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“Citadel” and “Patchwork” – two alternative futures to 2050
Reference Code: BI00035-001 Publication Date: September 2011
Peter Franklin has spent his whole career in energy utilities markets and spanning oil, gas, electricity, and water. He was schooled in the disciplines of scenario planning and systems thinking during the 14 years he spent with Shell between the late 70s and the early 90s. Peter then went on to be a leading figure in energy market liberalization in the UK until the end of the 90s. Since 1999 Peter has been a consultant to the sector, both to the players within the industry and to those seeking to expand their footprint in the energy and energy services worlds. He is also a regular contributor to thought leadership in both UK and European energy and utilities press.
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Table of Contents
Introduction to Future Energy Scenarios Pre-determined elements The energy system The Citadel scenario The Patchwork scenario Issues raised Future outlook
9 9 10 11 12 13 13
Chapter 1 Introduction to Future Energy Scenarios
Summary Introduction The aim of this report The structure of the report
15 15 17 19
Chapter 2 Pre-determined elements
Summary Introduction Demographics
Population growth over the last 50 years Looking forward to 2100 The urbanization of the world 3
20 21 21
21 23 29
Social networking Managing the trilemma 30 33 Chapter 3 The energy system Summary Introduction The energy system The economy Energy demand Fuel and electricity demand Community generation and central electricity production Hydrocarbon demand. energy prices and electricity production capacity Hydrocarbon supply 36 36 37 37 40 43 45 51 54 56 Coal supply Gas supply Unconventional gas China Electricity storage and smart 61 63 66 70 72 The energy system and CO2 76 Chapter 4 The Citadel scenario Summary Introduction Scenario drivers Society Policy drivers Climate change policy Cultural attitudes 4 79 79 80 80 80 81 81 83 .
Social networks Industrial and commercial markets Transport Residential Utility structure Industry character Generation Technology 86 88 88 90 92 93 94 95 Chapter 5 The Patchwork scenario Summary Introduction Society Social networks Cultural attitudes Climate change policy Industrial and commercial markets Transport Residential Utility structure Industry character Generation Energy sourcing Energy system implications 99 99 100 100 101 102 103 104 105 107 109 110 110 112 113 Chapter 6 Issues raised Summary 5 118 118 .
Introduction CO2 Carbon and hydrocarbon pricing Fashion and technology Community power Urbanization and EVs 118 119 121 122 124 125 Chapter 7 Future outlook Summary Reflections 127 127 128 Appendix Acknowledgements Scope of the report Methodology Glossary/Abbreviations Bibliography/References 130 130 130 131 133 134 6 .
1950 – 2010 Figure 2: World Population Scenarios. million tonnes CO2. (2010$/bbl). 1965 – 2010 Figure 19: Scenario drivers Figure 20: Citadel – Society Figure 21: Citadel – Market Figure 22: Citadel – Energy Industry Development Figure 23: Citadel – Overview Figure 24: Primary Energy CO2 emissions. Citadel Figure 25: Patchwork – Society Figure 26: Patchwork – Market Figure 27: Patchwork – Energy Industry Development Figure 28: Patchwork – Overview Figure 29: Primary Energy CO2 emissions. (mtoe). (‘000 English articles). Central Generation Capacity and Energy Price Figure 13: Hydrocarbon supply Figure 14: Peak Oil. (trillion cubic feet). 2010 Figure 17: Electricity storage and smart Figure 18: Primary Energy CO2 Emissions.Table of figures Figure 1: World Population. 1990 – 2035 Figure 12: Hydrocarbon Demand. (millions).Patchwork Figure 30: Scenario Issues Figure 31: Primary Energy CO2 emissions. (million tonnes CO2) . (million tonnes CO2). (bln bbl/year). 1950 – 2100 Figure 3: World Population Medium Scenario. 1950 – 2010 Figure 6: The energy system Figure 7: Economy Figure 8: Energy demand Figure 9: Fuel and electricity demand Figure 10: Community Generation and Central electricity Production Figure 11: Electricity Generation. 2010 Figure 13: Estimates of Global gas Reserves. (million tonnes CO2). 2001-2011 Figure 5: Crude Oil Prices. (trillion cubic feet). 1950 – 2100 Figure 4: Growth of Wikipedia. (millions). (millions).1930 – 2050 Figure 15: Estimates of Global Gas Reserves by region. 1990 – 2050 22 24 26 31 38 40 41 43 45 51 53 55 56 58 68 70 75 77 80 82 87 92 96 98 100 104 108 113 116 119 120 7 . Production of oil and gas liquids.
1990 – 2035 Table 10: Total Final Consumption. 1990 – 2010 Table 17: Gas consumption and production. (mtoe). (btoe). 1950 – 2100 Table 3: % Urban. 1990 – 2050 Table 22: Patchwork – hydrocarbon demand. 2009 – 2050 Table 5: Energy demand bandwidth. (mtoe). 1990 – 2035 Table 8: Buildings Final Consumption.hydrocarbon demand. (trillion cubic meters). production and consumption Table 20: China hydrocarbon Production and Consumption. 1990 – 2035 Table 9: Transport Final Consumption. 1950 – 2050 Table 4: GDP estimates. (mtoe). (mtoe). 1990 – 2030 Table 18: Gas Import/Export. 2010 Table 16: Proved gas reserves. (btoe). (mtoe). 1990 – 2010 Table 21: Citadel . 2010 Table 12: Oil production and consumption. (millions). (mtoe). 1990 – 2030 Table 14: Coal Consumption and Production. (million tonnes). 1990 – 2030 Table 15: Coal Proved Reserves. (mtoe). 1990 – 2035 Table 11: World hydrocarbon reserves. (mtoe). (mtoe). 2010 – 2050 Table 6: % electricity of total final consumption. (mtoe).Table of tables Table 1: World Population Medium Scenario. 1990 – 2050 28 29 30 42 44 46 47 48 49 50 57 59 60 61 62 64 65 66 71 72 97 115 8 . 1950 – 2100 Table 2: % World Population. 1990 – 2030 Table 19: China % of world hydrocarbon reserves. 1990 – 2030 Table 13: Oil Net Import/Export. (mtoe). 1990 – 2035 Table 7: Industry Final Consumption. (mtoe).
Scenarios are not forecasts – we cannot know exactly which future we will encounter.Executive summary Introduction to Future Energy Scenarios Scenarios are pictures of potential future worlds for testing strategies and policies. For 2050 it is assumed that the UN Medium scenario will apply such that the population will grow to 9. and High outcomes of 6.2 billion. The fifth draws out the issues raised in the scenarios.8 billion. It is interesting to note that if this did not happen and fertility rates remained as they are today then the population in 2100 would reach a staggering 26.1 billion. The first looks at predetermined elements and the second explores the energy system. The fourth develops the Patchwork scenario. These outcomes depend principally on the levels of fertility assumed in the various model runs. The developed nations (Europe/North America/Oceania) shrink from 30% of the world population to just 13% between 1950 and 2050. and 15.8 billion people respectively. All three scenarios assume that as countries develop their fertility rate drops to the long term rate of 2. By the end of the century UN scenarios envisage Low. The third looks at the Citadel scenario.3 billion at that time. The world that actually comes about is likely to include elements from both scenarios.5 billion to nearly 7 billion. Population growth is fuelled by Africa which grows from 9% of the global population in 1950 to 24% in 2050. Medium. The balance of this report comprises six chapters.1 children per female. 9 . Pre-determined elements Between 1950 and 2011 the population of the world has grown from 2. 10. And the final chapter reflects on the choices facing the energy sector.
at circa 55%. Supply security. over the period although China’s share decreases from 22% to 14%. These will be a feature of all scenarios moving forward. GDP growth will drive up energy demand significantly.the latter displacing the former due to the inherent inefficiencies in centralized generation. Industry demand is expected to increase 45% over the period 2008 – 2035. as indicated by their pronouncements to date. and Transport by 41%. show electricity’s share of demand increasing as a share of total final consumption between 2008 (27%) and 2035 (37% new policies scenario (nps) scenario). and Energy affordability is on the agenda of all major governments and will remain there – although the balance struck between the issues will vary across scenarios. In 1950 only 29% of the world population lived in urban environments. Building demand by 31%. The energy system can be visualized as being made up of 12 building blocks spanning supply. IEA projections – which are based on the expected policies of governments. Managing the trilemma of Climate change. by 2050 this will have risen to 51%. Social networks have added a new dimension to human connectivity and collaborative activity. This demand will be manifest in a combination of increased fuel demand.Asia’s share of the world population remains constant. The energy system Crude oil prices have exhibited all the signs of being part of a complex dynamic system which can exhibit both a wide variety of outcomes over time and significant volatility. demand and system infrastructure. The amount of centralized generation will depend on the amount of community generation . and increased electricity demand. 10 .
and traditional gas will become the province of the Middle East and the former Soviet Union. 11 . and will be no long term shortage of hydrocarbon per se although traditional oil may well be limited by the “peak oil” phenomenon. by 2030. Internet security (in the west) and Censorship (in the east) remove the power of social networks. and energy storage has the potential to beneficially transform the shape of the load curves on both nuclear and intermittent renewable electricity generation plant. China is building its economy on domestic coal. The Citadel scenario Top down decision making. China is well placed in this regard with extensive shale gas reserves. Hydrogen and batteries both have the potential to provide energy storage within the energy system. Global unconventional gas reserves are estimated to be 6x those of conventional gas. Continued dominance of the Internal Combustion engine for personal transport. Major consuming nations’ efforts focused on reducing import dependency. Power retained by nation states and supra-national bodies such as the EU. This can incentivize coal to liquids. Late in the period China introduces an electric car-pooling scheme in major cities. CCS not adopted by China and India – seen as conferring a cost disadvantage on the economy. however reserves of this are limited with a production to reserves ratio of only 35 years. albeit with significantly increasing bio-fuel use.There is. Lack of global consensus on climate change. and gas to liquids technology uptake. Major weather events post-2035 and changing societal attitudes trigger “better late than never” reactions in the period 2040-2050. and/or wind. wave. and gas. An alternative hydrocarbon sourcing route looks inevitable in the longer term. solar developments. Asia Pacific will become a major importer of oil.
Initially to transform the load shape of the plant – later on to provide hydrogen to the emerging residential fuel cell and H2 vehicle markets. Utility industry becomes a regulated. heat pumps. CO2 emissions from primary energy continue to rise till 2035 and then drop back slightly to levels which are still 50% higher than 1990 levels. 12 . DC circuitry and PV solar. High global carbon price established which is used to finance investments in CCS in China and India. Awareness in the Asia Pacific of the potential consequences of climate change – in particular the aftermath effects of Himalayan glacier melting. Innovation in residential markets. capital investment driven sector. Hydrogen plant built in conjunction with nuclear and wind facilities. Primarily centralized generation. Hydrogen fuels cells.Chinese involvement in Middle Eastern and North-African infrastructure development to try to protect access to imports from these geographies. Fragmentation of the utilities sector with some players exiting retail and new players coming in with a strong consumer market pedigree. proto-cell paints. Electric. Bottom-up decision making – enabled by effective and ubiquitous social networks linking both local communities and shared interest groups. hydrogen and also traditional hydrocarbon powered cars. Absence of a global carbon price. International accord reached on climate change. The Patchwork scenario Patchwork quilt of initiatives on the energy stage. Vehicle mix contains significant shares of CNG. LPG. High and volatile hydrocarbon prices.
Significant distributed generation in local communities as well as in the home. algae farming for biofuels. Issues raised 5 key issues identified and explored. Fashion and Technology – How hydrogen has left the energy stage and might re-appear. Carbon and hydrocarbon pricing – How a high carbon price. Earlier and bigger nuclear and renewable generation build. as the current custodians of their inheritance. Future outlook When future generations look back at us. and a low carbon outcome are all self reinforcing and self-financing.Bio-mining of shale gas. CO2 – achieving a low CO2 outcome with the same level of total primary energy demand but a different mix. an international accord on climate change. Urbanization – a strong pre-determined element which allows for rapid adoption of new technologies where new build and first time ownership are the characteristics of the market as opposed to retro-fit and replacement. how will they judge us? Will our place in history be the generation that failed future generations. combined with CCS. Rapid adoption of new bio/nano technologies . Community Power – the driver of political change and the infrastructure design of the energy system. a reduction in import dependency. or will we be seen as the architects of a sustainable future? Will we create a “Citadel” or a “Patchwork” world? 13 .Rapid exploitation of solar arrays in desert locations with DC interconnection to demand centers. CO2 from primary energy peaks in 2015 and then steadily reduces to well below 1990 levels by 2050.
As a player on the energy stage – the choice is yours. 14 .
The fourth develops the Patchwork scenario. even if he tells the truth". 15 . When looking at the future. We take these as a given. The third looks at the Citadel scenario. but that simply we cannot be certain what will happen. That is to say that it is impossible to predict what the future will hold. What we can do however. There are some trends and changes in the world about us which are following an inexorable pathway from the past to the present and from the present to the future. we start by looking at the past. a common thread through alternative scenarios. We call these trends and changes "predetermined elements". and interactions between them that can make a myriad of scenarios unfold. The world that actually comes about is likely to include elements from both scenarios. There are many uncertainties. Introduction There is an old Arab proverb that goes: "He who foretells the future lies. And the final chapter reflects on the choices facing the energy sector. These pictures of future worlds we call scenarios. That does not mean that we should not try to understand what the future may hold. The fifth draws out the issues raised in the scenarios. They are not predictions of the future. Scenarios are not forecasts – we cannot know exactly which future we will encounter.Chapter 1 Introduction to Future Energy Scenarios Summary Scenarios are pictures of potential future worlds for testing strategies and policies. The first looks at predetermined elements and the second explores the energy system. is to create some internally consistent pictures of the future against which to test our strategic thinking. The balance of this report comprises six chapters. but are credible and internally consistent possible futures.
which can take the future one way or another. The oil price collapse of the mid 80. This is even when it is clear from looking at the past that very different outcomes. The fall of the Soviet Union.We then have the key uncertainties facing the ecosystem. of the dangers of climate change. By choosing sets of consistent branching points we can construct internally consistent worlds depicting one of many possible futures. The recognition. rather than 2011 looking forward to the advent of 2051. The digitization of music from the birth of the CD to its replacement by the MP3. If this report had been written in 1971 looking forward to 2011. have been possible. This consistent world is a scenario. When looking ahead to the future it is important not to get trapped in the present. A black president of the US. The re-unification of Germany. 16 . The advent of. China becoming the largest energy consuming nation on the planet. The decoding of the human genome. for say oil prices. The exponential growth of personal computing in terms of both penetration and power. We call these the “branching points”. it could have tried to imagine the following: The oil shocks of 73 and 79. The gas price collapse of the mid 90s. by many but not all. and the demise of passenger supersonic flight. Female Prime Ministers and Chancellors. Over 30 years of experience in the energy industry has confirmed that the human brain feels comfortable extrapolating the current situation into the future. The first cloned animals.
And the list goes on and on…. It was interesting to note that all the other forecasters in the industry failed to spot something that was just two years away. High speed broad-band. and any other readers of this document to test the thinking on what needs to be done for the world to be successful in managing its energy future between now and 2050 and beyond. The aim of this report The aim of this report is to create two contrasting scenarios for the future which will enable policymakers. Bullet trains. constructed a scenario which demonstrated that an oil price shock was possible. But how many of these would have been foreseen? Just looking at crude oil prices it was only in 1972 that Pierre Wack. The world wide web. Shell was the only company to see this and gained significant competitive advantage by ceasing to build oil tankers. When we look back at 2011 from the perspective of 2051 we will be able to compile a similar list. 17 . Amazon. Wikipedia.and on. Facebook – if it were a country it would be the 3rd largest in the world. in Shell Group Planning. researchers and analysts.The digitization of photography. The development of the hybrid car and its climb to become the no 1 selling car in the world. The emergence of Microsoft and Google as the largest corporations. The ubiquity of mobile telephony. management teams.
at least in embryonic form. The challenge for the strategist is to find strategies that are robust to each pathway. the purpose of the report is to highlight the tell-tale signs which tell us which of the two scenarios we are in. scenarios are presented as two equally plausible pathways to the future. The scenarios that are developed in this report are called “Citadel” and “Patchwork”. It may well be that the actual future will hold elements of both scenarios but from a sustainability perspective the outcome of the “Patchwork” scenario is a much better world for our grand-children and our great-grandchildren. however. “Citadel” is constructed as a picture of what the world may look like in 2050 if the status quo is maintained. “Patchwork” is a world where much more change happens – but where none of that change is something that has not been seen. Normally. It is likely that the change that will be experienced over the next 40 will be greater than that experienced over the last 40. “Patchwork” is a sustainable world. In this case. “Citadel” is not – and indeed changes its nature at the end of the scenario period in response to experienced climate change impacts. The challenge for the strategist is to think through what they can do to nudge the world into a “Patchwork” like outcome. Both are possible worlds – but very different in their outcomes from a climate change perspective. by 2011. 18 .When reading the scenarios try to keep in mind the enormity of change that has happened over the past 40 years.
and looks at the world that is primarily decentralized from both societal and energy perspective. It focuses on population growth. and looks at the world that is primarily centrally driven from both a societal and an energy perspective. 19 . This is the second of the two scenarios. Chapter 2 – Pre-determined elements. urbanization. This chapter looks at those elements of development that are common to both scenarios. This is the first of the two scenarios. Chapter 4 – The Patchwork scenario. Chapter 3 – The Citadel scenario.The structure of the report This report is divided into five chapters: Chapter 1 – Introduction. Chapter 6 – Future outlook. and the management of the “Trilemma”. This chapter looks at those trends and changes which look to be inevitable given the experience of the past. This epilogue to the report reflects on the choices now facing us given the existence of these alternative scenarios. Chapter 4 – Scenario Issues. This chapter draws together the learnings that have come out of the examination of the two scenarios and the issues that they have raised. These define the common threads going through the two scenarios. social networking.
These outcomes depend principally on the levels of fertility assumed in the various model runs. Asia’s share of the world population remains constant. Medium. The developed nations (Europe/North America/Oceania) shrink from 30% of the world population to just 13% between 1950 and 2050. and 15. Supply security.1 billion. Population growth is fuelled by Africa which grows from 9% of the global population in 1950 to 24% in 2050.5 billion to nearly 7 billion. 10.2 billion. at circa 55%. by 2050 this will have risen to 51%. Managing the trilemma of Climate change.Chapter 2 Pre-determined elements Summary Between 1950 and 2011 the population of the world has grown from 2.1 children per female. Social networks have added a new dimension to human connectivity and collaborative activity. and High outcomes of 6.3 billion at that time. These will be a feature of all scenarios moving forward.8 billion people respectively. In 1950 only 29% of the world population lived in urban environments. All three scenarios assume that as countries develop their fertility rate drops to the long term rate of 2. By the end of the century UN scenarios envisage Low. It is interesting to note that if this did not happen and fertility rates remained as they are today then the population in 2100 would reach a staggering 26. For 2050 it is assumed that the UN Medium scenario will apply such that the population will grow to 9. and Energy affordability is on the agenda of all major governments and will remain there – although the balance struck between the issues will vary across scenarios. 20 . over the period although China’s share decreases from 22% to 14%.8 billion.
These are trends and changes which we can define as inevitable given they are grounded in events that have already happened.5 million. we can be pretty certain of the likely trajectory of population growth in the short and medium term. and government policies across the globe. From what we know of the current population. it is useful to look at the longer term view to place the assumptions made regarding population growth to 2050 in context. is demographics. assuring supply security. Demographics The first predetermined element is the growth of the population.Introduction This chapter looks at number of predetermined elements. the rise of social networking. and maintaining affordability. The clearest of these. which are aimed at managing the risk of climate change. This report draws on the work done by the United Nations Department of economic and social affairs' population division in their 2010 revision of population outlook for the world up to 2100. Other predetermined elements covered in this chapter are the urbanization. 21 . Population growth over the last 50 years Figure 1 below shows population growth from 1950 to 2011. of trends in mortality and fertility. In 1950 the world's population was approximately 2. Whilst the scenarios only look at the world up to 2050.
000 7.000 0 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: Source: United Nations. World Population Prospects: The 2010 Revision.000 4. 22 .Figure 1: World Population. Latin America and the Caribbean experienced a 3. Department of Economic and Social Affairs. CD-ROM Edition BUSINESS INSIGHTS Between 1950 and today population has grown nearly threefold to just under 7 billion. (millions).6 fold increase in population rising from just under 170 million to just under 600 million in 2011.000 1.000 World Population (millions) 5.000 OCEANIA NORTHERN AMERICA LATIN AMERICA AND THE CARIBBEAN REST OF EUROPE RUSSIA OTHER ASIA INDONESIA INDIA CHINA AFRICA 3.000 6. Population Division (2011).000 2. The fastest-growing region to date has been Africa which has grown from 230 million to just over 1 billion people between 1950 and 2010. 1950 – 2010 8. This is a four and a half-fold increase over the period.
and the rest of Asia. Indonesia. Oceania also exhibits high growth over the period with its population increasing 2. China's growth rate has been slightly less at 2. Whilst not quite as fast as Asia or Latin America.4. North America saw a doubling of its population over the period. with the exception of China.3. In these regions the ratio of the population in 2011 to that in 1950 is between 3. These four scenarios are shown in Figure 2 below.2 billion.9 fold. North America's growth rate was much higher than Europe's where the ratio of population in 2011 compared to 1950 was only 1.Close behind we get Asia including India. no doubt due to its one child per family policy. Looking forward to 2100 The population scenarios developed by the United Nations' population division examined four pathways to 2100. taking their share of global population from 55% in 1950 to just over 60% in 2011.5 times over the period. India and the rest of Asia grew from 1.2 and 3. 23 . Between 1950 and 2011 the population in China.4 billion to 4.
1950 – 2100 30. That said it is interesting that the population will display exponential growth unless fertility rates drop – as they are expected to do as countries become wealthier.000 World Population Scenarios (millions) Constant 25. More realistic are the low.000 15. CD-ROM Edition BUSINESS INSIGHTS High Medium Low The figure looks at four potential trajectories of population growth between now and the end of the century. If fertility rates were to stay as they are today then the population of the world would rise from just under 7 billion today to over 27 billion in 2100. The differences between the scenarios are driven by differing assumptions on fertility rates in different parts of the world. Underpinning the UN's analysis of fertility is an assumption that countries will move to a longterm value of 2. and high scenarios which look at alternative fertility rate change pathways over the time in question.1 children per female.000 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090 2095 2100 Source: United Nations. (millions). Population Division (2011). Department of Economic and Social Affairs. 24 .000 20. This is more mathematical construct rather than a plausible scenario since we know that fertility rates within populations change as countries develop.Figure 2: World Population Scenarios. World Population Prospects: The 2010 Revision.000 10.000 5. the steady-state necessary to maintain one surviving female per female. medium.
population is assumed to be a predetermined element which is the same in both The Citadel and Patchwork scenarios.In the low scenario.2 billion at the end of the century. In effect. What is striking about the graphic is that whilst we continue to see significant growth in the population of Africa over the entirety of the period. the rest of Asia. In the high scenario population continues to grow reaching 15.6 in the High Scenario. population peaks at just under 8. the population of China peaks in 2027 and then starts to decline over the rest of the century. and Latin America peak around 2050 and then also start to decline towards the end of the century. In the medium scenario the growth of world population flattens after 2050 where the population reaches a plateau of just under 10. both Europe and Russia are stable to declining from today onwards. This report uses the medium scenario as the source of population assumptions across both The Citadel and Patchwork scenarios. Figure 3 shows the regional detail of world population growth in the medium scenario. If we look at 2050 rather than 2100 we see that the world population is set to grow from just under 7 billion people today to 9.1 in the Low Scenario.1 billion people. and 10. The populations of India. Whilst North America and Oceania continue to show some growth over the entirety of the period.3 billion in the Medium Scenario with a bandwidth of uncertainty of between 8.1 billion people in 2046 and declines thereafter to 6. 25 .8 billion at the end of the century.
Figure 3: World Population Medium Scenario, (millions), 1950 – 2100
12,000 OCEANIA 10,000 NORTHERN AMERICA LATIN AMERICA AND THE CARIBBEAN REST OF EUROPE RUSSIA OTHER ASIA 4,000 INDONESIA INDIA 2,000 CHINA 0 1980 2010 2020 2030 2040 2050 1990 2000 2060 2070 1950 1960 1970 2080 2090 2100 AFRICA
World Population Medium Scenario, (million)
Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects: The 2010 Revision, CD-ROM Edition
Table 1 below shows some snap shots of the world population in 1950, 2011, 2050, and 2100. Table 2 below shows the percentage of the population accounted for by the major regions. Clearly the snapshot Table made up of absolute numbers mirrors the graph of population over the period. However, if we look at the percentage breakdown of regional populations an interesting picture emerges. The growth of Africa continues to dominate, with the continent growing from 9% of world population in 1950 to 35% by the end of the century. Whilst China's population has shown great growth between 1950 and 2011 its share of total world population has in fact dropped from 22% to 19% and is expected to drop to 14% by 2050 and thereafter to just 9% by 2100. Between 1950 and 2011 India grew from 15% of the global population to 18%. It remains at this level until 2050 and then the declines to 15% of the end of the century.
If we look at a combined total of China, India, Indonesia, and other Asia, in 1950 this represented 56% of the world population. By 2050 this will have decline marginally to 55%, and by the end of the century will be down to 45% of the global population. If we look at another growth region in the world, Latin America and Caribbean, this area is has grown from 7% of the world population to 9% in 2011. From here on in however its share of the global population drops first to 8% in 2050 and then down to 7% in 2100. Perhaps most dramatic of all, if we look at the combined totals of Russia, the rest of Europe, North America, and Oceania, this group represented 30% of the world population in 1950 but will only represent 13% of the population in 2100. Whilst political power is driven by a combination of population and economic prosperity it is clear that population alone will not shift the balance of power in the world. However with a growing affluence of China, Asia, and India it is clear that the balance of power has already shifted between 1950 and the present-day, and is likely to shift further as the century progresses. Whilst The Citadel and Patchwork scenarios look at the world between now and 2050, the attitudes and perceptions of the citizens of the world in 2050 will to some extent be shaped by their perception of the future development of the world population together with their experience of the history they have lived through. To look at what may happen between 2050 and the end of the century it is important to consider how people in 2040 and 2050 may think. How attitudes may shift, and the impacts these may have on behaviors and energy demand will be explored further in this report.
Table 1: World Population Medium Scenario, (millions), 1950 – 2100
REGION AFRICA CHINA INDIA INDONESIA OTHER ASIA RUSSIA REST OF EUROPE LATIN AMERICA AND THE CARIBBEAN NORTHERN AMERICA OCEANIA WORLD
1950 230 553 372 75 404 103 445 167 172 13 2,532
2011 1,046 1,355 1,241 242 1,368 143 596 597 348 37 6,974
2050 2,192 1,306 1,692 293 1,851 126 593 751 447 55 9,306
2100 3,574 952 1,551 254 1,839 111 564 688 526 66 10,125
Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects: The 2010 Revision, CD-ROM Edition
Department of Economic and Social Affairs. Of particular note is China. 1950 – 2100 REGION AFRICA CHINA INDIA INDONESIA OTHER ASIA RUSSIA REST OF EUROPE LATIN AMERICA AND THE CARIBBEAN NORTHERN AMERICA OCEANIA WORLD 1950 9 22 15 3 16 4 18 7 7 1 100 2011 15 19 18 3 20 2 9 9 5 1 100 2050 24 14 18 3 20 1 6 8 5 1 100 2100 35 9 15 3 18 1 6 7 5 1 100 BUSINESS INSIGHTS Source: United Nations. World Population Prospects: The 2010 Revision. This trend towards greater and greater urbanization is reflected in all regions of the globe. Population Division (2011). Back in 1950. In terms of The Citadel and Patchwork scenarios the shift towards urban society is a predetermined element in both scenarios – but one with a significant impact on the energy system. By 2100 the picture will have changed dramatically with over two thirds of the population living in towns and cities. “Literally taking millions of people every year and moving them from rural poverty .low energy using lives. by 2050 80% of the population will live in urban areas. Department of economic and social affairs. less than 30% of the world population lived in towns and cities.” Paul Appleby. CD-ROM Edition The urbanization of the world Table 3 shows the United Nations. to urban . BP 29 . data on the urbanization of society by region between 1950 and 2050.much more energy intensive lives. where in 1950 90% of the population lived in rural areas.Table 2: % World Population.
Authored. Population Division. the 1990s) we had the advent of the world wide web which transformed the way in which information is published both in terms of the medium for its dissemination and in broadening the author base to anyone with access to a PC. which in turn created a resource containing the expert knowledge of 30 . In the first 10 years of this century the phenomenon of Social Networking has taken hold and changed the human communication landscape – at least for that part of the global population with access to the internet. edited and read by contributors across the globe. In 2001 Wikipedia – the online encyclopedia was formed. 1950 – 2050 REGION AFRICA CHINA INDIA INDONESIA OTHER ASIA RUSSIA REST OF EUROPE LATIN AMERICA AND THE CARIBBEAN NORTHERN AMERICA OCEANIA WORLD 1950 14 12 17 13 22 44 53 41 64 63 29 2010 40 48 30 43 48 72 72 79 84 69 51 2050 56 80 52 65 69 76 82 86 90 70 68 BUSINESS INSIGHTS Source: United Nations. Department of Economic and Social Affairs. it embraced the new model of collaborative interaction in which the resource was built through the voluntary contribution of authors.However given the decentralized nature of the Patchwork scenario it is assumed that the degree of urbanization is slightly lower in the Patchwork scenario than it is in Citadel. Table 3: % Urban.e. World Urbanization Prospects: The 2009 Revision Social networking In the last decade of the last century (i.
en. The value contained in this resource then attracts more individual participants which then increases the level of contribution to the resource thus allowing it to grow exponentially. Growth of Wikipedia. 2001-2011 4. Wikipedia started on the 15th January 2001 and in 10 years the English edition has grown to contain more than 3.org BUSINESS INSIGHTS This phenomenon is however global in nature. (‘000 English articles).500 2. See Figure 4 below.7 million articles.000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: www. Figure 4: Growth of Wikipedia. (‘000 English articles) 31 .500 1.thousands of individuals across the globe.500 3. with Wikipedia now containing over 19 million articles in 200 languages.wikipedia.000 3.000 2.000 1.
it appears inevitable that online communities will flourish and thrive. Within the sphere of collaborative reviewing. We have also seen the growth of online communities in which active communications have flourished between people. be that in Wikipedia or online shopping. If you give a little of your own information to enhance the library you encourage others to do the same which then allows this collaborative resource to thrive and grow. The extent to which these types of communities will supplant and replace traditional community organizations. In the professional sphere we have LinkedIn which now has the community of over 100 million business people around the world. In some universities the favored communication medium is now the social networking site rather than e-mail. you will be asked to write a review of both the merchant and the product you purchased. Whilst the institutions that dominate the market today may or may not be the institutions that dominate the arena in the decades to come. On this site. Another example of where an enlightened sense of selflessness has led to the creation of a valuable community resource is Trip Advisor. Facebook now has more than 750 million participants around the globe. Only by embracing the concept of "if I give a little I'll be able to benefit from the shared resource" are such resources enabled to flourish and grow to the benefit of all who use them. The most famous example of this is of course Facebook which started operations back in February 2004. and that when they need to consult a review there will be plenty of other contributors to help them make their purchase decisions. People around the world have embraced this collaborative opportunity by writing reviews in the belief that others will do the same. people who have traveled to a hotel or restaurant leave their reviews as a guide for future travellers. Never before has it been possible to access knowledge and people on such a global scale. the individual contributor is talking to anonymous audience. 32 . If you buy a book or electronics online on Amazon or most other competing e-shops.Contributors and users alike have recognized the power of “give and take”.
“Around climate and energy policy. particularly renewable forms of energy is seen as positive.its always been important but it 33 .the rising importance of energy policy in shaping energy markets . Ensuring energy supply security. Indeed China. Managing the trilemma Governments around the world are finding themselves having to balance three issues. In Citadel the dominant communities are the traditional off-line communities. the attempt to decarbonize fuels is also interwoven with energy security concerns .from local groups through national governments to international bodies is uncertain. This trilemma affects every nation around the world. Delivering affordable energy supplies. new sources of energy in which wind energy would be a clear example. Energy importing countries are acutely aware of the supply disruption and price risks they face. Demand-side measures are also evident as governments look to tax energy sources based on their carbon content. This is leading to state support. as well as supporting initiatives to drive up energy efficiency. and subsidies for. These issues are as follows: Averting the impacts of climate change. However. The desire to move to a low carbon economy appears in political doctrines in all the countries of the developed world. in Patchwork on-line communities have a much stronger influence both at the local level and at the shared interest level internationally. The continued existence of social networking at scale is taken to be a pre-determined element. the impact on the world of social networking is taken up as a branching point underpinning the two scenarios. and many other Asian countries have also acknowledged the need to find a low carbon pathway to economic development. all of which are vital to the well-being of the societies they serve. and India. Anything they can do to switch to home produced sources of energy. To a greater or lesser extent all governments appear to have embraced the belief that they need to do something to avert the negative impacts of climate change.
In addition the Chinese government is mindful of the social unrest that comes from inner-city pollution which is recognized as the main driver of social unrest in the country. If we look at China we can see the same prerogative for economic growth. initiatives to combat climate change and to ensure energy supply security come at a price. keeping energy prices low is seen as a prerequisite to assuring continued economic growth and prosperity. or indeed both. This third element of the trilemma is the balancing item. In the US one could argue it is the dominant feature of the trilemma such that concerns about climate change or supply security are seen as less important than securing economic prosperity today. or can negatively impact on economic growth. There is a realization that the low carbon pathway needs to be found for the long-term and therefore China is destined to become one of the leading players in wind. These in turn lead to problems with affordability which can either cause social problems by disproportionately impacting on the poor and vulnerable in society.” Paul Appleby. Given that economic prosperity has been built on cheap energy. These developments will also ensure that China minimizes its energy import bill and its security of supply risks.seems even more important now particularly with this focus on decarbonization and at the same time trying to become more self-sufficient. lead to energy price increases. solar. one can also see some signs of China looking to manage the other two elements of the trilemma. So this report considers the management of the trilemma as a predetermined element. They inevitably. The extent to which economic growth and affordability are played off against averting climate change and assuring supply security of the differentiators between the two scenarios developed in this report. and inexorably. economic growth is priority since this is what creates affordability for the hitherto poor rural communities which are now migrating into the rapidly growing cities. If we look at the Indian subcontinent the same logic applies as it does in the rest of Asia. In terms of climate change China would be extremely adversely affected by the melting of the Himalayan glaciers and this is recognized by their own meteorogical service. and nuclear energy in the future. 34 . However. In the short term however. BP However.
35 . in the Patchwork scenario the avoidance of climate change impacts is the stronger feature.In the Citadel scenario economic growth and affordability are the stronger concerns.
demand and system infrastructure. Industry demand is expected to increase 45% over the period 2008 – 2035. however reserves of this are limited with a production to reserves ratio of only 35 years. and energy storage has the potential to beneficially transform the shape of the load curves on both nuclear and intermittent renewable electricity generation plant. as indicated by their pronouncements to date. Hydrogen and batteries both have the potential to provide energy storage within the energy system.Chapter 3 The energy system Summary Crude oil prices have exhibited all the signs of being part of a complex dynamic system which can exhibit both a wide variety of outcomes over time and significant volatility. The amount of centralized generation will depend on the amount of community generation . China is well placed in this regard with extensive shale gas reserves. The energy system can be visualized as being made up of 12 building blocks spanning supply. GDP growth will drive up energy demand significantly. This demand will be manifest in a combination of increased fuel demand. IEA projections – which are based on the expected policies of governments. show electricity’s share of demand increasing as a share of total final consumption between 2008 (27%) and 2035 (37% nps scenario). Asia Pacific will become a major importer of oil. and gas. 36 . and Transport by 41%. An alternative hydrocarbon sourcing route looks inevitable in the longer term. and increased electricity demand.the latter displacing the former due to the inherent inefficiencies in centralized generation. by 2030. Global unconventional gas reserves are estimated to be 6x those of conventional gas. China is building its economy on domestic coal. Building demand by 31%.
The system is first introduced in its entirety and then each component part is examined in terms of the issues raised and their interaction with other elements of the system. weekly. The energy system When looking forward to 2050. and monthly volatility in the market place. Figure 5 below shows crude oil prices in 2010$s from 1950 to 2010. which looks both at today and the view the IEA takes of the impact of policies that governments appear to be following today on demand in 2035. and provided the back-cloth for Shell management to think through what they should do given this world could occur. Within the system there are a number of issues which impact on one another and determine how the world will evolve. Having understood the scenario they knew to look for the signs that this outcome may manifest 37 . The understanding of the system. Energy market forecasters in the 1960s found it very difficult to entertain the thought that the 1970s might prove to be radically different. This was the start of the Scenario movement in Shell group planning. Looking globally at crude oil. and trying to imagine what the world of energy may look like. we have seen wholesale gas prices tumble from 22 pence per therm.Introduction This chapter looks at the world of energy and utilities as a system. provides the baseline for an examination of the two scenarios. It is clear that since the early 1970s the market has been extremely volatile. Only Pierre Wack – the founder of scenario planning in Shell managed to conceive of an imaginary world in which the underlying pressures in the external world could combine to create OPEC and an oil price shock. The figures shown are annual averages and thus smooth out daily. if we use the UK as an example. we need to keep in mind the diversity of outcomes which have already been seen in the past. a very narrow span of time in the context of our view from 1950 to 2050. Over the last 15 years. and then to rise to over 60 pence per therm. to 8 pence per therm.
we can take the existence of.itself. the volatility in the energy ecosystem would suggest that we are dealing with a complex dynamic system. 38 2010 . A hummingbird flapping its wings in the Amazon forest can move the molecules of air and change the overall weather patterns in North Europe. and in so doing were ahead of the competition in not purchasing tankers for the transport of crude as prices shot up and demand dipped. (2010$/bbl). and the nature of the energy system itself to be a pre-determined element. Such systems exhibit chaotic behavior in which a small change in one part of the system can lead to a large change somewhere else in the system. 1950 – 2010 120 100 80 60 40 20 0 Crude Oil Prices. The alternative outcomes that may occur in the two scenario worlds will be explored in the chapters examining the Citadel and the Patchwork scenarios. However. (2010$/bbl) 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 Source: BP Statistical Review of World Energy 2011 BUSINESS INSIGHTS Indeed. Figure 5: Crude Oil Prices. The often quoted example of a chaotic system is the weather.
The reason we can believe that the energy ecosystem is a chaotic system is that there are many feedback loops and time delays which are the characteristics of complex dynamic systems. The degree to which this is split between "fuel demand" and "electricity demand" will depend on the nature of the increase in “energy demand”. So for example. an increase in freight by commercial road transport would likely create an increase in demand for hydrocarbon fuels and biofuels. however. The remainder of this chapter will look at each element of the energy system such that we can build up a picture of the system from digestible building blocks. This is a relatively shortterm reaction. they do so over different time frames so. for example. A red arrow indicates that more of the element at the source of the arrow leads to less of the element at the tip of the arrow. 39 . A black arrow indicates that more of the element at the source of the arrow leads to more of the element at the tip of the arrow. Not only do elements impact on other elements positively and negatively. This latter influence. The diagram below illustrates a high-level picture of the energy ecosystem. Having both short-term and long-term influences between energy price and hydrocarbon supply can cause instability in the system and volatile pricing as we have seen over time. The picture is in the form of an influence diagram such that where elements of the system impact on other elements of the system these interactions are denoted by arrows between the elements. For example. less “hydrocarbon supply” leads to higher "energy price". The snapshot shown in Figure 6 is too complex to absorb in a single glance. Figure 6 shows a diagrammatic representation of the Energy system. If anything the energy system is about to become more complex rather than simpler over the coming decades and this will bring with it the potential for even greater volatility. is of a much longer duration. that a high “energy price" leads to more investment in “hydrocarbon supply" which in turn leads to an increase in "hydrocarbon supply". It is also true to say. whereas an increase in demand for electric vehicles would lead to an increase in electricity demand. more “energy demand” leads to more “fuel demand” and more “electricity demand”.
Figure 6: The energy system Hydrocarbon Gen Central Generation Nuclear Capacity Renewables Demand Management Smart Info Hydrocarbon Central Elec Production Central Generation No Carbon Batteries Elec Storage Geological Thermal Hydrogen Elec Price Fuel Cell H2 Export Oil Supply Energy price Hydrocarbon Hydrocarbon demand Demand Hydrocarbon Price Hydrocarbon subsidy Hydrocarbon Supply Coal Supply Gas Supply Carbon Price Community Gen Own use Local Gen Hydrocarbon Demand Population Economy Economic Productivity Fuel Demand Bio-fuels H2 Vehicles Elec Demand Elec Demand Energy Efficiency Modal split Energy Demand Asset usage Asset choice Residential Buildings Industrial Freight People transport Commercial Buildings Source: Enstra Consulting BUSINESS INSIGHTS In the following two chapters which describe the "Citadel" and "Patchwork" scenarios. Over the next 40 years it will be the size of the global population times per capita GDP which will determine the demand for goods and services. we will use the energy system model to both define and explain the energy outcome of each scenario. Factor into this the likely energy intensity of the world economy and we can determine the extent to which the economy will drive growth in energy demand. 40 . The economy The driving force behind the energy system is the growth of the economy as illustrated in Figure 7 below.
GDP per capita was estimated for 2050. published by Business Insights . The results of this analysis. adjusted to be consistent with the medium scenario of population growth from the UN.Figure 7: Economy Economy Population Economic Productivity Source: Enstra Consulting BUSINESS INSIGHTS In last year's report by Peter Franklin. 41 . are shown in Table 4 below. The Post Carbon Landscape – Alternative Pathways to a Low Carbon Landscape.
42 . By 2050 China and the rest of Asia will account for just under 50% of global GDP.692 2.342 1. will show significant increases in population but these regions will not achieve the level of per capita wealth seen in the developed world today. GDP per capita in Latin America.306 96 60 65 47 46 11 47 2 34 Source: GDP per capita. Population UN BUSINESS INSIGHTS “There are some clear trends that we are seeing today.” Marcello Contestabile. and the rest of Asia in 2050 will be at the same level as GDP in North America today.Table 4: GDP estimates. 2009 – 2050 Country 2009 GDP US$’000/ person 2009 GDP trn US$ Growth % pa 2050 Ratio 2050 GDP trn US$ 2009 Population 2050 Population 2050 GDP US$’000/ person North America Oceania Europe Latin America China India Rest of Asia Africa World 46 29 27 8 4 1 7 1 9 16 1 19 5 5 1 12 1 60 3 3 2 5 7 7 6 4 4 3 3 2 8 12 15 9 5 5 43 3 47 35 60 18 100 5 312 341 36 737 584 1.192 9.306 1. and particularly Africa.818 447 55 719 751 1. IMF 2009 and Enstra Consulting estimates. Energy consumption per capita is growing incredibly fast in developing countries. India.208 1.570 999 6. Global population is growing. China. Imperial College Taking the estimates in the Table above as fixed predetermined elements of the two scenarios we can see some features arising.144 2.
So if we take "people transport" and “freight" energy demand will be determined by the modal split which pertains to each of these categories. tram. The choices range from walking through bicycles. Within it we have a number of yellow hexagons each of which depicts the issues which determine what the exact level of energy demand will be. hydrocarbon fueled scooters and bikes. traditional cars and electric cars as well as bus. Within the "people transport" we have the issues of “asset usage” and "asset choice". electric bikes. rail. It is likely that the developing world in Asia (excluding the Indian sub-continent) will have the same GDP per capita in 2050 that the US has today. Figure 8: Energy demand Energy Demand Energy Efficiency Modal split Residential Buildings Industrial Freight People transport Asset usage Asset choice Commercial Buildings Source: Enstra Consulting BUSINESS INSIGHTS For "people transport" energy demand will be determined by how people decide to meet their needs for "mobility". This is the major driver of energy growth and will continue to be for some time. How these play out over time will determine how congested cities will become. That whole shift of the weight of the global economy to these countries. If that means that the people of Asia will both own the same number of cars per head.“The big one (emergent threads) is the rise of China and other industrializing and developing countries. and drive the same number 43 .” Paul Appleby BP Energy demand Figure 8 below shows the “energy demand" element of the system. boat and plane options.
For the developing world it is more a case of what will the "energy efficiency" of the residential housing stock and the commercial building stock that will be created during the urbanization of these countries be. This Table summarizes the analysis contained within the Business Insight report "The Post Carbon Landscape – Alternative Pathways to a low Carbon Landscape" published in 2010.5 4. 44 . 2050 Enstra Consulting estimates Table 5 shows the bandwidth of uncertainty in energy demand in 2050. If on the other hand.5 0.3 0.4 23.7 4. rail. We then have the energy requirements of "residential buildings".2 3. and "industrial" applications.7 8. this will reflect the degree to which “energy efficiency" can be retro-fitted into the existing housing stock.6 1. That report examined what the lowest and what the highest outcome energy demand might be in 2050. 2010 – 2050 Sector Household Transport Marine Aviation Industrial Commercial Total 2010 2.3 2. they still wish to own the vehicle assets but to do not drive them to anything like the same extent as current US citizens then the development pathway for transport in Asia will be much more manageable.7 12.2 2050 High 4.5 BUSINESS INSIGHTS Source: 2009 IEA World Energy Outlook.of miles per capita then the new megacities of the Asian world are destined to be gridlocked.3 2050 Low 2.8 0. Table 5: Energy demand bandwidth.6 2. If we look at the developed world.0 1. “Citadel” and “Patchwork”. The energy demand outcome for freight will be determined by the modal split between commercial road transport. "commercial buildings". (btoe).3 9.6 1.2 0. marine and aviation.3 0.3 1. This report will look at what the demand outcome might be for each of two scenarios.
One thing is certain – energy demand will grow. 45 . The IEA in its World Energy Outlook 2010 developed a number of scenarios for how energy demand might grow and how it might be split between “Electricity” and “Fuel Demand”. They examine each within three scenarios. Figure 9: Fuel and electricity demand Hydrocarbon Demand Fuel Demand Elec Demand Elec Demand Economy Bio-fuels H2 Vehicles Energy Demand Source: Enstra Consulting BUSINESS INSIGHTS The extent to which “Energy Demand” is transformed into either “Fuel Demand” or “Electricity Demand” is one of the major uncertainties facing the energy system as it evolves over time. Where the outcome will be in the range from a 50% increase in demand to a trebling of demand is the question. Current Policies (cps): The continuance of government policy initiatives as enshrined in current legislation. and Buildings. Transport. Fuel and electricity demand Figure 9 below illustrates that total energy demand then manifests itself in either an increase in “Fuel Demand” or an increase in “electricity” demand depending on the application. The IEA work breaks demand down into 3 sectors. Industry.
Table 6: % electricity of total final consumption.New Policies (nps): Adoption of new policies following the Copenhagen accords. the IEA scenarios still only envisage electricity penetration in the Transport sector reaching at maximum 4% of energy demand in the most extreme scenario. Looking at each of the three sectors we can the shift between the fuels over time. However. 1990 – 2035 Scenario Year TFC Industry Transport Buildings Source: IEA WEO 2010 nps 1990 13% 21% 1% 18% 2008 17% 26% 1% 27% 2035 23% 32% 2% 37% cps 2035 23% 33% 2% 38% 450 2035 23% 33% 4% 35% BUSINESS INSIGHTS As shown in Table 6 above. 450: Adoption of more aggressive environmental policies that deliver a CO2 concentration in the atmosphere of 450 ppm. the share of electricity of total final consumption has been rising since 1990. All three scenarios see this trend continuing across all sectors. 46 . The next set of Tables look at the IEA perspectives on the potential development of Energy Demand and its split between “Fuels” and “electricity”.
716 972 382 696 1. Total industry demand grows by 45% between 2008 and 2035 in the New Policies Scenario.Table 7: Industry Final Consumption. 47 . Gas and Coal both grow significantly at 43% and 30% respectively.110 730 301 604 1.012 114 347 1 Growth NPS/2008 45% 30% 2% 43% 82% 17% 77% BUSINESS INSIGHTS The split of Total industry consumption between the various energy sources is shown in Table 7 above.808 470 326 366 379 150 117 0 2008 2.409 837 337 666 1.099 132 338 1 cps 2035 3.351 646 332 466 603 113 191 0 2035 3. (mtoe). Whilst biomass also grows vigorously (+77%) it does so from a small base thus only reaching 10% of total demand by 2035. Electricity becomes the dominant source of energy in all three scenarios growing by 82% between 2008 and 2035. 1990 – 2035 Scenario Year Total Industry Coal Oil Gas Electricity Heat Biomass and waste Other renewables Source: IEA WEO 2010 nps 1990 1. Oil’s share of demand declines although total volumes remain constant in the growing market.227 144 294 1 450 2035 3.
although this growth is significantly more muted in the “450” scenario. 48 . Table 9 shows how the energy consumption of Transport is envisaged changing over time.167 cps 2035 3. Coal use declined significantly between 1990 and 2008 and continues to decline in all scenarios.850 125 344 617 781 142 827 14 923 2035 3. Again the electrification of demand is apparent with electricity growing by 77% over the period driven by both a growth in building use of electricity for power and the electrification of heat.364 82 264 654 1.165 131 917 151 1.137 Growth NPS/ 2008 31% -22% -5% 28% 77% 12% 8% 536% 26% BUSINESS INSIGHTS Table 8 shows how the energy consumption of Buildings (both commercial and residential) is met by the various energy sources in the three scenarios.379 159 891 89 1.468 178 855 65 1. (mtoe).729 97 327 787 1.247 237 331 431 404 173 668 4 657 2008 2.893 115 374 839 1.197 450 2035 3.Table 8: Buildings Final Consumption. 1990 – 2035 Scenario Year Total Buildings Coal Oil Gas Electricity Heat Biomass and waste Other renewables Other Source: IEA WEO 2010 nps 1990 2. Oil volumes remain broadly stable and gas shows growth of 28% in the New Policies Scenario.
BP Table 10 shows the overview of Total Final Consumption in the three scenarios. Fuel cell vehicles powered by hydrogen are only just being commercialized by 2035 in this IEA scenario. “Biofuels . 49 . Biofuels are seen to undergo rapid growth in all scenarios accounting for 14% of total transport fuels in 2035 in the most radical scenario.483 199 21 6 67 2008 2.299 2. The remaining 2% are gas powered vehicles. 28% of new passenger car sales are still internal combustion engine sales.850 2.” Paul Appleby.so we are looking towards second and third generation biofuels .150 335 23 45 81 2035 3.202 374 128 386 134 Growth NPS/2008 41% 33% 38% 148% 353% 48% BUSINESS INSIGHTS It should be noted that Bunker fuel (Marine) is included within Oil.Table 9: Transport Final Consumption. effectively waste vegetation that grows on wasteland rather than competing with food. it does so from such a small base to only reach a 4% share of demand in the most radical scenario (“450”). in 2035. and 29% are hybrids where an on-board battery is used to capture energy which otherwise would be wasted.244 2. 27% are plug-in hybrids which can run on both electricity and hydrocarbon fuel and only 14% are full electric vehicles. 1990 – 2035 Scenario Year Total Transport Oil Bunkers Electricity Biofuels Other fuels Source: IEA WEO 2010 nps 1990 1.102 475 53 163 114 450 2035 2.433 3. In these scenarios whilst electricity does show significant growth (148%).576 1. In the “450” scenario.864 463 57 204 120 cps 2035 3.second and third generation biofuels use different source crops. (mtoe).
239 1.502 1.152 4.423 823 3.692 159 Growth NPS/200 8 37% 21% 23% 37% 80% 14% 35% 540% BUSINESS INSIGHTS Roughly extrapolating the IEA estimates of Total Final Consumption by taking the growth in consumption between 2020 and 2035 and adding this to the 2035 Figure gives us a set of total demand figures ranging from 11.521 1.376 248 1.550 994 4.Table 10: Total Final Consumption.3 billion tonnes of oil equivalent.608 295 1.794 2.314 1. this is only half the story. These values are very much aligned with the low end of the bandwidth of uncertainty shown in Table 5 – which is logical given that the IEA “450” scenario is based on what needs to happen if the 450 ppm CO2 target is to be achieved rather than being based on what might reasonably happen. 50 .596 2.070 15 2035 11.289 763 2. However. 1990 – 2035 Scenario Year TFC Coal Oil Gas Electricity Heat Biomass and waste Other renewables Source: IEA WEO 2010 nps 1990 6. those with very different balances between the energy sources may well be.662 1.831 325 1.308 1.1 billion tonnes of oil equivalent to 14.875 2.446 258 1. (mtoe).460 868 3. Whilst scenarios with significantly lower demand volume may not be plausible.608 950 835 333 796 4 2008 8. In addition the potential role of hydrogen in all parts of the energy system could also have a significant outcome on the eventual fuel mix in 2050.325 69 450 2035 10. In particular the role of electricity in transportation could be very different to that envisaged in the IEA scenarios.449 96 cps 2035 12.
or to import it from a central facility. Figure 10: Community Generation and Central electricity Production Central Elec Production Hydrocarbon Central Generation No Carbon Fuel Cell H2 Export Own use Local Gen Community Gen Elec Demand Source: Enstra Consulting BUSINESS INSIGHTS For each application the choice will be to produce electricity locally either in the home or in the local community. The hexagons shown in the “community generation” ellipse illustrate technologies such as micro-gas-fired combined heat and power. and gas fed fuel cells in the home which could produce electricity for "own use" and could potentially "export" to the grid.Community generation and central electricity production In the previous section the growing share of electricity in Total Final Consumption was highlighted. Figure 10 below looks at how that electricity demand can be met. The 2010 Business Insights published report on "The Post Carbon 51 .
and biomass and waste are seen to grow dramatically – albeit from a small base between now and 2035. Electricity production has grown by 50% between 1990 and 2008 and. If this hydrogen was to be produced by the electrolysis of water then it would be true to say. according to the scenario forecasts made by the IEA is expected to continue to grow up to 2035. A complementary technology is the high temperature fuel cell which could provide a community source of electricity and heat. wind powered generation. The highest growth is seen in the “current policies” (cps) scenario. Looking at central electricity production itself. that increased penetration of hydrogen fuel cells would lead to increased central electricity production as each quantity of hydrogen would require the use of centrally generated electricity to create it. or could be zero carbon in the case of nuclear generation. and the lowest in the “450” scenario. In 2008 power generation (4. wave or solar. gas or coal-fired generation.605 mtoe) accounted for 37% of primary energy demand (12. 52 . as is illustrated in the diagram. Figure 11 shows historical and future global electricity production. “I could see high temperature fuel cells being used for community generation. and in remote wind-farms which feed into a national grid. The “new policies” scenario lies between the two. that is the production of electricity in traditional power stations.Landscape" highlighted the subsidy being given by the South Korean government for gas fed fuel cells which comprise of a natural gas reforming unit to produce hydrogen. possibly using the heat as well for CHP applications” Marcello Contestabile. this can either be carbon-based with oil.271 mtoe). Imperial College This potentially could lead to much lower carbon architecture by dropping out the reforming process and building the infrastructure to deliver hydrogen directly to households. This is not necessarily the case since the hydrogen could come from the reforming of natural gas or from the gasification of coal. In all three scenarios renewables. and a fuel cell to generate electricity from hydrogen.
000 o t c e ) m ( .000 3.000 0 1990 2008 2035 nps Source: IEA WEO 2010 2035 cps 2035 450 BUSINESS INSIGHTS “As electricity gets used for transport. When considering like for like technologies in the “central” and “local” contexts the red arrow linking “Community Generation” and “Central Elec Production” indicates that more “Community Generation” will tend to lead to less “Central Elec Production”.000 7.000 4. The reasoning behind this is that if capacity is available both locally and centrally that it will always be cheaper to utilize the hydrocarbon locally rather than process it centrally 53 . and more and more in buildings.000 8. overall demand will grow and the demand profile will change” Marcello Contestabile. (mtoe).000 5.It is interesting that EDF has started deploying tidal turbines off the cost of northern France in August 2011. (mtoe) 6.000 Electricity Generation. a n G y i r l E Other renewables Biomass and waste Hydro Nuclear Gas Oil 2. 1990 – 2035 9.000 Coal 1. Figure 11: Electricity Generation. Imperial College Looking towards the second half of the scenario period we could well see carbon capture and storage (CCS) transforming hydrocarbon-based generation into zero carbon emissions generation.
Hydrocarbon demand. Feeding back the other way. energy prices and electricity production capacity “Fuel Demand” creates “Hydrocarbon Demand”.due to the energy losses inherent in “Central electricity generation” and the losses incurred in the transmission and distribution of electricity. All other things being equal. or coal fired “Central electricity production”. oil. This is of course a long-term influence given the time it takes to plan and build additional central generation capacity. 54 . The conceptual model also shows that an increase in electricity price will lead to the creation of more "central generation capacity". increases in "hydrocarbon demand" will lead to an increase in hydrocarbon "energy price". These influences are shown in Figure 12. as does increased gas-fed “Community Generation” and gas. more "central generation capacity" will put downward pressure on electricity price within "energy price" as any surpluses in capacity will tend to bring prices down to marginal cost levels rather than long-term full cost levels. Increases in electricity demand will also raise "energy price".
and consequent CO2 emissions. The logic behind this is that central generation is by its very nature inefficient. The higher the carbon or the gas price the greater the cost of 55 . Taking gas to the point of demand and converting it to electricity locally. In addition transmission and distribution of electricity loses another 10% of energy. and thus making use of the heat created during the conversion process means that energy losses.Figure 12: Hydrocarbon Demand. losing 50 to 60% of its primary energy inputs to heat loss and mechanical energy loss. can be reduced by up to 50%. Central Generation Capacity and Energy Price Central Generation Capacity Hydrocarbon Gen Nuclear Renewables Hydrocarbon Central Elec Production Central Generation No Carbon Elec Price Fuel Cell H2 Hydrocarbon Price Hydrocarbon subsidy Hydrocarbon Demand Hydrocarbon demand Carbon Price Export Energy price Community Gen Own use Local Gen Hydrocarbon Demand Fuel Demand Bio-fuels H2 Vehicles Elec Demand Elec Demand Source: Enstra Consulting BUSINESS INSIGHTS The model shows that a higher "energy price" will tend to increase "community generation".
and to implement these investments. Before examining each of the sources of hydrocarbon individually an overview of global resource availability is shown in Table 11 below. oil supply. (Note this analysis excludes non-commercially proven unconventional gas). put plans in place. This aspect is a long-term effect given the time it takes to get approvals. It is also worth noting that historically. and gas supply. and infrastructure which in turn leads to increased hydrocarbons supply. As “energy price” rises so does investment in exploration. In the short term any surpluses in hydrocarbon supply can quickly drive down "energy price". in the cases of oil and gas. This short-term impact is denoted by the red arrow in the diagram.energy losses and/or CO2 emissions and hence the greater incentive to move towards "community generation". Hydrocarbon supply Figure 13: Hydrocarbon supply Hydrocarbon Supply Energy price Oil Supply Coal Supply Gas Supply Source: Enstra Consulting BUSINESS INSIGHTS The “Hydrocarbon Supply” ellipse shown in Figure 13 above has within it hexagons representing coal supply. production. Coal represents just over half of the global hydrocarbon resources with the balance split relatively evenly between oil and gas. as the reserves become depleted through production of hydrocarbon higher cost reserves tend to be brought on stream keeping the reserves to 56 .
(btoe). India and the Rest of Asia. as these countries develop.production ratio relatively constant. This particular analysis would indicate that we have reached “Peak-Oil” today and therefore will have significant issues with the increased oil demand requirements coming from China. This is the manifestation of the black arrow between “Energy Price” and “Hydrocarbon Supply” in the energy system map. 2010 Type Oil Gas Coal Total Reserves to production ratio 46 59 118 Reserves 181 169 442 791 % 23 21 56 100 Source: BP Statistical Review of World Energy 2011 BUSINESS INSIGHTS Oil supply Figure 14 below shows a view of the on-set of “Peak-Oil” in which the natural decline in the production capacity of existing reservoirs once they reach 50% depletion states causes production to decline rapidly unless other sources of oil are found and exploited to fill the gap. Table 11: World hydrocarbon reserves. 57 . and commercial road vehicle transport per unit of GDP mirror that of the developed world. should their increase in passenger car numbers per head.
(bln bbl/year). the view from BP is rather less catastrophic as shown in Table 12 below. Production of oil and gas liquids. (bln bbl/year) 30 25 20 15 10 5 0 Source: Association for the study of peak oil and gas. 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 BUSINESS INSIGHTS 58 . BP BP’s view is that production and consumption will both be able to rise significantly over the period to 2030. For every barrel of top line growth we have probably got to replace 4 or 5 barrels of declining fields” Paul Appleby.Figure 14: Peak Oil. “For oil little top line growth .most of the work is involved in replacing the decline of existing fields. with biofuels production assisting in balancing supply and demand by making up circa 5% of production and consumption in 2030. 2007 However.1930 – 2050 35 Peak Oil. Production of oil and gas liquids.
1990 – 2030 1990 Consumption Production Hydrocarbon liquids Bio fuels Total Source: BP Energy Outlook 2030: January 2011 2010 3. Lots more enhanced oil recovery .943 3.a lot more technology being applied to getting oil out of the places where we already know it is there. and the more expensive sources of oil. +324 mtoe over the period) and increases in net exports from Africa (333 to 346 mtoe i.e.153 mtoe i. it is possible to see the shift in import and export requirements over the years.179 BUSINESS INSIGHTS Looked at on a regional level. BP 59 . Table 13 shows Net import/export figures from BP’s analysis. A negative Figure indicates that the region is a net exporter.448 235 4. It is the arctic. +68 mtoe). +13 mtoe) and Central and South America (115 to 183 mtoe i.671 4. Whilst North America’s import requirements have increased over the last 20 years they are expected to decline over the next 20.e. it is oil sands. Europe’s import requirement has declined significantly over the last 20 years and will continue to decline marginally. “Within oil it’s obviously getting much harder to find and develop conventional oil and that's restricted to a few places. The Asia Pacific region is where the dramatic growth is expected. Going further and deeper offshore. which with it will bring a highly significant increase in oil import dependency from 851 mtoe today to 1.e.151 3.Table 12: Oil production and consumption. A positive Figure indicates that the region is a net importer.907 58 3.964 2030 4. (mtoe).446 mtoe in 2030. It’s much more the unconventional sources.” Paul Appleby. This oil is expected to come from increased production in the Middle East (net exports rising from 829 to 1.683 3.172 7 3. we can include biofuels.
but not for a lack of oil. and the oil age will end.153 -346 1. to electrified rail or through a switch to biofuels or through the adoption of electric or hydrogen vehicles. And we are still in a world where it is hard to really verify a lot of those Middle East reserves. in the long term it is likely that the demise of oil will come not from a drop off in production capacity but from a shift to alternative forms of energy for transport. “If you look at the (Middle East) reserves position in the 1980s there was a sudden jump and that was around the time when they started using reserves as one of the ways of setting quotas. There is clearly a link. Sheikh Yamani.Table 13: Oil Net Import/Export. The question is.446 -12 BUSINESS INSIGHTS Whether Middle East production can ramp up to meet the Asia Pacific production deficit is the big question. the former Saudi Oil minister summed this up appropriately when he said: "The Stone Age came to an end not for a lack of stones. This can be through modal shift e. 1990 – 2030 Net Import/Export North America S and C America Europe and Eurasia Middle East Africa Asia Pacific Total Fuels Source: BP Energy Outlook 2030: January 2011 1990 272 -68 339 -683 -226 338 -28 2010 359 -115 48 -829 -333 851 -21 2030 194 -183 30 -1.were they good estimates or were they simply numbers that were left over. Should “Peak-Oil” be reached during the period from 2011 to 2050 it may be that price spikes and supply disruptions come into play. When they did care about them they revised them upwards. rolled over. (mtoe).” Paul Appleby. BP However. were the reserves numbers they had previously . They didn't really care what the reserves were.g.'' Sheikh Ahmed Zaki Yamani 60 .
713 mtoe of the regional consumption total of 2.496 596 54 430 1 145 2.272 3.343 4.264 4.312 3. Indeed 1. 1990 – 2030 1990 Consumption North America South and Central America Europe and Eurasia Middle East Africa Asia Pacific Total Production North America South and Central America Europe and Eurasia Middle East Africa Asia Pacific Total Source: BP Energy Outlook 2030: January 2011 2010 570 25 473 9 107 2.800 mtoe in the same year according to the BP statistics. 61 . Coal production and consumption is dominated by the Asia Pacific region.468 BUSINESS INSIGHTS 514 17 790 3 79 830 2. This is illustrated in Table 15. China produced 1.247 However if we look at the Coal reserves positions of the various regions and the major reserve holding countries within them it can be seen that China accounts for only 13% of world reserves.412 510 72 410 1 210 3.234 609 18 713 1 105 801 2. (mtoe).312 mtoe in 2010 was accounted for by China.Coal supply Table 14 shows the breakdown of Coal Consumption and Production by region.499 2030 458 35 404 10 162 3. Table 14: Coal Consumption and Production.
843 860. Globally coal is in plentiful supply with a reserves to production ratio of 118 years. Whilst this is today matched by a similar level of coal production.Table 15: Coal Proved Reserves.295 7.600 14.088 12.604 30.739 32.873 39.699 33.793 245. makes long term reliance on coal a risky strategy for China. All the indications are that China’s dependency on coal will increase over the next 20 years with coal consumption expected to grow by close to 50%.156 2. 62 . (million tonnes).895 76.500 60.010 33.600 157.the limited reserves position. 2010 Countries/areas US Other North America Total North America Total South and Central America Germany Kazakhstan Russian Federation Ukraine Other Europe and Eurasia Total Europe and Eurasia South Africa Other Middle East and Africa Total Middle East and Africa Australia China India Other Asia Pacific Total Asia Pacific Total World Total 237.938 Share of Total 28% 1% 28% 1% 5% 4% 18% 4% 5% 35% 4% 0% 4% 9% 13% 7% 2% 31% 100% R/P ratio 241 231 148 223 303 495 462 257 119 8 127 180 35 106 57 118 BUSINESS INSIGHTS Source: World Energy Council 2010 (BP Statistical Review 2011) China’s share of world coal consumption in 2010 is a staggering 48%. with a reserves to production ratio of just 35 years.343 265.400 114.508 40.422 304.
a long way from markets. Carbon capture and storage is the key technology that could come into play here. Whilst Norway and The Netherlands (included within the Other Europe and Eurasia totals in Table 16) are both known as gas producing countries they both only hold circa 1% of global reserves and both have less than 20 years supply remaining. It will be determined by whether Chinese production can be sustained – and whether an environmentally acceptable. there is no particular shortage of resources. BP The future of coal will not be determined by global coal availability.its just a matter of investment to bring the coal to market. 63 .” Paul Appleby. The constraint on coal is much more at the market end. its an issue of linking them up with markets.“Coal . The old USSR accounts for 31% of global reserves of which the Russian Federation represents 24%. means of using coal can be found. big deposits. BP Reserves are however highly concentrated in the countries comprising the old USSR (in particular the Russian Federation) and the Middle East. potentially huge resources. requires the technology to get in there and make them economic. The Middle East accounts for 41% of global reserves. The shale gas. In fact proven reserves themselves have grown by 50% between 1990 and 2010 (from 126 to 187 tcm) as shown in Table 16.” Paul Appleby. “gas. We see gas growing but with a lot of work behind it. Gas supply Looking internationally there are plentiful gas supplies with proven reserves equal to nearly 60 years of production. but economic. There are large amounts of what we call stranded gas.no particular resource constraint . That needs LNG or big pipelines to move it to market.
from a very fragmented regional market. Over the next 20 years BP expect gas consumption to grow by another 50%.0 81.2 35. Its gradually becoming more international. America Russian Federation Other old USSR Total old USSR Other Europe and Eurasia Total Europe and Eurasia Iran Qatar Saudi Arabia United Arab Emirates Other Middle East Total Middle East Algeria Nigeria Other Africa Total Africa Total Asia Pacific Total World 10 5 49 5 55 17 5 5 6 6 38 3 3 2 9 10 126 2000 8 7 42 8 51 5 56 26 14 6 6 6 59 5 4 4 12 12 154 2010 10 7 45 14 58 5 63 30 25 8 6 7 76 5 5 5 15 16 187 Share of total 5% 4% 24% 7% 31% 2% 34% 16% 14% 4% 3% 4% 41% 2% 3% 3% 8% 9% 100% R/P ratio 12.0 70.5 32. 1990 – 2010 1990 Total North America Total S. and Cent.8 60. The rising share of gas.5 95. more flexible.8 58.9 76.6 Source: BP Statistical Review of World Energy 2011 BUSINESS INSIGHTS Table 17 shows the regional consumption and production. BP 64 . (trillion cubic meters). Over the last 20 years gas consumption has grown by 60%.5 56.1 77.Table 16: Proved gas reserves.0 45. “The rise of gas has been a pretty consistent theme over the past 30 years. Its not a fully open market but it is more linked up than it used to be because of LNG” Paul Appleby.
790 Within Asia Pacific.005 347 94 493 2.331 BUSINESS INSIGHTS 579 52 877 86 35 139 1.828 741 144 933 426 192 423 2. 20% of the region. 65 . (mtoe). and the Middle-East. The expected growth in Asia Pacific demand will. 1990 – 2030 1990 Consumption North America South and Central America Europe and Eurasia Middle East Africa Asia Pacific Total Production North America South and Central America Europe and Eurasia Middle East Africa Asia Pacific Total Source: BP Energy Outlook 2030: January 2011 2010 757 131 1.233 739 186 1.859 2030 864 246 1. However the differential rates of change will lead to a shifing in the import export balances in the different regions.044 4. and 87 mtoe of production.Gas consumption is expected to continue to grow as is production in all areas of the world.088 837 448 840 4. China represents 98 mtoe of consumption.769 584 52 865 91 62 136 1. create a strong import dependency on the region. with all other things being equal.312 851 267 1. This in turn increases the level of political risk and could well lead to increased price volatility Table 17: Gas consumption and production. As consumption grows the world will become more and more reliant on exports from Russia and the countries of the ex-Soviet Union.
Table 18 shows the development of imports and exports in the various regions of the world between 1990 and 2030. A positive number indicates a net import balance, a negative number a net export balance.
Table 18: Gas Import/Export, (mtoe), 1990 – 2030
Region North America South and Central America Europe and Eurasia Middle East Africa Asia Pacific
Source: BP Energy Outlook 2030: January 2011
1990 -5 0 12 -5 -26 3
2010 17 -13 72 -80 -97 70
2030 13 -20 145 -98 -263 204
The switch for the Asia Pacific region from a balanced position in 1990 to a significant net import position in 2030 is particularly evident, as is the growth in African and Middle East exports. Unconventional gas Over the last 10 years the world has been taken by surprise by the development of unconventional gas in the US which has grown from 15% to 58% of US gas production over this period. Unconventional gas is made up of Tight gas, Coal-bed methane, and shale gas. Tight gas. This is gas which is in a reservoir of low permeability leading to low gas flow rates using traditional vertical drilling. Whilst the gas is there it had previously been uneconomic to extract it. In order to extract this gas, water, chemicals and sand are injected into the formation at very high pressure to crack open (fracture hydraulically) the rock formation to expose a large surface area which allows the gas to flow to the well. Coal-bed methane. This is methane found in coal seams. The coal deposits are normally too deep or too poor quality to warrant commercial mining but recently developed techniques of hydraulic fracturing and horizontal drilling have made it economic to extract the gas. Significant quantities of water are 66
injected into the coal bed and this has to be pumped out before the gas can be produced. Having access to the quantity of water required, and the environmental impact of dealing with the enormous quantities of waste water produced are both challenges which need to be met if Coal-bed methane is to be successfully developed. Shale gas. This is natural gas found in shale deposits which are abundant in both the US and in many other locations around the world. Unlike traditional reservoirs the shales are rich in organic matter and are both the source and the storage medium for the gas. Shales can often exist above already explored oil and gas reservoirs, so information on them is readily available from previous exploration activity. In order to extract the gas the shale formation also needs to be hydraulically fractured. The fracturing is again carried out using high pressure fluid injection – although the quantities of water and the pressures needed are much greater than for tight gas. Again access to water and a means of disposing of the waste water are environmental challenges which need to be met. There are also concerns in urban communities regarding the fracturing process and its potential impact on buildings above the reservoirs. This may impede shale gas’s development in highly populated areas as New York (this also applies to Western Europe where significant shale gas deposits are to be found). It is interesting to note that the production profile of shale gas is very different to conventional gas. Typically a single rig able to drill a large number of horizontal wells and a multi-stage fracturing process is used. As each well is formed (by fracturing) and accessed (by the horizontal drill) it gives up its gas rapidly (over 2/3 years) and production from the well declines precipitously. Wells operate independently from one another so production from the field is dependent on the pace of well drilling. This rapid return on investment means that shale gas exploitation can follow market pricing trends with development activity rising and falling with market prices.
Figure 15: Estimates of Global Gas Reserves by region, (trillion cubic feet), 2010
Estimates of Global Gas Reserves, (trillion cubic feet)
5,000 Shale CBM 4,000 Tight Conventional 3,000
0 North Former Western Latin Middle China Rest of America Soviet Europe America East & World Union N.Africa
Source: The “Shale Gas Revolution” Hype and Reality, Paul Stevens A Chatham House Report, September 2010
This has the potential to change the geo-politics of gas significantly by offering gas consuming nations an alternative to imported supplies from the countries that control the conventional gas reserves. but in Europe in particular it will take a long time to take-off. Figure 16 below shows the split in gas reserves between the various gas source types.000 tcf. And also the regulatory environment is very different in Europe compared to the US.” Paul Appleby. 69 . BP It is interesting to note that whilst conventional gas is concentrated in just two regions (The Middle East and the Former Soviet Union) – all regions have significant unconventional gas reserves.Figure 16 shows that total global gas reserves are estimated to be circa 40. “There is certainly a large potential resource (of shale gas) out there. Places like China. things can happen quickly in China. How fast can a new technology be applied across these geographies. It’s got to be customised to some extent. There is no shortage of gas molecules – the question is will it be economically and environmentally viable to exploit these reserves in the way they have been in the US. It’s not as simple as taking the technology that has worked in the US and just plonking it down and hoping it will work. So it is going to take time. Figure 15 shows the distribution of this gas in various regions of the world. Russia and parts of Europe. I think it will happen. with North America and China being particularly rich in Shale Gas reserves. If they decide to go for it they can do things very quickly. this is nearly 6 times the quantity of proven conventional gas reserves. North America and the former Soviet Union are particularly rich in Coal Bed Methane reserves. In China. It’s the pace that is the issue.
70 . v r R b G f e a t s E Source: The “shale gas Revolution” Hype and Reality. measured as a share of global consumption.000 30.000 25. China accounts for 1. (trillion cubic feet) 40.600 15. By 2010 China’s consumption.1% of the world’s oil reserves and 1.000 6. (trillion cubic feet).000 Estimates of Global gas Reserves.000 35. Paul Stevens A Chatham House Report.000 5. September 2010 BUSINESS INSIGHTS China Given the importance of China on the development of the energy system an analysis of the country’s use of hydrocarbon relative to its reserve base is shown below in Table 19. far exceeds its share of global reserves which will lead to China depleting its reserves much faster than other nations.000 15. China’s reserves to production ratio in 2010 is just 35 – that is to say reserves will be exhausted in 35 years at the current level of production.300 o i l c m u n ( .000 20.5% of global gas reserves.700 Shale CBM Tight Conventional 9.000 10. This compares to a reserves to production ratio of 118 for the world as a whole.750 0 7. Its reserves position in coal is much stronger with over 13% of global coal reserves. 2010 45.Figure 13: Estimates of Global gas Reserves.
2 Source: BP Statistical Review of World Energy 2011 BUSINESS INSIGHTS The rapid growth of the Chinese economy has caused the nation to move from having hydrocarbon production greater than demand in 1990 to a significant deficit in 2010.4 48. They take energy efficiency very seriously.5 13.8 24. Coal is broadly balanced but is running at a rate of production and consumption far in excess of China’s share of this global resource. By 2010 China has become in oil deficit for over 50% of its requirements and 11% in respect of its gas requirements. BP Table 20 below shows production. production and consumption Global reserves China Oil Gas Coal 2010 1. With the continued growth in demand this deficit can only be expected to grow.8 Production 2010 5. consumption and the deficit or surplus created.6 3.3 1990 3. 71 .7 Consumption 2010 10.3 1990 4. Over the next 20-40 years this may well become a problem if the demand growth forecasts are correct but new reserves do not appear to replace the diminished reserves.1 1. They understand that what they are doing could be potentially disruptive to global energy markets which could result in higher import prices.4 0.Table 19: China % of world hydrocarbon reserves.2 3.6 0.8 23.” Paul Appleby. “They (the Chinese) are very wary of becoming too dependent on imported energy. and their impact on global energy markets.0 48.
“The Chinese are definitely looking at shale gas. Also there is a lot of Coal-bed methane in China. This is used in a number of locations around the globe for peak balancing to cover unexpected outages in supply. 1990 – 2010 1990 Type Oil Gas Coal Total Production 138 14 562 714 Consumption 113 14 525 652 Net 25 0 37 62 Production 203 87 1800 2091 Consumption 429 98 1714 2240 2010 Net -226 -11 87 -150 Source: BP Statistical Review of World Energy 2011 BUSINESS INSIGHTS As illustrated previously in Figure 15 previously China has significant reserves of unconventional gas which has the potential to remove its import dependency over time. and to the development of smart grids. Storage will become an intrinsic part of the energy system of the future and could take many forms. thinking about it. and through enabling demand response and demand management (as denoted by the Demand Management hexagon in Figure 17.Table 20: China hydrocarbon Production and Consumption. The IEA report China having made CBM (Coalbed methane) one of the top 16 projects in its 11th Five Year Plan. An example of this type of storage would be the 72 . Geological – electrical energy can be stored by pumping water up into a natural reservoir and then releasing it through turbines when the electricity is needed. The ways in which these impact on the energy system are through the provision of information (as denoted by the “Info” hexagon in Figure 17) which was hitherto not available to either the consumer or the grid operator.” Paul Appleby. BP Electricity storage and smart The final elements of the energy system to be reviewed are the impacts of “smart” and “electricity storage”. (mtoe). “smart” applies to both the introduction of smart metering and smart technologies in the home.
000 residents is seen as an essential. in a smart world. which is enough to run the whole of the UK for 15 minutes (BBC Focus magazine article Issue 233 Sept 2011). The battery in the vehicle. on the grid. Thermal – hot water tanks in residential and commercial premises could be used to store electrical energy produced at times of low demand as heat energy at the point of hot water consumption. or in the home. It is used for meeting sudden requirements since it can brought on stream at full capacity within 16 seconds. This facility can provide 9GWh of energy. Maintaining power supplies to the regions 90. The ability to do this has been in place for more than 30 years – what will be different in the energy system of the future is that the switching controls needed to ensure that the storage medium is available when the cheap electricity is available (for example when the wind is blowing in the middle of the night) are likely to be available as part of the implementation of “smart”. This solution to providing back-up power was implemented due to the fact that in the absence of power water pipes will freeze within 15 minutes in the Alaskan climate which can get down to -50 degrees C. Work is now underway to build such a facility in the Canary Islands (on the island of El Hierro) to manage the intermittency of wind to enable the island to remove its dependency on fossil fuel imports.Dinorwig facility in Snowdonia. offers the possibility for the grid operator to draw on its power when it is plugged into charging point as well as delivering power to it. The system can provide 27MW of power for 15 minutes – which gives GVEA the required window to bring back-up generation on–line. The anticipated growth of electric vehicle brings with it some interesting policies for the development of batteries in the energy system. UK which has been operating since 1984. An example would be the Golden Valley Electric Association (GVEA) BESS storage system in Alaska which commenced operation in 2003. Electrical vehicle batteries offer the potential for electricity storage either in the vehicle. Batteries – large scale battery stores within the grid are now beginning to appear. Materials which can absorb heat can be used in a similar fashion as night storage heaters. There are issues in terms of 73 . The BESS (battery energy storage system) was built by ABB using racks of Ni-Cd batteries developed by Seft.
However.degradation of battery performance through repeated charging and drawdown cycles – which would impact on the economic value of the battery to the owner of the vehicle. technically this would be possible provided suitable commercial arrangements could be put in place. Fashion has changed. Once the battery is past its useful life in the vehicle. Hydrogen can be sourced from either the electrolysis of water. The hydrogen can then be burned or turned back into electrical energy in a fuel cell. Companies like Shell had a very senior manager as the “Head of Hydrogen”. However. academic experts and innovators in the field of hydrogen see both technologies as playing a potentially major part in the energy system future. Clearly if the hydrogen is made from the electrolysis of water using energy provided from a nuclear or renewables source this offers a near zero carbon route to producing electrical power or heat. Hydrogen could also be made using concentrated solar energy. the gasification of coal or biomass. it will still be functioning but not able to deliver enough power to provide the travel distance desired by the motorist. 74 . The “intechnology” is now battery technology. A hydrogen plant attached to a nuclear power station would allow the plant to offer variable supply to the grid whilst keeping nuclear production at full load 24 hours a day – i. Imperial College One could envisage hydrogen production plants being sited at grid landing locations for off-shore wind or on on-shore wind-farms thus turning an intermittent electricity production facility into a dispatchable unit with guaranteed availability. Hydrogen – 15 years ago “The Hydrogen Economy” was at the forefront of the energy industry’s mind.e making hydrogen in demand troughs. These batteries could be retired and then reused either in community based storage facilities or potentially in the home. “In the case of hydrogen vehicles. or the reforming of natural gas or biogas. hydrogen just like electricity is an energy vector. so you would have to produce the hydrogen from primary energy sources and those would be very much the same that we use today for electricity” Marcello Contestabile.
because plans are being made to gradually increase the size of the fleet in future years. This is not a commercial project as such because the buses are more expensive than conventional buses but its not pure demonstration either. London being one of them. Imperial College 75 .Figure 17: Electricity storage and smart Hydrocarbon Gen Central Generation Nuclear Capacity Renewables Smart Demand Management Info Elec Storage Batteries Hydrogen Geological Thermal Hydrocarbon Hydrocarbon demand Demand Source: Enstra Consulting BUSINESS INSIGHTS A hydrogen plant could also be sited in communities or indeed in homes. next year we will have 8.” Marcello Contestabile. Hydrogen vehicles are under trial in many countries around the globe including London and Beijing. These plans involve the joint procurement of fuel cell buses across various cities worldwide. “We have 5 hydrogen buses in London this year.
if hydrogen is created from coal gasification or from the reforming of natural gas this would lead to an increase in hydocarbon demand. 76 .Just as hydrogen came into fashion and then went out of fashion. Utilising hydrogen created from zero carbon energy would have the same effect. Over the next decades it is probable that it will come back into fashion once again – potentially at various points in the energy system. The impact of “Storage” on “Hydrocarbon Demand” can either be positive or negative depending on the way in which the technologies are deployed. The red arrow between “Smart” and “Central Generation Capacity” reflects both the improvements in energy efficiency achievable in households and business through a better understanding of their energy usage as well as from the possibilities opened up through active demand management. However. The energy system and CO2 Figure 18 below shows the increase in CO2 emissions from the deployment of primary fuels. The former reduces total demand for energy. the latter reduces the peaks in energy usage. If storage enables more wind or nuclear generation to operate than otherwise would have. this will reduce the amount of hydrocarbon fired electricity required. The red arrow between “Elec storage” and “Central Generation Capacity” represents the probability that storage media will obviate the need for constructing peaking plant in the system.
Figure 18: Primary Energy CO2 Emissions. 77 .000 20. is the basis of its “450” scenario as published in the World Energy Outlook 2010.000 Total Europe & Eurasia Total S.000 25. The meeting of this target.000 5.000 million tonnes by 2035 to meet this target. by this date. (million tonnes CO2) 30. America Total North America 10.000 Primary Energy CO2 Emissions. IEA analysis would indicate that the world needs to reduce this to 20. 1965 – 2010 35.000 0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 Source: BP Statistical Review of World Energy 2011 BUSINESS INSIGHTS There is a broadly held view (in the scientific community and the IEA) that a sensible approach to climate change should aim to limit emissions to reduce the CO2 concentration in the air to 450 ppm. & Cent. (million tonnes CO2).000 Total Asia Pacific Total Africa Total Middle East 15.
“If the scientists are right that a 450 ppm level gives you a 2 degrees rise in temperature versus pre-industrial times we are certainly not on a path that avoids that. We will certainly see changes in sea level. Clearly the world is heading to overshoot that target substantially if nothing changes. BP 78 . changes in weather patterns. which will really make a difference or will it be a gradual change that people can adapt to. The two scenarios developed in the report look at one world in which the target is missed (Citadel). Because the global climate energy system itself is potentially chaotic at certain points .” Paul Appleby.there are potential large effects from small changes that maybe there or maybe not. The question is whether we are going to have catastrophic events. and one where good progress is made in achieving it (Patchwork). The impact of that .Whilst the BP figures in the chart are not strictly comparable it is reasonable to assume that the current level of emissions need to be reduced to around this level (20 Giga tonnes) if the 450 target is to be reached and temperature rise kept to under 2 degrees Centigrade.I don't think that even the scientists entirely agree on what the impact of that will be.
wave. albeit with significantly increasing bio-fuel use Late in the period China introduces an electric car–pooling scheme in major cities Chinese involvement in Middle Eastern and North-African infrastructure development to try to protect access to imports from these geographies Utility industry becomes a regulated. and gas to liquids technology uptake. CO2 emissions from primary energy continue to rise till 2035 and then drop back slightly to levels which are still 50% higher than 1990 levels 79 . and/or wind. This can incentivize Coal to Liquids. Power retained by nation states and supra-national bodies such as the EU Lack of global consensus on climate change Major consuming nations’ efforts focused on reducing import dependency. solar developments Internet security (in the west) and Censorship (in the east) remove the power of social networks Major weather events post-2035 and changing societal attitudes trigger “better late than never” reactions in the period 2040-2050 CCS not adopted by China and India – seen as conferring a cost disadvantage on the economy Continued dominance of the Internal Combustion engine for personal transport. capital investment driven sector Primarily centralized generation High and volatile hydrocarbon prices.Chapter 4 The Citadel scenario Summary Top down decision making. Absence of a global carbon price.
It goes on to examine what outcome the energy system may have produced in this particular scenario environment.Introduction This chapter looks at one possible pathway to 2050 by considering the set of scenario drivers depicted in Figure 19 below. Figure 19: Scenario drivers Source: Enstra Consulting BUSINESS INSIGHTS Scenario drivers Society This section of the scenario narrative looks at four facets of the world related to developments in society. Policy drivers Climate change policy Cultural attitudes Social networks 80 .
Climate change policy As was the case in the first 10 years of the new century. Imperial College Climate change policy could be termed a “compromise”. That is one major hurdle that we have to overcome” Marcello Contestabile. 81 . Two examples of this were China’s rapid expansion of coal to liquids and gas to liquids technologies to eliminate its growing dependency on imported oil. made top-down rather than bottom up. “In the UK and generally Europe there is relatively strong political commitment to these (CO2 reduction) targets. in the main. The architects of the energy industry in 2050 are the national and supranational bodies responsible for the creation and implementation of energy policy. “Destroying the world might not necessarily be a big concern at the moment (for China). The need to assure affordability of energy supply to maximise economic growth was the dominant arm of the “Trilemma”. between 2011 and 2030 the world saw a continuation of the absence of a strong global consensus on the need to tackle climate change. as well as its exploitation of its shale gas resources in order to counter its growing dependency on imported gas. Environmental policy is centrally driven. its more where do we get all the energy we need to keep developing the way we are developing” Marcello Contestabile. but other countries such as China and the US are not so commited.Policy drivers The Citadel scenario is one in which decisions are. Imperial College That said where nations found themselves facing major energy supply deficits actions were taken to correct these.
An alternative is to turn the “syngas” into methanol and the methanol into gasoline. The expansion of coal to liquids production brought some environmental benefits with it in that the plants using the indirect process needed to separate out the CO2 from the syngas as part of the process such that the cost of installing CCS was minimal and thus implemented. In addition biomass was added as a feedstock to the plant such that on a well to wheels basis a 20% reduction in CO2 emissions could be achieved versus 82 . At the turn of the century the most popular of these was the gasification of coal to produce “syngas” a combination of hydrogen and carbon monoxide. There are several ways of converting coal into liquid hydrocarbons.This was the route used by the Shenhua coal company in China at its plant in Inner Mongolia in the first decade of the new century. which was first used during the Second World War and which in 2010 was still used by Sasol in its South Afirca plant. This technology was demonstrated as workable in New Zealand by Exxon/Mobil. The Sasol plant commenced operation in 1955. There is also the direct route in which coal is reacted with hydrogen in the presence of a suitable catalyst to produce liquid hydrocarbon which can be processed in a conventional refinery. typically a high quality diesel.Figure 20: Citadel – Society Source: Enstra Consulting BUSINESS INSIGHTS Coal to Liquids technology was first used industrially during the second world war and then used by Sasol in South Africa to obviate the impacts of the oil embargo on the country at the time. using the Fischer-Tropsch process. This “syngas” is then turned into a liquid fuel.
The years 2025 – 2035 saw a number of gas to liquids projects come on stream as China developed its shale gas resources. generational differences emerge across Asia.This technology is similar to the indirect route for creating liquid hydrocarbons from coal. The vast majority of the facilities built were gas fired power stations whose project finance was secured on capacity payments mechanisms put in place by governements to encourage these investments. and California’s development of solar farms. Cultural attitudes Just as in the west there are discernable differences in the attitudes of generations. In the US little progress was made in the years up to 2035 in shifting the nation’s priorities from economic well-being to climate change mitigation. State subsidies for renewables continued and enabled these technologies to flourish. These attitudes are a reflection of the experiences and observations of the world the 83 . The natural gas is mixed with steam and oxygen to form a “syngas”. There were exceptions in states with abundant renewable resources such as Texas harnessing wind power. Countries with significant intermittent renewables based power needed to put in place stand-by generation facilities in order to meet the times when the wind did not blow and the sun did not shine. and is held in a chemical slurry rather than in compressed liquid form since there is no need to transport it over long distances – thus enabling the plants to operate cost effectively. Around the world. Those plants which went the direct route produced their hydrogen from carbon free sources of electricity and also reduced CO2 emissions whilst at the same time reducing the oil import requirement. Europe continued with its programmes of climate change mitigation and showed some progress in tightening up and broadening the European emissions trading mechanism. by 2035 some hydrogen facilities had been built in coastal locations to provide a buffer energy store for the off-shore wind farms. The hydrogen is produced through the electrolysis of water.conventional oil fuels. Then Fischer-Tropff synthesis is then used to create high quality diesel and naphtha or alternatively the “syngas” can be turned into methanol and the methanol into gasoline as is the case for coal to liquids.
” Paul Appleby. Generation X had to become adept with IT technology. 84 . The attitudes of society shift as each generation becomes older and takes hold of the strings of power in both the affairs of enterprise and those of the state. They expect anything to be available any time anywhere on-line. Industrialisation and the economic well-being form one part of the tapestry of life. Going out to 2050 you can allow people to behave differently. The following generation – generation Y – born in the years up to the end of the 20th century are the tech savvy generation who no longer expect their organisation or the state for that matter to look out for them. You can imagine that by 2050 it could be very different . They see a new bargain in the workplace – their commitment in return for interesting work.in the way that people have now turned against smoking. The millennials – those born after 2000 were born with an internet connection and a mobile phone. born in the 1960s and 1970s lived through this transition and suffered its consequences with a personal value system out of synchronization with the values of the workplace they found themselves in. This next generation. those born in the 15 years after the second world war. Which is probably fair enough out to 2030. be that the state or the organisation they worked for would look after them. In Asia and China the experience of the different generations is markedly different. as does the crushing of political opposition to central authority. The next generation saw the rules of the game change with organisations focusing on efficiency and “personnel” departments being renamed “human resources”. self-fulfillment and selfimprovement/marketability.child and then teenager encountered – which are always different – and sometimes very different from those of the previous generation. you could imagine that type of shift in attitudes might affect use of energy. The attitudes of later generations are coloured by what they see happening in the previous regime. The individual became a cost rather than a member of the firm’s family. BP In the West the baby-boomers. You can allow for different generations having different values. An attitude similar to the baby-boomers in the west becomes the dominant paradigm. grew up with a mental model that “the powers that be”. That kind of social change is possible by 2050 but not by 2030. “Out to 2030 we expect people to carry on behaving much as they do now.
As this generation takes over the positions of power at the end of the scenario period. and viruses. At that point the rush of water in spring will destroy the crops and the summer and autumn will be a period of extended drought as all the water has been emptied during the floods. Those born between 2015 and 2035 develop very different cultural attitudes to their previous generation. Bangladesh. However. emergency plans are developed to cope with the anticipated devastation which will occur once the glacial melting reaches its tipping point. The disparity of wealth in the mega-cities. they look to move towards a much more decentralised form of government with policy objectives that put sustainability at the heart of the agenda. This effectively neutralises any drive to make information more available to the global community. By 2035 New York had 85 . the poverty in the residual agricultural communities. there is a shift in attitude with the generations.5 billion people in India. The melting of the Himalayan glaciers gathers pace – increasing the agricultural fertility for the countries in the surrounding foothills. Pakistan. Thailand and China who depend on the agricultural productivity of this area.This paradigm persists till 2035 as the governments in the east manage to ensure that internet access to the rest of world is effectively censored. What was an ever improving agricultural haven was threatened with being transformed into an arid desert – and in 2050 this looks like an unavoidable inevitability. and the failure of the past generations to act as responsible stewards of the earth for future generations takes its toll. In the US. Carbon dioxide concentrations in the air are continuing to rise and the world seems to be heading for a 2-4 degrees C rise in temperature by the end of the century. No longer is the unrelenting pursuit of industrialisation seen as the way forward. and introduce privacy and security protocols which serve to limit the internet freedoms offered to the population in the first 10 years of the century. By 2035 the “compromise” on climate change policy is being perceived as having led to significant instability in weather patterns around the globe. The more and more regular serious weather events become perceived as being linked to the rising levels of CO2 in the atmosphere. In the West governments become more and more concerned about the unwanted dissemination of materials. This is good news in the short term for the 1. simply through the passage of time and the ageing of the old guard.
” James Cavanagh. Or resource conflicts. BP By 2050 a much more active dialogue has developed between the west and the east as the new generation look to recover from the legacy of the past. RWE npower “A wake up call in terms of a disaster could be the wake up call that gets China and the US thinking that they have got to do something” Paul Appleby. “If there was a general perception change that we needed to move faster (on climate change mitigation) then that would lead to all sorts of policy initiatives. Whilst there had been much democratic rhetoric – there had been staunch republican opposition to the implementation of effective climate change mitigation policies. The older generation remained convinced that markets would deliver the solution – their economic rational leaving no space for considering externalities such as the costs to future generations of inaction. 86 . The more seriously this is taken the more likely they are to be ones that are less concerned about the free market. Some really big either natural or social disaster could shift consciousness” Paul Appleby. as having failed spectacularly. by the younger generation. The narrow economic model of the 20th century was seen. BP The younger generation sees the impotence of the political establishment as leaving a legacy for the young and the generations that follow them to clean up. RWE npower Social networks The phenomenon of Facebook and collaborative information sharing sites such as Trip Advisor continues. “Some kind of natural catastrophe that convinces people that climate change is real and that they have to do something about it. shareholder value and market efficiency and more worried about just solving the problem and getting something done” James Cavanagh. “If things started to happen (climate change impacts) sooner that could have a dramatic impact on policy and response.been seriously flooded three times and New Orleans and Miami had endured death and destruction on repeated occasions after repeated hurricanes and tornadoes.
This change in the nature of the internet enables the status quo to persist till the end of the scenario period. we can see customers being cleverer in the way they go about their purchasing and the way they share information and understand what products and propositions are out there. RWE npower but the names and organisation which are the focus of attention change as new functionality makes the alternative kid on the block becomes the “must go to” on the web.” James Cavanagh.“Looking at the customer relationship. energy user groups. The narrative looks at three areas: Industrial and Commercial (I&C) markets 87 . with social networks like Facebook. Figure 21: Citadel – Market Source: Enstra Consulting BUSINESS INSIGHTS This section of the scenario narrative deals with energy markets and how they evolve between now and 2050. Whilst social networks continue to thrive they migrate onto propietary platforms which protect users from viruses and can assure their privacy and security (with the exception that law enforcement agencies have ubiquitous access).
Transport In the west the dominance of the internal combustion engine persists with advances in engineering design making significant improvements to the fuel efficiency of the car stock. 88 . Furthermore since the lifetime of coal resources is seen to be short (10 -15 years) the investment in CCS is seen as an investment in a “to-be” stranded asset. the former Soviet Union and Eastern Europe. The anomaly that carbon emissions are tagged to the country of manufacture rather than the country of consumption means that China comes in for more criticism for its emissions performance than it deserves given it is using the energy to meet the demands of consumers in the west. In addition the trend towards outsourcing energy intensive manufacturing to regions of the world with access to energy resources and cheaper labour continues such that there is a continued exodus of manufacturing to China. India and other Asian countries. Carbon capture and storage (CCS) is proven as a technology in Europe but fails to gain penetration in China since it is seen as putting the Chinese economy at a competitive disadvantage in the absence of any accords to mandate the technology internationally. Even though China recognises that its coal resources are finite it sees it preferable to use domestic energy production to fuel its economic growth.Transport Residential Industrial and commercial markets Market demand for energy to meet the requirements of industrial and commmercial users follows trends in population and GDP. By 2050 China has the same GDP per capita that US citizens enjoyed in 2011 – and market demand for products and services booms accordingly. The cost of batteries and the lack of significant government subsidies and support for both vehicles and infrastructure hamper the development of electric vehicles. This creates one more point of dissonance in the climate change debate which sees no move towards substantive international accords.
China had the largest number of electric vehicles of any country in the world in 2010 and becomes the dominant force in EV markets globally by 2050. Hydrogen had however made no in-roads. That would be the biggest technological change. Local commuting was supported through electric bikes which even in 2010 were outselling electric cars by a factor of 3 to 1. 89 . By the end of the period.” Paul Appleby. The growth of electrically powered cars was assisted by the development of a magnetic resonance recharging infrastructure in the 2030’s which enabled kerbside charging of electric vehicles through the roadway beneath the parked car thus obviating the need for wires and posts. This scheme ensured that the increased per capita income did not translate into the car ownership and usage levels experienced in the US – indeed levels were maintained well below EU levels. Within cities a well-developed public transport infrastructure is put in place including trams and metros together with a government sponsored electric vehicle rental scheme akin to the zip car and street car schemes which started up in the west in the early years of the new millennium. The Chinese government recognises that adoption of a US style solution to individual mobility is simply not viable in China without subjecting the citizenry of the emerging mega-cities to constant gridlock and intolerable levels of urban air pollution.“Is there a breakthrough battery technology that makes it a lot cheaper and a lot more cost effective to use batteries. the solution that has been put in place is a multi-faceted public transport solution with different modes of travel for different journey types. BP That said the drive towards increasing biofuels use continued with 15% of liquid fuels being biofuels by 2050. primarily in vehicles but there are of course a number of uses. In the east the challenge is coping with the urbanisation of the population. Long distance travel is focused on a high speed electrified rail network rather than aviation in order to limit the requirements for oil product imports. Counting electric bikes.
In Western Europe. This brings with it an increasing demand for electricity. In Western Europe.to do that it would have had to start off now” Paul Appleby.“Hydrogen itself is a nice clean fuel . 90 . In the first camp a number of countries decide to embark on major retro-fit programmes to capitalise on the smart meter roll-out between 2011 and 2020.but how do you produce the hydrogen. The focus of attention is in countries with high energy demand per household. France and Germany represent the extreme archetypes. with its focus on EU driven carbon reduction targets. National programmes succeed in delivering 5-10% reductions in residential energy use through a mix of smart energy management. BP “Hydrogen does not feature in our 2030 projections at all” Paul Appleby. So you probably have to solve the CCS problem at that end of the chain to get hydrogen to work or have it produced from solar power or something” Paul Appleby. Germany. BP “Hydrogen is not going to be taking over the world in 2050 . and those countries going through the urbanisation process that could choose new models for the development of their urban dwellings. better insulation. typically those with a high heating requirement in winter. BP Residential Residential developments will fall into two camps. Nation states make technology choices. and deployment of heat pumps. the activity is directed toward renewables and nuclear where public opinion supports it. nuclear sourced electricity. but this is sourced from renewable/nuclear resources to the maximum extent possible. France opts for the primarily nuclear solution – continuing its energy policy established at the end of the 20th century. In one camp there will be the countries with existing housing stock that could be retro-fitted to improve its energy efficiency performance. and these differ around the globe. avoids nuclear but develops its renewables – although it becomes a major importer of French.
China opts for maximising short term use of existing resources – primarily coal in the period 2010 to 2025. the country becomes a leading proponent of integrated PV in the fabric of buildings. In order to gain clients in the western European and US markets a “Green” seal of approval is a business asset and this solution provides just that. China becomes involved in both North African and Middle Eastern reconstruction initiatives in order to secure access to the liquid hydrocarbon and gas imports which growth at the beginning of the millennium have made a feature of the Chinese energy balance. Given China’s build of new city environments as part of its urbanization programme. India takes the lead in solar farms as a natural complement to its IT services industry. 91 . Thereafter the focus shifts to the development of its unconventional gas reserves in order to minimise the country’s import dependency. In the latter half of the scenario period the UK switches it attention to developing its plentiful unconventional gas reserves associated with its historical coal industry and offshore gas activities – for which in both cases production of conventional coal or gas is no longer economically feasible. In the interim. and PV windows enable Chinese city environments to be 20% less energy intensive than older cities around the world. Germany for a renewables one.As described above. access to low cost energy conveys a distinct competitive advantage on an IT services provider. France opts for a nuclear future. With datacentres using the same amount of energy as aviation. PV tiles.although finds the uptake of EVs limited and the use of heat pumps problematic when deployed in densely populated urban areas. The developments in the beginning of the second decade of the century in the fields of PV paints (Mitsubishi). Between 2000 and 2025 the UK opts for the electrification of transport and heating . In this world nation states adopt policies which suit their own circumstances – they make the technology choices for better or for worse.
Utility structure This world is characterised by large centrally driven capital projects and the utility industry is shaped to meet this decision making format. and new generation assets. The energy and energy services markets remain in the hands of the energy utilities. Large integrated companies. which suits national governments who wish control of the industry whether it is in private or public ownership. such as Germany. smart grids. Governments find it very convenient to blame the industry publicly for causing prices to rise. Energy companies are key instruments in the implementation of social policy with respect to subsidising vulnerable groups in society for both their energy and energy services requirements. often operating internationally are the norm. whilst at the same time insisting that the industry make the investments which are causing the prices to rise. Even countries with a more fragmented structure.Figure 22: Citadel – Energy Industry Development Source: Enstra Consulting BUSINESS INSIGHTS Figure 22 depicts how the structure of the Utility industry evolves over time in the Citadel scenario. undergo restructuring to a more concentrated industry structure as small companies find they cannot finance the large investments required in smart meters. 92 .
93 .territory that infrastructure investors who are mindful of pension fund returns would not want to go to. But once it is up and built and its got a 20-40 year tariff set by the government .Industry character The industry becomes more and more regulated as governments recognise that investors need certainty of returns to finance the investments needed in energy infrastructure. Once it is built (the nuclear generating station) it is refinanced with the infrastructure investors and we churn the money through and keep on going..a CEGB type approach” James Cavanagh. “If we move to costly expensive forms of renewables. The Utility industry can be described as solid and safe. If we are now looking at 2030 or 2040 one scenario could be a fully regulated model . or the costs escalate . It could mean that the early stage bit. when you are taking risks and getting a better return for it will stay with the utility. We will attract funding from pension funds and sovereign wealth funds under current proposals for CFDs. If you take nuclear for example at the moment it would be very difficult to get it financed because of all the many risks that surround it. Standardisation of offerings to minimise costs.then it is potentially a very attractive investment for an infrastructure investor……. RWE npower With this comes a culture of a regulated rather than a competitive market. and nuclear in time to meet the low carbon agenda and security of supply now then that's a way (fully regulated in the same way as distribution networks) that it may well go which is very different to the way it has been over the last 20 years…. the developer bit. If you are continuously releasing capital all the time you can have an on-going programme over 25 or 30 years. I cannot imagine anyone else doing it.that sort of regulatory model . and inertia in decision making are the hallmarks of the industry. At the start of the program something like Japan happens and it is put back another two years because another safety standard has to be brought in or it is stopped altogether.
at least at the beginning of the period with China using coal for 79% of its generation and India 69% in 2008 (source IEA WEO 2010). “How far and how fast will nuclear come on post the Japanese crisis” James Cavanagh.8 => 3.000TWh to 35.000TWh with 50% of this increase accounted for by China (3.” James Cavanagh RWE npower The European Union is the only region in the world which implements carbon capture and storage for coal fired plant.aggregation services for example . Will it be through demand side management . “How will we see the intermittency of renewables being managed. And that is what you would use to meet your peaking requirement where you just run it a few hours per year through a contract with National grid (STOR . Whilst bringing CO2 benefits. RWE npower 94 . “I think there is a big question over CCS. Both China and India rely on coal to fuel this increase. Nuclear exhibits modest growth over the period. Imperial College Up to 2035 both world electricity demand nearly doubles from 20. and will it work financially. By the end of the scenario period China’s coal dependence had dropped to 45% and India’s down to 47%.5 => 9.short term operating reserve). this hastens the departure of energy intensive industries to the east where CCS is not mandated.6TWh) and India (0. They are much cheaper per megawatt capacity but more expensive in terms of fuel usage per megawatt hour…… In an OCGT you just burn the fuel in it (could be aero derivative engines) and take the power off it. with the growing amount of renewable generation being backed up with spinning gas fired reserve – new OCGTs (open cycle gas turbines) are built to provide this capacity.1TWh). Whilst relatively inefficient compared to a CCGT (Combine cycle gas turbine) the lower capital costs and low utilisation make this the most economic option.Generation In the Citadel world generation remains a centralised activity. Will it work technically. We still don't know enough about that” Marcello Contestabile.or are we going to be looking at the need for reserve services and building OCGTs (Open cycle gas turbine stations)? These are the cheapest way of providing peaking plant.
With its new commitment to reducing CO2 emissions. more than 35x the size of its conventional gas reserves. In keeping with its desire to minimise its exposure to imported hydrocarbon China drives ahead with its commitment to wind power which grows to 15% of electricity production by 2050. In essence this is a world in which the “Trilemma” priorities are affordability and supply security.250 trillion cubic feet. China builds the world’s largest solar array in the Gobi desert. The hoped for breakthrough in battery technology has proven to be elusive. Technology Smart metering has become ubiquitous by 2025 and with it has come the ability of utilities to use demand response to balance the electricity system with its increasing renewables component. which has kept the capital cost of electric vehicles relatively high with the battery costing typically 50% of the total cost of the vehicle. and the technological advances made in the field of concentrated solar. Climate change effectively only appears on the EU agenda as China and India expand their economies on the back of coal fired generation. This move from coal to gas brings with it the opportunity to offer CO2 reductions as part of the international climate change accord which now emerges. with its coal resources dwindling China turns to the exploitation of its unconventional gas resources which are estimated at 5. 95 . By 2050 more than 25% of the world’s electricity is being produced from renewable resources.Energy sourcing Post 2035. Energy system implications Fig 23 summarises the elements of the “Citadel” scenario. Even in 2050 electric vehicle and plug-in hybrid sales are less than 20% of new car sales.
following the weather event shocks. In the following years there is a switch away from coal and into gas (based on the exploitation of un-conventional gas resources). Hence. It has then been assumed that action is taken. and residential. There is also some diminution in oil demand from the slow but steady take up of electric vehicles. Electric cars hardly make any impact and hydrogen does not come in to any significant extent to play either at the generation level (as an energy storage vector) or as an end use fuel. and including 2035.Looking at the energy system which was explored in Chapter 3 we can see that the global increase in GDP drives up energy demand which translates into both increased hydrocarbon demand and increased electricity demand. to try and remedy the climate change situation. industrial and commercial use. The status quo is maintained in terms of the fuels used for transport. the quantifications carried out by the IEA have been used up to. Figure 23: Citadel – Overview Source: Enstra Consulting BUSINESS INSIGHTS This scenario is akin to the new policies scenario developed by the IEA in their World Energy Outlook 2010. 96 . although by then it is too late to avert significant consequences. This increased demand for electricity is met through central generation resources.
Enstra Consulting estimates BUSINESS INSIGHTS In this world. Utilising BP’s global conversion factors the CO2 impacts of this hydrocarbon demand can be calculated.344 2050 2. Table 21: Citadel .596 9.Table 21 shows the energy outcome in terms of hydrocarbon demand. The result of this calculation is shown in Figure 24 and clearly demonstrates the climate change pressures associated with this scenario with CO2 concentrations peaking in 2035 before mitigating policies get put in place triggered by a series of extreme weather events. with strong hydrocarbon demand.000 tonnes CO2 emission level needed to keep global warming less than 2 deg C.hydrocarbon demand.222 1. 1990 – 2050 Product Coal Oil Gas Total hydrocarbon 1990 2.662 3. 97 .059 2. With the lack of international agreement on Carbon reductions no strong carbon price emerges. In this scenario the world fails to get anywhere near the 20. while oil and gas prices remain high they are also highly volatile leading to price peaks as events unfold in the region.500 12.602 4.934 4.748 12. oil and gas supply is highly dependent on Middle East stability – a region going through many perturbations over the scenario period.970 2035 3.674 7. we can foresee that hydrocarbon prices will be high – providing the stimulus for continued investments in supply. (mtoe).315 4.129 2008 3. Hence. However.950 4.233 3.052 Source: IEA WEO 2010. Supply disruptions and price peaks take their toll on global economic growth leading to a bumpy profile of hydrocarbon demand in the years between the snapshots shown in Table 21.
000 40.000 35. (million tonnes CO2). BP statistical review and Enstra calculations BUSINESS INSIGHTS Primary Energy CO2 emissions.Figure 24: Primary Energy CO2 emissions.000 15.000 25.000 20. (million tonnes CO2) 98 . Citadel 45.000 10.000 30.000 5.000 0 1990 2008 2015 2020 2025 2030 2035 2040 2045 2050 Source: IEA.
Fragmentation of the utilities sector with some players exiting retail and new players coming in with a strong consumer market pedigree Hydrogen plant built in conjunction with nuclear and wind facilities. High global carbon price established which is used to finance investments in CCS in China and India. Electric.Chapter 5 The Patchwork scenario Summary Patchwork quilt of initiatives on the energy stage Bottom-up decision making – enabled by effective and ubiquitous social networks linking both local communities and shared interest groups Awareness in the Asia Pacific of the potential consequences of climate change – in particular the aftermath effects of Himalayan glacier melting International accord reached on climate change.Bio-mining of shale gas. DC circuitry and PV solar. Vehicle mix contains significant shares of CNG. algae farming for biofuels Earlier and bigger nuclear and renewable generation build Significant distributed generation in local communities as well as in the home CO2 from primary energy peaks in 2015 and then steadily reduces to well below 1990 levels by 2050 99 . hydrogen and also traditional hydrocarbon powered cars Innovation in residential markets. LPG. proto-cell paints. Initially to transform the load shape of the plant – later on to provide hydrogen to the emerging residential fuel cell and H2 vehicle markets Rapid exploitation of solar arrays in desert locations with DC interconnection to demand centers Rapid adoption of new bio/nano technologies . hydrogen fuels cells. heat pumps.
RWE npower The outcome is then quantified by difference with the “Citadel” scenario. However. Within nation states.Introduction This chapter looks at an alternative pathway to the future that resembles a patchwork quilt of initiatives and developments on the energy stage. Social media means that community of interest groups can club together spontaneously and organise their lobbying activities. and in “patchwork” there is great diversity in the chosen solutions to issues facing communities. “I think the biggest issue is to what extent we respond to the low carbon agenda” James Cavanagh. and industry developments. Again the scenario is explored by looking at societal developments. cities and regions expect and grasp more autonomy. 100 . market developments. Figure 25: Patchwork – Society Source: Enstra Consulting BUSINESS INSIGHTS Society In the “Patchwork” scenario policy making is very much influenced by grass-roots thinking and communications. not all communities want the same.
By 2010 there were 50 million more Chinese males than females. They have also provided the medium for organisation of shared interest groups. As the decades passed social networks became part of the political and sociological infrastructure enabling nearly real-time feedback to organisations and governments on the ground-swell of public opinion on the issues of the day. China resisted this facet of 21st century society for the first 15 years of the new century but eventually relaxed internet access controls. Not only was public perception to organisational initiatives and public policy made visible. They were also used by dis-affected members of the community in the UK to organise riots and looting in a number of major cities. This change came about from the seeds of change sown in the last century. The one child per family policy had the unintended consequence of increasing the number of males in society as female foetuses were aborted by families wising a male heir. it led to the shaping of those initiatives and policies themselves. Since.Social networks Since their inception at the beginning of the century social networks have formed an increasingly powerful coagulating force for groups of common interest. Their reach is global and their scale is astounding. One of the observations this group brought back with them was the beneficial power of the internet 101 . In the second decade of the century we saw these networks being used to organise protest which led to regime change in a number of countries in the Middle East. it was the richer members of society that had this greater mobility the impact on Chinese society was particularly strong since this group of individuals were disproportionately represented in the management and political cadres of society. In “Patchwork” the collaboration potential of communities of shared interest was unlocked by the advent of this many to many communications medium. This led to significant numbers of Chinese males travelling abroad in search of a mate – and bringing back with them attitudes and perceptions coloured by other societies.
In Europe there is a shared belief in the risks of allowing man made CO2 emissions to grow together with a realisation of the supply risks. continue to be strong advocates of the need to mitigate climate change risks. Both are central to their lives and have been from childhood. this generation takes over the reins of power they insist that the voices of the community are listened to. In China. Even the generation before is very much influenced by the issues facing its community. both in terms of supply disruption and high prices. This view is however not shared by the west of the country where oil is central to the economy.and social media. Cultural attitudes Anyone born after 1990. Their views however are coloured by the issues in play in their own community. with access to the internet. In contrast Californians – who experienced the full force of energy supply disruption during the black-outs at the turn of the century. due to the passage of time. 102 . The benefits were seen to arise from the ability to rapidly engage in product development based on real time feedback from consumers across the world. Being able to communicate directly with the global consumers was something that China’s competitors took for granted and was something that as time passed was putting the People’s Republic at an ever-growing competitive disadvantage. In the growing cities urban pollution made life intolerable for many who were effectively economic prisoners – having to live in the polluted urban environment in order to survive from an economic perspective. With China exporting more and more on the basis of quality rather than price this becomes a more and more significant determinant of economic success – and this in turn caused policies on censorship to be relaxed. of becoming ever more reliant on energy imports. When. In the southern and eastern seaboards of the US the increasing frequency and severity of weather events causes public opinion to err on the side of accepting the climate change thesis that man-made carbon dioxide emissions are a real threat to humankind. thinks that social networks are as natural a means of communication as the mobile phone. the relaxing of internet censorship brought together groups of common interest and political pressures which drove policy measures.
Climate change policy The desire to curb urban pollution as well as avoid the impacts of climate change becomes part of grass roots thinking in most parts of the globe.In the west of the country the consequences of glacial melting of the Himalayas was a true local issue of life and livelihood threatening proportions . Imperial College An international agreement on carbon pricing is agreed. or not. were well aware of the potential for human catastrophe of the melting of the Himalayan glaciers which could ruin the livelihood of 1. The ability of people to express these views and influence public policy causes the governments within the international community to reach a binding accord on climate change in 2017. as well as the population in the west of the country.3 billion people in the affected countries.The Chinese government. The social and political upheavals that could arise thereafter were seen as a “must to avoid”. with the proceeds from carbon being fed back into the energy system to pay for carbon reduction investments such as the installation of CCS on Chinese and Indian coal fired generation plant. on binding global targets will put us on somewhat different trajectories” Marcello Contestable. “Whether there will be global agreement. 103 .
Hydrogen sterling engine vehicles and hydrogen fuel cell vehicles. diesel. The diversity in products available within a given market-space has grown enormously. Full electric cars and plug in hybrids. The traditional manufacturing organisations who would take years to develop and launch a new product. find themselves unable to compete with more nimble and fleet of foot competitors. such as car. We have LPG and CNG vehicles. methanol and various bio-blends. Looking at passenger cars we have cars that run on petrol. The need to be able to evolve new products in months to meet changing consumer tastes both in the home market and internationally becomes paramount. Two developments have brought about this change.Figure 26: Patchwork – Market Source: Enstra Consulting BUSINESS INSIGHTS Industrial and commercial markets By 2030 the nature of commercial and industrial markets had changed radically. 1. The markets have become much more diverse and fragmented. We have hybrids with auxiliary battery power drawn from the capture of waste energy. 104 .
“There is an IEA scenario where you have almost an equal share of electric vehicles. A computer aided 3D design is used to create the desired shape from a vat of the desired material and the product is formed molecule by molecule as the finished article is drawn out of the vat. The technology was developed during the 1990s and used by the mobile telephony industry to design new hand-sets.2. a lot more modular businesses. and hydrogen fuel cells. If we take an I&C customer you might take your energy from here. biofuels. “In another (scenario) we could see much more fragmentation. That to me is more realistic (than an essentially electric vehicle world) “ Marcello Contestabile. With respect to energy supply to this sector some of the industry fragments as customers disaggregate their needs.” James Cavanagh.” Marcello Contestabile. Imperial College Diversity is the order of the day in this scenario. For a market driven by design and speed of product development this technology allows for low production run manufacturers to compete effectively. For short commutes between home and work the e-bike becomes the mode of choice. RWE npower Transport “Technologies that enable the batteries and fuel cells to take over completely from the internal combustion engine are all technologies that were in the lab already 30 years ago. Over the following 10 years the population of electric bikes in China had risen 105 . New manufacturing techniques whereby many products are now “grown” rather than manufactured. but that diversity is focused on low emission vehicles and on a portfolio of mobility solutions for each individual. This form of transport originated in China at the beginning of the century where by 2010 more than 20 million electric bikes were being sold each year in China. Imperial College With increasing urbanisation car travel in the major cities is slow and painful at peak times of day. and your risk management services from somewhere else. your services from there.
Imperial College 106 .this is not a prediction it is what we would need to deploy in order for us to be able to decarbonise transport” Marcello Contestabile. “By 2030 we had quite a lot of the new car sales being hybrid. BP “For 35% of vehicles to be fuel cell we would need a full scale hydrogen infrastructure . Penetration of electric vehicles and plug-in hybrids soars.” Paul Appleby. 2030 seems to be a tipping point .which is not cheap but this includes the fuel and the maintenance. “If you live in California or Japan you can lease a hydrogen fuel cell car and drive it around for $600 a month . We could be producing liquid synthetic fuels from renewable energy .to 500 million and China had established itself as a global provider of electric powered personal bike transport. technically possible. With hydrogen being manufactured at scale (see generation below). Imperial College Electric vehicle uptake also showed strong growth.that is possible. By 2050 you could easily have over half the fleet electric. There would also be obviously (in 2050) batteries and fuel cells . “In 2050 there will still be internal combustion vehicles around but potentially running on biofuels or other synthetic fuels. but a relatively small part of the fleet by 2030 due to the lifetime of vehicles.thereafter things start to change very rapidly. Imperial College Battery technology improves dramatically in terms of both performance and cost in the second decade of the 21st century on the back of advances in design at the molecular level pioneered in the University of Illinois in 2010. This in turn shifts the economics of electric and plug-in hybrid vehicles by removing in excess of 25% of the vehicle cost.which would not be significantly different from what we have today for petrol and diesel. if not fully electric. Both forms of transport made attractive by the high carbon price applied to traditional hydrocarbon fuels. You would also need to have dedicated hydrogen production” Marcello Contestabile.” Marcello Contestabile. investments in distribution infrastructure followed leading to hydrogen powered vehicles achieving a significant share of the market by 2035.
Again diversity is the order of the day and a broad array of energy solutions takes their share of the residential stage. they would be quite happy to do that. China is leading the innovation in the transport sector on the back of strong and growing demand in its home market. In the residential sector these include improved insulation. RWE npower Externally the use of proto-cell paints becomes standard in the ever growing cities of the world. and that is not there today” Paul Appleby. In particular it has taken off in Germany as a result of the tariff structures they have brought in there. CNG. This is seen as 107 .Commercial road transport also exhibits diversity with a balanced portfolio of technologies taking their share of the vehicle park by 2035.” James Cavanagh. the installation of PV tiling and windows and DC circuitry to run electronic equipment. Hydrogen fuel cells are adopted by countries with an established natural gas distribution network to provide both electricity and heating. which became available in the second decade of the century. In the first implementation these run on natural gas which is converted to hydrogen in the home or in the local community energy plant through reforming. and diesel vehicles. react with CO2 in the atmosphere to create an insulating cladding on the building thus both reducing energy consumption and mitigating the climate change impacts of CO2 in the atmosphere at the same time. housing schemes around the world are able to take up technologies that reduce energy consumption and combat carbon emissions. Again spurred on by the heavy carbon tax on hydrocarbon fuels the vehicle park consists of a mix of hydrogen. “The Chinese could leapfrog technology in automotive. Yes. you have got to get the demand for green vehicles first. they would be certainly happy to go for a world market that wants to go green. However. “In the European context solar is interesting. BP Residential With investment in improving the energy using infrastructure being an agreed outlet for carbon price revenues. Many short range light vans are either plug-in hybrids or fully electric by 2035. These paints. They are already the world's largest manufacturer of wind turbines and solar panels. So yes.
battery stores are commonplace by 2025. Figure 27: Patchwork – Energy Industry Development Source: Enstra Consulting BUSINESS INSIGHTS 108 . These enable the excess production of electricity from micro-generation. As hydrogen infrastructure becomes more commonplace the hydrogen is delivered directly to the home or the community generating station to provide a carbon free solution (with the hydrogen being made from a zero carbon energy source).a positive step in managing carbon emissions as it avoids the 50% losses of energy inherent in traditional centralised CCGTs and in the transmission and distribution of the associated electricity. typically the fuel cell and PV combination to be stored thus minimising imports from the grid. Off gas-grid heat-pumps are particularly popular and are classed as a renewable resource for carbon taxing purposes. In the home.
Utility structure A number of divergent characteristics emerge in the utilities sector. In electricity infrastructure that is for generation. for example demand management and insulation. On the one hand there is the need for major infrastructure investments. but we also supply other energy services. Will the industry be there simply pushing out energy in some sort of regulated regime or are we more fleet of foot and doing all sorts of interesting things such as a range of services into the home with say Sky or Virgin. “To what extent will we be selling core energy in the future. 109 .. RWE npower The retail part of the business is so different from the infrastructure side that many traditional utilities decide to exit their retail operations and concentrate on delivering capital projects. RWE npower Effectively the value chain fragments. a deal with Renault for your electric car and a charging post in the home” James Cavanagh. The gas infrastructure business the nature of an oil and gas company…. On the other hand there is the need to meet ever changing customer requirements in terms of the energy products and services being offered to consumers for their residential and transport needs. The electricity infrastructure business has the character of a regulated utility. and how much will we be moving to an environment where there is a longer term relationship with the customer where we don’t just supply energy. as we do now. transmission and distribution. “A really interesting question is the degree to which the UK markets will be regulated on both the retail side and the generation side” James Cavanagh. and the energy services market has become a typical consumer goods environment. There is also a significant investment requirement for the exploitation of unconventional gas reserves. This allows in new players who come from consumer facing businesses such as the telecommunications and media businesses.
“Will the US and China agree a common approach on climate change” Paul Appleby. community and residential sectors. BP For a wind farm this enables wind generated electricity to be stored when demand is weak enabling the total facility to offer a dispatchable electricity service akin to that of a traditional generating station. Generation With the international accord on climate change comes an acceleration in the build of nuclear. The retail part of the sector is transformed by the changing cast of players – all fighting for the attention of the consumer who has unparalleled access to product and service performance information. from other consumers given the ubiquity of social networking. The infrastructure part of the business is also innovative and vibrant.Industry character The “Patchwork” world is much more innovative and vibrant compared to the “Citadel” world. With over 1/3rd of the earth’s surface a desert with very high levels of solar irradiation during the day the logic for the development of large scale solar farms becomes compelling as developments in solar PV cells lead to yields improving from 10% to 20% of incident energy being converted to electricity. For a nuclear facility this allows the energy produced during periods of low demand to be stored effectively turning a base-load generator into a production facility that can perfectly match supply and demand thus promoting the installation up the merit order. 110 . A number of infrastructure developers build hydrogen plant as part of their overall deployment. (The hydrogen is stored in a slurry and converted back in to electricity in a fuel cell). Not because of the need to beat the competition in meeting the needs of individual consumers but in terms of the diversity of technological solutions becoming available. This electricity is then transported by DC cable to the demand centres. Over time the hydrogen becomes the raison d’être for a significant number of developments where it is stored as pure hydrogen such that it can be transported to meet the needs of the transport. wind and solar generation.
In the urbanising nations.I don't think so. This circuitry can then also utilise in-home solar built into roof tiles and windows. It will be a question of energy security and country to country relations” Paul Appleby. Due to the international accord on climate change countries such as China and India find they can subsidise (out of the international carbon price revenue fund) the retro-fit of CCS (carbon capture and storage) enabling carbon emissions to be substantially reduced without impacting on the economic competitiveness of the country’s economy. given the need for new build rather than retro-fit housing.but can we meet our targets without it . Imperial College The high carbon price. and economically feasible. BP Two of the major project completed in 2025 and 2030 respectively were the North Africa to Spain link and the “Silk Road Genesis Plan” first conceived of in 2006 to link a concentrated solar facility in the Gobi desert to the regions of China and neighbouring countries. Later in the period wave-power becomes economic and again is associated with hydrogen production facilities to match supply and demand.“DC connectors are technically possible.” Marcello Contestabile. together with the desire of local communities to have a say in. “In a 40 year time scale we may potentially see CCS (carbon capture and storage). houses are built with separate AC and DC circuits to enable them to take the DC feed from the desert solar installations without the (5%) losses in energy associated with the inversion of the current from DC to AC. and a significant influence on. the energy choices being made in their communities spur on the developments of community 111 . Utilities also find that the total investment required to provide sufficient capacity in the system is reduced as peaking capability is built into the low carbon generating units via the inclusion of the hydrogen option. It is difficult to know the time that will take since we don’t really have anything to work from” James Cavanagh RWE npower “With CCS there is a lot of policy uncertainty and therefore uncertainty regarding how much of a return you will get on your investment .
community schemes are much more energy efficient since the waste heat can be utilised by the local community and the electricity transmission and distribution losses avoided.and in fact I would argue that hydrogen would essentially support and bring in more decentralised energy generation. 112 . like parts of China where they are not yet urbanised. “Distributed decentralised energy is probably compatible with batteries and hydrogen . rapidly advancing world that is the Patchwork” scenario advances in bio-engineering and nano-technology enable bio-mining technologies to become available for the fracturing of geological formations containing gas in a much more controlled and effective manner than the high pressure water and chemical injection technologies deployed to extract US shale gas at the turn of the century. BP So from both an economic and community preference perspective the balance between centralised and distributed generation shifts dramatically over the period. Furthermore transporting hydrogen is more expensive than transporting liquid fuel so the production sites would probably be nearer the demand than for example oil refineries. Imperial College Energy sourcing In the innovative. These technologies are pioneered by a joint venture between the Chinese and US government as part of the climate change accord and allow both governments to dramatically reduce the environmental impact of extracting unconventional gas resources.whilst you do need dedicated hydrogen production facilities these would not be at the same scale as a traditional power station otherwise they would be massively under-utilised. by 2050 we could see a much more distributed network of generation (electricity).” Marcello Contestabile. maybe they will leapfrog to this more decentralised pattern” Paul Appleby. “With the kind of smart grid technology that will be available then. This is because .generation. Developments in the field of algae farming provide for both large scale carbon absorption capacity (the algae absorbing CO2 as they grow) as well as a ramping up in biofuels production. As was the case when comparing in-home generation to a CCGT. In places that haven't industrialised yet.
Figure 28: Patchwork – Overview Source: Enstra Consulting BUSINESS INSIGHTS Energy system implications In “Patchwork” a diversity of energy supply and energy use technology abounds. the emergence of hydrogen vehicles at scale. the growth of gas. Communities exert their influence on the body politic and are pivotal in spurring on governments to both reach an international accord on climate change. home and community micro-generation together with solar PV embedded in the fabric of new build housing leads to a significant reduction in hydrocarbon demand compared to the “Citadel” scenario. but also to allow individual communities much greater control of their own energy system which then leads to a pluralistic mix of central and distributed generation to emerge. The more rapid build of nuclear and renewable capacity. the more rapid take up of electric vehicles. and then hydrogen. This world is one in which innovation thrives both at the consumer end of the value chain and in the realm of energy sourcing and generation. 113 .
Clearly there is a bit of a question mark against it now following Fukushima. From 2015 the year on year increase in nuclear generation doubles “Nuclear.” Paul Appleby. BP From 2015 biomass and waste increase by 15% vis a vis the Citadel assumptions. 114 . BP Gas – same as Citadel. For this reason gas assumptions are held constant. To illustrate. we have it growing in our projections.but there are limited opportunities now to grow that” Paul Appleby. The economic benefits will accrue to future generations as the costs of climate change remediation are avoided – and this is a situation that communities support in this scenario. RWE npower Hydro – same as Citadel – limited by availability of natural resources “Big hydro still growing . However. with high carbon prices it will be coal fired generation that is abated rather than gas due to the higher carbon content of coal. From 2015 other renewables double – reflecting large scale solar implementation “I can see the prices of silicon wafers continuing to come down and can see a much bigger take up of that (solar power) in the future” James Cavanagh. rather than calculate. In both scenarios unconventional gas is exploited toward the end of the scenario so gas assumptions are the same in both.This in turn leads to reductions in hydrocarbon prices relative to the “Citadel” scenario as well as to a reduction in the volatility of those prices as the world has sufficient hydrocarbon production capacity to be able to withstand any oil and/or gas supply disruptions in particular countries. the potential energy outcomes of “Patchwork” scenario the following assumptions were made relative to the “Citadel” scenario. Although a significant proportion of the gas that was due to be burnt in CCGTs will now go to community or home generation. But we don't think that will stop the Chinese and the Indians from building nuclear plants. Consumers do not feel the economic benefit of these cost reductions directly since they are compensated for by the high carbon price which is used to channel funds to energy and carbon saving measures such as CCS on coal-fired generation or community based generation schemes.
315 4.052 mtoe. When comparing the two scenarios. (mtoe). Much of the difference is taken up by oil which in the “Citadel” scenario accounted for 4.602 4. 1990 – 2050 Product Coal Oil Gas Total Hydrocarbon 1990 2.96 in 2010 to 0. “By 2050 having 90% of vehicles running on electricity is not realistic but 50% could be” Marcello Contestable. Figure 29 shows the CO2 outcome in the “Patchwork” scenario.129 2008 3. Driving the CO2/mtoe coal ratio gradually down from 3. whereas in “Patchwork” it is 9. rising to 40% in 2035. 200 less in 2025. Thereafter a steady 10% decline per annum.596 9. total hydrocarbon demand in 2050 in Citadel was 12.039 mtoe reflecting a much higher penetration of electric and hydrogen vehicles.602 mtoe in 2050.344 2050 2.970 2035 3. 115 .934 4. Imperial College Table 22: Patchwork – hydrocarbon demand. CCS implemented from 2025 onwards. Thereafter 200 mtoe decline year on year. and even more importantly the introduction of CCS on coal fired power stations.Oil – 10% drop in demand relative to Citadel in 2020. Coal – 150 mtoe less than Citadel in 2020.233 3.052 Source: Enstra Consulting estimates BUSINESS INSIGHTS The CO2 outcome is also markedly different due to the reduced hydrocarbon demand. and 300 less in 2035.674 7.573 mtoe.748 12. 250 less in 2030.662 3.2 in 2050 as non-CCS plants are retro-fitted or retired. Table 22 below shows the outcome for hydrocarbon demand based on the assumptions above.059 2. This reflects the displacement of coal by zero-carbon electricity and to some extent gas.950 4.222 1. and in “Patchwork” drops to 2.500 12.
(million tonnes CO2) .000 5. BP In “Patchwork” CO2 emissions peak in 2015 and fall below 1990 levels in 2045.000 10.” Paul Appleby.1 btoe) switching between energy sources and installing CCS can deliver a radically different outcome. (million tonnes CO2) 30.Patchwork 40.000 15.000 20. Patchwork 16. Figure 29: Primary Energy CO2 emissions. BP statistical review and Enstra calculations BUSINESS INSIGHTS 116 . If the world really gets serious about climate change it is going to have to do something on CCS.000 Primary Energy CO2 emissions.000 25.000 0 1990 2008 2015 2020 2025 2030 2035 2040 2045 2050 Source: IEA.000 35.7 btoe. “Carbon capture and sequestration.It is interesting that whilst primary energy demand is very similar in the two scenarios (2035 Citadel 16.
if you want to have fuel cell vehicles with a share of 35% of the market in 2050 they need to be cost competitive and appealing to customers by 2030 at the latest otherwise you just won't get there” Marcello Contestabile.and fast. Finally. changing people's attitudes and preferences takes time. Imperial College.000 tonnes of CO2 emissions is reached. like with vehicles. This is partly because the lifetime of the components of the energy system is quite long.“If we are going to get anywhere near our 2050 targets the change needs to start now . 117 . In the Patchwork scenario the 2050 target of 20. So. regulation also needs to evolve in order to accommodate new technology. Moreover.
Fashion and Technology – How hydrogen has left the energy stage and might re-appear. the “Patchwork” scenario is another possible outcome. CO2 – achieving a low CO2 outcome with the same level of total primary energy demand but a different mix. However.Chapter 6 Issues raised Summary 5 key issues identified and explored. the “Citadel” scenario is a picture of the current state of play extrapolated into the future. and a low carbon outcome are all self reinforcing and self-financing. Carbon and hydrocarbon pricing – How a high carbon price. Community Power – the driver of political change and the infrastructure design of the energy system. Urbanization – a strong pre-determined element which allows for rapid adoption of new technologies where new build and first time ownership are the characteristics of the market as opposed to retro-fit and replacement. combined with CCS. “Citadel” can and may well happen if change is limited in the energy system. and is probably related to man-made CO2 emissions. This chapter looks at the questions posed by the scenarios. From a climate change perspective clearly the “Citadel” scenario is not sustainable whilst the “Patchwork” scenario is. 118 . an international accord on climate change. If you believe that climate change is a real risk. a reduction in import dependency. then the challenge is how to nudge the world from “Citadel” to “Patchwork”. Introduction In essence.
119 .Figure 30: Scenario Issues Source: Enstra Consulting BUSINESS INSIGHTS Figure 30 shows the 5 main issues highlighted in the scenarios which are: CO2 Carbon and hydrocarbon pricing Fashion and Technology Community Power Urbanization CO2 The CO2 emission outcomes in the two scenarios are very different as shown in Figure 31 below.
000 35.000 15. Practically achieving them is going to be a massive challenge. million tonnes CO2 40. 1990 – 2050 45.000 0 1990 2008 2015 2020 2025 2030 2035 2040 2045 2050 Patchwork Source: IEA.000 Primary Energy CO2 emissions. Imperial College What is particularly noteworthy is that whilst CO2 outcomes are dramatically different. BP statistical review and Enstra calculations BUSINESS INSIGHTS “Although scientific evidence suggests that we need to stick to those targets in order to avert the catastrophic consequences of climate change.Figure 31: Primary Energy CO2 emissions. primary energy demand is broadly the same in the two worlds – indeed it might be somewhat higher in the Patchwork scenario if the electrification of transport and heat causes more losses in the system and thus leads to higher total energy use outcome.000 5. The factors that drive the Patchwork outcome vis a vis the Citadel outcome are: 120 .000 25.000 Citadel 20. million tonnes CO2.” Marcello Contestabile.000 30.000 10.
and also CCS and nuclear probably. I cannot see us achieving these targets relying mainly on just one of these options” Marcello Contestabile. 4. oil prices are expected to be high and volatile due to the rapidly growing demand for hydrocarbon based fuels and the continued political instability in oil producing areas. 121 .1. In the Citadel scenario. and less volatile (less sensitive to political troubles in the middle-east). the diminution of demand for hydrocarbon based transport fuels. In Patchwork the international accord on climate change creates a high carbon price which is deployed as a hypothecated tax whose revenues are used to fund CCS installation in China. 2. supported by a high carbon price which is driving the switch to electric and hydrogen vehicles leads to an oil price which is much lower. and of fuel cells and heat pumps on the building heating front. The combination of nuclear and wind power with hydrogen production facilities which in turn supports the development of hydrogen fuelled markets (see 1 above). India and the US – all of whom are significant coal fired generators. Imperial College Carbon and hydrocarbon pricing In the Citadel scenario. “(If we had met our carbon reduction targets in 2050) we would be using lots of renewable energy. A significantly different mix of technologies for transport and heat – with a much faster penetration of electric vehicles and hydrogen vehicles on the transportation front. China and India do not install CCS on their coal fired plant – perceiving the investment as a drain on their cost competitiveness. In the Patchwork scenario. 3. Carbon prices are nonexistent on the international plane – and are weak on the European plane. The earlier development of major solar farms in desert areas. And perhaps most importantly the introduction of CCS on coal fired plants – specifically in China and India – in the Patchwork scenario.
in Patchwork a low hydrocarbon price and a high carbon price. This is a reinforcing loop in the energy system. in Patchwork those funds are diverted to investments in low carbon outcomes in generation and end-use in consuming countries. in Patchwork this differential pricing at the total energy level (i. even 10 years ago. 122 . Shell.e. In Citadel the consumer pays a high hydrocarbon price and a low carbon price. BP What is interesting is that the energy price to consumers is broadly the same in the two worlds. at that time had a global head of hydrogen – but no longer. in Citadel Middle East producers reap the benefits of high oil prices over the scenario period. However.“How do you get all the commercial frameworks (for CCS) around that to make it work. which in turn keeps the hydrocarbon price low. Looked at geo-financially. This may well lead China and its Asia Pacific neighbors to prefer to adopt policies which cause the energy system to produce lower hydrocarbon prices and reduce import dependency. This price could then generate the funds to pay for the low carbon technology investments in generation and end-use. The Patchwork scenario would be such a world. To make this happen these countries would need to reach an international accord on climate change which puts in place an effective high carbon price across the globe. Fashion and technology If this report had been written 15 years ago. In the chapter on the energy system it was evident that Asia Pacific would become significantly import dependent (see Table 13) by 2030. hydrocarbon plus carbon) incentivizes the switch to low carbon technologies in both generation and end use. That is a big issue” Paul Appleby. it would have been written in a world where the energy industry had high hopes for the hydrogen economy.
it appears.the range of garments on offer is broadened significantly allowing consumers more choice and the ability to select the solution that suits their community the best. Patchwork requires that fashion changes – which it does in the clothing arena. From the author’s vantage point in the UK (which granted may be somewhat limited) it seems to be the case that the two fashion movements holding sway at the moment are the “improvement of the internal combustion engine” and the “electrification of transport and heat”. “Hydrogen . “There was a lot of hype around hydrogen 10 years ago. the “electrification of transport” will remain a dream rather than a reality for the next 25 years at least. If the IEA “new policies” scenario is a good reflection of government thinking around the world – and there is no reason to believe they are not.” Marcello Contestabile. BP In Patchwork the technology blinkers are removed and a much broader range of solutions appears in the world. It seems to come into fashion and then goes out again. Whether it will in the energy arena will determine which scenario comes about.Fashion. But then as time passed and the progress that was being made was clearly not as fast as politicians and investors were expecting then there was a sense of disappointment with hydrogen.in a time frame that attracts the attention of politicians . such as indirect emissions due to change in land use.but that is now in the past so people have forgotten about that and so batteries have come back up the agenda.” Paul Appleby.comes and goes. Then finally batteries.a 5 year time frame. so expectations were unrealistically high. It is very much out of fashion at the moment but I am sure it will come back.which again had the hype and disappointment cycle . At the time we thought we could make it happen in a relatively short period of time . At the same time biofuels came in as the solution so for some time it was all about biofuels. Imperial College 123 . is alive and well in the energy and utilities sector. which were high on the agenda in the 1980's . There then followed the discovery that biofuels can have some unpleasant unintended consequences. Taking the fashion analogy further .
For China this means that access to the global internet is not implemented – as is the case today. The political power base remains firmly fixed with nation states and supra-national institutions such as the EU. Let us consider the political power issue first. Whether. as could be the case in a Patchwork world is actually the key to the longevity of the central political organization itself – albeit operating in a much more federalized style. it is possible to have a world in which local communities and communities of common interest are denied effective representation is a very relevant question. this means that a controlled releasing of controls takes place which leads to an orderly transition to a more federal system of power with less power concentrated in the center. They become a catalyst for change and a greater focus for politicians. On the one hand we have the power of communities to impact on the political process. In the Citadel scenario the development of social networks into a politically dominant force never happens. the arrival of social networks changes the way in which communities of interest can exert political power. Perhaps.Community power Community power is an issue that manifests itself in two different manners in the two scenarios. For China. On the other hand we have the mix between centralized and distributed generation (the latter being either in local communities or in the home). In Patchwork. It could well be that the Citadel scenario is unsustainable and that what would happen is the uncontrolled fragmentation of the centralized power base as the pressure for change builds to breaking point. and more recently the changes in government in the Middle East all brought on by community action – and 124 . the falling of the Berlin wall. The ability to organize and galvanize communities both within geographical regions within nation states and between communities of shared interest across the globe is the mechanism by which consumers select the energy products and services they purchase (through consumer reviews) and influence the decisions on the local energy infrastructure that is put in place to meet their needs. Looking back at the last 25 years we have seen the collapse of the USSR. a controlled release of the pressure.
By 2010 this had grown to 51%. or indeed in terms of vehicle technologies on the roads. BP In 1950 (see Table 3) only 29% of the world population lived in urban area. Should the growth of community power really be a pre-determined element rather than a facet of a particular scenario? Urbanization and EVs Last but not least.certainly in the more recent events underpinned by the ubiquity of mobile telephony and the growth of social networking on the internet. What is clear from the UN population statistics is that over the coming 40 years we are going to see a radical transformation of the world in terms of the balance between rural and urban. On the energy front we have cities. The developing world will be looking at much more new build – whilst the developed world will be looking at retrofit. In 2050 this will have reached 68%. The consequence of this is that the developing world could create the electrical infrastructure of their new building to have both AC and DC circuits to allow a much more efficient uptake of solar power (avoiding the need for inverters. who are taking an active role in determining the shape of the energy infrastructure put in place to meet their needs.and that is going to continue . What this means for the developing world is that there is the opportunity to leap-frog the west in terms of the introduction of new technologies in the home. to convert the power to AC.” Paul Appleby. 125 .urbanization of the population. and their associated energy losses. such as Munich and London. we have urbanization. “The big social change relates to China and India. and indeed then back to DC for electronic equipment). and that is the move from rural lifestyles to urban lifestyles . This will increase energy use quite dramatically as people move into cities.
is the order of the day that alternative technology vehicles can gain a much higher percentage of the established fleet much more quickly. The mathematics of this means that in countries where growth of the vehicle park. will grow to somewhere between 1.could have more public transport . we can envisage that the current stable of vehicles. So it does require some positive public policy push to get cities to develop in a more environmentally friendly fashion” Paul Appleby.could be better planned from the point of view of energy use. BP Again if we look at the growth of the vehicle population over the next 40 years. rather than its replacement. Thus urbanization is a good foundation to build a Patchwork type world.“Cities could be designed differently . 126 .0 billion. But if you let cities evolve by themselves they don't go that way. circa 750 million.5 and 3.
how will they judge us? Will our place in history be the generation that failed future generations.Chapter 7 Future outlook Summary When future generations look back at us. or will we be seen as the architects of a sustainable future? Will we create a “Citadel” or a “Patchwork” world? 127 . as the current custodians of their inheritance.
“We do not inherit this land from our ancestors; we borrow it from our children.” Haida Indian saying When future generations look back at us, as the current custodians of their inheritance, how will they judge us? Will our place in history be the generation that failed future generations, or will we be seen as the architects of a sustainable future? Will we create a “Citadel” or a “Patchwork” world? Certainly the history textbooks will look at 2011 and see a world of rapidly rising CO2 emissions, the absence of an international accord on climate change, high and rising hydrocarbon prices, growing hydrocarbon import dependency across a rapidly developing Asia, and a US committed to the internal combustion engine. They will record that organizations and governments at the time, with a few notable exceptions such as the Stern report, used an economic calculus which failed to account for the future costs associated with environmental impacts. The snapshot of 2011 will be very similar to that described as the “Citadel” world in this report. Will that world simply develop to its postulated conclusion – changing course too late when the damaging impacts of climate change come to pass be that in 2035 (as envisaged in the Citadel scenario), 2050, or possibly even 2100? This could come about if the overwhelming priority in the body politic is successful short-term economic development, and that incurring additional costs to reduce emissions is seen as futile since it is not proven that man-made emissions of CO2 will cause significant damage to the planet. Alternatively, the world might move to a “Patchwork” style scenario. This could happen if:
The win-win of lowering hydrocarbon import dependency and combating climate change becomes the paradigm of the developing world; The body politic comes to see the costs of inaction being greater than the costs of action (as in the Stern report); Nations come to see the costs of moving from “Citadel” to “Patchwork” as limited given the lower hydrocarbon costs associated with the “Patchwork” outcome; Those who drive this transformation see the “costs” as “economic opportunities” rather than “economic threats”, just as one person’s purchase is another person’s sale. As a player on the energy stage – the choice is yours.
The foundation of this report is a model of the energy system which looks at the issues in play, and the interactions between them. In order to construct such a model, it is necessary to understand the universe of potential developments in the energy ecosystem. In order to gain this understanding the author of this report was fortunate to be able to interview three experts in the field of energy and energy futures. Paul Appleby – Head of energy economics at BP James Cavanagh – Head of strategic analysis at RWE npower Marcello Contestabile – a researcher focusing on batteries and fuel cells, and their commercial development at Imperial College London. Throughout this report, the thoughts and ideas of the three experts named above have been used to highlight and illustrate the issues in play in the energy ecosystem. The author wishes to thank each of the experts for their insight and opinions which have enriched the model in respect of the breadth of potential developments contained within this report.
Scope of the report
This report examines the demand for, and supply of energy within the global energy system historically and as forecast to develop over the next 20/25 years by two expert institutions in this field, the IEA and BP. The report places these forecasts in the context of a conceptual map of the energy system which can be used to look at how population, economic growth, demand, price, and supply can interact together.
the quantified outcomes of the scenarios produced in this report are logically consistent with the developments predicated in each of the scenarios . The report does not seek to provide bottom up detailed quantification of the alternative futures faced by the world of energy – but looks to highlight the main issues in play with a view to enabling the reader to build the issues raised into their own models of the future. 131 . together with the extensive experience of the author from both his work in the sector over 30 years. One on one interviews were conducted with three experts in the field of energy and the utilities: o o o Paul Appleby – Head of energy economics at BP James Cavanagh – Head of strategic analysis at RWE npower Marcello Contestabile – a researcher focusing on batteries and fuel cells. Using the UN Population analysis. and their commercial development at Imperial College London. These interviews were conducted using a set of trigger questions aimed at drawing out the issues facing the world of energy as it develops from the present day to 2050. A conceptual model of the Energy System was then developed and used to explore the issues in play as identified in the interviews. IEA World Energy Outlook 2010.thus the directional implications are believed to be robust. and BP’s Statistical Review of World Energy and 2030 Outlook as a starting point the historical and current development trends in energy were identified. Methodology 1.Two scenarios are then developed using the qualitative logic of the energy system. That said. An illustrative quantification is made by reference to the existing work of the IEA and assumptions on difference. and his on-going literature research.
The second. The first. 132 . The narrative for the scenario was then illustrated quantitatively by taking the IEA new policies outcomes and extrapolating them to 2050 based on the Citadel logic. Patchwork.Two scenarios were then developed. Citadel. The two scenarios were then reviewed and the key issues and learnings extracted as a discussion in the final chapter. was based on the status quo being maintained. was again first built as a narrative and then illustrated quantitatively by working through a number of difference assumptions relative to Citadel.
Glossary/Abbreviations bbl: barrel btoe: billion tonnes of oil equivalent CCS: carbon capture and storage cps: current policies scenario DC: direct current GDP: gross domestic product IEA: international energy agency mtoe: million tonnes of oil equivalent nps. new policies scenario tcf: trillion cubic feet TFC: total final consumption trn: trillion TWh:TeraWattHour 133 .
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