• Like

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Global Energy Conversation II: Solutions to 2050

  • 768 views
Published

This report, edited by the Economist Intelligence Unit and supported by Shell, follows an event held in November 2011 that brought together energy experts based in London, Sao Paulo and Washington DC …

This report, edited by the Economist Intelligence Unit and supported by Shell, follows an event held in November 2011 that brought together energy experts based in London, Sao Paulo and Washington DC for a live global conversation on the future of energy.

We have invited the same group of experts that participated in the debate to give us their views on how the world can meet rapidly rising demand for energy while also reducing greenhouse gas emissions. The report also highlights some of the best contributions made in the online debate that surrounded their conversation.

We would like to thank all of those who participated in the research.

Published in Business , Technology
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
768
On SlideShare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
16
Comments
0
Likes
1

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Solutionsto 2050
  • 2. Part II: Solutions to 2050 2 Prefacecontents 3 introduction From the Economist Intelligence Unit 4 Energy solutions to 2050 by the numbers Findings from a worldwide EIU survey on energy solutions 6 Overcoming the Energy Trilemma Joan MacNaughton, World Energy Council 8 New behaviours Alex Laskey, Opower 10 How can we use energy more efficiently? Gregory Kats, Capital E 11 What role for biofuels? Allan Kardec Duailibe, Brazilian National Agency of Oil, Natural Gas and Biofuels 12 Why economic growth is the new priority for energy Reg Platt, Institute for Public Policy Research 13 New policies for new energy demands John Norris, Federal Energy Regulatory Commission 15 The future of fossils Wim Thomas, Royal Dutch Shell 16 The case for power storage Tim Weiss and Ed Whittingham, Pembina Institute 17 The nuclear option José Goldemberg, University of São Paulo 19 appendix Survey results |1|
  • 3. the global energy conversation Preface This report, edited by the Economist Intelligence Unit and supported by Shell, follows an event held in November 2011 that brought together energy experts based in London, Washington and São Paulo for a live global conversation on the future of energy. It invites the same group of experts who participated in the debate to explain their views on the most challenging questions that came up during their discussion, and it also highlights some of the best contributions made in the online debate that surrounded their conversation. We would like to thank all of those who participated in the research. If you would like to view the event, you can access it online by registering at http://live.economistconferences.co.uk energy solutions to 2050 PANELIST by the numbers QUOTES To support the event, the Economist Where points made by panelists during the event Intelligence Unit conducted a survey of are relevant to articles written for the follow-up 790 people around the world. The survey report, these are noted in the text. was carried out between September and October 2011 and respondents were drawn from the Americas (41%), Europe (20%), the Middle East and Africa (20%) and Asia-Pacific (19%). PANELIST ARTICLES ONLINE A selection of the CONTRIBUTIONS experts who participated More than 1,600 people registered in this debate have to watch the event live online and more written articles for the than 400 contributions were received via the follow-up report. These event’s live feed. Where online contributions are articles are highlighted by particularly relevant to the topic being addressed a green bar in the text. in an article, these are noted in the text.|2|
  • 4. Part II: Solutions to 2050 introductionThe world faces two major energy challenges over the next 40 years. The first is to meet rapidly rising demand for energy,particularly in developing countries, by dramatically increasing supply. The second is to realise this goal while also achievingsubstantial reductions in carbon emissions. Failure to meet the first objective will constrain economic growth. Failure to meetthe second will exacerbate climate change.Research carried out for this report underlines how difficult it will be to achieve these two objectives. The latest figures showthat nearly 90% of global energy comes from fossil fuels and that renewables (including hydro, solar, wind and others) still onlyaccount for a combined 8% of the total. The clear problem with this is that, while it might be possible to meet the world’s long-term energy supply challenge with this kind of energy mix, large-scale emissions reductions will not be achievable with suchheavy use of fossil fuels.To achieve both of its energy objectives, therefore, the world needs to switch to low-carbon sources of energy. According to anEconomist Intelligence Unit poll of 790 business executives, however, that will be a slow process. Nearly two-thirds of respondents(65%) stated that they believe fossil fuels will still be the world’s primary energy source in 2030. If true, that will be a major sourceof concern for those wishing to prevent or at least limit the extent of dangerous climate change because it will see emissionscontinue to rise over the next couple of decades.Against this difficult backdrop, the experts contributing to this report have been set the task of articulating their “energysolutions to 2050”. For the World Energy Council’s Joan MacNaughton (p. 6) the answer lies in a combination of innovation,partnership working between the public and private sectors and robust monitoring of impacts so that practitioners have“more reliable evidence on what works and what pitfalls to avoid”.Alex Laskey (p. 8), president of Opower, a US firm which helps utility companies engage with their consumers to manage energyuse, highlights how much energy is wasted by users and argues for the adoption of information tools that can support behaviourchange and improve energy efficiency. Gregory Kats (p. 10) a clean energy advisor and investor, agrees with the need to boostenergy efficiency, suggesting that “it is the largest, most cost-effective way we have of meeting energy needs and reducingcarbon emissions”.Moving on to other possible solutions, Allan Kardec Duailibe (p.11), Director of the Brazilian National Agency of Oil, Natural Gasand Biofuels, explains how Brazil has become a world leader in biofuels. Wim Thomas (p.15), Shell’s Chief Energy Advisor, arguesthat fossil fuels will remain a key part of the energy mix and makes the point that states can reduce emissions by switching fromcoal to gas and investing in carbon capture and storage. José Goldemberg (p.17), Brazil’s former secretary of state for scienceand technology, argues that the expected revitalisation of nuclear energy over the next few decades is now unlikely to happenin the wake of the Fukushima disaster in Japan last year and rising concerns about both the safety and cost of nuclear energy.Meanwhile, Tim Weiss and Ed Whittingham (p.16) of the Pembina Institute, a Canadian think-tank, suggest that power storage is a“key technological innovation that requires development and deployment to allow renewable energy to become the backbone ofenergy systems”.On policy, Reg Platt (p.12), research fellow at the Institute for Public Policy Research, a British think-tank, argues thatgovernments should start making low carbon energy investments “on the basis of the growth and jobs potential that theseinvestments offer, not merely on account of which is cheapest”. Finally, John Norris (p.13), Commissioner at the Federal EnergyRegulatory Commission in the US, explains that one of the biggest roles for government is to regulate energy markets moreeffectively by taking action to “eliminate unnecessary barriers and level the playing field for participation by different players andtechnologies in the market”.As Joan McNaughton rightly points out in her article, there is no “silver bullet” for dealing with the world’s energy challenges,so on its own none of these individual ideas would be capable of meeting the world’s need for both more energy and reducedemissions. If states are to deliver on the demands being placed on them, therefore, an intelligent and pragmatic mixture ofpolicies and investments will be required. This report helps decision-makers and other interested parties understand more aboutwhat this policy mix might look like. |3|
  • 5. the global energy conversation Part II: Solutions to 2050 Energy solutions to 2050 by the numbers TECHNOLOGIES AND RESOURCES POLICIES Which energy sources will allow us to increase supply and reduce carbon emissions between 2031 and 2050? 100 75 34% NUCLEAR while 68% 50 44% OIL of people of people 35% think the world’s governments are very concerned 5% 5% 25 14% are committed to dealing about the problem RENEWABLES with climate change 0 2.5% 2.4% 1% 7% 7% Solar Wind Nuclear Gas Oil Coal HYDRO think democracy stands in the way of climate change 100 think fossil fuels will think that will still COAL 30 30 % 75 % 4% be the world’s primary energy source in 2030 be the case in 2050 2 NATURAL GAS 50 25 Source: BP Statistical Review 2011. Due to rounding, the figures in this chart do not sum to 100%. 0 BEHAVIOURS WHO SHOULD TAKE the MOST RESPONSIBILITY Carbon International air over the FOR DEALING WITH CLIMATE CHANGE? travel increased by same period emissions would support reforms increased 100 combating climate change Nation states: 41% if the changes had no effect 75 on their real income 50 The United Nations: 20% between 1990 25 and 2009 would agree that if these led Individuals: 17% 0 to a decline in their real Businesses: 13% 1990 2009 income of more than 5% Other/don’t know: 9% Source: World Bank. Source: World Bank. Unless otherwise indicated, infographics depict the results of a survey of 790 people conducted by the Economist Intelligence Unit in September 2011.|4| |5|
  • 6. the global energy conversation Overcoming the Energy Trilemma Joan MacNaughton, Executive Chair of the 2011 Energy Policies Assessment Report from the World Energy Council, reviews the options for driving low carbon growth. Until growth in energy demand can to encourage low carbon investment by be uncoupled from economic growth, valuing carbon are needed. This article We shouldn’t bet all we will continue to see global energy addresses four key drivers of low carbon demand rising, especially in emerging growth, applicable in both developed and our chips on one source of and developing countries. In the latter, developing countries. energy because we don’t know a key priority will be expanding access which one will be the most to electricity for the 1.3bn who lack Getting the policy framework right effective going forward. In the access today. As the outcome of the 17th Governments set the frameworks that UK, we’re investing in a diverse Conference of the Parties (COP17) to the enable markets to deliver and they also energy supply but I’m concerned UN Framework Convention on Climate plan strategically for national or regional that there has been a drop in Change in Durban has shown, there infrastructure needed to deliver it, and the funding of carbon capture remains broad commitment to global thereby keep costs lower than they would and storage. emissions reductions and indeed, 2012 otherwise have been. It is important for Reg Platt has been declared the Year of Sustainable governments to bear in mind that their Research Fellow Energy for All. intervention may create uncertainty and IPPR unintended consequences—stable, long- The challenges are numerous. Energy term, transparent policymaking can help must be accessible and affordable, to reduce this risk. necessary flexibility to adapt and contribute to the well-being of people change policies that may be failing. and the environment, and enhance As highlighted in the 2011 Assessment by economic growth now and for the future. the World Energy Council (WEC) of country UN mechanisms - such as Nationally Policymakers must accommodate these energy and climate policies, policy must Appropriate Mitigation Activities , the multiple requirements while reducing the be evidence-based and rooted in robust, Technology Mechanism and the Green carbon intensity of energy and addressing independent analysis of the objectives of Climate Fund, among others – will this “trilemma of energy sustainability”. the policy intervention and the context play vital roles in assisting developing in which it is made. Transparency is countries to adopt the cleanest There is no silver bullet of policy that vital to help business and consumers to technologies and where possible to addresses all needs simultaneously - understand the trade-offs that may be “leap-frog” to lower-tech solutions. though carbon pricing is probably the involved in adopting specific policies and most important single measure and their broader implications. The importance of supporting more national or regional moves innovation This should also imply high standards of Policy needs to be tailored to support the consultation and public engagement. whole innovation chain, from education Gas is the dominant This is to ensure that draft policies are in mathematics, science and engineering direction right now subjected to rigorous and broad-based in schools to the competitive environment because of lower prices assessment, as well as giving those who for businesses. This includes supporting and the emerging shale will be affected by them enough notice to invention through funding support prepare themselves to adapt and comply. for basic research in universities and gas industry, but in the the encouragement of international long term we’re going to Above all, implementation of the policy collaboration; supporting collaborative see more intermittent resources must be monitored to ensure that it is research by encouraging links between and a need for intelligent grid. delivering as intended, including ensuring research organisations and the private John Norris consistency across policy dossiers. Here sector to take inventions out of the lab Commissioner it is vital that governments are able to and turn them into products and services; Federal Energy Regulatory Commission balance the need to provide markets with and supporting competition through long-term policy stability against the protection of Intellectual Property Rights|6|
  • 7. Part II: Solutions to 2050(IPR), and through putting in place theright regulatory frameworks to drive Any new energy As we discuss the world inproduct development and lower costs. technology needs a few years, 2050, it is important to rememberIPR is important because it enables sometimes decades, before where we will see the biggest it can take off and reach a population and demographiccompanies to place a value on innovation. changes. Policies must thereforeThis is critical not just for companies, but substantial market share. be designed with the appropriatefor emerging and developing economies, Wim Thomas degrees of flexibility taking intoas they build knowledge-driven, high Chief Energy Advisor Royal Dutch Shell consideration some insights aboutvalue-added economies and industries.It is also critical to achieving climate population, water, and otherchange and energy security goals, resources that are required towhich cannot be accomplished without decades to come. To avoid this secure universal access to energy.massive private-sector engagement and requires developing supportive Lawrence Jones,continuing innovation. policy frameworks and providing Alstom Grid Inc, UNITED STATES capital funding support as well asFor example, the WEC policy assessment ongoing support through feed-in tariffsreport highlighted the role of energy or similar measures. Imperative to engage businessefficiency programmes, including labelling These solutions will only be deliveredschemes such as the US Energy Star Good energy policy should also enhance through unprecedented levels ofprogramme. This voluntary labelling and increase mechanisms that incentivise public-private partnership, basedscheme for household products and energy efficiency in the power generation, on clear commitments, transparentcommercial building equipment is widely transmission, and distribution context. policies, agreed outcomes and, crucially,considered to be a success. Not only does In particular, regulators should consider efficient and effective deployment ofit deliver substantial energy savings the substantial capabilities of smart- financial resources.and emissions reductions, but it is also grid technologies for achieving thesea considerable driving force behind objectives. This means engaging business in theimportant technological innovations, such policy discussion to gather feedback andas efficient fluorescent lighting, power Smart grids help to manage electricity benchmark against global policy bestmanagement systems for office equipment, supply reliably and efficiently. practice. It also means collaborating toand low standby energy use. Without them we will neither be able deliver, using public-private partnerships to maximise the use of renewable (PPPs) to attract private investment inEnabling transformational technologies power nor achieve effective demand major public infrastructure projects. PPPsInnovation can help us deliver both lower management. Smart grids can offer the benefits of flexibility in securingemissions and broader access, specifically also support action to reduce CO2 diverse sources of up-front finance andvia two transformational technologies: emissions. They help to manage funding, and help mitigate risk throughcarbon capture and storage (CCS) and intermittency and can facilitate sharing it between those partners bestsmart grid technology. connection in remote areas and for able to bear it. PPPs help most where smaller generation sources. Through projects are hard to finance on purelyThe World Energy Outlook 2011 of the their enhanced data and information commercial terms, for example whereInternational Energy Agency (IEA) places flows to end-users and network technology is deployed for the first time inheavy reliance on CCS, which it estimates operators, they also offer greater a country (especially where it can supportcould deliver 18% of the emissions flexibility in balancing electricity capacity building), or where a governmentsavings needed to stay within the 450ppm demand and supply – maximising faces the challenge of simultaneouslyatmospheric limit. The IEA’s CCS Roadmap efficiency in dispatching generation, developing infrastructure, policyprojects that 3,400 CCS plants will be and minimising network losses. frameworks and supply chains.needed globally by 2050 and expects that,by that time, developing countries will When applied together with The important thing is that governmentsaccount for 64% of all captured carbon smart generation, electricity should be active participants, co-dioxide emissions. If these nations are interconnectors, back-up capacity, funding projects, ensuring that theynot encouraged and assisted to adopt the storage options and demand-side are aligned with national developmentcleanest technologies at this crucial stage response, smart grids can open up new priorities and implementation plans andof their development, they will “lock-in” possibilities in managing power supply encouraging early dialogue with private-sources of carbon dioxide emissions for and demand. sector partners. |7|
  • 8. the global energy conversation As mentioned earlier, there are no dialogue between international energy- single “silver bullet” instruments. But policy experts, industry executives, Author biography there are opportunities to learn from and stakeholders and policymakers Joan MacNaughton is Executive “best practice” policy. In order to do from relevant jurisdictions. The 2012 Chair of the 2011 Energy Policies so, we need more rigorous evaluations WEC Assessment of countries’ energy Assessment Report from the of energy-policy instruments to bring and climate policies will aim to World Energy Council. She is an to light more reliable evidence on what contribute further to the better influential figure in the energy works and what pitfalls to avoid. It is understanding of what constitutes and climate policy debate and necessary to translate global findings successful policy and to deepen the holds a variety of UK, EU and about successful policy instruments into policy dialogue between business international roles. local arrangements and settings that and policymakers. work. This translation works best as a New behaviours Behaviour change is an immediate and cost-effective solution to inefficient energy use, argues Alex Laskey, president of Opower. Most people spend less time thinking change is often overlooked for several There are a lot of misconceptions about about their energy use every year than it reasons. using energy. For example, research will take you to read this article – about also shows that 81% of people leave six minutes for an average consumer in Energy is relatively inexpensive. In the their heating or cooling system running the industrialised world.1 US, only 1.7% of an average household when they aren’t at home. They believe income is spent on energy bills. Most it takes more energy to turn the systems Those six minutes largely go towards consumers aren’t motivated to make off and power them on again than it checking and paying utility bills. changes to save enough for an extra does to leave the systems running for As a result, consumers are completely fast-food meal once a month. Even an extended period of time, which in the dark about their inefficient in the environmentally progressive simply isn’t true for most households. energy use, leading to massive amounts US cities of Berkeley, California and Similarly, 48% leave their lights on, being wasted every year. According to Boulder, Colorado, a recent study thinking that the same phenomenon a recent McKinsey and Company study, found that only 0.18% and 0.64% of the applies there as well.5 this waste amounts to an estimated population, respectively, participated £260bn (or US$400bn) a year globally, in available energy efficiency So the question is, how do we get which equates to enough energy to programmes.3 consumers to think more about their power more than 330m homes. McKinsey energy usage and motivate them to also estimated that the US alone could Energy data generally aren’t interesting. make changes in their everyday lives? reduce energy consumption by 23% and Research shows that 90% of people say save families and businesses more than saving energy is important to them4, In 2005 the world-renowned £130bn (or US$260bn) on their energy yet it’s a subject that most people behavioural economist Dr Robert bills in the next ten years through spend very little time thinking about. Cialdini, who is also the author of increased energy efficiency.2 Presenting an overwhelming amount Influence, set out to answer this of numbers and charts on energy usage question. Dr Cialdini and his students There is an immediate, cost-effective won’t inspire change. at San Diego State University ran field solution to this wastefulness: behaviour tests during a hot summer in California, change. It can not only have a drastic Energy is confusing and ambiguous. going door to door and putting notices impact on our environment, but can Most average consumers don’t know on households’ door handles. The also accelerate the adoption of other what a kilowatt hour (or therm) is, such households received notices with one impactful energy improvements such that when they receive their bill, they of four different messages printed on as deriving more power from renewable don’t have the context to determine them. One group of homes received a resources or making structural changes whether using 200 kwh per month is a notice that said: “Turn off your AC [air to peoples’ homes. Still, behaviour high or low amount. conditioning system] and turn on a fan|8|
  • 9. Part II: Solutions to 2050– you can save money.” Another group of mobile service provider, utilitieshomes received a notice that said: “Turn can now alert a customer if the home isoff your AC and turn on a fan – you can The issue of on track for an irregularly high chargesave the environment.” The third group inefficient energy use is a for that billing period and offer tips toof homes received a notice that said: critical one in developing avoid that outcome.“Turn off your AC and turn on a fan – it’s countries, particularlyyour civic duty.” Energy-related behaviour change is a where grid supplies are complex challenge and a global problemAfter three weeks, Dr Cialdini and intermittent, unreliable and that creates an opportunity to activatehis team analysed the homes’ energy often very expensive. The energy users of all ages, interests andconsumption and found there was zero demographics by delivering the rightimpact on any of the three groups’ answer requires a mixture messages at the right time across allconsumption from receiving these of consumer behavioural communication channels. Social medianotices. However, there was a fourth change, improvement of are a particularly interesting mediumgroup. Their notice said: “4 in 10 of to harness the power of networking the quality of grid supplyyour neighbours turned off their AC and and stimulate a global dialogue aboutturned on a fan.” Homes that received and a more developed off- energy consumption. While peoplethis message used on average 6% less grid response, particularly spend six minutes a year thinkingelectricity than the control group. for the poorest and most about their energy use, they spend one in every six minutes online accessingThis discovery of the impact of social isolated consumers. social media to share, comment, andnorms was a catalyst for the creation of Neil Jeffery engage with others. If even seconds Renewable WorldOpower. Since then, our work – now with of that minute were spent on energy- UNITED KINGDOMmore than 60 utilities, including nine related topics, the impact would beof the ten largest in the US, and 10m tremendous.homes across the country and in the At Opower, we have first-handUK – has led us to have a much deeper experience of the results this As the international communityunderstanding of the mechanisms type of energy reporting can continues to grapple withneeded to harness the power of achieve. In the mid-western state sustainability, energy security andbehaviour change to have a profound of Minnesota, we work with concerns over global warming, enablingimpact on energy usage, and therefore, ten regional utilities, and our home and empowering consumers to makethe environment. energy efficiency reports have saved simple behavioural changes can result individual customers more than £4m in a windfall of savings. The impactAs Dr Cialdini’s study identified, (or US$6m) on their energy bills and on the economy and the environmentnormative comparisons (like the more than 110 gigawatts of electricity is truly exciting – now, and for futurefourth example above) work well, as since 2009. generations to come.do other tools such as goal setting, 1 A  ccenture. “ Engaging the New Energy Consumer.”usage ranking, and historical usage Providing contextualised and actionable 2010comparisons that tap into humans’ energy usage information stimulates 2 M  cKinsey & Company. “Unlocking Energy Efficiency in the US Economy.” July 2009innate competitive nature. But behaviour change, but must be coupled 3 B  ailey, Mark and Johnson, Claire B. “Innovativeit is the insights and actionable with continuous engagement strategies. Energy Efficiency Financing Approaches.” 1 June 2009recommendations – not just the data – Similarly to how speed limit notices are 4 Research conducted by Opower. Summer 2010 5 Research conducted by Opower. Summer 2010that must be presented. strategically placed every few miles on the roadway, the best way to sustainWhile this is a relatively new concept changes in energy behaviour is to use Author Biographyin the utility industry, the general regular and subtle feedback loops. Alex Laskey is president of Opowerconcept is not completely foreign. The new smart metering technologies and responsible for engaging utilityPersonal finance tools like Mint.com being deployed now allow utilities the and government partners withprovide users with reports on their opportunity to prompt action when it Opower’s purpose and products. Hespending and investments that are counts; not at the end of the billing was invited to the White House tobeyond the numbers. The service has cycle, but in real time. Like the low meet with President Obama to discussevolved into personalised insights and balance account notice you might innovation and job creation in therecommendations on services and steps receive from your bank or the over use green economy.that people can take to save money. alerts you might receive from your |9|
  • 10. the global energy conversation How can we use energy more efficiently? Gregory Kats, President of Capital E, answers questions about energy efficiency improvements and explains why countries should adopt deeper energy standards. How big a role do you think energy 1972-2006, thus reducing the state’s efficiency can play in helping the world energy import dependence. What has been really reduce carbon emissions and meet the neglected by policymakers growing demand for energy? Where are we making the most is the supply side of energy Energy efficiency is the largest, most progress in being more efficient and efficiency in the commercial cost-effective way we have of meeting which areas do we need to pay most sector. You need mandatory energy needs and reducing carbon attention to? standards to drive progress emissions. It decarbonises the energy The industry and owner-occupied in this area. system in that it allows us to switch buildings tend to be more energy Joan MacNaughton to lower energy intensity and reduce efficient but we should be doing a Executive Chair of the 2011 Energy the amount of waste. The explosion lot more in terms of cogeneration Policies Assessment Report in energy efficiency funded by venture and on-site generation to build World Energy Council capital, in green building, smart grid energy-efficient buildings. We need and renewables technologies means that to design our buildings better by intelligent building monitoring we can cut energy use/CO2 by half cost- harvesting daylight and reducing the and management systems such as effectively today in most buildings. artificial amount of lighting, through Tendril and Building IQ. an integrated design approach. Many questions have been raised Energy efficiency provides building Which measures, if any, should about the cost-effectiveness and owners with the opportunity to countries adopt to encourage merit of investing in energy efficiency. lower operating costs, increase energy efficiency? Corporations, cities and states that occupancy, enhance building quality Countries should adopt deeper energy- have adopted energy-efficiency and increase financial returns. The efficiency standards, both for new funding strategies have had a positive very rapid growth of green design constructions and retrofits. Companies return from a cost-effectiveness and standards that address health as well should harness the power of social job-creation perspective. For example, as energy and water are making green media by going through social media California’s sustained energy- energy an important branding issue contacts and sharing information about efficiency strategy over the last three and a differentiation strategy for energy use. Banks should structure decades has allowed households corporations, cities and universities. large energy-efficiency funding to save US$56bn in energy over that enables large-scale funding. What are the obstacles to Increasing energy-efficiency financing fully realising the benefits of represents one of the largest and most Demand-side management is energy efficiency? important opportunities not only to key to increasing energy efficiency. We need to be a lot more transparent meet our energy needs and reduce Clear incentives and policy decisions on the cost of energy. An individual carbon emissions, but also to expand towards higher effciency, will help who rents space and doesn’t pay economic growth and job creation. bring about the convergence of the energy bill has no incentive in introducing clean technologies and investing in energy efficiency. There Author Biography reducing waste. This is true in the are currently 15 to 20 American Gregory Kats is President of Capital residential as well as the commercial, states that have no energy efficiency E, a national clean energy advisory services and transport sector, which requirements, whereas we need to firm, and is also Venture Partner will be the main areas of energy adopt standards for buildings and at Good Energies, a billion-dollar growth. meter energy use more effectively. We global clean energy investor, where Mourad Belguedj, are switching more to renewables – he leads investments in energy World Bank, and their limits in terms of reliability efficiency and high performance UNITED STATES and availability can be offset by buildings.|10|
  • 11. Part II: Solutions to 2050 What role for biofuels? Biofuels have been a key component to diversify Brazil’s energy mix, argues Allan Kardec Duailibe, Director of the Brazilian National Agency of Oil, Natural Gas and Biofuels.The world faces a double challenge area, sugarcane mills have been turned the state decide which type of fuel theof guaranteeing energy supply to its into bioenergy complexes, producing car consumes, has boosted ethanolpopulation and providing a clean and ethanol, sugar, electricity, carbon consumption in Brazil enough to balancesustainable environment for generations credits and, in some cases, biodiesel the domestic consumption of gasolineto come. To reach these objectives, the and green diesel fuel. and ethanol. In 2009 Brazilian vehiclesworld’s energy mix must be diversified. consumed more ethanol than gasoline,Countries such as Brazil have applied How did Brazil reach this point? The and it is estimated that more than 50%technology to biofuels to address answer is an agenda that combines of the entire automobile fleet in Brazil isthis challenge. economic, energy, social, environment made up of flex fuel vehicles. and technology policies, along withIn the 1970’s, after the first oil price regulatory transparency and political Two significant results of theshock, Brazil strategically invested leadership. According to Empresa de development of the biofuel industry innot only in exploring oil in the deep Planejamento Energético – EPE (a state- Brazil must be emphasised. First, thesea water, but also in clean energies. controlled enterprise that subsidises the significant reduction of the country’sAfter three decades, the pre-salt oil planning of the energy sector), 43.9% of dependency on foreign oil. Ethanolreservoirs turned the country into a Brazilian domestic energy is generated production has saved over US$60bnmajor oil exporter. However, investments from renewables, compared with the in the foreign trade balance, without in hydraulic energy and biofuels have world and OECD average of respectively considering the earnings from ethanol positioned Brazil as a reference 14% and 6%. Currently, according exports. Second, the decrease of in clean energy. In the biofuels to EPE, biomass-derived electrical greenhouse gas emissions (specifically energy accounts for 4.7% of electricity CO2), since a great part of the carbon consumed in the country. emitted when ethanol is burned is Brazil turned to captured from the atmosphere during biofuels to reduce its In this context, an important innovation sugarcane photosynthesis. dependence on oil but it will in Brazil was the flex fuel – or dual need to diversify its energy fuel – vehicle in 2003, which is capable Biofuels (ethanol, biodiesel and biomass) of running on ethanol, gasoline or have the competitive advantage of supply further to meet any mixture of the two fuels in any being produced in various regions in growing energy demand. proportion. This innovation, which Brazil, meeting local needs and reducing let the consumer rather than transport and distribution costs. The productivity of These strengths are key to a country of sugar cane is much higher than continental dimensions like Brazil. But that of corn and wheat, and Affordable and sustainable although it is possible to grow sugarcane countries should encourage energy solutions for emerging and oleaginous plants almost anywhere mandates to blend ethanol markets hold the key to elevating in Brazil, the Ecological Zoning Law the standard of living for billions. into gasoline. approved by the National Congress This can reduce their dependence on prohibits agricultural and industry-related fossil fuel imports, provide greater Brazil lacks an adequate activities in protected areas such as forests economic independence, and show and marshlands. Meeting the demand for strategy to address structural a path to the developed world on ethanol by 2017 will require the use of only factors that have reduced the how to move towards a sustainable 2.56% of Brazil’s arable land. competitiveness of ethanol. energy infrastructure. Marcos Sawaya Jank, Prof Deepak Divan, The investment in research and President and Chief Georgia Institute of Technology, development of new technologies is Executive Officer, UNITED STATES UNICA another important issue for biofuel policies in Brazil, which include the |11|
  • 12. the global energy conversation training of professionals working in the Biofuels have been a key component to Author Biography biofuel industry. The Science Growth diversify Brazil’s energy mix, and the Allan Kardec Duailibe is currently Acceleration Programme (PAC) launched country is widely recognised as a biofuel Director of the Brazilian National by the federal government has a budget industry leader. However, Brazilian Agency of Oil, Natural Gas and of around US$22bn funded by public and biofuel companies have suffered in 2011 Biofuels. He is a researcher and private resources. The objective is to from poor margins owing to rising prices Professor of Electrical Engineering invest more than 1.4% of the country’s for corn and sugarcane and will need to at the Federal University of GDP in R&D, compared with current scale back their growth ambitions for the Maranhão (UFMA). investment of 1.1% of GDP. coming years. Why economic growth is the new priority for energy Reg Platt, Research Fellow at the Institute for Public Policy Research (IPPR), explains why governments that adopt ambitious and strategic energy policies with growth at their heart are likely to end up on top Last year closed on the back of two since its records started in 2004. unusually optimistic pieces of news: Annual clean energy investment has first, the surprising, albeit limited, risen nearly five-fold, from US$52bn in Re Durban, the progress made at the international 2004 to US$243bn in 2010, a compound danger is that policy is climate negotiations in Durban; second, annual growth rate of 29%. However, as moving too slowly. We have the growth of clean energy investment recent experiences in the solar sector political consensus on a 2° temp beyond US$1trn worldwide. The low show, countries wishing to benefit from rise (above pre-industrial levels) carbon transition has stepped up a these growth industries will need to be limit but continue to move further gear, and with it the international both strategic and bullish. This means along a 4-6° degree pathway. race to develop and deploy low-carbon identifying sectors where they have a Brian Ó Gallachóir, technologies is well and truly under way. comparative advantage and entering University College Cork, Given the perilous state of the global these sectors with bold ambitions. IRELAND economy, this timely shift provides huge opportunities for jobs and growth. In recent years, as governments worldwide have piled support into their Clean energy sectors are already growing domestic solar industries, the price indication that a US industry is materially fast. In November 2011 Bloomberg New of panels has plummeted. The price of injured” by the import of solar panels Energy Finance1 recorded the trillionth polysilicon, a core material, fell by 63% from China “that are allegedly subsidised dollar of investment by governments, in 2011. While such transformational cost and sold in the United States at less corporate and private investors into reductions are welcome, they mask how than fair value”3. The vote clears the way renewable energy, energy efficiency over, supply of panels has caused havoc for additional steps by the commission and smart energy technologies in the sector - many companies have gone and the Commerce Department that bust as a result. The most high-profile of could result in heavy tariffs on Chinese these was Solyndra, whose bankruptcy imports 4. The Ministry of Commerce An international deal involved defaulting on a US$528m loan in China has launched a retaliatory could provide a global economic from the US government 2. investigation into whether American stimulus by providing green subsidies and other policies in the solar, business with a clear commitment At the end of 2011 a number of US-based wind and hydroelectric sectors have solar firms lodged a complaint with the unfairly hurt the industrial development to emission reduction for the US International Trade Commission (ITC) of China’s renewable energy industries. foreseeable future, helping boost alleging that China was driving down the green economy. prices by subsidising its solar exports Putting potential breaches of World Juliet Davenport, and dumping panels on the US market Trade Organisation (WTO) rules to one Good Energy, UNITED KINGDOM (i.e. selling at prices below the costs side, these events show the significance of making and marketing panels) . In with which clean energy markets are December the ITC found a “reasonable increasingly viewed and how hard|12|
  • 13. Part II: Solutions to 2050countries are going to fight for the essential for returning the economy carbon finance, services and projectspoils. However, governments that to a period of sustained growth. management.are bound by outdated views of theenergy sector may fail to capitalise on What this means for energy policy is Prospects for the global economy inthe opportunities. that governments, working with 2012 look bleak, but clean energy private-sector partners, must first offers countries worldwide majorEnergy policy is regularly seen through identify sectors in which their country opportunities. Not all countries canthe prism of a “trilemma” - that is, how to is likely to have a comparative advantage be winners from clean energy, butbalance the needs for an energy system and then put in place the appropriate governments that adopt ambitious andthat is at once low-cost, low-carbon and support. This could include investing in strategic policies with growth at theirsecure. A new approach to this problem skills, training and R&D, providing tax heart are likely to end up on top.is required. Governments should make credits and low-interest loans to support 1 http://bnef.com/PressReleases/view/176investments to create a low-carbon and start-ups and the commercialisation 2 h  ttp://www.nytimes.com/2011/11/25/opinion/the-secure energy system on the basis of the and market breakthrough of new solyndra-mess.html 3 h  ttp://www.usitc.gov/press_room/news_growth and jobs potential that these technologies. Comparative advantage release/2011/er1202jj1.htminvestments offer, not merely on account will arise from a mixture of factors, 4 h  ttp://www.nytimes.com/2011/11/26/business/of which is the cheapest. including resource availability and energy-environment/china-looking-into-us- policies-in-renewable-energy-trade.html?_ the nature of the technologies. It r=1&scp=3&sq=solarworld&st=cseForthcoming research from the IPPR will will vary between countries - hence,argue the case for countries like the UK while offshore wind is likely to be a key Author Biographyto develop modern sectoral industrial opportunity for the UK, concentrated Reg Platt is a research fellowpolicies. These policies should include solar power may be more appropriate in at the Institute for Publicthe public and private sectors working Spain. China with its cheap labour force Policy Research (IPPR). He hastogether to identify opportunities in has clear advantages in manufacturing responsibility for developingsectors where the UK has a comparative but for emerging technologies which policy positions across a wide rangeadvantage and overcoming barriers to require high level engineering and of domestic climate and energydevelopment. The report argues that, in scientific expertise, such as carbon issues including micro-renewables,the new global economy, characterised capture and storage, the UK may be energy efficiency, behaviour change,by the rise of Asia and decline of a single better placed. A complementary community-led initiatives, cleanparadigm to organise our economic strategy for the UK would also be to tech and corporate sustainability.thinking, an activist government is play to its current strengths in New policies for new energy demands Government regulators and private investors should work together to establish a clean and reliable supply of energy, argues Commissioner John Norris of the Federal Energy Regulatory CommissionThe energy industry is facing of meeting the energy needs for moreunprecedented and rapid change. people in the world than ever before.  arbon has costs. To CFrom a US and international perspective, allow the markets totwo of the most marked challenges And so a key question becomes, how do we work you need carbonthat are driving this change stem from spend money wisely? How do we ensurethe need to expand our energy supply that increases in energy costs are no more pricing and companiesand the need to grapple with climate than necessary to establish a clean and should use it internallychange. Meeting these challenges will reliable supply of energy? to make more rationalincrease costs to consumers as we look investment decisionsto replace cheap but carbon-intensive In an industry as capital-intensive as in energy.energy sources and also modernise energy, governments cannot meet these Gregory Katsageing infrastructure that was designed challenges alone. This is particularly President, Capital Eto transport and utilise these old true in the current context of spiralling Venture Partner, Good Energiesenergy sources, all within the context government deficits and mounting |13|
  • 14. the global energy conversation deal of uncertainty and inefficiency, to infrastructure development and which ultimately leads to higher costs ensure open access to the networks. It is absolutely vital for consumers. In some instances, On the markets side, we regularly that governments have a clear policy uncertainty could lead entities review the rules and regulations that policy on energy strategy and to continue running older and less govern participation to ensure robust this is communicated in a way efficient plants until they are certain competition. For example, electricity that allows industry and capital cleaner and more efficient generators market rules were largely designed with to respond favourably and in will be required. While this could be traditional thermal and hydroelectric a way that does not prejudice cheaper in the short term and delay generation units in mind. These rules commitments already made. the investment in new infrastructure, may need to be re-examined in order to We recognise we are living in in the end it will result in dirtier and accommodate new market entry from a time of limited government less efficient units running longer at a intermittent renewable resources, funding and concerns for the cost both to consumers and to human electric storage providers, energy cost of energy, but capital is health. While some are waiting until a efficiency and demand resources, national policy is established before among others, that will all be needed to scarce and is subject to global acting to address the issue, other help expand energy supply and replace competition. Those governments industry leaders are changing their ageing infrastructure. Simply put, we which do not create a workable practices in anticipation that Congress need to modernise market rules to policy framework that recognises will eventually act to establish clean keep pace with the new realities of our this will see their energy energy standards and a national climate expanding energy supply. infrastructure programme change policy. In the interim, the flounder. only clear requirements are various It is important to emphasise that efforts Michelle Davies, state renewable energy standards and to expand energy supply will be all the Eversheds, climate change initiatives. This has more difficult in the absence of adequate UNITED KINGDOM made states, rather than the federal action to address climate change. Clearly government, a major driver of national it is possible to expand energy supply energy policy. While states should be in a way that is at odds with addressing calls for fiscal discipline. While applauded for their leadership, the climate change – in fact, it is happening government action will be one driver different rules that each state develops every day. The investments needed to of the coming change in our energy prevent markets from investing in expand energy supply typically involve industry, private investors, market efficient and cost-effective solutions long-lived and capital-intensive assets participants and technology developers that only a national policy on climate that cannot be changed or replaced will also need to answer the call. change can support. overnight. We need to make Any basis for action must begin by While firm government action is addressing climate change. The science needed to enable the markets to An important surrounding climate change is not develop solutions to climate change, going to suddenly change, nor will the the appropriate role for government requirement for policies to issue of climate change suddenly solve in expanding energy supply may be have the desired effect is for itself. The US and other governments more subtle, but no less important. their actions to have “tlc” - must address this issue head-on, Here, government action is needed to transparency, longevity and because market action alone will eliminate unnecessary barriers and certainty/consistency. It makes not be able to stop or reverse climate level the playing field for participation it very hard for businesses to change. Once governments establish by different players and technologies invest when policies change the ground rules that require everyone in the market. relatively frequently - and to pay the full environmental cost of that’s happening or has their energy usage, markets can be In the US, the Federal Energy relied upon to make the extraordinary, Regulatory Commission is doing its happened recently in a number long-term investments needed to part to remove barriers and ensure a of countries. reduce carbon emissions from the level playing field in the electricity energy sector. and natural gas wholesale markets David Elmes, Warwick Business School, and transmission networks that it UNITED KINGDOM In the US, the lack of a national climate regulates. On the network side, we change policy has created a great continually work to remove barriers|14|
  • 15. Part II: Solutions to 2050sure these investments are done right – continue to act to level the playing field Author Biographythe first time. to allow a greater diversity of resources to Commissioner John Norris was participate in energy markets. Once the nominated by President Barack ObamaThe US Congress needs to establish a playing field is more level and barriers to the Federal Energy Regulatorynational energy policy, clearly setting out are mitigated, the market can begin to Commission and confirmed by the USthe requirements that the energy industry efficiently allocate the capital that will Senate for a term expiring in Junemust meet. Unfortunately, this does not be necessary to address the unprecedented 2012. Mr Norris, a lawyer, has yearsseem likely in the foreseeable future. As challenges facing today’s industry. of experience in energy policy anda result, even without a clear national Private investment will be key to regulatory affairs.energy policy, government regulators must meeting these challenges. The future of fossils Wim Thomas, Chief Energy Advisor at Shell, answers questions about fossil fuels and investment in a cleaner energy mix What role do you see for fossil fuels in systems used by our children and the energy mix in 2050? grandchildren. That means if we truly Even if oil spikes, carbon Fossil fuels will remain a very important want to move to a low-carbon energy emissions from coal in the US, part of the energy mix. Shell’s system, we should make the decision now China and India must be addressed. Blueprint scenario predicts that by and not postpone it for a couple of years. Jud Virden, 2050 renewables will account for 30% Pacific Northwest of the energy mix and fossil fuels 60%. Do you think governments are prepared National Laboratory, JAPAN The reason that fossil fuels will remain to invest in the expensive infrastructure dominant is that the developing world required for a cleaner energy system? needs energy to fuel its rapid economic We need to distinguish what’s desirable overheat the market. So there’s a growth, and fossil fuels are available and doable. You may desire to switch balance we need to play there. now, whereas it takes decades to build very fast to a low-carbon system but new infrastructure for renewables how much can you afford to accelerate Are energy industries investing enough at scale. that process? At the moment, it’s very in carbon capture and storage (CCS) difficult for countries with budget technologies to make fossil fuels Of course, people will ask why we can’t deficits to give a stronger stimulus for cleaner? switch to renewables even faster. investment in renewables. Such technologies are very expensive Empirical evidence has shown that to implement, so we need to learn more it takes about three decades for new Is there a strong economic about how to make them cost-effective. technologies such as wind or solar argument for retaining fossil fuels in How much as a company can you afford to reach 1% of market share. That’s the energy mix over the next 40 years? to spend your shareholders’ money on the level when government can stop Are we sacrificing environmental goals that investment for the greater good? subsidising them because it means that for economic benefit? We need public-private partnerships renewables have become competitive Not necessarily, we need to be to make it happen. So far, there with the rest of the energy industry. pragmatic. Switching from coal to are precious few CCS projects around It then takes another three decades gas for example is very affordable, the world, and we will need more of before these technologies reach their full and reduces carbon emissions at the these to gain experience and bring potential, that is say, 10% or 20% of the same time but a solution on carbon costs down before moving to a market share. capture and sequestration is also larger scale. needed in the near future. In the This really underlines the point that meantime, we still have to build Will a transition to gas enable us there’s a very long lead time for these wind and solar parks, with enough to reduce carbon emissions quickly types of investment. The decisions we incentive for the industry to grow, but enough? make now will determine the energy at a measured pace so that it doesn’t It’s part of the solution. Gas is |15|
  • 16. the global energy conversation Author Biography available, whereas CCS will take at least get involved—governments, companies, Wim Thomas is Chief Energy Advisor at another ten years to take off on a large people—to change behaviours. I see Shell and heads the Energy Analysis scale. But we will need to invest in other a great role for built-in solutions in Team in Shell’s Global Scenario Group, things such as energy efficiency and city design. About half of the world which is part of the Corporate Strategy behavioural change as well. population now lives in cities, and Department. He and his team are many big cities will need to be built in responsible for worldwide energy Is there any role for energy producers the future. I think people will get on analyses, long-term global energy to support people in changing their board with high-efficiency homes, a scenarios, and advise Shell companies behaviour around energy? clever public transport system and so on on a wide range of energy issues. A very broad group of people have to because they’re more convenient. The case for power storage Large-scale power storage will be a key driver of the renewables revolution, argue Tim Weiss and Ed Whittingham from the Pembina Institute Aiming to generate one-fifth of our more variable output supply than they Alberta Innovates, a Canadian provincial electricity demand from renewable energy originally thought possible. government research arm, recently found may have seemed impossible a decade that storing wind power generated at off- ago — now it’s becoming the norm in The case for power storage peak times can improve the economics of North America. With almost half of the Large-scale power storage is widely these wind projects by as much as 42%. US states and Canadian provinces setting accepted as one key technological Storage abilities will also increase and targets of at least 20% of their electricity innovation that requires development and improve power quality and reliability, coming from renewable resources by the deployment to allow renewable energy to potentially reducing transmission year 2020, North America has joined the become the backbone of power systems. requirements as well as peaking costs. renewable energy revolution. In many cases, current renewable energy targets require very little change to the What’s still to come As long as renewable energy technologies overall system. Modest increases in targets Many questions about power storage were marginal players, the variability will at first require only minor upgrades to remain unanswered, including which of their output was a manageable issue. transmission, smart grid investments and technologies are most appropriate in However, as clean energy targets increase, additional peaking power, while moving which markets, what scale of systems this variability will start to pose more closer to a 100% renewable grid will are optimal for different electricity significant challenges for system operators require large-scale energy storage. supply systems, and what policies and regulatory bodies more familiar with traditional sources of power, Numerous technologies exist to store such as coal, natural gas and nuclear. electricity, including pumped hydro, Among all energy resources, Left unaddressed, variable output compressed air, fuel cells and simply solar energy is the most abundant technologies like wind and solar will start batteries, some of which are already one and compared to the rate at to encounter barriers to high levels of in commercial operations around the which all energy is used on this market penetration. world. In addition to improving technical planet the rate at which solar integration, the ability to store large energy is intercepted by the earth is Fewer and fewer technical challenges volumes of electricity generated from about 10,000 times higher. There is remain as obstacles to reaching the wind, sun, tides and other variable a whole family of solar technologies renewable energy targets in North output sources can also improve the which can deliver heat, cooling, America and Europe. With experience economics. Storage systems can enable electricity, lighting, and fuels for a and changes to the operating framework, host of applications. proponents or system operators to electricity system operators in countries choose the timing, and therefore the Arnulf Jäger-Waldau, like Scotland and Denmark — which have price, of feeding renewable power into Institute for Energy and Transport, remarkable targets of 100% renewables the grid. While it depends significantly ITALY — have found that they can integrate on the local electricity market structure,|16|
  • 17. Part II: Solutions to 2050 ELTRA. According to ELTRA’s chairman However, there is still a need to move this when presenting their 2003 annual report: development into widespread adoption. Carbon capture and storage (CCS) is extremely important for “[We] said that the electricity system could Building on lessons from Canada’s Clean gas and containing industrial not function if wind power increased above Energy Fund investments and the Canadian emissions. The IEA predicts 500 MW. Now we are handling almost five government’s success in catalysing wind that CCS can account for 18% of times as much. And I would like to tell the energy through its production incentives, emissions reduction by 2050, but Government that we are ready to handle strategic investments in energy storage delaying action by 10 years would even more, but it requires that we are can help build Canada’s participation in increase the cost of doing so by at allowed to use the right [policy] tools to the global clean energy economy, and least a US$1trn. manage the system.” provide federal support for all Canadian Joan MacNaughton provinces toward achieving Canada’s goal Executive Chair of the 2011 Energy Canada’s role of generating 90% of its electricity from Policies Assessment Report The storage technologies that will come non-emitting sources by 2020. Overall, the World Energy Council to lead will depend significantly on local Pembina Institute thinks that Canada market structure. As a Canada-based is well positioned to lead this “big will help push these technologies think-tank, the Pembina Institute believes idea” and to foster the next phase of to wide-spread commercialisation. that Canada has an opportunity to play a the renewable energy revolution that is What is clear, however, is that to leading global role given its expertise in already underway. move storage technologies beyond their key storage technologies including fuelcurrent relatively limited levels of market cells, hydro-power (pumped storage), as Authors’ Biographiespenetration, some form of government well as drilling and geology (compressed Dr Tim Weiss is a professional engineersupport is required. This support — which air storage). Just as Canada currently and the director of renewableis likely to be focused on technology stores natural gas for seasonal demand energy and efficiency policy atdemonstration and commercialisation variations, storing electricity will the Pembina Institute, a leading— will still take years to result in become increasingly important for supply Canadian environmental think-tank.significantly improved markets for the variations. He specialises in clean energy policyintegration of renewables. design, research and strategic decision The Canadian government has taken some making.That said, waiting for these technologies initial steps to foster this developmentshould not be a reason to slow current through its Clean Energy Fund that has Ed Whittingham is the Executivedevelopment of clean energy. Many recently given support to individual Director of the Pembina Institute.electricity grids can already accommodate electricity storage projects, such as Through his work, Mr Whittinghamadditional renewable power using existing Electrovaya’s demonstration project with regularly advises governments,load-balancing measures, and often much automotive-scale lithium ion batteries, transnational companies, NGOs andmore than originally expected, as shown and New Brunswick Power’s research on research networks on energy issues.by the Western Danish system operator load control in four Maritime communities. The nuclear option José Goldemberg, Professor Emeritus of the University of São Paulo, explains why he thinks it is unlikely we will see a resurgence of nuclear powerThere are currently 443 nuclear reactors gas or other fossil fuel imports used of nuclear reactors and the increasingoperating around the world, providing for electricity generation. There has attractiveness of alternative energyapproximately 15% of the world’s been talk of a renaissance of nuclear sources for developing countries,electricity supply. The great majority power as a cost-effective means of means that the resurgence of nuclearof these reactors were installed in decarbonising energy systems. However, will be limited.OECD countries 30-40 years ago to a reconsideration of risks in the lightimprove energy security by reducing of the Fukushima accident in Japan last The possibility of a nuclear renaissance or eliminating the need for natural year, combined with the rising costs The declining cost of oil and gas and |17|
  • 18. the global energy conversation high-profile nuclear disasters at Three Mile Island (1979) and Chernobyl (1986) NUCLEAR REACTORS under CONSTRUCTION in 2012 signalled the end of nuclear energy expansion some 20 years ago. More recently, however, concerns about rising 30 greenhouse gas emissions (GHG) and 26 effective lobbying by energy companies 25 has sparked a government-subsidised revival of nuclear power. By the end of 20 2010 there were 64 new reactors under construction around the world, including 15 28 in China and Taiwan alone (see chart). 10 10 Reconsidered risks and rising costs 6 5 5 This mini-revival of nuclear investment 2 2 2 2 2 will be short-lived. One of the main 1 1 1 1 1 1 reasons is that the Fukushima disaster, 0 a il ia a d e a n n ia ia n e US with its estimated cost of US$257bn, a tin in nc di in an pa ta wa az re ss ak ar In Ch ra is a Ko Br nl Ja Ru lg i n ov Fr Ta k Uk ge Fi Bu Pa Sl h has severely dampened enthusiasm for Ar ut So a nuclear power and has directly led to a Source: International Atomic Energy Agency 2012 number of countries, including Germany, Japan, Belgium and Italy, taking the decision to phase out existing or it is unlikely that countries with a GDP of Germany in 2010 to match that of planned nuclear reactors. smaller than US$50bn would be able to the entire European Union in 2035. purchase a nuclear reactor worth at least Meanwhile, the Middle East’s demand Another concern is that the cost of a few billion dollars. In addition to that, for gas is expected to almost double to a nuclear power has risen sharply in recent electric grids must have a minimum size level similar to that currently consumed years. Nuclear power plants come with to accommodate a large nuclear reactor, by China. It is thus likely that nuclear a price tag of around US$6-$10bn each, for technical reasons. Excluding the energy will be a last-resort option for so are already much more expensive countries that do not meet these criteria the supply of electricity, rather than a to build than plants powered by fossil leaves a shortlist of 16 countries that priority in economic terms. fuels. Added to this, new reactors under could be considered serious candidates construction in Finland and France have for purchasing large nuclear reactors, The future of nuclear energy hinges gone billions of dollars over budget, including Kuwait, United Arab Emirates, on its expansion in developing casting further doubt over affordability. Malaysia, Saudi Arabia, Greece, Chile, countries, mainly China and India. Similarly, new regulation will inevitably Portugal, Singapore and Poland. However, the rising costs of nuclear increase the cost of nuclear power. power plants and alternative cost- Plants approaching the end of their A close examination of the potential effective sources of energy in developing initial 40-year license period and resources of these 16 countries in countries mean that it is very unlikely lacking certain modern safety features oil, gas, biomass or hydroelectricity we will see a widespread resurgence will face additional scrutiny in having indicates that they have a number of of nuclear energy. their licenses extended. Little wonder other options to generate the electricity that the International Energy Agency they need. In all of them, the cost Author Biography (IEA) has already reduced its projection of nuclear-generated electricity is A member of the Brazilian Academy of for the number of new reactors to be significantly higher than other options, Sciences, Jose Goldemberg is presently installed up to 2035 by 50%. depending on the availability of gas Professor Emeritus of the University or hydroelectric sites. Malaysia, for of São Paulo. Between 1990 and 1992 Alternative options for developing example, is the world’s second-largest he was Brazil’s Secretary of State for countries producer and largest exporter of palm Science and Technology and Minister Of the 52 countries - which include 40 oil, and is therefore a strong advocate of State for Education. More recently, developing countries - that expressed of biomass-derived energy. between 2002 and 2006, he was interest to the International Atomic Secretary for the Environment of the Energy Agency (IAEA) in 2009 in Elsewhere, the IEA expects China’s gas State of São Paulo. acquiring their first nuclear power plant, demand to rise from about the level|18|
  • 19. Part II: Solutions to 2050 appendix: survey resultsThese are the full results of a survey on energy challenges conducted bythe Economist Intelligence Unit and supported by Shell. The survey wascarried out in September 2011.Rank the following energy sources according to how great a share of the worlds energy you think they will be providing in 2030?Please rate on a scale of 1 to 3, where 1=Largest share and 3=Smallest share.(% respondents) 1 Largest share 2 3 Smallest share Don’t knowFossil fuels 65 24 10 2Renewable energy 12 44 43 2Nuclear energy 10 52 35 3Rank the following energy sources according to how great a share of the worlds energy you think they will be providing in 2050?Please rate on a scale of 1 to 3, where 1=Largest share and 3=Smallest share.(% respondents) 1 Largest share 2 3 Smallest share Don’t knowFossil fuels 21 38 38 3Renewable energy 49 35 14 2Nuclear energy 21 39 36 4 |19|
  • 20. the global energy conversation Which energy sources do you think offer the most potential to increase energy supply and reduce carbon emissions over the time period of 2011-2030? Select three. (% respondents) Solar 48 Wind 46 Nuclear 44 Gas 34 Hydro 30 Biofuels 20 Geothermal 15 Oil 11 Hydrogen 7 Coal 6 Other 1 Dont know 2 Which energy sources do you think offer the most potential to increase energy supply and reduce carbon emissions over the time period of 2031-2050? Select three. (% respondents) Solar 68 Wind 44 Nuclear 35 Hydrogen 27 Geothermal 25 Hydro 23 Biofuels 20 Gas 14 Oil 3 Coal 2 Other 5 Dont know 2|20|
  • 21. Part II: Solutions to 2050How supportive are you about increased use of the following energy sources?(% respondents) Not at all supportive Somewhat unsupportive Neither supportive nor unsupportive Somewhat supportive Very supportiveNuclear 16 18 13 32 20Biofuels 9 17 18 32 25Natural gas1 9 19 41 30“Unconventional” gas (eg gas which is accessed through “fracking”) 13 16 36 23 12Wind 2 3 9 26 60Solar1 2 6 16 75Oil 18 32 26 20 4Coal 35 29 17 14 5Geothermal1 6 18 37 39Hydro1 5 12 36 46Hydrogen 4 6 26 28 36Do you think improved access to "unconventional" gas supplies will slow the growth of renewable energy sources?(% respondents)Yes 52No 32Dont know 16Is your government investing enough in the following technologies?(% respondents) Yes No Don’t knowResearch and development into renewable energy 35 60 5Large scale deployment of renewable energy technologies 28 66 7Nuclear power 32 60 8Making fossil fuels cleaner (eg through carbon capture and storage) 26 64 10Increasing access to fossil fuels 47 41 12Other, please specify 15 28 56 |21|
  • 22. the global energy conversation Please indicate how hostile or supportive you would be of reforms aimed at combating climate change if they had the following impacts on your real income: (% respondents) 1 Hostile 2 3 Neither hostile nor supportive 4 5 Very supportive Dont know No change in real income 5 3 11 6 73 2 Up to 1% decrease 6 6 14 22 52 1 Between 1-3% decrease 8 10 23 24 34 1 Between 3-5% decrease 16 19 20 20 24 2 More than a 5% decrease 33 18 20 11 15 3 How significant a role do you think energy efficiency can play in reducing carbon emissions? (% respondents) Highly significant 58 Significant 37 Not significant 4 Don’t know 0 How supportive are you of governments using the following tools to improve energy efficiency? Rate on a scale of 1 to 5 where 1 = Very supportive and 5 = Not at all supportive. (% respondents) Not at all supportive Somewhat unsupportive Neither supportive nor unsupportive Somewhat supportive Very supportive Information and advice 3 5 10 27 55 Regulation (eg of light bulbs or building standards) 6 8 9 33 44 Loans for energy efficient investments 6 8 16 32 37 R&D investments in energy efficient technologies 3 5 9 28 55 Rewards for energy efficient behaviour (eg tax breaks) 5 8 12 30 45 Energy efficient procurement policies 3 7 19 33 38 Other, please specify 7 7 35 13 37|22|
  • 23. Part II: Solutions to 2050Which of the following steps are you taking to conserve energy and reduce carbon emissions? Which would you consider taking?(% respondents) Already taking Would consider taking Would not consider takingSwitching off lights when not in use 95 51Switching off electrical appliances when not in use 85 13 2Turning down heating in winter 58 28 14Buying more energy efficient appliances 68 30 2Installing renewable domestic energy sources (eg, solar panels or wind turbines) 15 73 12Flexible working (including working from home and using teleconferencing) 36 51 13Driving less 43 42 14Use public transport more 37 42 21Taking fewer flights 26 44 30Other, please specify 38 48 14Do you expect the international community to reach a meaningful deal on climate change at the UN’s climate changeconference in Durban later this year?(% respondents)Yes 15No 79Dont know 7How much extra, if anything, would you be willing to pay for goods and services to cover the cost of CO2 emissions related totheir production? How much do you think your company would be willing to pay?(% respondents) Nothing Up to 2% 2.1% - 5% 5.1% - 10% > 10%You 19 33 31 12 5Your company 26 28 30 11 5 |23|
  • 24. the global energy conversation To what extent do you agree or disagree with the following statements? (% respondents) Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree Democracy stands in the way of the world making headway with climate change policy. 11 31 18 17 22 Politicians should ignore citizens who do not agree with policies combating climate change. 13 29 14 23 21 Democratic states should reconsider their form of government to deal with climate change more effectively. 17 25 14 10 34 Some nation states, depending on size and pollution levels, should have more control over environmental policy making. 30 32 14 12 12 International organisations hold enough power to steer nation states toward effective climate change policy implementation. 13 19 15 29 24 Who should take most responsibility for dealing with climate change? (% respondents) Nation states 41 United Nations 20 Individuals 17 Businesses 13 Regional organisations 4 Dont know 2 Non-governmental organisations 1 Other 1|24|
  • 25. Part II: Solutions to 2050In which country are you personally located?(% respondents)United States of America 15Brazil 7India 7United Kingdom 6South Africa 5Canada 5Mexico 5Nigeria 4Australia 3Singapore 3United Arab Emirates 3Germany 2Argentina 2Switzerland 2Chile 1Kenya 1Spain 1Italy 1Netherlands 1China 1France 1Ghana 1Other 24 |25|
  • 26. the global energy conversation In which region are you personally based? (% respondents) Latin America 21 Middle East and Africa 20 North America 20 Asia-Pacific 19 Western Europe 18 Eastern Europe 2 What is your primary industry? (% respondents) Financial services 25 Professional services 13 IT and technology 8 Energy and natural resources 8 Manufacturing 7 Education 5 Healthcare, pharmaceuticals and biotechnology 4 Government/Public sector 4 Entertainment, media and publishing 4 Construction and real estate 3 Agriculture and agribusiness 3 Telecommunications 3 Automotive 2 Chemicals 2 Consumer goods 2 Transportation, travel and tourism 2 Logistics and distribution 2 Retailing 2 Aerospace/Defence 1|26|
  • 27. Part II: Solutions to 2050What are your companys annual global revenues in US dollars?(% respondents)$50m or less 37$50m to $100m 7$100m to $250m 6$250m to $500m 3$500m to $1bn 7$1bn to $5bn 13$5bn to $10bn 7$10bn or more 19Don’t know0Not applicable0Which of the following best describes your job title?(% respondents)CEO/President/Managing director 29SVP/VP/Director 18Manager 16Head of department 9Board member 7Other C-level executive 5Head of business unit 5CFO/Treasurer/Comptroller 4CIO/Technology director 3Other 3While every effort has been taken to verify the accuracy of the information in this report, neither The Economist Intelligence Unit Ltd. nor thesponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information opinions orconclusions set out in the white paper. |27|
  • 28. the global energy conversation notes|28|
  • 29. Economist Intelligence UnitThe Economist Intelligence Unit (EIU) is the world’s leading resource for economic and business research, forecasting and analysis. It provides accurateand impartial intelligence for companies, government agencies, financial institutions and academic organisations around the globe, inspiring businessleaders to act with confidence since 1946.Economist Intelligence Unit26 Red Lion SquareLondonWC1R 4HQTelephone + 44 (0) 20 7576 8181Fax +44 (0) 207 576 8472E-mail london@eiu.comwww.economistconferences.co.ukCopyright© 2012 The Economist Group. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, ortransmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of The EconomistGroup. Whilst every effort has been taken to verify the accuracy of information presented in this document, neither The Economist Group nor itsaffiliates can accept any responsibility or liability for reliance by any person on this information.