The Shell Scenarios team looks at alternative views of the energy future. Martin Haigh is a Senior Energy Adviser in the team, responsible for energy modelling, and here he provides his take on the challenges we face and how we might meet those challenges responsibly.
In his article "Can we get off carbon by 2040?" Jeremy Rifkin points to the strains on oil resources, as well as climate change, for reasons why we need to change. My view is that the climate target is by far the more serious challenge of the two that we face. Indeed, recent breakthroughs in technologies like the extraction of shale gas and light tight oil, mean that the economically accessible fossil supply is significantly less pressured than we saw it only a few years ago. As a result, we cannot rely on "oil running out" to drive sufficient change. Policies to address climate change -- stimulating early-stage technologies, enabling infrastructure deployment, CO2 prices, and so on -- will need to bear a much greater part of the burden to put us on more sustainable pathways.
Rifkin cites the need to reduce emissions to zero by the 2040s; this is in keeping with scientists like James Hansen at NASA. They may well be proven right, but, at the moment, the mainstream view, based on the climate risks that scientists have laid out, is that we need to halve the global emissions of the year 2000 by 2050. For western countries like Britain, this typically means a reduction of 80 per cent, to accommodate energy demand growth in the rest of the world.
Our analyses in Shell's Scenarios team typically show growth of world energy demand, in the range 40 per cent to 80 per cent from 2010 to 2050; growth continuing like the last decade, would take us to that 80 per cent. For many countries the priority is to secure energy supplies to provide for the, rightly, growing demands of their developing populations. This growth in demand means that collectively we need to first try to turn round the growth in emissions, and then perhaps we will have the confidence to set ourselves "stretch targets", but only if policymakers and scientists conclude that we need to reduce climate risks further.
Despite Christmas traditionally representing a time of hope, a friend of mine recently said that we seemed to be in "an Advent of Gloom and Doom". Yet in the energy world, there are many interesting proposals being put forward at the moment. Rifkin's idea to transform the power grid into an energy internet, allowing people to sell and share extra energy harnessed from renewable supplies, including solar and wind, is a fascinating example. And whilst there is all the doom and gloom around, we can perhaps take encouragement that many great inventions and businesses took off in recessions; television in the 1930s depression is a good example of the former, while the 1970s birth of Microsoft typifies the latter. What we must do, however, is be realistic about what can be achieved, and by when, in the energy sector. Energy security and maintaining an affordable energy system will remain priorities along the pathway.
One of the most important considerations, when we think about the future of energy, is what the energy mix might look like. Rifkin repeatedly asserts that the world's energy can be met by renewables alone. By the 2040s, this is simply not the case. Maybe in the very long run (perhaps in the year 2100) we can achieve this, but not in only 30 to 40 years from now. Not only that, but Rifkin argues that the focus can be renewables generated from households. Whilst a valuable part of the solution, unfortunately, it is only likely to supply a relatively small portion of our total needs.
Let me illustrate this with a quick calculation for solar PV in the UK. The Ordnance Survey (OS) recently published a report stating1 that we have 30 m² / person building area available in England. Suppose we apply this OS figure to the whole UK. Suppose further that half of the roof space is south facing, and we use all of that (which itself is mind-boggling). That would generate around 0.6 EJ / year of electricity2. In 2010, the UK generated 1.4 EJ / year of electricity3. Something like 80 per cent of the 0.6 EJ / year would occur in the summer, so we would need other options for winter. And of course, even in July, we would still need massive daytime storage options to enable electricity demand at night, or else it may become infeasible to have solar PV supplying more than our summer daytime peak demand. Added to that, whilst electricity is critical it was only 19 per cent of the UK's total final energy consumption in 2010. More sustainable pathways nearly all show much greater electrification of our energy demand. Perhaps if things go really well on many fronts and electricity's share doubles by 2050 (though its share 40 years ago in 1970 was 13 per cent), and total demand can be held constant, this sort of quick calculation suggests Mr Rifkin's idea may be able to provide 10 per cent of our energy needs4. Usually, in my experience, considering more factors such as credible deployment rates, costs, or integrating supply and demand, tends to decrease these estimates. But the point remains that it is not the dominant solution.
David MacKay, a physics professor at Cambridge, and now DECC's chief scientist, has written an excellent book illustrating the scale of renewables that would be needed to satisfy large proportions of the UK's energy demand5. The conclusion is that even with a centralised system of renewables, such as solar farms and offshore wind parks, we'll struggle to make enough energy to meet total energy needs. And then on top of this, rapid deployment of such an energy system is unlikely to be at all cheap, but that would be something for another article.
So, while renewables will be an integral part in the energy mix, we need to consider many other energy options. The world context is of rising demand. And some applications, like heavy duty transport, will be difficult to electrify extensively. My view is that fossil energy will be extremely difficult to displace from its dominant position by 2050, so carbon capture and storage (CCS) becomes absolutely critical.
Another critical resource is likely to be biomass. Most modelling exercises of the world's energy system find it very difficult to make it work in the long run without large-scale use of biomass. Most likely this would be for biofuels, but another option would be biomass with CCS (to achieve negative emissions) offsetting remaining fossil emissions in transport.
The challenge remains to develop large-scale biomass in a sustainable way. This, indeed, is a focus for Shell. Some of my colleagues are working on biofuels sustainability industry groups, others are working on the R&D to get the next generation of biofuels economically viable, whilst the company at large has expanded with joint ventures in Brazil where the lowest-CO2 biofuels come from today. I found it telling that WWF, an organisation devoted to protecting the world's ecosystems, produced a report earlier this year arguing too that biomass could sustainably comprise 40 per cent of their envisaged world energy system in 20506.
In his article, Rifkin raises the point that the rapid roll out of renewables is possible given the rise of a new, younger generation of people who have grown up empowered by the internet to create and share their own information freely. I discussed energy issues with some teenagers last year; what I took away was that whilst awareness of issues is now high and some definitely were making strides, no one seemed to want to do without the energy services they had become accustomed to. Indeed, I think most amongst the group I spoke to saw it as their right to continue flying on holiday and having the latest gadgets. So, where there is little appetite for conservation, we usually turn to efficiency. Yet this can be a fraught area. If efficiency is the only or dominant policy measure then it may well lead to higher CO2 emissions in the long run, but that is, again, a subject for another piece.
The final point I want to address is Rifkin's argument around self-reliance, both in terms of households and for countries. I think we are missing vital options if this is our principal motivation. The result is unlikely to help keep energy bills down. As I've argued, we shall need to rely on centralised energy production -- whether electric renewable, biomass, nuclear or fossil -- for most of our energy supply, for the long-term. As such, it is critical that we have an effective environment for companies to invest in the energy transition. In the short-term, we have heard much throughout the financial crisis about how household and government finances are strained in the west. Businesses are our brightest option with the capacity to invest, in my view. The imperative remains to create the right incentives for investors. Only then will businesses create the jobs, develop the technologies and deploy their organisational talent to make the changes we want to see.
The energy transition is very likely going to cost each of us money for many years to come, as society invests in new infrastructure. Outcompeting fossil fuels like coal is proving extremely challenging7. But we argue for the energy transition -- if we want to use economic arguments -- that we see the long-term costs otherwise being (much) greater from dangerous climate change. Or, we do it because we believe it's simply something we have to do for a sustainable planet. We have got used to lifestyles based on cheap energy, so keeping costs down is going to be absolutely critical. In my view the best way for us to do that, by far, is to maintain our strong international trade in energy, so resources can be allocated most efficiently. Whether this is continental-scale grids to help balance growing renewable electricity supply, solar panel manufacturing in China, biofuels from Africa and South America, uranium from countries like Canada or Kazakhstan, or fossil energy from the major resource holders, international trade will have a huge role for decades to come. But, rather than see that as a regretful necessity, we should embrace it if we believe that we are more likely to work co-operatively towards solving climate change together around the world, if we also actively continue to trade with each other.
Martin Haigh is a Senior Energy Adviser of Shell Scenarios, responsible for energy modelling.
2 Electricity from solar panels in this example: 30 m² / person * 50 per cent [south facing] * 62.4 M people * 1200 kWh / m² / year [typical solar insolation in southern England] * 19 per cent [good PV panel efficiency] * 86 per cent [typical system efficiency for e.g. inverters] * 0.036 GJ / kWh = 0.66 EJ / year. This uses a southern England sunshine figure, so perhaps the UK average might be more like 0.6 EJ / year, at best.
3 Source: IEA 2011
4 In this example, electricity demand doubles, to nearly 40% of final demand. Then the rooftop panels would very roughly satisfy summer daytime electricity demand :2.8 EJ (double 2010 demand) / 2 (6 months of sunshine) / 2 (12 hours of effective sunshine in the 24 hours) = 0.7 EJ. Then 25 per cent of electricity * 40 per cent (electricity's share) = 10 per cent of the UK's total energy demand.
5 Sustainable Energy: Without the Hot Air, David Mackay (2009). UIT Cambridge.
6 The Energy Report, 100 per cent Renewable Energy by 2050, WWF International, February 2011. [p231: Biomass in 2050 = 105 EJ / year, out of projected 2050 total world demand of 261 EJ / year].
7 On 22 November, Google announced it was scrapping its RE<C initiative, after investing USD 850 million. RE<C's objective was to make renewable electricity cheaper than coal-based electricity.