Sustainable energy future needs industry support
The global energy industry must play a greater role in the transition to sustainable energy systems if United Nations development goals are to be met, warns a report recently released by the World Energy Council (WEC).
The potential for billions of people benefiting from sustainable energy systems in future decades hangs in the balance without increased private sector support, it says.
The WEC’s 2013 World Energy Trilemma report, “Time to get real – the case for sustainable energy investment,” was produced with global management consulting firm Oliver Wyman. The findings are based on interviews with more than 50 policymakers, including energy and environment ministers, leaders in development banks, governments, IGOs and NGOs, plus experts from more than 25 countries.
The policymakers interviewed expressed concern that the lack of global consensus on climate change and a future energy system framework, coupled with dramatic disruptions caused by emerging technologies and rapidly shifting patterns of energy use and supply, make it difficult to develop and implement long-term energy policies. This results in increased risk for industry and investors, which must be addressed if the much-needed energy transition is to be delivered in the future.
The report also reveals the results of the 2013 Energy Sustainability Index. The Energy Sustainability Index within the report is the world’s most comprehensive ranking of countries energy policies and evaluates how well 129 countries balance the three conflicting agendas involved in achieving energy sustainability – what the WEC has called the ‘energy trilemma’; energy security, energy equity and environmental sustainability.
The Index shows that developed countries with higher shares of energy coming from low- and zero-carbon energy sources supported by well-established energy-efficiency programs, such as Switzerland, Denmark and Sweden, outperform most countries across all three dimensions of the energy trilemma. Nevertheless, it is clear that all countries still struggle to balance all three aspects of the trilemma's currently conflicting agendas.
Only five countries in the top 10 have been awarded a ‘AAA’ score with Switzerland, Denmark, Sweden, the United Kingdom and Spain being the only countries that historically demonstrate their ability to manage the trade-offs between the three competing dimensions equally.
Pierre Gadonneix, chairman of the World Energy Council, said: “I am encouraged that there appears to be a growing consensus among both industry and policymakers on the nature of the challenge and what needs to be done.
“The next vital stage in this dialogue will be our World Energy Congress, to be held in just three weeks’ time in Daegu, Korea. There we will work towards a shared vision and smart, pragmatic solutions to securing a sustainable energy future.”
Joan MacNaughton, executive chair of the World Energy Trilemma report, said: “If countries are to improve the sustainability of their energy systems, they must continue to work hard at identifying and successfully implementing balanced and forward looking policies. A more sophisticated and proactive partnership with the private sector is also necessary to drive the higher level of energy investment now required.
“For its part, the private sector needs to better understand how policy is made and how to contribute to it more effectively. It should also be more proactive in helping to build an informed consensus that moves us away from ad hoc approaches dominated by debate about short-term costs.”
Calling for closer public-private partnership to help overcome these challenges, the policymakers interviewed for the report urge the energy industry to contribute to and promote a long-term energy vision with realistic targets.
Their recommendations include:
- Be more proactive in improving energy policies
To make sustainable energy systems a reality, energy leaders must take the initiative in sharing their knowledge, insights and experiences with policymakers, regulators and other stakeholders.
- Be less risk averse regarding energy investments.
Cash-strapped governments with limited funds look to the energy and financial sectors to take the lead in energy infrastructure and technology investments. The report recommends a better alignment of risk with those best able to bear it and urges the private sector to engage with other stakeholders to identify suitable approaches and mechanisms to achieve a better balance of risk. The crucial role of both the public and private sectors in encouraging the research, development and demonstration (RD&D) of new energy technologies and innovations is also recognized.
- Help developing countries chart a new energy course
The energy industry and other investors must work with public sector stakeholders to identify and lower the barriers that are holding up investment in least-developed, developing and emerging economies. The industry also needs to be more proactive in helping developing countries adopt proven technologies, working with them to reduce the cost of technology transfer and identifying suitable projects that can attract investment.
Roland Rechtsteiner, partner at Oliver Wyman, said: “The analysis that we have conducted with the World Energy Council clearly shows where countries and industry must focus their endeavours to deliver results. We identify five key energy profiles – the Pack Leaders, the Fossil-fuelled, the Hydro-powered, the Highly-industrialised and the Back of the Pack – to highlight the common challenges that countries face.”
Hwan-eik Cho, chairman of the World Energy Congress 2013 Organizing Committee, said: “This report reminds us that the public and private sectors cannot make the tough choices necessary to secure a sustainable energy future without having a proper dialogue. These discussions, which we will be proud to host in Daegu next month, could not be taking place at a more important time.”
Carbon dioxide removal revenues worth £2bn a year by 2030
Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission.
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.
The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.
The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture.
It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.
The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020.
Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.
The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.
While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.
Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.
Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse.
"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.
“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.”
The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets.
Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.
Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."
McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:
- Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
- Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
- Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
- Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
- The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere