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                                 IEA - Energy Technology Perspectives 2012


    Most graphs and the data behind them are available for download from http://www.iea.org/etp/secure/,
                         the required password received upon purchase of the book.

                       For questions please contact the ETP team etp_project@iea.org

                                                                                                   © OECD/IEA 2012
Table of contents
                  To jump to a specific section: Right click, then hit “open hyperlink”
   0. Context
Part 1. Vision, Status and Tools for the         Part 4. Scenarios and Technology Roadmaps
    Transition                                      11. Electricity Generation and Fuel
   1. Global Outlook                                Transformation
   2. Tracking Clean Energy Progress               12. Industry
   3. Policies to Promote Technology               13. Transport
    Innovation                                      14. Buildings
   4. Financing the Clean Energy Revolution        15. Roadmaps
                                                    16. 2075: can we reach zero emissions
Part 2. Energy Systems Thinking                     17. Regional Spotlights
   5. Heating and Cooling                                17.1 ASEAN
                                                          17.2 Brazil
   6. Flexible Electricity Systems
                                                          17.x Japan
   7. Hydrogen                                           17.3 China
                                                          17.4 European Union
                                                          17.5 India
Part 3. Fossil Fuels and CCS
                                                          17.6 Mexico
   8. Coal Technologies                                  17.7 Russia
   9. Natural Gas Technologies                           17.8 South Africa
                                                          17.9 United States
   10. Carbon Capture and Storage
    Technologies
                                                                                             © OECD/IEA 2012
Context
Chapter 0




            © OECD/IEA 2012
ETP 2012 – Choice of 3 Futures


         2DS                       4DS                      6DS
a vision of a sustainable   reflecting pledges by   where the world is now
energy system of reduced    countries to cut        heading with potentially
Greenhouse Gas (GHG)        emissions and boost     devastating results
and CO2 emissions           energy efficiency

    The 2°C Scenario          The 4°C Scenario         The 6°C Scenario




                                                                          © OECD/IEA 2012
Sustainable future still in reach


 Is a clean energy   Are we on track to   Can we get on
transition urgent?     reach a clean         track?
                      energy future?

   YES ✓                NO ✗               YES ✓




                                                          © OECD/IEA 2012
Recommendations to Governments

  1. Create an investment climate of confidence
  in clean energy

  2. Unlock the incredible potential of energy
  efficiency – “the hidden” fuel of the future

  3. Accelerate innovation and public research,
  development and demonstration (RD&D)




                                                  © OECD/IEA 2012
Key messages

1.   Sustainable energy future is still feasible and
     technologies exist to take us there
2.   Despite potential of technologies, progress is too
     slow at the moment
3.   A clean energy future requires systemic thinking
     and deployment of a variety of technologies
4.   It even makes financial sense to do it!
5.   Government policy is decisive in unlocking the
     potential


                                                          © OECD/IEA 2012
Global Outlook
Chapter 1




                 © OECD/IEA 2012
Choosing the future energy system




   To achieve the 2DS, energy-related C02
    emissions must be halved until 2050.
                                            © OECD/IEA 2012
Decoupling energy use from
economic activity




Reducing the energy intensity of the economy is vital
               to achieving the 2DS.
                                                        © OECD/IEA 2012
All sectors need to contribute




The core of a clean energy system is low-carbon
electricity that diffuses into all end-use sectors.
                                                      © OECD/IEA 2012
A portfolio of technologies is needed
        Technology contributions to reaching the 2DS vs 4DS




Energy efficiency is the hidden fuel that increases energy
         security and mitigates climate change.
                                                              © OECD/IEA 2012
A portfolio of technologies is needed
         Technology contributions to reaching the 2DS vs 4DS

                                   Power generation efficiency
                                       and fuel switching
                  Nuclear                     3%
                    8%                                           CCS
                                                                 20%
      End-use fuel switching
               9%




    End-use fuel and electricity                                       Renewables
            efficiency                                                    29%
               31%


Energy efficiency is the hidden fuel that increases
 energy security and mitigates climate change.
                                                                                    © OECD/IEA 2012
All technologies have roles to play

                  Technology contributions to reaching the 2DS vs 6DS

         60
                                                                               Power generation efficiency
                                                                               and fuel switching 3% (1%)
         50
                                                                               Nuclear 8% (8%)

         40                                                                    End-use fuel switching 12%
Gt CO2




                                                                               (12%)
         30                                                                    End-use fuel and electricity
                                                                               efficiency 42% (39%)
                                                                               Renewables 21% (23%)
         20
                                                                               CCS 14% (17%)
         10

          0
           2009          2020            2030           2040            2050

                       Nuclear is one piece of the puzzle

                                                                                                        © OECD/IEA 2012
                                                                                                        © OECD/IEA 2012
The cost of emitting a tonne of CO2

   Marginal abatement cost curve in electricity generation in 2050




Marginal abatement costs reach USD 150 in 2050
 and increase rapidly as reductions get deeper.
                                                                     © OECD/IEA 2012
Marginal abatement costs change over time


   Passenger LDV marginal abatement cost curves in 2DS




The marginal abatement costs decrease as learning
               improves over time.
                                                         © OECD/IEA 2012
Learning needs to deliver cost reductions

 Passenger LDV marginal abatement cost curves in 2DS in 2050 under
 different assumptions on learning




Future marginal abatement cost curves are very
        sensitive to input assumptions
                                                                     © OECD/IEA 2012
Tracking Clean Energy Progress
Chapter 2




                                 © OECD/IEA 2012
Near term action necessary in all sectors

   Global CO2 emissions under ETP 2012 scenarios




                                                   © OECD/IEA 2012
Clean energy: slow lane to fast track

        Cleaner coal power
             Nuclear power
                        Renewable power
              CCS in power


            CCS in industry               Progress is too slow in
                           Industry
                                          almost all technology areas

                                          Significant action is required
                  Buildings
                                          to get back on track

                    Fuel economy
                  Electric vehicles
       Biofuels for transport


                                                                     © OECD/IEA 2012
Fossil fuels continued to dominate

   Changes in sources of electricity supply, 2000-09




   Coal remains the largest source of electricity supply, and met about half of
              additional electricity demand over the last decade.

                                                                            © OECD/IEA 2012
Renewables provide good news
            Global renewable power generation




     42%                    75%                    27%
  Average annual        Cost reductions in      Average annual
 growth in Solar PV      Solar PV in just       growth in wind
                          three years in
                         some countries                          © OECD/IEA 2012
Fuel economy has improved

  Vehicle fuel economy, enacted and proposed standards




       The number one opportunity over the next decade in the transport
              sector, but few countries have standards in place.

                                                                          © OECD/IEA 2012
We must translate ambitions into reality

     Government and manufacturer Electric Vehicle targets




                                                            © OECD/IEA 2012
Energy intensity must decline further

  Progress in energy intensity




   Significant potential for enhanced energy efficiency can be achieved
                   through best available technologies.

                                                                          © OECD/IEA 2012
Key recommendations


 1) Level the playing field for clean energy technologies

 2) Unlock the potential of energy efficiency

 3) Accelerate energy innovation and public
    research, development & demonstration


      Help move clean energy from fringe, to main stream markets…


                                                                    © OECD/IEA 2012
Policies to Promote Technology
Innovation
Chapter 3




                                 © OECD/IEA 2012
Key findings

    Investment in energy research by IEA governments has been decreasing
     as a share of total national RD&D budgets, and stands at 4%
    Patents for renewable energy technology increased fourfold since
     2000, but were concentrated in solar PV and wind
    The maturity, modularity and scalability of PV and onshore wind have
     enabled them to take off
    Meanwhile, high capital costs and perceived risks are holding back pre-
     commercial technologies like CCS, IGCC and CSP, which appear to be
     stuck at the demonstration phase
    Carbon pricing, energy efficiency policy and technology support are the
     backbone of a least-cost package to achieve 2DS, but the interactions
     among policies should be managed carefully
    Optimum combinations of policies should be based on characteristics of
     comparable technologies that share similar impediments to
     development, deployment and diffusion
                                                                        © OECD/IEA 2012
Energy RD&D has slipped in priority
                                        OECD R&D spending
              25                                                                              12%



                                                                                              10%
              20




                                                                                                    Share of energy RD&D in total R&D
                                                                                              8%
                                                                                                                                        2008 non-IEA country
                                                                                                                                              spending
              15
                                                                                                                                                                                                      4
USD billion




                                                                                              6%

              10                                                                                                                                                                                      3




                                                                                                                                                                                                                 USD billion
                                                                                              4%
                                                                                                                                                                                                      2
               5
                                                                                              2%
                                                                                                                                                                                                      1


               0                                                                              0%                                                                                                      0




                                                                                                                                                                              Russia
                                                                                                                                            Brazil



                                                                                                                                                                     Mexico


                                                                                                                                                                                       South Africa
                                                                                                                                                     China
                                                                                                                                                             India
                   1974   1978   1982   1986    1990   1994   1998   2002     2006     2010




                                  Energy RD&D                   Share of energy RD&D in total R&D


                                                                                                                                                                                                      © OECD/IEA 2012
Energy RD&D has slipped in priority
                                              OECD R&D spending
              25                                                                                      12%



                                                                                                      10%
              20




                                                                                                            Share of energy RD&D in total R&D
                                                                                                      8%
                                                                                                                                                2008 non-IEA country
                                                                                                                                                      spending
              15
                                                                                                                                                                                                              4
                                                                                                      6%
USD billion




              10                                                                                                                                                                                              3




                                                                                                                                                                                                                        USD billion
                                                                                                      4%
                                                                                                                                                                                                              2
              5
                                                                                                      2%
                                                                                                                                                                                                              1


              0                                                                                       0%                                                                                                      0




                                                                                                                                                                                               South Africa
                                                                                                                                                                             Mexico
                                                                                                                                                             China
                                                                                                                                                                     India


                                                                                                                                                                                      Russia
                                                                                                                                                    Brazil
                   1974     1978     1982      1986    1990     1994   1998   2002      2006   2010


                          Energy efficiency                                   Fossil fuels
                          Renewable energy                                    Nuclear
                          Hydrogen and fuel cells                             Other power and storage technologies
                          Other cross cutting technologies/research           Share of energy RD&D in total R&D


                                                                                                                                                                                                              © OECD/IEA 2012
Energy RD&D has slipped in priority

                        OECD R&D spending

50%                                                                     Defence

40%                                                                     Health and
                                                                        environment
30%                                                                     General
                                                                        university funds
                                                                        Non-oriented
20%
                                                                        research
                                                                        Space
10%                                                                     programmes
                                                                        Energy
0%
  1981     1985       1990       1995       2000      2005       2010

      The IEA has called for a twofold to fivefold increase in annual public
        RD&D spending on low carbon technologies to achieve the 2DS.
                                                                                       © OECD/IEA 2012
Clean energy patents have increased sharply
since 2000, driven by solar PV and wind




   The US, Japan and Germany are the top three inventor countries for
           most technologies, but China has been catching up.

                                                                        © OECD/IEA 2012
Building from national leadership to promote
low-carbon innovation
     Develop a national energy strategy with clear priorities
     Increase R&D funding
     Create mechanisms to fund capital-intensive demonstration
     Design policies to support early deployment and drive private
      investment
     Expand international collaboration




                                                                      © OECD/IEA 2012
There is a wide selection of technology-push
and market-pull policy instruments




      The use of multiple, integrated instruments may be justified to
           develop and deploy new and improved technologies.

                                                                        © OECD/IEA 2012
The core policy mix




     Carbon price, energy efficiency policy and technology support are
          the backbone of a least-cost package to achieve 2DS.
                                                                         © OECD/IEA 2012
Emission trading systems need to take into
account the impact of supplementary policy




    Over- or under-delivery of supplementary policy targets can lead to
     significant swings in demand for allowances, and hence greater
                       uncertainty in carbon prices.
                                                                          © OECD/IEA 2012
Early support for new technologies can lower
their cost




     But technology learning is not a justification for any level of early support.


                                                                                      © OECD/IEA 2012
New technologies take time to scale up




    Time, as well as cost, is a relevant factor in the justification for early
                     support of emerging technologies.
                                                                                 © OECD/IEA 2012
Optimum combination of policies can
accelerate clean energy uptake




Note: The darker the colour, the greater the challenge for the related policy measures




                      Policy measures can be tailored to specific categories of
                   technologies, according to the challenge they aim to address.

                                                                                         © OECD/IEA 2012
An energy innovation policy framework




Government should create an environment in which clean energy innovation can
 thrive and within which policies are regularly evaluated to ensure that they are
                              effective and efficient.
                                                                               © OECD/IEA 2012
Financing the Clean Energy
Revolution
Chapter 4




                             © OECD/IEA 2012
Clean energy investment pays off

                                                                                Additional investment
                   Additional
                                                                                          Power
                  investment
                                                                                          Industry

                                                                                          Transport
                 Fuel savings
                                                                                          Residential

                                                                                          Commercial
                Undiscounted
Total savings




                                                                                Fuel savings

                                                                                          Biomass

                        10%                                                               Coal

                                                                                          Oil
                            - 120         - 80       - 40          0       40
                                                                                          Gas
                                                    USD trillion

                                Every additional dollar invested in clean energy
                                       can generate 3 dollars in return.

                                                                                                        © OECD/IEA 2012
Clean energy investment pays off




                             USD trillion




         Every additional dollar invested in clean energy
                can generate 3 dollars in return.

                                                            © OECD/IEA 2012
Investment needs to 2020

Additional investments in the 2DS, compared to 6DS




Investments in buildings sector dominates in all countries, highlighting
                   importance of energy efficiency
                                                                           © OECD/IEA 2012
Additional investment needs in 2DS




Additional Investments in transport dominate between 2020 and 2050

                                                                     © OECD/IEA 2012
Annual additional investments in 2DS




   Additional investments in non-OECD countries exceed the pledged
climate finance, but the incremental cost is much less due to fuel savings   © OECD/IEA 2012
Power generation: Additional
    investments in 2DS




Renewable energy sources dominate investments in power generation in
                             the 2DS.                                  © OECD/IEA 2012
Power generation: annual investments
   2DS




In the 2DS, investments in coal-fired plants do not decline significantly
                           until after 2020.                                © OECD/IEA 2012
Transport : Additional investments


                     .




 The cost of decarbonising the transport sector accelerates after 2030 as
greater investments are made in advanced vehicles and low-carbon options
                         in air, shipping and rail.                         © OECD/IEA 2012
Buildings: Average annual
   investments




In the 2DS, higher investments will be needed for more efficient HVAC
               systems and building shell improvements.
                                                                        © OECD/IEA 2012
Industry: Total investments to 2050




Investments needed in the 2DS are moderately higher than in the 6DS

                                                                      © OECD/IEA 2012
Clean energy investment pays off

                   Additional                                                       Additional investment
                  investment                                                                Power
                                                                                            Power
                     With
Fuel savings




                                                                                            Industry
                  price effect
                                                                                            Industry
                                                                                            Transport
                   Without
                  price effect                                                              Residential
                                                                                            Transport
                                                                                            Commercial
                Undiscounted
Total savings




                                                                                     Fuel savings
                                                                                           Residential
                          3%                                                                Biomass

                                                                                            Commercial
                                                                                            Coal
                         10%
                                                                                            Oil

                                                                                            Gas
                            - 160        - 120     - 80            - 40   0         40

                                                    USD trillion


                                 Every additional dollar invested in clean energy
                                        can generate 3 dollars in return.

                                                                                                  © OECD/IEA 2012
Clean energy investment pays off

                                                                    Additional investment
                   Additional
                                                                               Power
                  investment
                                                                               Industry

                                                                               Transport
                 Fuel savings
                                                                               Residential

                                                                               Commercial
                Undiscounted
Total savings




                                                                     Fuel savings
                                                                               Biomass
                        10%
                                                                               Coal

                                                                               Oil
                            - 120    - 80       - 40        0        40
                                                                               Gas
                                             USD trillion


                         Every additional dollar invested in clean energy
                                can generate 3 dollars in return.

                                                                                             © OECD/IEA 2012
Conclusions
   Investment in low carbon technologies need to double current
    levels by 2020, reaching USD 500 bn annually
   Balance between ensuring investors confidence and controlling
    total policy costs
   Need for coordination on energy, climate and investment
    policies
   Uncertainty in national regulatory policies and support
    frameworks remains key obstacle to finance
   Greater dialogue needed between governments and investors
   What can be done to incentives a move towards sustainable
    long term investments?
                                                                   © OECD/IEA 2012
Energy Systems Thinking




                          © OECD/IEA 2012
A smart, sustainable energy system

     Co-generation                                   Renewable energy resources



                                                            Centralised fuel production,
                                                               power and storage




                                Distributed
                             energy resources
Smart energy
system control


                                                                       H2 vehicle

       Surplus heat                             EV


                  A sustainable energy system is a smarter,
                 more unified and integrated energy system
                                                                                       © OECD/IEA 2012
The Global Energy system today




    Dominated by fossil fuels in all sectors
                                               © OECD/IEA 2012
The future low-carbon energy system




The 2DS in 2050 shows a dramatic shift in energy
              sources and demands                  © OECD/IEA 2012
Heating and Cooling
Chapter 5




                      © OECD/IEA 2012
Heating & Cooling: huge potential

       Renewable heat                               Integration with electricity




                             District heating and
                              cooling network


      Co-generation                                              Surplus heat




   Heating and cooling account for 46% of global energy use.
Their huge potential for cutting CO2 emissions is often neglected.

                                                                                   © OECD/IEA 2012
Decarbonising heating and cooling:
 neglected but necessary
Total final energy consumption by region as electricity, heat, transport
and non-energy uses, 2009




      Heating and cooling account for 46% of final
             energy consumption worldwide.                                 © OECD/IEA 2012
Decarbonising the existing buildings
    stock




In OECD countries, more than two-thirds of existing older buildings will still
                             be standing in 2050.
However, in non-OECD countries, an estimated 52% to 64% of the building
             stock that will exist by 2050 has not yet been built
                                                                                 © OECD/IEA 2012
Large quantities of heat losses can
 be recuperated


Heat loss in power generation by region, 2009




  More then 50% of energy input of thermal power
    plants is wasted in cooling towers and rivers.
                                                     © OECD/IEA 2012
District energy networks can reduce CO2
  intensity




Biomass and a mix of other renewable energy sources make up almost three-
              quarters of primary energy consumption in 2050.
                                                                            © OECD/IEA 2012
Heat pumps offer great potential
under the right conditions

Electricity load curve in the high-penetration base and smart case studies




 Poor installations can increase the costs of decarbonising electricity
                               networks…
…but smart control coupled with storage could minimise their possible
                                 impacts.
                                                                             © OECD/IEA 2012
Heat pumps and co-generation are not
conflicting technologies




   Integrating heat within the energy system can
   lower costs and help decarbonisation in other
                      sectors
                                                   © OECD/IEA 2012
Flexible Electricity Systems
Chapter 6




                               © OECD/IEA 2012
Global Electrical Energy Generation




 Lower electrical energy demand in 2DS even though
electricity is larger proportion of overall energy demand.

                                                        © OECD/IEA 2012
Electricity generation capacity




Generation capacity is higher in the 2DS due to great deployment
        of variable renewables with lower capacity factors.


                                                               © OECD/IEA 2012
Electricity system flexibility

Power system flexibility expresses the extent to which a power
  system can modify electricity production or consumption in
        response to variability, expected or otherwise.




                  ± MW / time                              © OECD/IEA 2012
Flexibility needs and resources




 Existing and new flexibility needs can be met by a range of
resources in the electricity system – facilitated by power system
               markets, operation and hardware.
                                                                    © OECD/IEA 2012
No “one-time” fits all




Balancing of the electricity system needs to address several time
frames for response and duration, impacting choice of technology.

                                                              © OECD/IEA 2012
The need for flexibility is increasing
GW




     All regions under all scenarios show an increasing need
                   for electricity system flexibility.

                                                               © OECD/IEA 2012
Flexibility from power generation

                          Start-up time [hours]     Ramp rate [% per min]         Time from 0 to full rate [hour]   Minimum stable load factor [%]
                      0       10      20     30 0            50             100   0          10          20         0         20        40


           Nuclear


             Hydro


Coal (conventional)


            OCGT


            CCGT


                      0       10      20     30 0            50             100   0          10          20         0         20        40




            All generation technologies have the technical ability to provide
                                    some flexibility.

                                                                                                                                        © OECD/IEA 2012
Flexibility from power generation
 Ancillary  Yes
 services
provided? Possible

                                                          Diesel and
                                                            CCGT
                       CCGT         Co-generation          standby     Bio-energy   Wind     PVs
                                  Large       Micro
                     > 100 MW 1 - 100 MW 1 - 5 kW         <50 MW       1 - 100 MW          < 100kW

        Frequency                limited

                                              if high
         Reserve                 possible
                                            penetration

         Reactive

         Network                              if high
         support                            penetration


       Grid support from distributed generation should be enabled.

                                                                                                     © OECD/IEA 2012
Two very different profiles for natural
      gas use in power generation
     Power generation from natural gas increases to 2030 in the
      2DS and the 4DS.
     From 2030 to 2050, generation differs markedly.




Natural gas-fired power generation must decrease after 2030 to meet
          the CO2 emissions projected in the 2DS scenario.
Notes: Natural gas-fired power generation includes generation in power plants equipped with CCS units. Biogas is not included here.
                                                                                                                                      © OECD/IEA 2012
Mode of operation of natural gas plants
    differs according to scenario

   Gas increasingly provides base load in the 4DS and peak load
    in the 2DS




The lowering of the capacity factor threatens the viability of existing
        plants and detracts from investment in new plants.

                                                                    © OECD/IEA 2012
The demand side flexibility resource
is large and under utilised




All regions exhibit a significant demand side flexibility
resource – especially for regulation and load following.
                                                        © OECD/IEA 2012
North American sectoral resource




Demand-side energy efficiency decreases resource.
                                                    © OECD/IEA 2012
Storage – a game changer or niche
player?




Existing installations and niche applications will
     play a definite role in the future, but cost
       concerns exist for new deployments.           © OECD/IEA 2012
Storage technology cost vary widely




Application specific deployment is key for successful
             business case development.                 © OECD/IEA 2012
Methodology – T&D analysis

   3 drivers in grid development
       Grid extension
       Grid renewal
       Renewable integration


   Data sources:
       power sector: IEA statistics and ETP 2012 scenarios
       T&D grid length and age: ABS Energy Research




                                                              © OECD/IEA 2012
T&D infrastructure investments in
the 4DS and 2DS are similar




       ...but sectoral allocation differs

                                            © OECD/IEA 2012
2DS offers new challenges and
opportunities for T&D systems
  Cumulative costs and benefits of smart grids versus conventional T&D
                        systems in the 2DS to 2050




 Smart-grids’ costs are substantial, but estimated
         benefits do exceed investment.
                                                                         © OECD/IEA 2012
Methodology – Smart grids

   Long-run incremental social costs and benefits
    compared to a conventional T&D grid
   Costs - bottom up approach
       Technology costs are calculated by multiplying units
        required, market penetration, and unit cost
       component replacement at the end of its technical
        lifetime.
       Data: EPRI, IEE, CER, expert interview
   Benefits
       CO2 savings, capital cost savings, extended
        lifetime, increased reliability, reduced operational cost.
       Methodology from: IEA, EPRI
                                                                     © OECD/IEA 2012
Smart grid benefits exceed costs by
 a factor of between 1.5 and 4.5




..., but direct benefits of investment in one sector may
                  be found in other sectors.
                                                           © OECD/IEA 2012
Technology choices in electricity
system flexibility




                                    © OECD/IEA 2012
What do we need to do? Barriers?

   Use systems based approaches – utilise flexibility
    resources from all parts of the electricity system
   Learn by doing - increased pilot and demonstration
    projects will enable of real-world solutions for
    flexibility
   Support new technology deployment – develop
    regulatory and market solutions that allow new
    technologies and new actors to support system
    operation
   Determine regulatory approaches that support
    conventional and new technologies – and
    adequately share costs, benefits and risks.          © OECD/IEA 2012
Hydrogen
Chapter 7




            © OECD/IEA 2012
H2 is a flexible energy carrier

            H2 is one of only a few
     near-zero-emissions energy carriers
     (along with electricity and bio-fuels)
          with potential applications
          across all end-use sectors.




                                              © OECD/IEA 2012
Energy storage in H2




Source: NREL 2009




    H2 storage may be cost competitive in the future.

                                                        © OECD/IEA 2012
FCEV are still expensive




H2 could be used in fuel-cell vehicles such as longer
              range cars and trucks.
                                                        © OECD/IEA 2012
Decarbonisation of road transport
saves money




Investment in H2 technology decreases savings but
       opens the way towards sustainability.
                                                    © OECD/IEA 2012
A pathway for H2 infrastructure roll-
  out




Optimisation of centralised and decentralised H2
  production is one of the major challenges.
                                                   © OECD/IEA 2012
H2 T&D infrastructure investments




H2 infrastructure to serve a fleet of 500 million FCEVs
    by 2050 would cost, which equals roughly 1% of
           total spending in vehicles and fuels.
                                                          © OECD/IEA 2012
Post 2050: H2 an alternative to
bioenergy




Post 2050, hydrogen could become an important
energy carrier in a clean energy system, especially if
         bioenergy resources are limited.
                                                         © OECD/IEA 2012
The Future of Fossil Fuels




                             © OECD/IEA 2012
Fossil fuels dominate energy demand …
  Primary energy demand (EJ)




   Demand for coal over the last 10 years has been
growing much faster than for any other energy sources.
                                                         © OECD/IEA 2012
Non-fossil power generation
    Electricity generation (TWh)




                                                               Share of electricity (%)
                                   Non-hydro renewables
                                                    Hydro



                                                    Nuclear



 Despite an increasing contribution across two decades, the
 share of non-fossil generation has failed to keep pace with
         the growth in generation from fossil fuels.
                                                                                          © OECD/IEA 2012
Coal Technologies
Chapter 8




                    © OECD/IEA 2012
Key findings

    Coal demand and generation of electricity from coal both need
     to fall by more than 40% to meet the 2DS.
    Substantial numbers of old, inefficient coal power plants
     remain in operation.
    The increasing use of widely available, low-cost, poor-quality
     coal is a cause for concern.
    Supercritical technology, at a minimum, should be deployed on
     all combustion installations.
    Research, development and demonstration of advanced
     technologies should be actively promoted.
    To achieve deeper cuts, CCS offers the potential to reduce CO2
     emissions to less than 100 g/kWh.
    It is important to reduce local pollution for coal.
                                                                  © OECD/IEA 2012
Coal is abundant and widely available
   Coal reserve (Gt)




                                     Brown coal




                                      Hard coal


Sufficient coal reserves exist for an estimated 150 years
      of generation at current consumption rates.
                                                            © OECD/IEA 2012
Reducing emissions from coal is critical




  Reducing non-GHG emissions is also important to
      maintain or improve air quality locally.
                                                    © OECD/IEA 2012
Policy and regulation play a major role
  Electricity generation from coal (TWh)




                                                                                     Policy and
                                                                                     Regulation




                                           Coal   Coal with CCS   Electricity reduction in the 2DS

Encourage reduction of generation from inefficient plants
and switching from coal to gas, renewables and nuclear.                                              © OECD/IEA 2012
CO2 intensity must also be reduced

                                             2010                                       2050(4DS)




                                                               Technology development
   CO2 emissions (Gt)




                                       Policy and regulation
                        2050(2DS)

                                Electricity (TWh)

Technology development coupled with targeted policies and
 regulation are essential to realise the 2DS target in 2050.
                                                                                                    © OECD/IEA 2012
Couple efficient plant with CCS
Raising plant efficiency:
 reduces emissions of CO2, and
 reduces the cost of CCS.
                         Subcritical
                                         Supercritical
                                               Ultra-supercritical
CO2 intensity
(gCO2/kWh)




                                                       Advanced-USC



                                                            90%


                                                                  With CCS

                                Efficiency (LHV, net)
        If CCS is applied to an average subcritical plant, its
                 efficiency would drop by one-third.                         © OECD/IEA 2012
Adoption of best practice technology is
needed to raise average efficiency
  Capacity (GW)




   Potential for capacity growth in coal-fired power
generation is seen mostly in non-OECD countries such as
                    China and India.                      © OECD/IEA 2012
Reducing CO2 emissions
Global electricity generation




                                            1. Subcritical
     from coal (TWh)




                                                              3. Plants with CCS

                                                     2. USC

                                  2. Supercritical




                                1. Reduce generation from least efficient plant
                                2. Increase capacity of more efficient plant
                                3. Deploy CCS                                      © OECD/IEA 2012
Carbon lock-in must be avoided
To meet the 2DS, generation from subcritical plants would cease
              before end of their natural lifetimes.
                                                          Including
                                                          construction
 Capacity (GW)




                                                           plans up to
                                                          2015




                 Existing plants built
                     before 2000




   Generation from subcritical units should be reduced;
future capacity additions should be supercritical or better.
                                                                     © OECD/IEA 2012
Development of advanced technology is
                          essential

                                                                      Advanced USC 700oC
                                                                      Demonstrations are
                                                                      being planned from
                                                                      2020 - 2025
Steam temperature (°C )




                                                Ultra-supercritical


                                    Supercritical


                            Subcritical




                           Ultra-supercritical plants are currently operated in
                                   various countries including China.                      © OECD/IEA 2012
Opportunities and recommendations

   Technologies to address the environmental impacts of sharply
    increased coal use must be used.
   Increasing the average efficiency of global coal-fired power
    generation plants will be essential over the next 10 to 15 years:
      Deploy supercritical and ultra-supercritical technologies

      Minimise generation from older, less efficient coal plants

      Accelerate development of advanced technology.

   CCS must be developed and demonstrated rapidly if it is to be
    deployed widely after 2020.
   Finally, there must be a shift away from reliance on coal. In a
    truly low-carbon future, coal will not be the dominant energy
    source.
      Strong policies will be essential if these goals are to be met.
                                                                        © OECD/IEA 2012
Natural Gas Technologies

Chapter 9




                           © OECD/IEA 2012
Key findings

 Increasing production of unconventional gas leads to an
  improvement in energy security in many regions.
 Continuous technology improvement at each stage of
  unconventional gas exploration and production is essential
 In the 2DS:
   • Natural gas will retain an important role in the power,
      buildings and industry sectors to 2050.
   • The share of natural gas in total primary energy
      demand declines more slowly – and later (after 2030) –
      than other fossil fuels.
   • Natural gas acts as a transitional fuel towards a low-
      carbon energy system.

                                                               © OECD/IEA 2012
Unconventional gas rises in importance




The share of unconventional gas of total gas supply
    continues to increase in both 4DS and 2DS.        © OECD/IEA 2012
Continuous technology improvement is
essential




 Continuous technology improvement at each stage of
  exploration and production goes hand in hand with
reducing the environmental impact of those processes.
                                                        © OECD/IEA 2012
Maturity of technology and experience
can differ widely




 Technology needs and solutions should be adapted
 according to experience and geographical location.
                                                      © OECD/IEA 2012
Natural gas is the second-largest source
of primary energy in 2050




Although the share of fossil fuels in total primary energy
 production declines by 2050, the share of natural gas
                    declines least.                          © OECD/IEA 2012
Power sector is the dominant consumer
of natural gas




Note: For power, including co-generation, and for commercial heat, gas contribution represents gas input to the plants




To achieve the 2DS, natural gas consumption needs to
      be reduced strongest in the power sector.
                                                                                                                         © OECD/IEA 2012
Two very different profiles for natural
gas use in power generation




Note: Natural gas-fired generation includes generation in power plants equipped with CCS units. Biogas is not included.




Natural gas-fired power generation must decrease after
 2030 to meet the CO2 emissions projected in the 2DS.
                                                                                                                          © OECD/IEA 2012
Natural gas as a transitional fuel

         Power generation from natural gas increases to 2030 in the
          2DS and the 4DS.
         From 2030 to 2050, generation differs markedly.
                   4DS
                   4DS                                           2DS
                                                                2DS
          10 000                                       10 000


           7 500                                        7 500
    TWh




           5 000                                        5 000


           2 500                                        2 500


              0                                            0
               2009      2020   2030     2040   2050        2009        2020    2030   2040   2050
                                    OECD                               Non-OECD


            Natural gas-fired power generation must decrease after 2030 to
                meet the CO2 emissions projected in the 2DS scenario.
                                                                                                     © OECD/IEA 2012
Mode of operation of natural gas plants
 differs according to scenario
Gas increasingly provides base load in the 4DS and peak load
                         in the 2DS.




               Note: Generation from gas-fired plants equipped with CCS is not included



The lowering of the capacity factor threatens the viability of
existing plants and detracts from investment in new plants.
                                                                                          © OECD/IEA 2012
Natural gas becomes a ‘high-carbon fuel’
 after 2025

CCGTs are the most efficient natural gas-fired power generation
  plants, with a CO2 intensity almost half that of the best coal-
                            fired plant.




  The global average CO2 intensity from natural gas-fired
     power generation falls below the carbon intensity of
                       CCGTs in 2025.                               © OECD/IEA 2012
Gas technologies in the power sector are
 essential to achieve the 2DS




Continuous technology improvement will be necessary to
achieve efficiency increases and to reduce the cost of CCS.
                                                              © OECD/IEA 2012
Efficiency improvement plays an
    important role
   State-of-the-art CCGT has reached 60% efficiency, while
    some emerging technologies have the potential to reach
    70%.




   Whether open-cycle or combined-cycle, larger capacity
plants are generally capable of achieving higher efficiencies.
                                                                 © OECD/IEA 2012
Gas-fired power generation complements
    variable renewables
   Both OCGT and CCGT are sufficiently flexible in their
    responses to meet unexpected variations in demand.




    OCGTs are less costly and have a smaller footprint, but
             are much less efficient than CCGTs.              © OECD/IEA 2012
Biogas and CCS are essential
components of a low-carbon future




In the 2DS, 40% of the electricity generated from gas
    comes from natural gas with CCS and biogas.
                                                        © OECD/IEA 2012
Opportunities and recommendations

 Regulation to mitigate the potential for environmental
  risks associated with production of unconventional gas
  must be introduced.
 Gas-fired technologies to provide flexibility for power
  generation will be essential over the short term.
 Over the next ten years, gas will displace significant coal-
  fired power generation – though it should be noted,
  natural gas-fired generation will itself need to be
  displaced in the longer term to decarbonise the power
  sector still further.
 First-generation, large-scale gas plants with CCS need to
  be demonstrated and deployed.

                                                                 © OECD/IEA 2012
Carbon Capture and Storage
Technologies
Chapter 10




                             © OECD/IEA 2012
The technology portfolio includes CCS
        Emissions (GtCO2)




                                                                                        20%
                                                                                                    29%
                                                                                             8%
Carbon capture and storage (CCS) contributes one-fifth of total emissions reductions through 2050

                                                                                                          © OECD/IEA 2012
CCS must grow rapidly around the globe
CO2 Captured (GtCO2)




                        In the near term, the largest amount of CO2 is captured in OECD
                       countries; by 2050, CO2 capture in non-OECD countries dominates

                                                                                     © OECD/IEA 2012
CCS is applied in power and industry




Note: Capture rates shown in MtCO2/year



The majority of CO2 is captured from power generation globally, but in some regions CO2 captured from
industrial applications dominates
                                                                                                        © OECD/IEA 2012
CCS in power generation




Photo: Vattenfall                             © OECD/IEA 2012
Three CO2 capture routes in power

Post-combustion       • Fossil fuel or biomass is burnt normally and CO2 is
  CO2 capture           separated from the exhaust gas


 Pre-combustion       • Fossil fuel or biomass is converted to a mixture of
                        hydrogen and CO2, from which the CO2 is separated
   CO2 capture          and hydrogen used for fuel


Oxy-combustion        • Oxygen is separated from air, and fossil fuels or
                        biomass are then burnt in an atmosphere of oxygen
  CO2 capture           producing only CO2 and water


At the present time, none of the options is superior; each has
particular characteristics making it suitable in different power
                   generation applications

                                                                              © OECD/IEA 2012
Three CO2 capture routes in power




At the present time, no one route is clearly superior to another; each has particular characteristics that
make it suitable in different cases of power generation fuelled by coal, oil, natural gas and biomass.
                                                                                                             © OECD/IEA 2012
Capture technologies are ready
                                              Pre-        Post-         Oxy-       Inherent             Other
                                           combustion   combustion   combustion
                          Gas               Concept.       Pilot        Pilot                       Concept. (CLC)
Electric
power




                          Coal                Pilot        Pilot        Pilot                       Concept. (CLC)
                          Biomass           Concept.     Concept.     Concept.
                          Fuel
                                              Pilot                     Pilot
                          processing
Industrial applications




                          Iron and steel                                                        Pilot (Hisarna, Ulcored)
                                                           Pilot        Pilot                        Demo (FINEX)
                                                                                               Commercial (DRI, COREX)
                          Biomass
                                              Pilot       Demo                    Commercial
                          conversion
                          Cement                                                                       Concept.
                                                           Pilot        Pilot
                          manufacture                                                             (Carbonate looping)
                          High-purity
                                                           Pliot                  Commercial
                          sources

Numerous routes to CO2 capture are in pilot-testing or demonstration stages for
power and industrial applications; some are commercially available today
                                                                                                                     © OECD/IEA 2012
No one technology is a clear winner, yet…

                                                        Coal                        Natural gas
Capture route                       Post-combustion Pre-combustion Oxy-combustion Post-combustion
Reference plant without capture                 PC             IGCC           PC           NGCC
Net efficiency with capture (LHV,              30.9             33.1         31.9              48.4
%)
Net efficiency penalty (LHV,                   10.5              7.5          9.6                 8.3
percentage points)
Relative net efficiency penalty                25%             20%           23%              15%
Overnight cost with capture                   3 808            3 714        3 959           1 715
(USD/kW)
Relative overnight cost increase               75%             44%           74%              82%
LCOE with capture (USD/MWh)                    107              104           102               102
Relative LCOE increase                         63%             39%           64%              33%
Cost of CO2 avoided                             58               43            52                  80
(USD/tCO2)

Applying CCS to a power plant will likely increase the LCOE by one- to two-thirds
depending on the type of plant, relative to a similar power plant without CCS
                                                                                             © OECD/IEA 2012
CCS is expected to be cost-competitive




                                         © OECD/IEA 2012
CCS is applied to coal, gas and biomass




In 2050, 63% of coal-fired electricity generation (630 GW) is CCS
    equipped, 18% of gas (280 GW) and 9% of biomass (50 GW)

                                                                © OECD/IEA 2012
Generation from CCS equipped plants grows




Power plants with CCS produce 15% of electricity in 2050, while
      fossil-fueled plants without CCS produce only 10%

                                                              © OECD/IEA 2012
Natural gas is not a panacea




The global average CO2 intensity from power generation falls below
the carbon intensity of CCGTs in 2025 in the 2DS; CCS can play a role
                   in reducing emissions from gas

                                                                  © OECD/IEA 2012
CCS is deployed globally for power
Generation capacity (GW)




                           In OECD North America, almost all coal-fired and 36% of gas-fired
                               generation is CCS equipped; nearly two-thirds of coal-fired
                                       generation in China is equipped with CCS
                                                                                           © OECD/IEA 2012
Retrofitting CCS to coal-fired generation

   The more than 1 600 GW of installed coal-fired
    generation emitted almost 9 GtCO2 in 2010; more
    than 350 GW were added in the past five years.
   In most general terms, larger, more efficient (i.e.
    younger) plants are suitable for retrofit: today, 471
    GW of coal-fired plants are larger than 300 MW and
    younger than 10 years
   In the 2DS, 150 GW of supercritical and ultra-
    supercritical capacity are retired because they are
    uneconomic for retrofit due, and
   100 GW of coal are retrofitted with CCS
                                                            © OECD/IEA 2012
Retrofitting CCS to coal-fired generation




                                        In the 2DS, through 2050:

                                        700 GW of subcritical capacity is
                                               retired
In most general terms, larger, more     150 GW of uneconomic
  efficient (i.e. younger) plants are          supercritical and ultra-
          suitable for retrofit                supercritical are retired
                                        100 GW of coal are retrofitted with
Source: IEA, 2012                              CCS
                                                                       © OECD/IEA 2012
CCS in industrial applications




Photo: BP                                    © OECD/IEA 2012
Industrial applications of CCS
   Some industrial processes                                Industrial
                                                          processes suited
    produce highly concentrated                                to CCS
    CO2 vent streams; capture from
    these “high-purity” sources is     Dilute exhaust                   Concentrated
    relatively straightforward            streams                       vent streams
                                     e.g. blast furnaces and cement   e.g. gas processing, NH3 and
   Other industrial applications                  kilns                   ethanol production

    require additional CO2
    separation technologies to                Post-combustion
    concentrate dilute streams of
    CO2
   The same CO2 separation                   Oxy-Combustion

    technologies applied in power
    generation can be applied to              Pre-combustion
    industrial sources
                                                                                             © OECD/IEA 2012
Cost of CCS in industry varies widely




A wide range of abatement costs through CCS exists in industrial applications

                                                                                © OECD/IEA 2012
Industrial applications play an important role
CO2 Captured (GtCO2/y)




                          Non-OECD countries account for 72% of cumulative CO2 captured
                         from industrial applications of CCS between 2015 and 2050 – China
                                     alone accounts for 21% of the global total

                                                                                        © OECD/IEA 2012
Industrial applications vary by region




 Note: Capture rates shown in MtCO2/year



The predominant industrial application of CCS will vary by region and over time

                                                                                  © OECD/IEA 2012
Negative emissions from BECCS

    Bio-energy with carbon capture and storage (BECCS) can
     result in permanent net removal of CO2 from the
     atmosphere, i.e. “negative CO2 emissions”
    In BECCS, energy is provided by biomass, which
     removed atmospheric carbon while it was growing, and
     the CO2 emissions from its use are captured and stored
     through CCS
    BECCS can be applied to a wide range of biomass
     conversion processes and may be attractive cost-
     effective in many cases

    Biomass must be grown and harvested sustainably, as
    this significantly impacts the level of emissions reductions
    that can be achieved

                                                                   © OECD/IEA 2012
Where is CO2 storage needed?




  Note: Mass captured shown in GtCO2



Between 2015 and 2050, 123 Gt of CO2 are captured that need to be transported to suitable sites and
stored safely and effectively. Storage sites will need to be developed all around the world.
                                                                                                      © OECD/IEA 2012
Total investment for CCS: 3.6 trillion USD




                                             © OECD/IEA 2012
Transport and storage challenges

                Storage                                       Transport
   Fundamental physical processes and            Most straightforward and well-known
    engineering aspects of geologic storage        step in the CCS chain
    are well understood                           Pipeline and ship (or barge) are the
   Suitable geologic formations must have         only practical options at scale
    sufficient capacity and injectivity, and      In 2010, over 60 MtCO2 were
    prevent CO2 (and brine) from reaching          transported through a 6 600 km
    the atmosphere, sources of potable             pipeline network in the United States
    groundwater and other sensitive
                                                  Cost of transport is generally low, but is
    regions in the subsurface
                                                   a function of distance, capacity, and
   Storage assessments suggest that the           terrain
    available global pore space resource is
                                                  Transport by ship or barge is generally
    sufficient to store 123 GtCO2
                                                   more expensive than by pipeline over
   Storage cost of storage is highly              short distances
    variable: US cost estimates for onshore
    saline aquifers range from less than
    USD 1/tCO2 to over USD 20/t of CO2
    stored
                                                                                        © OECD/IEA 2012
Recommended actions for the near term


     The gap between the current trajectory for CCS and the
     2DS can be bridged, but concerted policy action is
     necessary from both industry and all levels of
     government

1.    Government must assess the role of CCS in their
      energy futures, develop suitable deployment
      strategies for CCS and a clear timeline to develop
      enabling regulations
2.    Government and industry must redouble efforts to
      demonstrate CCS at a commercial scale in different
      locations and technical configurations—including
      large-scale CO2 storage projects

                                                              © OECD/IEA 2012
Recommended actions for the near term

3.    Government must implement appropriate and transparent
      incentives to drive CCS deployment; long-term climate change
      mitigation commitments and policy actions are necessary
4.    Government must develop enabling legal and regulatory
      frameworks for demonstration and deployment of CCS, so that
      lack of regulation does not unnecessarily impede or slow
      deployment
5.    Government and industry must develop clear, accurate
      information on the geographic distribution of storage capacity
      and associated costs for storing CO2
6.    Government and industry increase emphasis on CO2 transport
      and storage infrastructure development so that integrated CCS
      projects can be successful
7.    All parties must engage the public at both policy and project
      levels. A lack of transparency and a two-way flow of information
      from early stages can be fatal for CCS.
                                                                         © OECD/IEA 2012
Electricity Generation and Fuel
Transformation
Chapter 11




                                  © OECD/IEA 2012
Energy and CO2 impacts of
electricity generation
                                         Other transformation Agriculture
Other transformation Agriculture
                         2%                       5%              2%
         6%                        Buildings
                                      9%

        Buildings
          15%
                           Power        Transport              Power
      Transport             38%            20%                  38%
         18%

               Industry                        Industry
                 21%                             26%


         Total primary energy               Total energy-related
         use: 509 EJ in 2009                CO2 emissions:
                                            31.4 Gt in 2009


Power sector accounted in 2009 for almost 40% of global
 primary energy use and energy-related CO2 emissions.                       © OECD/IEA 2012
Past trends in power generation
Global electricity generation by fuel                 Incremental generation 1990-2009

                                              4 000
                                                                                  non-OECD
                                                                                  OECD
                                              3 500

                                              3 000

                                              2 500




                                        TWh
                                              2 000

                                              1 500

                                              1 000

                                               500

                                                 0
                                                      Coal     Gas   Renewables   Nuclear



Increase in electricity generation over the last two decades
 largely covered by fossil fuels, but strong growth rates for
                         renewables .                                                    © OECD/IEA 2012
Age distribution of existing power
   plants




Ageing infrastructure is the challenge in many OECD countries, whereas
emerging economies have to cope with a growing demand for electricity.
                                                                         © OECD/IEA 2012
Carbon lock-in must be avoided



                                                                Including
                                                                construction
   Capacity (GW)




                                                                 plans up to
                                                                2015




                   Existing plants built
                       before 2000




   To meet the 2DS, generation from subcritical plants would
       need to cease before end of their technical lifetimes.
                                                                           © OECD/IEA 2012
Electricity demand




Liquid fuel demand is stabilised at today’s level in 2050 in the 2DS,
 largely due to efficiency improvements and electrification in the
                          transport sector.                             © OECD/IEA 2012
Electricity demand

       Incremental final electricity demand between 2009-2050 in the 2DS




Strong growth in electricity demand in emerging economies across
  all sectors, whereas in OECD countries consumption is driven by
         electrification of the transport and buildings sector.            © OECD/IEA 2012
Low-carbon electricity: a clean core

                  Global electricity generation in the 2DS
      45 000                                                        Other
      40 000                                                        Wind
      35 000                                                        Solar
      30 000                                                        Hydro
TWh




                                                                    Nuclear
      25 000
                                                                    Biomass and waste
      20 000
                                                                    Oil
      15 000                                                        Gas with CCS
      10 000                                                        Gas
       5 000                                                        Coal with CCS
          0                                                         Coal
           2009       2020           2030           2040     2050

         Renewables will generate more than half the world’s
                   electricity in 2050 in the 2DS
                                                                                 © OECD/IEA 2012
Electricity generation scenarios
                                               100%
     4DS                                              19%
                                                80%          36%
                                                      13%                Renewables
                                                60%          12%         Nuclear
                                                                    3%   Fossil w CCS
                                                40%                      Fossil w/o CCS
                                                      67%
                                                             49%
                                                20%

                                                 0%
                                                      2009   2050

                                               100%
     2DS                                              19%
                                                80%
                                                      13%    57%         Renewables
                                                60%                      Nuclear
                                                                         Fossil w CCS
                                                40%                      Fossil w/o CCS
                                                      67%    19%
                                                20%
                                                             14%
                                                              9%
                                                 0%
                                                      2009   2050

In the 2DS, global electricity supply becomes decarbonised
                           by 2050.                                           © OECD/IEA 2012
Power generation; Nuclear
               Global installed capacity




 Without further action, nuclear deployment in 2025 will be
below levels in the 2DS, although a majority of key countries
                remain committed to nuclear.
                                                                © OECD/IEA 2012
                                                                © OECD/IEA 2012
Average annual capacity additions

        Hydro

      Nuclear

          CSP
                                                                     2030-50
           PV
                                                                     2020-30
Wind, offshore
                                                                     2010-20
Wind, onshore

                                                                     2006-10
      Biomass

 Gas with CCS

 Coal with CCS

                 0   20    40         60        80    100      120
                                  GW per year

      Massive acceleration of deployment of low-carbon power
        technologies is needed over the next four decades.
                                                                     © OECD/IEA 2012
All technologies have roles to play




    Electricity demand savings and renewables are each
responsible for one-third of the cumulative CO2 reductions in
                 the power sector in the 2DS.
                                                                © OECD/IEA 2012
All technologies have roles to play

                  Technology contributions to reaching the 2DS

         60
                                                                        Power generation efficiency
                                                                        and fuel switching 3% (1%)
         50
                                                                        Nuclear 8% (8%)

         40                                                             End-use fuel switching 12%
Gt CO2




                                                                        (12%)
         30                                                             End-use fuel and electricity
                                                                        efficiency 42% (39%)
                                                                        Renewables 21% (23%)
         20
                                                                        CCS 14% (17%)
         10

          0
           2009       2020           2030           2040         2050

                    Nuclear is one piece of the puzzle

                                                                                                 © OECD/IEA 2012
                                                                                                 © OECD/IEA 2012
All technologies have roles to play

         600


         550


         500
Gt CO2




         450


         400


         350


         300
                 4DS    Electricity Fuel switching Nuclear 14%   CCS 18%   Wind 14%   Solar 12%       Other       2DS
                       savings 28% and efficiency                                                 renewables 9%
                                          5%

      Electricity demand savings and renewables are each
  responsible for one-third of the cumulative CO2 reductions in
                   the power sector in the 2DS.                                                                    © OECD/IEA 2012
Key technologies to reduce CO2 in
 the power sector
                                       Geothermal Ocean
                                          1%      0.4%
                               Wind
                               13%




                     Solar
                                                                    Electricity savings
                     11%
                                                                           38%



                  Biomass
                     4%                                                  Cumulative reductions in the
                                                                         power sector of 474 Gt between
                    Hydro                                                2009 and 2050 in the 2DS
                     4%                                                  (relative to the 6DS)
                             Nuclear                       Fuel switching and
                              13%                    CCS       efficiency
                                                     12%           4%




Renewables provide more than one third of the cumulative reductions
       needed to decarbonise electricity supply in the 2DS.
                                                                                                © OECD/IEA 2012
Electricity generation mix
            100%
                       13%    9%    12%                        11%
                                          19%          25%
                                                                           34%
                 80%   19%    24%
                                    36%                                             Nuclear
                 60%                                                                Renewables
                                          57%                  71%
                                    3%
                                                       63%                 49%
                                                                                    Fossil w/ CCS
                 40%
                       67%    68%                                                   Fossil w/o CCS
                                    49%
                 20%                      14%                  7%          7%
                                          9%           13%     12%         10%
                 0%
                              6DS   4DS   2DS     2DS-NoCCS 2DS-hiRen   2DS-HiNuc
                       2009                     2050
                  0
  USD trillion




                  -5
                 -10
                 -15                                                                Cumulative additional costs
                                                                                    rel. to 6DS
                 -20
                 -25
                 -30
                                    4DS   2DS     2DS-NoCCS 2DS-hiRen   2DS-HiNuc

Other technology portfolios reach the same reduction as in the 2DS, but,
      with the exception of the 2DS-hiNuc variant, at higher costs.
                                                                                                      © OECD/IEA 2012
There are many routes to decarbonisation

                          Regional electricity mixes in the 2DS in 2050
        US     4%                    24%                               22%                6%           15%                   18%                   12%


South Africa 2%                 23%                                  24%           2%                   28%                            16%               6%


     Russia        5%     8%                         28%                                   28%                 1%          14%                17%


    Mexico                20%                     10%           8%          7%             21%                         19%                     15%


      India              19%                       14%                      17%                16%                         21%               6%       7%


        EU 2% 6%                           22%                       13%          10%                         29%                             18%


     China         7%                 21%                              24%                       14%            10%                15%               9%


     Brazil 2% 5%
             0%                                                      60%                                        6%          7%               19%


    ASEAN                      25%                         14%               5%         18%              6%          10%                 22%


              0%          10%              20%           30%               40%     50%            60%           70%              80%         90%            100%
                        Fossil w/o CCS           Fossil w CCS        Nuclear      Hydro        Solar     Wind         Other renewables
         Portfolios to decarbonise the power sector depend on regional
                          challenges and opportunities.                                                                                                  © OECD/IEA 2012
Renewables: Central to reach the
             2DS
        60
                                                                  CCS 22%
                                                                 CCS 22%

        50                                                        Nuclear 9%

                                                                 Nuclear 9%
                                                                  Power generation efficiency and fuel switching 3%

        40                                                        Renewables 28%
                                                                 Power generation efficiency and fuel switching 3%
                                                                  End-use fuel switching 9%
GtCO2




        30                                  Renewables           Renewables 28% electricity efficiency 31%
                                                                  End-use fuel and

                                                                  6DS
        20                                                       End-use fuel switching 9%
                                                                  4DS

                                                                 End-use fuel and electricity efficiency 31%
                                                                  2DS
        10



        0
             2009   2020        2030       2040       2050




    Renewables provide almost 30% of the cumulative reductions needed to reach
    the 2DS.
                                                                                                               © OECD/IEA 2012
Hydropower is a giant
                              8 000

                              7 000                                                            Non-OECD Europe and Eurasia

                              6 000                                                            Other non-OECD Asia
Hydropower generation [TWh]




                                                                                               Other Latin America
                              5 000
                                                                                               China
                              4 000
                                                                                               Brazil
                              3 000
                                                                                               Africa and Middle East

                              2 000                                                            OECD Europe

                              1 000                                                            OECD Asia Oceania

                                                                                               OECD Americas
                                 0
                                      1990   2000         2010     2020   2030   2040   2050


                                               Historic          2DS

                                  Hydropower will continue to play a major role in power generation:
                               hydropower generation more than doubles in the 2DS compared to today.

                                                                                                                     © OECD/IEA 2012
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future
IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future

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IEA ETP 2012 Slide Deck: Choosing a Sustainable Energy Future

  • 1. ETP 2012 complete slide deck Slide deck You are very welcome to use the contents of this slide deck as long as you reference them as IEA - Energy Technology Perspectives 2012 Most graphs and the data behind them are available for download from http://www.iea.org/etp/secure/, the required password received upon purchase of the book. For questions please contact the ETP team etp_project@iea.org © OECD/IEA 2012
  • 2. Table of contents To jump to a specific section: Right click, then hit “open hyperlink”  0. Context Part 1. Vision, Status and Tools for the Part 4. Scenarios and Technology Roadmaps Transition  11. Electricity Generation and Fuel  1. Global Outlook Transformation  2. Tracking Clean Energy Progress  12. Industry  3. Policies to Promote Technology  13. Transport Innovation  14. Buildings  4. Financing the Clean Energy Revolution  15. Roadmaps  16. 2075: can we reach zero emissions Part 2. Energy Systems Thinking  17. Regional Spotlights  5. Heating and Cooling  17.1 ASEAN  17.2 Brazil  6. Flexible Electricity Systems  17.x Japan  7. Hydrogen  17.3 China  17.4 European Union  17.5 India Part 3. Fossil Fuels and CCS  17.6 Mexico  8. Coal Technologies  17.7 Russia  9. Natural Gas Technologies  17.8 South Africa  17.9 United States  10. Carbon Capture and Storage Technologies © OECD/IEA 2012
  • 3. Context Chapter 0 © OECD/IEA 2012
  • 4. ETP 2012 – Choice of 3 Futures 2DS 4DS 6DS a vision of a sustainable reflecting pledges by where the world is now energy system of reduced countries to cut heading with potentially Greenhouse Gas (GHG) emissions and boost devastating results and CO2 emissions energy efficiency The 2°C Scenario The 4°C Scenario The 6°C Scenario © OECD/IEA 2012
  • 5. Sustainable future still in reach Is a clean energy Are we on track to Can we get on transition urgent? reach a clean track? energy future? YES ✓ NO ✗ YES ✓ © OECD/IEA 2012
  • 6. Recommendations to Governments 1. Create an investment climate of confidence in clean energy 2. Unlock the incredible potential of energy efficiency – “the hidden” fuel of the future 3. Accelerate innovation and public research, development and demonstration (RD&D) © OECD/IEA 2012
  • 7. Key messages 1. Sustainable energy future is still feasible and technologies exist to take us there 2. Despite potential of technologies, progress is too slow at the moment 3. A clean energy future requires systemic thinking and deployment of a variety of technologies 4. It even makes financial sense to do it! 5. Government policy is decisive in unlocking the potential © OECD/IEA 2012
  • 8. Global Outlook Chapter 1 © OECD/IEA 2012
  • 9. Choosing the future energy system To achieve the 2DS, energy-related C02 emissions must be halved until 2050. © OECD/IEA 2012
  • 10. Decoupling energy use from economic activity Reducing the energy intensity of the economy is vital to achieving the 2DS. © OECD/IEA 2012
  • 11. All sectors need to contribute The core of a clean energy system is low-carbon electricity that diffuses into all end-use sectors. © OECD/IEA 2012
  • 12. A portfolio of technologies is needed Technology contributions to reaching the 2DS vs 4DS Energy efficiency is the hidden fuel that increases energy security and mitigates climate change. © OECD/IEA 2012
  • 13. A portfolio of technologies is needed Technology contributions to reaching the 2DS vs 4DS Power generation efficiency and fuel switching Nuclear 3% 8% CCS 20% End-use fuel switching 9% End-use fuel and electricity Renewables efficiency 29% 31% Energy efficiency is the hidden fuel that increases energy security and mitigates climate change. © OECD/IEA 2012
  • 14. All technologies have roles to play Technology contributions to reaching the 2DS vs 6DS 60 Power generation efficiency and fuel switching 3% (1%) 50 Nuclear 8% (8%) 40 End-use fuel switching 12% Gt CO2 (12%) 30 End-use fuel and electricity efficiency 42% (39%) Renewables 21% (23%) 20 CCS 14% (17%) 10 0 2009 2020 2030 2040 2050 Nuclear is one piece of the puzzle © OECD/IEA 2012 © OECD/IEA 2012
  • 15. The cost of emitting a tonne of CO2 Marginal abatement cost curve in electricity generation in 2050 Marginal abatement costs reach USD 150 in 2050 and increase rapidly as reductions get deeper. © OECD/IEA 2012
  • 16. Marginal abatement costs change over time Passenger LDV marginal abatement cost curves in 2DS The marginal abatement costs decrease as learning improves over time. © OECD/IEA 2012
  • 17. Learning needs to deliver cost reductions Passenger LDV marginal abatement cost curves in 2DS in 2050 under different assumptions on learning Future marginal abatement cost curves are very sensitive to input assumptions © OECD/IEA 2012
  • 18. Tracking Clean Energy Progress Chapter 2 © OECD/IEA 2012
  • 19. Near term action necessary in all sectors Global CO2 emissions under ETP 2012 scenarios © OECD/IEA 2012
  • 20. Clean energy: slow lane to fast track Cleaner coal power Nuclear power Renewable power CCS in power CCS in industry Progress is too slow in Industry almost all technology areas Significant action is required Buildings to get back on track Fuel economy Electric vehicles Biofuels for transport © OECD/IEA 2012
  • 21. Fossil fuels continued to dominate Changes in sources of electricity supply, 2000-09 Coal remains the largest source of electricity supply, and met about half of additional electricity demand over the last decade. © OECD/IEA 2012
  • 22. Renewables provide good news Global renewable power generation 42% 75% 27% Average annual Cost reductions in Average annual growth in Solar PV Solar PV in just growth in wind three years in some countries © OECD/IEA 2012
  • 23. Fuel economy has improved Vehicle fuel economy, enacted and proposed standards The number one opportunity over the next decade in the transport sector, but few countries have standards in place. © OECD/IEA 2012
  • 24. We must translate ambitions into reality Government and manufacturer Electric Vehicle targets © OECD/IEA 2012
  • 25. Energy intensity must decline further Progress in energy intensity Significant potential for enhanced energy efficiency can be achieved through best available technologies. © OECD/IEA 2012
  • 26. Key recommendations 1) Level the playing field for clean energy technologies 2) Unlock the potential of energy efficiency 3) Accelerate energy innovation and public research, development & demonstration Help move clean energy from fringe, to main stream markets… © OECD/IEA 2012
  • 27. Policies to Promote Technology Innovation Chapter 3 © OECD/IEA 2012
  • 28. Key findings  Investment in energy research by IEA governments has been decreasing as a share of total national RD&D budgets, and stands at 4%  Patents for renewable energy technology increased fourfold since 2000, but were concentrated in solar PV and wind  The maturity, modularity and scalability of PV and onshore wind have enabled them to take off  Meanwhile, high capital costs and perceived risks are holding back pre- commercial technologies like CCS, IGCC and CSP, which appear to be stuck at the demonstration phase  Carbon pricing, energy efficiency policy and technology support are the backbone of a least-cost package to achieve 2DS, but the interactions among policies should be managed carefully  Optimum combinations of policies should be based on characteristics of comparable technologies that share similar impediments to development, deployment and diffusion © OECD/IEA 2012
  • 29. Energy RD&D has slipped in priority OECD R&D spending 25 12% 10% 20 Share of energy RD&D in total R&D 8% 2008 non-IEA country spending 15 4 USD billion 6% 10 3 USD billion 4% 2 5 2% 1 0 0% 0 Russia Brazil Mexico South Africa China India 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 Energy RD&D Share of energy RD&D in total R&D © OECD/IEA 2012
  • 30. Energy RD&D has slipped in priority OECD R&D spending 25 12% 10% 20 Share of energy RD&D in total R&D 8% 2008 non-IEA country spending 15 4 6% USD billion 10 3 USD billion 4% 2 5 2% 1 0 0% 0 South Africa Mexico China India Russia Brazil 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 Energy efficiency Fossil fuels Renewable energy Nuclear Hydrogen and fuel cells Other power and storage technologies Other cross cutting technologies/research Share of energy RD&D in total R&D © OECD/IEA 2012
  • 31. Energy RD&D has slipped in priority OECD R&D spending 50% Defence 40% Health and environment 30% General university funds Non-oriented 20% research Space 10% programmes Energy 0% 1981 1985 1990 1995 2000 2005 2010 The IEA has called for a twofold to fivefold increase in annual public RD&D spending on low carbon technologies to achieve the 2DS. © OECD/IEA 2012
  • 32. Clean energy patents have increased sharply since 2000, driven by solar PV and wind The US, Japan and Germany are the top three inventor countries for most technologies, but China has been catching up. © OECD/IEA 2012
  • 33. Building from national leadership to promote low-carbon innovation  Develop a national energy strategy with clear priorities  Increase R&D funding  Create mechanisms to fund capital-intensive demonstration  Design policies to support early deployment and drive private investment  Expand international collaboration © OECD/IEA 2012
  • 34. There is a wide selection of technology-push and market-pull policy instruments The use of multiple, integrated instruments may be justified to develop and deploy new and improved technologies. © OECD/IEA 2012
  • 35. The core policy mix Carbon price, energy efficiency policy and technology support are the backbone of a least-cost package to achieve 2DS. © OECD/IEA 2012
  • 36. Emission trading systems need to take into account the impact of supplementary policy Over- or under-delivery of supplementary policy targets can lead to significant swings in demand for allowances, and hence greater uncertainty in carbon prices. © OECD/IEA 2012
  • 37. Early support for new technologies can lower their cost But technology learning is not a justification for any level of early support. © OECD/IEA 2012
  • 38. New technologies take time to scale up Time, as well as cost, is a relevant factor in the justification for early support of emerging technologies. © OECD/IEA 2012
  • 39. Optimum combination of policies can accelerate clean energy uptake Note: The darker the colour, the greater the challenge for the related policy measures Policy measures can be tailored to specific categories of technologies, according to the challenge they aim to address. © OECD/IEA 2012
  • 40. An energy innovation policy framework Government should create an environment in which clean energy innovation can thrive and within which policies are regularly evaluated to ensure that they are effective and efficient. © OECD/IEA 2012
  • 41. Financing the Clean Energy Revolution Chapter 4 © OECD/IEA 2012
  • 42. Clean energy investment pays off Additional investment Additional Power investment Industry Transport Fuel savings Residential Commercial Undiscounted Total savings Fuel savings Biomass 10% Coal Oil - 120 - 80 - 40 0 40 Gas USD trillion Every additional dollar invested in clean energy can generate 3 dollars in return. © OECD/IEA 2012
  • 43. Clean energy investment pays off USD trillion Every additional dollar invested in clean energy can generate 3 dollars in return. © OECD/IEA 2012
  • 44. Investment needs to 2020 Additional investments in the 2DS, compared to 6DS Investments in buildings sector dominates in all countries, highlighting importance of energy efficiency © OECD/IEA 2012
  • 45. Additional investment needs in 2DS Additional Investments in transport dominate between 2020 and 2050 © OECD/IEA 2012
  • 46. Annual additional investments in 2DS Additional investments in non-OECD countries exceed the pledged climate finance, but the incremental cost is much less due to fuel savings © OECD/IEA 2012
  • 47. Power generation: Additional investments in 2DS Renewable energy sources dominate investments in power generation in the 2DS. © OECD/IEA 2012
  • 48. Power generation: annual investments 2DS In the 2DS, investments in coal-fired plants do not decline significantly until after 2020. © OECD/IEA 2012
  • 49. Transport : Additional investments . The cost of decarbonising the transport sector accelerates after 2030 as greater investments are made in advanced vehicles and low-carbon options in air, shipping and rail. © OECD/IEA 2012
  • 50. Buildings: Average annual investments In the 2DS, higher investments will be needed for more efficient HVAC systems and building shell improvements. © OECD/IEA 2012
  • 51. Industry: Total investments to 2050 Investments needed in the 2DS are moderately higher than in the 6DS © OECD/IEA 2012
  • 52. Clean energy investment pays off Additional Additional investment investment Power Power With Fuel savings Industry price effect Industry Transport Without price effect Residential Transport Commercial Undiscounted Total savings Fuel savings Residential 3% Biomass Commercial Coal 10% Oil Gas - 160 - 120 - 80 - 40 0 40 USD trillion Every additional dollar invested in clean energy can generate 3 dollars in return. © OECD/IEA 2012
  • 53. Clean energy investment pays off Additional investment Additional Power investment Industry Transport Fuel savings Residential Commercial Undiscounted Total savings Fuel savings Biomass 10% Coal Oil - 120 - 80 - 40 0 40 Gas USD trillion Every additional dollar invested in clean energy can generate 3 dollars in return. © OECD/IEA 2012
  • 54. Conclusions  Investment in low carbon technologies need to double current levels by 2020, reaching USD 500 bn annually  Balance between ensuring investors confidence and controlling total policy costs  Need for coordination on energy, climate and investment policies  Uncertainty in national regulatory policies and support frameworks remains key obstacle to finance  Greater dialogue needed between governments and investors  What can be done to incentives a move towards sustainable long term investments? © OECD/IEA 2012
  • 55. Energy Systems Thinking © OECD/IEA 2012
  • 56. A smart, sustainable energy system Co-generation Renewable energy resources Centralised fuel production, power and storage Distributed energy resources Smart energy system control H2 vehicle Surplus heat EV A sustainable energy system is a smarter, more unified and integrated energy system © OECD/IEA 2012
  • 57. The Global Energy system today Dominated by fossil fuels in all sectors © OECD/IEA 2012
  • 58. The future low-carbon energy system The 2DS in 2050 shows a dramatic shift in energy sources and demands © OECD/IEA 2012
  • 59. Heating and Cooling Chapter 5 © OECD/IEA 2012
  • 60. Heating & Cooling: huge potential Renewable heat Integration with electricity District heating and cooling network Co-generation Surplus heat Heating and cooling account for 46% of global energy use. Their huge potential for cutting CO2 emissions is often neglected. © OECD/IEA 2012
  • 61. Decarbonising heating and cooling: neglected but necessary Total final energy consumption by region as electricity, heat, transport and non-energy uses, 2009 Heating and cooling account for 46% of final energy consumption worldwide. © OECD/IEA 2012
  • 62. Decarbonising the existing buildings stock In OECD countries, more than two-thirds of existing older buildings will still be standing in 2050. However, in non-OECD countries, an estimated 52% to 64% of the building stock that will exist by 2050 has not yet been built © OECD/IEA 2012
  • 63. Large quantities of heat losses can be recuperated Heat loss in power generation by region, 2009 More then 50% of energy input of thermal power plants is wasted in cooling towers and rivers. © OECD/IEA 2012
  • 64. District energy networks can reduce CO2 intensity Biomass and a mix of other renewable energy sources make up almost three- quarters of primary energy consumption in 2050. © OECD/IEA 2012
  • 65. Heat pumps offer great potential under the right conditions Electricity load curve in the high-penetration base and smart case studies Poor installations can increase the costs of decarbonising electricity networks… …but smart control coupled with storage could minimise their possible impacts. © OECD/IEA 2012
  • 66. Heat pumps and co-generation are not conflicting technologies Integrating heat within the energy system can lower costs and help decarbonisation in other sectors © OECD/IEA 2012
  • 68. Global Electrical Energy Generation Lower electrical energy demand in 2DS even though electricity is larger proportion of overall energy demand. © OECD/IEA 2012
  • 69. Electricity generation capacity Generation capacity is higher in the 2DS due to great deployment of variable renewables with lower capacity factors. © OECD/IEA 2012
  • 70. Electricity system flexibility Power system flexibility expresses the extent to which a power system can modify electricity production or consumption in response to variability, expected or otherwise. ± MW / time © OECD/IEA 2012
  • 71. Flexibility needs and resources Existing and new flexibility needs can be met by a range of resources in the electricity system – facilitated by power system markets, operation and hardware. © OECD/IEA 2012
  • 72. No “one-time” fits all Balancing of the electricity system needs to address several time frames for response and duration, impacting choice of technology. © OECD/IEA 2012
  • 73. The need for flexibility is increasing GW All regions under all scenarios show an increasing need for electricity system flexibility. © OECD/IEA 2012
  • 74. Flexibility from power generation Start-up time [hours] Ramp rate [% per min] Time from 0 to full rate [hour] Minimum stable load factor [%] 0 10 20 30 0 50 100 0 10 20 0 20 40 Nuclear Hydro Coal (conventional) OCGT CCGT 0 10 20 30 0 50 100 0 10 20 0 20 40 All generation technologies have the technical ability to provide some flexibility. © OECD/IEA 2012
  • 75. Flexibility from power generation Ancillary Yes services provided? Possible Diesel and CCGT CCGT Co-generation standby Bio-energy Wind PVs Large Micro > 100 MW 1 - 100 MW 1 - 5 kW <50 MW 1 - 100 MW < 100kW Frequency limited if high Reserve possible penetration Reactive Network if high support penetration Grid support from distributed generation should be enabled. © OECD/IEA 2012
  • 76. Two very different profiles for natural gas use in power generation  Power generation from natural gas increases to 2030 in the 2DS and the 4DS.  From 2030 to 2050, generation differs markedly. Natural gas-fired power generation must decrease after 2030 to meet the CO2 emissions projected in the 2DS scenario. Notes: Natural gas-fired power generation includes generation in power plants equipped with CCS units. Biogas is not included here. © OECD/IEA 2012
  • 77. Mode of operation of natural gas plants differs according to scenario  Gas increasingly provides base load in the 4DS and peak load in the 2DS The lowering of the capacity factor threatens the viability of existing plants and detracts from investment in new plants. © OECD/IEA 2012
  • 78. The demand side flexibility resource is large and under utilised All regions exhibit a significant demand side flexibility resource – especially for regulation and load following. © OECD/IEA 2012
  • 79. North American sectoral resource Demand-side energy efficiency decreases resource. © OECD/IEA 2012
  • 80. Storage – a game changer or niche player? Existing installations and niche applications will play a definite role in the future, but cost concerns exist for new deployments. © OECD/IEA 2012
  • 81. Storage technology cost vary widely Application specific deployment is key for successful business case development. © OECD/IEA 2012
  • 82. Methodology – T&D analysis  3 drivers in grid development  Grid extension  Grid renewal  Renewable integration  Data sources:  power sector: IEA statistics and ETP 2012 scenarios  T&D grid length and age: ABS Energy Research © OECD/IEA 2012
  • 83. T&D infrastructure investments in the 4DS and 2DS are similar ...but sectoral allocation differs © OECD/IEA 2012
  • 84. 2DS offers new challenges and opportunities for T&D systems Cumulative costs and benefits of smart grids versus conventional T&D systems in the 2DS to 2050 Smart-grids’ costs are substantial, but estimated benefits do exceed investment. © OECD/IEA 2012
  • 85. Methodology – Smart grids  Long-run incremental social costs and benefits compared to a conventional T&D grid  Costs - bottom up approach  Technology costs are calculated by multiplying units required, market penetration, and unit cost  component replacement at the end of its technical lifetime.  Data: EPRI, IEE, CER, expert interview  Benefits  CO2 savings, capital cost savings, extended lifetime, increased reliability, reduced operational cost.  Methodology from: IEA, EPRI © OECD/IEA 2012
  • 86. Smart grid benefits exceed costs by a factor of between 1.5 and 4.5 ..., but direct benefits of investment in one sector may be found in other sectors. © OECD/IEA 2012
  • 87. Technology choices in electricity system flexibility © OECD/IEA 2012
  • 88. What do we need to do? Barriers?  Use systems based approaches – utilise flexibility resources from all parts of the electricity system  Learn by doing - increased pilot and demonstration projects will enable of real-world solutions for flexibility  Support new technology deployment – develop regulatory and market solutions that allow new technologies and new actors to support system operation  Determine regulatory approaches that support conventional and new technologies – and adequately share costs, benefits and risks. © OECD/IEA 2012
  • 89. Hydrogen Chapter 7 © OECD/IEA 2012
  • 90. H2 is a flexible energy carrier H2 is one of only a few near-zero-emissions energy carriers (along with electricity and bio-fuels) with potential applications across all end-use sectors. © OECD/IEA 2012
  • 91. Energy storage in H2 Source: NREL 2009 H2 storage may be cost competitive in the future. © OECD/IEA 2012
  • 92. FCEV are still expensive H2 could be used in fuel-cell vehicles such as longer range cars and trucks. © OECD/IEA 2012
  • 93. Decarbonisation of road transport saves money Investment in H2 technology decreases savings but opens the way towards sustainability. © OECD/IEA 2012
  • 94. A pathway for H2 infrastructure roll- out Optimisation of centralised and decentralised H2 production is one of the major challenges. © OECD/IEA 2012
  • 95. H2 T&D infrastructure investments H2 infrastructure to serve a fleet of 500 million FCEVs by 2050 would cost, which equals roughly 1% of total spending in vehicles and fuels. © OECD/IEA 2012
  • 96. Post 2050: H2 an alternative to bioenergy Post 2050, hydrogen could become an important energy carrier in a clean energy system, especially if bioenergy resources are limited. © OECD/IEA 2012
  • 97. The Future of Fossil Fuels © OECD/IEA 2012
  • 98. Fossil fuels dominate energy demand … Primary energy demand (EJ) Demand for coal over the last 10 years has been growing much faster than for any other energy sources. © OECD/IEA 2012
  • 99. Non-fossil power generation Electricity generation (TWh) Share of electricity (%) Non-hydro renewables Hydro Nuclear Despite an increasing contribution across two decades, the share of non-fossil generation has failed to keep pace with the growth in generation from fossil fuels. © OECD/IEA 2012
  • 100. Coal Technologies Chapter 8 © OECD/IEA 2012
  • 101. Key findings  Coal demand and generation of electricity from coal both need to fall by more than 40% to meet the 2DS.  Substantial numbers of old, inefficient coal power plants remain in operation.  The increasing use of widely available, low-cost, poor-quality coal is a cause for concern.  Supercritical technology, at a minimum, should be deployed on all combustion installations.  Research, development and demonstration of advanced technologies should be actively promoted.  To achieve deeper cuts, CCS offers the potential to reduce CO2 emissions to less than 100 g/kWh.  It is important to reduce local pollution for coal. © OECD/IEA 2012
  • 102. Coal is abundant and widely available Coal reserve (Gt) Brown coal Hard coal Sufficient coal reserves exist for an estimated 150 years of generation at current consumption rates. © OECD/IEA 2012
  • 103. Reducing emissions from coal is critical Reducing non-GHG emissions is also important to maintain or improve air quality locally. © OECD/IEA 2012
  • 104. Policy and regulation play a major role Electricity generation from coal (TWh) Policy and Regulation Coal Coal with CCS Electricity reduction in the 2DS Encourage reduction of generation from inefficient plants and switching from coal to gas, renewables and nuclear. © OECD/IEA 2012
  • 105. CO2 intensity must also be reduced 2010 2050(4DS) Technology development CO2 emissions (Gt) Policy and regulation 2050(2DS) Electricity (TWh) Technology development coupled with targeted policies and regulation are essential to realise the 2DS target in 2050. © OECD/IEA 2012
  • 106. Couple efficient plant with CCS Raising plant efficiency:  reduces emissions of CO2, and  reduces the cost of CCS. Subcritical Supercritical Ultra-supercritical CO2 intensity (gCO2/kWh) Advanced-USC 90% With CCS Efficiency (LHV, net) If CCS is applied to an average subcritical plant, its efficiency would drop by one-third. © OECD/IEA 2012
  • 107. Adoption of best practice technology is needed to raise average efficiency Capacity (GW) Potential for capacity growth in coal-fired power generation is seen mostly in non-OECD countries such as China and India. © OECD/IEA 2012
  • 108. Reducing CO2 emissions Global electricity generation 1. Subcritical from coal (TWh) 3. Plants with CCS 2. USC 2. Supercritical 1. Reduce generation from least efficient plant 2. Increase capacity of more efficient plant 3. Deploy CCS © OECD/IEA 2012
  • 109. Carbon lock-in must be avoided To meet the 2DS, generation from subcritical plants would cease before end of their natural lifetimes. Including construction Capacity (GW) plans up to 2015 Existing plants built before 2000 Generation from subcritical units should be reduced; future capacity additions should be supercritical or better. © OECD/IEA 2012
  • 110. Development of advanced technology is essential Advanced USC 700oC Demonstrations are being planned from 2020 - 2025 Steam temperature (°C ) Ultra-supercritical Supercritical Subcritical Ultra-supercritical plants are currently operated in various countries including China. © OECD/IEA 2012
  • 111. Opportunities and recommendations  Technologies to address the environmental impacts of sharply increased coal use must be used.  Increasing the average efficiency of global coal-fired power generation plants will be essential over the next 10 to 15 years:  Deploy supercritical and ultra-supercritical technologies  Minimise generation from older, less efficient coal plants  Accelerate development of advanced technology.  CCS must be developed and demonstrated rapidly if it is to be deployed widely after 2020.  Finally, there must be a shift away from reliance on coal. In a truly low-carbon future, coal will not be the dominant energy source. Strong policies will be essential if these goals are to be met. © OECD/IEA 2012
  • 112. Natural Gas Technologies Chapter 9 © OECD/IEA 2012
  • 113. Key findings  Increasing production of unconventional gas leads to an improvement in energy security in many regions.  Continuous technology improvement at each stage of unconventional gas exploration and production is essential  In the 2DS: • Natural gas will retain an important role in the power, buildings and industry sectors to 2050. • The share of natural gas in total primary energy demand declines more slowly – and later (after 2030) – than other fossil fuels. • Natural gas acts as a transitional fuel towards a low- carbon energy system. © OECD/IEA 2012
  • 114. Unconventional gas rises in importance The share of unconventional gas of total gas supply continues to increase in both 4DS and 2DS. © OECD/IEA 2012
  • 115. Continuous technology improvement is essential Continuous technology improvement at each stage of exploration and production goes hand in hand with reducing the environmental impact of those processes. © OECD/IEA 2012
  • 116. Maturity of technology and experience can differ widely Technology needs and solutions should be adapted according to experience and geographical location. © OECD/IEA 2012
  • 117. Natural gas is the second-largest source of primary energy in 2050 Although the share of fossil fuels in total primary energy production declines by 2050, the share of natural gas declines least. © OECD/IEA 2012
  • 118. Power sector is the dominant consumer of natural gas Note: For power, including co-generation, and for commercial heat, gas contribution represents gas input to the plants To achieve the 2DS, natural gas consumption needs to be reduced strongest in the power sector. © OECD/IEA 2012
  • 119. Two very different profiles for natural gas use in power generation Note: Natural gas-fired generation includes generation in power plants equipped with CCS units. Biogas is not included. Natural gas-fired power generation must decrease after 2030 to meet the CO2 emissions projected in the 2DS. © OECD/IEA 2012
  • 120. Natural gas as a transitional fuel  Power generation from natural gas increases to 2030 in the 2DS and the 4DS.  From 2030 to 2050, generation differs markedly. 4DS 4DS 2DS 2DS 10 000 10 000 7 500 7 500 TWh 5 000 5 000 2 500 2 500 0 0 2009 2020 2030 2040 2050 2009 2020 2030 2040 2050 OECD Non-OECD Natural gas-fired power generation must decrease after 2030 to meet the CO2 emissions projected in the 2DS scenario. © OECD/IEA 2012
  • 121. Mode of operation of natural gas plants differs according to scenario Gas increasingly provides base load in the 4DS and peak load in the 2DS. Note: Generation from gas-fired plants equipped with CCS is not included The lowering of the capacity factor threatens the viability of existing plants and detracts from investment in new plants. © OECD/IEA 2012
  • 122. Natural gas becomes a ‘high-carbon fuel’ after 2025 CCGTs are the most efficient natural gas-fired power generation plants, with a CO2 intensity almost half that of the best coal- fired plant. The global average CO2 intensity from natural gas-fired power generation falls below the carbon intensity of CCGTs in 2025. © OECD/IEA 2012
  • 123. Gas technologies in the power sector are essential to achieve the 2DS Continuous technology improvement will be necessary to achieve efficiency increases and to reduce the cost of CCS. © OECD/IEA 2012
  • 124. Efficiency improvement plays an important role  State-of-the-art CCGT has reached 60% efficiency, while some emerging technologies have the potential to reach 70%. Whether open-cycle or combined-cycle, larger capacity plants are generally capable of achieving higher efficiencies. © OECD/IEA 2012
  • 125. Gas-fired power generation complements variable renewables  Both OCGT and CCGT are sufficiently flexible in their responses to meet unexpected variations in demand. OCGTs are less costly and have a smaller footprint, but are much less efficient than CCGTs. © OECD/IEA 2012
  • 126. Biogas and CCS are essential components of a low-carbon future In the 2DS, 40% of the electricity generated from gas comes from natural gas with CCS and biogas. © OECD/IEA 2012
  • 127. Opportunities and recommendations  Regulation to mitigate the potential for environmental risks associated with production of unconventional gas must be introduced.  Gas-fired technologies to provide flexibility for power generation will be essential over the short term.  Over the next ten years, gas will displace significant coal- fired power generation – though it should be noted, natural gas-fired generation will itself need to be displaced in the longer term to decarbonise the power sector still further.  First-generation, large-scale gas plants with CCS need to be demonstrated and deployed. © OECD/IEA 2012
  • 128. Carbon Capture and Storage Technologies Chapter 10 © OECD/IEA 2012
  • 129. The technology portfolio includes CCS Emissions (GtCO2) 20% 29% 8% Carbon capture and storage (CCS) contributes one-fifth of total emissions reductions through 2050 © OECD/IEA 2012
  • 130. CCS must grow rapidly around the globe CO2 Captured (GtCO2) In the near term, the largest amount of CO2 is captured in OECD countries; by 2050, CO2 capture in non-OECD countries dominates © OECD/IEA 2012
  • 131. CCS is applied in power and industry Note: Capture rates shown in MtCO2/year The majority of CO2 is captured from power generation globally, but in some regions CO2 captured from industrial applications dominates © OECD/IEA 2012
  • 132. CCS in power generation Photo: Vattenfall © OECD/IEA 2012
  • 133. Three CO2 capture routes in power Post-combustion • Fossil fuel or biomass is burnt normally and CO2 is CO2 capture separated from the exhaust gas Pre-combustion • Fossil fuel or biomass is converted to a mixture of hydrogen and CO2, from which the CO2 is separated CO2 capture and hydrogen used for fuel Oxy-combustion • Oxygen is separated from air, and fossil fuels or biomass are then burnt in an atmosphere of oxygen CO2 capture producing only CO2 and water At the present time, none of the options is superior; each has particular characteristics making it suitable in different power generation applications © OECD/IEA 2012
  • 134. Three CO2 capture routes in power At the present time, no one route is clearly superior to another; each has particular characteristics that make it suitable in different cases of power generation fuelled by coal, oil, natural gas and biomass. © OECD/IEA 2012
  • 135. Capture technologies are ready Pre- Post- Oxy- Inherent Other combustion combustion combustion Gas Concept. Pilot Pilot Concept. (CLC) Electric power Coal Pilot Pilot Pilot Concept. (CLC) Biomass Concept. Concept. Concept. Fuel Pilot Pilot processing Industrial applications Iron and steel Pilot (Hisarna, Ulcored) Pilot Pilot Demo (FINEX) Commercial (DRI, COREX) Biomass Pilot Demo Commercial conversion Cement Concept. Pilot Pilot manufacture (Carbonate looping) High-purity Pliot Commercial sources Numerous routes to CO2 capture are in pilot-testing or demonstration stages for power and industrial applications; some are commercially available today © OECD/IEA 2012
  • 136. No one technology is a clear winner, yet… Coal Natural gas Capture route Post-combustion Pre-combustion Oxy-combustion Post-combustion Reference plant without capture PC IGCC PC NGCC Net efficiency with capture (LHV, 30.9 33.1 31.9 48.4 %) Net efficiency penalty (LHV, 10.5 7.5 9.6 8.3 percentage points) Relative net efficiency penalty 25% 20% 23% 15% Overnight cost with capture 3 808 3 714 3 959 1 715 (USD/kW) Relative overnight cost increase 75% 44% 74% 82% LCOE with capture (USD/MWh) 107 104 102 102 Relative LCOE increase 63% 39% 64% 33% Cost of CO2 avoided 58 43 52 80 (USD/tCO2) Applying CCS to a power plant will likely increase the LCOE by one- to two-thirds depending on the type of plant, relative to a similar power plant without CCS © OECD/IEA 2012
  • 137. CCS is expected to be cost-competitive © OECD/IEA 2012
  • 138. CCS is applied to coal, gas and biomass In 2050, 63% of coal-fired electricity generation (630 GW) is CCS equipped, 18% of gas (280 GW) and 9% of biomass (50 GW) © OECD/IEA 2012
  • 139. Generation from CCS equipped plants grows Power plants with CCS produce 15% of electricity in 2050, while fossil-fueled plants without CCS produce only 10% © OECD/IEA 2012
  • 140. Natural gas is not a panacea The global average CO2 intensity from power generation falls below the carbon intensity of CCGTs in 2025 in the 2DS; CCS can play a role in reducing emissions from gas © OECD/IEA 2012
  • 141. CCS is deployed globally for power Generation capacity (GW) In OECD North America, almost all coal-fired and 36% of gas-fired generation is CCS equipped; nearly two-thirds of coal-fired generation in China is equipped with CCS © OECD/IEA 2012
  • 142. Retrofitting CCS to coal-fired generation  The more than 1 600 GW of installed coal-fired generation emitted almost 9 GtCO2 in 2010; more than 350 GW were added in the past five years.  In most general terms, larger, more efficient (i.e. younger) plants are suitable for retrofit: today, 471 GW of coal-fired plants are larger than 300 MW and younger than 10 years  In the 2DS, 150 GW of supercritical and ultra- supercritical capacity are retired because they are uneconomic for retrofit due, and  100 GW of coal are retrofitted with CCS © OECD/IEA 2012
  • 143. Retrofitting CCS to coal-fired generation In the 2DS, through 2050: 700 GW of subcritical capacity is retired In most general terms, larger, more 150 GW of uneconomic efficient (i.e. younger) plants are supercritical and ultra- suitable for retrofit supercritical are retired 100 GW of coal are retrofitted with Source: IEA, 2012 CCS © OECD/IEA 2012
  • 144. CCS in industrial applications Photo: BP © OECD/IEA 2012
  • 145. Industrial applications of CCS  Some industrial processes Industrial processes suited produce highly concentrated to CCS CO2 vent streams; capture from these “high-purity” sources is Dilute exhaust Concentrated relatively straightforward streams vent streams e.g. blast furnaces and cement e.g. gas processing, NH3 and  Other industrial applications kilns ethanol production require additional CO2 separation technologies to Post-combustion concentrate dilute streams of CO2  The same CO2 separation Oxy-Combustion technologies applied in power generation can be applied to Pre-combustion industrial sources © OECD/IEA 2012
  • 146. Cost of CCS in industry varies widely A wide range of abatement costs through CCS exists in industrial applications © OECD/IEA 2012
  • 147. Industrial applications play an important role CO2 Captured (GtCO2/y) Non-OECD countries account for 72% of cumulative CO2 captured from industrial applications of CCS between 2015 and 2050 – China alone accounts for 21% of the global total © OECD/IEA 2012
  • 148. Industrial applications vary by region Note: Capture rates shown in MtCO2/year The predominant industrial application of CCS will vary by region and over time © OECD/IEA 2012
  • 149. Negative emissions from BECCS  Bio-energy with carbon capture and storage (BECCS) can result in permanent net removal of CO2 from the atmosphere, i.e. “negative CO2 emissions”  In BECCS, energy is provided by biomass, which removed atmospheric carbon while it was growing, and the CO2 emissions from its use are captured and stored through CCS  BECCS can be applied to a wide range of biomass conversion processes and may be attractive cost- effective in many cases Biomass must be grown and harvested sustainably, as this significantly impacts the level of emissions reductions that can be achieved © OECD/IEA 2012
  • 150. Where is CO2 storage needed? Note: Mass captured shown in GtCO2 Between 2015 and 2050, 123 Gt of CO2 are captured that need to be transported to suitable sites and stored safely and effectively. Storage sites will need to be developed all around the world. © OECD/IEA 2012
  • 151. Total investment for CCS: 3.6 trillion USD © OECD/IEA 2012
  • 152. Transport and storage challenges Storage Transport  Fundamental physical processes and  Most straightforward and well-known engineering aspects of geologic storage step in the CCS chain are well understood  Pipeline and ship (or barge) are the  Suitable geologic formations must have only practical options at scale sufficient capacity and injectivity, and  In 2010, over 60 MtCO2 were prevent CO2 (and brine) from reaching transported through a 6 600 km the atmosphere, sources of potable pipeline network in the United States groundwater and other sensitive  Cost of transport is generally low, but is regions in the subsurface a function of distance, capacity, and  Storage assessments suggest that the terrain available global pore space resource is  Transport by ship or barge is generally sufficient to store 123 GtCO2 more expensive than by pipeline over  Storage cost of storage is highly short distances variable: US cost estimates for onshore saline aquifers range from less than USD 1/tCO2 to over USD 20/t of CO2 stored © OECD/IEA 2012
  • 153. Recommended actions for the near term The gap between the current trajectory for CCS and the 2DS can be bridged, but concerted policy action is necessary from both industry and all levels of government 1. Government must assess the role of CCS in their energy futures, develop suitable deployment strategies for CCS and a clear timeline to develop enabling regulations 2. Government and industry must redouble efforts to demonstrate CCS at a commercial scale in different locations and technical configurations—including large-scale CO2 storage projects © OECD/IEA 2012
  • 154. Recommended actions for the near term 3. Government must implement appropriate and transparent incentives to drive CCS deployment; long-term climate change mitigation commitments and policy actions are necessary 4. Government must develop enabling legal and regulatory frameworks for demonstration and deployment of CCS, so that lack of regulation does not unnecessarily impede or slow deployment 5. Government and industry must develop clear, accurate information on the geographic distribution of storage capacity and associated costs for storing CO2 6. Government and industry increase emphasis on CO2 transport and storage infrastructure development so that integrated CCS projects can be successful 7. All parties must engage the public at both policy and project levels. A lack of transparency and a two-way flow of information from early stages can be fatal for CCS. © OECD/IEA 2012
  • 155. Electricity Generation and Fuel Transformation Chapter 11 © OECD/IEA 2012
  • 156. Energy and CO2 impacts of electricity generation Other transformation Agriculture Other transformation Agriculture 2% 5% 2% 6% Buildings 9% Buildings 15% Power Transport Power Transport 38% 20% 38% 18% Industry Industry 21% 26% Total primary energy Total energy-related use: 509 EJ in 2009 CO2 emissions: 31.4 Gt in 2009 Power sector accounted in 2009 for almost 40% of global primary energy use and energy-related CO2 emissions. © OECD/IEA 2012
  • 157. Past trends in power generation Global electricity generation by fuel Incremental generation 1990-2009 4 000 non-OECD OECD 3 500 3 000 2 500 TWh 2 000 1 500 1 000 500 0 Coal Gas Renewables Nuclear Increase in electricity generation over the last two decades largely covered by fossil fuels, but strong growth rates for renewables . © OECD/IEA 2012
  • 158. Age distribution of existing power plants Ageing infrastructure is the challenge in many OECD countries, whereas emerging economies have to cope with a growing demand for electricity. © OECD/IEA 2012
  • 159. Carbon lock-in must be avoided Including construction Capacity (GW) plans up to 2015 Existing plants built before 2000 To meet the 2DS, generation from subcritical plants would need to cease before end of their technical lifetimes. © OECD/IEA 2012
  • 160. Electricity demand Liquid fuel demand is stabilised at today’s level in 2050 in the 2DS, largely due to efficiency improvements and electrification in the transport sector. © OECD/IEA 2012
  • 161. Electricity demand Incremental final electricity demand between 2009-2050 in the 2DS Strong growth in electricity demand in emerging economies across all sectors, whereas in OECD countries consumption is driven by electrification of the transport and buildings sector. © OECD/IEA 2012
  • 162. Low-carbon electricity: a clean core Global electricity generation in the 2DS 45 000 Other 40 000 Wind 35 000 Solar 30 000 Hydro TWh Nuclear 25 000 Biomass and waste 20 000 Oil 15 000 Gas with CCS 10 000 Gas 5 000 Coal with CCS 0 Coal 2009 2020 2030 2040 2050 Renewables will generate more than half the world’s electricity in 2050 in the 2DS © OECD/IEA 2012
  • 163. Electricity generation scenarios 100% 4DS 19% 80% 36% 13% Renewables 60% 12% Nuclear 3% Fossil w CCS 40% Fossil w/o CCS 67% 49% 20% 0% 2009 2050 100% 2DS 19% 80% 13% 57% Renewables 60% Nuclear Fossil w CCS 40% Fossil w/o CCS 67% 19% 20% 14% 9% 0% 2009 2050 In the 2DS, global electricity supply becomes decarbonised by 2050. © OECD/IEA 2012
  • 164. Power generation; Nuclear Global installed capacity Without further action, nuclear deployment in 2025 will be below levels in the 2DS, although a majority of key countries remain committed to nuclear. © OECD/IEA 2012 © OECD/IEA 2012
  • 165. Average annual capacity additions Hydro Nuclear CSP 2030-50 PV 2020-30 Wind, offshore 2010-20 Wind, onshore 2006-10 Biomass Gas with CCS Coal with CCS 0 20 40 60 80 100 120 GW per year Massive acceleration of deployment of low-carbon power technologies is needed over the next four decades. © OECD/IEA 2012
  • 166. All technologies have roles to play Electricity demand savings and renewables are each responsible for one-third of the cumulative CO2 reductions in the power sector in the 2DS. © OECD/IEA 2012
  • 167. All technologies have roles to play Technology contributions to reaching the 2DS 60 Power generation efficiency and fuel switching 3% (1%) 50 Nuclear 8% (8%) 40 End-use fuel switching 12% Gt CO2 (12%) 30 End-use fuel and electricity efficiency 42% (39%) Renewables 21% (23%) 20 CCS 14% (17%) 10 0 2009 2020 2030 2040 2050 Nuclear is one piece of the puzzle © OECD/IEA 2012 © OECD/IEA 2012
  • 168. All technologies have roles to play 600 550 500 Gt CO2 450 400 350 300 4DS Electricity Fuel switching Nuclear 14% CCS 18% Wind 14% Solar 12% Other 2DS savings 28% and efficiency renewables 9% 5% Electricity demand savings and renewables are each responsible for one-third of the cumulative CO2 reductions in the power sector in the 2DS. © OECD/IEA 2012
  • 169. Key technologies to reduce CO2 in the power sector Geothermal Ocean 1% 0.4% Wind 13% Solar Electricity savings 11% 38% Biomass 4% Cumulative reductions in the power sector of 474 Gt between Hydro 2009 and 2050 in the 2DS 4% (relative to the 6DS) Nuclear Fuel switching and 13% CCS efficiency 12% 4% Renewables provide more than one third of the cumulative reductions needed to decarbonise electricity supply in the 2DS. © OECD/IEA 2012
  • 170. Electricity generation mix 100% 13% 9% 12% 11% 19% 25% 34% 80% 19% 24% 36% Nuclear 60% Renewables 57% 71% 3% 63% 49% Fossil w/ CCS 40% 67% 68% Fossil w/o CCS 49% 20% 14% 7% 7% 9% 13% 12% 10% 0% 6DS 4DS 2DS 2DS-NoCCS 2DS-hiRen 2DS-HiNuc 2009 2050 0 USD trillion -5 -10 -15 Cumulative additional costs rel. to 6DS -20 -25 -30 4DS 2DS 2DS-NoCCS 2DS-hiRen 2DS-HiNuc Other technology portfolios reach the same reduction as in the 2DS, but, with the exception of the 2DS-hiNuc variant, at higher costs. © OECD/IEA 2012
  • 171. There are many routes to decarbonisation Regional electricity mixes in the 2DS in 2050 US 4% 24% 22% 6% 15% 18% 12% South Africa 2% 23% 24% 2% 28% 16% 6% Russia 5% 8% 28% 28% 1% 14% 17% Mexico 20% 10% 8% 7% 21% 19% 15% India 19% 14% 17% 16% 21% 6% 7% EU 2% 6% 22% 13% 10% 29% 18% China 7% 21% 24% 14% 10% 15% 9% Brazil 2% 5% 0% 60% 6% 7% 19% ASEAN 25% 14% 5% 18% 6% 10% 22% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fossil w/o CCS Fossil w CCS Nuclear Hydro Solar Wind Other renewables Portfolios to decarbonise the power sector depend on regional challenges and opportunities. © OECD/IEA 2012
  • 172. Renewables: Central to reach the 2DS 60 CCS 22% CCS 22% 50 Nuclear 9% Nuclear 9% Power generation efficiency and fuel switching 3% 40 Renewables 28% Power generation efficiency and fuel switching 3% End-use fuel switching 9% GtCO2 30 Renewables Renewables 28% electricity efficiency 31% End-use fuel and 6DS 20 End-use fuel switching 9% 4DS End-use fuel and electricity efficiency 31% 2DS 10 0 2009 2020 2030 2040 2050 Renewables provide almost 30% of the cumulative reductions needed to reach the 2DS. © OECD/IEA 2012
  • 173. Hydropower is a giant 8 000 7 000 Non-OECD Europe and Eurasia 6 000 Other non-OECD Asia Hydropower generation [TWh] Other Latin America 5 000 China 4 000 Brazil 3 000 Africa and Middle East 2 000 OECD Europe 1 000 OECD Asia Oceania OECD Americas 0 1990 2000 2010 2020 2030 2040 2050 Historic 2DS Hydropower will continue to play a major role in power generation: hydropower generation more than doubles in the 2DS compared to today. © OECD/IEA 2012

Editor's Notes

  1. 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.
  2. 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&amp;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.
  3. 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&amp;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.
  4. Let me start by outlining some key messages coming from ETP-2012.First of all, we believe that we still can reach a sustainable energy future. A wide range of technologies exist, or are in advanced stages of development, and can take us there;Secondly, despite the potential of many clean energy technologies, the progress in deploying them is falling behind our ambitious goals;Thirdly, a clean energy future cannot be achieved by looking into one or two technologies only. It requires a range of technologies and, even more than before, energy systems thinking;Fourthly, we have strong reasons to believe that a transition to a clean energy future makes economic sense, right now;And finally, government policy is critical to unlock the potential of clean energy technology.
  5. The message is clear: different energy systems deliver very different futures.Governments have the responsibility to choose what future they want and start building the appropriate energy system now if that future is to be realised.On a global basis, total primary energy supply (TPES) will grow in all scenarios.In the 2DS, TPES increases by some 35% in the period 2009 to 2050.This is significantly lower than the 85% rise seen in the 6DS and the 65% increase in the 4DS.
  6. In the 2DS, the energy intensity of the global economy falls significantly, and demand for physical goods and energy decreases over time. Success will depend on a significant decoupling of energy use from economic activity, which could originate from 3 factors:technology developmentf.ex. Increased electrification of end-use sectors, coupled with decarbonisation of electricity generationStructural changef.ex. potential saturation of demand at certain levels, like residential floor area.Individual behaviour changef.ex. modal shifts in the transport sectorWithout this decoupling, achieving the 2DS becomes very costly, if not impossible.
  7. Achieving the 2DS requires a collective effort of all sectors at varying degrees:The largest contributor, 42%, is the power generation sector, which is the backbone of a clean energy system as laid out in the 2DS.Clean electricity is an important fuel for all end-use sectors and has thus implications on the whole economy.
  8. A portfolio of technologies needs to be applied across all sectors to achieve the 2DSThe three largest technology groups represent 81% perfect of CO2-emission reductions by 2050:End-use fuel and electricity efficiencyEnergy efficiency is a hidden fuel that reduces vulnerability to all the things that might go wrong across the value chain and also contributes to achieving climate change goals.RenewablesBy 2050, bioenergy is the major primary energy source and renewables are the dominant fuel for power generation.CCSAbout half of the total volume of carbon captured by 2050 comes from the industry and transformation sectors.Heavy industries like iron and steel and cement rely entirely on CCS to make prevent substantial emissions.In the power sector, about 60% of coal-fired generating capacity will be equipped with CCS units by 2050.
  9. A portfolio of technologies needs to be applied across all sectors to achieve the 2DSThe three largest technology groups represent 81% perfect of CO2-emission reductions by 2050:End-use fuel and electricity efficiencyEnergy efficiency is a hidden fuel that reduces vulnerability to all the things that might go wrong across the value chain and also contributes to achieving climate change goals.RenewablesBy 2050, bioenergy is the major primary energy source and renewables are the dominant fuel for power generation.CCSAbout half of the total volume of carbon captured by 2050 comes from the industry and transformation sectors.Heavy industries like iron and steel and cement rely entirely on CCS to make prevent substantial emissions.In the power sector, about 60% of coal-fired generating capacity will be equipped with CCS units by 2050.
  10. So let us start with a thorny bit straight away:From ETP2012’s point of view, nuclear is one of important energy resource to achieve 2DS. And the vast majority of countries with nuclear power remain committed to its use despite the Fukushima accident, but projections suggest that nuclear deployment by 2025 will be below levels required to achieve the 2DS objectives. In addition, increasing public opposition could make government ambitions for nuclear power’s contribution to their energy supply harder to achieve.
  11. Marginal abatement costs are an important policy design tool, they:Represent the cost for the last tonne of CO2 emissions to be eliminated andIndicate the level of the carbon price needed to trigger abatement, by making the cost of emitting higher than the cost of avoidance.Carbon pricing is a method to internalize the damage caused by emitting CO2 into the atmosphere.ETP2012 follows the principle that the most expensive abatement costs should be roughly the same across all regions and all sectors. In 2050 the marginal abatement costs range between 130 and 160 USD per tonne CO2. In electricity generation, such a marginal price translates into the cost-effective use of technologies such as biomass with CCS and ocean energy.In reality, several factors impact the implementation of such homogeneous abatement costs: basic cost uncertainties, trade barriers, imperfect information, different political priorities and distributional considerations
  12. The dynamic nature of marginal abatement cost curves (MACC) creates 2 principle processes working in opposite directions.Everything else being equal, costs increase as emission reductions get deeperAs more clean energy technologies are deployed, the cost of using each technology may also decline as a result of learning.The figure shown here shows a MACC for passenger LDVs as an example. The CO2 reduction potential (X-axis) increases over time and abatement costs decreaseThe use of MACC in policy design has two major limitationsThe technology potential may be limited by other factors than pure cost (e.g. land availability for biofuels)The cost reduction potential over time needs to be considered. Early deployment of technologies with high marginal abatement costs can be cost-effective in the longer term, if economies of scale and technology learning bring down the cost.
  13. Learning brings down technology cost and hence abatement costs. Continuous R&amp;D and international collaboration are therefore 2 main pillars to accelerate learning and deliver the 2DS .The figure for passenger LDV shown here, represents MACC if technology costs stay constant until 2050 after 2030, 2040 or 2050, repectively. The marginal costs in 2050 for LDV (from hydrogen fuel cell vehicles) are around 130 USD per tonne by using 2050 technology assumptions but would be 700 USD per tonne by assuming 2030 technology cost assumptions.
  14. Under the 6DS, energy use and CO2 emissions would increase by a third by 2020, and almost double by 2050. This would increase the chances of a rise in global temperatures of at least 6°C this centurySuch an outcome would force future generations to deal with significant economic, environmental and energy security impacts- a legacy that I know none of us wish to leave behind.A more optimistic future is one that reduces carbon emissions and pollutants, decreases fuel demand, and makes our economies more efficient, more competitive and less vulnerable to external shocks. The ‘2DS’, or 2 degree scenario, would see global temperatures limit to a 2°C rise. Through our analysis, we explore a cost-efficient combination of technology options that would help realise this goal.While ambitious, we do believe that achieving this goal is still possible, IF timely and significant government policy action is taken, and a range of clean energy technologies are developed and deployed globally across major economic sectors.
  15. 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]
  16. Between 2000 and 2009, coal and natural gas dominate the growth of new electricity generation plants:Natural gas has been the quickest growing source in OECD countriesCoal the fastest growing energy source in absolute terms, meeting nearly half of new power plant capacity globally.Perhaps the most disappointing finding from our recent analysis is that about half of new coal power plants are still built with inefficient technologies.This makes the need for progress in CCS - the key technology for de-carbonizing coal-fired power generation - even more urgent.
  17. Indeed, progress in renewable power technologies has been positive: Hydro, biomass, wind and solar PV, are broadly on track to achieving the 2 degree scenario goals.In particular, wind has progressed impressively, with 27% growth rates; and it is now among the most competitive of renewable energy technologies.Solar PV has been growing even faster - albeit from a much smaller base - registering average annual growth rates of about 42% over the past decade.This growth has been driven by strong policy support and impressive cost reductions- with some countries seeing a 75% system cost reduction in just the past three years. Maintaining such progress will not be easy: Enhanced research, development and demonstration, is still needed for refining new generation renewable technologies that are not advancing quickly enough- including concentrated solar power and offshore wind. More mature renewable energy technologies must also continue to deploy to new markets with high resource potential. But just to repeat this book’s high-note – on the whole, renewables, particularly wind and solar PV, are progressing well.
  18. As another positive message, sometimes the simplest actions can offer the greatest benefits.Improving vehicle fuel economy is the number one action that can be taken over the next decade to reduce emissions, and reduce energy demand in the transport sector. Rising fuel prices can be politically sensitive, but in the longer term (dare I say), drivers can reduce their bills by both driving more efficiently, and purchasing more fuel efficient cars. Naturally, consumers must choose these vehicles – but policy can help create better options and incentivize their choices. While progress in this area has been made, more is required: Average new light-duty vehicle fuel economy improved by 1.7% annually between 2005 and 2008, but a rate of 2.7% would be required to achieve the 2 degree scenario objective. Surprisingly, today, outside the OECD, few countries have fuel economy standards in place for light-duty vehicles. For trucks, standards are only now emerging for the United States and Japan.
  19. For other technologies, we find that governments have ambitious goals.That is positive- but translating goals into action on the ground can often be challenging. Targeted policies are required to help achieve targets. Here you see the case for Electric Vehicles. Governments have set targets to achieve a stock of 20 million electric vehicles on the road by 2020, but after 2014, announced manufacturer targets are less certain and less predictable.Nuclear is another example. We find that following the tsunami and unfortunate nuclear accident at Fukushima, some governments have stated an intention to decrease their dependence on nuclear energy. But most continue to maintain ambitious nuclear deployment objectives. By 2025, announced plans would see global nuclear capacity increase by almost 50%.Achieving these goals may prove challenging –public opposition to nuclear power has increased, and a number of those projects are already facing challenges.Translating ambitions into action will therefore require significant public policy efforts and private sector commitment.
  20. Energy efficiency remains a key objective. Improvements to industry energy intensity have helped to slow growth in energy consumption. Between 1990 and 2009, energy intensity decreased by an average of about 2% per year. While the progress is positive, the energy intensity of the global economy needs to fall by another two-thirds by 2050 to achieve a 2-degree scenario, or 2DS.This means increasing the annual improvements in energy intensity, to 2.4 % in the coming four decades. Overall, the role of efficiency is critical. It will deliver a third of the emissions reductions required to achieve the 2DS. While less “sexy”, and often a result of local legislation, promoting energy efficiency is relatively cheap, especially given its contribution to emissions reduction and energy security.
  21. In order to accelerate clean energy progress, the ETP makes three key recommendations.First, ensure that energy prices reflect the ‘true cost’ of energy- accounting for the positive and negative impacts of energy production and consumptionSecond, unlock the incredible potential of energy efficiency – the “hidden” fuel of the future. And finally, accelerate energy innovation and public support for research, development and demonstration. This will help lay the groundwork for private sector innovation, and bring technologies to market.
  22. Against this backdrop, it is worrying to see the most recent development in public energy RD&amp;D. While public RD&amp;D hit a new high in 2009 as a result of economic stimulus spending, it declined sharply in 2010 to just above 2008 levels. Preliminary 2011 data suggests, that spending may again be on the rise. But overall, the energy sector only accounts for about 4% of total government R&amp;D spending, down from well over 11% in 1980. This weakening support for energy R&amp;D represents a major challenge, given the strategic importance of the sector. Targeted RD&amp;D efforts will help bring key early-stage clean energy technologies to market. Such measures must be coupled with policies aimed at fostering early deployment, which would provide opportunities for learning and cost reduction.
  23. Against this backdrop, it is worrying to see the most recent development in public energy RD&amp;D. While public RD&amp;D hit a new high in 2009 as a result of economic stimulus spending, it declined sharply in 2010 to just above 2008 levels. Preliminary 2011 data suggests, that spending may again be on the rise. But overall, the energy sector only accounts for about 4% of total government R&amp;D spending, down from well over 11% in 1980. This weakening support for energy R&amp;D represents a major challenge, given the strategic importance of the sector. Targeted RD&amp;D efforts will help bring key early-stage clean energy technologies to market. Such measures must be coupled with policies aimed at fostering early deployment, which would provide opportunities for learning and cost reduction.
  24. Governments’ lack of clear, coherent strategies that specify technology priorities for clean energy RDD&amp;D could pose a risk to achieve the 2DS
  25. 1- National energy strategy designed to accelerate the development and adoption of low-carbon technologies is the single most important step to address the energy innovation challenge2- An integrated approach to innovation should include public support for RD&amp;D, combined with targeted incentives for the deployment of energy technologies3- Engaging in and managing effective public-private partnerships reduce the costs of low-carbon innovation4- Strengthening international collaboration can increase the pace of innovation5- In-depth evaluation help identify the most effective approaches to encourage innovation6- Co-ordinating the system of institutions within which innovation takes place is an important part of the innovation challenge
  26. How much will this all cost? We know that the investments we make today will determine the energy system we have in 2050. Investment in clean energy needs to double by 2020 to limit the rise in global temperatures to 2°C.The cost of creating a low-carbon energy system now will be outweighed by the potential fuel savings enjoyed by future generations. Even 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.
  27. How much will this all cost? We know that the investments we make today will determine the energy system we have in 2050. Investment in clean energy needs to double by 2020 to limit the rise in global temperatures to 2°C.The cost of creating a low-carbon energy system now will be outweighed by the potential fuel savings enjoyed by future generations. Even 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.
  28. Compared to the investment requirements over the next decade under the 6DS of USD 19 trillion, total additional investment needs to achieve the 2DS is projected to be 25% above investments needed in the 6DS.OECD member countries represent over half (USD 2.5 trillion) of these total additional investments, with the European Union accounting for the largest share of any region at 22%.The buildings sector requires more than half of the additional investment globally until 2020:Early investments in low-carbon building options are critical to achieving the high share of energy efficiency outlined in the 2DS.Delays in implementing these investments will result in additional investments for new power generation capacity, as well as higher fuel costs in buildings and an increase in the number of people without access to reliable and affordable energy.For new buildings, mandatory building codes with stringent minimum energy performance requirements (standards), aiming at zero-energy buildings, are essential.For existing buildings, governments should implement mandatory annual renovation rates, where retrofits to low-energy standards are based on an analysis of the lifetime energy costs. In many cases these options have short payback periods with low or negative abatement costs.
  29. For emerging economies and least developed countries, the gross additional investments required (i.e., not taking into account fuel savings) in the 2DS compared to the 6DStotal USD 76 billion per year from 2010 to 2020, and USD 130 billion per year from 2020 to 2030.Adding in other major economies brings the annual additional investment in non-OECD countries to USD 226 billion from 2010 to 2020 and USD 439 billion per year from 2021 to 2030.The investment needs in non-OECD countries clearly exceed the USD 100 billion of pledged climate finance (a significant share of which will be dedicated to adaptation funding).However, this does not necessarily mean that this funding will be insufficient.The additional investment needs are partially compensated by fuel savings, meaning that the incremental cost is much less (and can even result in net savings over the long term to 2050).If the Green Climate Fund and other vehicles for the USD 100 billion can structure their funding so that they primarily target those incremental costs not compensated by fuel savings while leveraging private finance for the cost-effective component of these investments, then reaching the required scale of finance becomes more achievable.
  30. Decarbonising the power sector requires switching from traditional fossil fuel plants to a mix of renewable energy, nuclear and fossil fuel plants equipped with CCS.In addition investments will also be needed in T&amp;D to connect more variable renewable sources, modernise existing assets and introduce enhanced demand-side management. Total investments in the power sector, from 2010 to 2050 under the 2DS, are USD 36 trillion, of which USD 25.4 trillion is for low-carbon power generation and USD 10.5 trillion for T&amp;D investments.These investments (USD 7.6 trillion) are 30% higher than in the 6DS, and the majority of these additional investments will take place after 2030 as the benefits of greater energy efficiency help reduce the need for new power capacity. Improvements in energy efficiency in the buildings and industry sectors reduce electricity demand by 19% compared to the 6DS.This lowers the investment amount required to extend distribution networks, which more than off sets any additional investments in transmission to accommodate more variable renewables. As a result, investments in T&amp;D are relatively similar in the 6DS and the 2DS.
  31. Deployment of low-carbon power generation technologies rises significantly after 2020, however, as the cost of low-carbon power technologies declines and countries gain experience in integrating larger shares of variable renewable energy into their generation portfolios as well as nuclear.In the following decade, annual investments rise to USD 630 billion, with wind (26%) and solar (20%) accounting for the largest shares. Investment in coal and gas plants without CCS falls to nearly zero, while investments in coal and gas plants with CCS reach over 15%.After 2030, solar represents the largest share of total investments (30%), followed by wind (22%) and nuclear (16%); CCS and other renewables make up the remainder. Total average annual investment after 2030 is double that of the 2010 to 2020 period.
  32. Under the 2DS, investments in conventional gasoline and diesel vehicles will be diverted to low-carbon advanced vehicles.Over the next two decades, additional investments in low-carbon transport remain relatively low as significant cost reductions are needed before these vehicles break into the mass market.After 2030, sharp declines in battery costs and fuel-cell vehicles occur in the 2DS, with investments in advanced vehicles surpassing conventional vehicles.China accounts for the largest share of transport investments (based on full vehicle costs) in both scenarios – USD 60 trillion in the 6DS and USD 65 trillion in the 2DS – roughly 24% of total investments in global transport in each. This level of investment is slightly larger then in the United States and Europe.
  33. Significant opportunities exist to reduce energy use and CO2 emissions in the buildings sector through the use of more energy efficient building envelopes, HVAC systems, lighting and appliances.In the 6DS, an estimated USD 16.3 trillion will be required to purchase these technologies over the next four decades. This breaks roughly down to 50% in the residential and 50% in the commercial sub-sector.Achieving a low-carbon buildings sector requires an additional USD 11.4 trillion, or 70% more, in spending for both sub-sectors.In the residential sub-sector, more efficient building envelopes, HVAC systems and appliances require approximately 30% each in additional investment. In the commercial sector, the largest share of additional investments is for more efficient building envelopes (40%), followed by appliances and other equipment (33%).Comparing the additional investment needs in the 2DS, 2010 to 2030 and 2030 to 2050, shows several interesting trends.In OECD member countries, the level of investment is higher in the earlier time period than in the later, because existing building stock requires significant retrofitting.This is particularly the case in the European Union, where the residential sub-sector requires more than twice the additional investment needs of the commercial sub-sector.China’s rapid economic growth over the next two decades is expected to substantially expand its commercial building sector.In contrast, additional investment needs of other non-OECD countries are in the residential sector, some two to six times higher than in the commercial sector. As these economies are less mature, the relative size of the commercial sector compared to the residential sector is significantly less than in developed economies. This difference declines as the economies mature and the commercial sectors grow.
  34. Investment requirements in industrial production plants for the five most energy-intensive sectors (chemicals and petrochemicals, iron and steel, pulp and paper, cement and aluminum) are estimated between USD 9.6 trillion and USD 11 trillion from 2010 to 2050 in the 6DS and the 2DS.A significant reduction in industrial emissions under the 2DS requires investingin more energy efficient equipmentimproved energy managementadditional recyclingfuel switching and CCS to capture process emissions.Investment needs for the 2DS are about 20% higher than in the 6DS, with additional investments of USD 1.6 trillion to USD 2 trillion from 2010 to 2050.Additional investment requirements to achieve the 2DS are much higher after 2030 than in the earlier decades because CCS technologies, which represent one of the highest additional costs for the industry sector, are not widely deployed until after 2030 when the technology is expected to reach commercial deployment.A breakdown of regional investment requirements in industry shows thatOECD member countries represent less than one-quarter of future investments, as industrial production declines in OECD regions and rises in emerging and developing countries in Asia, the Middle East and Africa.In the 6DS, investment requirements in industry for China are higher than for all OECD member countries combined;
  35. 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]
  36. Of course when we discuss the transition to clean energy systems, arguably the greatest concern revolves around costs. Let me then touch on the economics of such a transition.A simple fact is that investment in clean energy needs to double by 2020 to limit the rise in global temperatures to 2°C. We need to spend an extra $130 per person every year on average on clean energy over the next 40 years. But, our calculations show that those investments make sense.* The cost of creating a low-carbon energy system now will be outweighed by the potential fuel savings enjoyed by future generations:By 2025, fuel savings from the transition would outweigh investments;By 2050 fuel savings could reach $100 trillion.Every additional dollar invested in clean energy can generate three dollars in return.The longer we wait to transform our energy system, the more expensive it will get.
  37. [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.
  38. ThisSankey diagram illustrates today’s energy flows from supply to demandToday’s energy system is heavily depend on fossil fuels that power all end-use sectors.The majority of the renewables are used in the buildings sector, but represent mainly fire wood use in developing countries for heating and cooking. Indoor burning of firewood, like all solid fuels, releases toxic pollutants including particulate matter and carbon monoxide. Nearly 2 million people a year die prematurely from illness attributable to indoor air pollution due to solid fuel use, according the World Health Organisation (2004 data).
  39. Fuel use in the demand sectors diversifies in a low-carbon system.New fuels like biofuels and hydrogen start penetrating especially in the transport sectorElectricity use is increasing in all demand sectors. Electricity generation doubles from 2009 to 2050, with renewables providing more then half of the primary energy supply.Surprisingly, losses in fuel transformation and electricity generation increase.Losses in fuel transformation increase by 30 EJ due to biofuel and H2 production.In the electricity generation sector, overall losses increase from 40% to 46% between 2009 and 2050. So, actually power generation is less efficient in 2050. Though it also depends on the conventions.The share of renewables in electricity generation increases and with efficiencies of 100% efficiency for wind, solar PV, hydro, the average efficiency should increase.But on the other hand, the average efficiency is decreased through the increased use of nuclear and CCS. The share of nuclear, with an efficiency of roughly 33% , grows from 13% to 19% and most of the fossil fuels plants are equipped with a CCS unit in 2050 that reduces the efficiency of thermal power plants.Generally, when we talk about energy efficiency in ETP, the largest improvements are seen in the end-use sectors, not in the supply side. Though there are improvements in energy efficiency in fossil power generation as well, but fossil generation plays a less dominant role in the 2DS.
  40. 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 &amp; 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.
  41. Energy consumption to generate heat varies with the level of economic development.The highest percentages of total final energy in the form of heat are seen in Africa (71%) and Asia (60%), largely due to widespread, inefficient use of biomass for cooking and heating.Developing countries have a high percentage of heat as an energy source. Easily accessible, low-cost energy sources are combusted inefficiently, providing minimum comfort in relatively small spaces.In developed countries, higher living standards have brought heating distribution systems to larger living areas, which allows efficient use of more valuable energy sources (e.g. gas, electricity).Development is also accompanied by mass motorisation, the electrification of other energy services and a demand for higher temperatures in industry, which requires higher-quality, more efficient fuels – all of which change the relative share of heat in the energy mix.Finally, a strong component of the demand for heat – the demand for thermal comfort – is heavily influenced by climate and geographic location. This does not include only average annual temperatures, but also seasonal and daily variability and other factors such as humidity or hours of sunlight.Worldwide, 66% of heat is generated by fossil fuels.This share rises in OECD countries to 85% and falls to 57% in non-OECD countries.The large proportion of heat generation from fossil fuels in OECD countries is in many cases used to provide low-grade heat services (i.e. heat below 100°C), which can be supplied by a wide range of low-carbon alternatives.
  42. In most OECD countries, more than two-thirds of existing older buildings will still be standing in 2050.Energy demand for space heating in OECD countries is expected to remain flat and begin a declining trend after 2020, as a result of new energy efficient buildings in combination with an ambitious annual retrofit of 2.5% for existing buildings,Governments in non-OECD countries face a different set of challenges.However, an estimated 52% to 64% of the building stock that will exist in non-OECD countries by 2050 has not yet been built. The opportunity to build to more efficient standards in these regions is great.As income levels rise, the demand for thermal comfort (heating and cooling) increases, combined with the risk of locking in older technologies in building stocks.
  43. More then 50% of energy input of thermalpowerplantsiswasted in coolingtowers and rivers.This waste heat can, in many cases, be captured economically and reused to increase process or plant efficiency.Different industrial sectors use heat of varying temperatures. Cement kilns require peak temperatures on the order of 1 400°C while the reduction of iron oxide to iron during the smelting process occurs at around 1 250°C.Beyond high-temperature uses, substantial quantities of low-grade heat remain that are suitable for heating building spaces or residential hot water supply, or to provide air conditioning from heat-driven chillers.Capturing and reutilising these large quantities of waste heat efficiently requires district energy infrastructure.
  44. In the 2DS, the carbon dioxide (CO2) intensity of district heating and cooling networks in 2050 is one-sixth that of existing systemsBiomass and a mix of other renewable energy sources make up almost three-quarters of primary energy consumption in 2050. The share of district energy networks in useful energy demand in buildings is in fact doubled in the period from 2010 to 2050.But the primary energy input to district heating networks does not show a sustained increase in the 2DS, due to improvements in the efficiency of the building stock to reduce space heating and cooling loads.Even where district heating makes environmental and economic sense, its wider use has barriers that must be addressed to achieve the technology penetration in the 2DS. For example:Necessary road works and retrofitting buildings to connect to the network creates planning issues.Regulation should open up district heating networks to third parties. Their presence arguably improves the potential for competition in heating and cooling and each producer can then sell thermal energy to the network.In practice, profitability often depends on a large share of customers in the area joining the scheme.
  45. ETP 2012 has developed case studies for the 2DS that evaluate the increase in peak demand from a high penetration of heat pumps in OECD countries with high heat demands.The base case assumes aggressive deployment of heat pumps to 2050, and requires sustaining the current 28% annual growth rate of heat pumps in the European Union. By 2050, heat pumps would deliver 38% of useful energy demand for space heating in the OECD region.Peaks in demand from heat pumps are likely to occur more often in winter, which coincides with peak demands for electricity for other uses.If heat pumps are operated on a time-of-day cycle, similar to many central-heating timers, the additional demand would coincidewith traditional morning and evening demand increments (Periods 2 and 4 in Figure), adding to the burden on peak electricity capacity.Such operation profiles are a worst-case scenario for heat pumps and could lead to an average additional peak electricity demand of 22% in the OECD region.Meeting the increased peak electricity demand in such a scenario would require additional investment in electricity generation assets, mainly involving peaking plants with low annual operational hours. The resulting changing demand profiles would also require reinforcements to electricity T&amp;D networks.Smarter operation of heat pumps, combined with efforts to reduce overall heating needs, can counter this risk of increased demand – and transform heat pumps into active players in the energy system.More efficient building envelopes, together with advanced measures (such as phase-change materials in insulation), provide the thermal mass necessary to maintain a flatter operational profile for heat pumps.In conjunction with advanced controls and ancillary storage, and supplemental technologies, heat pumps can be operated to offer demand-response (DR) services.Smart operation can lower the peak by 25% compared to standard operation
  46. Heat pumps and co-generation are often seen as conflicting technologiesBut compared to deployment of only one technology, the simultaneous use of co-generation and heat pumps flattens the load profile and reduces the upstream impact of both distributed energy technologies on the electricity system.Systemsthinkingisrequired: Integratingheatwithintheenergysystem can lowercosts and helpdecarbonisation in othersectorsAppraisingtherightend-use technologyfor a particular application in light of local demands and locallyavailablesourcesIntegratingexistinginfrastructurewiththenewlybuiltNecessarytoincreasetheskills of architects, designers and installersEnsuringpoliciesconsiderthewideraspects of deployingheating and coolingtechnologies.
  47. Clean electricity generation is the main pillar of a clean energy system will influence the operation and challenges of the future T&amp;D gridIn the 4DS,fossil fuels will continue to dominate electricity generation, although their global share falls in this scenario from 67% in 2009 to around 50% in 2050.Renewables (due to solar and wind) increase their share to more than one third in 2050.As a consequence, the global average CO2 intensity drops from around 500 g/kWh today to 280g/kWh in 2050.A markedly different picture emerges in the 2DS.Almost 57% of global electricity are generated from renewable sources with solar and wind each providing around 15% in 2050. 22% of the global generation is variable renewable generation.Nuclear accounts for around one fifth in the electricity mix.The remainder is based on fossil-fired plants, with the majority of the plants being equipped with CCS.Global average CO2 intensity falls to below 60 g/kWh in 2050, a reduction of 80% compared to 2009.Overall generation in the 2DS is only 6% lower then in the 4DS.
  48. But when we look at capacity, the trend is opposite.The 4DS requires 13% less electricity generation capacity then in the 2DS, due to great deployment of variable renewables with lower capacity factors
  49. In other words, it expresses the capability of a power system to maintain reliable supply in the face of rapid and large imbalances, whatever the cause. It is measured in terms of the MW available for ramping up and down, over time (+/- MW/time)For example, a given combined cycle gas turbine (CCGT) plant may be able to ramp output up or down at 10 MW per minute
  50. Different technologies: demand response is often best suited to short duration time frames, large scale generation that is relatively slow to respond, but can operate continuously for long periods of time can be suited for the scheduling time frame.Some technologies can serve all time frames – but may not do it at least cost
  51. All scenarios and all regions show an increasing need for flexibility The increase for flexibility is being driven by the deployment of variable renewablesThe flexibility resource needed in the 2DS is higher than the 4 DS due to the increasing deployment of renewables. The high values for scheduling do not need to be alarming since it is a longer time frame
  52. All generation technologies have the technical ability to provide some flexibility:Hydro generation can respond more quickly than other technologies, but the resource is geographically limited.Open cycle gas turbines are therefore very often consideredBUT, even the typical base load technologies offer some flexibilityFor the traditional base load power plants, a change in operation would translate into reduced load factors, while maintenance cost increase and thus lower financial revenue.
  53. Distributed generation will increasingly play an important role.While there are many advantages to distributed generation,the lack of centralised (or co-ordinated) monitoring and control of medium and low-voltage networks makes it difficult to manage the generation across the power system.Today, distributed generation technologies are either prevented from supporting the grid or actually increase the need for flexibility in the grid. Yet numerous ancillary services could be provided by distributed generation sources.Gas could be a key fuel for flexible generation plants.
  54. In the 4DS, natural gas-fired generation increases strongly, mainly driven by economic growth non-OECD countries. Natural gas-fired power generation: Supplies base-load power Displaces generation from coal Meets rapid new growth in demand. However, if we are to reach the 2DS, at some point gas becomes part of the problem rather than part of the solution. Between 2030 and 2050 global natural gas-fired generation decreases by 30% The majority of the power generation capacity needed to meet electricity demand will be very low carbon - including renewables (biomass, wind, hydro, solar, etc), coal plants equipped with CCS and nuclear power Natural gas power plants are still best placed to provide peak-load and back-up capacity to balance the variability in electricity demand resulting from renewable energy sourcesChina and India rapidly build up the share of gas in their generation mix (currently quite low) by 2030 to 2035, before they gradually decrease it to 2050. Rigorous planning and construction processes essential to minimise (ideally, to avoid) stranded assets. Gas turbines and combined cycle power plants typically designed for a service life of more than 25 years.
  55. Evolution over time of the average capacity factor of gas-fired generation gives an indication of the role of the power plants: Capacity factors of CCGTs are normally around 40% to 80% While for peak-power plants, capacity factors are typically 10% to 15%, but can be less. In OECD countries In the 4DS, natural gas is increasingly used as base load generation plant, displacing other base load technologies In the 2DS, to complement a large amount of additional variable renewable energy, natural gas plants operate increasingly as peak-load plantsReducing capacity factors has a negative impact on: Viability of existing plants Potential to attract investment for new plants.In some regions also experience the problem and regulators try to encourage the investment in peak power plants through capacity payments f.ex. The right regulatory framework should support all means of flexibility to ensure that the most efficient is deployed.
  56. When compared to the flexibility requirement shown earlier – all regions can provide over 50% of the entire flexibility requirement with the demand side – out to 2050.On a net basis, the increased energy efficiency (demand side) in the 2DS lowers the overall electricity demand compared to the 4DS, despite the higher use of electricity for heating and other applications; the result is less demand to provide flexibility services. On a percentage basis, this is compounded by the fact that more variable renewable generation in the 2DS means higher flexibility requirements than in the 4DS. This trend should be monitored as the electricity system evolves, but since both scenarios have sufficient flexibility resources, it is a secondary consideration. It is expected that only a fraction of the full technical resource will be realised, but this will still provide a valuable – and economical resource to the system‘This resource is less suited to the scheduling time frame
  57. Storage plays a key role today with existing installations, but it is unclear what the long term role will be.More analysis is needed to determine where this can best be deployed
  58. Grid extension investments that expand and strengthen networks to accommodate growing electricity demand.Grid renewal investments include the refurbishment or replacement of network assets that reach the end of their operational lifetimes (averaging 40 years, although some older lines still operate today).Renewable integration investment represents additional grid extension needed to connect renewable-energy generators to the network. It may include added distance to connect remote renewable generation sources to demand centres (including submarine power cables to connect off shore wind), and may result in higher energy-specific costs due to the variability of the resource and resulting lower load factors.The three investment categories cover the main sources, but do not reflect, for instance, investments to improve system reliability for existing consumers.
  59. The difference in cumulative cost between the 2DS and 4DS ranges from 2% to 12% in the countries analysed.Europe has the highest difference, where the 2DS requires greater investment than the 4DS, as does India.OCED Americas, OECD Asia Oceania and China exhibit a trend where the 2DS investment is lower than in the 4DS.The sectoral allocation differs:In the OECD regions, investments to replace ageing distribution infrastructure account for 50% to 70% of total investment, surpassing investments in new networks.In China and India, investment in new distribution to 2050 to meet markedly increasing demand, is over 60% of total T&amp;D investment.This trend showing the difference between OECD regions and China and India is similar for transmission investments.Investment costs are heavily weighted toward the distribution system in all regions. One significant factor is the length of the distribution system, which represents 92% of the total actual global T&amp;D network length in 2009.Renewable integration investment represents additional grid extension needed to connect renewable-energy generators to the network. The total additional investments to accommodate renewable generation vary between the 2DS and 4DS, but do not make up more than 10% of total investments in T&amp;D.Public resistance to the placement of T&amp;D infrastructure in many regions means that considerable non-financial effort is needed to deliver these resources. Clear communication of the criticality of network infrastructure while presenting a range of solutions to beconsidered will help to gain the support of all stakeholders.
  60. ETP 2012 analysis provides an estimate of the incremental costs and benefits of smart grid deployment over the long term, compared to simply expanding and upgrading a conventional T&amp;D grid.Deployment of smart grids in the 2DS permeates the entire electricity system; the resulting increase in available system capacity helps to reduce congestion. As a result, investment decreases for some network components and possibilities open up to implement a range of operating paradigms previously not feasible. Included are full participation of residential customers in generation and demand-side flexibility services, and technology options that increase existing power-line capacities to alleviate congestion and enable maximum utilisation of existing and new systems.The additional costs of smart grids versus costs of investments in conventional T&amp;D to 2050 for the 2DS include technologies (such as smart metering infrastructure and PMUs) that are atypical in T&amp;D investment modelling. Since this analysis covers a 40-year period, costs also include replacement of some technologies (e.g. smart meters). The benefits, shown as negative costs, include both operational and capital savings. Operational cost savings include reduced fuel use due to efficiency savings, direct carbon dioxide (CO2) emissions reductions, and lower operation and maintenance costs. Examples of capital investment savings include reduction and/or deferral of conventional T&amp;D investments and of generation infrastructure investments.The minimum and maximum cases of the 2DS demonstrate the level of uncertainty in the future costs and benefits. The costs are relatively easy to quantify because relevant data are readily available; in actual fact, the cost difference between the two cases is quite small. Putting a monetary value on the benefits of smart-grid deployment is much more difficult, in part because there is still some debate as to the precise level of benefit they can deliver. As a result, the range between the minimum and maximum benefits is larger.
  61. high-level social cost benefit analysisThe component renewal calculation is crucial, as many digital devices have considerably shorter lifetimes (10 to 20 years) than mechanical components (40 to 50 years)A learning factor was assumed for all technologies according to their maturity level. The analysis assumed that all five base regions have identical unit costs, but different technology penetrations; the estimates were based on government plans and policy support in place as of 2011.following technologies are included in the cost calculations (based EPRI, 2011):Transmission : DTLR, Line sensors, Short current Limiter, FACTS, intelligent electronic devices PMU, IT &amp; communication layer, operational cost (incremental ongoing system maintenance, cyber security, data analysis and mining) and structural adaptation ( System operator adaptation).Distribution, IT &amp;Communication layer, Intelligent Reclosers &amp; Relays Power Electronics, , Reclosers, Monitored Capacitor Banks, Regulators &amp; Circuit Improvement, Voltage &amp; VAR Control on Feeders, Intelligent Reclosers, Remotely Controlled Switches, ElectriNet Controllers, Intelligent Universal Transformer for storage and PV, and EMS controller.Consumer side: smart metering infrastructure, energy management systems, in-home displays and commercial building automation.It is assumed that smart grid benefits are gradually captured between 2010 and 2050 as technology (i.e. costs) is deployed.
  62. However, the financial benefits arising from smart-grid investment outweigh the total cost of investment, making a strong case for smart-grid technologies.But in some cases, the benefits are spread throughout the electricity system to sectors other than the one that needs to make the investment. This complicates the business case for investments, since all benefits may need to be monetised and accounted for in order to create a positive business case.As an example: Advanced metering infrastructure to reduce peak demand benefits the T&amp;D system and lowers the cost of generation. Investment costs, however, will be borne entirely by the distribution system stakeholders, who will likely need to adjust their pricing for goods and services to realise a sufficient return on their investment.Technical solutions and regulatory changes are needed to address this barrier, so that cost an benefits are equally shared among all stakeholders.The largest benefit are to the overall system, which mainly includes increased reliability and CO2 savings.Remark:The costs are relatively easy to quantify because relevant data are readily available; in actual fact, the cost difference between the two cases is quite small. Putting a monetary value on the benefits of smart-grid deployment is much more difficult, in part because there is still some debate as to the precise level of benefit they can deliver. As a result, the range between the minimum and maximum benefits is larger.
  63. Multiple technologies can meet many of these system requirements, with due consideration of the particular aspects of a given electricity system and available resources. Alongside many existing and conventional approaches, new ones are becoming viable and could offer secure economic solutionsto system operation. It is only by thinking in terms of complete systems that optimum solutions can be found.
  64. Why is hydrogen a flexible energy carrier and why can it be used amongst all end-use sectors?It can be used as fuel in the transport and buildings sector (e.g. using fuel cells, dedicated combustion devices or mixing with natural gas and used in conventional gaseous combustion devices), It is also an important feedstock for the chemical and refining industry.Is hydrogen really low carbon?This depends on the energy source hydrogen is generated from. Pure hydrogen can be generated from any hydrocarbon energy carrier (e.g. fossil fuels like natural gas and coal), from bio-mass and from electricity. Hydrogen is only a low carbon energy carrier if it is generated from renewable electricity, bio-mass or from fossil fuels in combination with carbon capture and storage (CCS). If the production process implies CO2-emissions, the use of hydrogen simply shifts the emissions away from the end-user to the point of hydrogen production.
  65. Why is energy storage important?Two main areas for energy y storage are of interest: On-board storage in transport:Vehicles require high quantities of energy to be stored with low weight and space demand – currently batteries are large and heavy Driving ranges provided by the conventional internal combustion engine vehicle will hardly ever be possible with battery electric vehicles but Fuel cell electric vehicles can reach almost similar performance also with respect to refilling time Large scale stationary energy storage: An increased need for energy storage is required if high quantities of variable renewable energies are integrated in the power system. As wind and solar power do not necessarily comply with electricity demand, both demand and supply needs to be decoupled on a timely as well as geographic basis.
  66. Will fuel cell electric vehicles be ever competitive with conventional cars?This depends on lots of factors: Will the costs of fuel cells come down? The US DOE is projecting deep cuts if high production rates can be achieved and the use of platinum be lowered. Stack costs could decline from currently USD 1000/kW to as low as USD 50/kW. High costs of the high pressure storage tanks still needs to come down. How will the future costs of hydrogen and gasoline compare?Our analysis shows that if hydrogen can reach targeted retail costs of USD 4/kg to 5/kg and gasoline would cost around USD 1.9/L, FCEVs could become cost competitive.
  67. What are the global benefits of using hydrogen as a transport fuel in the end?In the transport sector, total additional costs of using hydrogen and fuel cell electric vehicles instead of more plug-in hybrid vehicles plus conventional diesel trucks and a higher share of bio-fuels would account for about USD 2.5 trillion. However, it could open the door for more sustainable transport as biomass supply for energy use is likely to become constrained and other biomass related sustainability issues, such as green house gas emissions from direct and indirect land-use change are still poorly quantified.These uncertainties in other transport re-enforce the need to continue efforts in hydrogen and keep the door open for future use, especially in view finding long term solutions for sustainability.
  68. What role does hydrogen infrastructure play?Transmission, distribution and retail infrastructure for hydrogen plays a crucial role when considering hydrogen. Infrastructure is costly and needs to be set up almost from scratch. In the transport sector this causes a classics “chicken and egg problem”, the consumer will only buy FCEVs if the infrastructure is in place and infrastructure will only be developed with demand.This problem during the technology roll-out phase can only be overcome by strong government support and a high level of coordination among all actors: refining/chemical industry, natural gas grid operators, power providers, car manufacturers, station owners and municipalities.How could a future hydrogen T&amp;D system look like?The hydrogen T&amp;D system needs to evolve with demand: With low demand current existing hydrogen generation infrastructure from the refining and chemical industry needs to be included where possibleAlternatives include decentralised and small scale hydrogen generation that tend to have higher production prices. Initially, retail stations needs to be very small scale with daily refilling capacities as low as 50kg. Hydrogen stations will only be found in large urban areas and need to be intelligently clustered. The system needs to get more centralised over time in order to achieve low generation and T&amp;D costs. Targeted hydrogen retail costs of USD 4/kg to 5/kg might only be viable with a dedicated hydrogen pipeline system.
  69. How much would the hydrogen generation, transmission, distribution and retail infrastructure cost?On a global scale, investment cost to supply a vehicle fleet of close to 500 million FCEVs (roughly one quarter of global 2050 PLDV stock) would be around USD 2 trillion. On a per kilometre driven basis this would add USD 0.02/km for all FCEVs used until 2050. For comparison, investment into recharging infrastructure for plug-in electric vehicles would account for less than USD 0.005 per kilometre driven.
  70. Sectoral emissions reductions to meet the 2°C target appear achievable through 2050 without H2Eliminating fossil fuels in the very long term (&gt; 2050) may be hard to achieve without H2
  71. Between 2000 and 2009, demand for coal grew by 42 exajoules (EJ), far exceeding the increase in demand from all non-fossil energy sources combined.In contrast: Nuclear power grew by 1.2 EJ Biomass and waste by 8.4 EJ Hydro by 2.3 EJ Renewable energy technologies by 1.7 PJThe mix of fossil fuels used in a country or region is driven mainly by resource availability and domestic fuel prices.
  72. Coal has also satisfied the major growth in power generation over the past decade.The figure speaks for itself. Note the declining share of non-fossil fuels to generate electricity.
  73. Coal is by far the most abundant fossil-fuel resource worldwide Recoverable reserves can be found in 70 countries or more At 1 trillion tonnes, there are sufficient reserves for 190 years of generation at current consumption rates.Increasing use worldwide of cheaper, lower quality brown coal. Not traded internationally, but for local use.Brown call often referred to as ‘lignite’, though may also cover softer sub-bituminous coals.As brown coal is lower quality and often has a high water content, efficiency of power generation is often low.Reducing the moisture content is important for efficient use in power generation.Recent work on, e.g. on coal drying, has now raised potential for efficiency to values close to those attainable using hard coal.
  74. In the power sector, 40% of global electricity came from coal and 75% of the CO2 emissions (in 2009). For 2050, the numbers are a projected 12% and 45%, respectively.Raising plant efficiency reduces coal consumption and reduces emissions (of all pollutants) per unit of electricity generated.Reducing local pollution is important. Equipment to reduce levels of NOx, SO2 and particulates to a low level are available.However, reducing emissions of CO2 using CCS is key to achieving the 2DS.
  75. Technology is an important part of the solution: Improve plant efficiency Deploy CCS.However, to achieve a major cut in CO2 emissions, reduced generation from coal is also necessary This is only likely if strong, targeted policy and regulatory measures are brought to bear.Measures required to encourage: Reduced generation from less efficient coal-fired plant Switch from coal to lower-carbon alternatives.
  76. To reduce the CO2 intensity of power generation, need to use a combination of: Technology (A) Policy and regulation (B)Power generation from coal is responsible for emissions of nearly 9 Gt CO2 today. In the 6DS , CO2 emissions roughly double by 2050. CCS provides around 4 Gt of reductions in 2050. {{However, this large reduction is not achieved by only CCS technology itself. Efficiency improvement will play a certain important role. This will be explained in the next slide.}}
  77. Globally, there is very large capacity of low efficiency coal-fired plant 75% of total capacity is still subcritical plantsAverage efficiency can be raised by: Reducing efficiency from low efficiency plant Constructing and generating from much higher efficiency plant.Some countries, notably Japan and Korea, have high efficiency coal-fired fleets. Some countries, notably China and India, are constructing high efficiency plant. Average plant efficiency is rising.
  78. Generation from subcritical (low efficiency) coal-fired units must be significantly reduced: Substantial numbers of old, inefficient coal power plants remain in operation More than half of present capacity is over 25 years old and comprises units of less than 300 megawatts Three-quarters (75%) of coal-fired plants in operation use subcritical technology Around 50% of plants currently under construction today are subcritical.In practice, this would require decommissioning plant before reaching their design lifetimes.New plant construction should be best practice, i.e. high efficiency.CCS must be deployed.
  79. Technology improvement is essential.Current best practice reaches around 45% efficiency.Significant programmes to raise efficiency towards and beyond 50% in: China Europe India Japan USA … and elsewhere.Demonstration of advanced combustion and gasification plant anticipated from early 2020s.More advanced technologies, e.g. IGFC, presently at an earlier stage of development.
  80. In the 4DS, unconventional gas production is projected to rise from 13% of global gas supply in 2009 to 27% in 2050.Global gas production increases from 3 051 billion cubic metres (bcm) in 2009 to an estimated 5 150 bcm by 2050, a growth of more than 60% in four decades. In the 2DS, although total gas production decreases after peaking in 2035, the share of unconventional gas continues to increase, reaching 24% by 2035 and 34% by 2050.Notably, shale gas production increases from 88 bcm (3%) in 2009 to 570 bcm (16%) in 2050, and coalbed methane production from 67 bcm (2%) to 470 bcm (13%) over the same period. Main reasons:Cost competitiveness of unconventional gas More geographically dispersed, including in major gas consuming countries.
  81. Key technologies that unlock the potential of unconventional gas are horizontal drilling and multi-stage hydraulic fracturing.The current technology status and environmental risks (air, land, water) and impacts associated with these processes have been reviewed. The focus has been on how technologies and their continuous improvement can mitigate the environmental risks.
  82. Due to experience gained over the last decade, North America has a different set of technology needs and solutions from the rest of the world. North America Technology development has reached a more mature stage Increasing reservoir productivity and enhance recovery are identified needsRest of the world Development of unconventional gas has just started Gaining better well data and adapting drilling and completion techniques are the key challenges. Minimizing the footprint of exploration and production activities are key to continued development of the resources across the globe.
  83. In the 4DS: Global primary production of natural gas grows continuously to 2050 and is 67% larger than in 2009 Over the same period, the share of natural gas in overall primary energy production increases from 21% to 26%.In the 2DS: Growth of natural gas is slower, demand peaks in 2030 and decreases after 2030 Globally, primary natural gas production is larger by 28% in 2030 than in 2009, and larger by 16% in 2050.These reductions indicate the change in perception after 2030, when natural gas begins to be viewed as a high-carbon fuel and, although the cleanest of fossil fuels, in relative terms it becomes a source of high CO2 emissions.
  84. End-use sectors include, in order of decreasing natural gas consumption: Buildings Industry Non-energy use and Transport.Natural gas is used in the end-use sectors either directly as heat or as feedstock or indirectly as electricity.In OECD countries, the increase in gas consumption comes mainly from fuel switching, whereas in non-OECD regions, strong economic growth drives higher demand. In the 4DS in non-OECD countries, natural gas demand more than doubles both from the end-use sectors and from thepower sector. The increases in OECD countries appear rather modest in comparison.In the 2DS, growth in natural gas demand in non-OECD countries is much more constrained. In contrast, natural gas demand in OECD countries actually decreases.The generation of electricity from gas in the 2DS markedly changes after 2030, decreasing by 52% in OECD countries and 20% in non-OECD countries.
  85. Power generation from natural gas increases to 2030 in the 2DS and the 4DS.After 2030, generation differs markedly.In the 4DS, natural gas-fired generation increases strongly, mainly driven by economic growth non-OECD countries. Natural gas-fired power generation: Supplies base-load power Displaces generation from coal Meets rapid new growth in demand. In the 2DS: Between 2030 and 2050 global natural gas-fired generation decreases by 30% The majority of the power generation capacity needed to meet electricity demand will be very low carbon - including renewables (biomass, wind, hydro, solar, etc), coal plants equipped with CCS and nuclear power Natural gas power plants still best placed to provide peak-load and back-up capacity to balance the variability in electricity demand resulting from renewable energy sources Share of gas in electricity generation drops steadily in the OECD and in other non-OECD countries China and India rapidly build up the share of gas in their generation mix (currently quite low) by 2030 to 2035, before they gradually decrease it to 2050. Rigorous planning and construction processes essential to minimise (ideally, to avoid) stranded assets. Gas turbines and combined cycle power plants typically designed for a service life of more than 25 years.
  86. But even when it comes to European power, the IEA does not pretend that fossil fuels will go away any time soon. Let us start with a look at the role of gas in electricity generation. Power is the dominant consumer of natural gas and when gas displaces coal – like it currently does in many markets, it carries great environmental benefits. Indeed, consumption of natural gas for power generation projected to grow in the 4DS and 2DS to 2030. But the two scenarios do look quite different after that.In the 4DS natural gas-fired generation increases strongly, mainly driven by economic growth non-OECD countries. In the 2DS natural gas-fired power peaks and then reduces: Between 2030 and 2050 global natural gas-fired generation decreases by around 30%, reflecting the assumption that a very ambitious global climate policy will drive power investment into low-carbon production But natural gas power plants continue to be best placed to provide peak-load and back-up capacity to balance the variability in electricity demand resulting from renewable energy sources However, in this scenario the share of gas in electricity generation drops steadily in OECD countries.
  87. Evolution over time of the average capacity factor of gas-fired generation gives an indication of the role of the power plants: Capacity factors of CCGTs are normally around 40% to 80% While for peak-power plants, capacity factors are typically 10% to 15%, but can be less. In OECD countries In the 4DS, natural gas is increasingly used as base load generation plant, displacing other base load technologies In the 2DS, to complement a large amount of additional variable renewable energy, natural gas plants operate increasingly as peak-load plantsReducing capacity factors has a negative impact on: Viability of existing plants Potential to attract investment for new plants.
  88. Achieving the 2DS requires a transition from high-carbon to low-carbon generation.As a result, technological improvements will provide the reductions in carbon emissions after 2025: Continue development of more efficient technologies Deploy CCS Use lower-carbon fuels, such as biogas and hydrogen. In the 4DS, the global average carbon intensity does not fall below the carbon intensity of CCGTs until 2040.
  89. In the 2DS, CO2 emissions in the power sector are reduced by a projected 20 Gt between 2009 and 2050 relative to the 4DS. 2 700 MtCO2 from efficiency improvement 6 900 MtCO2 from fuel switching from coal to gas 7 800 MtCO2 from employing CCS 2 700 MtCO2 from use of biogas. Fuel switching from coal to gas has a major impact on emissions reduction in the short- and medium-term Efficiency improvement will play a role throughout the period Emerging and capital intensive technologies, such as CCS and biogas, contribute to curb CO2 emissions in the long-term.
  90. Efficiency of gas-fired power generation has improved steadily over decades as a result of technology developments.Generally speaking, higher efficiencies are generally achieved by larger capacity unitsState-of-the-art: CCGT has reached 60% efficiency (on LHV basis) OCGT has over 40% efficiency.Some new and emerging technologies have the potential to raise efficiency to around 70% . For example: CCGT coupled with concentrated solar power CCGT coupled with fuel cells.
  91. Flexibility, operational characteristics and response rates of gas turbines compared with other power generation technologies. Ramp from zero to full load: Open cycle gas turbines (OCGTs) take less than an hour Combined cycle gas turbines (CCGTs) take up to two hours. Start-up times: OCGTs less than 20 minutes CCGTs less than 60 minutes.Both have shut-down times of less than an hour. Ramp rates: 20% to 30% per minute for OCGTs and 5% to 10% per minute for CCGTs. Technology improvements needed to offset degradation of components and reduction of efficiency due to their cyclic operation.
  92. In the 4DS, generation from natural gas continues to rise: Natural gas becomes the fuel-of choice for power generation Power generation from natural gas increases to 2050.In the 2DS, biogas and CCS are both required to reduce the CO2 intensity of power generation: Natural gas becomes high carbon after 2030, relative to the carbon intensity required Consequently, the application of CCS to gas-fired power steps up appreciably Natural gas-fired power plants equipped with CCS generate 1588 TWh Biogas-fuelled power plants, 481 TWh Conventional natural gas fired generation is 3190 TWh (a quarter lower than in 2009)
  93. More efficient end-uses of energy and, where energy is used, using less carbon intensive fossil-fuels in more efficient conversion processes (e.g. higher efficiency gas turbines)Where fossil-fuels are consumed, emissions must be captured and stored; even non-energy emissions (e.g. CO2 from gas processing, cement production) must be reduced.Key message: CCS is equally as important as other technologies and actions in meeting emissions constraints at lowest cost.
  94. Total cumulative mass of 123 GtCO2 captured between 2015 and 2050The largest deployment of CCS occurs in non-OECD countries, with China capturing just over one-third of the cumulative mass of CO2 over the 2015-to-2050 time periodIn 2020, approximately 260 million tonnes of CO2 (MtCO2) is captured and stored, about half in OECD countries, but by 2050, non-OECD countries will have captured just over 70% of the cumulative mass of CO2Key message: while OECD (developed) countries must move first on CCS, non-OECD countries must follow close behind.
  95. Deployment in the power sector is slightly higher than in industrial applications, with 55% of the total CO2 captured between 2015 and 2050; however, the fraction of CO2 captured from the power sector varies significantly by region.In OECD Asia and Oceania only 29% of captured CO2 comes from power; in the OECD Americas and China, this figure is over 70%.Key message: highlights the need for increased focus on industrial capture of CO2
  96. Technologies for CO2 capture in power generation can be grouped into pre-combustion, post-combustion and oxy-combustion processes. Regardless of the capture process used, the objective is the same: to separate CO2 from the fuel or combustion products while generating electricityAll three capture processes require significant amounts of energy to separate CO2 from the flue gas, fuel or oxygen from air: e.g., capturing 90% of CO2 from flue gas in a post-combustion capture process on a coal-fired power plant using existing capture processes requires the energy equivalent of approximately 20% of plant outputCurrent capture processes are highly inefficient: i.e., the theoretical minimum work to capture CO2 from a coal-fired power plant is around 4% of the net electrical power output of a typical plant. This indicates large potential for technological innovation to reduce the efficiency penalty associated with CO2 captureKey message: A diversity of capture processes are available for power generation fired by coal, natural gas, and biomass
  97. Technologies for CO2 capture in power generation can be grouped into pre-combustion, post-combustion and oxy-combustion processes. Regardless of the capture process used, the objective is the same: to separate CO2 from the fuel or combustion products while generating electricityAll three capture processes require significant amounts of energy to separate CO2 from the flue gas, fuel or oxygen from air: e.g., capturing 90% of CO2 from flue gas in a post-combustion capture process on a coal-fired power plant using existing capture processes requires the energy equivalent of approximately 20% of plant outputCurrent capture processes are highly inefficient: i.e., the theoretical minimum work to capture CO2 from a coal-fired power plant is around 4% of the net electrical power output of a typical plant. This indicates large potential for technological innovation to reduce the efficiency penalty associated with CO2 captureKey message: A diversity of capture processes are available for power generation fired by coal, natural gas, and biomass
  98. Key message: CO2 capture is commercially deployed in several different industrial processes (e.g. gas processing and ethanol production) and capture technologies for power generation are close behind
  99. Based on IEA analysis of conceptual design studies; not directly applicable to real investment casesAverage figures for OECD countries; figures do not include cost of CO2 transportation and storageThe accuracy of capital cost estimates from feasibility studies is on average ± 30%; hence, for coal the variation in average overnight costs, LCOE and cost of CO2 avoided between capture routes is within the uncertainty of the studyUnderlying oxy-combustion data include some cases with CO2 purities &lt; 97%. Overnight costs include owners’, engineering procurement construction (EPC) and contingency costs, but not interest during construction (IDC)A 15% contingency based on EPC cost is added for unforeseen technical or regulatory difficulties for CCS cases, compared with a 5% contingency applied for non-CCS cases. IDC is included in LCOE calculations.Key message: The LCOE of fossil fuels with CO2 capture (including estimated transport and storage costs) is reckoned to be competitive with alternative low-carbon generation options, such as nuclear, large-scale hydroelectricity, wind and concentrating solar power, with energy storage
  100. Key message: Many low-carbon power technologies in the 2DS, including CCS, become cost-competitive over time with fossil-fuel power plants, due to cost reductions from technology learning and the increasing CO2 price penalty for fossil-fuel generation without CCS.Fossil-fuel generation options with CCS, particularly gas fired generation, will also have value as a technology that can be dispatched to help balance out generation from variable renewables.Notes:Levelised cost calculations are based on a discount rate of 8%.Fuel and CO2 prices are based on the 2DS.Coal prices are USD 3.4/GJ in 2010, USD 3.2/GJ in 2020, USD 2.5/GJ in 2030 and USD 2.1/GJ in 2050.Gas prices are USD 4.2/GJ in 2010, USD 6.2/GJ in 2020, USD 8.0/GJ in 2030 and USD 6.6/GJ in 2050.Nuclear fuelcosts are set to USD 0.7/GJ. CO2 prices are USD 0/tCO2 in 2010, USD 40/t in 2020, USD 90/t in 2030 and USD 150/t in 2050.Variations are based on 30% increase and 30% decrease of the investment and fixed operating cost parameters in Table 11.1, and the mentioned fuel and CO2 prices.Lower and upper bounds of the discount rate variation correspond to a discount rate of 3% and 10%, respectively.FOM = Fixed operating and maintenance costsUSC = ultra-supercritical coal plantUSC + oxy-fuel = ultra-supercritical coal plant with oxy-firing and CO2 captureNGCC + postcomb. = natural gas combined cycle with post-combustion CO2 capture;LWR = nuclear light water reactor;Onshore = onshore wind turbine.
  101. In 2030, about one-fifth (60 GW) of all CCS-equipped power generation capacity is natural gas-firedBy 2050, 960 GW of electric generation capacity (8% of global capacity) is equipped with CCSKey message: CCS is not just a technology for coal; it is applied to multiple different fuels used in electric power generation, including biomass.
  102. In 2050,renewables produce one-third of generation and hydro a further 16% (in total, about 50% of electricity); nuclear is one-fifth; CCS is 15%; gas and coal produce 10%; and biomass the remainder.
  103. Achieving the 2DS requires a transition from high-carbon to low-carbon generation.As a result, technological improvements will provide the reductions in carbon emissions after 2025: Continue development of more efficient technologies; use carbon-free fuels, such as biogas and hydrogen; deploy CCS.In the 4DS, the global average carbon intensity does not fall below the carbon intensity of CCGTs until 2040.
  104. Total of 960 GW of CCS equipped power generation in 2050By 2050, over one-third of power generation capacity with CCS is in China, the next largest fraction is in OECD North AmericaKey message:In the near term, most power generation equipped with CCS will be built in OECD countries; by 2050, the majority is located in non-OECD countries.
  105. Current coal fired emissions (9 Gt) accounts for one-quarter of total anthropogenic CO2 emissionsRetrofitting CCS to existing plants is a complex, site-specific process, and largely depends on market- and technology-specific operational conditionsAlmost 850 GW of coal with CCS are retired early, 700 GW of which are based on sub-critical technologyIn the 2DS, almost 850 GW of coal with CCS are retired early, 700 GW of which are based on sub-critical technologyIt is critical that construction of new installations allows economical retrofit at a later stage. With new power investment projects, industries should therefore consider potential technical options for retrofitting, consider including the necessary space for capture equipment at the plant site, and investigate potential transport and storage optionsKey message:Governments and industry should analyze the potential of CCS retrofit, investigate and enact frameworks to ensure that retrofit is possible when necessary drivers are in place, and also engage in dialogue on how to best encourage retrofit in the future.
  106. Current coal fired emissions (9 Gt) accounts for one-quarter of total anthropogenic CO2 emissionsRetrofitting CCS to existing plants is a complex, site-specific process, and largely depends on market- and technology-specific operational conditionsIn the 2DS, almost 850 GW of coal with CCS are retired early, 700 GW of which are based on sub-critical technology150 GW of uneconomic supercritical and ultra-supercritical capacity is retired because it’s remaining life to too short to make retrofit an economic proposition100 GW of high-efficiency coal is retrofittedThus, it is critical that construction of new installations allows economical retrofit at a later stage. With new power investment projects, industries should therefore consider potential technical options for retrofitting, consider including the necessary space for capture equipment at the plant site, and investigate potential transport and storage optionsKey message:Governments and industry should analyze the potential of CCS retrofit, investigate and enact frameworks to ensure that retrofit is possible when necessary drivers are in place, and also engage in dialogue on how to best encourage retrofit in the future.
  107. Key message: The ways in which CO2 can be captured from industrial processes is highly specific to the process and facility design, making it difficult to make general statements about industrial applications of CCS
  108. Key message: Abatement costs vary widely by region, but costs of high-purity sources and biomass conversion are generally low relative to other industrial process and power generation.
  109. By 2030, 1.10 GtCO2/year are captured from industrial facilitiesBy 2050, 3.8 GtCO2 per year are captured from industrial applications, the majority in China, India and other non-OECD countries.Key message:By as early as 2020 in the 2DS, the majority of industrial applications of CCS are in non-OECD countries, primarily China and India.
  110. Of the cumulative mass of CO2 captured from industrial applications between 2015 and 2050, 30% comes from application of CCS to industrial processes that produce high-purity CO2, such as gas processing and fertilizer manufactureCapture from high-purity sources of CO2 initially predominates in such regions as OECD North America and Europe; however, capture from other, higher-cost sources of CO2 becomes more widely practiced globally post-2025 in all regionsCapture from biomass conversion (e.g. biomass to hydrogen, synthetic natural gas and liquid fuels) also grows rapidly, contributing 29% of CO2 captured from industrial applications – or 13% of all CO2 captured – between 2015 and 2050Key message: CCS can and will likely be applied to numerous different industrial processes, including processes that use biomass as a fuel or a feedstock
  111. The significant advantage of BECCS over other mitigation alternatives is that they do not actually decrease the amount of CO2 in the atmosphere, only emissions going into the atmosphereKey message: The potential of BECCS has not, to date, been realized because incentive policies must appropriately assess and account for the CO2 footprint of biomass production.
  112. Under the 2DS, between 2015 and 2030, 13 GtCO2 are captured and stored globally; through 2050, this total grows to 123 GtCO2The total global storage rate is 2.41 GtCO2 per year in 2030, growing to 7.83 GtCO2 per year in 2050.Key message: Capturing this amount of CO2 and at these rates will require the development of transport and storage infrastructure globally.
  113. The total undiscounted investment to move from the 4DS to 2DS: 36 trillion USDThe total cost of investing in CCS across power and industrial applications equates to approximately USD 31/tCO2 avoided (115 GtCO2 avoided through CCS).Key message: Removing CCS from the list of options to reduce emissions in electricity generation increases the required capital investment necessary to meet the same emissions constraint by 40% in the electricity sector (approximately 3.1 trillion).Removing CCS also means that, relative to the 2DS, there is a 5% decrease in coal-fired electricity generation capacity and nearly 30% increases in gas-fired and nuclear capacity globally in 2050 without CCS.Notes for CalculationsPower generation investment cost for CCS includes the total cost of the power plant, not just the incremental cost of capture; at the current time, the incremental cost of capture is about 50% of the total cost of a coal-fired power plant with CCS.Investment costs for CCS in industrial applications do not include the cost of transport and storage, thus they probably underestimate the true cost of CCS in this sector by 20%-30%.
  114. Capture contributes 80% or more of the current avoidance cost in power generation based on current cost estimatesFurther research and experience is needed because the volume of fluid injection for CCS is generally larger and new demands are being made on existing technologies to predict and monitor subsurface behavior of CO2While economics of CO2-EOR are generally attractive, there are a host of factors that make development of CO2-EOR projects for storage outside established areas more difficult than the economics otherwise implyKey message: At the current time, there are no insurmountable technical challenges in transport and storage, but there is an urgent need to develop transport and storage infrastructure since lead-times are long , particularly for storage sites.
  115. Generating electricity is a central element in our energy system today. The power sector is responsible for almost 40% of global primary energy use.Large part of the energy used for electricity generation is based on fossil fuels (78% in 2009). Generation of electricity leads to energy losses: only less than half of the energy going into power plants is converted into electricity or district heat. As a result, production of electricity was responsible for almost 40% of the energy-related CO2 emissions (including process emissions in industry) in 2009.
  116. Global electricity demand grew by more than 4 000 TWh, or almost one-third, between 2000 and 2009.China alone was responsible for almost half of this increase, largely driven by electricity use in its industry sector.The majority of the growing electricity demand has still be covered by fossil fuels over the last two decades: strong growth in coal-fired generation could be observed in non-OECD countries, whereas gas was the fuel of choice in the OECD, especially in the US (due to the uptake of shale gas production), and in Europe (due to its low capital costs and the possibility to hedge against volatile electricity prices on liberalised electricity markets).Renewables rank only third after coal and gas in terms of the incremental generation between 1990 and 2009, but their growth rates have been strong over recent years: despite the economic crisis, renewables, mainly wind and solar, accounted for around half of the total new capacity of 194 GW added in 2010.
  117. Looking at the recent capacity developments in the power sector,one observes massive capacity additions in China and Indiato meet a growing demand for electricity. Majority of the capacity additions were based on coal, making coal the fastest growing primary energy carrier in the world. Encouraging is the fact that both countries are pursuing measures to improve the efficiency of coal-fired generation: by closing down small and inefficient plants as well as by making super- or ultras-supercritical technology mandatory for new plants. Developed countries are confronted with the task of modernising their ageing power infrastructure.In the EU, around 40% of the power plants are more than 30 years old;the situation is similar in the United States. The major challenge in these regions is mobilising the necessary investments to modernise the power plants, but it also presents an excellent opportunity to drastically improve the efficiency and environmental impacts of power generation.
  118. Generation from subcritical units should be reduced; future capacity additions should be supercritical or better.Generation from subcritical (low efficiency) coal-fired units must be significantly reduced: Substantial numbers of old, inefficient coal power plants remain in operation More than half of present capacity is over 25 years old and comprises units of less than 300 megawatts Three-quarters (75%) of coal-fired plants in operation use subcritical technology Around 50% of plants currently under construction today are subcritical.In practice, this would require decommissioning plant before reaching their design lifetimes.New plant construction should be best practice, i.e. high efficiency.CCS must be deployed.
  119. In the 4DS, global final electricity demand more than doubles from 17 000 TWh in 2009 to 38 000 TWh in 2050, driven by increased demand in the buildings and industry sectors.On a regional level, most of the demand growth occurs in non-OECD countries, whereas demand in OECD countries rises only moderately.By 2050, China reaches a per capita consumption similar to the European Union Keep in mind, however, that their demand structures differ: China has a much higher share of industrial consumption, so its residential per capita consumption will be 1 600 kilowatt hours (kWh) per capita in 2050, still 33% lower than in the European Union.In the 2DS, more efficient use of electricity in the industry and buildings sectors leads to a reduced electricity demand of 34 000 TWh in 2050.These efficiency improvements in electricity use are partially offset by increased electricity demand from electric vehicles in the transport sector, as well as the rising use of heat pumps for heating and cooling purposes in the buildings sector.As a result of these two counteracting developments, the share of electricity in final energy use increases from 17% today to 26% in the 2DS in 2050.
  120. Overall global electricity demand doubles between 2009 and 2050 from 17 000 to 34 000 TWh in the 2DS.Major part of this growth in the non-OECD part of the world, and there especially in Asia.China alone is in this scenario for almost one third of increase in global electricity demand.Industry is in these regions still a major driver of electricity demand.In OECD countries, increased electrification of the transport and buildings sector are important factors for the future electricity demand.
  121. Let&apos;s start with the electricity sector. Massive deployment of low-or zero-carbon technologies is needed if we are to de-carbonise the world’s electricity supply and achieve the 2DS. However, over the past two decades most of the growth in electricity demand has been met by fossil fuels, primarily coal-fired generation in non-OECD countries and natural gas in OECD countries.*Moreover, three-quarters of coal-fired plants in operation use inefficient sub-critical technologies. As a result, global electricity production produced almost 40% of energy-related CO2 emissions in 2009. Under 2DS, the picture would look radically different in 2050: global electricity generation has double from 20 000 TWh in 2009 to more than 40 000 TWh, fuelled by growing demand in non-OECD countries like China and India. However, the use of renewable sources grows even more rapidly, and they generate more than half (57%) of global electricity, with solar and wind each providing around 15% in 2050. Nuclear could account for around another one fifth of the electricity mix. The remainder is generated by fossil-fired plants. However, the majority of these plants are equipped with CCS. Global average CO2 emissions per KWh of electricity generated has fallen by 80% compared to 2009.
  122. In the 4DS, fossil fuels will continue to dominate electricity generation, although their global share falls in this scenario from 67% in 2009 to around 50% in 2050.On the other hand, renewables (again due to solar and wind) increase their share to more than one third in 2050.As a consequence, the global average CO2 intensity drops from around 500 g/kWh today to 280g/kWh in 2050.A markedly different picture emerges in the 2DS. Almost 57% of global electricity are generated from renewable sources, with solar and wind each providing around 15% in 2050.Nuclear accounts for around one fifth in the electricity mix.The reminder is based on fossil-fired plants, with the majority of the plants being equipped with CCS. Global average CO2 intensity falls to below 60 g/kWh in 2050, a reduction of 80% compared to 2009.
  123. So let us start with a thorny bit straight away:From ETP2012’s point of view, nuclear is one of important energy resource to achieve 2DS. The vast majority of countries with nuclear power remain committed to its use despite the Fukushima accident, but projections suggest that nuclear deployment by 2025 will be below levels required to achieve the 2DS objectives. In addition, increasing public opposition could make government ambitions for nuclear power’s contribution to their energy supply harder to achieve.
  124. A massive deployment of low- or zero-carbon technologies is needed in the 2DS to decarbonise electricity supply. The required deployment rates appear huge, if compared with present capacity rates for PV or offshore wind, for example.It should not be forgotten, however, that fossil fuels achieved growth rates of similar magnitude in the recent past.The average construction rate for coal power plants was 75 GW per year between 2006 and 2009, and for gas plants around 50 GW per year.Overall, additional investments of USD 7.7 trillion in power generation are needed in the 2DS relative to the 6DS between 2011 and 2050.These investments are, however, are more than offset by fuel cost savings in the order of USD 33.7 trillion.
  125. Compared with the 4DS, cumulative CO2 emissions from the power sector in the 2DS between 2009 and 2050 fall by 258 Gt. Around one-quarter of this reduction is not achieved directly in the power sector itself, but from electricity savings in the end uses through more efficient use of electricity or a switch to renewable energy sources, e.g. solar water heating. The cumulative abatement actually realised in the power sector is around 187 Gt. Renewables provide more than 30% of the reduction from 4DS to 2DS.The deployment of coal and natural gas plants equipped with CO2 capture leads to cumulative reductions of 18%. Nuclear power is responsible for 14% of the emissions savings. Already in the 4DS, electricity generation from renewables increases markedly by 2050 compared with today, meaning renewables provide significant CO2 reductions over time in this scenario. Major contributors to the CO2 reductions between the 6DS and the 4DS are electricity savings in the end uses, which alone is responsible for around half of the cumulative reductions, and renewables, which account for around one-third of the CO2 savings.
  126. So let us start with a thorny bit straight away:From ETP2012’s point of view, nuclear is one of important energy resource to achieve 2DS. And the vast majority of countries with nuclear power remain committed to its use despite the Fukushima accident, but projections suggest that nuclear deployment by 2025 will be below levels required to achieve the 2DS objectives. In addition, increasing public opposition could make government ambitions for nuclear power’s contribution to their energy supply harder to achieve.
  127. Compared with the 4DS, cumulative CO2 emissions from the power sector in the 2DS between 2009 and 2050 fall by 258 Gt. Around one-quarter of this reduction is not achieved directly in the power sector itself, but from electricity savings in the end uses through more efficient use of electricity or a switch to renewable energy sources, e.g. solar water heating. The cumulative abatement actually realised in the power sector is around 187 Gt. Renewables provide more than 30% of the reduction from 4DS to 2DS.The deployment of coal and natural gas plants equipped with CO2 capture leads to cumulative reductions of 18%. Nuclear power is responsible for 14% of the emissions savings.
  128. Renewable energy sources are important to decarbonise the power sector:In the 2DS more than one third of the CO2 reductions in the power sector are coming from renewablesSolar and wind providing the largest reductions of one quarter combined.
  129. To address the inherent uncertainties in the future progress of low-carbon technologies in the power sector, variants of the 2DS were analysed exploring different electricity mixes.All variants lead to the same cumulative emissions as in the base 2DS of 320 Gt.Excluding CCS as reduction option in the power sector (2DS-NoCCS) requires a stronger reliance on nuclear and renewables.Without CCS, cumulative investment needs in the power sector increase by around USD 3 trillion compared with the 2DS. This represents a 40% increase in the additional capital costs needed to reach the same climate target as in the 2DS, and underscores the important role CCS may play in decarbonising the power sector.Taking into account the cumulative fuel cost savings (of the 2DS-no CCS variant relative to the base 2DS of USD 1.2 trillion), the overall costs of this variant are around USD 2 trillion higher than in the base 2DS.The 2DS-hiRen variant is based on a 10-year delay in the commercial deployment of CCS (starting in 2030 instead of 2020) and a slower growth in the construction of new nuclear plants (only half of the new capacity added in the base 2DS is realised in this variant).As a result, renewables reach a share of more than 70% in the 2DS in 2050 largely due to an increase in generation from solar and wind energy. Generation from natural gas also increases, partly due to the need to provide flexible generation to integrate the larger generation from variable renewable sources in the system. costs of the 2DS-hiRen variant are USD 2 trillion higher than in the base 2DS.The 2DS-hiNuc variant assumes that nuclear generation capacity can be increased to 2000 GW in 2050, compared to 1200 GW in the base 2DS.The share of nuclear in the generation mix increases to 34% in 2050. Compared with the base 2DS, nuclear replaces power plants with CCS and renewables. Overall costs are USD 1.8 trillion lower than in the base 2DS.
  130. The approach to decarbonise the electricity system in a region or country depends on the local opportunities and challenges.Hydro will continue to play a major role in Brazil,wind would become an important option in the EU and US,solar technologies would be central to India, South Africa and Mexico, andnuclear power as well as CCS would be key in China.
  131. Hydropower is the largest renewable source for power generation today, representing 16% of the global electricity generation and dominating electricity generation in a few countries, as here in Brazil. In recent years, one could observe a strong growth in hydropower generation, with a 30% increase in global hydropower generation between 2000 and 2009 (32% increase in Brazil). New hydro development was led by China in Asia and Brazil in Latin America.In the 2DS, this growth will continue, resulting in more than a doubling of hydro power generation by 2050. Thereby, hydro power contributes significantly to CO2 reductions in the power sector: if the newly added hydro generation in the 2DS were replaced by coal-fired power generation without CCS (gas w/o CCS), this would result in additional annual CO2 emissions of around 2.5 Gt in 2050 (1.2 Gt for gas plants).In addition, dispatchable hydro power plants can help the deployment of other renewable energy sources, notable variable renewables, such as solar and wind.More important, the sustainable development of hydro power can provide in addition to energy more efficient access to water and support the social as well as economic development in a region. Because of this important role of hydro power for a sustainable energy future, the IEA is working together with Brazil as co-author and other partners on a technology roadmap for hydropower, which is foreseen to be released this fall.
  132. Coal becomes the largest primary energy carrier in the 6DS, overtaking oil. In the 2DS, coal and oil demand fall below today’s level.Gas consumption slightly increases compared to 2009 (by 15%).Overall, fossil energy intensity of primary energy demand falls from 81% today to 46% in 2050 in the 2DS.Biomass becomes the largest single primary energy carrier before gas in 2050.Biomass is a very versatile energy carrier, which can be used for various purposes in the energy system.In the 2DS, around half of it is used to produce biofuels for the transport sector.The other half goes to power generation or is used in industry and in the buildings sector.Part of the biofuel production plants and the biomass-fired power plants are equipped w CCS, so that in the 2DS CO2 captured at such plants results in “negative” emissions or CO2 reductions of around 1.5 Gt in 2050.
  133. Global liquid fuel demand (including biofuels and hydrogen) increases in the 4DS by around 55% by 2050 compared with today.Petroleum use in the transport sector, especially from the growth in travel demand in non-OECD regions, is primarily responsible for this growth.The increase in liquid fuel demand in the 4DS is not met by conventional crude oil production alone.With oil prices increasing over time in this scenario, reaching around USD 120 per barrel in 2050, alternatives to petroleum, such as gas-to-liquids, coal-to-liquids and biofuels, become more competitive. In the 2DS, the impact of growth in transport activities on liquid fuel demand is gradually offset, initially by more efficient conventional vehicles and later through the deployment of electric vehicles, so that global liquid fuel demand stabilises at around today’s levels in 2050. Due to the CO2 penalty associated with the use of petroleum (+63 USD/bbl in 2050), alternative fuels are more and more deployed by 2050. Liquid biofuels provide 27 EJ (or 18% of global liquid fuel demand).In addition, around 7 EJ of synthetic natural gas from biomass (bio-SNG) and 5 EJ of hydrogen are produced in 2050. Electrolysis becomes in the 2DS an attractive option to produce hydrogen (largely for the transport sector), as it allows the storage of electricity from variable renewable sources, such as wind, PV or tidal power. Around 14% of the electricity from variable renewable energy sources is used in 2050 in the 2DS to produce hydrogen.
  134. Nuclear power is the largest low carbon energy source in Europe and should continue to play a major role. We see a considerable risk that the political reaction after Fukushima might lead to a lower investment in nuclear power. I call this a risk, since IEA analysis suggest that a low investment in nuclear leads to higher energy prices, higher CO2 emissions and higher import dependency in importing regions. It would make the achievement of sustainability targets more expensive and more difficult to reach. The European nuclear capacity is aging, so serious investments will need to start in replacement around 2020 the latest. This will be a major challenge. Unfortunately the new 3rd generation designs while deliver superior safety, are also extremely expensive, and tend to suffer from cost overruns and project delays. The capital needs of a nuclear project stretch the financial capability even of the largest utilities, and very unusual risks hinder bank financing. In most countries, including the United States and the United Kingdom, governments designed explicit policies to facilitate the financing of new nuclear power plants.
  135. A lynchpin of Nordic cooperation has long been a shared power grid. And indeed, the core of the future clean energy system is electricity. Electricity allows for many modern necessities and comforts to be accessed, and its production can be decarbonised. Electricity can also be decentralised and allow for deployment to remote areas without massive grid investment.At the global level, electricity consumption is doubled in the 2 degree scenario, but its production is largely decarbonised. 90% of electricity would in 2050 be produced either by renewables, nuclear or CCS-equipped plant, and only 10% would remain from unabated gas, coal or oil plant.Such a pictureistruealso for the EU. Growth in EU electricitydemand by 2050 issomewhatsmallerthanglobally, but power production stillincreases by nearly 50% fromtoday’slevels. In the 2DS scenario, also the Europeanelectricity mix islargelydecarbonised. Wind, solar and hydro all play an important role. And, as youseefromthispicture, wealsosee a very important future for nuclear power in Europe, an area whereFinlandiscurrentlytaking important steps.One new nuclear plant isunder construction and the ‘’decisions in principle’’ for anothertwo new units have been taken. In addition, Finland has takendecisions on final storage of high-level radioactive waste, and the facilityisalreadybeingconstructed. Whenoperational, the facilityislikely to be the world’s first. The IEA commends Finland for such a clear and positive approach to nuclearenergy.
  136. 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&amp;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 &amp; 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
  137. Over recent decades, global industrial energy efficiency has improved and CO2 intensity has declined substantially in many sectors.This progress has been more than offset by growing industrial production worldwide.As a result, total industrial energy consumption and CO2 emissions have continue to rise. Most of the growth in energy consumption occurred in the last decade with the increased demand for, and production of, industrial materials in developing countries.This increase is reflected in the substantial change in regional industrial energy consumption.
  138. China, India and other developing countries in Asia have dominated growth in industrial production since 1990.Based on observed historical trends and projected growth in population and GDP in developing countries, the IEA scenarios assume that in the next 20 to 40 years, as industrial development matures, there will be another significant change in industrial production.Growth in China materials will flatten or decline; but in most non-OECD regions industry development will accelerate.
  139. Industrial energy consumption is, to a large extent, driven by production of materials.However, while more growth generally results in greater energy consumption, it also opens up opportunities to improve the overall efficiency of the industry by adopting BATs in the new facilities or production units being built.This improved efficiency contributes to the further decoupling of materials production and energy consumption.Changes in the raw materials or processes used can also, in some cases, allow a shift from fossil-fuel consumption to other less carbon-intensive energy sources.
  140. A significant reduction in CO2 emissions in industry will only be possible if all sectors contribute. However, each sector will contribute differently, and this contribution will be different by region. The potential reduction by sectors/region will depend on:The efficiency of the plants currently in place and its age (will it be refurbished soon)The expected growth in production (it is often easier to implement BAT at time of construction than at time of refurbishment)The resources/materials available (scrap use is limited by availability in non-OECD)The quality of the resources availableThe technologies availableEtc…The ETP analysis takes into consideration those specificities when developing the reductions by sector/regions
  141. The reduction envisaged under the 2DS in industry in industry can only be achieved by deploying existing BATs, by improving production techniques, and by developing and installing new technologies that deliver improved efficiency, enable fuel and feedstock switching, promote more recycling, and increase capture and storage of CO2. Many new technologies that can support these outcomes are currently being developed, demonstrated and adopted by industry.
  142. Reducing emissions in industry will require the application of current BAT, together with the development and deployment of promising new technologies which will significantly reduce energy use and/or CO2 emissions.
  143. 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.
  144. 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]
  145. Total energy demand in the buildings sector will increase from 115 to 160EJ in 2050 in the 4DS.In the 2DS, energy consumption in the buildings sector is 20% lower than in the 4DS.Electricity demand grows 1.3% per year and becomes the largest single source of energy.The energy sources and growth-demand patterns in OECD and non-OECD are dramatically different. While electricity and natural gas are the main energy sources for OECD countries, non-OECD continue to rely on biomass, mostly for household applications such as cooking.
  146. In the residential sub-sector, total energy consumption grows 0,6% a year between 2009 and 2050.Electricity demand continues to climb sharply by 2.3% per year on average, increasing its share of consumption from 20% to 33%.In per-capita terms, significant differences in energy consumption still remain between countries and regions, due to different income levels, climates and cultural preferences.In OECD countries, the changes are driven by efficiency improvements. The relatively modest changes in end-use shares for OECD by 2050 highlight the fundamental difficulty of rapidly reducing the energy consumption of residential buildings. In non-OECD, the continued shift away from traditional biomass for cooking and heating means there is a significant efficiency effect in these households that helps offset the increased energy consumption from the increasing number of home appliances and air conditioners.
  147. Global energy demand in the service sector is projected to grow by 75% in the 4DS and 40% in the 2DS, between 2009 and 2050.In non-OECD countries, service-sector energy intensity in the 2DS is 4% lower than current levels, and 19% lower than it would be in the 4DS.In OECD countries, energy intensity in the 2DS is 15% lower than current values.While energy efficiency improves in all end uses, space heating and miscellaneous equipment contribute the most improvement in the overall service sector.
  148. Total energy savings in the buildings sector in the 2DS, compared to the 4DS, are 20% lower (32 EJ) in 2050.Energy savings in residential space heating amount to 22% of the total savings.While the savings in end uses dominated by the use of electricity will not have a direct impact on the energy-related CO2 emissions in the buildings sector, their overall contribution to a low-carbon future will nevertheless be important.Reduction in electricity demand will have the co-benefit of reducing the number of additional power plants that will need to be built to meet the buildings’ energy demand, and will facilitate the decarbonisation of the power sector.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.
  149. Buildings sector is two-speed: buildings shell versus appliances and OECD vs Non-OECDOECD characterised by old stock, cold climate and slow growth. Retrofits will be critical to reduce energy demand and emissions in OECD [Key Message]Non-OECD is growing rapidly with less old stockIn non OECD the rapid growth of new build offers opportunities to avoid lock-in of poor performing stock [Key Message]But common challenges: electricity supply security, costs and environmental impacts need to be addressed.
  150. The CO2 emissions savings from the buildings sector in the 2DS can only be achieved if the entire buildings system contributes. Early improvements in the thermal envelope of buildings and other building shell enhancements account for 13% of the total savings from the buildings sector in 2050 (excluding the savings from electricity decarbonisation and associated savings from downsizing of heating and cooling equipment). This necessary first step in improving building efficiency will not only reduce energy needs (heating and cooling loads), it will also allow downsizing of heating and cooling equipment. Increased deployment of more efficient heat pumps and co-generation and solar thermal for space and water heating, as well as cooling, accounts for 21% of the savings. Parts of these savings are possible due to the improvement in building shells. Co-generation plays a notable role in reducing CO2 emissions, as well as helping balance the renewables-dominated electricity system in the 2DS.More efficient lighting, appliances and miscellaneous equipment account for 17% of the total reduction. This proves the importance of electrical end-use growth and energy-efficiency improvements in non-OECD countries.
  151. To achieve the transformation that is needed in the 2DS will require significant policy action over a range of technologies and end-use.Balancing the availability of technologies and their current costs with the rate of capital stock turnover means that some changes are more urgent than others. Some will achieve greater savings, over different time scales, than others.
  152. ETP is analysing if by 2075 we can achieve zero CO2 emissions?Based on Intergovernmental Panel on Climate Change (IPCC) scenarios, net energy-related carbon dioxide (CO2) emissions may need to reach zero by 2075 under the ETP 2012 2oC Scenario (2DS).This appears possible, but will be very challenging, even if 2050 targets are met in the 2DS. It depends on many factors that, given the distant time frame, are highly uncertain. Trends projected in the 2DS through 2050 for energy service demand and technology penetration, if they continue through 2075, get close, but a gap remains that may need to be closed with additional (e.g. breakthrough) technologies.
  153. The 2DS was extended to 2075 with typical growth rates for activity, efficiency, and technology penetration from 2030-2050 time frame continued, with some saturations occurringAn alternative scenario was also developed with faster tech penetrations after 2050, particularly for bioenergy.
  154. Nearly all fossil fuel use in 2075 is accompanied with CCSRenewables use doubles between 2050 and 2075Bioenergy use is held roughly constant in Extended 2DS but allowed to grow by 50% in Alternative 2DS.Oil use is nearly eliminated in Alternative 2DS
  155. In the Extended 2DS, global electricity use grows by 40% between 2050 and 2075Solar and wind account for over 40% of generation in 2075
  156. Strong material growth is expected to continue after 2050 across sectors such as cement, steel, paper, chemicals and others.
  157. In Extended 2DS for industry, energy use continues to grow after 2050, but coal and oil use declinesIn the Alternative 2DS, additional efficiency and low Carbon fuels measures help cut demand and fossil fuel use further by 2075
  158. In Extended 2DS, Industry-related CO2 emissions decline from 2050 to 2075 but remain significant. They are cut an additional 50% in 2075 under the Alternative 2DS.
  159. New technology vehicles continue to gain market share; hydrogen, biofuels and electricity account for three-fourths of energy use in 2075 in the extended 2DS, and almost 90% in the alternative 2DS. Biofuels are held constant after 2050 in Extended 2DS but grow by 50% in the Alternative 2DS. All are advanced, near zero net CO2.
  160. In Extended 2DS, buildings energy use rises slowly after 2050, with a strong decline of fossil fuels (though still with 10 EJ of gas in 2075)
  161. Very little coal- or oil-related CO2 is emitted in 2075 in services or residential buildings
  162. 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 &amp; 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
  163. This year’s edition of the ETP for the first time contains a specific chapter on Brazil, which has profited greatly from the continued dialogue between the IEA and the Ministry of Mines and Energy. Under the 4 degrees scenario Brazil is on track for a significant increase of its CO₂ emissions by 2050. By contrast, in order to limit global warming to 2 degrees, by 2050 ETP projects a need for a 60% reduction of Brazil’s CO2 emissions.In terms of the contribution of different sectors to these reductions, we expect the lion’s share of that reductions to come from the transport sector. We expect the second largest contribution to emissions reduction to come from the power sector, which already stands at a low level of emissions today. I will discuss this in more detail with the following slide.
  164. Thanks to hydropower, electricity in the Brazilian power system has a CO2 intensity of 60 grammes per kilowatt-hour (g/kWh), the same as the level achieved globally by 2050 in the 2DS!So one can say that Brazil is ahead of the times, however: In 4DS, projected increase of electricity demand drives strong growth in biomass-based generation, that, coupled with hydropower limitations and the uptake of natural gas, lead to an intensity increase to around 80g/kWh.By contrast, in the 2DS, Brazil’s already low emissions intensity is further reduced by more than 50% relative to 2009 by a mix of wind, solar and biomass. Renewables provide around 80% of these reductions relative to the 4DS scenario, with the largest part coming from biomass. End-use electricity savings are responsible for around one-fifth of the abatement.
  165. Hydropower is the largest renewable source for power generation today, representing 16% of the global electricity generation and dominating electricity generation in a few countries, as here in Brazil.In recent years, one could observe a strong growth in hydropower generation, with a 30% increase in global hydropower generation between 2000 and 2009 (32% increase in Brazil).New hydro development was led by China in Asia and Brazil in Latin America.In the 2DS, this growth will continue, resulting in more than a doubling of hydro power generation by 2050.Thereby, hydro power contributes significantly to CO2 reductions in the power sector: if the newly added hydro generation in the 2DS were replaced by coal-fired power generation without CCS (gas w/o CCS), this would result in additional annual CO2 emissions of around 2.5 Gt in 2050 (1.2 Gt for gas plants).In addition, dispatchable hydro power plants can help the deployment of other renewable energy sources, notable variable renewables, such as solar and wind.More important, the sustainable development of hydro power can provide in addition to energy more efficient access to water and supportthe social as well as economic development in a region. Because of this important role of hydro power for a sustainable energy future, the IEA is working together with Brazil as co-author and other partners on a technology roadmap for hydropower, which is foreseen to be released this fall.
  166. The industry sector accounted for 40% of energy consumption in Brazil in 2009. Iron and Steel industry is the most important users, followed by the chemical industry. Production of key material is expected to increase at a sustained pace between 2009 and 2050. For example, we expect the production of crude steel to increase more than threefold between 2009 and 2050. Energy consumption will increase between 2009 and 2050 in all the scenarios analyzed.About 50% of the emissions reductions from the 4DS can be attributed to the steel and chemicals industry. Reduction in these sectors can be achieved through the application of carbon capture and storage (CCS) and improvements in energy efficiency.Overall, energy efficiency accounts for the most important contribution: 46% of the emission reductions in the industrial sector.The other, less-intensive industries will also play a key role in reducing CO2 emissions. These reductions would mostly come from a switch away from oil to natural gas and renewable energy sources and greater efficiency.
  167. In the transport sector, the rise of megacities and the trend towards a highly urbanised population slows the growth of car ownership in Brazil, despite GDP per capita rising steadily to 2050.Brazil is likely to remain one of the top producers and users of biofuelsin the decades to come, with biofuels representing half of the country’s transport sector energy needs. Flex-fuel vehicles will remain market leaders in the 4DS, so that fossil liquid fuels retain a significant share in the transport energy mix, especially in the freight sector – see the left side of the figure. Alternative technologies adopted in the 2DS rely on biofuels, reducing the participation of fossil fuels - see right side of the figure. These technologies include hybrids and diesel engines for heavy vehicles, in order to combine the efficiency of advanced vehicles with the low carbon content of biofuels.
  168. Not every country will follow the same path. While the IEA believes that electric vehicles will need to play a key role out to 2050 to help us decarbonise transport, there are other ways to achieve low carbon transport.Biofuels is one, provided that we can achieve truly sustainable, low carbon pathways. I realize there is a lot of controversy around this topic but I think Brazil is showing the world that cane ethanol can reach high volumes at competitive prices, with low net CO2 emissions. Other countries will also need to increase their use of biofuels. Even if we reach our global targets for selling electric and hybrid vehicles in the ETP 2 degree scenario, half of all cars in 2050 will still run on liquid fuels. We project 30% biofuels as an average blend level in that year, world wide. Today’s cars can not run on such a blend (except here in Brazil).Many countries, such as the United States, have already reached a 10% blend level, and are finding that there are problems with going to much higher levels because of vehicle-fuel compatibiliity issues. Clearly Brazil has found the solution to this problem – flex fuel vehicles. The transformation of your market in the past 10 years has been remarkable, and it means that by 2020 you will not have many vehicles on the road that are not flex-fuel. Other countries are really lagging behind and we need to start now if we want to be able to accommodate higher biofuels levels in the 2020 or even 2030 time frame. The cost is low – our estimates are about USD 200 per vehicle, you may be finding it becomes even cheaper as the market size increases.
  169. Both key drivers for the buildings sector – number of households and floor area – are expected to increase substantially to 2050. The population growth in Brazil will be only by 0.3% per year to around 223 million in 2050. However, the trend towards fewer people per household will accelerate. There will also be rapid growth in the service sector. In the 4DS for the buildings sector, energy consumption in 2050 is therefore almost two times higher than at present. In the 2DS, it will increase by only 36%. Main factors in the lower increase is the improvement in building shells, which helps reduce cooling needs; the adoption of best technologies for cooling and water-heating equipment; and fuel-switching towards electricity in the residential sector.If one takes indirect emissions into account, decarbonisation of the power sector will play a key role in reducing emissions from the building sector and will account for about half of emissions reductions between the 4DS and 2DS.
  170. In sum, I would like to highlight a few elements of a low-carbon future for Brazil:Today, Brazil has one of the highest contibutions of renewablesto its energy mix thanks to hydro in the power sector and biofuels in the transport sector.The maintenance of a clean energy matrix and further reductions of carbon dioxide emissions entails opportunities and challenges. For example we were pleased to see that wind energy was so successful in the past supply auctions in Brazil. Brazil is already the second-largest producer of biofuels and the third-largest producer of hydropower, and it can take a leadership position in the deployment of low-carbon technologies. To accomplish this Brazil should address difficulties that could potentially hamper growth in power generation from hydropower and wind. For example I learned that Brazil has created a compensation registry for hydro projects. This can help to ensure the further increase of using this energy source in the future.expand production and use of biofuels in the transport sectorContribute its technological capacity and expertise to the development of renewables in many countries in Latin America and Africa. E.g. Brazil is already making a very valuable contribution to the IEA hydropower roadmapIn closing, let me stress that IEA values close cooperation with Brazil very highly and looks forward to deepening it even further in the future.
  171. In Japan, an uncertain nuclear power situation combined with the introduction of new feed-in tariffs is likely to spur strong growth.Japan’s main drivers include:An acute need to replace nuclear power generation shortfalls amid uncertainty over restart.A strengthened renewable policy environment backed by generous feed-in tariffs.Good solar PV potential with quick installation times and peak load shaving abilities during the summer.Japan’s main challenges are:The power system remains fragmented among ten vertically integrated utilities with weak interconnections.The costs of solar PV and wind installations are relatively high compared to international markets.The location of wind and geothermal resources far from demand centers.
  172. From ETP2012’s point of view, nuclear is one of important energy resource to achieve 2DS. And the vast majority of countries with nuclear power remain committed to its use despite the Fukushima accident, but projections suggest that nuclear deployment by 2025 will be below levels required to achieve the 2DS objectives. In addition, increasing public opposition could make government ambitions for nuclear power’s contribution to their energy supply harder to achieve.
  173. In Japanese buildings sector, electricity dominates in both the residential and services sector.In the residential sector, energy consumption declines after 2015 because of population decrease and energy efficient equipments deployment in the 4DS.In the services sector, it increases gradually due to the slow growth of GDP in the 4DS.In terms of CO2 emissions, around half of the emissions reduction will come from electricity decarbonisation of the power sector.
  174. In Japan, hybrid vehicle sales reached 10% share of passenger vehicles in 2011 (20% excluding Mini category) due to incentives and subsidy for good fuel economy car.The improvement of conventional engines, such as down sizing, idle stop, friction reduction, together with an increase of low carbon bio fuel usage substantially reduce fuel consumption, however, in orderto achieve 2DS, more than 90% of vehicles sold in Japan in 2050 should be electrically driven with de-carbonized electricity and hydrogen.
  175. Let&apos;s start with the electricity sector. Massive deployment of low-or zero-carbon technologies is needed if we are to de-carbonise the world’s electricity supply and achieve the 2DS. However, over the past two decades most of the growth in electricity demand has been met by fossil fuels, primarily coal-fired generation in non-OECD countries and natural gas in OECD countries.*Moreover, three-quarters of coal-fired plants in operation use inefficient sub-critical technologies. As a result, global electricity production produced almost 40% of energy-related CO2 emissions in 2009. Under 2DS, the picture would look radically different in 2050: global electricity generation has double from 20 000 TWh in 2009 to more than 40 000 TWh, fuelled by growing demand in non-OECD countries like China and India. However, the use of renewable sources grows even more rapidly, and they generate more than half (57%) of global electricity, with solar and wind each providing around 15% in 2050. Nuclear could account for around another one fifth of the electricity mix. The remainder is generated by fossil-fired plants. However, the majority of these plants are equipped with CCS. Global average CO2 emissions per KWh of electricity generated has fallen by 80% compared to 2009.
  176. The core of the future clean energy system is electricity. Electricity allows for many modern necessities and comforts to be accessed, and its production can be decarbonised. Electricity can also be decentralised and allow for deployment to remote areas without massive grid investment.At the global level, electricity consumption is doubled in the 2 degree scenario, but its production is largely decarbonised.90% of electricity would in 2050 be produced either by renewables, nuclear or CCS-equipped plant, and only 10% would remain from unabated gas, coal or oil plant.Such a pictureistruealso for the EU.Growth in EU electricitydemand by 2050 issomewhatsmallerthanglobally, but power production stillincreases by nearly 50% fromtoday’slevels.In the 2DS scenario, also the Europeanelectricity mix islargelydecarbonised.Wind, solar and hydro all play an important role.And, as youseefromthispicture, wealsosee a very important future for nuclear power in Europe.
  177. The core of the future clean energy system is electricity. Electricity allows for many modern necessities and comforts to be accessed, and its production can be decarbonised. Electricity can also be decentralised and allow for deployment to remote areas without massive grid investment.At the global level, electricity consumption is doubled in the 2 degree scenario, but its production is largely decarbonised.90% of electricity would in 2050 be produced either by renewables, nuclear or CCS-equipped plant, and only 10% would remain from unabated gas, coal or oil plant.Such a pictureistruealso for the EU.Growth in EU electricitydemand by 2050 issomewhatsmallerthanglobally, but power production stillincreases by nearly 50% fromtoday’slevels.In the 2DS scenario, also the Europeanelectricity mix islargelydecarbonised.Wind, solar and hydro all play an important role.And, as youseefromthispicture, wealsosee a very important future for nuclear power in Europe.
  178. Reaching the 2DS will require massive investments in low-carbon technologies over the next four decades. Driven by national support policies, European countries are the frontrunners when it comes to the deployment of renewable technologies. EU countries accounted for 27% of the global wind capacity added in 2010, and for 17% of the solar one. France ranked among the Top 10 countries in new wind and solar PV capacity built in 2010 (rank 7 in each case).In the 2DS, investment efforts in the EU have to be intensified over the next four decades for many renewable technologies, but also for nuclear and CCS compared to the sluggish deployment over the last five years. Investmentneeds are large, an additional 1.2 trillion are required in the power sector in the 2DS compared to a scenario withoutany CO2 mitigation efforts. These efforts are, however, more than offset by fossil fuel savings of USD 2.7 trillion.
  179. Main differences to EU Roadmap 2050 (diversified supply scenario) and 2DS: Roadmap has 5% higher final electricity demand Less nuclear in roadmap: 102 vs. 144 GW More CCS in roadmap: 192 vs. 63 GW
  180. But even in the OECD, growthwill have to continue atsignificant rates in order to achieveourclimate change goals over the longer term.Indeed, across OECD Europe renewableenergy technologies willneed to account for more than 2/3 of total power generation by 2050 to stay on a path to 2 degrees. This willbeextremelychallenging. Weneed to maintain a stronggrowth rate for years to come.
  181. 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. To identify how much variability a system can handle, as it is configured today, the first step should be to take a snapshot of its existing flexible resources and the extent to which they are present in the market place.When the extent of these resources is known, and the present need for them also clear, the ability to balance additional variability can be computed.
  182. Measurable acceleration of efforts to develop the transmission system is needed… …. enabling the use of flexibility resources on a European scale.
  183. Other technologies continue to face challenges in lowering costs
  184. Renewables expansion in Spain according to the IEA’s Medium Term Market report on Renewables is expected to slow due to macroeconomic challenges and the moratorium on the Special Regime. However Spain’s renewable electricity generation will remain sizeable in absolute terms. Drivers for renewables deployment in Spain include abundant renewable resources and excellent capacity for integration of variable renewables. Spain is one of the front runners in integrating variable electricty thanks to ample gas generation capacity and large pumped hydropower storage which provide amble flexibility to the system in order to balance the variablity of wind and solar. At 15% in 2011, Spain has one of the highest wind penetration rates in the world. In April of this year wind supplied 60% of the country’s electricity consumption. Spain can further build on its strong expertise in renewables technologies for growth and exports to other markets.
  185. Challenges:Policy uncertainty over Electricity Market Reform and levels/start dates of financial supports undermines investment climate Technical and financial challenges for offshore windInvestment needed for grid reinforcement and extensionsDrivers:Ambitious targets for clean power generationAcute need to replace ageing conventional generation fleetTargeted financial support to offshore wind from newly created Green Investment Bank
  186. Conventional ICEs will remain dominant in new vehicle sales for the next 2 decades, even in a low carbon scenario.The EU has done a good job on improving vehicle efficiency, thanks to the fuel economy standard for cars.The trucks FE standard implementation needs to be accelerated, as fuel demand growth will now come from the road freight sector.Standrds are acting on the supply side; the demand side also needs to be addressed and harmonized, through common labels across the EU, and fiscal policies for fuels and vehicles that are consistent and harmonized
  187. Conventional ICEs will remain dominant in new vehicle sales for the next 2 decades, even in a low carbon scenario.The EU has done a good job on improving vehicle efficiency, thanks to the fuel economy standard for cars.The trucks FE standard implementation needs to be accelerated, as fuel demand growth will now come from the road freight sector.Standrds are acting on the supply side; the demand side also needs to be addressed and harmonized, through common labels across the EU, and fiscal policies for fuels and vehicles that are consistent and harmonized
  188. Even the EU is working at this particular issue, it is important that the EU member countries have consistent messages regarding vehicle energy efficiency; this also applies to fiscal policies, even though there are down to each member states, consistent and harmonized base for policy setting and fiscal options setting is of primary importance not to lead to counter productive outcomes.
  189. Renewables provide more than 30% of the reduction from 4DS to 2DS.The deployment of coal and natural gas plants equipped with CO2 capture leads to cumulative reductions of 18%.Nuclear power is responsible for 14% of the emissions savings.The clean Indian generation mix of the future will therefore require a portfolio of technologies. When it comes to fossil fuel generation, it is particularly important that carbon lock-in is avoided. That is true globally, but especially in India where new generation investments will be large and where in all scenarios coal remains a key source.Three-quarters (75%) of coal-fired plants in operation use subcritical technology, and around 50% of plants currently under construction today are subcritical.In practice, this would require decommissioning plants before they reach their design lifetimes. It also means encouraging best practices in new plant construction – particularly high efficient generators. And let’s not forget the quarter of electricity carbon reductions not even achieved in the power sector itself, but rather from electricity savings in end uses.This means the more efficient use of electricity, or a switch to local renewable energy sources, for example solar water heating. Efficiency is the low-hanging fruit, which is why it is responsible for around half of the cumulative reductions from 6DS to 4DS.
  190. Here is the carbon reduction picture specifically in India, and as you can see the numbers are not greatly different than in the global context. Again, the power sector must carry much of the responsibility for reducing carbon emissions.To reach the 2-degree scenario, 43% of carbon reductions by 2050 must come from power, followed by the transport sector with 22%.So, if this is where we need to look to make carbon reductions in the future, let’s look at Indian power generation going forward, under our scenarios.
  191. Fossil fuels will continue to dominate Indian power generation with a share of 65% in the 4DS. Efficiency improvements, especially in coal-fired plants, limit the growth in annual CO2 emission, only doubling from 2009 to 2050.The Indian climate is particularly conducive to solar power, which can also carries significant benefits for energy access is rural areas. In our 2DS, solar power provides one-fifth of India’s electricity needs by 2050.However the deployment of solar and other variable renewables, like wind, creates a greater need for electricity system flexibility – even beyond what is needed to stabilize today’s grid.That means that investment needs in system flexibility, or flexibility resource, are increasing in India and globally. But the need for flexibility is even greater under lower carbon scenarios like 2DS.
  192. This year’s edition of the ETP for the first time contains a specific chapter on Mexico, which has profited greatly from the continued dialogue between the IEA and SENER. Under the 4 degrees scenario Mexico is on track for a 10% increase in CO₂ emissions by 2050. However, in order to limit global warming to 2 degrees, ETP projects a need to halve Mexico’s CO2 emissions by 2050. This actually coincides with the target which has been set in the recently passed climate change law. In terms of the contribution of different sectors to these reductions, we expect the lion’s share of cumulative CO2 reductions to come from the power sector: Almost 40% of reductions come from electricity generation, mainly due to an increased deployment of solar and wind power. Another important source of reductions is the transport sector, where the switch to biofuels represents the best option to reduce the reliance on oil. In addition, the easy access to car ownership in Mexico will need strong policies to be constrained.The industrial sector also contributes, mainly by a noticeable shift away from oil and increased use of electricity, and renewables and waste, which helps limit the increase in industrial CO2 emissions.Finally, the building sector also represents a significant mitigation potential: stringent building codes and enforcement could reduce the demand for space cooling and heating of the average Mexican household by as much as 35%.
  193. Under the ETP 2 degree scenario, annual CO2 emissions in the Mexican power sector are more than halved relative to 2009.Main drivers for these reductions are energy efficiency, as well as increased generation from clean energy technologies.In 2010, a quarter of Mexican generation capacity corresponded to clean energy, dominated by large hydro with 18.7% of installed capacity. Other renewables accounted for 3.8%, nuclear 2.3%. In terms of solar energy, the increase does not come as a surprise, given that Mexico is one of the countries with the highest average insolation rates in the world. The insolation in some areas of northern Mexico equals the best areas in northern African deserts. Wind energy has already started to take off in recent years: installed capacity increased from 85 MW in 2008 to 875 MW in March 2012 and capacity is expected to surpass the 1 GW milestone in 2012. In 2050, we expect installed wind capacity to reach 38 GW, mostly onshore.CO2 capture from natural gas plants is also an effective option. Deployment of natural gas plants with CCS is assumed to start in 2025 and its contribution to electricity generation is expected to rise from initial 1 GW to 8 GW by 2050.
  194. In the transport sector, the cross-border flow of used vehicles from the United States makes leads to a very high share of car travel in Mexico, which is projected to increase. Strong policies will be needed to constrain this growth.Implementation of fuel economy standards for Passenger light-duty vehicles along with new Bus Rapid Transit systems planned for Mexico City and elsewhere will contribute to more than halving emissions in the 2DS compared with the 4DS. Reaching this target is however also dependent on the greening of the vehicle fleet, mainly by drop-in biofuels.
  195. Today, Mexico’s buildings sector is responsible for about 5% of total direct CO2 emissions in the country, and 20% of total final energy consumption. With a fast-growing population, Mexico’s buildings sector is set to experience dramatic growth and change. A 2.7-fold increase in income per capita will drive number of people per households down, more than doubling the number of households between now and 2050; around 80% of the additional houses are yet to be built. This opens up lots of mitigation opportunities, starting with the introduction of strict buildings standards. More than half of the emissions reduction in the buildings sector will however come from the decarbonization of the power sector.
  196. A few final remarks on a low-carbon future for Mexico:Mexico’s National Development Plan, the energy efficiency and renewable energy programmes derived from it, as well as the scenarios contained in the National Energy Strategy 2012 to 2026 are clear testimony to a political will to embark on a low-carbon trajectory. Despite first successes, such as in the end-use energy efficiency programmes, even more ambitious action will be needed to achieve the 2 degree scenario. For example, in terms of energy efficiency, co-generation and renewable energy, further improvement of the regulatory framework will be crucial to tapping the potential. The recently passed climate law represents an extraordinary commitment to a pathway towards a low-carbon future.In fact, Mexico has all the resource potential needed for a “green” development strategy , which can pave the way towards achieving the climate goals.I would like close by stressing that IEA stands ready to deepen cooperation with Mexico in pursuit of a sustainable energy future. For example, we look forward to the jointly organized regional training on low-carbon technology, which will bring representatives from all over Latin America to Mexico City for one week of energy training in September.
  197. If we look more closely now at the ETP 2012 results for Russia, the ETP 2012 4oC Scenario (4DS) and 2oC Scenario (2DS) shows a very different way forward for Russia in terms of fuel mix and overall electricity demand compared with the Russian Energy Strategy to 2030 or Russia’s General Scheme for the Power Sector. Russian projections have electricity consumption in 2030 increasing to just over 1 500 terawatt hours (TWh) a 50% increase compared to 2009 levels. IEA ETP projects electricity consumption of about 1 350 TWh in the 4DS and 1 200 TWh in the 2DS in 2030. This reflects greater efficiency improvements in these scenarios.The fuel mix is also very different. While the Russian Energy Strategy projects natural gas remaining the main input fuel for power generation, ETP 2012 projects a needed drop in natural gas of more than a quarter as well as a dramatic decline in coal-fired power generation in order to meet the 2DS goals.Whereas the Russian strategy and General Scheme see a moderate increase in other renewables (excluding large-scale hydro power), the ETP 2012 Scenarios call for a major increase in on- and offshore wind and biomass electricity generation.
  198. This is perhaps the most telling slide of all from the IEA’s perspective. It shows how much CO2 emissions need to be reduced for Russia to get on a sustainable energy path. I understand that reducing CO2 emissions is not the main priority in Russia.Energy efficiency is the focus here and we are very happy that it is. But energy efficiency is the flip side of the same coin as CO2 reductions. Energy efficiency equals CO2 reductions. So I think we are really focusing on one and the same issue and that this chart is just as important for Russian energy policy makers as if it had terra joules on the axis in the place of MtCO2. Especially given Russia’s ambitious energy efficiency targets and goals. This figure shows how Russia’s power sector accounts for 48% of potential carbon dioxide (CO2) reduction to 2050 in 2DS while other transformation accounts for another 20%. So IEA analysis is pointing to this sector as the least cost area for energy efficiency gains. It is encouraging that Russia has created technology platforms covering nuclear, bio-energy, smart grids, thermal power and distributed energy – all key parts of the power and transformation sectors. This is exactly where the IEA model considers the most cost-effective way for Russia to get on a sustainable energy path. The IEA stands ready to support these platforms and has already held a roadmap training workshop focussed on these technologies and a bioenergy workshop in coordination with the Russian bioenergy technology platform.
  199. Russia is the world’s 3rd largest industrial energy consumer and among the world’s top 5 producers of crude steel, cement and aluminium. Great potential exists in Russia to substantially decrease CO2 emissions from the industry sector. In the 2DS, emissions could be halved compared to 2009 levels. The first step to achieving this is the implementation of current BATs, best available technologies, given that industry in Russia is relatively old and inefficient. Energy efficiency measures, most notably the application of BAT when building or refurbishing steel, cement and paper facilities, would account for over 50% of the reductions between the 4DS and 2DS in 2050. The application of CCS is also an important option and would account for about 35% of the reductions below the 4DS in 2050.
  200. Buildings are the largest energy-consuming end-use sector in Russia, accounting for 36% of total energy consumption. As such, this sector holds great energy and emissions abatement potential. The growth in buildings energy consumption can be limited to only 5% in the 2DS between 2009 and 2050. Most of the energy reduction potential to achieve the 2DS in 2050 lies in energy efficiency improvement in water heating, lighting and appliances. Together, these end uses account for almost 50% of the reductions between the 4DS and the 2DS. Great potential also exists in large-scale refurbishment of ageing buildings to stringent code levels in the 2DS. This could reduce the specific demand for space heating by 20%, resulting in levels similar to the current building stock of Canada, an OECD country with comparable heating degree days (HDDs).
  201. Although today’s car ownership rates are considerably higher in Russia than in countries such as China and Brazil, in the 4DS the car ownership rate more than doubles between 2009 and 2050. As in OECD countries, car and truck technologies in Russia in the 2DS become much more diversified with emphasis on plug-in vehicles over the coming decades. Even by 2050, however, liquid and gaseous fossil fuels dominate road transportation – though with far lower demand under the 2DS thanks to the introduction of strong fuel-economy policies. Passenger light-duty vehicle (PLDV) technology in Russia is following the global trend towards electricity – in hybrid, plug-in hybrid or battery electric vehicles. Hybridisation plays the dominant role in increasing vehicle efficiency after 2025.
  202. In conclusion, I would like to reiterate how the IEA’s ETP projects the need for a very different energy path for Russia. But it is a very possible path: The high average age of Russian infrastructure means low average efficiency. But it also means Russia has more “room to manoeuvre” than many other leading industrial economies. It is encouraging that Russia has created technology platforms and that innovation and modernisation of the Russian economy is the focus at the highest political level. However, the overall investment environment in Russia raises challenges, especially for small and uncharted energy efficiency and renewable projects. Furthermore, the regulatory framework needs to be completed for there to be a major increase in the share of renewables. Russia’s sheer size and natural resource endowments mean that energy policies and modernisation goals made by the Russian government in the near term will shape not only the prospects for Russia’s national economic development, but also global energy security and environmental sustainability. That is a key reason why Russia is important to the IEA and why we want to continue to work together for a more sustainable energy future.Thank you for your attention.
  203. Thanks to low-cost gas supply and modest CO2 pricing policies, CO2 emissions already fall by one quarter compared to today.More ambitious reduction actions are needed in the 2DS with overall reductions of 75% by 2050 compared to today. Efforts are needed across all sectors, but power generation and transport stick out, each providing around one third of the cumulative reductions needed to go from the 2DS to the 4DS.
  204. In the United States, state renewable mandates provide a strong deployment floor, but uncertainties persist over some federal policies.Main drivers in the US include:State level renewable portfolio standards.Federal financial incentives, largely tax credits, which have enhanced the economic attractiveness of renewable technologies.Ample capacity for the grid to absorb new variable renewable sources over the medium term.The emergence of innovative financing schemes, particularly for the deployment of small-scale systems.Main challenges in the US are:The durability of federal tax incentives. However, this varies by technology. While the production tax credit for wind is slated to expire at the end of 2012, with uncertain prospects for renewal, the investment tax credit for solar runs through 2016.Low natural gas prices and competition from natural gas-fired generation.The cost and availability of tax equity finance, which is an important mechanism for funding renewable projects.Duration of federal incentivesWind production tax credit (PTC) expires at end-2012; but investment tax credit for solar goes through 2016Competition with natural gasCost and availability of tax equity finance
  205. In the United States, state renewable mandates provide a strong deployment floor, but uncertainties persist over some federal policies.Main drivers in the US include:State level renewable portfolio standards.Federal financial incentives, largely tax credits, which have enhanced the economic attractiveness of renewable technologies.Ample capacity for the grid to absorb new variable renewable sources over the medium term.The emergence of innovative financing schemes, particularly for the deployment of small-scale systems.Main challenges in the US are:The durability of federal tax incentives. However,