Category: Electricity

The Energy Mix

April 27, 2012

The World Business Council for Sustainable Development (WBCSD) held its annual company delegate conference in Switzerland this week. For the WBCSD Energy and Climate team the event marked the launch of the latest WBCSD publication “The Energy Mix”. This is a document that started life back in the middle of last year, originally as a response to the reaction from a number of governments to the events in Fukushima. The initial aim was to inform policy makers on the implication of sudden changes in energy policy, such as the decision by the German government to rapidly phase out the use of nuclear power. But as the work got going, the document took on a number of additional dimensions. Many have been covered in previous postings on this blog, but the document does a nice job of bringing a lot of information together in a crisp fold-out brochure format (at the moment the PDF is in regular page format, so the fold-out aspect is rather lost through this medium).

Sitting behind this effort is the WBCSD Vision 2050 work which charts the necessary pathway to a world in 2050 which sees “Nine billion people living well within the means of one planet”. A number of key themes are explored in “The Energy Mix” brochure:

  1. The risk of carbon lock-in, in other words current and “on the drawing board” infrastructure and related emissions being sufficient to consume the remaining global carbon budget (related to a 2°C temperature goal) within the normal remaining lifespan of those assets.
  2. The need for clear energy policy framework to guide the necessary changes over the coming decades.
  3. The importance of carbon pricing within that framework.

The document uses some fifteen vignettes to illustrate a variety of points. For example, to illustrate a) that policy can make a difference and b) it takes a long time, but c) its still very hard to reduce emissions by a big amount, take the case of France. Back in the 1970s the government intervened in the energy system and have progressively forced the construction of substantial nuclear capacity and a national high speed rail network, operating in combination with (like the rest of the EU) high transport fuel taxes. While these measures were not originally intended to reduce CO2 emissions, they are nevertheless compatible with such a goal and could just as easily be the route forward for a country. France now gets about 80% of its electricity from nuclear and has one of the best rail systems in the world, yet emissions have only fallen by 28% in 40 years. Economic growth and population growth continue to eat into the gains made, which might argue for yet further measures in the longer term. However, French emissions on a CO2/GDP basis are about 60% less than in the USA. With a very low CO2 per kWh for power generation, France would be in an excellent position to further decarbonize if electric cars entered the vehicle population in significant numbers. Interestingly, the car company with perhaps the worlds most progressive electric vehicle production programme also happens to be French. 

 The key message on the required policy framework is a pretty simple one – cover the key sectors and focus on the elements of the technology development pathway (Discover, Develop, Demonstrate, Deploy). The resulting grid looks like this:

 Filling in the boxes results in something that looks like this:

The framework shouldn’t be a big surprise, many of the elements are alive in the EU (but not so well in all cases- such as the carbon price).

The new WBCSD Energy Mix document can be downloaded here.

The dash isn’t over yet

March 21, 2012

Over the weekend the UK Secretary for Energy and Climate Change, Ed Davey, announced plans to secure a continuing role for natural gas in the UK power generation sector. Mr Davey noted;

“Gas will continue to play a vital role in a low-carbon economy. Modern gas-fired power stations are relatively quick to build and twice as clean as many of the coal plant they’re replacing. Carbon capture and storage promises to give gas an even longer term future in the mix.”

The announcement from the Department of Energy and Climate Change (DECC) introduced further policy additions to the Electricity Market Reform as follows;

The Energy and Climate Change Secretary set out measures to be included in the intended Electricity Market Reform legislation to provide certainty to gas investors:

  • The level of the Emissions Performance Standard (EPS), designed to limit the emissions from individual plant, will be enshrined in primary legislation. Power stations consented under the 450g/kWh-based level would then be subject to that level until 2045, a process called ‘grandfathering’ which provides long-term certainty to gas investors.
  • The Capacity Market will be designed to bring forward sufficient investment in new reliable capacity, including gas, in order to ensure security of electricity supply. This will help to ensure that there is sufficient capacity in place to cope with peaks and troughs in demand.

The Government intends to bring forward this legislation, subject to the Queen’s Speech, in the next Session of Parliament.

He also announced plans to publish a new gas generation strategy in the Autumn.

So continues the rollout of a comprehensive policy framework designed to decarbonise the UK power sector, ensure security of supply / cost and provide sufficient certainty for the necessary investments to take place. The announcement fits well with the statements made by Oliver Letwin MP, Minister of State (providing policy advice to the Prime Minister in the Cabinet Office) and Cabinet attendee, at a recent panel debate held by the Daily Telegraph. At that event Mr Letwin argued that there was a need for the government to ensure that the resulting energy mix was built on a variety of energy sources and technologies. These included renewables, nuclear and fossil fuels, the latter also supported by CCS. 

Regular readers will note that I have grumbled about some of the EMR provisions in the past, particularly the role of the carbon floor price in the context of an EU wide ETS (Emissions Trading System). However my concerns pale in comparison with those of a number of correspondents and NGOs who argued in the media this week that the level (450 g/kWh) and longevity (until 2045 for those receiving consent) of the EPS would threaten the core UK target of near complete power sector decarbonisation by 2030.

I can’t subscribe to this view.

They seem to have missed the fact that the UK power sector, like the power sector in the rest of the EU, is covered by the EU ETS. Ultimately this is what will determine the level of decarbonisation on any given date, not for the UK in isolation but for the EU as a whole. The targets set at EU level may well embed a certain desired trajectory for the UK, but once allowances are auctioned and trade is underway, actual decarbonisation in the UK may take a variety of courses. This will be influenced by the overall EU cap and the prevailing price of carbon, the economics of various UK power generation options and any local supplementary measures unique to the UK, such as the carbon floor price and the EPS. Gas will almost certainly find a home within the mix, particularly given the favourable capital cost for new facilities and the relatively low emissions from modern high efficiency gas fired CHP.

What the UK government has done is provide a level of investment certainty for the generators. This has been done for renewable energy, nuclear and now fossil energy. But the eventual mix will be determined by the overall carbon constraint in combination with other factors discussed above. The UK will find its own way forward within this, with each generator surrendering allowances against CO2 emitted. Actual UK power sector emissions in 2030 and beyond will not be determined by the EPS details announced on the weekend, but by a complex mix of factors, including the value of EU allowances.

Success slipping away?

November 17, 2011

Earlier this year I looked at the prospects for the USA meeting its 2020 declaration to reduce greenhouse gas emissions by 17% by 2020, relative to a 2005 baseline. Success at least looked feasible, driven by three significant factors:

  1. The reduction in emissions as a result of the financial crisis;
  2. The surge in natural gas production which at least has the potential to back out coal in the power sector, thereby delivering a reduction in power generation emissions;
  3. The new and much more stringent CAFE standards which are now in place.

As illustrated in the chart below, a key element of the appraisal is the degree to which emissions bounce back after the recession, i.e. as production ramps up in response to new factory orders and so on. This is because of the scale of the fall in emissions as a result of the recession itself – some 500+ million tpa. 

Very recently the US Carbon Dioxide Information Analysis Center (CDIAC) released new estimates for global and national emissions for the years 2008, 2009 and 2010 – i.e. the key years in terms of the drop in emissions and first signs of recovery. The global trend is a concern given the significant jump of over 2 billion tonnes in CO2 emissions from 2009 to 2010 which more than offsets the 2008 to 2009 fall and puts global emissions at a record level.

The US figure is a real good news / bad news story. The rise from 2009 to 2010 was over 200 million tpa, which on the one hand indicates some recovery in the economy, but on the other puts significant pressure on a successful outcome  in 2020. The same projection but with the Industrial Recovery bar revised to 218 mtpa shows the target being missed by some margin.

 

A second critical element of this pathway is the rate at which natural gas backs out coal in the power generation sector – or coal generation is reduced as environmetal standards become tougher to meet, with natural gas filling the gap. The data for 2008-2010 isn’t conclusive, but it is showing some signs of a smaller recovery for coal than the national energy total and a loss of share in power generation to natural gas. 

Assuming about constant output from fossil generation through to 2020 (i.e. incremental power is picked up by new renewable capacity), then the necessary reduction scenario is only achieved if coal output drops by some 500,000 GWHrs and natural gas rises by a similar amount. More data is needed, but there is at least some indication that this trend may be underway, particularly now that petroleum based power generation has been driven to very low levels.

An electric Hummer in London – sort of!!

June 1, 2011

Saturday afternoon in Bond Street is a great place to see all manner of Aston Martins, Maybachs, Lamborghinis and just possibly a Bugatti Veyron. But the car that was turning heads last Saturday was a downsized electric Hummer. In fairness this isn’t quite a car, the website refers to it as the MEV HUMMER HX™ , the only proportionally correct licensed resort vehicle on the market. But it was still turning heads.

The nature of uncertainty

May 27, 2011

As the debate continues in Australia with regards the implementation of a carbon price, the issue of investor uncertainty has risen up the agenda. A recent interview conducted by ABC (Australian Broadcasting Corporation) illustrates the point:

One of Australia’s largest home and business electricity suppliers has warned that household power bills will double in six years after a carbon price is introduced and uncertainty over its implementation might lead to power shortages.

The gas and electricity giant’s chief executive said uncertainty over what the long-term carbon price might be has stalled capital investment in the industry and halted construction of new power stations. “Capital is not being invested so we haven’t seen new power stations built,” the CEO told ABC TV today.

Electricity regulator Australian Energy Market Operator (AEMO) had forecast shortages of baseload power for Queensland in 2013 and 2014, with Victoria and NSW experiencing shortages in 2015 and 2016, he said. “Given the timeframe for building new power stations, we’re concerned that we need that certainty today so we can build power stations to meet that coming gap in the market,” the CEO said.

He said that gap had resulted in electricity prices rising by 40 per cent in the past three years as a result of network investment. Rising fuel and gas prices would cause them to increase by another 30 per cent over the next three years, the CEO said. The mooted carbon tax of between $20 and $25 a tonne of emissions would not change industry behaviour but would double electricity bills for households over six years given the 30 per cent rise, he said.

Without wanting to comment on any of the figures in the interview, it is nevertheless clear that uncertainty surrounding the implementation of policy is a problem for some, but should it be?

When it comes to power generation on a national scale, arguably the uncertainty question is about the exact nature of the policy rather than the existence of carbon policy at all. Although some will still choose to disagree, there really is very little uncertainty around the need to reduce CO2 emissions, so it is much more about how and when rather than if.

The “when” question is perhaps less uncertain than we might imagine. In the context of major power projects with planning, approval and construction periods of up to ten years, exposure to a carbon price during the operational lifetime of the facility (i.e. the 2020s and 2030s) becomes a near certainty. Although there is concern as to the lack of policy development in key regions today, it is also true that in the last ten years there has been a spectacular shift in the policy agenda. Carbon markets are a reality, global carbon trade exists, carbon targets are the stated goal of dozens of economies and most financial institutions now operate carbon business units of one sort or another (from trading to analysis). By 2020 and beyond, as the environmental picture becomes clearer, policy implementation will likely accelerate, even if it still isn’t sufficient to address the issue head on. So the working assumption should be that a carbon policy framework will be in place during the operational life of a project just starting out today.

So the real issue is “how” (in actual fact “how much”) – i.e. what will the policy look like and what sort of price signal will it send? This was probably at the root of the decision by a number of coal fired generators to actively engage in the formulation of US cap-and-trade policy in 2009 and 2010 – it wasn’t a burst of environmental enthusiasm that brought them to the table, but the sobering reality of a regulatory future that might be created without their input. Many companies now address this aspect of uncertainty with assumed carbon prices, as is the case in Shell today. From a planning perspective looking out 10-20 years, the actual shape of the policy isn’t that important, the key issue is the carbon price it might deliver. Even this can be picked apart based on signals from legislators today and arguments put forward by academia. For example, it is clear from signals in the EU and the UK that in the EU-ETS covered sector the desired outcome is a noticeable shift in the type of generating capacity, so we therefore shouldn’t imagine that a price of €5-10 will somehow suffice. Equally, there are enough technology options in play at the moment to offer significant emission reduction opportunites below €100 per tonne of CO2.

Although it all looks messy today, there is reason to believe that this issue is far more certain than it appears. Even in Australia, both parties now have carbon price policies of some sort whereas neither really did ten years ago. In Canada, there is the proposed moratorium on unabated coal which certainly injects a carbon price into the power sector and in the USA the progressive implementation of rules under the Clean Air Act may well persuade legislators to look again at a more comprehensive approach. Even if they don’t the CAA alone delivers a pretty powerful signal.

Of course, once governments start to collect significant revenue from carbon pricing policies, certainty abounds.

Ambitious reduction targets for the United Kingdom, but . . .

May 18, 2011

On Tuesday in the House of Commons, the Secretary of State for Energy and Climate Change, Chris Huhne, announced that the UK would adopt the recommendations of the Climate Change Committee and shift the economy towards ambitious 2030 carbon reductions. Specifically, Huhne announced a 4th Carbon Budget of 1950 Mt CO2 for the period 2023-2027 which is aligned with an indicative 2030 target to reduce emissions by 60% relative to 1990 levels (46% relative to 2009 levels). The government did deviate from the recommendations in one important area in that it accepted the need to keep carbon trading options open – “to maintain maximum flexibility, and minimise costs in the medium-long term”.

But there is an important caveat to this ambition – namely the need to ensure alignment with the EU. While the UK may well be an island and even one with its own currency inside the EU, at least for carbon it is joined at the hip to the EU by the emissions trading system. A UK power generator and emitter handles exactly the same allowances as a continental EU one and sees, at least for now, exactly the same carbon price. If the UK happens to embark on its own reduction pathway independent of that prescribed by the EU then the result will be 100% carbon leakage into the EU via allowance trade. As such, the announcement by the Secretary of State included the following;

 Under the Climate Change Act, emissions reductions by the UK’s industrial and power sectors are determined by the UK’s share of the EU Emissions Trading System cap. This protects UK industrial and power sectors from exceeding EU requirements. However if the EU ETS cap is insufficiently ambitious, this could mean placing disproportionate strain on other sectors outside the EU ETS such as transport.‪

 To overcome this and to provide clearer signals for businesses and investors, government will review progress towards the EU emissions goal in early 2014. If at that point our domestic commitments place us on a different emissions trajectory than the Emissions Trading System trajectory agreed by the EU, we will, as appropriate, revise up our budget to align it with the actual EU trajectory.

At least in terms of the power sector, the future differences appear stark. In recent months the EU has released its Low Carbon Roadmap for 2050 which sees an EU wide reduction of some 40% by 2030 compared to 1990. This equates to a reduction in the power sector of around 60% by 2030 (or 54% for the EU-26), in contrast to the proposal of the 4th Carbon Budget which sees a nearly 90% reduction.

 

Although the time period is short, the UK and EU power sectors appear to have followed more aligned pathways since the start of the EU-ETS, as would be expected given the underlying trade in allowances. Between 2005 and 2008, both have been relatively flat.

A sustained, more aggressive pathway for the UK is not possible unless supplementary domestic policies are introduced to force the direction. As noted in previous postings, this will drive up the cost for UK consumers relative to the EU and potentially impact UK competitiveness. So the challenge now sits with the UK to force the issue in Europe, rather than focus on domestic energy policies to meet its goals. To date there has been an almost singular focus on the EU 2020 target (i.e. the 20% or 30% debate), but the reality is that 2020 emissions are now largely defined by major projects already in planning, car designs on the drawing boards and the current building codes. This means that the UK needs to get the EU to turn its attention to Phase IV of the EU-ETS and open up the discussion regarding its structure and ambition (i.e. the 2030 target).

The current EU legislation would see the post-2020 ETS continue to deliver reductions of 1.74% per annum (absolute percentage points, not percent relative to the previous year), which means about 35% between now and 2030. This is far short of the recommendations of the 4th Carbon Budget proposal for the UK.

The UK government has quite a challenge ahead.

Greener Britain: Is there a winning technology?

April 15, 2011

I recently participated in The Economist debate, Towards a Greener Britain: Is there a Winning Technology? The video is now available online.

It was an interesting evening featuring a range of speakers from academia, the NGO community and industry (me). The question “Is there a winning technology” was posed to both the panel and the audience and for the most part the response was a list of such candidates as smart grids, CCS, wind power, electric vehicles and so on. There is no doubt that some combination of all these technologies will be part of Britain’s future, but identifying the winner is much more than just picking a favourite or guessing about where the world might head.

As you will see from the video, I took a somewhat different perspective on the question and argued that the winning technology is the one that is most cost effective. This is what is really going to matter over the coming years, particularly as government budgets are strained to the limit and many family budgets likewise. Yet, at least in Britain, there are signs that we may not be going for the most cost effective approach at all. As noted in a recent post on this blog, the UK is proposing a carbon price bubble within the broader EU-ETS and the recent release of the 4th Carbon Budget proposal by the Climate Change Committee references a 60% reduction by 2030, by which time the UK will have a near zero emissions power sector (-91% according to the medium abatement scenario, below).

This appears to be out of line with the EU proposals in its recently released 2050 Roadmap, where the power sector will have decarbonised by 54% to 58% by 2030 and won’t reach the levels desired by the UK Climate Change Committee until nearly 2050. This implies that the UK will have to maintain a set of policy measures to drive a change that isn’t aligned with the EU-ETS, which in turn implies a less cost effective outcome for UK consumers. Of course there is the possibility that the most cost effective reductions to be found in the EU are in the UK, but we can’t really know that in advance – hence the reason for choosing an emissions trading system as the principal policy mechanism for Europe, including the UK.

The outcome for the UK is that it will be running ahead of the general EU trend, but the outcome for the EU is unchanged because EU allowance flow between the UK and the rest of the EU will re-balance the situation. The UK may well get its zero emissions power sector, but at what cost?

In terms of the most cost effective technology today, the current winner appears to be natural gas. As I illustrated for the US recently, natural gas backing out coal offers a relatively quick win for many economies and certainly is compatible with the EU 2030 goals. Longer term it must of course be linked with carbon capture and storage, so developing a natural gas plus CCS technology pathway is essential. In the shorter term gas also sits well with the many national targets to expand renewable energy given its ability to respond quickly to changes in electricity supply-demand during periods of peak load and/or low renewable electricity output.

Finding the most cost effective route forward, whatever it may be, is the job of the EU Emissions Trading System. Without wanting to sound like a broken record (I have no idea what the 21st century MP3 version of that is), the ETS is here to stay and needs to be left to do that job. Even the recent argument for recalibration following the allowance surplus generated by the recession seems less relevant today following the German nuclear decision. However, looking at the EU chart above, current policy (the red line) would appear to be insufficient for the desired 2050 environmental goal, so such proposals to make EU ETS more stringent in Phase IV should still be on the table for discussion.

The problem with two carbon prices

March 31, 2011

Last week as the UK Budget was unveiled, the government announced, to nobody’s surprise, its intention to implement a UK carbon price floor for power generators. This mechanism would operate in tandem with the EU Emissions Trading System, effectively underpinning it for one sector within its existing coverage. The proposal will see a minimum price, delivered via a top-up payment mechanism against the prevailing carbon market, of £16 per tonne from 1/1/2013 rising to £30 per tonne by 2020. Of course if the EU-ETS price is high enough, and it may well be if a very different nuclear scenario plays out in the EU following Fukushima, then this policy measure will have no fiscal impact. But it will serve to support investments in the UK and deliver a degree of certainty to those making them. However, major power generation investments won’t even begin operation until 2017 at the earliest, which does bring into question why the UK needs a floor price in the near term.

In a scenario of lower EU-ETS prices, a UK floor price will have an impact right throughout the EU because of the reach of the Emissions Trading System. In the illustration below, abatement across the EU is shown as the sum of UK abatement and EU-26 abatement (i.e. the remaining member states). The horizontal axis is tonnes of CO2 reduced (R) and the vertical axis is the carbon price in €s. In the first chart we see that the reductions required to reach the EU 2020 target (RUK + REU-26) are delivered at a carbon price of just over €20 (as a hypothetical number). The pink area represents the UK abatement curve and the blue area is the EU-26 abatement curve, both shown in their simplest theoretical shape.

The second chart illustrates the effect on UK abatement of an imposed floor price which is higher than the price otherwise required to meet the EU target. Additional UK reductions take place, shown as ΔRUK. But, as shown in the third chart where the total EU reduction requirement for 2020 is unchanged, an equivalent amount of reductions are now no longer necessary in the EU given that they have been found in the UK, so there is a perfect offset. The overall EU carbon price falls as a result, although this is not felt by the UK consumer.

The net environmental impact of such a policy is zero because of the role of the EU-ETS and allowance trade. But the investment outcome in the UK is changed and the total cost of meeting the EU 2020 target rises as the cost of the extra carbon reductions in the UK is higher than the next best on offer in other parts of the EU. The UK consumer bears this additional cost. The slight fall in the EU carbon price, while giving a small benefit to EU (but non-UK) consumers, may also serve to undermine investor confidence in equally important power generation projects across the other 26 member states. This in turn may encourage other EU member states to implement their own support mechanisms, which in turn would further erode the effectiveness of the ETS.

An EU-ETS free of policy overlay can do the job that is needed across the EU, but it will take time. This is a forty year policy instrument and as such should be left to perform the role intended.

Energy impacts after Fukushima

March 16, 2011

It is hard to make any comment at all after the scenes of destruction that have been filling the airwaves since Friday. But as the immediate disaster starts to move into recovery, then rebuilding, the issue of energy supply in Japan will doubtless rise up the agenda. In a country with limited natural energy sources, security of supply has been the traditional energy source consideration, although more recently this has been augmented with greenhouse gas emission targets. In terms of primary energy demand for electricity production (see chart), data for 2008 from the IEA shows a 3+ way split – the key components being gas, coal and nuclear. Oil products (e.g. fuel oil) are a further important part, followed by much smaller contributions from renewables, waste, biomass and geothermal.

 The nuclear generated electricity comes from 55 operating nuclear plants (including those in Fukushima) for a total of about 51 GW of capacity. With rolling blackouts now underway on Tokyo as a result of the cluster of nuclear plants in the Fukushima area now out of action, it is clear that the grid is very dependent on nuclear power. In the short term all the other generating capacity will have to be maximized to make up for the loss of the Fukushima facilities. The load is likely to fall on coal, fuel oil and natural gas which will further stretch international supplies at a time of high energy prices and disruption to coal supply following the floods in Australia. With 10 GW in the Fukushima area now offline (or 20% of the national nuclear capacity), replacement with LNG would require some 8 million tonnes per annum against a global supply of about 230 million tonnes.

But in the longer term, what if Japan took the decision to phase out nuclear power? I am not proposing that it should or shouldn’t, but sometimes major events can have a profound impact on societal developments going forward. In terms of potential replacements, current technology points to coal and natural gas, although the latter has an advantage in terms of lower CO2 emissions.  Equally, a profound shock such as that experienced in Fukushima could be a catalyst for accelerating the development of solar PV and concentrated solar in Japan.

In 2008 Japan imported about 68 million tonnes of LNG, of which about two thirds was used for electricity production. In the same year electricity production from the nuclear power plants was about 10% less than that produced by natural gas, so replacing that with natural gas would require another 40 million tonnes of LNG imports per annum. By comparison, annual LNG production in Qatar, the world’s largest supplier, is some 80 million tonnes. As already noted, global production is now 230 million tonnes, but it is growing rapidly. For example, the Gorgon project in Australia which is now under construction will produce 15 million tonnes of LNG starting in 2014.

But the impact of Fukushima could be more profound. Arguably nuclear is undergoing something of a renaissance as nations grapple with the challenges of energy supply, diversity of supply and CO2 emissions. According to the World Nuclear Association there is currently more capacity proposed, planned, on order or under construction (609 GW) than is presently in operation (378 GW). Of this, 64 GW is actually under construction with 176 GW on order or planned. Reverting to coal, for example, even with modern efficient facilities, could result in an additional billion or more tonnes per annum of CO2 emissions by the end of this decade if 200 less nuclear plants were constructed than current expectations.

It is early days and emotions remain high, but balancing climate risk against nuclear risk looks certain to feature in the energy discussion for some time to come.

100% Renewables in my Lifetime

February 14, 2011

Very recently WWF released a new report which argues the case for a near 100% renewable energy system by 2050 (I remain optimistic with regards my longevity) as a solution to the environmental issues and resource depletion associated with the current energy mix. This would also eliminate the need for a shift to nuclear and the use of CCS as potential means to reduce emissions. The report is supported by an analysis produced by Ecofys, a Dutch consultancy focusing on sustainable energy solutions.

A paper along similar lines by researchers based at Stanford and the University of California, Davis, was given media coverage in Wired Magazine on almost the same day. This paper looks at the feasibility of a renewable energy end-state, rather than tackling the timeline in which it could be implemented. A key focus of the paper is the grid interconnection required to support such an energy system. In the abstract the authors state;

. . . we discuss methods of addressing the variability of WWS [wind, water, sun] energy to ensure that power supply reliably matches demand (including interconnecting geographically dispersed resources, using hydroelectricity, using demand-response management, storing electric power on site, over-sizing peak generation capacity and producing hydrogen with the excess, storing electric power in vehicle batteries, and forecasting weather to project energy supplies), the economics of WWS generation and transmission, the economics of WWS use in transportation, and policy measures needed to enhance the viability of a WWS system. We find that the cost of energy in a 100% WWS will be similar to the cost today. We conclude that barriers to a 100% conversion to WWS power worldwide are primarily social and political, not technological or even economic.

Assuming that such an outcome is achievable (and I imagine that many would contest this, but not here, not now), then the real focus has to be on the timeline.

In a 2009 post I explored the impact of a “trillion tonne” carbon budget on the energy system. Today (mid-February 2011), according to the researchers who put forward the idea, we have consumed some 545 million tonnes of the budget. With emissions today from fossil fuel use, cement production and land use change running at some 10 billion tonnes carbon per annum and including a global plateau in emissions for the next 10 years before reductions really start in earnest, society would have to reduce this to zero by 2090 to come in on a trillion tonne budget, assuming a linear decline. To have a 75% chance of keeping within a 2°C temperature rise, the budget drops to 750 billion tonnes (from a trillion) and the end date becomes 2041. In the latter case, a 2050 goal becomes very important.

But 2050 presents an immensely challenging timeline to transform the global energy system. For example in 2005, for a World Business Council for Sustainable Development (WBCSD) publication called Facts and Trends to 2050, I developed a simple model to illustrate the rate at which alternative fuel vehicles would have to be developed and deployed to completely replace the global fleet by 2050. WWF/Ecofys have done this by shifting to an all-electric fleet in their study. We assumed the availability of a zero emissions vehicle from 2010, with 200,000 units produced in that year and growing at 20% per annum thereafter until all production globally is switched. That doesn’t occur until about 2040, with full substitution on the road being a 2055-2060 outcome. But it is now 2011 and although there is a potentially viable electric vehicle (the Nissan Leaf) available, production this year is set for a maximum of 4,000 units per month. We need five Nissan Leaf type production lines this year and adding 2 per annum through to 2015, then 3 per annum and so on to get to 30 major production lines by 2020 and 200 by 2030.

 

 The power sector will be equally challenging, but there is some room for optimism. The WWF / Ecofys report has global wind energy rising from 1.2 EJ/annum in delivered power in 2010 to 7.2 EJ/annum by 2020 and 15.6 EJ/annum by 2030. This means some 80,000 5 MW turbines will have to be added globally over the next 10 years, or about 40 GW per annum. According to the World Wind Energy Association, global capacity rose by nearly 40 GW in 2010. But as noted in the Stanford paper, grid development must match this as the interconnection requirements to overcome the problems of intermittency and supply / demand balance, especially in a world without fossil fuel backup, becomes essential. Storage development and deployment also becomes paramount as renewable energy use grows, yet this technology remains in its infancy, at least on a large scale. As noted in a December 2009 post, development and deployment of a new technology is a multi-decade effort and there is almost no evidence in history that gives confidence this can be otherwise. Many sectors of industry are supporting major effort to get CCS up and running, yet after 10 years of effort only a handful of modest projects exist globally and there is no single example of what is actually needed, a large scale CCS project linked with coal fired power generation.

A further major feature of the WWF report is the assumption that energy use peaks in 2020 then falls back to below 2000 levels by 2050, all while 9 billion people enjoy access to energy and an increasingly comfortable lifestyle. This is delivered through a massive improvement in energy efficiency in every sector of the global economy – one that far outstrips current year on year improvements. Not only will strict efficiency mandates be required, but society will also have to avoid the inevitable rebound effect (Jevons Paradox) that is bound to happen in many sectors that become super efficient.

As the report notes, all this requires a comprehensive global policy framework with high carbon prices, significant support for technology development, tough building codes, efficiency mandates and so on. The EU is perhaps the most developed in this regard, but the policy framework in place today has taken 10 years to implement and is not fully functional. With a carbon price at €15 its effectiveness is also being questioned. Gaps remain as well. Internationally, the Kyoto Protocol was agreed nearly 15 years ago with a framework that positively encourages carbon markets, a price on carbon and carbon price incentive instruments to help developing countries get going. Yet it is clearly faltering and almost certainly won’t be built on, rather, a more national based architecture is emerging. But allowing that to bed down over a further 15 years isn’t conducive to a 30-40 year timeline to actually complete the whole job.

The WWF / Ecofys report outlines a particular pathway forward for addressing global emissions – there are certainly many others. But all will require a focus on policy and social change that collectively we are not even close to reaching.