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Royal Swedish Academy of Sciences

Energy for the New Millennium Author(s): José Goldemberg, Thomas B. Johansson, Amulya K. N. Reddy, Robert H. Williams Source: Ambio, Vol. 30, No. 6 (Sep., 2001), pp. 330-337 Published by: Allen Press on behalf of Royal Swedish Academy of Sciences Stable URL: http://www.jstor.org/stable/4315161 Accessed: 19/04/2010 22:40
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Article

Jose Goldemberg, Thomas B. Johansson, Amulya K.N. Reddy and Robert H. Williams

Energy

for

the

New

Millennium
lish a differentway of thinking about energy. We shareda vision of energy as an instrumentof global and nationaldevelopment and of technology as a crucialmechanismfor making this possible. Ourthinkingwas bolsteredby energy use trendsin the wake of the oil shocks of the 1970s, which showed thatthe link between energy consumption and economic growth could be substantiallyweakened. The challenge of trying to change the energy paradigmwas the catalyst for our collaborationon Energyfor a Sustainable World(2, 3), in which we showed how new patternsof energy productionand use could furthereconomic efficiency, equity, empowerment and environmental soundness. Each of the authorshad an establishedtrackrecordin energy analysis before we startedcollaborating.Although we had scientific backgrounds, were sensitive to socioeconomic issues. we Our sharedcommitmentto economically viable, need-oriented, self-reliantand environmentallysound developmentconvinced us to work togetheras peers in an informalpartnership was that independentof institutionalpressures.Our differences in terms of perspectives,experience and expertise were complementary, andtogetherwe were able to producewhatnone of us could have producedalone. Ourcollaboration continuedto this day withhas out a conventional organizationalor institutionalumbrella, in parallelwith our work on our own individualprojects. In our firstproject,Energyfor a SustainableWorld,for which our collaborationis perhapsbest known, we looked at energy, not in isolation,but in relationto global issues, such as poverty, populationgrowth, food and undernutrition environmental and to degradation, which energy is inextricablylinked.We believed that new approachesto energy must not aggravatethese other problems. Instead, solving the energy problem should contribute to, and be consistent with, the solutions to the other major issues. Energy, we argued, must be an instrumentof need-oriented, self-reliant and environmentallysound developmentwhat has come to be referredto as sustainabledevelopment. The emphasis on using energy to serve needs meant that the focus must not be on energy consumption,but on the end-uses of energy-that is, the tasks that energy performsand the utility it provides to human beings. The switch in focus from energy consumptionto energy services was not a semantic trick. It emphasizedthe fact that enhancementof energy services does not necessarily require expanding supplies. It can also be achieved by using energy more efficiently. Technological opportunitiesaboundfor enhancingenergy services withouta correspondingincreasein primaryuse. Indeed, over the long term, efficiency increases of an order of magnitudeare theoretically possible. In additionto many othercollaborativeefforts,the four of us have just served, along with many other scientists and researchers,on the editorial board of the WorldEnergy Assessment.We discoveredthat our vision of energyas a force for sustainable developmenthas gained currencyin many circles, including among industryleaderswho served with us on the editorial board. Still, the assessmentrevealed majorcontradictions between the currentenergy path and the ideal of a sustainable world: - Modern energy carriersare still not accessible to some two billion people, severely limiting their choices and opportunities. The wide disparitiesin access to and use of affordable commercial energy runs counterto the concept of equitable humandevelopmentand threatenssocial stability.
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The evolution of thinking about energy is discussed. When the authors began collaborating 20 years ago, energy was typically considered from a growth-oriented, supply-side perspective, with a focus on consumption trends and how to expand supplies to meet rising demand. They were deeply troubled by the environmental, security and equity implications of that approach. For instance, about two billion people lack access to affordable modern energy, seriously limiting their opportunities for a better life. And energy is a significant contributor to environmental problems, including indoor air pollution, urban air pollution, acidification, and global warming. The authors saw the need to evolve a different perspective in which energy is provided in ways that help solve such serious problems. They argued that energy must become an instrument for advancing sustainable development-economically viable, need-oriented, self-reliant and environmentally sound development-and that the focus should be on the end uses of energy and the services that energy provides. Energy technological options that can help meet sustainable development goals are discussed. The necessity of developing and employing innovative technological solutions is stressed. The possibilities of technological leapfrogging that could enable developing countries to avoid repeating the mistakes of the industrialized countries is illustrated with a discussion of ethanol in Brazil. The role foreign direct investment might play in bringing advanced technologies to developing countries is highlighted. Nearand long-term strategies for rural energy are discussed. Finally, policy issues are considered for evolving the energy system so that it will be consistent with and supportive of sustainable development.

A COLLABORATION GREATER THAN THE SUM OF ITS PARTS This paper is based on findings that have resulted from more than20 years of collaboration the authors,andbegan at a time by when energy security concerns were paramount.The fact that billions of people in the developingcountriesrelied on traditional and inefficient energy sources for cooking, heating, and working was just startingto come into focus as a policy concern;and environmentalissues were gaining increasingattention,though climate change was not yet listed high on the public policy agenda.Most expertsconsideredenergy from a growth-oriented, supply-side perspective, focusing on consumption trends and how to expand suppliesto meet rising demand,withoutaddressing the mounting environmentalimpacts and security concerns associatedwith energyproduction use. For example,in 1981, and the International Instituteof Applied SystemsAnalysis published Energy in a Finite World(1), which envisioned an energy future in which thousandsof plutoniumbreederreactorsproducing annually thousands of tonnes of weapons-usable material would be introducedearly in the 21stcentury, and that the use of fossil fuels would increasedramatically. prospectthatthe The energy system might be made sustainable using such options while the world served by this energy would become more and more unsustainablewas frightening. The authorsof this paper believed it was importantto estab330

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Energy activities are major contributorsto indoor air pollution, urbanairpollution,acidificationandglobal warming.For example, they contribute85% of anthropogenicemissions of sulfurdioxide and a significantfractionof emissions of small particulatematter, and their contributionto greenhouse gas emission is also very significant-78% of C02, and 23% of methane. - Unreliableenergysuppliespose a hardshipand economicburden for a substantialportion of the world's population.And the fact thatthe world is becoming increasinglydependenton oil from politically troubled regions leaves many countries vulnerableto disruptionsin supply. As recently as 25 years ago, it was widely believed that a shortageof fossil fuels might constrainglobal economic develanalysisrefutesthis notion. Physical limitations opment.Current of fossil fuel resourcesare not likely to constrainenergy development; rather a departurefrom the current energy path will probablybe requiredin response to social, environmentaland thereare ways to reconcile these securityconcerns.Fortunately, concerns-even the dauntingchallenge of climate change mitigation-with the need for more energy services. However, despite good technicaland economicprospectsfor shiftingto a suspathis supported tainablepath,this will not be easy. The current and by weighty infrastructures powerful vested interests.

MOVING TOWARDENERGYSYSTEMSTHAT WORLD SUPPORTA SUSTAINABLE
The following patternscharacterizeprimaryenergy consumption in both industrializedand developing countries: - Per capita primaryenergy consumptionper year in developing countries averages less than 30 gigajoules, comparedto about 380 gigajoules for the United States plus Canada. - Fossil fuels represent81% of primaryenergy consumptionin industrialized countries and 70% in developing countries of where three quarters the world populationlives. - Biomass representsonly 4% of primaryenergy consumption in industrializedcountries and is the most widely used form of energy elsewhere. (Traditionalbiomass representsabout 90% of total energy consumption in some least developed countries.)Althoughmodernbiomassenergyconversiontechfriendly,in the denologies can be clean and environmentally veloping world, biomass tends to be used very inefficiently, and with serious environmental health consequences. - Energygrowthwas about 1.5%in OECD countriesin the period 1987-1997 and 4.5% in developing countries. The increase in global energy demandin the next 15 to 20 years will be largely from these developing countries as they strive to for meet the basic needs of and improveliving standards their growing populations. There is now widespread agreementon the broad strategies needed to steer the presentenergy system in a more sustainable direction.They include: Improvingefficiency of energy use to help reduce costs and environmental damage. Many cost effective steps have already been taken in this directionsince the oil crises of the 1970s, but these have not been sufficient to reduce the rate of growth of energy consumption.Tremendousenergy savings (from 25 to 35% in many countries)are cost-effectively possible with available technologies. And greater potential exists over the long term. Increasing the contributionof renewable energy sources such as wind,photovoltaics, and modernizedbiomass. These renewable energy sources have the potential to provide energy services with zero or almost zero emissions of both air pollutants they are based on the use and greenhouse gases. Furthermore, of indigenousresources.New renewableenergy sourcescontribute about 2%of total primaryenergy. Substantialprice reducAmbio Vol. 30 No. 6, Sept. 2001

tions in the last decades have made these sources competitive with fossil fuels in certainapplications growingmarkets.Modin ernized biomass energy is especially importantfor developing wind technolocountries.Solarphotovoltaicsand grid-connected gies are growing at a rate of 30% per year. Increasing the share of the cleaner and more-efficientfossilfuel new technologiesin the energymix. In transportation hybridelectric cars offer a 50% reductionin gasoline requirements,along with a 1/3 reductionin air pollution damage costs comparedto conventional cars. In power generation,new naturalgas combined cycle power plants are highly cost-competitive, with air pollution damage costs and CO2emission rates less than 10% and40%,respectively,of those for new coal steam-electric plants with pollutioncontrols.Combinedheat andpower systemsbased on gas turbines,combinedcycles, and microturbines, and, in the years immediatelyahead fuel cells as well, offer substantialenand ergy-saving,environmental, economic benefits comparedto the productionof electricity and heat in separatefacilities. The use of such technologies is growing rapidly, especially where market reforms encourage competition in power generation. Moreover, new coal integratedgasifier combined cycle power plants that are becoming cost competitivewith coal steam-electricplantsoffer damagecosts fromairpollutantemissionsas low as those for naturalgas combinedcycles and CO2emissions that are 80% of those for new coal steam-electricplants. Costs for coal gasification technologies are especially attractive in "polygeneration"configurations, in which various mixes of with chemicals,fuels, and industrial processheat are coproduced electricity. Accelerating developmentand deploymentof new energy technologies. Many advancedenergy technologieswill be much less environmentally damagingand more cost-competitivethantechnologies availableon the markettoday. Some examplesare:fuel cells for transportation; fuels cell hybridswith gas and/orsteam turbinesfor stationary power and combinedheat andpower;fossil fuel-derived hydrogen with geological sequestrationof the separatedcarbon dioxide; dimethyl ether produced from crop residuesfor use as a clean cooking fuel, village-scalepower genin eration,and transportation ruralareas;wind and photovoltaic systems that provide dispatchablepower by coupling to hydroelectric power or compressedair energy storage.Advanced nucleartechnologiesmight also make contributions the problems if of cost, reactorsafety, waste disposal, and the nuclearweapons link to nuclear power that presently stall the expansion of nuclear power can be satisfactorilyresolved. Opportunities While the above strategiesare straightforward one sense, their in is in implementation handicapped partbecause differentpartsof the world are so different in terms of resources, technical and institutional capacity, and energy infrastructure.In many respects, the achievementof sustainabledevelopmentdependson what happens in the developing world, where energy demands are set to grow substantiallyin any scenario of economic success. This observationis not meant to understatethe responsibility that industrializedcountriesbear for most energy-linked global environmental problemsto date,especiallyclimatechange andacidification, the rightof developingcountriesto develop nor economically. Ratherit is intendedto point out that while the lack of large-scaleenergy systems is one of the problemsfaced by many developing countries,this relatively "blankslate" also affords some interestingpossibilities. It means that many developing countrieshave the opportunity "get energy right"at an to early stage in their economic development,which will be less expensive for them over the long term. It also means that developing countrieshave the chance to leapfrog over the many of the dirty and wasteful processes that industrializedcountries adoptedbecauseof the limits of technologyat the time. The com331

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bination of state-of-the-artand advanced energy-efficient enduse and clean modem energy supplytechnologies offers a promising energypathfor developingcountries.Because of theirrapid and energy demandgrowth,nascent infrastructures large renewable energypotentials(e.g. typically much higherinsolationlevels than in most industrializedcountries),these countriescould become majortheatresfor energy technological innovation. In industrialized countries,technological advance (mainly involving improvedenergy efficiency) has weakened the historically tight link between economic developmentand primaryenergy consumption. shiftingto more energyefficientprocesses By and end-use devices and to modem energy carriersin the developing world, it would be possible to achieve dramaticimprovementsin living standards,with relatively small additional inputsof primaryenergy. For example, providingmodem clean cooking fuels in the amountneeded to satisfy the cooking needs of the two billion people, today deprivedof of such fuels, would require a mere 1.3% increment of global commercial energy, equivalentto 3% of global oil consumption. The early adoptionof modem up-to-datetechnologies-tested and availablein the industrialized countries-is one obvious option. An example, albeit outside the energy area, is the adoption of mobile phones as the preferred way of expandingthe telephone system instead of following the path used in the past of extending lines for fixed telephones. The success of this strategy is evident all over the world, and the manufactureof these products via joint ventures in the developing countries themselves is perhapsan importantcontributor success. to An example of leapfrogging in the energy area is the early transitionto LPG (liquefied petroleumgas) as a fuel for cooking replacing inefficient and highly polluting fuelwood or coal cooking stoves. The success of such an approach,especially in a numberof LatinAmericancountries,is very impressive(4). In addition, developing countries can profit by developing technologies that are particularlysuited to their needs and in which they might have comparativeadvantage.An example of success is the ethanol program in Brazil based on the use of sugarcane,which grows well in the particular geographicalconditions of that country. The technology has desirable general characteristics sustainability-the raw materialis renewable; of ethanol is far superiorto leaded gasoline from an environmental perspective and generates less air pollution damage than reformulatedgasoline; and the productionof sugar cane-derived ethanol provides ruraldevelopment benefits, e.g. 700 000 jobs were created by the programme.Moreover, in contrast to the volatility of the world oil price, the price of this synthetic fuel has declinedwith experience,on averageabout4% per year with
Figure 1. History of the ethanol price in southeast Brazil and the gasoline price in Rotterdam for comparison. The price shown for ethanol is the price on a higher fuel heating value basis divided by 1.15 to take into account the higher thermal efficiency of ethanol-fuelled engines (5, 6).

cumulativeproductionsince 1980-as is typical of many manufacturedproducts(Fig. 1). Ethanolis now competitivewith gasoline on a cost basis, not accountingfor externaleffects. A note of caution is warrantedto avoid applying the "leapfrogging" concept indiscriminately. Advanced technologies shouldbe pursuedin a countryor region only if they would help advance sustainabledevelopment objectives. What is required there is a high level of human technological capacity for enabling energy decisionmakersto make technological choices that are often not obvious. Clearly, developing (and transitional)countries need to further develop their own unique combinationsof resources-human, naturaland technological-so they can create energy systems appropriate their own circumstances.But to do so, they to need assistance in terms of technology transfers,financing and capacitybuilding. The declining share of official development assistance relative to other investmentcapital, especially foreign direct investment (FDI), suggests the importanceof steering private sector resources towardthese ends. International industrialcollaborations (e.g. industrial joint ventures)andprivate/public sectorpartnerships are alternativeattractivemechanisms that could both fosterthe migrationof new technologies to developing countries and help build the capacity for indigenous technological innovation.Considerthatfor the 20 developingcountriesthataccount for about three quartersof GDP and four fifths of primaryenof ergy requirements all developing countries,FDI as a percentage of gross domestic investment(GDI) was relatively stable at 2-3% duringthe 15-yearperiod ending in 1986 but then rose to about 4% during the late 1980s and during the 1990s rose sharply,reaching 10 per cent in 1994. The massive infusion of FDI duringthe 1990s was stronglycorrelatedwith a drop in the energy intensity of the economy (Fig. 2). The coefficient of determination the regressionline of the energy intensityagainst for foreign direct investment (FDI) share of gross domestic investment (GDI) is R2= 0.87. Energy intensitywas reducedat a rate averaging about 1.5% per year, more than 50% faster than the long-termhistorical trend-probably due to the introductionof moderntechnologies that came with the FDI and thus leapfrogging over the traditionaltechnologies in wide use in the countries.

THECHALLENGE RURALENERGY OF
A pressing concern is that some two billion people-mostly in ruralareas of developing countries-do not have access to affordablemodernenergy services that could help them breakout of cycles of poverty, ill-health and deprivation.It would be an
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enormousmistake-on moral,political and economic groundsaccomplishedthroughlarge governmentinterventions.The curto ignore the plight of this deprivedsegment of humanity. rent trend of corporatisinginefficient public sector units may Serving ruralenergy needs is a dauntingchallenge but is not need to be coupled with imposed obligations to serve the untechnologically constrained. Technologies are available that derprivileged. could make significant improvementsin living standardsin just Subsidizing rural energy would not necessarily mean abana few years. And looking ahead, many new technological op- doning the use of marketmechanismsto efficiently allocate retions will become available. Table 1 outlines some of the pros- sources. Consider,for example, the ruralenergy concession, an in pects for meeting energy services for ruralareas over the near-, arrangement which a substantialmarketis awardedto a supmedium-and long-terms.Some of the more advancedtechnolo- plier, along with an obligation to serve all customers within a gies are describedin the next section. specified market.If such a concession were awardedcompetiThe remote, dispersed characterof rural populations makes tively, marketforces could hopefullybe broughtinto play to find provision of electrical energy services problematic.The exten- the least-costlymix of energy technologies. While some subsidy sion of centralized, grid-based systems will probably not be economically feasible in the foreseeable fuTable 1. Some near-, medium-, and long-term technological options for rural energy (9). ture. Decentralized rural electrificaterm Energysource Present Nearterm Medium Longterm tion-based on variouscombinations or task of wind turbines, mini-hydro turbines, Source village-scale biopower systems, solar Electricity Gridor no Natural gas Biomass-based Grid-connected photovoltaics, and diesel generaand combinedcycles, generationusing photovoltaic electricity biomass-based gasifierscoupledto solarthermal, tors-may be the solution. Some of generationusing microturbines and biomass-based these technologies still need publicgasifierscoupled integrated gastifier generationusing to intemal combinedcycles, gasifierscoupledto sector supportfor their development, combustion minigridsinvolving fuel cells and fuel engines, various celVturbine hybrids but even for those decentralized of photovoltaic, combinations power systems for which cost-effecsmallwind,small photovoltaic, wind, hydroelectric for small hydroelectric, tiveness is proven, some public inapplications batteries vestmentwill probablybe requiredto remotefromgrids get systems up and running. Fuel Wood,charcoal, Natural gas, LPG, Syngas, DME Biomass-derived As a general rule, subsidies for DMEwith dung,crop producer gas, residues biogas electricity commercially established energy coproduct Microturbines and technologies are ill advised, for reaCogeneration Intemal Fuelcells, fuel celVturbine (combinedheat combustion integrated gasifier hybrids sons discussed below. But an imporand power) engines, turbines combinedcycles tant exception is temporarysubsidies to ensure that energy services from Task Woodstoves Producer Electric Cooking Improved gas, stoves, modem, clean energy supplies are natural and woodstoves, LPG gas catalyticbumers available in quantities sufficient to DMEstoves stoves, biogas satisfy basic needs of the poor, inOiland kerosene Electric Lighting lights Fluorescentand Improved lamps compactfluorescent fluorescentand cluding the ruralpoor, as an element lamps compact of an integrateddevelopment initiafluorescentlamps tive that seeks to alleviate poverty in Motivepower Humanand Intemal Biofueledprime Fuel cells rural areas. Such subsidies should animal-powered combustion movers,improved devices motors engines, electric serve as an enabling transitional motors measure rather than a permanent Process heat Solarthermal Wood,biomass Electric fumaces, Induction fumaces crutch.It is useful, in this context, to biomass/solar fumaces withheat cogeneration, producer gas, recall that the extension of modem thermal fumaces storage NG/solar thermal energy to the ruralareas of the nowfumaces industrialised countrieshas often been
Energy intensity and FDVGDI 20 developing countries (1987-1998) Figure 2. Energy intensity of the economy for 20 developing countries vs. percentage of FDI in GDI. GDP data are on a purchasing power parity basis, from the World Resources Institute (7). Energy, Foreign Direct Investment (FDI),and Gross Domestic Investment (GDI)data are from the World Bank (8). 0.33 -

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might still be necessary,competitionwould help ensurethatpublic funds providedthe minimum subsidy requiredto satisfy the concessionaire'sobligationto providemodem energyto all. This ruralenergy concession concept is theoreticallyvery appealing but requirestesting and modificationas needed in light of field tests, because successful experience is lacking.

CHANGEIN ENERGY RADICAL ENVISIONING FORTHE LONG WORLDWIDE TECHNOLOGIES TERM
Over the long-term, not just new but truly radical new energy technologies will be needed in orderto address effectively the challenges of air pollution, climate change, and energy supply insecuritywhile expandingenergy service availabilityto all, including those who today do not enjoy the benefits of modem energy, and keeping the costs of energy services affordableto all. One hopes to see duringthe second quarterof this century technologies like i) photovoltaicpower; ii) fuel cell cars;iii) hydrogenderivedfrom fossil fuels with sequesteringof carbondioxide in geological reservoirs,and iv) dimethyl ether (or similar synthetic fuel) derived from biomass, become as commonplace as gasoline cars and coal-firedpowerplantsaretoday. And if such technologies are to be commonplace duringthe second of quarter this century,they must be launchedin the marketduring the first decade of this century. These are daunting challenges. Realizing a futurefor energy that is supportiveof sustainable development goals requires thinking seriously about the long term-say 2050 and beyond. A clear articulationof long-term goals is essential for prioritizingnear-termactivities for building the path to a sustainablefuture. The long-termenergyfuturemustbe both affordableand characterizedby near-zeroemissions of both airpollutantsandgreenhouse gases. It must also involve a diversificationof the transportationenergy supply system away from petroleum.Ideally, such a future would involve using only three energy carriers: electricity,hydrogenand a supercleancarbon-based fluid fuelperhapsdimethylether. Electricityis a very familiarclean energy carrierthat in principle might satisfy all energy needs. But storing electricity and using it to meet peaky energy demands(as in transportation) is difficult, so one or more fluid fuels will also be probablyneeded as well-although thisjudgmentmight changeif thereis a breakthroughin electric storagetechnology. Hydrogenis a fluid fuel thatcan be derivedfrom a wide range of primaryenergy sources.Its use can facilitatea shift to highlyefficient end-use devices such as fuel-cell vehicles. Its production and use could satisfy the zero emissions criteriaif the CO2 co-productwere sequesteredsecurely in geological formations wheneverthe hydrogenis manufactured from fossil fuels. There is growing optimism in the scientific communitythatthe global capacity for secure CO2storage in such formationsis large, althoughmore researchis needed to be confidentof this. One drawbackof hydrogenis its low volumetricenergy density, which complicates storage issues. For this reason, hydrogen will probablybe economically viable mainly in urbanareas having high populationdensities where fulelinfrastructure costs can be kept to relatively low levels. For ruralareas,which characteristicallyhave low population densities, an easily storable carbon-basedfluid fuel will probably be needed-even in the long term. But if a new carbon-basedfuel is to be introduced,it should probablybe both far cleaner than today's hydrocarbonbased liquid fuels, derivable from a wide variety of primary feedstocks, and useful in a wide range of ruralapplications.To meet the near-zerogreenhousegas emissions criterion,the fuel should be derived from biomass. The energy carrierthat comes closest to meeting these criteriais dimethyl ether (DME). DME
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is not used today as fuel but ratheras an aerosol spray-canpropellant that has come to replace fluorinatedhydrocarbonsthat were phased out because of ozone-layer depletion concerns.At ambientconditions,DME is a gas that must be storedat modest pressure,for example, in canistersvery similar to the canisters now used for storingLPG. Like LPG, DME is an ideal cooking fuel. It is also a good energy carrierfor use in compression-ignited engines-the combustionof which leads to zero soot formation. And it is well suited for use in fuel cells for stationary or mobile applicationsbecause it is even easier to reformthan methanol. In an energy futurebased on these energy carriers,electricity could be producedfrom renewableenergy sources such as PV, wind, and hydroelectricpower, or from hydrogen or DME in some applications. The hydrogenfor urbanuse might well be producedin large city-gate plants that produce electricity as a co-product. Such plants would use as feedstock a variety of carbonaceousmaterials-natural gas, coal, heavy oils, and municipal solid waste. Hydrogenwould be deliveredto refueling stationsfor hydrogen fuel-cell vehicles and to buildings where it would be used both in fuel cells for combinedheat and power (CHP) as well as for cooking and supplementalheating. The CO2byproductof hydrogenproductionwould be transported pipeline to geologiby cal disposal sites such as deep saline formationslocated up to km severalhundred fromhydrogen/electricity production plants. The DME for ruralapplicationswould probablybe produced from biomass feedstocks (perhapsfrom crop residues) as a coproductwith electricityin relatively small-scale plants (perhaps 10 megawattsof electricityplus 60 tonnes per day of DME) located near where the biomass is grown. Manufactureof these modernenergy carriersfrom crop residueswould createthe opportunityfor even the pooresthouseholdsto affordthe clean energy producedwith income they might earn gatheringresidues from the fields of rich farmersand delivering them to energy conversioncenters. This vision for the long term is of course only one of many possible alternativefutures for energy systems at mid-century thatwould be characterized near-zeroemissionsandenhanced by energy supply security. It has been chosen for illustrativepurposes because, on the basis of preliminarycalculations, it appears that there are reasonablygood prospectsthat such clean/ secure energy systems could be evolved at attractivecosts comparedto conventionalenergy systems and thus "affordable." But would such systemsbe sustainable? the extentthatthey To rely on fossil fuels of course they would not be. Eventuallyboth economically recoverable fossil fuels and secure CO2 storage capacity will run out. It is not yet clear which limit will come first,but these physical constraints likely to be manifestonly are in the very distant future.But these fossil energy systems with their characteristics near zero emissions of air pollutantsand of greenhousegases, diversifiedprimaryenergyresourcebase, and affordabilitymight suffice for a centuryor two. Of course it might turn out that geological sequestrationof CO2at large scales is not viable because of some environmental and/orstorage securityproblemsthat are not currentlyforeseen. Undersuch conditionshydrogencould alternatively probe vided by electrolysisusing a renewableelectric source.But electrolytic hydrogenwould be much more costly-even underoptimistic assumptionsaboutlong-termcosts for renewableelectricity and advancesin electrolytictechnology. The detailed features of an energy future such as this one in which electricity, H2 and DME are the dominantenergy carriers can be describedin technologicalterms in some detail based on present knowledge. Substantialcost reductions for proven technologies would be needed via exploitationof scale economies, learning,and continuingmarginaltechnological improvements to realize such an energy future.Fundamental technologiAmbio Vol. 30 No. 6, Sept. 2001

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would of course be helpful but would not be cal breakthroughs necessaryto move toward.But getting therewill not be easy because fundamentalredesign and rebuildingof the entire energy the system are required.Perhapsmost important, process would have to be guided by public-sectorleaders who would both set the goals for a clean and secure energy futureand enact the facilitatingpolicies, andby private-sectorleaderswho would show the way and begin makingthe needed investments.

FUTUREDEMANDS TO GETTING A SUSTAINABLE ACTIONNOW
Many might think that putting in place an energy system like the one described above by the middle of this century should be the responsibilityof the next generation.But that is not so. If we as a humansociety decide to pursuesuch a futureor something similarwe have to begin to shift to such a coursevery soon, because of the slow rate of turnoverof the capital stock for the energy system. Long lead times for new technology dictatethat intensive energy innovative activity is needed today in orderto establisha portfolioof new energytechnology optionsto choose from over the longerterm.Effectively addressingsuch long-term technological challenges will require major new public policy initiatives. New public policy initiatives are also needed to encouragewider deploymentof many commerciallyavailableclean and efficient energy technologies,with which much can be done in meeting sustainabledevelopmentobjectives. Whateveris done to promoteenergy strategiesand technologies for sustainabledevelopmentmust be carriedout in the context of the evolving structureof the energy industryworldwide, which, in short,has involved a diminishingrole for government in supplyingand distributingenergy. In the industrialized countries this has been driven largely by technological changes that underminesome of the naturalmonopoly featuresof the energy system and is leadingto restructuring aimedat encouraging more competition in energy markets-most notably advances that make smaller-scale systems for energy conversion more economically attractive.In developing countries energy sector retoward corporatization privatization,in some inor structuring stances with elements of competitionas well, are takingplacemainly as a responseto inefficiencies and otherdifficulties with publicly run energy companies, althoughthe technological advances thatare drivingchangein industrialized countriesare also relevant. Some might view this diminished role for governmentsas a threatto the protectionof public goods-especially in the face of the dauntingrequirements makingthe energy system susfor tainable.However, ongoing structural changes in the energy sector also present an opportunityfor a new role for government. Indeed, implementing regulatory and tax measures to protect societal objectives and ensure fair competition may be a more and appropriate effective role for government. In the process of economic liberalization, corporations creare ated that act under the provisions of the legal, economic and regulatorysystems of the country.Changes in these framework conditionsoften demandreadjustments, with associatedcosts and changes in competitiveness, and are therefore often resisted. However, once a new frameworkis introducedto replace a monopoly situation,the process of change has alreadybegun. This transitionalperiod, while the rules are in flux, may present a timely opening in which to introduceand negotiate provisions that addresssocial and environmentalconcerns.Because of ongoing marketreforms,many countriesare now in a position to take advantageof this window of opportunity. One of the most obvious places to begin the process of redirecting the course of energy, in a world whose economic functioning is dictatedby markets,is by making sure that the power of the market in efficiently allocating resources is working toAmbio Vol. 30 No. 6, Sept. 2001

wardthe efficient realizationof societal aims. In the energy sector, economic efficiency is hamperedby a lack of competition and huge price distortions.Its functioningwould be enormously improved by promoting competition, removing subsidies, and internalizingexternalities. The emergent new energy industry should be reregulatedin ways that are consistent with this new, more efficient, more competitive marketstructure,to compensate for free marketshortcomingsin addressingsustainabledevelopment objectives. Promotingcompetitionto keep energyprices in check is complicated in the power sector by the high cost of electricity storage options, which dictates that most electricity must be consumedas soon as it is generated,so thatreformspromotingcompetition must be shaped to ensure that reliable electricity supplies are adequateto meet demand. Such considerationshighlight the importanceof coupling measurespromotingcompetition to integrated resourceplanningactivitiesthatestablishgoals for capacity expansion and electricity supply reliability that would be met competitively. Energy subsidies work at cross-purposesto the aims of sustainable development, representingpublic costs at the global level of the orderof USD 100-200 billion per year-not including those in the transport sector.Since these support conventional technologies, they create a huge hurdle for new technologies, especially energy efficiency improvementsand renewables, to overcome. However, as discussed above, an importantexception to the general rule of removing subsidies is where the subsidy would be used to ensure that basic needs of the poorest and most vulnerable groups are met and provided in the context of broader programsdesigned to help such groups break out of a cycle of poverty. One possibility is "lifeline rates"for such groups, that is, the provisionof small amounts(in the case of electricity,perhaps 50 kilowatt hours per household per month at little or no cost). Because the goal should be to satisfy basic needs at the least cost, a key part any scheme should be a one-time subsidy to assist in the purchase of energy-efficient capital equipment (e.g. compact fluorescentlight bulbs, LPG stoves). Where such subsidiesare well-targeted, well-designed(to encourageuse, and but not inefficiency), the resultingbenefits-including access to the outside world throughradio and television, light for reading and studying, time savings, health benefits and so on-far outweigh the costs. A second distortionoccurs because externalitiesare often not reflected in prices; although many Europeancountries, in particular,have made considerableprogressin this. In the absence of governmentintervention,marketsfail to accountfor environmental and other societal costs associated with energy production and use. Finding ways to accuratelyfigure these negative externalitiesinto the energy pricing equation is difficult, however, partiallybecause there is no consensus on how to measuretheircosts in monetary terms.Nevertheless,the best estimates available of these "external" costs are that they can be substantial-in some cases comparableto, or in excess of, the direct privatecosts of the energy provided.Variousapproachescan be taken to integrateexternalitiesinto prices at the national level. One widely practicedapproachis to regulateharmfulemissions of energy systems to air, water, and solid waste streams.An alternativeapproachis to tax emissions. A carbontax provides a simple and consistentmethod for internalizingthe cost of mitigating climate change. A mix of carbon taxes and other pollution-impact-weightedenergy taxes could addressa wide range of environmental impactsassociatedwith energyproductionand use; all or most of the revenues so generatedshould be used to offset revenues from conventional taxes that are regressive or otherwise unfair. Correctpricing signals can have a profound impacton measuresto make renewableand advancednear-zeroemitting fossil energy systems more competitive and to over335

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technologies, demonstration projects and decades of market growthare typically requiredbefore new technologies can command majormarketshares. Demonstrationprojects are generally costly, risky and difficult to finance, so thatgovernmentsupportis crucialat this stage of the energy innovationprocess. One way of limiting risks and enhancingprospectsthatdemonstration be followed by comwill mercializationis to insist on major roles for the private sector. Some of the most successful demonstrationprojects have been those where the government role has been to set performance and cost goals and to have only limited financial involvement, e.g. providing only a fraction of the needed capital investment or providing instead a price guaranteefor the energy produced in the demonstration project, while the private sector has taken responsibility to decide how to meet the goals and has shouldered a substantialshareof the financialrisk. Even after successful demonstration,incentives will often be neededto bringclean energytechnologiesto the point wherethey can compete with conventional energy. Radically new energy technologiesoffering significantpotentialin meeting sustainable development objectives are almost invariably initially more costly thanthe conventionalenergytechnologiesthey would displace. But economies of scale in production,learning,and competition can all help drive the costs of new technologies down. Typically,manufactured goods show cost declines of about20% for each cumulativedoublingof production.Subsidies for "buying down costs" of such technologies to marketclearing levels (Fig. 3) are warranted should be craftedto be both effective but and efficient. Mandatedmarketshare measuresthat use market competition to select among qualifying technologies those that warrant subsidy offer promise in these respects. The UK's RenewablesNon Fossil Fuel Obligationthat was in place in the 1990s and the Renewal Portfolio Standard(known as the Green Certificate Market in Europe) being tried in several countries aroundthe world are examples of such initiatives that encourage cost buy-downsby stipulatingthat a specified amountof renewable energy or percentageof renewables in the energy mix is provided by energy suppliers.Experience with the Non-Fossil Fuel Obligationillustratesboth the efficacy and the economic efficiency of this approach:between 1991 and 1998, the average contractprice for renewables purchasedin a series of auctions declined nearly threefold, yet the cost of buy down, paid for via a levy on fossil fuel power supplierswas never burdensome, resultingin a retailconsumerrateincrease of no more than 1%in any year. Figure 3. Learning curve and buy-down cost for an advanced energy technology. The If developing countries are to meet their enincremental cost for buying down the cost of the advanced technology relative to the ergy needs, they will also need more human conventional technology is shown, as the advanced technology moves along its learning curve. The area between the curves indicates the total cost for buying down capital and strongerinstitutions.Technological, the cost of the advanced technology to the level at which the advanced technology is and entrepreneurial, managerialcapabilitiesare competitive with the conventional technology. The point where costs for advanced all criticalfor successful technology transferand and conventional technologies are equal does not necessarily represent the asymptotic (long-term) market price for the advanced technology. innovation. Such capacity building in developing countries is a sine qua non condition for technological leapfrogging.Yet, capacitybuildLearning curve for advanced technology ing in developing countries is often given low priorityeven by organizationsthat are supposed Area undercurve is total cost to be committed to this challenge. Capacity of Buy-downrequiredto building is a slow, time-consumingprocess, and commercialize advanced programexecutives in a hurryfor profits do not emphasizethe task. However,withoutstrongprivate-sectoractorsand marketsas well as sustainable energy programsand agencies, sustainable energy initiatives in developing countries are Conventional technology likely to be ad hoc, limited in scope, and insufficient to overcome the full set of barriersinhibIncrementalcost for advancedtechnology iting large-scale implementation. Strong government-privatesector collaboration has been a key feature of many successful number of units produced (cumulative) market development programs.This means in336
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come some of the obstacles standingin the way of energy efficiency improvements. Unfortunatelyfor the many strongcandidatetechnologies for meeting sustainable developmentobjectivesthatarealreadycosteffective, "getting the energy prices right" is not sufficient to ensurewidespreaddeployment.It is now widely recognizedthat many cost-effective energy efficiency improvements are not readily implementedby marketforces alone, because of a range of institutionalbarriers-barriersthat are faced by many renewable and distributed energy systems as well. Barriers includelack of informationabout costs and benefits, high implicit consumer discount rates (potentialbenefits tend to be strongly discounted by individualswho have to invest time and money up front in orderto realize long-termsavings), inadequatefinancingopportunities, split responsibilities between those who make investments and those who pay operatingcosts, and high transaction costs because of a lack of marketaggregationin the delivery of services provided, among others. Such problems call for government intervention. The needed programs can take various forms, includinginformationprograms,regulations(e.g. energy efficiency standards),tax incentives, subsidized loans or guaranteedprices, governmentprocurementand competitivemarket transformation initiatives. To the extent that governmentintervention involves subsidies, the supportshould be temporary and partof a broaderinitiativeaimed at eliminatingthe targetedbarrier. "Green"pricing, whereby customers can choose to pay higher prices for environmentallyfriendly energy, is a marketbased mechanism for helping overcome barriersto such technologies. Another crucial area for public policy and investment is in helping to develop and launch some of the advancedtechnologies discussed above. Because the private firm cannot fully appropriatethe benefits of R&D investmentsand the existence of environmentaland other negative externalities,it is widely recognized that governmenthas a major obligation to supportresearchand development(R&D)-and the need for such support is especially great for energy R&D. What is not widely recognized is that governmentalso has major obligations to encourage demonstration projectsand early deploymentof energytechnologies that offer promise in addressing sustainabledevelopment objectives, because the marketalone will typically not be able to overcomethe higherinitial costs of new energytechnologies. Even after R&D has shown the viability of promisingnew

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volving the private sector in programdesign as well as implementation.Successful nationalenergy efficiency and renewable energy centers and programs are already operating in Brazil, China, India, and EasternEurope. These centers and programs work with the privatesector, utilities, and other entities to introduce and provide supportfor a variety of energy efficiency and renewableenergy measures.

CONCLUSIONS
A tremendouschallenge for human society is to move beyond the tangible pressuresexperienced today and to manage global resourceswith futuregenerationsin mind. Taking such actions, interests,will requirea parain the face of competing short-term digm shift. For this shift to occur, the sustainabilitydebatemust move to center stage and be accompaniedby greatly raised levels of public awareness, informationand commitment.Continued dialogue and consensus building within the international community,between the public and private sectors, and within society at large is needed to advance sustainableenergy policies at the national,regionaland global levels. A goal-oriented,stratto egy-basedpolicy drivenapproach energy in the new paradigm implies thatthe futureis a matterof choice ratherthanbusinessas-usual destiny. In this sense, we continue to be the optimists we were when Energyfor a Sustainable Worldwas first written-harbingers of hope ratherthan prophetsof doom.

Further Reading * Johansson,T.B., Kelly, H., Reddy, A.K.N. and Williams, R.H. 1993. Renewable Energy-Sources for Fuel and Electricity.IslandPress,Washington,DC. 1160 pp. * Johansson, T.B., Bodlund, B. and Williams, R.H. (eds). 1989. Electricity: Efficient End-Use and New Generation Technologies, and their Planning Implications.Lund University Press. Lund, Sweden. 960 pp. * Nakicenovic, N., Griibler,A. and MacDonald,A. 1998. Global Energy Perspectives. CambridgeUniversity Press, Cambridge,UK. 299 pp. * PCAST Panel on InternationalCooperationin ERD. 1999: Powerful Partnerships: the Federal Energy Research & Developmentfor the Challenges Cooperationin Enof the 21st Century.Reportof the Panel on International ergy Research, Development, Demonstration,and Deployment of the President's Committeeof Advisors on Science and Technology, Office of Science and Technology, the White House, Washington,DC, June 1999. This report is availableon the World-WideWeb at http://www.whitehouse.gov/WH/EOP/ OSTP/html/ISTP_Home.html. * Reddy, A.K.N., Williams, R.K. and Johansson,T.B. 1997. EnergyAfterRio: Prospects and Challenges. United Nations Development Programme,New York,.176 pp. * United Nations Development Programme,United Nations Departmentfor Economic and Social Affairs, World Energy Council. 2000. WorldEnergy Assessment:Energy and the Challenge of Sustainability.UNDP, New York. 508 pp. * World Energy Council. 2000. Energyfor Tomorrow'sWorld-Acting Now! Atalink ProjectsLtd. London.

References and Notes

Prof. Jose Goldemberg Instituto de Eletrotecnica e Energia Universidade de Sao Paulo Av. Prof. Almeida Prado, 925 Cidade Universitaria 05508-900 Sao Paulo - SP Brazil E-mail: goldemb@iee.usp.br Prof. Thomas B. Johansson Bureau for Development Policy United Nations Development Programme 304 East 45th Str., Room 9100 New York, NY, 10017 USA E-mail: thomas.johansson@undp.org

Prof. Amulya K.N. Reddy International. Energy Initiative (IEI) 25/5 Borebank Road Benson Town Bangalore 560 046 India E-mail: ieiblr@bgl.vsnl.net.in Dr. Robert H. Williams Center for Energy and Environmental Studies Princeton University Engineering Quadrangle Princeton, N.J. 08544 USA E-mail: rwilliam@arundel.princeton.edu

1. Haefele, W. (project leader). 1981. Energy in a Finite World:A Global Systems Analysis. Report by the EnInstitutefor Apergy SystemsGroupof the Intemational plied Systems Analysis. Ballinger,Cambridge.837 pp. 2. Goldemberg, J., Johansson, T.B., Reddy, A.K.N. and Williams, R.H. 1987. Energyfor a Sustainable World, World Resources Institute,Washington,DC. 119 pp. 3. Goldemberg, J., Johansson, T.B., Reddy, A.K.N. and Williams, R.H. 1988. Energyfor a Sustainable World, Wiley Eastem Limited,New Delhi. 517 pp. 4. LPG in Brazil-54 Yearsof History. Published for the IV World LPG Conference,November 6-8, 1991. Rio de Janeiro,Brazil. 5. DATAGROLPG in South America,DATAGRO(Cana de Asucar e Alcool), Bimonthly Bulletin published by DATAGRO PUBLICACOES LTDA, Plinio Nastari, EditorApril 2001 (for ethanolprice paid to producers). 6. Based on the OPEC Monthly Oil Market Report, and Platt's Oilgram Price Report, published in the OPEC Bulletin (for Rotterdamregulargasoline price). 7. WorldResourcesInstitute,1999. Privatecommunication from A. Sevilla. 8. World Bank. 1999. WorldDevelopmentIndicators. 9. UNDP. 2000. WorldEnergy Assessment. UNDP, New York. Chapter10.

Volvo EnvironmentPrize
Why Reward Environmental Efforts?
The threatsposed by pollutionof the biosphereand the loss of its resources are today evident, and all humanactivity has an impacton the environment. The landscapeis changed, the quality of air and water deteriorates,and effluents and noise increase.Over the past few decades, consensus has spread across the social, industrialand political spectrumabout the urgentneed to show greaterrespect and care for the Earth'secosystems and their management. As a consequence,every industrialenterprisesuch as Volvo has evident responsibilitiesto reduce the impact its productsand processes have on the environment.This must be done continuously and consistently making full use of new knowledge and technology. In 1972, at the first United Nations Conferenceon the Environment, held in Stockholm, Volvo demonstratedits awareness of the issues at stake by initiating its own environmentalprogramconcerning cars. Volvo fully believes it has a responsibilityto ensure that its vehicles function effectively perspective (Volvo 1972, The Car in the Environfrom a pro-environment ment). protectiondemandsthatwe reflect upon the The realityof environmental entire life cycle of a productfrom conceptionto design, production,use and, finally, its recycling or disposal. It is only by taking such a global view of the problems that we will be able to solve them effectively. Deep and current knowledge is essential to be able to decide the right priorities in the environmentalfield. The new results that research is presenting are therefore a necessity for both industryand society in general. In institutingan annualenvironmentprize Volvo wanted to attractattention to extraordinary researchefforts and to encouragescientistswhose work and discoveries are of decisive importancefor our future. The creation of the VolvoEnvironmentPrize is an expression of Volvo's awarenessof the interdependenceof all actions, inventions and processes that sustain and base on which we all stand. protectthe environmental

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