- Email: [email protected]
Renewable energy: a response to climate change
Solar Energy 76 (2004) 9–17 www.elsevier.com/locate/solener
Renewable energy: a response to climate change R.E.H. Sims
*
Centre for Energy Research, College of Sciences, Massey University, Private Bag 11 222, Palmerston North, New Zealand
Abstract ‘‘We recognize the importance of renewable energy for sustainable development, diversification of energy supply, and preservation of the environment. We will ensure that renewable energy sources are adequately considered in our national plans and encourage others to do so as well. We encourage continuing research and investment in renewable energy technology, throughout the world’’. Communique from the G8 Leaders’ Summit, Genoa, July 2001. The Third Assessment Report of the IPCC confirmed that the Earth’s climate is changing as a result of human activities, particularly from energy use, and that further change is inevitable. Natural ecosystems are already adapting to change, some are under threat, and it is evident that human health and habitats will be affected world-wide. Such climate changes could also affect the present supplies of renewable energy sources and the performance and reliability of the conversion technologies. This paper concentrates on the reduction of carbon dioxide emissions and the role that the global renewable energy industry might play in this regard. (The five other major greenhouse gases are given less emphasis here.) The paper compares the costs of renewable energy systems with fossil fuel-derived energy services and considers how placing a value on carbon emissions will help provide convergence. The move towards a de-carbonised world, driven partly by climate change science and partly by the business opportunities it offers, will need to occur sooner rather than later if an acceptable stabilisation level of atmospheric carbon dioxide is to be achieved. Government policy decisions made now will determine the sort of future world we wish our children to inherit. The renewable energy era has begun. 2003 Elsevier Ltd. All rights reserved.
1. Climate change impacts The Third Assessment Report of the United Nations’ Intergovernmental Panel on Climate Change was produced by three working groups focusing on climate science, adaptation and mitigation (IPCC, 2001a). The report confirmed that the Earth’s climate is changing as a result of human activities, particularly from fossil energy use, and that further change is inevitable. The report confirmed there is a range of renewable energy options (together with hundreds of energy efficiency technology solutions) that could be implemented over the next 20 years to help reduce greenhouse gas (GHG) emissions. Significant global business opportunities will result from the near term potential for renewable energy
*
Fax: +64-6-350-5640. E-mail address: [email protected] (R.E.H. Sims).
and related new industries, their business earning capacity, and their high employment potential. This paper concentrates on the reduction of carbon dioxide emissions and the role that the global renewable energy industry might play in this regard. It compares the costs of renewable energy systems with fossil fuelderived energy services and considers how placing a value on carbon emissions will help provide cost convergence. Government policies and mechanisms will be needed to encourage the greater uptake of renewable energy projects in the short term (along with energy efficiency measures) in order to help stabilise greenhouse gas concentrations at acceptable levels. 1.1. Fossil fuels The present atmospheric level of 368 ppm has risen from the stable 280 ppm level measured back over hundreds of years, largely as a result of mankind using
0038-092X/$ - see front matter 2003 Elsevier Ltd. All rights reserved. doi:10.1016/S0038-092X(03)00101-4
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fossil fuels which became common practice by around 1860. Today there is no global shortage of cheap fossil fuels in their various hydrocarbon forms, so this trend could well continue (Fig. 1). Reserves of oil, coal, natural gas and also uranium are more than adequate to meet projected energy demand growth until beyond 2020 but large investments in production and transportation infrastructure will be needed in order to exploit them (IEA, 2001). Compared with the 300 Gt of carbon emitted since 1860 from the burning of fossil fuels, five times that amount is contained in the known reserves of oil, gas and mainly coal that could be recovered in the near future, based on existing economic and operating conditions. In addition there are further conventional resources that may well be accessed in future as knowledge and extraction technologies advance and market conditions change. A large quantity of unconventional resources also exists which includes oil shales, tar sands, coal bed methane, and deep geopressured gas. Gas hydrates (clathrates) are not included in Fig. 1 but are estimated to contain a further 12 000 Gt C. So the world is not going to run out of fossil energy in the short term. Shortages may well occur due to instability in the Middle East (which will hold almost 90% of oil reserves by around 2020), and to a lack of infrastructure to deliver the energy source, such as natural gas, to the areas of greatest demand. However for the longer term, the question is that, if the climate is already changing as a result of releasing 300 Gt C (plus the other greenhouse
gases) into the atmosphere in a relatively short timeframe (in geological terms), then what will happen if we continue with Ôbusiness as usual’ as many industries currently seem to prefer to do? 1.2. Climate change science From many years of observations and detailed scientific assessments, we know with fairly good degrees of certainty that: • CO2 levels have increased 31% in the past 200 years; • deforestation has been responsible for around 20 Gt C of this since 1800; • CH4 has more than doubled since 1800; • the global mean surface temperature has increased by 0.4–0.8 C in the last century above the baseline of 14 C; • the 1990s was probably the warmest decade of the last 1000 years; • since the 1950s, night time minimum temperatures have increased at twice the rate of day time maximum temperatures; • the number of frost days for nearly all land areas decreased during the last century; • precipitation increased by 5–10% in the northern hemisphere last century, though it decreased in the drier regions (N and W Africa, Mediterranean); • flooding from high precipitation events occurred more frequently at mid and high latitudes; • global mean sea levels increased at an average annual rate of 1–2 mm over the last century; • Arctic sea ice thinned by 40% and decreased in extent by 10–15% in summer since the 1950s; • glaciers retreated and snow cover decreased in area by 10% since the 1960s; • El-Nino events became more frequent, persistent and intense; • growing seasons lengthened by around 1–4 days each decade during the last 40 years; • plants, insects, birds and fish shifted towards the poles and to higher elevations; and • weather related, inflation adjusted economic losses rose 14 times over the past 40 years. Regardless of future actions, the world will continue to change for some time and adaptation to change by fauna and flora as well as humans is inevitable. Indeed in many instances it has already started. 1.3. Adaptation resulting from climate change
Fig. 1. Atmospheric carbon emissions from fossil fuel use since 1860 compared with remaining known and unconventional reserves and resources (IPCC, 2001b).
From climate models and current and recently observed trends by climate scientists, we can expect the following changes to continue with varying degrees of certainty and adaptation to result:
R.E.H. Sims / Solar Energy 76 (2004) 9–17
• Higher maximum temperatures, more hot days and heat waves over all land areas leading to higher deaths in older and urban poor people; heat stress in livestock; greater risk of crop damage; increased electricity loads to meet air conditioning and cooling demands; and a change in popular tourist destinations. • Increasing minimum temperatures and less frosts giving lower cold related human deaths; decreased risk of crop damage (except to those requiring a cold period); increased range and activity of pests and diseases; and a reduced demand for heat energy. • More intense rainfall events and intensities leading to the recharging of some floodplain aquifers but conversely, more floods, landslides, soil erosion and loss of life; risk of infectious disease epidemics; increased pressure on government and insurance companies for flood damage and disaster relief; and potential damage to hydro-power schemes. • Increased summer drying over continental land areas and elsewhere leading to damage to building foundations from ground shrinkage; decreased water resources and poorer quality; increased risk of forest fires reducing the biological carbon stocks and sinks and the availability of woody biomass; decreased pasture crop yields including energy crops; increased demand for irrigation; and hydro-power inflow reductions in drought prone areas. • Increases in peak wind intensities, storm events and tropical cyclones leading to increased risks to human life and health; increased coastal erosion and damage to coastal ecosystems such as coral reefs; and damage to coastal buildings, infrastructure and wind, wave and tidal power installations. • Higher CO2 levels increasing plant growth, but constrained by water shortages in some regions making energy crop production and use of crop residues for bioenergy less reliable. • Sea levels continuing to rise leading to greater risks to on-shore wave and tidal installations and off-shore wave, wind and ocean current installations. • Cloud cover and water vapour feedbacks from increasing global temperatures are uncertain but could result in lower radiation levels received at the Earth’s surface leading to reduced outputs from solar thermal and PV devices. A large number of climate change scenarios have been modelled using various broad and wide assumptions such as what will be the global population by 2100. A wide range of model outputs have been the result, showing that, for example, the atmospheric CO2 level by 2100 could lie between 550 and 950 ppm (Fig. 2) and the Earth’s mean surface temperature will continue to rise to reach somewhere between 16 and 20 C.
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Fig. 2. Atmospheric CO2 concentrations based on ice core and direct atmospheric data with projections to 2100 based on a limited number of scenario models, and global average surface temperatures from tree rings, corals, ice cores and historical records with scenario predictions.
Climate change will continue even if we could stop fossil fuel use and methane and nitrous oxide emissions tomorrow. To stabilise atmospheric concentrations of CO2 at 450 ppm and accept there will be a considerable degree of adaptation as a result, then emissions would have to peak within the next 10–20 years. If they take 30–40 years to peak, then the level of stabilisation will be around 650 ppm and if it takes a century to achieve a change in our current dependence on fossil fuels, then the level will reach around 1000 ppm. What the world will be like if this occurs is hard to predict but resulting changes will continue for many centuries due to the time lags involved (Fig. 3). After CO2 emissions are reduced and atmospheric levels eventually stabilise, the surface temperature will continue to increase for a few centuries to stabilise and sea level rise will continue for even longer as a result of both thermal expansion and ice melting. So the faster the CO2 emission peak is reached, the better off future generations will probably be. The fossil fuel age will certainly be remembered for having considerable impact on the future of the planet.
Fig. 3. Time of responses to a reduction in carbon dioxide emissions by various components of the global climate system.
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For the developed world to reduce its greenhouse gas levels to below 5% of 1990 emission levels as sought under the Kyoto Protocol is proving to be a huge challenge in itself, but it is only the first step. The international community now needs to accept that the science, with all its uncertainties, is showing we have a huge problem to resolve; that under business as usual it will not go away but rapidly increase; and that although largely created by the developed world, it will have as great an impact on the developing world. The sooner methods are found to reduce greenhouse gas emissions in a sustainable and economically and environmentally acceptable manner, and equitably, the better.
2. Greenhouse gas mitigation opportunities Greenhouse gas emission reductions by technological options are wide ranging. For CO2 reductions, they include increased conversion efficiencies of heat and electricity generation plants such as natural gas combined cycle and cogeneration systems, improved efficiency of end-use devices, improved energy management systems, physical and biological carbon sequestration and storage, and a shift to low or zero carbon emission technologies based on renewable and sustainable energy systems. Global potential greenhouse gas reductions from mitigation technologies for various sectors were aggregated to provide estimates and to take into account possible overlaps between and within sectors (Table 1 from IPCC, 2001b). Appliance use was included in the building sector. A wide range was given for agricultural emissions as there is considerable uncertainty over methane and nitrous oxide compared with carbon dioxide from the other sectors. Waste is dominated by landfill methane. The energy supply and conversion sector is already included in the other sectors so was excluded from the total. The scenarios used by the IPCC predicted that global greenhouse gas emissions will be around 11 500– 14 000 Mt Ceq /year by 2010 and 12 000–16 000 Mt Ceq / year by 2020. The potential emission reduction estimates by these dates (Table 1) take into account a regular turnover of capital stock. They are not limited to perceived cost effective options but do exclude options with costs likely to be greater than $US100/t Ceq to implement. Thus the overall technical reduction potential under these assumptions is around 16–18% of business as usual by 2010 and 30–32% by 2020. The energy supply sector could provide around 10% of these savings from electricity generation options such as fuel switching from coal to gas and nuclear, physical CO2 capture and storage, improved power station efficiencies and the greater uptake of renewables. In summary, there are hundreds of technologies and practices for end-use efficiency in buildings, transport
and manufacturing industries whose uptake could account for more than half of the emission reduction potential. At least up till 2020 energy supply and conversion will remain dominated by relatively cheap and abundant fossil fuels with natural gas taking an increasing share. Low carbon energy supply systems from renewables will make an important contribution through biomass from forestry and agricultural residues, municipal and industrial waste-to-energy plants, dedicated energy crops where suitable land and water are available, landfill methane capture, wind energy and hydro-power. After 2010 emissions from fossil-fuelled or biomass-fuelled power plants could be reduced through pre- or post-combustion carbon removal and storage. Environmental, safety and reliability constraints may limit the use of some technologies including nuclear.
3. Energy supply options for mitigation of carbon dioxide Many new and emerging renewable energy technology projects including large hydro and geothermal already exist. Indeed hydro currently provides more electricity generation (19% of total generation capacity) than nuclear (17%), natural gas (16% but rising rapidly) or oil (9%). Further large scale hydro is partly constrained by environmental concerns and also by social issues as shown by the Three Gorges project in China where 1.3 million people will be displaced by the project. Geothermal developments will continue to occur but there are questions concerning the carbon dioxide emissions during steam and brine extraction, resulting land subsidence, and whether geothermal heat is truly renewable as fields tend to decline over several decades since, to be economic, the rate of heat extraction often has to be greater than the replenishment rate. Nuclear power has the advantage of being a zero greenhouse gas emitting generation technology but major public concerns exist at the lack of safe radioactive waste treatment, the proliferation of material for atomic weapons, and the possible targeting of nuclear power plants by terrorists which are constraints to further development. Some major form of government intervention will be required for new and emerging renewable energy projects to displace fossil fuels and obtain an increased market share as energy demand continues to increase. Encouraging increased implementation will be necessary to maintain the current 2% share of the electricity market, and the relatively minor shares of the heat and transport fuel markets. Fuel switching from coal to gas, the increased uptake of nuclear energy (if public concerns can be overcome), and the possible physical capture and storage of carbon dioxide could all provide cheap GHG mitigation options in terms of $/t C avoided. Hence they compete with the uptake of renewables.
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Table 1 Estimates of potential greenhouse gas emission reductions in 2010 and in 2020 Sector
Gases
Historic emissions in 1990 (Mt Ceq /year)
Historic Ceq annual growth rate in 1990– 1995 (%)
Buildings
CO2 only
1650
1.0
Transport
CO2 only
1080
2.4
Industry Energy efficiency Material efficiency Material substitutes Agriculture
CO2 only
2300
0.4
CO2 only
210
n.a.
Waste
CH4 /N2 O CH4 only
1250–2800 240
Montreal Protocol gas replacements Energy supply and conversion
Total
CO2 only
(1620)
Potential emission reductions in 2020 (Mt Ceq /year)
Net direct costs per tonne of carbon avoided
700–750
1000–1100
100–300
300–700
Most reductions are available at net negative direct costs Most studies indicate net costs less than $US25/ t C but two suggest costs will exceed $US50/t C
300–500
700–900
200
600
100
100
1.0
150–300 200
350–750 200
n.a.
100
n.a.
Non-CO2
Non-CO2
Potential emission reductions in 2010 (Mt Ceq /year)
1.5
6900–8400a
50–150
350–700
1900–2600
3600–5050
More than half available at net negative costs Costs are uncertain N2 O emissions reduction costs are $0–$10/t Ceq Most reductions will cost between $0 and 100/t Ceq with some opportunities for negative cost options About 75% of the savings as methane recovery from landfills at negative cost; 25% at $20/t Ceq About half of the reductions available at costs below $200/t Ceq Limited net negative cost options exist; many options are available for less than $100/t Ceq
a
Total excludes non-energy-related sources of CO2 (from cement production 160 Mt C/year, gas flaring 60 Mt C/year, and land use change 600–1400 Mt C/year), forest sinks, as well as energy used for conversion of fuels (630 Mt C/year) in the end-use sector totals.
A detailed comparison was made in the IPCC report for a range of electricity generating technologies in both developed and developing countries up until 2020, each compared with the chosen base case of either pulverised coal (as discussed here) or combined cycle natural gas where available (Sims et al., 2003). Costs were Ôaveraged’ across several countries and any possible regional variations considered. For example, flue gas desulphurisation was included for all future coal projects in OECD countries but only for 20% of those in developing countries. Projected generating costs of the pulverized coal plant were compared for gas, nuclear, physical CO2 capture and storage from coal or gas, hydro, biomass, wind, solar thermal and solar PV. Various assumptions were made depending on the variations in new technologies likely to be used in developed countries and
their uptake by 2020 versus those in developing countries. A sample of the results, averaged over all countries, is given in Table 2 to indicate the main findings. The IPCC report should be referred to for details of all the assumptions made, such as the rate of phasing in of new technologies as old power plants need to be replaced. The penetration rates for renewable energy technologies were based on the growth scenario published by Shell International (Shell, 1997) and, in this example, were applied to displace only new coal-fired plant. The overall uptake was assumed to be slightly less than if the current growth rate of around 25% per year for wind and solar had been applied right through to 2020. Where good wind sites are close to load and have very good mean annual wind speeds around say 9–10 m/s, or where
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Table 2 Examples of cost ranges and potential by 2010 and 2020 for carbon dioxide reduction using alternative electricity generating technologies compared with a conventional pulverized coal-fired power plant Power station type
Carbon emissions (g C/kW h)
Pulverized coal––as base case Integrated gasification combined cycle (IGCC)––coal Pulverised coal + CO2 capture Combined cycle gas turbine (CCGT) natural gas CCGT gas + CO2 capture Hydro Bioenergy IGCC––wood wastes Wind––good to medium sites Solar thermal and solar PV
229 190–198
Emission savings (g C/kW h)
Generating costs (USc/kW h)
$/t carbon avoided ($/t)
0 31–40
4.9 3.6–6.0
0 )10–40
49/140
40–50 103–122
179–189 107–126
7.4–10.6 4.9–6.9
136–165 0–156
10/100 38/240
14–18 0 0 0 0
211–215 229 229 229 229
6.4–8.4 4.2–7.8 2.8–7.6 3.0–8.0 8.7–40.0
71–165 )31–127 )92–117 )82–135 175–1400
Uncertain 26/92 14/90 63/173 2.5/28
biomass wastes such as bark or sawdust are already available and have a disposal cost, then using renewables to displace coal can provide both commercial cost savings as well as carbon dioxide emission reductions. The costs of avoiding a tonne of carbon released as carbon dioxide compared with the base case scenario showed that there can be negative costs resulting from implementing some technologies, depending on site and resources. The added incentive of carbon trading would encourage more projects to become viable. In simple terms, if the investment cost of avoiding emissions from a given project was calculated to be $40/t C whereas the value of carbon being traded was $41/t, then the project would become viable. The CO2 reduction potential from renewable energy was estimated to be substantially more for 2020 than for 2010 reflecting the time needed to make decisions and to build up manufacturing capacity. Over this period,
Reduction potential to 2010/2020 (Mt C/year)
continued replacement of coal by gas will also make a significant contribution to total GHG reductions as might CO2 capture and storage if proven viable. Regardless it was considered that renewables will have a significant role to play, although solar power will continue to be expensive and hence more suited to niche markets and off-grid applications. In order to reduce CO2 emissions, a government or company needs to consider the value of investing in new or improved energy supply technologies versus other forms of mitigation such as energy efficiency measures, or ruminant methane reduction. A method was developed in the IPCC report to enable indicative assessments to be made, as exemplified in Table 3. The detailed inputs will vary from country to country but the simple method as outlined, using just a few examples shown in the table, could be used to identify the preferred investment options from a wide range of
Table 3 Estimations of potential greenhouse gas emission reductions and the investment cost ($/t C avoided) from a selected range of fossil fuel substitution options
R.E.H. Sims / Solar Energy 76 (2004) 9–17
possibilities based on local costs and the resource availability.
4. Increasing the renewable energy market share Other than hydro-power and the inefficient use of traditional biomass for cooking and heating in developing countries, renewable energy supplies have contributed only around 2% of total global consumer energy for some time. With regard to increasing this share, a recent press release announcing the latest IEA World Energy Outlook report (IEA, 2001) stated ‘‘There is huge potential for expanding the supply of renewable energies if strong government backing can achieve steep reductions in their cost’’. In fact, the costs of electricity and heat generation have already declined significantly over the last two decades, partly driven by support from governments in one form or another but also by project experience giving greater knowledge (Fig. 4 based on www.iea.org/public/studies). For renewables, these rapid cost reductions should continue if government deployment policies are maintained for a further period to give greater project learning experiences; to support increased investment in R, D and D; and hence lead to mass production of components as demand increases. In addition, various fiscal policies and mechanisms for encouraging the uptake of renewables such as the introduction of a carbon emission charge on fossil fuels in some form, the international trading of carbon as a new commodity, mandatory renewable energy target mechanisms and the trading of the resulting certificates (RECS) as an additional revenue stream (currently reported to be around $Aus24/MW h in New South Wales) will assist in the process. Typically for every doubling of installed capacity, the power plant capital costs are reduced by 20%. This has already been demonstrated over several decades by combined cycle gas turbines (CCGT) and advanced coal technologies such as integrated gasification
Fig. 4. Generation cost reductions from wind, PV and bioenergy projects from the mid 1980s till 2000.
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combined cycle (IGCC). Since the 1980s, these established technologies have made some fundamental design improvements in certain components and functions but as these only represent a portion of the total technology cost, the learning rates are much less than for the emerging technologies. Yet there are still significant gaps between the costs of renewable energy and that of more traditional forms. Taking New Zealand as an example, as shown by the cost supply chart developed from various sources in relation to the National Energy Efficiency and Conservation Strategy (Fig. 5), industrial heat from woody biomass and geothermal (and a little landfill gas (LFG) and biogas) is close to market as it competes with coal and oil at around $NZ 14–5/GJ. Many projects are already in place. The gap between the average wholesale electricity price and some small hydro, wind (W) on the best sites, new geothermal power (G) and woody biomass using wood process residues on site (WB) is small and a few projects are operating. Less favourable sites are more costly and will require considerable incentives to bring them on stream. Solar water heating is close to market in some regions where the hot water tariff is around 12 c/kW h but with 100 000 solar water heaters being equivalent to around 1 PJ/year, there will only be a small contribution towards the total. Finally, the gap between biofuels for transport and the ex-refinery price of diesel and petrol is large, even when biodiesel is produced from tallow, a by-product from the meat industry and bioethanol is produced from whey, a byproduct from the dairy industry. The need for the continuation of governments to provide access to Ôlearning investment’ opportunities to bring down the cost of new renewable energy technologies to compete with current technologies is clearly illustrated using the GENIE model. Swedish researchers compared two technology paths for supplying global electricity demand by 2040 (IEA, 2000). Fig. 6a shows a business as usual scenario which depends on advanced coal and some increase in nuclear to substitute for dwindling natural gas reserves after 2025. The alternative option (Fig. 6b) results from a total learning investment of around $US400 billion between 2000 and 2025 in solar, hydrogen production and fuel cells in order to gain later benefits. At a real 5% discount rate, the total investment costs were estimated to be remarkably similar at around $US9100 billion. The key difference however was that even with similar capacities of wind, bioenergy and hydro-power over the period, the Ôbusiness as usual world’ produced double the carbon dioxide emissions in 2045 that were emitted in 2000
1
$NZ1 ¼ $US0.40 ¼ $Aus0.80 approximately.
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40
PV
Solar water heaters
Biodsl
35
Methanol Ethanol
Retail electricity
30
W
10c/kWh
G
25
WB Biogas
$/GJ W
20
G Small hydro LFG
15 5c/kWh 10
LFG
W
G
WB
Wholesale electricity
Biogas
Ex-refinery petrol /diesel price
Woody biomass
5
Coal/gas
G
0 0
20
10
30
40
50
60
Market Potential PJ/y Fig. 5. Cost supply curves for new renewable projects (other than large hydro) in New Zealand to possibly meet the National Energy Efficiency and Conservation Strategy target range of 30 PJ/year by 2012.
40 40 Bioenergy
30
30
PV H2
Bioenergy
PWh 20
PV Wind
PWh
Wind
20
Fuel cell NGCC
NGCC
Advanced coal
10 Oil Gas Coal
0 1995
Nuclear Hydro
2005
2015
2025
2035
Advanced coal
10 Oil Gas Coal
0 1995
Nuclear Hydro
2005
(a)
2015
2025
2035
(b)
Fig. 6. Business as usual scenario for global electricity demand (a) versus results of government learning investment for PV and fuel cells between 2000 and 2025 (b).
whereas the Ôrenewable energy world’ returned to 2000 CO2 emission levels. As costs for renewable energy projects converge with fossil fuel-based projects, the greater their implementation will be in developing countries, encouraged by the Clean Development Mechanism of the Kyoto Protocol. The use of Ôleapfrog technologies’ to provide electricity, cooling, heating and transport fuels to the two billion or so people mainly living in developing countries without easy and affordable access to these energy services is imperative if there is to be a truly global solution to climate change. There is already little enough encouragement for businesses in OECD countries to attempt to reduce their greenhouse gas emissions when they are rapidly increasing in China, India, South America and
elsewhere. These countries will invest in the cheapest energy technologies available, regardless of their conversion efficiencies or GHG emissions. The challenge is to provide sufficient incentive for the direct uptake of renewables. This may well be possible in rural communities where the advent of distributed generation worldwide based on using micro-turbines, fuel cells, etc. could become applicable.
5. Conclusions Increasing the share of renewable energy in the global primary energy mix will be difficult whilst there is an abundance of cheap fossil fuels available. Climate sci-
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entists have shown that the continued use of coal, gas and oil will lead to greater climate instability and politicians have largely accepted the argument. Obtaining industry support to modify their operations to produce lower greenhouse gas emissions will be challenging, especially where there are investment costs involved. Several industry leaders are positioning themselves to benefit from the inevitable move towards renewable energy and government support has not been totally lacking. However new and emerging renewables are still struggling to maintain their 2% share of global consumer energy. To produce an acceptable future world with minimum cost needed for adaptation resulting from climate change will, inter alia, require the rapid uptake of renewables to displace fossil fuels. This will need significant learning investments and other supporting government policies and mechanisms to make progress sufficient to give long-term benefits. Business opportunities will abound as the world decarbonises and moves into the Renewable Energy era. The growing demand for energy will continue. International climate change negotiations of this complexity have never been entered into before. Until now there has been no cost associated with the environmental impacts of burning fossil fuels. In the future society will have to pay retrospectively. This will create negative bottom lines for some companies but opportunities for others. The question often not asked by those industries
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under threat is Ôwhat will be the cost of climate change if we continue with business as usual’? Society must choose what sort of world it wishes to pass on to future generations.
References IEA, 2000. Technology paths for the global electricity system. International Energy Agency, Paris. IEA, 2001. World Energy Outlook: 2001 Insight. Assessing today’s supplies to fuel tomorrow’s growth. International Energy Agency, Paris. ISBN 92-64-19658-7, 401 pp. Available from. IPCC, 2001a. Climate Change 2001 (3 volumes). United Nations Intergovernmental Panel on Climate Change. Cambridge University Press, UK. Available from . IPCC, 2001b. Climate Change 2001. In: Metz, B., Davidson, O., Swart, R., Pan, J. (Eds.), Mitigation. United Nations Intergovernmental Panel on Climate Change. Cambridge University Press, UK. ISBN 0-521-01502-2, 751 pp. Available from . Shell, 1997. The evolution of the world’s energy system. Shell International Limited Report, Shell Centre, London, UK, 7 pp. Sims, R.E.H., Rogner, H.-H., Gregory, K., 2003. Carbon emission and mitigation cost comparisons between fossil fuel, nuclear and renewable energy resources for electricity generation. Energy Policy 31, 1315–1326.
Renewable energy: a response to climate change R.E.H. Sims
*
Centre for Energy Research, College of Sciences, Massey University, Private Bag 11 222, Palmerston North, New Zealand
Abstract ‘‘We recognize the importance of renewable energy for sustainable development, diversification of energy supply, and preservation of the environment. We will ensure that renewable energy sources are adequately considered in our national plans and encourage others to do so as well. We encourage continuing research and investment in renewable energy technology, throughout the world’’. Communique from the G8 Leaders’ Summit, Genoa, July 2001. The Third Assessment Report of the IPCC confirmed that the Earth’s climate is changing as a result of human activities, particularly from energy use, and that further change is inevitable. Natural ecosystems are already adapting to change, some are under threat, and it is evident that human health and habitats will be affected world-wide. Such climate changes could also affect the present supplies of renewable energy sources and the performance and reliability of the conversion technologies. This paper concentrates on the reduction of carbon dioxide emissions and the role that the global renewable energy industry might play in this regard. (The five other major greenhouse gases are given less emphasis here.) The paper compares the costs of renewable energy systems with fossil fuel-derived energy services and considers how placing a value on carbon emissions will help provide convergence. The move towards a de-carbonised world, driven partly by climate change science and partly by the business opportunities it offers, will need to occur sooner rather than later if an acceptable stabilisation level of atmospheric carbon dioxide is to be achieved. Government policy decisions made now will determine the sort of future world we wish our children to inherit. The renewable energy era has begun. 2003 Elsevier Ltd. All rights reserved.
1. Climate change impacts The Third Assessment Report of the United Nations’ Intergovernmental Panel on Climate Change was produced by three working groups focusing on climate science, adaptation and mitigation (IPCC, 2001a). The report confirmed that the Earth’s climate is changing as a result of human activities, particularly from fossil energy use, and that further change is inevitable. The report confirmed there is a range of renewable energy options (together with hundreds of energy efficiency technology solutions) that could be implemented over the next 20 years to help reduce greenhouse gas (GHG) emissions. Significant global business opportunities will result from the near term potential for renewable energy
*
Fax: +64-6-350-5640. E-mail address: [email protected] (R.E.H. Sims).
and related new industries, their business earning capacity, and their high employment potential. This paper concentrates on the reduction of carbon dioxide emissions and the role that the global renewable energy industry might play in this regard. It compares the costs of renewable energy systems with fossil fuelderived energy services and considers how placing a value on carbon emissions will help provide cost convergence. Government policies and mechanisms will be needed to encourage the greater uptake of renewable energy projects in the short term (along with energy efficiency measures) in order to help stabilise greenhouse gas concentrations at acceptable levels. 1.1. Fossil fuels The present atmospheric level of 368 ppm has risen from the stable 280 ppm level measured back over hundreds of years, largely as a result of mankind using
0038-092X/$ - see front matter 2003 Elsevier Ltd. All rights reserved. doi:10.1016/S0038-092X(03)00101-4
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fossil fuels which became common practice by around 1860. Today there is no global shortage of cheap fossil fuels in their various hydrocarbon forms, so this trend could well continue (Fig. 1). Reserves of oil, coal, natural gas and also uranium are more than adequate to meet projected energy demand growth until beyond 2020 but large investments in production and transportation infrastructure will be needed in order to exploit them (IEA, 2001). Compared with the 300 Gt of carbon emitted since 1860 from the burning of fossil fuels, five times that amount is contained in the known reserves of oil, gas and mainly coal that could be recovered in the near future, based on existing economic and operating conditions. In addition there are further conventional resources that may well be accessed in future as knowledge and extraction technologies advance and market conditions change. A large quantity of unconventional resources also exists which includes oil shales, tar sands, coal bed methane, and deep geopressured gas. Gas hydrates (clathrates) are not included in Fig. 1 but are estimated to contain a further 12 000 Gt C. So the world is not going to run out of fossil energy in the short term. Shortages may well occur due to instability in the Middle East (which will hold almost 90% of oil reserves by around 2020), and to a lack of infrastructure to deliver the energy source, such as natural gas, to the areas of greatest demand. However for the longer term, the question is that, if the climate is already changing as a result of releasing 300 Gt C (plus the other greenhouse
gases) into the atmosphere in a relatively short timeframe (in geological terms), then what will happen if we continue with Ôbusiness as usual’ as many industries currently seem to prefer to do? 1.2. Climate change science From many years of observations and detailed scientific assessments, we know with fairly good degrees of certainty that: • CO2 levels have increased 31% in the past 200 years; • deforestation has been responsible for around 20 Gt C of this since 1800; • CH4 has more than doubled since 1800; • the global mean surface temperature has increased by 0.4–0.8 C in the last century above the baseline of 14 C; • the 1990s was probably the warmest decade of the last 1000 years; • since the 1950s, night time minimum temperatures have increased at twice the rate of day time maximum temperatures; • the number of frost days for nearly all land areas decreased during the last century; • precipitation increased by 5–10% in the northern hemisphere last century, though it decreased in the drier regions (N and W Africa, Mediterranean); • flooding from high precipitation events occurred more frequently at mid and high latitudes; • global mean sea levels increased at an average annual rate of 1–2 mm over the last century; • Arctic sea ice thinned by 40% and decreased in extent by 10–15% in summer since the 1950s; • glaciers retreated and snow cover decreased in area by 10% since the 1960s; • El-Nino events became more frequent, persistent and intense; • growing seasons lengthened by around 1–4 days each decade during the last 40 years; • plants, insects, birds and fish shifted towards the poles and to higher elevations; and • weather related, inflation adjusted economic losses rose 14 times over the past 40 years. Regardless of future actions, the world will continue to change for some time and adaptation to change by fauna and flora as well as humans is inevitable. Indeed in many instances it has already started. 1.3. Adaptation resulting from climate change
Fig. 1. Atmospheric carbon emissions from fossil fuel use since 1860 compared with remaining known and unconventional reserves and resources (IPCC, 2001b).
From climate models and current and recently observed trends by climate scientists, we can expect the following changes to continue with varying degrees of certainty and adaptation to result:
R.E.H. Sims / Solar Energy 76 (2004) 9–17
• Higher maximum temperatures, more hot days and heat waves over all land areas leading to higher deaths in older and urban poor people; heat stress in livestock; greater risk of crop damage; increased electricity loads to meet air conditioning and cooling demands; and a change in popular tourist destinations. • Increasing minimum temperatures and less frosts giving lower cold related human deaths; decreased risk of crop damage (except to those requiring a cold period); increased range and activity of pests and diseases; and a reduced demand for heat energy. • More intense rainfall events and intensities leading to the recharging of some floodplain aquifers but conversely, more floods, landslides, soil erosion and loss of life; risk of infectious disease epidemics; increased pressure on government and insurance companies for flood damage and disaster relief; and potential damage to hydro-power schemes. • Increased summer drying over continental land areas and elsewhere leading to damage to building foundations from ground shrinkage; decreased water resources and poorer quality; increased risk of forest fires reducing the biological carbon stocks and sinks and the availability of woody biomass; decreased pasture crop yields including energy crops; increased demand for irrigation; and hydro-power inflow reductions in drought prone areas. • Increases in peak wind intensities, storm events and tropical cyclones leading to increased risks to human life and health; increased coastal erosion and damage to coastal ecosystems such as coral reefs; and damage to coastal buildings, infrastructure and wind, wave and tidal power installations. • Higher CO2 levels increasing plant growth, but constrained by water shortages in some regions making energy crop production and use of crop residues for bioenergy less reliable. • Sea levels continuing to rise leading to greater risks to on-shore wave and tidal installations and off-shore wave, wind and ocean current installations. • Cloud cover and water vapour feedbacks from increasing global temperatures are uncertain but could result in lower radiation levels received at the Earth’s surface leading to reduced outputs from solar thermal and PV devices. A large number of climate change scenarios have been modelled using various broad and wide assumptions such as what will be the global population by 2100. A wide range of model outputs have been the result, showing that, for example, the atmospheric CO2 level by 2100 could lie between 550 and 950 ppm (Fig. 2) and the Earth’s mean surface temperature will continue to rise to reach somewhere between 16 and 20 C.
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Fig. 2. Atmospheric CO2 concentrations based on ice core and direct atmospheric data with projections to 2100 based on a limited number of scenario models, and global average surface temperatures from tree rings, corals, ice cores and historical records with scenario predictions.
Climate change will continue even if we could stop fossil fuel use and methane and nitrous oxide emissions tomorrow. To stabilise atmospheric concentrations of CO2 at 450 ppm and accept there will be a considerable degree of adaptation as a result, then emissions would have to peak within the next 10–20 years. If they take 30–40 years to peak, then the level of stabilisation will be around 650 ppm and if it takes a century to achieve a change in our current dependence on fossil fuels, then the level will reach around 1000 ppm. What the world will be like if this occurs is hard to predict but resulting changes will continue for many centuries due to the time lags involved (Fig. 3). After CO2 emissions are reduced and atmospheric levels eventually stabilise, the surface temperature will continue to increase for a few centuries to stabilise and sea level rise will continue for even longer as a result of both thermal expansion and ice melting. So the faster the CO2 emission peak is reached, the better off future generations will probably be. The fossil fuel age will certainly be remembered for having considerable impact on the future of the planet.
Fig. 3. Time of responses to a reduction in carbon dioxide emissions by various components of the global climate system.
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For the developed world to reduce its greenhouse gas levels to below 5% of 1990 emission levels as sought under the Kyoto Protocol is proving to be a huge challenge in itself, but it is only the first step. The international community now needs to accept that the science, with all its uncertainties, is showing we have a huge problem to resolve; that under business as usual it will not go away but rapidly increase; and that although largely created by the developed world, it will have as great an impact on the developing world. The sooner methods are found to reduce greenhouse gas emissions in a sustainable and economically and environmentally acceptable manner, and equitably, the better.
2. Greenhouse gas mitigation opportunities Greenhouse gas emission reductions by technological options are wide ranging. For CO2 reductions, they include increased conversion efficiencies of heat and electricity generation plants such as natural gas combined cycle and cogeneration systems, improved efficiency of end-use devices, improved energy management systems, physical and biological carbon sequestration and storage, and a shift to low or zero carbon emission technologies based on renewable and sustainable energy systems. Global potential greenhouse gas reductions from mitigation technologies for various sectors were aggregated to provide estimates and to take into account possible overlaps between and within sectors (Table 1 from IPCC, 2001b). Appliance use was included in the building sector. A wide range was given for agricultural emissions as there is considerable uncertainty over methane and nitrous oxide compared with carbon dioxide from the other sectors. Waste is dominated by landfill methane. The energy supply and conversion sector is already included in the other sectors so was excluded from the total. The scenarios used by the IPCC predicted that global greenhouse gas emissions will be around 11 500– 14 000 Mt Ceq /year by 2010 and 12 000–16 000 Mt Ceq / year by 2020. The potential emission reduction estimates by these dates (Table 1) take into account a regular turnover of capital stock. They are not limited to perceived cost effective options but do exclude options with costs likely to be greater than $US100/t Ceq to implement. Thus the overall technical reduction potential under these assumptions is around 16–18% of business as usual by 2010 and 30–32% by 2020. The energy supply sector could provide around 10% of these savings from electricity generation options such as fuel switching from coal to gas and nuclear, physical CO2 capture and storage, improved power station efficiencies and the greater uptake of renewables. In summary, there are hundreds of technologies and practices for end-use efficiency in buildings, transport
and manufacturing industries whose uptake could account for more than half of the emission reduction potential. At least up till 2020 energy supply and conversion will remain dominated by relatively cheap and abundant fossil fuels with natural gas taking an increasing share. Low carbon energy supply systems from renewables will make an important contribution through biomass from forestry and agricultural residues, municipal and industrial waste-to-energy plants, dedicated energy crops where suitable land and water are available, landfill methane capture, wind energy and hydro-power. After 2010 emissions from fossil-fuelled or biomass-fuelled power plants could be reduced through pre- or post-combustion carbon removal and storage. Environmental, safety and reliability constraints may limit the use of some technologies including nuclear.
3. Energy supply options for mitigation of carbon dioxide Many new and emerging renewable energy technology projects including large hydro and geothermal already exist. Indeed hydro currently provides more electricity generation (19% of total generation capacity) than nuclear (17%), natural gas (16% but rising rapidly) or oil (9%). Further large scale hydro is partly constrained by environmental concerns and also by social issues as shown by the Three Gorges project in China where 1.3 million people will be displaced by the project. Geothermal developments will continue to occur but there are questions concerning the carbon dioxide emissions during steam and brine extraction, resulting land subsidence, and whether geothermal heat is truly renewable as fields tend to decline over several decades since, to be economic, the rate of heat extraction often has to be greater than the replenishment rate. Nuclear power has the advantage of being a zero greenhouse gas emitting generation technology but major public concerns exist at the lack of safe radioactive waste treatment, the proliferation of material for atomic weapons, and the possible targeting of nuclear power plants by terrorists which are constraints to further development. Some major form of government intervention will be required for new and emerging renewable energy projects to displace fossil fuels and obtain an increased market share as energy demand continues to increase. Encouraging increased implementation will be necessary to maintain the current 2% share of the electricity market, and the relatively minor shares of the heat and transport fuel markets. Fuel switching from coal to gas, the increased uptake of nuclear energy (if public concerns can be overcome), and the possible physical capture and storage of carbon dioxide could all provide cheap GHG mitigation options in terms of $/t C avoided. Hence they compete with the uptake of renewables.
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Table 1 Estimates of potential greenhouse gas emission reductions in 2010 and in 2020 Sector
Gases
Historic emissions in 1990 (Mt Ceq /year)
Historic Ceq annual growth rate in 1990– 1995 (%)
Buildings
CO2 only
1650
1.0
Transport
CO2 only
1080
2.4
Industry Energy efficiency Material efficiency Material substitutes Agriculture
CO2 only
2300
0.4
CO2 only
210
n.a.
Waste
CH4 /N2 O CH4 only
1250–2800 240
Montreal Protocol gas replacements Energy supply and conversion
Total
CO2 only
(1620)
Potential emission reductions in 2020 (Mt Ceq /year)
Net direct costs per tonne of carbon avoided
700–750
1000–1100
100–300
300–700
Most reductions are available at net negative direct costs Most studies indicate net costs less than $US25/ t C but two suggest costs will exceed $US50/t C
300–500
700–900
200
600
100
100
1.0
150–300 200
350–750 200
n.a.
100
n.a.
Non-CO2
Non-CO2
Potential emission reductions in 2010 (Mt Ceq /year)
1.5
6900–8400a
50–150
350–700
1900–2600
3600–5050
More than half available at net negative costs Costs are uncertain N2 O emissions reduction costs are $0–$10/t Ceq Most reductions will cost between $0 and 100/t Ceq with some opportunities for negative cost options About 75% of the savings as methane recovery from landfills at negative cost; 25% at $20/t Ceq About half of the reductions available at costs below $200/t Ceq Limited net negative cost options exist; many options are available for less than $100/t Ceq
a
Total excludes non-energy-related sources of CO2 (from cement production 160 Mt C/year, gas flaring 60 Mt C/year, and land use change 600–1400 Mt C/year), forest sinks, as well as energy used for conversion of fuels (630 Mt C/year) in the end-use sector totals.
A detailed comparison was made in the IPCC report for a range of electricity generating technologies in both developed and developing countries up until 2020, each compared with the chosen base case of either pulverised coal (as discussed here) or combined cycle natural gas where available (Sims et al., 2003). Costs were Ôaveraged’ across several countries and any possible regional variations considered. For example, flue gas desulphurisation was included for all future coal projects in OECD countries but only for 20% of those in developing countries. Projected generating costs of the pulverized coal plant were compared for gas, nuclear, physical CO2 capture and storage from coal or gas, hydro, biomass, wind, solar thermal and solar PV. Various assumptions were made depending on the variations in new technologies likely to be used in developed countries and
their uptake by 2020 versus those in developing countries. A sample of the results, averaged over all countries, is given in Table 2 to indicate the main findings. The IPCC report should be referred to for details of all the assumptions made, such as the rate of phasing in of new technologies as old power plants need to be replaced. The penetration rates for renewable energy technologies were based on the growth scenario published by Shell International (Shell, 1997) and, in this example, were applied to displace only new coal-fired plant. The overall uptake was assumed to be slightly less than if the current growth rate of around 25% per year for wind and solar had been applied right through to 2020. Where good wind sites are close to load and have very good mean annual wind speeds around say 9–10 m/s, or where
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Table 2 Examples of cost ranges and potential by 2010 and 2020 for carbon dioxide reduction using alternative electricity generating technologies compared with a conventional pulverized coal-fired power plant Power station type
Carbon emissions (g C/kW h)
Pulverized coal––as base case Integrated gasification combined cycle (IGCC)––coal Pulverised coal + CO2 capture Combined cycle gas turbine (CCGT) natural gas CCGT gas + CO2 capture Hydro Bioenergy IGCC––wood wastes Wind––good to medium sites Solar thermal and solar PV
229 190–198
Emission savings (g C/kW h)
Generating costs (USc/kW h)
$/t carbon avoided ($/t)
0 31–40
4.9 3.6–6.0
0 )10–40
49/140
40–50 103–122
179–189 107–126
7.4–10.6 4.9–6.9
136–165 0–156
10/100 38/240
14–18 0 0 0 0
211–215 229 229 229 229
6.4–8.4 4.2–7.8 2.8–7.6 3.0–8.0 8.7–40.0
71–165 )31–127 )92–117 )82–135 175–1400
Uncertain 26/92 14/90 63/173 2.5/28
biomass wastes such as bark or sawdust are already available and have a disposal cost, then using renewables to displace coal can provide both commercial cost savings as well as carbon dioxide emission reductions. The costs of avoiding a tonne of carbon released as carbon dioxide compared with the base case scenario showed that there can be negative costs resulting from implementing some technologies, depending on site and resources. The added incentive of carbon trading would encourage more projects to become viable. In simple terms, if the investment cost of avoiding emissions from a given project was calculated to be $40/t C whereas the value of carbon being traded was $41/t, then the project would become viable. The CO2 reduction potential from renewable energy was estimated to be substantially more for 2020 than for 2010 reflecting the time needed to make decisions and to build up manufacturing capacity. Over this period,
Reduction potential to 2010/2020 (Mt C/year)
continued replacement of coal by gas will also make a significant contribution to total GHG reductions as might CO2 capture and storage if proven viable. Regardless it was considered that renewables will have a significant role to play, although solar power will continue to be expensive and hence more suited to niche markets and off-grid applications. In order to reduce CO2 emissions, a government or company needs to consider the value of investing in new or improved energy supply technologies versus other forms of mitigation such as energy efficiency measures, or ruminant methane reduction. A method was developed in the IPCC report to enable indicative assessments to be made, as exemplified in Table 3. The detailed inputs will vary from country to country but the simple method as outlined, using just a few examples shown in the table, could be used to identify the preferred investment options from a wide range of
Table 3 Estimations of potential greenhouse gas emission reductions and the investment cost ($/t C avoided) from a selected range of fossil fuel substitution options
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possibilities based on local costs and the resource availability.
4. Increasing the renewable energy market share Other than hydro-power and the inefficient use of traditional biomass for cooking and heating in developing countries, renewable energy supplies have contributed only around 2% of total global consumer energy for some time. With regard to increasing this share, a recent press release announcing the latest IEA World Energy Outlook report (IEA, 2001) stated ‘‘There is huge potential for expanding the supply of renewable energies if strong government backing can achieve steep reductions in their cost’’. In fact, the costs of electricity and heat generation have already declined significantly over the last two decades, partly driven by support from governments in one form or another but also by project experience giving greater knowledge (Fig. 4 based on www.iea.org/public/studies). For renewables, these rapid cost reductions should continue if government deployment policies are maintained for a further period to give greater project learning experiences; to support increased investment in R, D and D; and hence lead to mass production of components as demand increases. In addition, various fiscal policies and mechanisms for encouraging the uptake of renewables such as the introduction of a carbon emission charge on fossil fuels in some form, the international trading of carbon as a new commodity, mandatory renewable energy target mechanisms and the trading of the resulting certificates (RECS) as an additional revenue stream (currently reported to be around $Aus24/MW h in New South Wales) will assist in the process. Typically for every doubling of installed capacity, the power plant capital costs are reduced by 20%. This has already been demonstrated over several decades by combined cycle gas turbines (CCGT) and advanced coal technologies such as integrated gasification
Fig. 4. Generation cost reductions from wind, PV and bioenergy projects from the mid 1980s till 2000.
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combined cycle (IGCC). Since the 1980s, these established technologies have made some fundamental design improvements in certain components and functions but as these only represent a portion of the total technology cost, the learning rates are much less than for the emerging technologies. Yet there are still significant gaps between the costs of renewable energy and that of more traditional forms. Taking New Zealand as an example, as shown by the cost supply chart developed from various sources in relation to the National Energy Efficiency and Conservation Strategy (Fig. 5), industrial heat from woody biomass and geothermal (and a little landfill gas (LFG) and biogas) is close to market as it competes with coal and oil at around $NZ 14–5/GJ. Many projects are already in place. The gap between the average wholesale electricity price and some small hydro, wind (W) on the best sites, new geothermal power (G) and woody biomass using wood process residues on site (WB) is small and a few projects are operating. Less favourable sites are more costly and will require considerable incentives to bring them on stream. Solar water heating is close to market in some regions where the hot water tariff is around 12 c/kW h but with 100 000 solar water heaters being equivalent to around 1 PJ/year, there will only be a small contribution towards the total. Finally, the gap between biofuels for transport and the ex-refinery price of diesel and petrol is large, even when biodiesel is produced from tallow, a by-product from the meat industry and bioethanol is produced from whey, a byproduct from the dairy industry. The need for the continuation of governments to provide access to Ôlearning investment’ opportunities to bring down the cost of new renewable energy technologies to compete with current technologies is clearly illustrated using the GENIE model. Swedish researchers compared two technology paths for supplying global electricity demand by 2040 (IEA, 2000). Fig. 6a shows a business as usual scenario which depends on advanced coal and some increase in nuclear to substitute for dwindling natural gas reserves after 2025. The alternative option (Fig. 6b) results from a total learning investment of around $US400 billion between 2000 and 2025 in solar, hydrogen production and fuel cells in order to gain later benefits. At a real 5% discount rate, the total investment costs were estimated to be remarkably similar at around $US9100 billion. The key difference however was that even with similar capacities of wind, bioenergy and hydro-power over the period, the Ôbusiness as usual world’ produced double the carbon dioxide emissions in 2045 that were emitted in 2000
1
$NZ1 ¼ $US0.40 ¼ $Aus0.80 approximately.
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40
PV
Solar water heaters
Biodsl
35
Methanol Ethanol
Retail electricity
30
W
10c/kWh
G
25
WB Biogas
$/GJ W
20
G Small hydro LFG
15 5c/kWh 10
LFG
W
G
WB
Wholesale electricity
Biogas
Ex-refinery petrol /diesel price
Woody biomass
5
Coal/gas
G
0 0
20
10
30
40
50
60
Market Potential PJ/y Fig. 5. Cost supply curves for new renewable projects (other than large hydro) in New Zealand to possibly meet the National Energy Efficiency and Conservation Strategy target range of 30 PJ/year by 2012.
40 40 Bioenergy
30
30
PV H2
Bioenergy
PWh 20
PV Wind
PWh
Wind
20
Fuel cell NGCC
NGCC
Advanced coal
10 Oil Gas Coal
0 1995
Nuclear Hydro
2005
2015
2025
2035
Advanced coal
10 Oil Gas Coal
0 1995
Nuclear Hydro
2005
(a)
2015
2025
2035
(b)
Fig. 6. Business as usual scenario for global electricity demand (a) versus results of government learning investment for PV and fuel cells between 2000 and 2025 (b).
whereas the Ôrenewable energy world’ returned to 2000 CO2 emission levels. As costs for renewable energy projects converge with fossil fuel-based projects, the greater their implementation will be in developing countries, encouraged by the Clean Development Mechanism of the Kyoto Protocol. The use of Ôleapfrog technologies’ to provide electricity, cooling, heating and transport fuels to the two billion or so people mainly living in developing countries without easy and affordable access to these energy services is imperative if there is to be a truly global solution to climate change. There is already little enough encouragement for businesses in OECD countries to attempt to reduce their greenhouse gas emissions when they are rapidly increasing in China, India, South America and
elsewhere. These countries will invest in the cheapest energy technologies available, regardless of their conversion efficiencies or GHG emissions. The challenge is to provide sufficient incentive for the direct uptake of renewables. This may well be possible in rural communities where the advent of distributed generation worldwide based on using micro-turbines, fuel cells, etc. could become applicable.
5. Conclusions Increasing the share of renewable energy in the global primary energy mix will be difficult whilst there is an abundance of cheap fossil fuels available. Climate sci-
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entists have shown that the continued use of coal, gas and oil will lead to greater climate instability and politicians have largely accepted the argument. Obtaining industry support to modify their operations to produce lower greenhouse gas emissions will be challenging, especially where there are investment costs involved. Several industry leaders are positioning themselves to benefit from the inevitable move towards renewable energy and government support has not been totally lacking. However new and emerging renewables are still struggling to maintain their 2% share of global consumer energy. To produce an acceptable future world with minimum cost needed for adaptation resulting from climate change will, inter alia, require the rapid uptake of renewables to displace fossil fuels. This will need significant learning investments and other supporting government policies and mechanisms to make progress sufficient to give long-term benefits. Business opportunities will abound as the world decarbonises and moves into the Renewable Energy era. The growing demand for energy will continue. International climate change negotiations of this complexity have never been entered into before. Until now there has been no cost associated with the environmental impacts of burning fossil fuels. In the future society will have to pay retrospectively. This will create negative bottom lines for some companies but opportunities for others. The question often not asked by those industries
17
under threat is Ôwhat will be the cost of climate change if we continue with business as usual’? Society must choose what sort of world it wishes to pass on to future generations.
References IEA, 2000. Technology paths for the global electricity system. International Energy Agency, Paris. IEA, 2001. World Energy Outlook: 2001 Insight. Assessing today’s supplies to fuel tomorrow’s growth. International Energy Agency, Paris. ISBN 92-64-19658-7, 401 pp. Available from