- Email: [email protected]
A setting for the diffusion of renewable energies
Renewable Energy, Vol.5, Part 1, pp. 77~82, 1994 Elsevier Science Lid Printed in Great Britain 0960-1481/94 $7.00+0.00
Pergamon
A SETTING FOR THE DIFFUSION OF RENEWABLE ENERGIES
Ugo Farineili ENEA, Rome, Italy
1. Introduction Throughout the history of humankind, energy has been an important factor of development; the availability and exploitation of new energy sources has accompanied and made possible major economic and social changes. In the Paleolythic age, the use of fire allowed cooking and conserving food, and protection against winter cold: this produced a less day-by-day life and hence a more complex and stable social organisation; it also brought to an extension of human habitat. Ten thousand years ago, the use of animal power was an important component in the advent of agriculture. In the renaissance, the use of wind for navigation and for windmills contributed to a new development of agriculture and to broader horizons for commercial and cultural exchanges. The industrial revolution at the beginning of the 19th century was made possible by the use of hydropower and more extensively of coal as an energy source. This involved preferential development of countries having large coal reserves (such as Britain and Germany) and, within them, to the birth of new large cities that rose in the vicinity of coal deposits. The rebirth of the economy after the second world war and the great development of industrialised countries were made possible, and at the same time deeply conditioned, by the availability of oil: an abundant, flexible and - most of the time - cheap energy source (Fig. 1).
10000 9000 800O 7000
;EO
6000 5000 4000 3000
GAS
2000 1000 0 1850
1950
1992
NOTE: t~2 dQtaare eslJm~el
Fig. 1 - Historical world energy consumption by source In the past, at each time one form of energy has been predominant over the others. As a new, more convenient, form of energy became available it gradually took the place of the former. Will this be the case also for the future? Although natural gas, nuclear and renewable energies have been indicated in turn by their 77
78 supporters as the inevitable egemonic energy source of the future, it is our opinion that we are going towards an era of more open options, with several sources co-existing, to be used in a greater or smaller proportion according to local needs and opportunities, to changing conditions over time, and to different applications; the key to such a future is increased flexibility. Cheap and abundant energy is required to maintain and improve further the high standerd of living in industrialised countries, even if a more effective and less wasteful lifestyle is envisaged. Much greater quantifies of energy will be essential for Third World countries in order to get out of their present poverty, and to make the transition to industrial and post-industrial societies.
2. The availability of energy Fossil fuels account for the great majority of energy consumption at the world level. When the famous report by the MIT for the Club of Rome, "Limits to Growth", was published in 1972, it pointed to the finite nature of fossil fuel and mineral resources (as well as to the limited carrying capacity of the environment). When the first oil crisis shocked the world just one year leater, it seemed to many people that the gloomy predictions of that report were already taking shape. We now know that the oil crisis was not due to physical exhaustion of the reserves. Although fossil fuels are non-renewable, finite resources, the threat of their physical exhaustion has not yet materialised, and their known reserves are higher than at all times. This can be better perceived in looking at the ratio between assured reserves and production for oil, for gas and for coal (Fig. 2). As the need increases, new reserves are
IQSS
I~
19TS
19IS
I~o
VIAl
Fig.2 - Ratio of resources to yearly consumption for fossil fuels found, thanks also to new and improved methods for exploration and for the exploitation. Preoccupations on the assurance of the availability and stability of prices of fossil fuels (in particular oil), at least for the short and medium term, are less incumbent at present than in the past. However, there is no assurance that a situation of instability will not be repeated in the future. Reserves in the Middle East (which account for the larger share of oil reserves) have extraction costs that are much lower than those of other deposits and can therefore dictate to a large extent the price ofoil on the international market. The two oil crises of 1973 and 1979-1980, with the consequent world-wide economic depression, and the countershock of 1985 have shown how the rigidity that affects both demand and supply can bring to instabilities in the market. While until recently oil was the only energy commodity largely exchanged on the international market, coal and especially natural gas have seen in the recent past an increased share of exports (Fig. 3); this trend could relax the necessity of relying on one specific form of energy alone, but the shift from one source to another is often not immediate and sometime problematic (as in the case of transportation, which today depends almost entirely on oil and its derivatives). Lately, even the share of electricity exchanged internationally has become no longer negligible.
79 60 50
40 30 20 ..~¢.:.:~':':':•:'~:•~~,r.:~:':':':':~':~
•
I0
~'" 0 ~;;~.~.:~ 1950
i
, i
i
j f,i
i
1960
j i
r i
i
i
i
i i,
i
\~ C O A t i ~ i i
1970
i
i i i
i,
r , ,
1980
i ,
, i r~
^
1991
Fig. 3 - Share of energy sources on the international market 3. Environmental limits to energy utilisation
The most important limit to the use of energy today derives from preoccupations on environment and climate. Many negative effects on the environment derive, directly or indirectly, from the energy, cycle. In recent times, the local effects (which have always been recognised) are accompanied by increasing preoccupations on regional and global effects. Acid rains, deriving from the release of sulphur and nitrogen oxides in the combustion of fossil fuels (particularly, but not only, coal) occur up to many hundred kilometers away from the polluting source and have adverse effects on agriculture, on forests, on lakes and oa the conservation of manufacts and works of art. Although acid emissions have been drastically reduced in industrialised countries, they are increasing in developing countries, especially those (like China) that have ample domestic resources of coal. Reducing the emissions is feasible (although at non-negligible costs) for large installations, such as power plants; it is much more difficult for smaller users, such as domestic heating or cooking. Other energy-related environmental problems derive from oil spills from tankers, which are often cause of major ecological disasters; from nuclear accidents, which in the case of Chernobyl have spread radioactive products over half a continent; and the contribution to deforestation and desertification deriving from the nonsustainable use of firewood. The most striking case of adverse effects of the energy cycle is that of possible global climate changes associated with man-produced greenhouse warming. 4. Prediction of Energy Needs for the Future In order to be able to predict the prospects of renewable energies in the future, it would be useful to have an idea of how much energy will be needed in the years to come, and of what share of it can we expect to be covered by each of the traditional energy sources. However, predictions in all fields are difficult, especially if they cover a long period of time; and, unfortunately, energy predictions have a record of being particularly unreliable. Originally, predictions of energy demand were based on straightforward extrapolations of observed trends. This is a dangerous procedure, especially when dealing with exponentialy growing curves! The energy crises of 1973 and 1989 have made justice of these rough methods and have opened a new era of bold predictions, all of which (with the few exceptions which could be expected from random statistics) were doomed to be wrong qualitatively.as well as quantitatively. The most relevant advances in this period was linking energy demand with energy prtce (as for any other good). Although the demand-to-price relation is far from simple (as it depends on investment cycles, perception of future trends, ease of substitution of fuels etc.), improving its understanding was not
80 very helpful since it only shifted the uncenahldes from the prediction of demand to the prediction of prices: and the last did not perform any better than the former (Fig. 4). $/b 40-
Trendof the forecasls made In the year ............ ~ Realevolullon of price(") Z
30-
20-
I0-
/.°/ ............
° ....... oO'° y ! 1974
1968
19J'719801
19~S3
1~88
I'i~93
(')Ctmenl US $1b
Fig. 4 - Predictions of trends of oil prices carried out at various times It would be out of the scope of this presentation to discuss the recent developments in this discipline. I would just like to call the attention to the global analyses of energy demand that have been derived from the concept of dematerialisation. In general terms, the evolution of economies in countries undergoing the process of industrialisation and beyond that into post-industrial societies displays a typical shape for the (commercial) energy intensity of the GNP (gross national product) (Fig. 5a), rising in a first stage (when infrastructures have to be built and durable goods provided for the first time to the population), reaching a maximum and then decreasing, as demand shifts towards less energy and material intensive goods, towards quality rather than quantity, towards services and software rather than hardware. The value of the maximum of this curve decreases for counuies which reach it later in time (Fig. 5b), because more advanced and efficient techniques have become available.
I TIME
I TIME source E ~
~v ENF.A
Fig. 5a - Trend of energy intensity of GNP during development and industrialisation
~:u:~
/~
E:a~r~,on oy ENEA
Fig. 5b - Comparison of energy intensity for countries industrialising at different times
81 While the historical curves for present industrialised societies in the Western World conform to these rules (Fig. 6), notable exceptions are the formerly Centrally Planned Economies (CPE) where the absence of market mechanisms has resulted in high wastes and low efficiency technologies; and most developing countries (DC), where for a number of reasons modern technologies are not available. Any global strategy aimed at reducing environment and climate problems at the world level must address these problems with priority, by transfer, adaptation, diffusion and joint development of advanced technologies in ex-CPE's and in DC's. 20~0
1400
IIHffl~
1200 10O0
:.g
I~A~T
Fig. 6 - Historical trends of (commercial) energy intensity of GNP for several countries The same considerations as for energy apply to the use of raw materials and of water, and the production of wastes. Their intensity per unit of GNP is decreasing in industrialised countries, and in some cases also the per-capita consumption has started to decrease. Technologies to reduce wastes are becoming available, and have economic merits, although it is unlikely that their full potential can be exploited by pure market mechanisms unless some correction for long-term and global objectives is applied to the market by means of norms, fiscal corrections or incentives. Life-cycle considerations of materials and products is a powerful approach to reducing both wastes and use of finite raw materials. 5. The role of renewables Energy will continue to play an important role in the future world. Its availability at reasonable price is one of the key issues for the development of Third World countries. The rapid increase of population, especially in developing countries, which will not level off before the middle of the next century, and the expected improvement of their quality of life will demand more and more energy, much as we can do to improve the efficiency of energy utilisation. Fossil fuels are not running short in the next future. Although their non-renewable resources are eventually bound to finish, this is not going to happen soon for coal or natural gas, and not even for oil. Prices have shown a remarkable stability in the last years, as compared with the volatility of the previous period. Price surges and crises of availability axe certainly possible in the future, especially as a consequence of unforeseen political events, and such scenarios have recently been discussed lately. However, as long as decisions remain rational, they should be less dramatic than in the past: both producers and users have found out that tensions and confrontations produce negative effects for both sides. At the beginning of the 1980's, the International Conference on New and Renewable Sources of Energy convened by the United Nations in Nairobi adopted a positive and somewhat optimistic view on the future of renewables. The emphasis was then on the availability of energy, and renewable sources of energy were seen mostly as a way out of the predicted scarcity and soaring prices of fossil fuels. A decade later, the United Nations Conference on Environment and Development in Rio de Janeiro, although it regrettably devoted little attention to the specific solution offeed by renewable energies, set a completely different scenario. The emphasis is now on the protection of the environment and of global climate: the deterioration of local and
82
global environmental conditions, the increasing recognition of the threats posed by man-produced enhancements of the greenhouse effect have become the main driving force towards the development of energy alternatives, in particular renewable sources of energy and improvements in the efficiency of energy USe.
This should not be seen as a new dressing for an old salad. Renewables will not diffuse as a resuh of technology push. Only a response to an actual demand of the market will change the situation. The challenge is now to demonstrate that once the obstacles to the diffusion of renewable energies are removed, they can become a substantial part of the energy supply in both industriaiised and developing countries. Such obstacles are mostly of a non-technicai narrate, and derive from legislation that, more or less consciously, incentivates the use of fossil fuels, from energy prices that do not reflect the costs paid by the community, from insufficient information. If really put on an equal footing with other energy sources (the so-called level playing field), renewables can compete on the market even with today's technologies; an effort of R&Dto improve these technologies or to develop new ones (which is fully justified in terms of public support and industrial commitment) would make this competition even more favourable to renewables. This view has some non-negligible strategic implications. Much of the talk about applications of renewables (for instance, solar photovoltaics) has concerned niche markets. Niche markets (i.e. applications for which renewables have no competitor, or certainly perform better and are cheaper than alternative solutions) are indeed important in providing an assured basis for the expansion of the market, but the attention should be concentrated on large-scale applications where renewables directly compete with traditional energies. Another consequence is that the past emphasis on using renewables to alleviate the riving conditions of the world's poor (such as supplying small amounts of energy to backward rural villages not connected to the grid) may have been excessive. In such cases, the lack of entitlement of those who directly benefit from the application puts them outside the market. Even if it certainly beneficial from a social point of view to devote international aid funds and national investments for social support to this kind of projects, more attention should be given to the cases in which the final user either has money to buy, or may make enough money just through the availability of energy which derives from the project, so as to establish a correct market approach. In other words, more emphasis should be given to the possible role of renewables in supporting profitable activities and in creating revenues. If applied for instance to Africa, such considerations may point to a quite different strategy from that followed in the past.
Pergamon
A SETTING FOR THE DIFFUSION OF RENEWABLE ENERGIES
Ugo Farineili ENEA, Rome, Italy
1. Introduction Throughout the history of humankind, energy has been an important factor of development; the availability and exploitation of new energy sources has accompanied and made possible major economic and social changes. In the Paleolythic age, the use of fire allowed cooking and conserving food, and protection against winter cold: this produced a less day-by-day life and hence a more complex and stable social organisation; it also brought to an extension of human habitat. Ten thousand years ago, the use of animal power was an important component in the advent of agriculture. In the renaissance, the use of wind for navigation and for windmills contributed to a new development of agriculture and to broader horizons for commercial and cultural exchanges. The industrial revolution at the beginning of the 19th century was made possible by the use of hydropower and more extensively of coal as an energy source. This involved preferential development of countries having large coal reserves (such as Britain and Germany) and, within them, to the birth of new large cities that rose in the vicinity of coal deposits. The rebirth of the economy after the second world war and the great development of industrialised countries were made possible, and at the same time deeply conditioned, by the availability of oil: an abundant, flexible and - most of the time - cheap energy source (Fig. 1).
10000 9000 800O 7000
;EO
6000 5000 4000 3000
GAS
2000 1000 0 1850
1950
1992
NOTE: t~2 dQtaare eslJm~el
Fig. 1 - Historical world energy consumption by source In the past, at each time one form of energy has been predominant over the others. As a new, more convenient, form of energy became available it gradually took the place of the former. Will this be the case also for the future? Although natural gas, nuclear and renewable energies have been indicated in turn by their 77
78 supporters as the inevitable egemonic energy source of the future, it is our opinion that we are going towards an era of more open options, with several sources co-existing, to be used in a greater or smaller proportion according to local needs and opportunities, to changing conditions over time, and to different applications; the key to such a future is increased flexibility. Cheap and abundant energy is required to maintain and improve further the high standerd of living in industrialised countries, even if a more effective and less wasteful lifestyle is envisaged. Much greater quantifies of energy will be essential for Third World countries in order to get out of their present poverty, and to make the transition to industrial and post-industrial societies.
2. The availability of energy Fossil fuels account for the great majority of energy consumption at the world level. When the famous report by the MIT for the Club of Rome, "Limits to Growth", was published in 1972, it pointed to the finite nature of fossil fuel and mineral resources (as well as to the limited carrying capacity of the environment). When the first oil crisis shocked the world just one year leater, it seemed to many people that the gloomy predictions of that report were already taking shape. We now know that the oil crisis was not due to physical exhaustion of the reserves. Although fossil fuels are non-renewable, finite resources, the threat of their physical exhaustion has not yet materialised, and their known reserves are higher than at all times. This can be better perceived in looking at the ratio between assured reserves and production for oil, for gas and for coal (Fig. 2). As the need increases, new reserves are
IQSS
I~
19TS
19IS
I~o
VIAl
Fig.2 - Ratio of resources to yearly consumption for fossil fuels found, thanks also to new and improved methods for exploration and for the exploitation. Preoccupations on the assurance of the availability and stability of prices of fossil fuels (in particular oil), at least for the short and medium term, are less incumbent at present than in the past. However, there is no assurance that a situation of instability will not be repeated in the future. Reserves in the Middle East (which account for the larger share of oil reserves) have extraction costs that are much lower than those of other deposits and can therefore dictate to a large extent the price ofoil on the international market. The two oil crises of 1973 and 1979-1980, with the consequent world-wide economic depression, and the countershock of 1985 have shown how the rigidity that affects both demand and supply can bring to instabilities in the market. While until recently oil was the only energy commodity largely exchanged on the international market, coal and especially natural gas have seen in the recent past an increased share of exports (Fig. 3); this trend could relax the necessity of relying on one specific form of energy alone, but the shift from one source to another is often not immediate and sometime problematic (as in the case of transportation, which today depends almost entirely on oil and its derivatives). Lately, even the share of electricity exchanged internationally has become no longer negligible.
79 60 50
40 30 20 ..~¢.:.:~':':':•:'~:•~~,r.:~:':':':':~':~
•
I0
~'" 0 ~;;~.~.:~ 1950
i
, i
i
j f,i
i
1960
j i
r i
i
i
i
i i,
i
\~ C O A t i ~ i i
1970
i
i i i
i,
r , ,
1980
i ,
, i r~
^
1991
Fig. 3 - Share of energy sources on the international market 3. Environmental limits to energy utilisation
The most important limit to the use of energy today derives from preoccupations on environment and climate. Many negative effects on the environment derive, directly or indirectly, from the energy, cycle. In recent times, the local effects (which have always been recognised) are accompanied by increasing preoccupations on regional and global effects. Acid rains, deriving from the release of sulphur and nitrogen oxides in the combustion of fossil fuels (particularly, but not only, coal) occur up to many hundred kilometers away from the polluting source and have adverse effects on agriculture, on forests, on lakes and oa the conservation of manufacts and works of art. Although acid emissions have been drastically reduced in industrialised countries, they are increasing in developing countries, especially those (like China) that have ample domestic resources of coal. Reducing the emissions is feasible (although at non-negligible costs) for large installations, such as power plants; it is much more difficult for smaller users, such as domestic heating or cooking. Other energy-related environmental problems derive from oil spills from tankers, which are often cause of major ecological disasters; from nuclear accidents, which in the case of Chernobyl have spread radioactive products over half a continent; and the contribution to deforestation and desertification deriving from the nonsustainable use of firewood. The most striking case of adverse effects of the energy cycle is that of possible global climate changes associated with man-produced greenhouse warming. 4. Prediction of Energy Needs for the Future In order to be able to predict the prospects of renewable energies in the future, it would be useful to have an idea of how much energy will be needed in the years to come, and of what share of it can we expect to be covered by each of the traditional energy sources. However, predictions in all fields are difficult, especially if they cover a long period of time; and, unfortunately, energy predictions have a record of being particularly unreliable. Originally, predictions of energy demand were based on straightforward extrapolations of observed trends. This is a dangerous procedure, especially when dealing with exponentialy growing curves! The energy crises of 1973 and 1989 have made justice of these rough methods and have opened a new era of bold predictions, all of which (with the few exceptions which could be expected from random statistics) were doomed to be wrong qualitatively.as well as quantitatively. The most relevant advances in this period was linking energy demand with energy prtce (as for any other good). Although the demand-to-price relation is far from simple (as it depends on investment cycles, perception of future trends, ease of substitution of fuels etc.), improving its understanding was not
80 very helpful since it only shifted the uncenahldes from the prediction of demand to the prediction of prices: and the last did not perform any better than the former (Fig. 4). $/b 40-
Trendof the forecasls made In the year ............ ~ Realevolullon of price(") Z
30-
20-
I0-
/.°/ ............
° ....... oO'° y ! 1974
1968
19J'719801
19~S3
1~88
I'i~93
(')Ctmenl US $1b
Fig. 4 - Predictions of trends of oil prices carried out at various times It would be out of the scope of this presentation to discuss the recent developments in this discipline. I would just like to call the attention to the global analyses of energy demand that have been derived from the concept of dematerialisation. In general terms, the evolution of economies in countries undergoing the process of industrialisation and beyond that into post-industrial societies displays a typical shape for the (commercial) energy intensity of the GNP (gross national product) (Fig. 5a), rising in a first stage (when infrastructures have to be built and durable goods provided for the first time to the population), reaching a maximum and then decreasing, as demand shifts towards less energy and material intensive goods, towards quality rather than quantity, towards services and software rather than hardware. The value of the maximum of this curve decreases for counuies which reach it later in time (Fig. 5b), because more advanced and efficient techniques have become available.
I TIME
I TIME source E ~
~v ENF.A
Fig. 5a - Trend of energy intensity of GNP during development and industrialisation
~:u:~
/~
E:a~r~,on oy ENEA
Fig. 5b - Comparison of energy intensity for countries industrialising at different times
81 While the historical curves for present industrialised societies in the Western World conform to these rules (Fig. 6), notable exceptions are the formerly Centrally Planned Economies (CPE) where the absence of market mechanisms has resulted in high wastes and low efficiency technologies; and most developing countries (DC), where for a number of reasons modern technologies are not available. Any global strategy aimed at reducing environment and climate problems at the world level must address these problems with priority, by transfer, adaptation, diffusion and joint development of advanced technologies in ex-CPE's and in DC's. 20~0
1400
IIHffl~
1200 10O0
:.g
I~A~T
Fig. 6 - Historical trends of (commercial) energy intensity of GNP for several countries The same considerations as for energy apply to the use of raw materials and of water, and the production of wastes. Their intensity per unit of GNP is decreasing in industrialised countries, and in some cases also the per-capita consumption has started to decrease. Technologies to reduce wastes are becoming available, and have economic merits, although it is unlikely that their full potential can be exploited by pure market mechanisms unless some correction for long-term and global objectives is applied to the market by means of norms, fiscal corrections or incentives. Life-cycle considerations of materials and products is a powerful approach to reducing both wastes and use of finite raw materials. 5. The role of renewables Energy will continue to play an important role in the future world. Its availability at reasonable price is one of the key issues for the development of Third World countries. The rapid increase of population, especially in developing countries, which will not level off before the middle of the next century, and the expected improvement of their quality of life will demand more and more energy, much as we can do to improve the efficiency of energy utilisation. Fossil fuels are not running short in the next future. Although their non-renewable resources are eventually bound to finish, this is not going to happen soon for coal or natural gas, and not even for oil. Prices have shown a remarkable stability in the last years, as compared with the volatility of the previous period. Price surges and crises of availability axe certainly possible in the future, especially as a consequence of unforeseen political events, and such scenarios have recently been discussed lately. However, as long as decisions remain rational, they should be less dramatic than in the past: both producers and users have found out that tensions and confrontations produce negative effects for both sides. At the beginning of the 1980's, the International Conference on New and Renewable Sources of Energy convened by the United Nations in Nairobi adopted a positive and somewhat optimistic view on the future of renewables. The emphasis was then on the availability of energy, and renewable sources of energy were seen mostly as a way out of the predicted scarcity and soaring prices of fossil fuels. A decade later, the United Nations Conference on Environment and Development in Rio de Janeiro, although it regrettably devoted little attention to the specific solution offeed by renewable energies, set a completely different scenario. The emphasis is now on the protection of the environment and of global climate: the deterioration of local and
82
global environmental conditions, the increasing recognition of the threats posed by man-produced enhancements of the greenhouse effect have become the main driving force towards the development of energy alternatives, in particular renewable sources of energy and improvements in the efficiency of energy USe.
This should not be seen as a new dressing for an old salad. Renewables will not diffuse as a resuh of technology push. Only a response to an actual demand of the market will change the situation. The challenge is now to demonstrate that once the obstacles to the diffusion of renewable energies are removed, they can become a substantial part of the energy supply in both industriaiised and developing countries. Such obstacles are mostly of a non-technicai narrate, and derive from legislation that, more or less consciously, incentivates the use of fossil fuels, from energy prices that do not reflect the costs paid by the community, from insufficient information. If really put on an equal footing with other energy sources (the so-called level playing field), renewables can compete on the market even with today's technologies; an effort of R&Dto improve these technologies or to develop new ones (which is fully justified in terms of public support and industrial commitment) would make this competition even more favourable to renewables. This view has some non-negligible strategic implications. Much of the talk about applications of renewables (for instance, solar photovoltaics) has concerned niche markets. Niche markets (i.e. applications for which renewables have no competitor, or certainly perform better and are cheaper than alternative solutions) are indeed important in providing an assured basis for the expansion of the market, but the attention should be concentrated on large-scale applications where renewables directly compete with traditional energies. Another consequence is that the past emphasis on using renewables to alleviate the riving conditions of the world's poor (such as supplying small amounts of energy to backward rural villages not connected to the grid) may have been excessive. In such cases, the lack of entitlement of those who directly benefit from the application puts them outside the market. Even if it certainly beneficial from a social point of view to devote international aid funds and national investments for social support to this kind of projects, more attention should be given to the cases in which the final user either has money to buy, or may make enough money just through the availability of energy which derives from the project, so as to establish a correct market approach. In other words, more emphasis should be given to the possible role of renewables in supporting profitable activities and in creating revenues. If applied for instance to Africa, such considerations may point to a quite different strategy from that followed in the past.