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.
[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]
Let me start with the electricity sectorMassive deployment of low- or zero-carbon technologies is needed to de-carbonise the world’s electricity supply in 2DS. [KEY MESSAGE]Today we are far from that low-carbon electricity system. Global electricity production is still heavily reliant on fossil fuels and produced almost 40% of energy-related CO2 emissions (including process emissions in industry) in 2009.Global electricity demand grew by more than 4 000 TWh, or almost one-third, between 2000 and 2009.The majority of the growing electricity demand has been covered by fossil fuels over the last two decades: primarily coal-fired generation in non-OECD countries and gas in OECD countries. Three-quartersof coal-fired plants in operation use in efficient sub-critical technology. The picture in 2050 under 2DS looks radically different: Renewables will generate more than half the world’s electricity in the 2DS. [KEY MESSAGE]Global electricity generation doubles between 2009 and 2050from 20 000 TWh to more than 40 000 TWh, fuelled by demand in non-OECD countries like China and India. Renewable sources generate more than half (57%) of global electricity, 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 emissions per kWh falls by 80% compared to 2009.
In the 2SDS, the electricity sector changes from a system being dominated by fossil fuels today, largely coal, to one where more than 80% are based on low-carbon technologies, notably nuclear, but also renewables.Korea has already takes steps in the direction of decarbonising the electricity sector. The 2008 announced “Low-Carbon, Green Growth” strategy is a top national policy priority in Korea and initiated several initiatives to leapfrog into a low-carbon society. Korea was among the top ten countries in terms of installed solar PV capacity in 2010. In its national energy plan, Korea has itself the goal to increase the renewable share in power generation to 11% by 2030 (compared to around 1% in 2009).The future of nuclear power, which is an important part of the electricity sector in Korea with a share of 33% in 2009, has become somewhat controversial after the Fukushima disaster. As nuclear in the 2DS covers almost half of the electricity needs, a phase-out would put additional burden on renewables and CCS to achieve the climate targets.
Reaching the 2DS will require massive investments in low-carbon technologies over the next four decades.Deployment rates for renewables, especially solar PV and wind, have to be accelerated. As shown in the previous slide, nuclear can play an important role, but requires also a more than threefold increase in construction rates for the next four decades.This investment will benefit from complementary efforts to address public acceptance on the security of nuclear plants.For context (Recently, old nuclear generator Gori #1(587MW) re commissioning is a sensitive issue after IAEA’s security check due to small outage of backup diesel generator. Local people and NGO are against the re operation of Gori#1 nuclear. Due to outage and security issue brought KHNP to dismiss CEO.)
As I showed just before, variable generation will pose additional challenges to the electricity system. New demand from electric vehicles – alone accounting for 11% of global electricity demand in 2050 – and increased electrification of space conditioning (heating and cooling) will add to these. This will compound existing concerns with respect to peak power demand stressing the electricity system.Aside from “dispatchable” power plants, there are – potentially at least – 3 other sources of flexibility: demand-side response via a smart grid, energy storage, and trade with neighbouring markets via interconnectors. In essence, all four resources can provide the same flexibility service. A stronger and smarter grid must be therefore be a central priority. [KEY MESSAGE]Additionalcontext: (Korea will start new demand response market program with capacity payment. That is new methodology to promote and explore potential demand curtailment. Also, Korea can utilize the Advanced Battery technology like Li-ion for real time balancing and load levelling at summer and winter peak time. To avoid the risk of isolated power system operation, we can imagine the trading with neighbouring countries’ market via interconnectors. For instance, Asian Super grids among China, Korea and Japan may be discussed in the near future. It will help to supply reliable electricity considering each country’s different load pattern.)
Strengthening and smartening the grid will of cost money, but again our analysis shows the net benefits are significant In fact, smart grid benefits exceed costs by a factor 1.5- 4.5. [KEY MESSAGE]This makes a strong case for smart-grid technologies. However, benefits are typically spread throughout the electricity system and rather than restricted to the sector where investments are made. This complicates the business case for investments and is a barrier to deployment. [KEY MESSAGE]Policy and regulatory measures are needed to address this barrier, so that costs and benefits are better shared among stakeholders.Identifying the key issues in the electricity system - such as peak demand or variable renewable deployment – and determine what resources are available to address these – using both conventional approaches and smart grid technology. When the extent of these resources is known, and the present need for them also clear, the ability to choose solutions that will provide both short term and long-term economic, secure and sustainable electricity system.
While it is vital to end our addiction to fossil fuels, it is important to acknowledge that fossil fuels still will play a vital role in the future. Natural gas, oil and coal will remain important to the global energy system for decades. [KEY MESSAGE]Natural gas remains important until 2050 in reaching the 2DS.The share of unconventional gas is forecast to rise steadily to 2050.Technology improvements will go hand in hand with the reducing environmental impact of exploration, production anduse of gas.However, if we are to reach the 2DS, at some point gas becomes part of the problem rather than part of the solution. [KEY MESSAGE]Like coal and oil, gas is a fossil fuel and its use produces CO2. In the 2DS, power generation from natural gas increases to 2030 but must decrease thereafter. [It is worth noting, however, that the trajectory after 2030 will be dependent on the gas price and on the maturity and cost of CCS. If gas prices fall even further and CCS develops better than we expect, gas use could be higher even in the 2DS]
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
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
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.
This decade we will see an historic shift in demand for cars. Non-OECD car sales – driven by countries like China -- are set to overtake OECD car sales before 2015.Rich countries are increasingly relying on energy-intensive transport.Fuel economy has improved but more stringent performance standards are vital.Policy can create the right incentives for consumers to choose fuel efficient vehicles.Look at the case for Electric Vehicles. Governments have set targets to achieve annual sales of 7 million electric vehicles by 2020, but after 2014, announced manufacturer targets are less certain and less predictable. Although industry capacity can change, this points to an important general message: Government ambitions must translate into action on the ground. [KEY MESSAGE]Again, this is not just about the individual technologies but the system as a whole. Without supporting infrastructure we will not see the vehicles on our roads. [KEY MESSAGE]
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 appliancesand 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.
ETP 2012 looks to 2050 and then over the horizon to 2075. It asks: Is a zero carbon future possible by 2075? Although the uncertainties are great, the main conclusion is very clear:A zero-carbon future looks possible but will be very challenging even if 2050 targets are met in the 2DS. [KEY MESSAGE] Integrating variable renewable sources in the electricity system will be key, and will require a mix of grid expansion, flexiblegeneration plants, demand-side management and storage technologies.Bioenergy plays an important role in determining the CO2 reduction potential to 2075. If biomass use is frozen at 2050 levels (for example, due to land use constraints), CO2 emissions in 2075 are significantly higher than if it can continue to grow, at least with the technology portfolio considered in ETP 2012.Hydrogen may play an important long-term role as one of few zero emission energy carriers.Advanced and break-through technologies may be necessary to reach zero emissions by 2075 [KEY MESSAGE]IF NEEDED, example breakthrough techs:Power gen: CCS combined with bioenergy to create negative emissionsIron and steel: hydrogen use and steel from electrolysis increase. CCS heavily deployed.Chemicals: Hydrogen becomes the primary feedstock for ammonia, methanol, ethylene and propylene. All new ammonia and ethylene plants equipped with CCS.Pulp & paper: Switch away from fossil fuels to renewables and heat pumps for paper drying. CCS installed in 75% of all pulp plantsAll sectors: enhanced energy efficiency.Transport: Hydrogen fuel cells in shipping, radically better batteries, charge-as-you-drive technologies
While public RD&D peaked in 2009 as a result of economic stimulus spending, it declined in 2010 to just above 2008 levels. Preliminary 2011 data suggests, however, that spending is again on the rise- which is positive. But - overall, energy sector only accounts from about 4% of total government R&D spending, down from above 11% in 1980. This small share and significant decline represents a major challenge given the strategic importance of this sector. Coupled with continued measures aimed at fostering early deployment to provide opportunities for learning and cost reduction for more mature technologies, targeted RD&D efforts will help bring key early stage clean energy technologies to market. Why is this important? Next Slide
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!
Energy Technology Perspectives 2012: Tapping technology's potential to secure a clean energy future