Overcoming the obstacles

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The good news in the fight to avert the threat of catastrophic climate change is that all the technologies needed for it already exist.

Abundant supplies of low-cost biofuels from algae or nuclear fusion power would be welcome, but they are not necessary. Everything that the world might need for a low carbon energy system exists somewhere, often in commercial use. The technology may need further development, but not a radical transformation.

The bad news is that all of those technologies have drawbacks. Deploying them on the vast scale that is required will demand a huge effort of political will.

As sketched out by the International Energy Agency in last month’s World Energy Outlook, the world will have to be substantially more electrified than it is today if the atmospheric concentration of greenhouse gases is to be kept to no more than 450 parts per million – the level that would offer a 50/50 chance of keeping the increase in global temperatures to 2ºC.

Low carbon substitutes for petrol, diesel and jet fuel remain elusive. With electricity, however, the routes to decarbonisation are reasonably clear. The areas of the system that are now largely based on combustion of fossil fuels, such as transport and heating, will have to be electrified.

According to the IEA, to stay within the 450ppm limit, by 2030 six out of every 10 new cars sold will have to have battery power of some kind, whether all-electric or hybrid with a petrol engine. However, as Fatih Birol, the IEA’s chief economist, points out: “It is not enough to electrify the cars: you also have to decarbonise the electricity.”

Today, power generation accounts for more than a quarter of all man-made greenhouse gas emissions, but ending those emissions is a realistic goal. The European electricity industry has set itself the target of becoming carbon-free by 2050, and if the European Union’s wider objectives for emissions reduction – at least 80 per cent by the same date – are to be achieved, that target will have to be hit.

A decarbonised electricity system will rely on what is often referred to as the “trinity” of energy sources: renewables, nuclear power and fossil fuel generation fitted with equipment to capture and store its emissions.

Renewables make a small contribution: excluding hydro-electric power, they provided 2 per cent of the world’s electricity in 2007, but are growing fast. Nuclear is an important part of the electricity mix, with a global share of 14 per cent, and though carbon capture and storage has not yet been demonstrated as an integrated system, the engineering for the key elements of the process is well understood.

However, all three technologies face similar challenges in terms of commercial viability, supply chain capacity shortages and public acceptance, as well as some special factors unique to each. The energy “revolution” that the IEA talks about will mean building wind farms, reactors and so on at rates never seen before. Commercial frameworks, regulatory systems and political leadership will need to be aligned to make that happen.

Renewables face the fewest barriers. Concerns about energy security and global warming have prompted a spectacular increase in global wind power capacity, for example, which doubled from 59,000MW at the end of 2005 to 121,000MW at the end of last year. However, there are still regulatory constraints that have slowed the growth of the industry.

Some people complain about wind farms being built near them – more in crowded Europe than in the open spaces of the US – and some governments have onerous rules to reflect that. In Germany, for example, new offshore wind farms will have to be at least 12km from the coast.

There are other problems with the leading “non-hydro” renewables, wind and solar, such as their intermittency – the fact that they cannot always be relied on – and cost.

Intermittency means that back-up capacity is required to keep the lights on when the wind does not blow or the sun does not shine. The UK, which is committed to generating 30 per cent of its electricity from renewable sources by 2020 to meet its commitments in the EU, has given a revealing insight into what that will mean. Peak demand for power in the 2020s is expected to be roughly what it is today, about 60,000MW. But instead of needing about 80,000MW of supply capacity, as in today’s fossil fuel-based generation system, the country will need 110,000MW of capacity, the government believes, to cope with intermittency.

As for cost, onshore wind is now a mature, well-understood technology, and is increasingly competitive with fossil fuel generation, though it has taken a blow from the plunge in natural gas prices. The cost of solar power has been falling steadily, but a fierce debate rages about how soon it will be cost-competitive with gas and coal-fired power. Offshore wind is still an emerging industry, and faces huge challenges of installation and maintenance, often in harsh conditions. At today’s cost of up to $6m per MW of installed capacity, it is a very expensive option.

Nuclear power does not suffer the same problem of intermittency, but is expensive in upfront cost, with estimates ranging up to the same $6m per MW figure. In some countries, such as

Germany, it is a politically controversial issue; in others, such as France and Japan, it is long accepted. A further group, including the UK, the US and Italy, has been sceptical, to varying degrees, but is now becoming more enthusiastic.

The biggest problem for the industry is likely to be the capacity of the supply chain. After decades in which the industry was run down, following the oil price crash and the Chernobyl explosion in the 1980s, dozens of countries are now seeking to develop their nuclear industries or start from scratch. The world’s supply of components and skilled and experienced staff is unlikely to be able to keep up.

For carbon capture and storage, the problem of public acceptance has taken the industry by surprise. Projects in both Germany and the Netherlands have run into trouble because of plans for underground storage of carbon dioxide that have been fiercely opposed by local residents, even though the planned reservoirs are sometimes more than a mile beneath their homes. Fears of leaks and asphyxiation, though considered entirely unrealistic by the industry, have loomed very large with the public.

At the same time, the technical feasibility of a fully integrated large-scale project to generate electricity from coal, capture the carbon dioxide and then store it, has not been demonstrated, and will not be until the middle of the next decade at the earliest. Governments and companies expect it will work, but they are not certain, and it is still not clear how much it will cost in the long run.

The result is that while an electricity system based on these three sources is possible, it will not be easy or cheap. Energy prices will inevitably have to rise significantly to make it work.

The other great opportunity for cutting emissions – by far the largest opportunity, according to the IEA – is improving energy efficiency, which will help reduce energy bills.

The standard calculations of the costs of emissions reduction by researchers such as McKinsey, the consultancy, find that energy efficiency improvements have a negative cost; in other words, they are profitable investments while also cutting carbon dioxide.

However, the IEA warns: “These investments face many complex barriers, and are actually among the most challenging for governments to influence.”

Consumers’ lack of knowledge, and resistance to making changes in their lifestyles, are often deep-rooted obstacles that are hard to overcome. Here, too, a strong lead will have to be taken.

The need for a clear road map for the energy industry to follow is why the IEA believes the next week’s Copenhagen conference on climate change is so important. Fatih Birol says that “a very strong signal needs to be sent to the energy sector” to make that investment happen. By that, he means not words but money: a carbon price or other financial incentive to reward spending on emissions reductions. If that signal is not strong enough, then decarbonised energy technologies are still likely to grow, but not fast enough to prevent atmospheric carbon dioxide concentrations rising to levels that could seem very worrying.

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