for around one-third of the CO2 savings.
Looking at the generation side of electricity:In the 4DS, fossil fuels will continue to dominate electricity generation, despite a CO2 price reaching around 60 USD/t in 2050. Global fossil share falls in this scenario, however, from 67% in 2009 to around 50% in 2050, largely at the cost of coal, while gas maintains its share in the global electricity mix of around 20%, as today. On the other hand, renewables (due to solar and wind) increase their share to more than one third in 2050. As a consequence, the average CO2 intensity drops from around 500 g/kWh today to 280g/kWh in 2050.A markedly different picture emerges in the 2DS. Almost 57% of global electricity are generated from renewable sources, with solar and wind each providing around 15% in 2050. Nuclear accounts for around one fifth in the electricity mix. The reminder is based on fossil-fired plants, with the majority of the plants being equipped with CCS. Global average CO2 intensity falls to below 60 g/kWh in 2050, a reduction of 80% compared to 2009.
But when we look at capacity, the trend is opposite.The 4DS requires 13% less electricity generation capacity then in the 2DS, due to great deployment of variable renewables with lower capacity factors
In other words, it expresses the capability of a power system to maintain reliable supply in the face of rapid and large imbalances, whatever the cause. It is measured in terms of the MW available for ramping up and down, over time (+/- MW/time)For example, a given combined cycle gas turbine (CCGT) plant may be able to ramp output up or down at 10 MW per minute” (IEA, 2011a, p. 35).
The difference in cumulative cost between the 2DS and 4DS ranges from 2% to 12% in the countries analysed.Europe has the highest difference, where the 2DS requires greater investment than the 4DS, as does India.OCED Americas, OECD Asia Oceania and China exhibit a trend where the 2DS investment is lower than in the 4DS.The sectoral allocation differs:In the OECD regions, investments to replace ageing distribution infrastructure account for 50% to 70% of total investment, surpassing investments in new networks.In China and India, investment in new distribution to 2050 to meet markedly increasing demand, is over 60% of total T&D investment.This trend showing the difference between OECD regions and China and India is similar for transmission investments.Investment costs are heavily weighted toward the distribution system in all regions. One significant factor is the length of the distribution system, which represents 92% of the total actual global T&D network length in 2009.Renewable integration investment represents additional grid extension needed to connect renewable-energy generators to the network. The total additional investments to accommodate renewable generation vary between the 2DS and 4DS, but do not make up more than 10% of total investments in T&D.Public resistance to the placement of T&D infrastructure in many regions means that considerable non-financial effort is needed to deliver these resources. Clear communication of the criticality of network infrastructure while presenting a range of solutions to beconsidered will help to gain the support of all stakeholders.
However, the financial benefits arising from smart-grid investment outweigh the total cost of investment, making a strong case for smart-grid technologies.But in some cases, the benefits are spread throughout the electricity system to sectors other than the one that needs to make the investment. This complicates the business case for investments, since all benefits may need to be monetised and accounted for in order to create a positive business case.As an example: Advanced metering infrastructure to reduce peak demand benefits the T&D system and lowers the cost of generation. Investment costs, however, will be borne entirely by the distribution system stakeholders, who will likely need to adjust their pricing for goods and services to realise a sufficient return on their investment.Technical solutions and regulatory changes are needed to address this barrier, so that cost an benefits are equally shared among all stakeholders.The largest benefit are to the overall system, which mainly includes increased reliability and CO2 savings.Remark:The costs are relatively easy to quantify because relevant data are readily available; in actual fact, the cost difference between the two cases is quite small. Putting a monetary value on the benefits of smart-grid deployment is much more difficult, in part because there is still some debate as to the precise level of benefit they can deliver. As a result, the range between the minimum and maximum benefits is larger.
IEEE has namedelectrification the single greatest engineering achievement of the 20th century.BUT there is not time to rest on the laurelsWe have already entered a new age of electrification, that requires more great achievement not only in engineering, but also policy, regulation, economics , finance and communication.Decarbonising electricity is a prerequisite:to reducing fossil fuel use and to mitigating CO2 emissionsnot only in power generation but across all the end-use sectors (industry, transport and buildings)in a relatively short time, until 2050, as required in the ETP 2012 2°C Scenario (2DS).Where are we today?
First if we look at the 2 degree scenario for ASEAN countries, you can see that ASEAN is very representative of the world context.The power sector holds responsibility for 41% of carbon emissions reductions in the model. Or in other words, to reach the 2 degree scenario for ASEAN countries, 41% of carbon reductions must come from power by 2050.After that, notice that transport and buildings hold similar responsibilities at 19% each.Given that energy consumption within ASEAN is already approaching levels similar to the Middle East and only expected to grow, as shown here, the importance of power is certainly notable. Given the exciting projections for growth in ASEAN, we know that electricity demand will grow rapidly. This will require important attention for the ASEAN energy system, particularly since the region is rich in fossil fuel resources, and these may offer the faster, go-to options for power development. Now let’s look at how power generation stands in China under our scenarios.
ASEAN faces strong challenges due to the domination by fossil fuels with coal-fired power plants being most poignant. So we can see in the 4 degree scenario that power generation is dominated by coal, or we can say, more than half of the electricity mix in 2050. In fact, we know that ASEAN countries are rich in fossil fuel resources, BUT they have a large potential for renewable energy. Thus, in the 2 degree scenario, we see a much improved balance of fuel mix with renewables providing more than half of the electricity now in 2050. Hydro and geothermal power become important options. The scenario mirrors the huge untapped resource potential for these renewable options that are awaiting technology and investment.
In the 2 degree scenario for ASEAN, annual CO2 emissions fall by more than 50%, relative to the 4 degree scenario in 2050.As you can see, renewables provide half of these reductions and geothermal power alone, accounts for 15% of carbon emissions reductions.Now let’s not forget that ASEAN faces strong challenges due to the domination of fossil fuels, with coal-fired power plants being most poignant. So we see in the 2 degree scenario that fossil-fired plants with CCS technology will provide 12% of the reductions. Similarly, emissions reductions contribution from nuclear is about 11%.Improvements in energy efficiency combined with electricity savings by end-use sectors are responsible for another quarter of emissions reductions in 2050. An important initiative in this regard is the ASEAN Power Grid, which was originally mandated in 1997 by member states. An integrated power grid will aid member states to more efficiently meet their electricity demands. Additionally, an interconnected system within ASEAN would allow for the integration of more variable renewable power sources since the region is filled with great potential in renewable sources of energy. Of course challenges related to infrastructure development and establishment of a regional regulatory and technical framework remain, so we recognize the need to address these issues in order to facilitate integration of the ASEAN power system.Overall, as one of the fastest-growing regions in the world and its rapidly rising energy demand, ASEAN countries will play a pivotal role in the 2 degree scenario. ASEAN has the potential to take advantage of its large renewable energy resource potential.
Yerim to and including slide 24The approach to decarbonise the electricity system in a region or country depends on the local opportunities and challenges. For example: hydro will continue to play a major role in Brazil, wind becomes an important option in the EU and US, solar technologies would be central to India, South Africa and Mexico, and nuclear power as well as CCS would be key in China.
Dave to and including slide 29Achieving the 2DS requires a transition from high-carbon to low-carbon generation.As a result, technological improvements will provide the reductions in carbon emissions after 2025: Continue development of more efficient technologies; use carbon-free fuels, such as biogas and hydrogen; deploy CCS.In the 4DS, the global average carbon intensity does not fall below the carbon intensity of CCGTs until 2040.
In the 4DS, natural gas-fired generation increases strongly, mainly driven by economic growth non-OECD countries. Natural gas-fired power generation: Supplies base-load power Displaces generation from coal Meets rapid new growth in demand. However, if we are to reach the 2DS, at some point gas becomes part of the problem rather than part of the solution. Between 2030 and 2050 global natural gas-fired generation decreases by 30% The majority of the power generation capacity needed to meet electricity demand will be very low carbon - including renewables (biomass, wind, hydro, solar, etc), coal plants equipped with CCS and nuclear power Natural gas power plants are still best placed to provide peak-load and back-up capacity to balance the variability in electricity demand resulting from renewable energy sourcesChina and India rapidly build up the share of gas in their generation mix (currently quite low) by 2030 to 2035, before they gradually decrease it to 2050. Rigorous planning and construction processes essential to minimise (ideally, to avoid) stranded assets. Gas turbines and combined cycle power plants typically designed for a service life of more than 25 years.
ANIMATED SLIDEWe know that the investments we make today will determine the energy system we have in 2050. ETP 2012 shows:That investment in clean energy needs to double by 2020 to limit the rise in global temperatures to 2°C.CLICKThe cost of creating a low-carbon energy system now will be outweighed by the potential fuel savings enjoyed by future generations. CLICKEven when discounted at 10% net savings amount to USD trillion.So, investing in clean energy will pay off. By 2025, fuel savings from the transition would outweigh investments. By 2050 fuel savings could reach $100 trillion.Let’s look at it this way. We need to spend an extra $130 per person every year on average on clean energy over 40 years. We know that the longer we wait to transform our energy system, the more expensive it will get. [KEY MESSAGE]Thank you!
Coming to the end of my presentation, let me summarise some key messages from ETP2012.First of all, we believe that we still can reach a sustainable energy future. Technologies exist and can take us there.Secondly, despite the potential of many clean energy technologies, the progress in deploying them is falling behind our ambitious goalsThirdly, a clean energy future cannot be achieved by looking into one technology only. It requires many technologies and, even more than before, energy systems thinkingFourthly, we have strong reasons to believe that a transition to a clean energy future makes economic sense, right now.And finally, government policy is critical to unlock the potential of clean energy technology.
David Elzinga - Tapping Technology's Potential to Secure a Clean Energy Future