Sunday, May 27, 2007

UK's White paper on energy - is it enough to lead the world?

The UK Government has published its new white paper on energy. As a progressive country leading the fight against climate change and a paradigm shift towards sustainable energy, it's worth having a look at the concrete measures proposed.

Typical for this kind of roadmap, a wide range of measures in various stages of development and covering all sectors is listed. A few highlights.

Energy saving, whether in industry, services, households, transport or the public sector is the first frontier. Interestingly, reduction targets are phrased in terms of carbon rather than energy saved, which makes sense: when including renewable energy flows, there is plenty of energy to go around, and its carbon emissions in use become the limiting factor.

More worrying are the words on renewable energy, where the EU now has a 20% commitment by 2020. UK, as a major EU member, and one of its most progressive ones on sustainable energy, states a 20% renewable electricity target as an aspiration. Regarding the 2 other renewable energy sectors:

  • a 5% renewable fuel target in transport by 2010, with an intention to go beyond after 'if the conditions are right'
  • a plan for biomass-based renewable heat

These actions on renewable energy look moderate for UK, which is naturally endowed on renewable energy sources. If UK already falls short on the EU's 20% target, we can be much more pessimistic on other countries.

Finally, careful words on nuclear energy, but a statement that without it, the 2050 60% carbon reduction target can only be met with more difficulties, at higher cost and more risks in terms of security of supply.

Saturday, May 19, 2007

Is sustainable energy policy sustainable?

Or a bubble about to burst?

Sustainable policy requires a.o. sound economics, political commitment, consideration on technical development, while taking into account possible reactions of market actors affected.

Ifenergy comments about the explosion in venture capital finance for energy technology startups, speculating on money flowing into shaky startups which may lead to an alternative energy bubble.

Another case is wind energy. Ambitious policies have created an industry employing 40,000 in Germany. But now that onshore opportunities have been largely exhausted, this industry is pressured to go rapidly offshore, with relatively unproven technology. The quick ramp in turbine size is almost beyond precedent compared to other engineering technologies. Hopefully, there will be no future price to pay.

Investment into renewable energy has developed into a large global market - we can find many posts citing 11-12 digit figures for annual turnover of this industry. But equally, large subsidy flows accompany market development. These subsidies are usually presented as 'a few percent of the household electricity bill', and much smaller than the support for conventional energy (carbon fuels and nuclear), and hence declared reasonable. However, compared to its contribution, renewable energy receives much larger support than conventional energy. How will citizens react if the expected learning investments would not materialise, and renewable energy pushes up the electricial energy bill?

Learning effects may come to the rescue. Historically, renewable energy technologies have demonstrated a 15-20% cost reduction for each doubling of cumulative output.  But costs still need to go down a factor 2-3 to be competitive with conventional generation. At the current market size of more than 50 B$ annually, the learning investment to double cumulative output a couple of times to achieve a factor 2 cost reduction represents a daunting figure.

Energy prices and externalities may come to the rescue. If energy prices continue to rise, and the cost of carbon is fully taken into account in energy prices, renewable energy may not need much cost reduction to become competitive. This seems an assumption embedded in many roadmap scenarios.

Time will tell, but it appears that sustainable energy policies could benefit from basic engineering considerations in the scaling up of systems, as well as economic consideration on learning effects towards mass deployment. Sequencing the right policies at the right time, while timely phasing out policies that have run their course deserves more attention.

All the discussion about an energy revolution is a bit reminiscent of the 'new economy' before the dot-com bubble burst in 2002.

Wednesday, May 02, 2007

Scaling up

Sustainable energy is a numbers game with many zeroes. Many experiments are possible in a laboratory, or as a small pilot, but to make a difference, these technologies needs to be scaled up many orders of magnitude.

Breathingearth.net gives a sense of these dimensions through an interactive map showing how much time it takes for various nations to emit a 1000 tonnes of CO2. Your visit to the site will also be measured in terms of global CO2 emissions.

Another site measures time in terms of barrels of oil. Chevron's Will you join us campaign. During the time of writing this simple post, the world consumed a million barrels of oil, and a few 100,000 tonnes of CO2 have been emitted.