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SolutionS

to 2050

Part ii: solutions to 2050

contents

2 3 4 6 8 10 11 12 13 15 16 17 19

Preface

introduction
From the Economist Intelligence Unit

energy solutions to 2050 by the numbers


Findings from a worldwide EIU survey on energy solutions

overcoming the energy trilemma


Joan MacNaughton, World Energy Council

new behaviours
Alex Laskey, Opower

how can we use energy more efficiently?


Gregory Kats, Capital E

what role for biofuels?


Allan Kardec Duailibe, Brazilian National Agency of Oil, Natural Gas and Biofuels

why economic growth is the new Priority for energy


Reg Platt, Institute for Public Policy Research

new Policies for new energy demands


John Norris, Federal Energy Regulatory Commission

the future of fossils


Wim Thomas, Royal Dutch Shell

the case for Power storage


Tim Weiss and Ed Whittingham, Pembina Institute

the nuclear oPtion


Jos Goldemberg, University of So Paulo

aPPendix
Survey results

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the global energy conversation

Preface
this report, edited by the economist intelligence unit and supported by shell, follows an event held in november 2011 that brought together energy experts based in london, washington and so Paulo for a live global conversation on the future of energy. It invites the same group of experts who participated in the debate to explain their views on the most challenging questions that came up during their discussion, and it also highlights some of the best contributions made in the online debate that surrounded their conversation. We would like to thank all of those who participated in the research. If you would like to view the event, you can access it online by registering at http://live.economistconferences.co.uk

energy solutions to 2050 by the numbers


To support the event, the Economist Intelligence Unit conducted a survey of 790 people around the world. The survey was carried out between September and October 2011 and respondents were drawn from the Americas (41%), Europe (20%), the Middle East and Africa (20%) and Asia-Pacific (19%).

Panelist Quotes
Where points made by panelists during the event are relevant to articles written for the follow-up report, these are noted in the text.

Panelist articles
A selection of the experts who participated in this debate have written articles for the follow-up report. These articles are highlighted by a green bar in the text.

online contributions
More than 1,600 people registered to watch the event live online and more than 400 contributions were received via the events live feed. Where online contributions are particularly relevant to the topic being addressed in an article, these are noted in the text.

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Part ii: solutions to 2050

introduction
the world faces two major energy challenges over the next 40 years. the first is to meet rapidly rising demand for energy, particularly in developing countries, by dramatically increasing supply. the second is to realise this goal while also achieving substantial reductions in carbon emissions. failure to meet the first objective will constrain economic growth. failure to meet the second will exacerbate climate change. Research carried out for this report underlines how difficult it will be to achieve these two objectives. The latest figures show that nearly 90% of global energy comes from fossil fuels and that renewables (including hydro, solar, wind and others) still only account for a combined 8% of the total. The clear problem with this is that, while it might be possible to meet the worlds longterm energy supply challenge with this kind of energy mix, large-scale emissions reductions will not be achievable with such heavy use of fossil fuels. To achieve both of its energy objectives, therefore, the world needs to switch to low-carbon sources of energy. According to an Economist Intelligence Unit poll of 790 business executives, however, that will be a slow process. Nearly two-thirds of respondents (65%) stated that they believe fossil fuels will still be the worlds primary energy source in 2030. If true, that will be a major source of concern for those wishing to prevent or at least limit the extent of dangerous climate change because it will see emissions continue to rise over the next couple of decades. Against this difficult backdrop, the experts contributing to this report have been set the task of articulating their energy solutions to 2050. For the World Energy Councils Joan MacNaughton (p. 6) the answer lies in a combination of innovation, partnership working between the public and private sectors and robust monitoring of impacts so that practitioners have more reliable evidence on what works and what pitfalls to avoid. Alex Laskey (p. 8), president of Opower, a US firm which helps utility companies engage with their consumers to manage energy use, highlights how much energy is wasted by users and argues for the adoption of information tools that can support behaviour change and improve energy efficiency. Gregory Kats (p. 10) a clean energy advisor and investor, agrees with the need to boost energy efficiency, suggesting that it is the largest, most cost-effective way we have of meeting energy needs and reducing carbon emissions. Moving on to other possible solutions, Allan Kardec Duailibe (p.11), Director of the Brazilian National Agency of Oil, Natural Gas and Biofuels, explains how Brazil has become a world leader in biofuels. Wim Thomas (p.15), Shells Chief Energy Advisor, argues that fossil fuels will remain a key part of the energy mix and makes the point that states can reduce emissions by switching from coal to gas and investing in carbon capture and storage. Jos Goldemberg (p.17), Brazils former secretary of state for science and technology, argues that the expected revitalisation of nuclear energy over the next few decades is now unlikely to happen in the wake of the Fukushima disaster in Japan last year and rising concerns about both the safety and cost of nuclear energy. Meanwhile, Tim Weiss and Ed Whittingham (p.16) of the Pembina Institute, a Canadian think-tank, suggest that power storage is a key technological innovation that requires development and deployment to allow renewable energy to become the backbone of energy systems. On policy, Reg Platt (p.12), research fellow at the Institute for Public Policy Research, a British think-tank, argues that governments should start making low carbon energy investments on the basis of the growth and jobs potential that these investments offer, not merely on account of which is cheapest. Finally, John Norris (p.13), Commissioner at the Federal Energy Regulatory Commission in the US, explains that one of the biggest roles for government is to regulate energy markets more effectively by taking action to eliminate unnecessary barriers and level the playing field for participation by different players and technologies in the market. As Joan McNaughton rightly points out in her article, there is no silver bullet for dealing with the worlds energy challenges, so on its own none of these individual ideas would be capable of meeting the worlds need for both more energy and reduced emissions. If states are to deliver on the demands being placed on them, therefore, an intelligent and pragmatic mixture of policies and investments will be required. This report helps decision-makers and other interested parties understand more about what this policy mix might look like.

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Part ii: solutions to 2050

ENERGy SOLUTIONS TO 2050 By THE NUmBERS


TECHNOLOGIES AND RESOURCES
Which energy sources will allow us to increase supply and reduce carbon emissions between 2031 and 2050?
100 75 50 25 0 Solar Wind Nuclear Gas

POLICIES

68% 44% 35% 14% 2.5% 2.4%

OIL

34%

NUCLEAR

While

of people
RENEwABLES

of people
are very concerned about the problem

Oil

Coal

1%

think the worlds governments are committed to dealing with climate change

5% 5%

7% 7%

HyDRO

think democracy stands in the way of climate change

100

% 30 % 30

think fossil fuels will be the worlds primary energy source in 2030

4%

think that will still be the case in 2050

COAL

75
NATURAL GAS

50 25

Source: BP Statistical Review 2011. Due to rounding, the figures in this chart do not sum to 100%.

BEHAVIOURS
carbon
international air travel increased by
100 75 50
between 1990 and 2009

emissions

over the same period

Who should taKe the most resPonsibility For dealing With climate change?
would support reforms combating climate change if the changes had no effect on their real income

increased

NATION STATES: 41%

THE UNITED NATIONS: 20% would agree that if these led to a decline in their real income of more than 5% INDIVIDUALS: 17% BUSINESSES: 13% OTHER/DONT kNOw: 9%

25 0 1990

2009

Source: World Bank.

Source: World Bank.

Unless otherwise indicated, infographics depict the results of a survey of 790 people conducted by the Economist Intelligence Unit in September 2011.

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overcoming the energy trilemma


Joan macnaughton, executive chair of the 2011 energy Policies assessment report from the world energy council, reviews the options for driving low carbon growth.

Until growth in energy demand can be uncoupled from economic growth, we will continue to see global energy demand rising, especially in emerging and developing countries. In the latter, a key priority will be expanding access to electricity for the 1.3bn who lack access today. As the outcome of the 17th Conference of the Parties (COP17) to the UN Framework Convention on Climate Change in Durban has shown, there remains broad commitment to global emissions reductions and indeed, 2012 has been declared the Year of Sustainable Energy for All. The challenges are numerous. Energy must be accessible and affordable, contribute to the well-being of people and the environment, and enhance economic growth now and for the future. Policymakers must accommodate these multiple requirements while reducing the carbon intensity of energy and addressing this trilemma of energy sustainability. There is no silver bullet of policy that addresses all needs simultaneously though carbon pricing is probably the most important single measure and more national or regional moves

to encourage low carbon investment by valuing carbon are needed. This article addresses four key drivers of low carbon growth, applicable in both developed and developing countries. getting the policy framework right Governments set the frameworks that enable markets to deliver and they also plan strategically for national or regional infrastructure needed to deliver it, and thereby keep costs lower than they would otherwise have been. It is important for governments to bear in mind that their intervention may create uncertainty and unintended consequencesstable, longterm, transparent policymaking can help to reduce this risk. As highlighted in the 2011 Assessment by the World Energy Council (WEC) of country energy and climate policies, policy must be evidence-based and rooted in robust, independent analysis of the objectives of the policy intervention and the context in which it is made. Transparency is vital to help business and consumers to understand the trade-offs that may be involved in adopting specific policies and their broader implications. This should also imply high standards of consultation and public engagement. This is to ensure that draft policies are subjected to rigorous and broad-based assessment, as well as giving those who will be affected by them enough notice to prepare themselves to adapt and comply. Above all, implementation of the policy must be monitored to ensure that it is delivering as intended, including ensuring consistency across policy dossiers. Here it is vital that governments are able to balance the need to provide markets with long-term policy stability against the

we shouldnt bet all our chips on one source of energy because we dont know which one will be the most effective going forward. in the uK, were investing in a diverse energy supply but im concerned that there has been a drop in the funding of carbon capture and storage.
Reg Platt Research Fellow IPPR

necessary flexibility to adapt and change policies that may be failing. UN mechanisms - such as Nationally Appropriate Mitigation Activities , the Technology Mechanism and the Green Climate Fund, among others will play vital roles in assisting developing countries to adopt the cleanest technologies and where possible to leap-frog to lower-tech solutions. the importance of supporting innovation Policy needs to be tailored to support the whole innovation chain, from education in mathematics, science and engineering in schools to the competitive environment for businesses. This includes supporting invention through funding support for basic research in universities and the encouragement of international collaboration; supporting collaborative research by encouraging links between research organisations and the private sector to take inventions out of the lab and turn them into products and services; and supporting competition through protection of Intellectual Property Rights

gas is the dominant direction right now because of lower prices and the emerging shale gas industry, but in the long term were going to see more intermittent resources and a need for intelligent grid.
John Norris Commissioner Federal Energy Regulatory Commission

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(IPR), and through putting in place the right regulatory frameworks to drive product development and lower costs. IPR is important because it enables companies to place a value on innovation. This is critical not just for companies, but for emerging and developing economies, as they build knowledge-driven, high value-added economies and industries. It is also critical to achieving climate change and energy security goals, which cannot be accomplished without massive private-sector engagement and continuing innovation. For example, the WEC policy assessment report highlighted the role of energy efficiency programmes, including labelling schemes such as the US Energy Star programme. This voluntary labelling scheme for household products and commercial building equipment is widely considered to be a success. Not only does it deliver substantial energy savings and emissions reductions, but it is also a considerable driving force behind important technological innovations, such as efficient fluorescent lighting, power management systems for office equipment, and low standby energy use. enabling transformational technologies Innovation can help us deliver both lower emissions and broader access, specifically via two transformational technologies: carbon capture and storage (CCS) and smart grid technology. The World Energy Outlook 2011 of the International Energy Agency (IEA) places heavy reliance on CCS, which it estimates could deliver 18% of the emissions savings needed to stay within the 450ppm atmospheric limit. The IEAs CCS Roadmap projects that 3,400 CCS plants will be needed globally by 2050 and expects that, by that time, developing countries will account for 64% of all captured carbon dioxide emissions. If these nations are not encouraged and assisted to adopt the cleanest technologies at this crucial stage of their development, they will lock-in sources of carbon dioxide emissions for

any new energy technology needs a few years, sometimes decades, before it can take off and reach a substantial market share.
Wim Thomas Chief Energy Advisor Royal Dutch Shell

decades to come. To avoid this requires developing supportive policy frameworks and providing capital funding support as well as ongoing support through feed-in tariffs or similar measures. Good energy policy should also enhance and increase mechanisms that incentivise energy efficiency in the power generation, transmission, and distribution context. In particular, regulators should consider the substantial capabilities of smartgrid technologies for achieving these objectives. Smart grids help to manage electricity supply reliably and efficiently. Without them we will neither be able to maximise the use of renewable power nor achieve effective demand management. Smart grids can also support action to reduce CO2 emissions. They help to manage intermittency and can facilitate connection in remote areas and for smaller generation sources. Through their enhanced data and information flows to end-users and network operators, they also offer greater flexibility in balancing electricity demand and supply maximising efficiency in dispatching generation, and minimising network losses. When applied together with smart generation, electricity interconnectors, back-up capacity, storage options and demand-side response, smart grids can open up new possibilities in managing power supply and demand.

As we discuss the world in 2050, it is important to remember where we will see the biggest population and demographic changes. Policies must therefore be designed with the appropriate degrees of flexibility taking into consideration some insights about population, water, and other resources that are required to secure universal access to energy.
Lawrence Jones, Alstom Grid Inc, UNITED STATES

imperative to engage business These solutions will only be delivered through unprecedented levels of public-private partnership, based on clear commitments, transparent policies, agreed outcomes and, crucially, efficient and effective deployment of financial resources. This means engaging business in the policy discussion to gather feedback and benchmark against global policy best practice. It also means collaborating to deliver, using public-private partnerships (PPPs) to attract private investment in major public infrastructure projects. PPPs offer the benefits of flexibility in securing diverse sources of up-front finance and funding, and help mitigate risk through sharing it between those partners best able to bear it. PPPs help most where projects are hard to finance on purely commercial terms, for example where technology is deployed for the first time in a country (especially where it can support capacity building), or where a government faces the challenge of simultaneously developing infrastructure, policy frameworks and supply chains. The important thing is that governments should be active participants, cofunding projects, ensuring that they are aligned with national development priorities and implementation plans and encouraging early dialogue with privatesector partners.

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As mentioned earlier, there are no single silver bullet instruments. But there are opportunities to learn from best practice policy. In order to do so, we need more rigorous evaluations of energy-policy instruments to bring to light more reliable evidence on what works and what pitfalls to avoid. It is necessary to translate global findings about successful policy instruments into local arrangements and settings that work. This translation works best as a

dialogue between international energypolicy experts, industry executives, and stakeholders and policymakers from relevant jurisdictions. The 2012 WEC Assessment of countries energy and climate policies will aim to contribute further to the better understanding of what constitutes successful policy and to deepen the policy dialogue between business and policymakers.

author biograPhy Joan MacNaughton is Executive Chair of the 2011 Energy Policies Assessment Report from the World Energy Council. She is an influential figure in the energy and climate policy debate and holds a variety of UK, EU and international roles.

new behaviours
behaviour change is an immediate and cost-effective solution to inefficient energy use, argues alex laskey, president of opower.

Most people spend less time thinking about their energy use every year than it will take you to read this article about six minutes for an average consumer in the industrialised world.1 Those six minutes largely go towards checking and paying utility bills. As a result, consumers are completely in the dark about their inefficient energy use, leading to massive amounts being wasted every year. According to a recent McKinsey and Company study, this waste amounts to an estimated 260bn (or US$400bn) a year globally, which equates to enough energy to power more than 330m homes. McKinsey also estimated that the US alone could reduce energy consumption by 23% and save families and businesses more than 130bn (or US$260bn) on their energy bills in the next ten years through increased energy efficiency.2 There is an immediate, cost-effective solution to this wastefulness: behaviour change. It can not only have a drastic impact on our environment, but can also accelerate the adoption of other impactful energy improvements such as deriving more power from renewable resources or making structural changes to peoples homes. Still, behaviour

change is often overlooked for several reasons. Energy is relatively inexpensive. In the US, only 1.7% of an average household income is spent on energy bills. Most consumers arent motivated to make changes to save enough for an extra fast-food meal once a month. Even in the environmentally progressive US cities of Berkeley, California and Boulder, Colorado, a recent study found that only 0.18% and 0.64% of the population, respectively, participated in available energy efficiency programmes.3 Energy data generally arent interesting. Research shows that 90% of people say saving energy is important to them4, yet its a subject that most people spend very little time thinking about. Presenting an overwhelming amount of numbers and charts on energy usage wont inspire change. Energy is confusing and ambiguous. Most average consumers dont know what a kilowatt hour (or therm) is, such that when they receive their bill, they dont have the context to determine whether using 200 kwh per month is a high or low amount.

There are a lot of misconceptions about using energy. For example, research also shows that 81% of people leave their heating or cooling system running when they arent at home. They believe it takes more energy to turn the systems off and power them on again than it does to leave the systems running for an extended period of time, which simply isnt true for most households. Similarly, 48% leave their lights on, thinking that the same phenomenon applies there as well.5 So the question is, how do we get consumers to think more about their energy usage and motivate them to make changes in their everyday lives? In 2005 the world-renowned behavioural economist Dr Robert Cialdini, who is also the author of Influence, set out to answer this question. Dr Cialdini and his students at San Diego State University ran field tests during a hot summer in California, going door to door and putting notices on households door handles. The households received notices with one of four different messages printed on them. One group of homes received a notice that said: Turn off your AC [air conditioning system] and turn on a fan

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you can save money. Another group of homes received a notice that said: Turn off your AC and turn on a fan you can save the environment. The third group of homes received a notice that said: Turn off your AC and turn on a fan its your civic duty. After three weeks, Dr Cialdini and his team analysed the homes energy consumption and found there was zero impact on any of the three groups consumption from receiving these notices. However, there was a fourth group. Their notice said: 4 in 10 of your neighbours turned off their AC and turned on a fan. Homes that received this message used on average 6% less electricity than the control group. This discovery of the impact of social norms was a catalyst for the creation of Opower. Since then, our work now with more than 60 utilities, including nine of the ten largest in the US, and 10m homes across the country and in the UK has led us to have a much deeper understanding of the mechanisms needed to harness the power of behaviour change to have a profound impact on energy usage, and therefore, the environment. As Dr Cialdinis study identified, normative comparisons (like the fourth example above) work well, as do other tools such as goal setting, usage ranking, and historical usage comparisons that tap into humans innate competitive nature. But it is the insights and actionable recommendations not just the data that must be presented. While this is a relatively new concept in the utility industry, the general concept is not completely foreign. Personal finance tools like Mint.com provide users with reports on their spending and investments that are beyond the numbers. The service has evolved into personalised insights and recommendations on services and steps that people can take to save money.

The issue of inefficient energy use is a critical one in developing countries, particularly where grid supplies are intermittent, unreliable and often very expensive. The answer requires a mixture of consumer behavioural change, improvement of the quality of grid supply and a more developed offgrid response, particularly for the poorest and most isolated consumers.
Neil Jeffery Renewable World UNITED KINGDOM

mobile service provider, utilities can now alert a customer if the home is on track for an irregularly high charge for that billing period and offer tips to avoid that outcome. Energy-related behaviour change is a complex challenge and a global problem that creates an opportunity to activate energy users of all ages, interests and demographics by delivering the right messages at the right time across all communication channels. Social media are a particularly interesting medium to harness the power of networking and stimulate a global dialogue about energy consumption. While people spend six minutes a year thinking about their energy use, they spend one in every six minutes online accessing social media to share, comment, and engage with others. If even seconds of that minute were spent on energyrelated topics, the impact would be tremendous. As the international community continues to grapple with sustainability, energy security and concerns over global warming, enabling and empowering consumers to make simple behavioural changes can result in a windfall of savings. The impact on the economy and the environment is truly exciting now, and for future generations to come.
1

At Opower, we have first-hand experience of the results this type of energy reporting can achieve. In the mid-western state of Minnesota, we work with ten regional utilities, and our home energy efficiency reports have saved individual customers more than 4m (or US$6m) on their energy bills and more than 110 gigawatts of electricity since 2009. Providing contextualised and actionable energy usage information stimulates behaviour change, but must be coupled with continuous engagement strategies. Similarly to how speed limit notices are strategically placed every few miles on the roadway, the best way to sustain changes in energy behaviour is to use regular and subtle feedback loops. The new smart metering technologies being deployed now allow utilities the opportunity to prompt action when it counts; not at the end of the billing cycle, but in real time. Like the low balance account notice you might receive from your bank or the over use alerts you might receive from your

Accenture. Engaging the New Energy Consumer. 2010 McKinsey & Company. Unlocking Energy Efficiency in the US Economy. July 2009 Bailey, Mark and Johnson, Claire B. Innovative Energy Efficiency Financing Approaches. 1 June 2009 Research conducted by Opower. Summer 2010 Research conducted by Opower. Summer 2010

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author biograPhy Alex Laskey is president of Opower and responsible for engaging utility and government partners with Opowers purpose and products. He was invited to the White House to meet with President Obama to discuss innovation and job creation in the green economy.

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how can we use energy more efficiently?


gregory Kats, President of capital e, answers questions about energy efficiency improvements and explains why countries should adopt deeper energy standards.

How big a role do you think energy efficiency can play in helping the world reduce carbon emissions and meet the growing demand for energy? Energy efficiency is the largest, most cost-effective way we have of meeting energy needs and reducing carbon emissions. It decarbonises the energy system in that it allows us to switch to lower energy intensity and reduce the amount of waste. The explosion in energy efficiency funded by venture capital, in green building, smart grid and renewables technologies means that we can cut energy use/CO2 by half costeffectively today in most buildings. Many questions have been raised about the cost-effectiveness and merit of investing in energy efficiency. Corporations, cities and states that have adopted energy-efficiency funding strategies have had a positive return from a cost-effectiveness and job-creation perspective. For example, Californias sustained energyefficiency strategy over the last three decades has allowed households to save US$56bn in energy over

1972-2006, thus reducing the states energy import dependence. Where are we making the most progress in being more efficient and which areas do we need to pay most attention to? The industry and owner-occupied buildings tend to be more energy efficient but we should be doing a lot more in terms of cogeneration and on-site generation to build energy-efficient buildings. We need to design our buildings better by harvesting daylight and reducing the artificial amount of lighting, through an integrated design approach. Energy efficiency provides building owners with the opportunity to lower operating costs, increase occupancy, enhance building quality and increase financial returns. The very rapid growth of green design standards that address health as well as energy and water are making green energy an important branding issue and a differentiation strategy for corporations, cities and universities. What are the obstacles to fully realising the benefits of energy efficiency? We need to be a lot more transparent on the cost of energy. An individual who rents space and doesnt pay the energy bill has no incentive in investing in energy efficiency. There are currently 15 to 20 American states that have no energy efficiency requirements, whereas we need to adopt standards for buildings and meter energy use more effectively. We are switching more to renewables and their limits in terms of reliability and availability can be offset by

what has been really neglected by policymakers is the supply side of energy efficiency in the commercial sector. you need mandatory standards to drive progress in this area.
Joan MacNaughton Executive Chair of the 2011 Energy Policies Assessment Report World Energy Council

intelligent building monitoring and management systems such as Tendril and Building IQ. Which measures, if any, should countries adopt to encourage energy efficiency? Countries should adopt deeper energyefficiency standards, both for new constructions and retrofits. Companies should harness the power of social media by going through social media contacts and sharing information about energy use. Banks should structure large energy-efficiency funding that enables large-scale funding. Increasing energy-efficiency financing represents one of the largest and most important opportunities not only to meet our energy needs and reduce carbon emissions, but also to expand economic growth and job creation. author biograPhy Gregory Kats is President of Capital E, a national clean energy advisory firm, and is also Venture Partner at Good Energies, a billion-dollar global clean energy investor, where he leads investments in energy efficiency and high performance buildings.

Demand-side management is key to increasing energy efficiency. Clear incentives and policy decisions towards higher effciency, will help bring about the convergence of introducing clean technologies and reducing waste. This is true in the residential as well as the commercial, services and transport sector, which will be the main areas of energy growth.
Mourad Belguedj, World Bank, UNITED STATES

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what role for biofuels?


biofuels have been a key component to diversify brazils energy mix, argues allan Kardec duailibe, director of the brazilian national agency of oil, natural gas and biofuels.
The world faces a double challenge of guaranteeing energy supply to its population and providing a clean and sustainable environment for generations to come. To reach these objectives, the worlds energy mix must be diversified. Countries such as Brazil have applied technology to biofuels to address this challenge. In the 1970s, after the first oil price shock, Brazil strategically invested not only in exploring oil in the deep sea water, but also in clean energies. After three decades, the pre-salt oil reservoirs turned the country into a major oil exporter. However, investments in hydraulic energy and biofuels have positioned Brazil as a reference in clean energy. In the biofuels area, sugarcane mills have been turned into bioenergy complexes, producing ethanol, sugar, electricity, carbon credits and, in some cases, biodiesel and green diesel fuel. How did Brazil reach this point? The answer is an agenda that combines economic, energy, social, environment and technology policies, along with regulatory transparency and political leadership. According to Empresa de Planejamento Energtico EPE (a statecontrolled enterprise that subsidises the planning of the energy sector), 43.9% of Brazilian domestic energy is generated from renewables, compared with the world and OECD average of respectively 14% and 6%. Currently, according to EPE, biomass-derived electrical energy accounts for 4.7% of electricity consumed in the country. In this context, an important innovation in Brazil was the flex fuel or dual fuel vehicle in 2003, which is capable of running on ethanol, gasoline or any mixture of the two fuels in any proportion. This innovation, which let the consumer rather than the state decide which type of fuel the car consumes, has boosted ethanol consumption in Brazil enough to balance the domestic consumption of gasoline and ethanol. In 2009 Brazilian vehicles consumed more ethanol than gasoline, and it is estimated that more than 50% of the entire automobile fleet in Brazil is made up of flex fuel vehicles. Two significant results of the development of the biofuel industry in Brazil must be emphasised. First, the significant reduction of the countrys dependency on foreign oil. Ethanol production has saved over US$60bn in the foreign trade balance, without considering the earnings from ethanol exports. Second, the decrease of greenhouse gas emissions (specifically CO2), since a great part of the carbon emitted when ethanol is burned is captured from the atmosphere during sugarcane photosynthesis. Biofuels (ethanol, biodiesel and biomass) have the competitive advantage of being produced in various regions in Brazil, meeting local needs and reducing transport and distribution costs. These strengths are key to a country of continental dimensions like Brazil. But although it is possible to grow sugarcane and oleaginous plants almost anywhere in Brazil, the Ecological Zoning Law approved by the National Congress prohibits agricultural and industry-related activities in protected areas such as forests and marshlands. Meeting the demand for ethanol by 2017 will require the use of only 2.56% of Brazils arable land. The investment in research and development of new technologies is another important issue for biofuel policies in Brazil, which include the

brazil turned to biofuels to reduce its dependence on oil but it will need to diversify its energy supply further to meet growing energy demand. the productivity of sugar cane is much higher than that of corn and wheat, and countries should encourage mandates to blend ethanol into gasoline. brazil lacks an adequate strategy to address structural factors that have reduced the competitiveness of ethanol.
Marcos Sawaya Jank, President and Chief Executive Officer, UNICA

Affordable and sustainable energy solutions for emerging markets hold the key to elevating the standard of living for billions. This can reduce their dependence on fossil fuel imports, provide greater economic independence, and show a path to the developed world on how to move towards a sustainable energy infrastructure.
Prof Deepak Divan, Georgia Institute of Technology, UNITED STATES

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training of professionals working in the biofuel industry. The Science Growth Acceleration Programme (PAC) launched by the federal government has a budget of around US$22bn funded by public and private resources. The objective is to invest more than 1.4% of the countrys GDP in R&D, compared with current investment of 1.1% of GDP.

Biofuels have been a key component to diversify Brazils energy mix, and the country is widely recognised as a biofuel industry leader. However, Brazilian biofuel companies have suffered in 2011 from poor margins owing to rising prices for corn and sugarcane and will need to scale back their growth ambitions for the coming years.

author biograPhy Allan Kardec Duailibe is currently Director of the Brazilian National Agency of Oil, Natural Gas and Biofuels. He is a researcher and Professor of Electrical Engineering at the Federal University of Maranho (UFMA).

why economic growth is the new Priority for energy


reg Platt, research fellow at the institute for Public Policy research (iPPr), explains why governments that adopt ambitious and strategic energy policies with growth at their heart are likely to end up on top
Last year closed on the back of two unusually optimistic pieces of news: first, the surprising, albeit limited, progress made at the international climate negotiations in Durban; second, the growth of clean energy investment beyond US$1trn worldwide. The low carbon transition has stepped up a gear, and with it the international race to develop and deploy low-carbon technologies is well and truly under way. Given the perilous state of the global economy, this timely shift provides huge opportunities for jobs and growth. Clean energy sectors are already growing fast. In November 2011 Bloomberg New Energy Finance1 recorded the trillionth dollar of investment by governments, corporate and private investors into renewable energy, energy efficiency and smart energy technologies since its records started in 2004. Annual clean energy investment has risen nearly five-fold, from US$52bn in 2004 to US$243bn in 2010, a compound annual growth rate of 29%. However, as recent experiences in the solar sector show, countries wishing to benefit from these growth industries will need to be both strategic and bullish. This means identifying sectors where they have a comparative advantage and entering these sectors with bold ambitions. In recent years, as governments worldwide have piled support into their domestic solar industries, the price of panels has plummeted. The price of polysilicon, a core material, fell by 63% in 2011. While such transformational cost reductions are welcome, they mask how over, supply of panels has caused havoc in the sector - many companies have gone bust as a result. The most high-profile of these was Solyndra, whose bankruptcy involved defaulting on a US$528m loan from the US government 2. At the end of 2011 a number of US-based solar firms lodged a complaint with the US International Trade Commission (ITC) alleging that China was driving down prices by subsidising its solar exports and dumping panels on the US market (i.e. selling at prices below the costs of making and marketing panels) . In December the ITC found a reasonable

Re Durban, the danger is that policy is moving too slowly. We have political consensus on a 2 temp rise (above pre-industrial levels) limit but continue to move further along a 4-6 degree pathway.
Brian Gallachir, University College Cork, IRELAND

An international deal could provide a global economic stimulus by providing green business with a clear commitment to emission reduction for the foreseeable future, helping boost the green economy.
Juliet Davenport, Good Energy, UNITED KINGDOM

indication that a US industry is materially injured by the import of solar panels from China that are allegedly subsidised and sold in the United States at less than fair value3. The vote clears the way for additional steps by the commission and the Commerce Department that could result in heavy tariffs on Chinese imports 4. The Ministry of Commerce in China has launched a retaliatory investigation into whether American subsidies and other policies in the solar, wind and hydroelectric sectors have unfairly hurt the industrial development of Chinas renewable energy industries. Putting potential breaches of World Trade Organisation (WTO) rules to one side, these events show the significance with which clean energy markets are increasingly viewed and how hard

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Part ii: solutions to 2050

countries are going to fight for the spoils. However, governments that are bound by outdated views of the energy sector may fail to capitalise on the opportunities. Energy policy is regularly seen through the prism of a trilemma - that is, how to balance the needs for an energy system that is at once low-cost, low-carbon and secure. A new approach to this problem is required. Governments should make investments to create a low-carbon and secure energy system on the basis of the growth and jobs potential that these investments offer, not merely on account of which is the cheapest. Forthcoming research from the IPPR will argue the case for countries like the UK to develop modern sectoral industrial policies. These policies should include the public and private sectors working together to identify opportunities in sectors where the UK has a comparative advantage and overcoming barriers to development. The report argues that, in the new global economy, characterised by the rise of Asia and decline of a single paradigm to organise our economic thinking, an activist government is

essential for returning the economy to a period of sustained growth. What this means for energy policy is that governments, working with private-sector partners, must first identify sectors in which their country is likely to have a comparative advantage and then put in place the appropriate support. This could include investing in skills, training and R&D, providing tax credits and low-interest loans to support start-ups and the commercialisation and market breakthrough of new technologies. Comparative advantage will arise from a mixture of factors, including resource availability and the nature of the technologies. It will vary between countries - hence, while offshore wind is likely to be a key opportunity for the UK, concentrated solar power may be more appropriate in Spain. China with its cheap labour force has clear advantages in manufacturing but for emerging technologies which require high level engineering and scientific expertise, such as carbon capture and storage, the UK may be better placed. A complementary strategy for the UK would also be to play to its current strengths in

carbon finance, services and project management. Prospects for the global economy in 2012 look bleak, but clean energy offers countries worldwide major opportunities. Not all countries can be winners from clean energy, but governments that adopt ambitious and strategic policies with growth at their heart are likely to end up on top.
1 2

http://bnef.com/PressReleases/view/176 http://www.nytimes.com/2011/11/25/opinion/thesolyndra-mess.html http://www.usitc.gov/press_room/news_ release/2011/er1202jj1.htm http://www.nytimes.com/2011/11/26/business/ energy-environment/china-looking-into-uspolicies-in-renewable-energy-trade.html?_ r=1&scp=3&sq=solarworld&st=cse

author biograPhy Reg Platt is a research fellow at the Institute for Public Policy Research (IPPR). He has responsibility for developing policy positions across a wide range of domestic climate and energy issues including micro-renewables, energy efficiency, behaviour change, community-led initiatives, clean tech and corporate sustainability.

new Policies for new energy demands


government regulators and private investors should work together to establish a clean and reliable supply of energy, argues commissioner John norris of the federal energy regulatory commission
The energy industry is facing unprecedented and rapid change. From a US and international perspective, two of the most marked challenges that are driving this change stem from the need to expand our energy supply and the need to grapple with climate change. Meeting these challenges will increase costs to consumers as we look to replace cheap but carbon-intensive energy sources and also modernise ageing infrastructure that was designed to transport and utilise these old energy sources, all within the context of meeting the energy needs for more people in the world than ever before. And so a key question becomes, how do we spend money wisely? How do we ensure that increases in energy costs are no more than necessary to establish a clean and reliable supply of energy? In an industry as capital-intensive as energy, governments cannot meet these challenges alone. This is particularly true in the current context of spiralling government deficits and mounting

carbon has costs. to allow the markets to work you need carbon pricing and companies should use it internally to make more rational investment decisions in energy.
Gregory Kats President, Capital E Venture Partner, Good Energies

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the global energy conversation

It is absolutely vital that governments have a clear policy on energy strategy and this is communicated in a way that allows industry and capital to respond favourably and in a way that does not prejudice commitments already made. We recognise we are living in a time of limited government funding and concerns for the cost of energy, but capital is scarce and is subject to global competition. Those governments which do not create a workable policy framework that recognises this will see their energy infrastructure programme flounder.
Michelle Davies, Eversheds, UNITED KINGDOM

calls for fiscal discipline. While government action will be one driver of the coming change in our energy industry, private investors, market participants and technology developers will also need to answer the call. Any basis for action must begin by addressing climate change. The science surrounding climate change is not going to suddenly change, nor will the issue of climate change suddenly solve itself. The US and other governments must address this issue head-on, because market action alone will not be able to stop or reverse climate change. Once governments establish the ground rules that require everyone to pay the full environmental cost of their energy usage, markets can be relied upon to make the extraordinary, long-term investments needed to reduce carbon emissions from the energy sector. In the US, the lack of a national climate change policy has created a great

deal of uncertainty and inefficiency, which ultimately leads to higher costs for consumers. In some instances, policy uncertainty could lead entities to continue running older and less efficient plants until they are certain cleaner and more efficient generators will be required. While this could be cheaper in the short term and delay the investment in new infrastructure, in the end it will result in dirtier and less efficient units running longer at a cost both to consumers and to human health. While some are waiting until a national policy is established before acting to address the issue, other industry leaders are changing their practices in anticipation that Congress will eventually act to establish clean energy standards and a national climate change policy. In the interim, the only clear requirements are various state renewable energy standards and climate change initiatives. This has made states, rather than the federal government, a major driver of national energy policy. While states should be applauded for their leadership, the different rules that each state develops prevent markets from investing in efficient and cost-effective solutions that only a national policy on climate change can support. While firm government action is needed to enable the markets to develop solutions to climate change, the appropriate role for government in expanding energy supply may be more subtle, but no less important. Here, government action is needed to eliminate unnecessary barriers and level the playing field for participation by different players and technologies in the market. In the US, the Federal Energy Regulatory Commission is doing its part to remove barriers and ensure a level playing field in the electricity and natural gas wholesale markets and transmission networks that it regulates. On the network side, we continually work to remove barriers

to infrastructure development and ensure open access to the networks. On the markets side, we regularly review the rules and regulations that govern participation to ensure robust competition. For example, electricity market rules were largely designed with traditional thermal and hydroelectric generation units in mind. These rules may need to be re-examined in order to accommodate new market entry from intermittent renewable resources, electric storage providers, energy efficiency and demand resources, among others, that will all be needed to help expand energy supply and replace ageing infrastructure. Simply put, we need to modernise market rules to keep pace with the new realities of our expanding energy supply. It is important to emphasise that efforts to expand energy supply will be all the more difficult in the absence of adequate action to address climate change. Clearly it is possible to expand energy supply in a way that is at odds with addressing climate change in fact, it is happening every day. The investments needed to expand energy supply typically involve long-lived and capital-intensive assets that cannot be changed or replaced overnight. We need to make

An important requirement for policies to have the desired effect is for their actions to have tlc transparency, longevity and certainty/consistency. It makes it very hard for businesses to invest when policies change relatively frequently - and thats happening or has happened recently in a number of countries.
David Elmes, Warwick Business School, UNITED KINGDOM

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sure these investments are done right the first time. The US Congress needs to establish a national energy policy, clearly setting out the requirements that the energy industry must meet. Unfortunately, this does not seem likely in the foreseeable future. As a result, even without a clear national energy policy, government regulators must

continue to act to level the playing field to allow a greater diversity of resources to participate in energy markets. Once the playing field is more level and barriers are mitigated, the market can begin to efficiently allocate the capital that will be necessary to address the unprecedented challenges facing todays industry. Private investment will be key to meeting these challenges.

author biograPhy Commissioner John Norris was nominated by President Barack Obama to the Federal Energy Regulatory Commission and confirmed by the US Senate for a term expiring in June 2012. Mr Norris, a lawyer, has years of experience in energy policy and regulatory affairs.

the future of fossils


wim thomas, chief energy advisor at shell, answers questions about fossil fuels and investment in a cleaner energy mix

What role do you see for fossil fuels in the energy mix in 2050? Fossil fuels will remain a very important part of the energy mix. Shells Blueprint scenario predicts that by 2050 renewables will account for 30% of the energy mix and fossil fuels 60%. The reason that fossil fuels will remain dominant is that the developing world needs energy to fuel its rapid economic growth, and fossil fuels are available now, whereas it takes decades to build new infrastructure for renewables at scale. Of course, people will ask why we cant switch to renewables even faster. Empirical evidence has shown that it takes about three decades for new technologies such as wind or solar to reach 1% of market share. Thats the level when government can stop subsidising them because it means that renewables have become competitive with the rest of the energy industry. It then takes another three decades before these technologies reach their full potential, that is say, 10% or 20% of the market share. This really underlines the point that theres a very long lead time for these types of investment. The decisions we make now will determine the energy

systems used by our children and grandchildren. That means if we truly want to move to a low-carbon energy system, we should make the decision now and not postpone it for a couple of years. Do you think governments are prepared to invest in the expensive infrastructure required for a cleaner energy system? We need to distinguish whats desirable and doable. You may desire to switch very fast to a low-carbon system but how much can you afford to accelerate that process? At the moment, its very difficult for countries with budget deficits to give a stronger stimulus for investment in renewables. Is there a strong economic argument for retaining fossil fuels in the energy mix over the next 40 years? Are we sacrificing environmental goals for economic benefit? Not necessarily, we need to be pragmatic. Switching from coal to gas for example is very affordable, and reduces carbon emissions at the same time but a solution on carbon capture and sequestration is also needed in the near future. In the meantime, we still have to build wind and solar parks, with enough incentive for the industry to grow, but at a measured pace so that it doesnt

Even if oil spikes, carbon emissions from coal in the US, China and India must be addressed.
Jud Virden, Pacific Northwest National Laboratory, JAPAN

overheat the market. So theres a balance we need to play there. Are energy industries investing enough in carbon capture and storage (CCS) technologies to make fossil fuels cleaner? Such technologies are very expensive to implement, so we need to learn more about how to make them cost-effective. How much as a company can you afford to spend your shareholders money on that investment for the greater good? We need public-private partnerships to make it happen. So far, there are precious few CCS projects around the world, and we will need more of these to gain experience and bring costs down before moving to a larger scale. Will a transition to gas enable us to reduce carbon emissions quickly enough? Its part of the solution. Gas is

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the global energy conversation

available, whereas CCS will take at least another ten years to take off on a large scale. But we will need to invest in other things such as energy efficiency and behavioural change as well. Is there any role for energy producers to support people in changing their behaviour around energy? A very broad group of people have to

get involvedgovernments, companies, peopleto change behaviours. I see a great role for built-in solutions in city design. About half of the world population now lives in cities, and many big cities will need to be built in the future. I think people will get on board with high-efficiency homes, a clever public transport system and so on because theyre more convenient.

author biograPhy Wim Thomas is Chief Energy Advisor at Shell and heads the Energy Analysis Team in Shells Global Scenario Group, which is part of the Corporate Strategy Department. He and his team are responsible for worldwide energy analyses, long-term global energy scenarios, and advise Shell companies on a wide range of energy issues.

the case for Power storage


large-scale power storage will be a key driver of the renewables revolution, argue tim weiss and ed whittingham from the Pembina institute

Aiming to generate one-fifth of our electricity demand from renewable energy may have seemed impossible a decade ago now its becoming the norm in North America. With almost half of the US states and Canadian provinces setting targets of at least 20% of their electricity coming from renewable resources by the year 2020, North America has joined the renewable energy revolution. As long as renewable energy technologies were marginal players, the variability of their output was a manageable issue. However, as clean energy targets increase, this variability will start to pose more significant challenges for system operators and regulatory bodies more familiar with traditional sources of power, such as coal, natural gas and nuclear. Left unaddressed, variable output technologies like wind and solar will start to encounter barriers to high levels of market penetration. Fewer and fewer technical challenges remain as obstacles to reaching renewable energy targets in North America and Europe. With experience and changes to the operating framework, electricity system operators in countries like Scotland and Denmark which have remarkable targets of 100% renewables have found that they can integrate

more variable output supply than they originally thought possible. the case for power storage Large-scale power storage is widely accepted as one key technological innovation that requires development and deployment to allow renewable energy to become the backbone of power systems. In many cases, current renewable energy targets require very little change to the overall system. Modest increases in targets will at first require only minor upgrades to transmission, smart grid investments and additional peaking power, while moving closer to a 100% renewable grid will require large-scale energy storage. Numerous technologies exist to store electricity, including pumped hydro, compressed air, fuel cells and simply batteries, some of which are already in commercial operations around the world. In addition to improving technical integration, the ability to store large volumes of electricity generated from the wind, sun, tides and other variable output sources can also improve the economics. Storage systems can enable proponents or system operators to choose the timing, and therefore the price, of feeding renewable power into the grid. While it depends significantly on the local electricity market structure,

Alberta Innovates, a Canadian provincial government research arm, recently found that storing wind power generated at offpeak times can improve the economics of these wind projects by as much as 42%. Storage abilities will also increase and improve power quality and reliability, potentially reducing transmission requirements as well as peaking costs. whats still to come Many questions about power storage remain unanswered, including which technologies are most appropriate in which markets, what scale of systems are optimal for different electricity supply systems, and what policies

Among all energy resources, solar energy is the most abundant one and compared to the rate at which all energy is used on this planet the rate at which solar energy is intercepted by the earth is about 10,000 times higher. There is a whole family of solar technologies which can deliver heat, cooling, electricity, lighting, and fuels for a host of applications.
Arnulf Jger-Waldau, Institute for Energy and Transport, ITALY

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Part ii: solutions to 2050

carbon capture and storage (ccs) is extremely important for gas and containing industrial emissions. the iea predicts that ccs can account for 18% of emissions reduction by 2050, but delaying action by 10 years would increase the cost of doing so by at least a us$1trn.
Joan MacNaughton Executive Chair of the 2011 Energy Policies Assessment Report World Energy Council

ELTRA. According to ELTRAs chairman when presenting their 2003 annual report: [We] said that the electricity system could not function if wind power increased above 500 MW. Now we are handling almost five times as much. And I would like to tell the Government that we are ready to handle even more, but it requires that we are allowed to use the right [policy] tools to manage the system. canadas role The storage technologies that will come to lead will depend significantly on local market structure. As a Canada-based think-tank, the Pembina Institute believes that Canada has an opportunity to play a leading global role given its expertise in key storage technologies including fuel cells, hydro-power (pumped storage), as well as drilling and geology (compressed air storage). Just as Canada currently stores natural gas for seasonal demand variations, storing electricity will become increasingly important for supply variations. The Canadian government has taken some initial steps to foster this development through its Clean Energy Fund that has recently given support to individual electricity storage projects, such as Electrovayas demonstration project with automotive-scale lithium ion batteries, and New Brunswick Powers research on load control in four Maritime communities.

However, there is still a need to move this development into widespread adoption. Building on lessons from Canadas Clean Energy Fund investments and the Canadian governments success in catalysing wind energy through its production incentives, strategic investments in energy storage can help build Canadas participation in the global clean energy economy, and provide federal support for all Canadian provinces toward achieving Canadas goal of generating 90% of its electricity from non-emitting sources by 2020. Overall, the Pembina Institute thinks that Canada is well positioned to lead this big idea and to foster the next phase of the renewable energy revolution that is already underway. authors biograPhies Dr Tim Weiss is a professional engineer and the director of renewable energy and efficiency policy at the Pembina Institute, a leading Canadian environmental think-tank. He specialises in clean energy policy design, research and strategic decision making. Ed Whittingham is the Executive Director of the Pembina Institute. Through his work, Mr Whittingham regularly advises governments, transnational companies, NGOs and research networks on energy issues.

will help push these technologies to wide-spread commercialisation. What is clear, however, is that to move storage technologies beyond their current relatively limited levels of market penetration, some form of government support is required. This support which is likely to be focused on technology demonstration and commercialisation will still take years to result in significantly improved markets for the integration of renewables. That said, waiting for these technologies should not be a reason to slow current development of clean energy. Many electricity grids can already accommodate additional renewable power using existing load-balancing measures, and often much more than originally expected, as shown by the Western Danish system operator

the nuclear oPtion


Jos goldemberg, Professor emeritus of the university of so Paulo, explains why he thinks it is unlikely we will see a resurgence of nuclear power

There are currently 443 nuclear reactors operating around the world, providing approximately 15% of the worlds electricity supply. The great majority of these reactors were installed in OECD countries 30-40 years ago to improve energy security by reducing or eliminating the need for natural

gas or other fossil fuel imports used for electricity generation. There has been talk of a renaissance of nuclear power as a cost-effective means of decarbonising energy systems. However, a reconsideration of risks in the light of the Fukushima accident in Japan last year, combined with the rising costs

of nuclear reactors and the increasing attractiveness of alternative energy sources for developing countries, means that the resurgence of nuclear will be limited. the possibility of a nuclear renaissance The declining cost of oil and gas and

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the global energy conversation

high-profile nuclear disasters at Three Mile Island (1979) and Chernobyl (1986) signalled the end of nuclear energy expansion some 20 years ago. More recently, however, concerns about rising greenhouse gas emissions (GHG) and effective lobbying by energy companies has sparked a government-subsidised revival of nuclear power. By the end of 2010 there were 64 new reactors under construction around the world, including 28 in China and Taiwan alone (see chart). reconsidered risks and rising costs This mini-revival of nuclear investment will be short-lived. One of the main reasons is that the Fukushima disaster, with its estimated cost of US$257bn, has severely dampened enthusiasm for a nuclear power and has directly led to a number of countries, including Germany, Japan, Belgium and Italy, taking the decision to phase out existing or planned nuclear reactors. Another concern is that the cost of nuclear power has risen sharply in recent years. Nuclear power plants come with a price tag of around US$6-$10bn each, so are already much more expensive to build than plants powered by fossil fuels. Added to this, new reactors under construction in Finland and France have gone billions of dollars over budget, casting further doubt over affordability. Similarly, new regulation will inevitably increase the cost of nuclear power. Plants approaching the end of their initial 40-year license period and lacking certain modern safety features will face additional scrutiny in having their licenses extended. Little wonder that the International Energy Agency (IEA) has already reduced its projection for the number of new reactors to be installed up to 2035 by 50%. alternative options for developing countries Of the 52 countries - which include 40 developing countries - that expressed interest to the International Atomic Energy Agency (IAEA) in 2009 in acquiring their first nuclear power plant,

nuclear reactors under construction in 2012


30 26 25 20 15 10 5 1 0
d Ja pa n az il ia ia a e e Uk ra in In di a ta n Ru ss ia Ko re a tin ov ak lg ar Ch Fr a Br nl is Ar ge n Pa k Bu Fi ut h Sl Ta i wa n an nc in US a

10 6 1 2 1 1 2 5 1 2 2 2 1

Source: International Atomic Energy Agency 2012

it is unlikely that countries with a GDP smaller than US$50bn would be able to purchase a nuclear reactor worth at least a few billion dollars. In addition to that, electric grids must have a minimum size to accommodate a large nuclear reactor, for technical reasons. Excluding the countries that do not meet these criteria leaves a shortlist of 16 countries that could be considered serious candidates for purchasing large nuclear reactors, including Kuwait, United Arab Emirates, Malaysia, Saudi Arabia, Greece, Chile, Portugal, Singapore and Poland. A close examination of the potential resources of these 16 countries in oil, gas, biomass or hydroelectricity indicates that they have a number of other options to generate the electricity they need. In all of them, the cost of nuclear-generated electricity is significantly higher than other options, depending on the availability of gas or hydroelectric sites. Malaysia, for example, is the worlds second-largest producer and largest exporter of palm oil, and is therefore a strong advocate of biomass-derived energy. Elsewhere, the IEA expects Chinas gas demand to rise from about the level

So

of Germany in 2010 to match that of the entire European Union in 2035. Meanwhile, the Middle Easts demand for gas is expected to almost double to a level similar to that currently consumed by China. It is thus likely that nuclear energy will be a last-resort option for the supply of electricity, rather than a priority in economic terms. The future of nuclear energy hinges on its expansion in developing countries, mainly China and India. However, the rising costs of nuclear power plants and alternative costeffective sources of energy in developing countries mean that it is very unlikely we will see a widespread resurgence of nuclear energy. author biograPhy A member of the Brazilian Academy of Sciences, Jose Goldemberg is presently Professor Emeritus of the University of So Paulo. Between 1990 and 1992 he was Brazils Secretary of State for Science and Technology and Minister of State for Education. More recently, between 2002 and 2006, he was Secretary for the Environment of the State of So Paulo.

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Part ii: solutions to 2050

aPPendix: survey results


these are the full results of a survey on energy challenges conducted by the economist intelligence unit and supported by shell. the survey was carried out in september 2011.

Rank the following energy sources according to how great a share of the world's energy you think they will be providing in 2030? Please rate on a scale of 1 to 3, where 1=Largest share and 3=Smallest share.
(% respondents) Fossil fuels
65 24 10 2 43 2 52 35 3
1 Largest share 2 3 Smallest share Dont know

Renewable energy
12 44

Nuclear energy
10

Rank the following energy sources according to how great a share of the world's energy you think they will be providing in 2050? Please rate on a scale of 1 to 3, where 1=Largest share and 3=Smallest share.
(% respondents) Fossil fuels
21 38 49 35 39 36 38 3
1 Largest share 2 3 Smallest share Dont know

Renewable energy
14 2 4

Nuclear energy
21

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the global energy conversation

Which energy sources do you think offer the most potential to increase energy supply and reduce carbon emissions over the time period of 2011-2030? Select three.
(% respondents) Solar
48

Wind
46

Nuclear
44

Gas
34

Hydro
30

Biofuels
20

Geothermal
15

Oil
11

Hydrogen
7

Coal
6

Other
1

Don't know
2

Which energy sources do you think offer the most potential to increase energy supply and reduce carbon emissions over the time period of 2031-2050? Select three.
(% respondents) Solar
68

Wind
44

Nuclear
35

Hydrogen
27

Geothermal
25

Hydro
23

Biofuels
20

Gas
14

Oil
3

Coal
2

Other
5

Don't know
2

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Part ii: solutions to 2050

How supportive are you about increased use of the following energy sources?
(% respondents)
Not at all supportive Somewhat unsupportive Neither supportive nor unsupportive Somewhat supportive Very supportive

Nuclear
16 18 17 9 13 19 16 9 6 18 16 32 35 29 37 36 26 28 26 17 20 14 26 36 18 41 23 13 32 32 20 25 30 12 60 75 4 5 39 46 36

Biofuels
9

Natural gas
1

Unconventional gas (eg gas which is accessed through fracking) Wind


2 3

Solar
1 2

Oil Coal Geothermal


1 6 5 4 6 12 18

Hydro
1

Hydrogen

Do you think improved access to "unconventional" gas supplies will slow the growth of renewable energy sources?
(% respondents) Yes
52

No
32

Don't know
16

Is your government investing enough in the following technologies?


(% respondents) Research and development into renewable energy
35 60 66 32 60 64 47 41 5 7 8 10 12 56
Yes No Dont know

Large scale deployment of renewable energy technologies


28

Nuclear power Making fossil fuels cleaner (eg through carbon capture and storage)
26

Increasing access to fossil fuels Other, please specify


15 28

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the global energy conversation

Please indicate how hostile or supportive you would be of reforms aimed at combating climate change if they had the following impacts on your real income:
(% respondents) No change in real income
5 6 8 3 6 10 16 19 33 18 11 6 14 23 20 20 22 24 20 11 73 2 52 1 34 1 24 2 15 3
1 Hostile 2 3 Neither hostile nor supportive 4 5 Very supportive Don't know

Up to 1% decrease Between 1-3% decrease Between 3-5% decrease More than a 5% decrease

How significant a role do you think energy efficiency can play in reducing carbon emissions?
(% respondents) Highly significant
58

Significant
37

Not significant
4

Dont know
0

How supportive are you of governments using the following tools to improve energy efficiency? Rate on a scale of 1 to 5 where 1 = Very supportive and 5 = Not at all supportive.
(% respondents)
Not at all supportive Somewhat unsupportive Neither supportive nor unsupportive Somewhat supportive Very supportive

Information and advice


3 6 6 3 5 3 7 7 7 5 8 5 8 8 9 12 19 35 10 9 16 28 30 33 13 27 33 32 55 44 37 55 45 38 37

Regulation (eg of light bulbs or building standards) Loans for energy efficient investments R&D investments in energy efficient technologies Rewards for energy efficient behaviour (eg tax breaks) Energy efficient procurement policies Other, please specify

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Part ii: solutions to 2050

Which of the following steps are you taking to conserve energy and reduce carbon emissions? Which would you consider taking?
(% respondents) Switching off lights when not in use
95 51 13 2 14 30 2 73 36 51 43 42 42 44 38 48 12 13 14 21 30 14
Already taking Would consider taking Would not consider taking

Switching off electrical appliances when not in use


85

Turning down heating in winter


58 28 68

Buying more energy efficient appliances Installing renewable domestic energy sources (eg, solar panels or wind turbines)
15

Flexible working (including working from home and using teleconferencing) Driving less Use public transport more
37

Taking fewer flights


26

Other, please specify

Do you expect the international community to reach a meaningful deal on climate change at the UNs climate change conference in Durban later this year?
(% respondents) Yes
15

No
79

Don't know
7

How much extra, if anything, would you be willing to pay for goods and services to cover the cost of CO2 emissions related to their production? How much do you think your company would be willing to pay?
(% respondents) You
19 33 26 28 31 30 12 11 5 5
Nothing Up to 2% 2.1% - 5% 5.1% - 10% > 10%

Your company

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the global energy conversation

To what extent do you agree or disagree with the following statements?


(% respondents)
Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree

Democracy stands in the way of the world making headway with climate change policy.
11 13 17 30 13 19 15 31 29 25 14 14 32 10 14 29 12 18 17 23 22 21 34 12 24

Politicians should ignore citizens who do not agree with policies combating climate change. Democratic states should reconsider their form of government to deal with climate change more effectively. Some nation states, depending on size and pollution levels, should have more control over environmental policy making. International organisations hold enough power to steer nation states toward effective climate change policy implementation.

Who should take most responsibility for dealing with climate change?
(% respondents) Nation states
41

United Nations
20

Individuals
17

Businesses
13

Regional organisations
4

Don't know
2

Non-governmental organisations
1

Other
1

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Part ii: solutions to 2050

In which country are you personally located?


(% respondents) United States of America
15

Brazil
7

India
7

United Kingdom
6

South Africa
5

Canada
5

Mexico
5

Nigeria
4

Australia
3

Singapore
3

United Arab Emirates


3

Germany
2

Argentina
2

Switzerland
2

Chile
1

Kenya
1

Spain
1

Italy
1

Netherlands
1

China
1

France
1

Ghana
1

Other
24

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the global energy conversation

In which region are you personally based?


(% respondents) Latin America
21

Middle East and Africa


20

North America
20

Asia-Pacific
19

Western Europe
18

Eastern Europe
2

What is your primary industry?


(% respondents) Financial services
25

Professional services
13

IT and technology
8

Energy and natural resources


8

Manufacturing
7

Education
5

Healthcare, pharmaceuticals and biotechnology


4

Government/Public sector
4

Entertainment, media and publishing


4

Construction and real estate


3

Agriculture and agribusiness


3

Telecommunications
3

Automotive
2

Chemicals
2

Consumer goods
2

Transportation, travel and tourism


2

Logistics and distribution


2

Retailing
2

Aerospace/Defence
1

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Part ii: solutions to 2050

What are your company's annual global revenues in US dollars?


(% respondents) $50m or less
37

$50m to $100m
7

$100m to $250m
6

$250m to $500m
3

$500m to $1bn
7

$1bn to $5bn
13

$5bn to $10bn
7

$10bn or more
19

Dont know
0

Not applicable
0

Which of the following best describes your job title?


(% respondents) CEO/President/Managing director
29

SVP/VP/Director
18

Manager
16

Head of department
9

Board member
7

Other C-level executive


5

Head of business unit


5

CFO/Treasurer/Comptroller
4

CIO/Technology director
3

Other
3

While every effort has been taken to verify the accuracy of the information in this report, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information opinions or conclusions set out in the white paper.

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the global energy conversation

notes

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