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World Energy Council- get real

By Dave Elliott

The World Energy Council (WEC) has called for policymakers and industry leaders to ‘get real’ on global energy policy, claiming that the global financial crisis, Fukushima, and the development of unconventional hydrocarbons has changed the context and that, as a consequence, the CO2 targets for 2050 will be missed, unless significant changes and policy frameworks are adopted. It says that energy demand will continue to increase and double by 2050, primarily driven by economic growth in non-OECD countries, mostly using fossil fuels. It says that there will be ‘a near doubling of global greenhouse gas (GHG) emissions by 2050, compared to where we should be in 2050 to meet the 450 parts per million CO2 reference adopted by many. At worst GHG emissions could increase by over four-fold’.  Pretty gloomy stuff.  And that is despite the fact that it is quite optimistic about renewables.

In its 2050 global energy market-led ‘Jazz’ scenario, the share of renewables in electricity generation is 31% and in it’s more policy-led  ‘Symphony’ scenario, 48%, shifting in total energy terms, ‘from 15% today to a figure between 20% and 30% in 2050’. That is a big jump for the traditionally rather conservative WEC, but still a way off the near 100% many studies claim is actually possible. Even so, WEC says Electricity generation from renewable energy sources will increase around four to five times by 2050 in comparison to 2010. This is strongest in the Symphony scenario. In Symphony, electricity generation from hydro doubles, for biomass the increase is eight-fold, and for wind eleven-fold [to 4000-4500TWh pa] when comparing figures for 2010 with 2050. Solar PV has the highest increase of approximately 30 times between 2010 and 2050’ to 7,740TWh in Symphony. It adds ‘By 2050, globally, almost as much electricity is produced from solar PV as from coal.’  It is also keen on biomass use for power generation, with Carbon Capture and possibly subsequent carbon use e.g. to make synfuels.

By contrast it says No renaissance of nuclear energy is anticipated.’ While in terms of total primary energy, ‘the share of renewable energy sources will increase from around 15% in 2010 to almost 20% in Jazz in 2050 and almost 30% in Symphony in 2050… nuclear energy will contribute approximately 4% of total primary energy supply in Jazz in 2050 and 11% in Symphony globally – compared to 6% in 2010’.

So, renewables and possibly Carbon Capture and Storage (and Utilisation) apart, WEC is not looking to the supply side to solve too many problems. Although it says ‘the degree to which renewable energy sources will be used, and investment in CC(U)S technologies for coal and gas (and also biomass), will be decisive in mitigating climate change’, it adds ‘the focus must shift from the supply mix to demand efficiency. We need more demand-side investments, innovation, incentives and stronger technical standards to reduce energy intensity’.

 It’s hard to disagree with that, although a little more assertiveness over reducing and replacing the use of fossil fuels, coal especially, would not be amiss: WEC sees fossil fuels falling, but still dominating in 2050- 59% (in Symphony) and 77% (in Jazz) compared to 79% today. Even if you believe fossil CCS is going to come to the rescue, it won’t be able to handle the emissions from all of that.  We are going to need a more radical approach.

However, in free-market mode, WEC says ‘Price controls, subsidies, trade barriers and absolute targets for individual technologies distort  the market and can have unintended consequences, so policy makers must use them only sparingly’.  Given that WEC also says ‘The usual business approaches are not effective’, in that ‘current market designs  and business models are unable to cope with the increasing renewable shares, decentralised systems, or growing information architecture,’ it is perhaps a little odd that it objects to market intervention policies  and targets. But it does offer its ‘Symphony’ policy-led  scenario, as well as the market-led ‘Jazz’ scenario.

It is just conceivable that the rapid fall in cost for renewables like PV and wind could lead to faster uptake than is envisaged in their Jazz section, i.e. without the need for significant market intervention. In addition to its scenarios, WEC has also just published a current global Levelised Costs of Energy (LCOE): www.worldenergy.org/publications/2013/world-energy-perspective-cost-of-energy-technologies  This has on-shore wind clearly beating nuclear and level with coal, while the US Energy Information Administration’s 2013 Energy Outlook puts solar PV’s mid range cost at  $144.3/MWh for 2018 plant startups, compared to Advanced Coal with CCS at $135.5/MWh,  while also offering lowest cost estimates of  $123.9/MWh (coal/CCS) and  $112.5/MWh (PV). In the UK, DECC’s new solar road map has PV at around the mid range of on-land wind costs by 2020, while DECC’s 2013 ‘Electricity Generation Costs’ report has PV beating on-land wind by 2030. By then, PV also beats gas CCGT and even comes (almost) level with unabated gas costs. www.gov.uk/government/publications/uk-solar-pv-strategy-part-1-roadmap-to-a-brighter-future andwww.gov.uk/government/publications/decc-electricity-generation-costs-2013

Even so, reduced costs like this are perhaps not enough of an incentive to propel renewables ahead on the scale needed – and getting to this stage has already involved substantial market intervention. If we want more rapid acceleration, we will need more intervention- and more than envisaged in WEC’s Symphony scenario. A more aggressive policy-led approach could surely get renewables up beyond 50% of electricity by 2050: Germany is aiming for over 80% by then, along with a 50% reduction in demand.  But WEC has at least made a start in highlighting the problems and the requirements.

The big issue is whether enough politicians will be brave enough to push ahead at a time when energy economics are highly sensitive and energy security a growing concern, sometimes trumping climate change, which can be portrayed as a longer-term problem. Quite apart from climate related benefits, investing heavily in renewables and energy saving technology now will pay off economically longer term, providing a hedge against rising fossil fuel costs, but with shale gas being portrayed as the great saviour and renewables as expensive, it may be hard to get a more sustainable approach accepted.

WEC: www.worldenergy.org/publications/2013/world-energy-scenarios-composing-energy-futures-to-205 and www.worldenergy.org/news-and-media/news/world-energy-council-issues-official-statement-ahead-of-22nd-world-energy-congress/

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