Energy in transition - navigating through uncertainty. · Energy in transition - navigating through...

© World Energy Council 2013

Energy in transition -

navigating through

uncertainty .

Dr Christoph Frei

Secretary General & CEO

World Energy Council .

Wellington

07 March 2014

twitter:

@chwfrei


World Energy Council (WEC) ► the world energy leaders’ network

► promoting an affordable, stable, and environmentally sustainable energy system for all since 1923

► truly global – 90+ country member committees

► inclusive and impartial – OECD & non-OECD – 3000+ member organisations from governments, industry, academia, & NGOs

► Informs global, regional, national strategies – authoritative studies – high-level network & events

► World Energy Congress – Daegu, South Korea – 13–17 October 2013

38%

business

25%

experts

7%

government

30%

other


Our studies

► World Energy Scenarios – explorative assessments

providing a realistic vision of the future energy landscape

► World Energy Resources – surveys the global

availability and production of all major energy sources,

with national and regional assessments

► World Energy Trilemma – assesses how well countries

are addressing the energy trilemma

► World Energy Issues Monitor – assesses the issues on

top of the global and regional energy agenda

► World Energy Perspectives – specific issues and

technologies


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals

World Energy Issues Monitor

World, 2013

climate framework

large scale accidents

global recession

capital markets

commodity prices

energy prices

currency uncertainty

energy water nexus

talent

energy poverty

energy affordability

corruption

China India

Brazil

Russia

EU Cohesion

Middle East dynamics

US policy

terrorism

trade barriers

regional interconnection

business cycle innovative regulation

energy subsidies

new market players

sustainable cities

energy efficiency

ccs

renewable energies

biofuels smart grids

electric vehicles

electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


World, 2013 time tracking

climate framework


global recession

capital markets

commodity prices

energy prices


energy water nexus

talent

energy poverty


corruption

China India

Brazil

Russia

EU Cohesion


US policy

terrorism trade barriers


business cycle innovative regulation

energy subsidies

new market players

sustainable cities

energy efficiency

ccs

renewable energies


electric vehicles

electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


World, 2013

climate framework


global recession

capital marketscommodity prices

energy prices


energy water nexus

talent

energy poverty


corruption

China India

Brazil

Russia

EU Cohesion


US policy



business cycleinnovative regulation

energy subsidies

new market players

sustainable cities

energy efficiency

ccs

renewable energies


electric vehicles

electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy

geographical tracking:

Asia

Africa

Europe

LatAm

MENA

NAm

OECD

NonOECD

G20

energy efficiency


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


World, 2013

climate framework


global recession


energy prices


energy water nexus

talent

energy poverty


corruption

China India

Brazil

Russia

EU Cohesion


US policy




energy subsidies

new market players

sustainable cities

energy efficiency

ccs

renewable energies


electric vehicles

electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


AsiaAfrica

Europe

LatAmMENA

NAm

OECD

NonOECD

G20

renewable energies


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


World, 2013

climate framework


global recession


energy prices


energy water nexus

talent

energy poverty


corruption

China India

Brazil

Russia

EU Cohesion


US policy




energy subsidies

new market players

sustainable cities

energy efficiency

ccs

renewable energies


electric vehicles

electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


Asia

Africa

Europe

LatAm

MENA

NAm

OECD

NonOECDG20

ccs


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


Africa, 2013

climate framework


global recession

capital markets

commodity prices

energy prices


energy water nexus talent

energy poverty


corruption

China India

Brazil

Russia EU Cohesion


US policy

terrorism

trade barriers regional interconnection

business cycle

innovative regulation

energy subsidies

new market players

sustainable cities energy efficiency

ccs renewable energies

biofuels

smart grids electric vehicles

electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


Asia, 2013

climate framework


global recession

capital markets

commodity prices

energy prices


energy water nexus

talent

energy poverty


corruption

China India

Brazil

Russia

EU Cohesion


US policy



business cycle


energy subsidies

new market players

sustainable cities

energy efficiency

ccs

renewable energies biofuels

smart grids

electric vehicles

electric storage

nuclear

large scale hydro

unconventionals hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


Europe, 2013

climate framework


global recession

capital markets commodity prices

energy prices


energy water nexus

talent

energy poverty


corruption

China India

Brazil

Russia EU Cohesion Middle East dynamics

US policy



business cycle


energy subsidies

new market players sustainable cities

energy efficiency ccs renewable energies

biofuels

smart grids electric vehicles

electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


MENA, 2013

climate framework


global recession

capital markets

commodity prices

energy prices


energy water nexus

talent

energy poverty


corruption China India

Brazil

Russia

EU Cohesion


US policy



business cycle

innovative regulation energy subsidies

new market players sustainable cities

energy efficiency

ccs

renewable energies biofuels smart grids

electric vehicles electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


LatAm, 2013

climate framework

large scale accidents global recession capital markets commodity prices

energy prices


energy water nexus

talent

energy poverty energy affordability

corruption

China India

Brazil Russia

EU Cohesion


US policy

terrorism

trade barriers


business cycle


energy subsidies

new market players


ccs

renewable energies


electric vehicles

electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


NAm, 2013

climate framework


global recession

capital markets

commodity prices energy prices

currency uncertainty energy water nexus

talent

energy poverty energy affordability

corruption

China India

Brazil

Russia EU Cohesion


US policy

terrorism

trade barriers


business cycle


energy subsidies

new market players


ccs

renewable energies


electric vehicles

electric storage

nuclear

large scale hydro

unconventionals hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


New Zealand, 2013

climate framework


global recession

capital markets

commodity prices

energy prices


talent energy poverty


corruption

China India

Brazil

Russia

EU Cohesion


US policy

terrorism

trade barriers


business cycle


energy subsidies

new market players

sustainable cities

energy efficiency

ccs

renewable energies

biofuels

smart grids electric vehicles electric storage

nuclear

large scale hydro

unconventionals

hydrogen economy


need for

action

critical

uncertainties

impact

un

ce

rta

inty

weak

signals


New Zealand, 2013

climate framework


global recession

capital markets

commodity prices

energy prices


talent energy poverty


corruption

China India

Brazil

Russia

EU Cohesion


US policy

terrorism

trade barriers


business cycle


energy subsidies

new market players

sustainable cities

energy efficiency

ccs

renewable energies

biofuels

smart grids

electric storage

nuclear

large scale hydro

hydrogen economy

unconventionals

electric vehicles

© World Energy Council 2013 © World Energy Council 2013

World Energy Perspectives:

Energy Efficiency Policies


Energy Efficiency: Moderate progress worldwide… Source: World Energy Perspectives: Energy Efficiency Policies

Improvements in primary energy intensity, 1990 to 2011

9.6 Gt CO2 globally


Big regional disparities… Source: World Energy Perspectives: Energy Efficiency Policies

Change in energy intensity by region


Challenges in transformation & transport… Source: World Energy Perspectives: Energy Efficiency Policies

Industrial sectors shares in primary energy intensity (2011)


► 2010-2013

Project Partner:

Paul Scherrer Institute

© World Energy Council 2013 25

Scenario Building Process


Key Clusters

1. Role of Government

2. Availability of Funds

3. Mitigation of CO2

4. Equality

5. Global Economics

6. Energy Prices

7. Consumer/citizen

acceptance

8. Energy Efficiency

9. Technology

developments

10. Security of supply

11. China and India

12. Energy Poverty

13. Energy Sources

14. Competition for

resources

15. Skills shortages


• Evolutions of key scenario drivers are expressed in a coherent storyline of future economic

and social developments

• Some drivers are interdependent, e.g. energy intensity

• Drivers must be translated into quantified inputs for the energy system models

Key scenario drivers


WEC Scenarios

Deriving the scenario stories

2

8

Two Scenarios stories, exploratory, different and equally

probable rather than good and bad

Jazz: Market & trade based,

consumer driven,

decentralized decision

making, focussed on

access and affordability.

achieving growth through

low cost energy.

Governments facilitate

GHG actions.

Symphony: Government led,

“orchestrated”, voter driven,

focussed on environmental

goals and energy security,

national and regional

measures to increase share

of renewables in energy

mix. Binding international

agreement on GHG

emissions.


Brief outline of the two scenario stories

Jazz Symphony

Price-conscious consumers Environmentally-minded voters

Competitive markets pick technologies Governments pick technology winners

Higher GDP due to efficient market

practices.

Lower GDP due to non-optimal economic

policies

Increased exports due to free-trade

strategies

Reduced exports/imports due to

nationalistic strategies

Main players are multi-national

companies, banks, venture capitalists

Main players are private- and public sector

companies, local governments, NGOs

Carbon market grows more slowly from

bottom up, based on regional, national and

local initiatives.

Carbon market is top down based on an

international agreement, with

commitments and allocations.


Jazz Symphony

GDP growth Higher (3.54% pa CAGR,

PPP)

Lower (3.06% pa CAGR,

PPP)

Population Lower (2050 = 8.7 billion) Higher (2050 = 9.3 billion)

Efficiency/

Intensity

Increasing (-2.29% pa

(primary, PPP))

Increasing more strongly (-

2.44% pa (primary, PPP))

Climate policy Limited Prices (2050): 23-45

USD/tCO2

Stronger Prices (2050): 75-80

USD/tCO2

Resources Better access to

unconventionals

More expensive

unconventionals

Technology

support

Limited; energy choice based

on free markets

support for nuclear, large

hydro, CCS and renewables

Technology

innovation

Further development of CCGT

decentralized power (SPV)

Focused R&D programs (esp.

CC(U)S, solar PV)

Storyline and quantification assumptions


1

Highlighted results

2010 Jazz, 2050 Symphony, 2050

Final demand 373 EJ +69% +31%

Fossil fuels * 80% 77% 59%

Renewables * 15% 19% 29%

CO2 emissions

[Gt CO2/yr]

30.5 44.1 19.1

Solar ** 0.2% 6% 16%

Wind ** 2% 8% 8%

Nuclear ** 13% 6% 15%

Hydro ** 7% 11% 16%

* Shares in total primary energy supply

** Shares in electricity production


Renewable electricity production

Jazz Symphony

Renewables undergo rapid

development, accounting for almost

50% of total electricity generation in

2050 (cf. 20% in 2010)

Hydro and wind electricity are

competitive. Renewables account for

roughly 30% of total electricity

generation by 2050.


Global total primary energy supply

Jazz Symphony

Upstream liberalized;

technology development,

supply surge/more producers

Coal remains dominant in some regions

Tighter supply (lower E&P)

Higher infrastructure costs

Energy security drives reduced fossil use

oil: +/- 15%

natural gas: +100%/+50%

coal: +/- 40%

16 Gtoe

10.4 Gtoe

26% 25% 13%

fossil fuels: +55%/- 5%


Electricity production and capacity

Jazz Symphony

0

10000

20000

30000

40000

50000

60000

2010 Jazz 2050 Symphony2050

TW

h/y

Electricity Production

Geothermal

Solar

Wind

Biomass (with CCS)

Biomass

Hydro

Hydrogen

Nuclear

Gas

Gas (with CCS)

Oil

Coal

Coal (with CCS)0

2000

4000

6000

8000

10000

12000

14000

16000


GW

Electricity Capacity

coal: expected to remain dominant

gas: share increases (esp. N. America),

nuclear: mainly non-OECD

coal: share drops, CCS increasingly required

nuclear: increasing; led by governments

More stable & quicker transition to

renewables


Total fuel consumption by fuel type

JAZZ:

• economic growth leads

to higher consumption

• improved access to

energy

SYMPHONY:

• lower consumption,

high impact of energy

saving (and lower

growth)

• switching away from

fossil fuels (peak in

2030)

0

100

200

300

400

500

600

700


EJ/y

Solar

Bio, Alc

Hydrogen

Electricity

Gas

Oil Type

Coal

Heat

Bio noncomm.


Global investment in Electricity Generation

Cumulative 2010-2050 in GW JAZZ:

Approximately US$19.3

trillion (US$2010)

SYMPHONY:

Approximately US$25.7

trillion (US$2010)

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

JAZZ SYMPHONY

Geothermal

Solar

Wind

Biomass (with CCS)

Biomass

Hydropower

Hydrogen

Nuclear

Gas

Gas (with CCS)

Oil

Coal

Coal (with CCS)

Symphony cumul. undiscounted investment:

Jazz cumul. undiscounted investment:

25.7

19.3

trillion US$2010

trillion US$2010

.


Carbon Capture, Utilization and Storage

JAZZ:

• Possibly ready at

commercial scale 2035

• CC(U)S not adopted

initially due to high

costs/low carbon price

• Commercial use in

enhanced oil recovery

• Wider adoption post

2040

SYMPHONY:

• Entry of CC(U)S earlier

due to govt. intervention;

govt. promotion

• CC(U)S increasingly

required on coal new

build

• CC(U)S in enhanced oil

recovery

0

1

2

3

4

5

6

7

8


GtC

O2/y

CENTASIA

EASTASIA

EUROPE

LAC

MENA

NAM

PACIASIA

SSAFRICA


The global economy will be challenged to meet the 450 ppm target

without enormous economic costs

Resulting CO₂ emissions


CO₂ emissions by region JAZZ:

• Energy choice based on

free markets

• limited regulations

supporting low-carbon

energy (but regional

diversity)

• consequently: carbon

pricing only after significant

income growth

SYMPHONY:

• Priority to environmental

sustainability

• CO2 reduction obligations,

carbon taxes, CC(U)S

mandates, renewable

energy subsidies

• consequently: global carbon

price emerges

0

5

10

15

20

25

30

35

40

45

50


GtC

O₂/

y

CENTASIAEASTASIAEUROPE

LAC

MENA


JAZZ:

• upstream liberalized;

• technology

development

• supply surge/more

producers

• coal remains dominant

in some regions

SYMPHONY:

• tighter supply (lower

E&P)

• higher infrastructure

costs

• energy security drives

reduced fossil use

Energy mix in 2050


JAZZ:

• 310 million without

access in 2050

SYMPHONY:

• 530 million without

access in 2050

Access to electricity in 2050


Energy Security

The effective management of primary energy supply

from domestic and external sources, the reliability

of energy infrastructure, and the ability of energy

providers to meet current and future demand.

Environmental Sustainability

Encompasses the achievement of supply

and demand side energy efficiencies and the

development of energy supply from renewable

and other low-carbon sources.

Energy Equity

Accessibility and affordability of energy supply

across the population.

Balancing the

‘Energy Trilemma’


Energy Sustainability Index structure

Country

performance

100%

1. Energy

performance

75%

1.1 Energy

Security

25%

1/6

Each1.1.1 Ratio of total energy production to consumption

1.1.2 Diversity of electricity generation

1.1.3 Distribution losses as a percentage of generation

1.1.4 Five year CAGR of the ratio of TPEC to GDP

1.1.5 Days of oil and oil product stocks

1.1.6a For importers – Net fuel imports as a percentage of GDP

1.1.6b For exporters – Fuel exports as a percentage of GDP

1.2 Energy

equity

25%

1/2

Each

1.2.1 Affordability of retail gasoline

1.2.2 Affordability and quality of electricity relative to access

1.3 Environmental

sustainability

25%

1/2

Each

1/

Each1.3.1 Total primary energy intensity

1.3.2 CO2 intensity

1.3.3 Effect of air and water pollution

1.3.4 CO2 grams/kWh from electricity generation

2. Contextual

performance

25%

2.1 Political

strength

8.3%

1/4

Each2.1.1 Political stability

2.1.2 Regulatory quality

2.1.3 Effectiveness of government

2.2 Societal

strength

8.3%

1/3

Each2.2.1 Control of corruption

2.2.2 Rule of law

2.2.3 Quality of education

2.3.4 Quality of health

2.3 Economic

strength

8.3%

1/3

Each2.3.1 Cost of living expenditure

2.3.2 Macroeconomic stability

2.3.3 Availability of credit to the private sector

Total score Indicator type Dimension Indicators

Enhancedmethodology for 2013


Conclusions

Countries with AAB balance score Countries with AA A balance score

2013 Rank Country

1 Switzerland

2 Denmark

3 Sweden

4 Austria

5 United Kingdom

6 Canada

7 Norway

8 New Zealand

9 Spain

10 France


1 Switzerland

2 Denmark

3 Sweden

4 Austria

5 United Kingdom

6 Canada

7 Norway

8 New Zealand

9 Spain

10 France

5 Top 5

Energy security

1 Canada

2 Russia

3 Denmark

4 Bolivia

5 Colombia

Top 5

1 Switzerland

2 Costa Rica

3 Albania

4 Colombia

5 Uruguay

Top 5

Energy equity

1 United States

2 Canada

3 Australia

4 Luxembourg

5 France

Top Energy

sustainability

index Energy

security

Energy

equity

Environmental

Sustainability AAA score

AAB score


New Zealand on Rank 8

2011 2012 2013 Trend Score

Energy security 20 19 15 h A

Energy equity 15 18 26 i A

Environmental sustainability 40 36 37 i B

Overall rank and score 9 7 8 i AAB


New path to development


Environmental sustainability results identify

out- and underperformers

Algeria

Argentina

Armenia

Australia

Austria

Azerbaijan

Bangladesh

Barbados

Belgium

Benin

Bolivia

Botswanta

Brazil

Bulgaria

Cambodia

Cameroon

Canada

Chad

Chile

China

Colombia

Côte d’Ivoire

Cyprus

Czech Rep.

Dominican Rep.

Ecuador

Egypt

Estonia

EthiopiaFinland

France

Georgia

Germany

Greece

Guatemala

Hong Kong

Hungary

Iceland

India

Indonesia

Iran

Ireland

Israel

Italy

Jamaica

Japan

Jordan

Kenya

Korea

Kuwait

Latvia

Lebanon

Lithuania

Luxembourg

Macedonia

Malawi

Malaysia

Malta

Mauritania

Mauritius

Mexico

Moldova

Morocco

Mozambique

Namibia

Nepal

Netherlands

New Zealand

Nicaragua

Niger

Nigeria

Norway

Oman

Pakistan

Panama

Paraguay

Peru

Philippines

Poland

Portugal

Qatar

Romania

Russia

Senegal

SerbiaEstonia

Singapore

Slovenia

South Africa

Spain

Sri Lanka

Swaziland

Sweden

Taiwan

Tanzania

Thailand

Tunisia

Turkey

UAE

UK

USA

Venezuela

Vietnam

Yemen

Zambia

En

viro

nm

en

talsu

sta

ina

bili

ty

Total primary energy consumption / GDP (PPP)Low High

Low

HighOutperformers: countries that

perform significantly better than

expected on environmental

sustainability given their level of

energy consumption

Underperformers: countries

that perform significantly worse

than expected on environmental

sustainability given their level of

energy consumption

“Column

of Expectation”

WEC member countries

non-WEC member countries


The World Energy

Council’s World

Energy Trilemma2012–2013 research

programme captured

the insights of morethan 100 global

energy leaders and

led to the identification

of a 10-point agenda

to address three

broad policy areas.

10-POINT

AGENDA

FOR

CHANGE

Connect energy

trilemma to the broader

national agenda1

Minimise policy

and regulatory risk

and ensure optimal

risk allocation

Drive (green) trade

liberalisation

Increase

engagement with the

financial community

Provide leadership

to build consensus –

nationally and

globally

Improve policy-

maker and

industry dialogue

Market-based

approaches to

carbon pricing to

drive investments5

Design transparent,

flexible and

dynamic pricing

frameworks6

7

8

4

Meet the need for more

research, development

and demonstration (RD&D)9

Encourage joint

pre-commercial industry

initiatives, including early

large-scale demonstration

and deployment

10

2

3


22nd World Energy Congress, 2013, Daegu “The world’s premier energy gathering”

Summing it all up


► 7 Myths • M1: Global energy demand will flatten out. Reality: Energy

demand will double by 2050

• M2: Peak Oil. Reality: No shortage for fossil fuels in sight.

• M3: Demand growth will be fully met by new clean energy sources. Reality: The contribution of fossil fuels to the global energy demand is still growing in absolute terms.

• M4: We can reduce global GHG emission by 50% by 2050. Reality: Even in the best case we will see a near doubling of GHG emissions compared to 1990 levels.

• M5: Current business models and markets are delivering. Reality: Current designs are unable to cope with the increasing renewable shares, decentralised systems, or growing information architecture.

• M6: Current programmes will deliver universal energy access by 2030. Reality: On current paths, 320..530 million people will still be without electricity in 2050.

• M7: On a global scale capital is cheap and abundant. Reality: Capital is extremely sensitive to perceived political and regulatory risks. Lack of agreement between investors and governments on nature, price, and value of risks related to energy infrastructure makes capital flow elsewhere.



► 6 Fixes for the Future • F1: We are looking in the wrong place: The focus must

shift from the supply mix to demand efficiency.

• F2: In order to attract the needed investment national policy and regulatory frameworks have to be balanced: the "Energy Trilemma" provides a solid policy framework.

• F3: We need significant investments and focus in RD&D: Electricity storage and CC(U)S are potential game changers for energy systems.

• F4: The energy map is changing: Institutions need to change to reflect these changes or risk becoming obsolete.

• F5: Universal access to energy is a key development enabler: Policy / institutional frameworks & funds need to de-risk entrepreneurial approaches.

• F6: New risks (energy-water nexus, extreme weather events, social activism, or cyber attacks) expose our energy infrastructure to potential disasters: We need to urgently re-think, redefine, and adapt the resilience for energy infrastructure.


© World Energy Council 2013 © World Energy Council 2013

www.worldenergy.org

@WECouncil

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