Energy Technology Revolution in the Making Stampa E-mail

by Mary Harries Magnusson, Editor IEA OPEN Energy Technology Bulletin


Peter Taylor - Copyright photo courtesy of IISD 2009Are we seeing the first sparks of an energy technology revolution around the globe? Encouraging steps in that direction are described in the IEA’s newly released study Energy Technology Perspectives 2010 (ETP2010).
Crucially, this latest edition of the IEA flagship publication also provides a detailed blueprint for stepping up the pace towards wide-scale decarbonisation of the world’s energy systems.
Peter Taylor heads the IEA’s Energy Technology Perspectives team tells readers about findings presented in ETP2010

Have factors like the recent economic downturn had a large impact on the IEA energy technology scenarios to 2050 presented in Energy Technology Perspectives 2010?
Of course, seen in the short term, the economic downturn has certainly depressed global energy demand and reduced CO2 emissions over the past couple of years. Investment in the energy sector has also been affected. In some areas, the effect has been adverse, but investment levels in others like renewable electricity generation have held up quite well, partly helped by funding from the stimulus packages introduced by many countries. Also, energy efficiency improvements are again accelerating, as higher energy prices and government policies have made people more aware of the need to save energy.

But you have to bear in mind that our latest Energy Technology Perspectives (ETP2010) scenarios are longterm, to 2050. They see economic growth picking up again over the next few years, so the impact from the current problems should be negligible after 2030.
If we look specifically at CO2 emissions, however, we see that these are certainly lower in our new Baseline scenario, based on unchanged government policies, than they were in the corresponding scenario in the previous Energy Technology Perspectives (ETP2008). We now project that emissions would almost double to around 57 Gt in 2050, which is 8% lower than our projection in ETP2008. This stems from a combination of higher fossil fuel prices and introduction of new government policies encouraging energy efficiency and use of advanced technologies in many countries. Together, these changes result in lower energy demand and stronger penetration of low-carbon technologies and fuels than in the previous Baseline scenario.

Our ETP BLUE Map scenario, on the other hand, assumes a substantial increase in implementation of policies leading to the deployment of low-carbon technologies and a halving of global CO2 emissions in 2050 compared with 2005 levels. Here, the combination of lower Baseline emissions and higher fossil fuel prices means that this target appears a little easier to meet than we thought two years ago. For instance, the marginal cost of CO2 emissions abatement in 2050 is USD 175/tCO2, which is USD 25/tCO2 lower than the cost in ETP2008. However, we have produced this ETP BLUE Map scenario precisely because, seen globally, the world’s energy systems continue to move in the wrong direction, and at an accelerated pace, even though we see isolated pockets of encouraging progress towards enhanced climate protection, energy security and economic growth.

Can you enlarge a little on the economic benefits of shifts to cleaner, more effi- cient energy technology solutions?
ETP2010 demonstrates how the move to a low-carbon economy is not only good for the global climate but also good for addressing other challenges like energy security and economic growth. Under the ETP BLUE Map scenario, global demand for oil, for gas and for coal in 2050 would all be lower than today. World oil demand alone would be 27% less than in 2007.
For some countries and regions, the changes are even more striking. For instance, oil demand in the United States would drop by more than 60% by 2050 and in OECD Europe it would fall by 50%; in China, oil demand would increase in 2050 to only half the level projected in the Baseline scenario based on no changes in government policies. It is easy to see how many countries would benefit economically from less pressure on prices and less dependency on imported energy.
Following the BLUE Map scenario could even help people like you and me to save money. The upfront investment required to make this scenario a reality is USD 46 trillion more than investment in the Baseline scenario over the period to 2050. Most of this reflects additional spending by consumers on more efficient and low-carbon end-use equipment, particularly cars and other vehicles. But the BLUE Map scenario also delivers huge fuel savings totalling USD 112 trillion over the same period. So, even if both investments and fuel savings are discounted back to their present values using a 10% discount rate, the net savings still amount to USD 8 trillion.

Do the same technology options apply in all countries or regions?
When we look at the most appropriate low-carbon technologies for different countries and regions we see certain common elements but also some differences in economic development, national situations and endowments of natural resources. These differences of course have an influence on the energy mix. That is why we have delivered more detailed analysis in the new ETP2010 on four countries or regions, namely OECD Europe, China, India and the United States.
But in all regions, energy efficiency should be a top priority, since it frequently offers the least-cost way of reducing emissions. Moreover, many of the technologies needed are commercially available today. So there should be every reason for industry and consumers to adopt more ef- ficient products and processes and cash in on savings to be had from the resulting fuel savings, which in many cases quickly compensate for the initial outlay on new technology.

Decarbonising the power sector is another important strategic means of reducing emissions in many countries. However, differing resource availability from one region or country to another means differences in the best mix of low-carbon technologies to use. For instance, China and India currently have significant coalbased generation, which means that highly efficient coal technologies, together with carbon capture and storage (CCS), will be needed to ensure that these countries’ continued use of coal does not damage the climate.
In Europe, we see a significant role for renewables in many countries. Wind and solar are the two most important options. But some countries clearly have a better wind resource, while other countries see much more sun. The deployment of other technologies will also be affected by differing local policies and opportunities.
So, for France, nuclear is expected to continue being the dominant source for power generation, while countries bordering the North Sea have access to CO2 storage sites at comparably low costs, making coal or gas plants with CCS an attractive option. Pretty much everywhere, we see a growing role for the smart electricity grids that will facilitate grid integration of variable renewables-based electricity and more responsive, more economical use of power by end-users.
In the United States, we see a range of renewables, together with nuclear and CCSequipped fossil fuels technologies all playing important roles, but with differences in their geographic deployment across the nation.

A new government can often mean new policy orientations, resulting in a changed outlook for energy-sector investment. What can governments do to encourage longer-term financial commitments by industry and the research community?
Ultimately, a low-carbon economy should thrive on market principles. But one of the biggest challenges is that many of the most promising low-carbon technologies are not yet cost-competitive. We therefore need to reduce their costs through a combination of the push of research, development and demonstration (RD&D) and the pull of the market. Governments will therefore have a crucial role to play in the next decade to set a framework that avoids locking in high-emitting, inefficient technologies, while promoting the development and deployment of low-carbon alternatives.
ETP2010 estimates that government investment in RD&D needs be two to five times higher than current levels, and that this additional funding should be complemented with deployment policies and other tools like carbon pricing, regulations or tax breaks that reflect the maturity of both the technology and the market. The aim should be to reduce risk for investors in the early stages of a technology’s development, but then gradually expose the technology to stiffer competition, at the same time allowing industry to realise reasonable returns on their investments as the low-carbon economy gains ground.

But governments’ resources are limited so they should also plan exit routes. The level of support should decrease over time and then disappear once technologies become competitive or show clear signs that they are unlikely to become so.
There are roles for all stakeholders, but the fastest results come from concerted action, as our experience has shown with collaborative technology research, development, demonstration and deployment programmes. Technology roadmaps can be effective in showing the way.
While governments are importantly placed to encourage the right parties to take the lead in relevant areas, industry can demonstrate its leadership through active involvement in public-private partnerships. Meanwhile, universities’ training and education capabilities must be supported to ensure that adequate, highly skilled human capacity is available to catalyse innovation and mobilise the necessary innovative energy technologies. Non-governmental organisations are important to get the public involved and convey how urgent it is to deploy new energy technologies on a large scale, but also what are the costs and benefits.

What are the priorities to be addressed in the different sectors to accelerate radical shifts towards low-carbon technologies and systems?
While all sectors will need to make huge cuts in their CO2 intensity, not every sector will need to halve its emissions. This is because factors like sectoral growth prospects or breadth of technology choice must be taken into account. But one message is common to all sectors, namely that we need to act fast and take a long-term perspective to avoid locking in technologies that cannot promise a low-carbon future.
Let me focus first on the industrial sector, whose direct emissions represent 22% of today’s CO2 emissions. The priority here should be widespread implementation of current best available technology all around the world. This can make an enormous impact on CO2 emissions in the short run. Longer-term, however, we shall need to develop and deploy a range of new technologies. CCS is one example, which we see as crucial for achieving deep CO2 reductions in industries such as iron and steel or cement. Other new technologies and processes will also be needed, such as efficient smelting processes in the iron and steel industry, the use of separation membranes in a wide-range of process industries, or technologies that can provide useful energy from waste streams, such as the gasification of black liquor to generate heat and electricity in the pulp and paper industry.

Another high priority is buildings, which are interesting because they are an amalgam of many energy-consuming elements. There is the building envelope itself and its insulation, then space heating and cooling systems, water heating systems, lighting, appliances, and consumer or business equipment. Most buildings have long life spans, so more than half of the current global building stock will still be standing in 2050.
Low retirement rates of buildings in the OECD area and in economies in transition, combined with relatively modest growth, means that most of the potential for energy and CO2 savings lies in retrofitting new technologies into existing buildings. In contrast, new-building growth in developing countries will be very rapid, so the key opportunities lie in building codes that ensure maximum energy efficiency in these buildings.

What about the transport sector, which is responsible for 23% of energy-related CO2 emissions?
Achieving deep cuts by 2050 will depend on slowing the rise in transport fuel use through greater energy efficiency and increasing the share of low-carbon fuels. Encouraging travellers and transporters to switch from light-duty vehicles (LDVs), trucks and air travel to more frequent use of bus and rail is another route for substantial savings.
LDVs account for the largest share of energy and emissions from transport. The main options we see here are increasing the efficiency of conventional internal combustion engines, hybridisation and adoption of plug-in hybrid electric vehicles, electric vehicles and fuel-cell vehicles.

No agreement was reached on legally binding targets to tackle climate change at the Copenhagen 15th Conference of Parties to the UN Framework Convention on Climate Change (COP 15). How can the IEA contribute to more widespread adoption of climate-benign energy production, transformation and use?
There are many ways in which the IEA can - and is - acting to help bring about badly needed transformations in the world’s energy systems. Significantly, we undertake analysis such as that just published in ETP2010 in order to provide impartial insight on what are the most promising technologies. We are also developing roadmaps for key technologies. These identify the main technical, legal/regulatory, investment and public acceptance barriers that they face. They propose priority actions for governments, industry, financial partners and civil society to take in order to overcome these barriers and promote faster technology development and uptake.
At the request of the G8 and the IEA Governing Board, the IEA Secretariat is also working on a new initiative, known as the international low-carbon energy technology platform. This will provide a forum where policy makers, business representatives and international experts can discuss how best to design policies to accelerate the spread of low-carbon technologies by encouraging the transition of national energy systems to the most appropriate combination of emerging technologies.
We are confident that this will result in a number of concrete projects in different countries that will materially advance deployment of some of the key low-carbon technologies, thus helping to enhance the lives of local populations, as well as advancing further towards global energy security, economic and climate goals.

OPEN Energy Technology Bulletin No. 69, © OECD/IEA, July 2010

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