The Energy Challenge

Arthur Lyon Dahl Ph.D.European Bahá'í Business Forum (EBBF)

http://www.ebbf.organd

International Environment Forum (IEF)http://www.bcca.org/ief

March 2006

Overview of the challenge

• Our industrial economy was built on cheap energy

• Transportation, communications, trade, agriculture, heating/cooling, consumer lifestyle all depend on energy

• Energy demand is rising rapidly and the supply is shrinking

• Adaptation will be extremely expensive

• Western material civilization is unsustainable

Unsustainability

Warning signs• Energy crises• Economic fragility• Food insecurity• Water shortages• Terrorism, refugees• Natural, economic and social

disasters

Developing countries● Two thirds of future growth in energy demand is expected to

come from developed countries where at least 1.6 billion people are without access to electricity in their homes.

● Over half of people in developing countries still rely on biofuel, including wood, dung and agricultural wastes, for cooking and heating, most of which is burnt indoors.

● Between 10 per cent and 20 per cent of the fuel used in households on biomass stoves is not fully burnt, triggering a wide range of harmful air-borne pollutants.

● Globally, indoor air pollution of fine particles from fuels like charcoal is ranked in the top ten causes of mortality, causing up to 2.4 million premature deaths a year from respiratory problems and heart attacks.

● In homes burning biomass, particle levels can be between 300 to 3,000 microgrammes per cubic metre ( EU guideline 40 µg/m3).

● GEO Year Book 2006 http://www.unep.org/geo/yearbook/

The Science of Energy● Second Law of Thermodynamics: entropy● All resources are limited on a finite planet● Human civilization has reached planetary

limits● Growth cannot continue indefinitely● The human population is expected (barring

surprises – war, famine, pestilence) to reach 9 billion in mid-century and then decline

● Planetary carrying capacity depends on numbers and standard of living

The end of the fossil fuel era• Consumption continues to grow at 1.1%/yr

• At present consumption rates, reserves of oil will last 40 years, gas 67 years and coal 164 years

• Published reserves can increase through new discoveries (declining) and new extraction technologies

• Other constraints are investment cost, environmental impact and insecurity in supply

• Massive investment in present infrastructure creates great resistance to change

Growth in oil use

• World 1.1%/year• OECD 1.3%• World less economies in transition 2.1%• Latin America 2.8%• India 5.4%• China 7.5%• From 2001-2020, world oil consumption will

rise 56%, with OPEC production doubling• Non-OPEC production has already peaked• Oil provides 40% of world's primary energy

How much oil?• Ultimate recoverable reserve 2000 Bb• Cumulative production 980 Bb• Reserves 827 Bb• Yet to find 153 Bb• Production peaks and starts to decline at half

of recoverable resource, ca. 2008• Post-peak production will fall at about 2.7%

per year, dropping 75% in 30 years• Athabaska tar sands (300Bb) and Orinoco

heavy oil (300Bb) face severe extraction problems (and equal only 22 years current consumption)

Alternative fossil fuels

• Coal – larger reserves but high mining impact, less energy density, high pollution and CO

2 emissions

• Gas – less polluting, but reserves also limited

• Methane hydrates in ocean sediments – extraction difficulties, potent greenhouse gas

Our dependence on oil● Road transport, shipping, aviation● Chemical feedstocks, plastics, synthetics● Industrial production● Agricultural fertilizers● Mechanized agriculture● Electricity generation● Heating and cooling, lighting● Town planning, suburban lifestyle● Global trade, food distribution

Energy and population

80% of global energy comes from fossil fuels

The world population has expanded sixfold, exactly in parallel with oil production

Can the world maintain such a population without cheap energy?

What will happen if it cannot?

Another big question

Even if we could exploit every fossil fuel reserve, do we

really want to?

The Biosphere

• Delicately balanced – conditions for life created by life

• Complex systems and feedback mechanisms poorly understood

• Humanity now captures one quarter of primary productivity

• We lack management mechanisms at the planetary scale

Fossil fuels and CO2

● Fuel oil produces 2.9 tonnes of CO2 from

burning 1 tonne of oil equivalent (toe)

● Natural gas produces 2.1 tonnes CO2 per toe

● Coal produces 3.8 tonnes CO2 per toe

Greenhouse gases and climate change

• Greenhouse gases (carbon dioxide, methane, water vapour, etc) trap heat in the atmosphere

• The CO2 level in the atmosphere is rising rapidly

as we burn fossil fuels• More heat in the atmosphere changes air

circulation and climate• Effects will be highly variable around the world,

and are not easily predictable

The latest evidence suggests that the worst predictions may be realized

● The Gulf Stream has recently slowed by 30%● Half of the permafrost in the Arctic is expected to melt

by 2050 and 90% before 2100● Major parts of the Arctic Ocean were ice-free in 2005 for

the first time● Greenland glaciers have doubled their rate of flow in the

last two years● The rate of sea level rise has doubled over the last 150

years to 2 mm per year, and melting in the Antarctic is expected to add a further 4mm/yr

We may be approaching a tipping point where runaway climate change would be catastrophic

Controlling greenhouse gases?● UN Framework Convention on Climate Change

(Rio, 1992)● Kyoto Protocol on reduction of greenhouse gases

– return emissions to 1990 levels by 2012

● CO2 emissions rose 4.5% in 2004 to 27.5 b

tonnes, 26% higher than 1990

● China and India have doubled CO2 production

since 1990, US +20%, Australia +40%● US released 5.8, China 4.5, Europe 3.3, India 1.1

billion tonnes of CO2 in 2004

The Nuclear Option?• Research costs and development highly

subsidized, including by military uses• High energy input in construction and fuel

fabrication, not carbon free• Risks of accidents uninsurable• Decommissioning costs not included• UK unable to privatize its nuclear industry• Waste disposal costs imposed on future

generations• No safe long-term disposal yet found• Fusion still "40 years" off

New Energy Technologies

• Hydrogen• Fuel cells• Metal nano-fuelsstill require a source of energy, fossil or

renewable

The economics of energy

• Hidden subsidies are frequent• Price instabilities produce windfall profits• Reserve estimates are notoriously unreliable• The market is politically manipulated• As with any addiction, users will pay anything

to maintain their habit

Investment impactCarbon Disclosure Project

Representing a group of 211 investors with $31 trillion of assets under management, i.e more than 50% of the world’s invested assets, the Carbon Disclosure Project (CDP) has invited 1,800 companies worldwide to discloseof investment-relevant information concerning their greenhouse gas emissions. The fourth iteration of such a request, this year’s round will involve over twice as many companies as the previous rounds.

See: http://www.cdproject.net

Investment in developing countries

The Clean Development Mechanism (CDM) of the Kyoto Protocol will make available over $3bn of carbon funds currently managed by public and private bodies for investment in projects that cut emissions of greenhouse gases. This new source of finance for clean energy projects in Africa and other developing countries is putting them firmly back on the map for clean energy and forestry project finance.

See: Carbon finance for Africa - An Investors' Guidehttp://www.africapractice.com/case.html

The politics of fossil fuels

• Fossil fuel reserves are concentrated in a few regions, accentuating the unjust distribution of wealth

• The struggle to control reserves and access is a major source of conflict

• Since access to energy is a vital national interest, these problems will increase as supplies diminish

• Only global management assuring just distribution of energy resources can resolve this situation

Asia-Pacific Partnership on Clean Development and Climate

● US, Australia, Japan, South Korea, India, China, July 2005 (45% of world population)

● Consume 45% of world energy, produce 52% of CO2, with

both expected to double by 2025● Agreement to develop and share cleaner, more efficient

technologies to reduce greenhouse gas emissions and provide secure energy supplies

● Focus on carbon sequestration● Pact among major coal producing/consuming countries

(China plans 560 new coal-fired plants, India 213)

● 25% of global CO2 emissions come from coal-fired power

stations

How do we go back to life without fossil fuels?

Or can we go forward toward a new integrated approach to energy capture and efficient use?

SOLAR ENERGY

The only long-term, large-scale

energy source

Bio-fuels

• Wood• Dung, animal wastes• Ethanol• Biodiesel• Coconut, palm, rapeseed oils• Bagass• Biogas• Chicken shitbut their production will compete with food

production and other land uses

Technologies for solar energy capture

• Photovoltaic• Solar water heaters• Parabolic reflectors (need steering)• Tubular captors with reflectors• Greenhouse effect• Passive solar heating in buildings

Indirect solar power

• Water – hydroelectric power is widely used where resources permit

• Wind – commercially viable as part of a mix of energy sources

• Tides – selected locations• Waves – engineering challenges• OTEC ocean thermal energy conversion• Chimney effect (air thermal gradients)

Energy efficiency

–Reduce the resources and energy necessary to maintain our standard of living–Factor 4 (von Weizsäcker, Lovins et Lovins, 1997. Factor four: Doubling

wealth – halving resource use. Earthscan, London)

–Factor 10–Targets adopted by OECD–Examples: more efficient appliances, reduce heat loss from buildings, public transport

Energy Wastage in the Global Electricity Sector (2002) Total Electricity Generation Worldwide (TWh)

 

(source: International Energy Agency 2002)World Alliance for Decentralized Energy (WADE) http://www.localpower.org

Centralized versus decentralized

● The Western economic system has encouraged centralized energy systems (large generating stations, large dams, large refineries, extensive power grids)

● Transmission produces large losses● Small-scale systems close to users do not

interest large corporations● Solar energy and most renewables are

inherently decentralized● The economic system biases technology

choice

Some strategies

• Iceland hydrogen economy• Sweden – plan for oil-free economy within

15 years• In Geneva 85% of electricity is from

renewable sources • Hawaii Energy for Tomorrow programme

(efficiency, renewables, biofuels, hydrogen technology, consumer incentives)

A US strategy to stabilize CO2 emissions

Pacala, Stephen and Robert Socolow (2004), Science 305:968

15 proven technologies, including:● Carbon sequestration● Better energy efficiency in buildings● Doubling fuel efficiency of cars● Wind turbines● Clean coal technologies● +700 gigawatts of nuclear power

to stabilize CO2 at today's level by 2054

World Business Council for Sustainable Development

Key areas for action:• Energy efficiency – first priority• Energy mix: promote the use of all non-emitting

technologies, including nuclear energy• Carbon capture and storage: bridge from fossil

fuels to new energy systems• Enabling energy technology research and

development• Support to developing countries: technology

transfer to leap-frog to modern energy technologies

http://www.wbcsd.org

World Business Council for Sustainable Development

PROJECTS AND REPORTS

The GHG Protocol – A Corporate Accounting and Reporting Standard

Clean Development Mechanism and the new GHG Protocol for Project Accounting

Sector projects:

• Electricity Utilities

• Sustainable Forest Products Initiative

• Sustainable Cement Initiative

• Mobility

• Energy Efficiency in Buildingshttp://www.wbcsd.org

World Business Council for Sustainable Development

Long term policy framework:• Predictability• Efficiency-based objectives on climate change,

energy, economic development and trade• Wide participation by governments with fairness,

equity and common but differentiated responsibilities

• Use of market-based mechanisms and instruments – long-term value for carbon

• Engaging the capital markets• Changing consumer behaviour

http://www.wbcsd.org

Barriers to change

“… the biggest obstacles to the take up of technologies such as renewablesources of energy and "clean coal" lie in vested interests, cultural barriers to change and simple lack of awareness.”

- Avoiding Dangerous Climate Change, UK Meteorological Office -from http://www.unepfi.org/ebulletin

Ways forward

Harness all available sources of energy on the surface of the planet

Reduce environmental impact to sustainable limits

Accelerate the transition to reduce the shock

Create global governance mechanisms to manage this global challenge

Share the cost, effort and benefits globally with equity and justice

Building a sustainable energy future is a major challenge for the

present generation

Thank you