The International Energy Association’s (IEA) World energy Outlook 2011 had only just hit the deck when it generated a political stoush, this time between Labor and The Greens.
Greens deputy leader Christine Milne told The Age the report showed that there was no longer time to use gas – which is a cleaner-burning fuel than coal – as a stepping stone to renewable energy such as wind, solar and geothermal. ”[The outlook] is basically saying to the investment community, ‘You are going to be gambling on how long gas has got as any kind of transitional fuel’.”
However, Mr Ferguson told The Age: ”The flexibility of gas-fired technology and the fact it is the cleanest fossil fuel make it an attractive investment option.
”In addition to gas, the message I am getting firsthand out of China and India … is that coal-fired power will increase and Australia is well placed to supply coal to fuel their growing economies.”
I picked that one up in Queensland Country Life, a Fairfax paper in which they reprint articles from The Age and the SMH.
But who’s right?
Not Christine Milne, I’m afraid. She has her eye on the IEA’s 450 Scenario, but even here we find this in the IEA Factsheet:
The share of fossil fuels in the global energy mix falls from 81% in 2009 to 62% in 2035. Global demand for both coal and oil peak before 2020, and then decline by 30% and 8% respectively by 2035, relative to their 2009 levels. By contrast, natural gas demand grows by 26%, though it plateaus by around 2030.
Ferguson has his eye on what the world is actually doing.
In the Current Policies Scenario, demand [for coal] carries on rising after 2020, increasing overall by nearly two-thirds to 2035. But in the 450 Scenario, coal demand peaks before 2020 and then falls heavily, declining one-third between 2009 and 2035.
Under the New Policies Scenario (see below) coal increases to the early 2020s and then remains broadly flat. Nevertheless the increase in 2035 over 2009 is a healthy one quarter.
I’ll outline some basic concepts first, then link to some sources, followed by some discussion.
First, the report contemplates three broad scenarios. The first of these is the Current Policies Scenario. It assumes we carry on with business as usual. This, they say, will give us CO2 concentrations of 1000 ppm and a temperature rise of 6C. While this makes for startling headlines it barely gets a mention in the literature I’ve seen. The assumption is that the world will act.
After the Copenhagen conference in 2009 some 120 countries made commitments to restrain or lower emissions. These commitments will not give us the 450 ppm which the conference adopted as an aim. Rather they will give us 650 ppm and 3.5C. This the IEA calls the New Policies Scenario, termed “central” in the Executive Summary.
The third scenario details what the world will need to do if it takes the necessary action to achieve 450 ppm. That is the 450 Scenario which gives us a 50% chance of remaining within the 2C guard rail.
I’ve commented here on the inadequacy of these targets and won’t bang on about it. We should assume, however, that Treasury in its modelling has in mind the New Policies Scenario. We will do ‘our share’ of what the world is attempting to do.
Second, a fundamental concept of the report is what could be termed ‘infrastructure lock-in’. Under the 450 Scenario, 80% of all allowable emissions to 2035 are already locked in with existing capital stock, including power stations and factories. By 2017 everything new that causes emissions will have to be matched by decommissioning existing stock. The bottom line is that:
for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions. (Emphasis added)
Third, in using the term “allowable emissions” they do understand that everything we emit now and in future on the way to stabilisation counts. All emissions leave an airborne fraction the effect of which persists. So the sooner we act the better.
Fourth, the report appears to assume that whatever the demand for energy in the future, it will be supplied. In the New Policies Scenario, world primary demand for energy increases by about from one-third to 40% between 2010 and 2035, with 90% of the increase coming from non-OECD economies. It’s not clear whether this changes under the 450 Scenario; it appears that the supply simply switches to renewables.
I’ve already linked to the main page for the IEA World energy Outlook 2011. The full report costs €120, which I can’t afford. The main free sources are the Press Release, the Factsheet and the Executive Summary.
Giles Parkinson at Climate Spectator is a must read, and relates the report to the Australian situation.
After writing this post and just before publishing I found this excellent post at Skeptical Science, obviously with access to the full report. It also links to the World Energy Model which the IEA uses and I’d missed.
Parkinson says that the IEA is a deeply conservative organisation, whose annual Outlook is keenly followed by the energy industry. It is highly significant therefore that they have dropped a bombshell urging immediate action.
“Governments need to introduce stronger measures to drive investment in efficient and low-carbon technologies. If fossil fuel infrastructure is not rapidly changed, the world will lose forever the chance to avoid dangerous climate change.”
It spells out the path for a 450ppm scenario, and if we don’t act until 2015 then half of the world’s existing coal and gas-fired energy plants will need to be shut down by 2035. If we leave it until 2017, then, from the Factsheet:
If internationally co-ordinated action is not taken by 2017, we project that all permissible emissions in the 450 Scenario would come from the infrastructure then existing, so that all new infrastructure from then until 2035 would need to be zero-carbon, unless emitting infrastructure is retired before the end of its economic lifetime to make headroom for new investment. This would theoretically be possible at very high cost, but is probably not practicable politically.
The 450 Scenario would simply kill the coal export industry which has a bright future under the New Policies Scenario. In any real world scenario concerted international action will be delayed by at least two years. The implication domestically is that new gas-fired power stations built then will need to close early. So in the real world, Christine Milne is right about the uncertainty of investing in gas.
The report couldn’t be clearer about where future investment and business and job opportunities lie:
The most dramatic change is in non-hydro renewables, whose share increases phenomenally – from just 4 per cent in 2009, to 34 per cent of global electricity capacity in 2035. Wind capacity grows 10-fold to 1,685GW, sending Landscape Guardians across the globe completely barmy. Solar PV rises 40-fold to 901GW from 22GW in 2009; solar thermal leaps from just 1GW to 226GW; geothermal from 11GW to 60GW; marine from zero to 23GW, and biomass grows six-fold to 329GW. In terms of generation, non-hydro renewables soar to 28 per cent from just 2 per cent in 2009, nuclear and hydro have a 20 per cent share each, while coal drops from 41 per cent to 15 per cent, and gas from 21 per cent to 17 per cent.
In practical terms significant international action before 2015 is to me unimaginable. The IEA says initiating action after 2020 will become politically impossible. Joe Romm at Climate Progress disagrees. By then he thinks “most policymakers will realize that we are on path to the self-destruction of modern civilization.”
So we are in a squeeze, but there are two little factors in there that some will find unpalatable. One is that the IEA sees nuclear energy output increasing by 70%. The other is that it assumes the deployment of CCS (carbon capture and sequestration) technology. CCS is assumed to be available in the early 2020s and accounts for 18% of emissions savings in the 450 Scenario relative to the New Policies Scenario. Without those two we’ll have to crank up renewables even harder. Closing down nuclear completely looks impossible.
The report does highlight that any meaningful global action is going to have to fully include the major developing countries.
Maybe we should be looking for a new paradigm. This one does seem unworkable. Perhaps the future lies in cheaper decentralised production of power by means of emerging technologies. Creative destruction would then make dinosaurs out of fossil fuel-based grid power.
In other aspects of the report, by 2035 they think that electric vehicles or plug-in hybrids will account for one third of all vehicle sales, and power for those who lack grid power or rely on biomass for cooking can be had for a mere $48 billion per annum.
Update: I’ve added here the IEA energy projections in Mtoe (million tonnes oil equivalent):
Update 3 – Key climate posts by Brian: