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CONFIDENTIAL SWOT/SCENARIO ANALYSIS 2012 Report: 2012/10 July 2012
CONFIDENTIAL SWOT/SCENARIO ANALYSIS 2012
Report: 2012/10
July 2012
CONFIDENTIAL
IEA GREENHOUSE GAS R&D PROGRAMME
Report on Strategic Planning Activities SWOT Analysis and Scenario Planning Exercise
BACKGROUND
At the 40th ExCo meeting held in London in November 2011 it was agreed to undertake a SWOT (Strengths, Weaknesses, Opportunities and Threats) activity coupled with a Scenario Planning exercise to determine where IEAGHG’s future focus should lie for Phase 6 (2011 to 2017) and beyond. Note the Strategic Plan agreed by members for the period 2011-2017 was used as the base reference document for this activity.1 An Ad Hoc group of members was formed to undertake this exercise and report back to members at the 41st ExCo meeting in Bergen, Norway. The members from the committee in the group comprised: John Carras, Australia, AD Hoc Group Chair. Kelly Thambimuthu, Australia Helle Brit Mostad, Statoil Jay Braitsch, USA, Arthur Lee, Chevron Gunter Siddiqi, Switzerland Tim Hill, EoN Taher Najah, OPEC Klass Van Alphen, GCCSI Eddy Chui, Canada Richard Rhuddy, EPRI Daan Jansen, Netherlands Kevin McCauley, B&W John Gale, General Manager of IEAGHG provided secretariat support to the Ad Hoc Group. Note that due to prior commitments, Don Rose represented Eddy Chui and Peter Grubnic GCCSI. An expert contractor, Geoffrey Styles of GSW Strategy Group, LLC of the USA was hired to help facilitate the exercise. This report provides a summary of the activities undertaken and the conclusions and recommendations presented to the full membership at the 41st ExCo meeting. Some members sent deputies on occasions when meetings clashed with other activities, or interacted by phone.
SWOT/SCENARIO PROCESS
The process used in this exercise consisted of a SWOT on the current state of IEAGHG, development of four mutually exclusive scenarios on the future of technologies for mitigating
1 The Strategic Plan 2011-2017 was presented and agreed by members and agreed at the 40th ExCo meeting held in London, UK in November 2011. See paper GHG/11/45 for details.
CONFIDENTIAL
fossil fuel GHG emissions, and the subsequent extension of the SWOT in the context of these scenarios. Although the SWOT and scenarios were useful analytical tools, the emphasis in this report is on the outcomes and recommendations derived from them. For those members that wish to understand more about the rigorous process undertaken, additional details are given in Annex1 attached to this report. Members wishing to read more about scenario planning in general and its application in this type of process can reference the following articles: A short article on scenario thinking: http://www.economist.com/node/12000755 One that outlines the basic scenario steps that the AD Hoc Committee went through as part of this exercise. : http://www.wired.com/special_multimedia/2009/ff_scenario_1708
WORK PLAN AND SCHEDULE OF ACTIVITIES The work plan for this activity comprised in a series of phases:
1. As an initial SWOT activity, information was collated by the consultant from the group members by telephone interview in mid February 2012. The questions asked by the consultant for reference were: • What is working well in the current IEAGHG group? • What's not working so well? • What are the key factors likely to shape the global environment in which
IEAGHG and CCS will be operating in the next 5-10 years?
2. Following the telephone interview stage the contractor collated the information
gained and complied it ahead of the first meeting of the group (See Annex 1). The SWOT analysis was completed and the scenario planning exercise initiated at a meeting hosted by Chevron in San Ramon, California on 27th and 28th February 2012. This was a two day meeting, in which 7 members participated directly and two by phone. The information generated by this meeting was then summarized and supplemented as required and circulated to participants for further reflection/comment.
3. The 4 scenario outlines agreed at the 1st workshop were then drafted into
narratives by the consultant and circulated (See Annex 2) for suggestions, along with a summary of the meeting outcomes as pre-reading for the second and final meeting of the Ad Hoc Group (See annex 3). This meeting was held in Bergen, Norway directly before the 41st ExCo meeting in May 2012. Following this meeting a draft report was prepared by the consultant and passed to the Ad Hoc group for refinement. Members of the Ad Hoc group (Arthur Lee, Chevron and Jay Braitsch, USA) presented the findings to members at the 41st ExCo (See Annex 4)
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OUTCOMES The principal outcome was a new revised strategy which is set out below. The items in italics are the new suggested revisions to the existing strategy. Within the framework of the IEA, IEAGHG studies and evaluates technologies that can reduce greenhouse gas emissions derived from the use of fossil fuels. The Programme aims to provide its members with definitive information on the role that technology can take in reducing greenhouse gas emissions.
• Communicate and engage with IEA and other Implementing Agreements to improve the effectiveness of pursuing the primary objective.
• Ensure that the information provided is objective, timely and reflects the highest priorities by maintaining market and policy awareness.
• Communicate and engage with key influencers of technology acceptance and deployment.
• IEAGHG will ensure that their staffs reflect the Programme’s desire to be the preeminent organization providing such information.
The key recommendations that came out of the analysis emerged as a result of a systematic look at the uncertainties and trends in the external environment. The main finding was:
• IEAGHG’s strategy for 2011-2017 was reaffirmed through a rigorous process of review.
Other key findings included:
• Technology acceptance is a major obstacle or enabler of deployment and there is a need to review IEAGHG’s activities in this area.
• The IEAGHG should broaden and strengthen its communications and engagement
activities, both within IEA and with external stakeholders.
• The IEAGHG should revise its current communications/engagement plan
• To achieve its strategic aims IEAGHG should maintain an appropriate skill base in this context
• The IEAGHG should enhance its monitoring of external market and policy trends, with a focus on issues and uncertainties identified in the scenarios.
In addition to the key recommendations a number of critical issues emerged from the SWOT/Scenario planning exercises which are listed below:
• IEAGHG needs to find ways to work within limitations of IEA framework and with other Implementing Agreements
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• IEAGHG needs to prioritise its technical activities based on timing/interdependence of projects and expected developments.
• IEAGHG needs to maintain a balance of technical activities not just focus on one area • IEAGHG needs to think more in terms of maximising the impacts of a its technical
work by considering the current and future external need for such work. • Technology acceptance – What is IEAGHG’s role? • Information role: IEAGHG must maintain high level of trustworthiness • IEAGHG needs to consider its interactions with key influencers like the media and,
policy makers, without affecting its independence • It was noted that the public are affected by projects; IEAGHG can provide
independent and factual technical information to the public debates. ? • IEAGHG needs to ensure that it maintains appropriate staffing levels and skills to
deliver the desired mix of technical activities that members require. • IEAGHG’s staff capabilities must align with member priorities in terms of its
technical delivery to help ensure member satisfaction/retention. • Succession planning and training are aspects of staffing.
ACTIONS GOING FORWARD The main actions going forward include:
• Flesh out details relating to the operations of the Programme • Develop method for tracking scenario “signposts” and other key trends • Revise the communications plan
The Ad Hoc committee will carry out this work by email and teleconference and bring it to the 42nd ExCo meeting for concurrence.
Current-state SWOT Analysis IEAGHG Strategy Workshop
San Ramon, California 27-28 February 2012
Facilitated by: Geoffrey Styles GSW Strategy Group LLC
Purpose
• Enable systematic review of strategies, and • Development of potential new strategies • Recommendations for re-balancing goals &
activities (if appropriate) • Assumption: Not a zero sum game
Overall Process
SWOT Scenarios
Strategy
SWOT Framework
Strengths What does IEAGHG do well? Unique advantages
Weaknesses What could IEAGHG improve? Unique disadvantages
Opportunities What are our opportunities?
Threats What threatens IEAGHG’s success or survival?
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Overview of Interview Feedback - SWOT
• IEAGHG has a strong reputation for leadership on CCS from producing high-quality studies and conferences and building valuable networks.
• Its large and growing membership provides resources and positive interactions that enhance the value of the organization to members.
• However, IEAGHG’s tight focus on the technological aspects of CCS and dependence on the uncertain pace and extent of its adoption put its continued success at risk.
Interviews: Top Strengths • Consistent high quality of studies over 2 decades
• Broad coverage and objective analysis • Quick studies for urgent topics
• Reputation for quality and objectivity • “First source” on CCS
• Diversity of membership • Interaction among company and company members
• Quality of management and permanent staff • Skill in managing contractor engagements
• Networks expand IEAGHG’s reach with relevant/timely conferences • Concentrated exposure to specific topics
• Large, growing membership (and resources) • Enhanced financial security
• Success of GCHT conference – “The Standard” • Structure and organization (stability) • Value for money
• Volume of reports from limited budget
Interviews: Other Strengths • Reaches multiple audiences • Originality of group’s work (especially compared to Clean Coal) • Quick review process for non-time-sensitive issues • Especially strong on carbon capture • Emerging strength on policy • Strategic plan (scope/balance) • Communications • Coverage of material • Summer school program • Attract key players from industry and research community • Meeting expectations and maintaining a lead on CCS • Executive meetings twice a year • First class reporting on all aspects
Interviews: Top Weaknesses • Repetition of previous work while awaiting deployment
• Hard to find new breakthrough research • Relationship with IEA (Paris) and numerous IAs • Studies weak on finance and commercial aspects • Narrow focus on CCS • Reliance on contractors for studies
• Need wider contractor net • Staff retention & pipeline • Interaction with policy makers
• Influence on policy but not politics • Differentiating IEAGHG from other CO2 groups
• Distribution of workload with other CO2 groups • Process for selecting report topics (and helpers) • Imbalance between company and country members
Interviews: Other Weaknesses • Unwieldiness of Executive Committee meetings • Delays in starting and completing some contracts/projects • Cost of membership • Transparency and accountability questions • Not reaching broader audience beyond research community • Accessibility of reports outside narrow community • Balance & competition between country and company members • Project participation hasn't always been as useful as expected • Some reports "indifferent" • More communication needed • Perceptions of problems with demo projects, e.g. CO2 leaks • Breadth of talent required to cover subject matter • Work overload • Focused on oil & gas, power industries
Interviews: Opportunities • Push into other technology areas
• Look at other alternatives, especially to storage (e.g., EOR, other CO2 utilization) • More focus on gas and gas power generation • Consider mobile source capture and air capture
• Broaden into other industries (steel, cement, methane) • Do more committee work in smaller groups • Competitors could be partners – improvement opportunity • Engage younger people more via social media • Use growing resources to expand capabilities, accelerate development • Be vigilant and proactive about CCS’s public image
Interviews: Threats • Uncertainty of path forward • What is role after CCS deployment? • Tensions within implementing group and operating agent • Push for EOR competes with storage and shifts priorities away from studying storage • Keeping at top vs. competitors
• Competition from private sector as CCS takes off
Additional Strengths/Weaknesses
• Strengths – Ability to hire best contractors – Ability to call on scientific experts – IEA brand/framework – Current size: well-positioned for “watch & see”
• Weaknesses – IEA perception in China – Limited application of remit to CCS – Restrictiveness of IEA
Additional Opportunities • Expand to fulfill remit
– Renewables, energy carriers (H2, methanol), infrastructure – Unconventional gas – Sustainability, including water issues – Fugitive emissions – Consequences of large roll-out (technology adaptation,
“penetration/ integration”) • Expand topics to encompass performance of CCS to be
useful in different scenarios • Expand the U in CCUS (utilization of CO2) • Role of CCS as “baseload” changes, dispatchability
Additional Threats
• Cheap natural gas • Economy • Regulations • EOR vs. Utilization discriminate between them • Creep of work / overlap/ interface with CCC. • Pipeline of talent (in the long interviewed items) • Existing staff level spread too thinly on many
things (weakness? Or threat, which is external.)
ANNEX 2
The 4 scenarios developed as part of the Scenario planning exercise are presented in this Annex for reference purposes
Scenario 1: "Happy Days"
(Favorable/Advancing Energy and Environmental Policy & "Cool" Technology Acceptance)
This is a scenario in which a renewed climate consensus and stronger global economy boost demand for clean energy that feeds, and is in turn fed by, a growing appetite for new energy technology from consumers and voters around the world.
After previous UN climate meetings devoted to negotiating a replacement for the expiring Kyoto Protocol had resulted in little more than elaborate forms of procrastination, expectations for 2013's COP-19 meeting in Prague were low. So it was all the more surprising when the session produced a new agreement with modest but binding emissions targets for both developed and developing countries. The US, China, Australia and South Africa took the lead, and ultimately all the other delegations signed on. The reactions from environmental NGO’s were generally harsh, calling it "watered down" or worse, because the agreement explicitly recognized that renewables and efficiency were unlikely to replace fossil fuels by mid-century, and that the latter would remain crucial for economic growth for decades to come. However, the pragmatism embodied in the Prague Protocol was just what had been needed to reenergize action on climate mitigation and the technologies it required.
It was also fortunate that the global economy had finally shaken off the lingering effects of the recession and financial crises and returned to healthy growth. That growth created more headroom for environmental policy, although it also required abundant energy. Companies and governments were scrambling to provide that in ways that seemed consistent with the new climate targets, including developing the technology to bridge coal and hydrocarbons into the low-emissions future. R&D funding was increased across the board, and in 2017 the EU enacted its CCS Directive, committing to fund and builds five carbon capture and storage demonstration projects
on an accelerated track, with a larger number of industrial-scale CCS projects to follow once the technology was proved.
Steadily increasing energy demand sent energy prices to unprecedented levels and pushed the price of emissions credits to new heights, with allowances on the EU's Emission Trading Scheme hitting €60 per tonne for the first time. Oil prices had been trending higher for years, but when they rose sharply in 2022, this did more than just spur additional conservation and fuel efficiency, on top of the improvements in energy intensity and vehicle fuel economy of the previous two decades. Among other things it created an insatiable demand for CO2 for enhanced oil recovery, just as the CCS demonstration projects were starting up and achieving impressive results.
Public acceptance of CCS was aided by several factors. The improving economic conditions and global climate consensus--reinforced by increased awareness of the ongoing effects of climate change--had moderated resistance to a wide range of energy technologies. A good deal of the former NIMBYism wilted in the more upbeat, pro-technology spirit of the times. It also helped that a consortium of governments had invested $500 million in qualifying a range of CO2 storage options and locations, addressing numerous stakeholder concerns in the process. A few years later the IPCC declared that most EOR projects could be certified as CO2 storage for international trading purposes, and governments and insurance companies finally resolved the long-standing question of allocating liability for CCS. These developments helped convince agricultural interests that CO2 storage was entirely compatible with surface uses like farming and livestock, removing another impediment for the technology to take off. Utilities saw their new coal and natural gas CCS power plants as win-win-win propositions, promising valuable clean electricity, valuable CO2 for EOR, and valuable emissions credits.
CCS was also able to take advantage of the public's enthusiasm for the "subsurface revolution" that had inadvertently been sparked by the popularity of Google's new "Earth-4D" app, which incorporated vast quantities of seismic imagery. Once geologists and engineers figured out how to drill enhanced geothermal wells without triggering earthquakes, the subsurface was increasingly referred to as the next big frontier. Shale
developers benefited from this to a lesser extent, because they were still tied up by environmentalists over their water usage and fugitive emissions.
These new, large-scale options for low-emission power were timely, as electrification became the mantra of the decade and intermittent sources like wind and solar power proved unable to cope with growing baseload demand. Global electricity consumption took off with a vengeance as utilities finally began reaching the billions in the developing world--a designation that was gradually losing its relevance--whose needs for basic services like lighting and heating had been unserved for decades. At the same time demand growth in the developed world reached a pace that hadn't been seen for a decade, reflecting the rapid electrification of transportation as petroleum products failed to keep up with demand. After steady improvements in battery capacity and recharging infrastructure, electric vehicles became the top alternative to astronomical fuel prices and waiting in petrol queues. The last markets for heating oil and illumination kerosene also gave way, as these fuels became simply too valuable to burn for these uses.
Among the biggest constraints on these changes were the capital and resources needed to implement them, with the energy industry competing for these factors with many other sectors that needed them for their own growth. The immigration reforms of the early part of the decade had proved very timely in making cross-border access to highly skilled technical staff easier.
By the late 2020s climate change remained a major concern, but the pace of positive responses was obvious. Truly commercial scale CCS power plants were starting up on every continent, incorporating the cost-reductions pioneered in the early demonstrations. Transportation fleets were increasingly powered by renewable energy and decarbonized fossil generation, and a growing number of new homes included geothermal heat pumps and electric vehicle recharging pedestals. Nor was the energy sector the only one to participate in these shifts. Manufacturing was also following, and the first CCS steel plant had opened in Kenya in 2027, delivering top-quartile performance from day one. These developments gave governments and voters a growing sense that at least some of the key solutions to the climate problem were at last falling into place.
Scenario 2: "Spinning the Wheels"
(Retreating/Unfavorable Energy and Environmental Policy & "Cool" Technology Acceptance)
In this scenario a weak economy and widespread focus on affordable energy undermine both climate policy and big carbon-management projects, in spite of growing numbers of green consumers and environmentally concerned voters.
Environmentalists tended to blame it on Greece. It wasn't so much that the public was no longer concerned about climate change; far from it, with mounting evidence of accumulating environmental damage, in spite of global temperatures that had been going essentially sideways for a decade. The problem was that without a strong EU to drive the global climate negotiations forward, while balancing the agendas of the large developing countries, the renewed sense of momentum that had come out of the Cancun and Durban climate conferences dissipated.
As Europe grappled with its more immediate future and retreated into a structure resembling its pre-Maastricht organization, climate change still looked important but no longer quite as urgent as basic issues of finance, currency, and economic growth. And although the problems had seemingly started there, Greece wasn't even the first country to seek an exit from the Euro, since that country's shorter-term challenges had been remedied in 2012. It took crises in Portugal and then Belgium--yes, Belgium-- to bring Europe's leaders to the realization that although the common market had been an excellent idea, the common currency was a bridge too far. Although the resulting turmoil made for some jittery trading sessions on financial markets, the carefully managed reversion to national currencies and greater national autonomy in 2013-14 allowed the global economy to weather the storm and narrowly avoids another financial crisis and recession. Instead of collapsing, growth remained uneven and volatile in Europe and across the Atlantic and Pacific, as the gathering private sector expansion stayed just ahead of retrenching governments that were finally coming to grips with their debts.
Without the leadership of the EU, the COP-19 climate meeting was a debacle. "Worse than Copenhagen," was the verdict of delegates and media alike. In its aftermath there was no longer a roadmap to a new treaty; there wasn't even a road, and the major emitting countries were held meetings about narrowing the entire UNFCCC process to focus on carbon mitigation and adaptation technology, rather than policy. The ripple effects from these outcomes were felt most strongly in the energy sector and in carbon markets, which at first nearly collapsed. By 2017 credits on the European Emissions Trading Scheme changed hands at around 2 NewMarks per tonne, and several emissions trading firms were wiped out by the resulting losses.
The new approach suited the big, multinational energy groups very well, because they understood technology. It fit their business models and was directly responsive to their customers, who on the whole were becoming cleaner and greener every year, even as their governments were retreating from emissions targets and renewable energy deployment subsidies in preference for secure and affordable energy to fuel economic growth. The mid-to-late 'teens were a rough period for big-ticket, long-lead-time efforts like carbon capture and storage (CCS), which had a number of demonstration projects canceled. Meanwhile, startups pursuing novel and potentially revolutionary processes for capturing CO2 at modest costs per ton prospered as investors looked for the next big thing in an energy market in which solar power was becoming mainstream without subsidies, even if Germans were now mostly building solar installations in North Africa instead of Bavaria.
One area from which governments never retreated was R&D, which was seen as compatible with an era of budget austerity, especially in the pursuit of breakthrough technologies. It also fit the generally pro-technology tone of the 2020s, as the public finally embraced shale gas and next-generation nuclear, both large- and small-scale, after lengthy and unprecedentedly proactive stakeholder engagement efforts by these industries. The other hot energy technology of the decade was electric vehicles, the sales of which took off in most markets as they became the must-have green device among consumers finally sated with the latest consumer electronics.
In the midst of this wave of pro-energy-technology sentiment, CCS was in limbo. The concept appealed to those worried about the emissions from the growing coal and gas power sectors, and to companies looking for a hedge in
case restrictive climate policy someday reemerged. However, the technology still wasn't entirely proven, in light of continuing contradictory research on the long-term sustainability of CO2 storage in saline aquifers. The economics of actual projects looked challenging in the absence of a meaningful price on carbon, and with insurance companies still hesitant to offer coverage. These factors held back project development, except where it made sense as an expensive source of CO2 for enhanced oil recovery.
In 2027 an attempt to revive the UN climate process in order to deal with a geoengineering demonstration project involving high-altitude sulfide seeding ended in disarray. The US President had announced that as far as he was viewed concerned climate change was as still highly uncertain and probably more amenable to adaptation than mitigation, while the remaining European members refused to even consider geoengineering as an acceptable option. The Chinese delegation returned to Beijing more convinced than ever that their country, which had become a net coal exporter in the wake of its energy transformation by shale gas, shale oil and cheap solar power, should go it alone on climate change, as it increasingly did in other fields.
Scenario 3: "Against All Odds"
(Retreating/Unfavorable Energy and Environmental Policy & "Uncool" Technology Acceptance)
In this scenario, governments that are focused mainly on economic recovery and energy security, together with local opposition to unfamiliar energy technologies and those with intrusive footprints, create an extremely challenging environment for both climate policy and emission mitigation technologies.
The latest announcements that the economy was showing renewed signs of recovery were beginning to sound Orwellian. Based on recent history they virtually guaranteed that within a month or two another bit of bad news would rock stock markets and send employers looking for cover. Few events were as bad as the Greek exit from the Euro in late 2012, but that one had set the tone. The rest of the Eurozone had stuck with the common currency, but though with little enthusiasm and little to show for it for the next several years. With continuing deficits and mounting debts around the world there was little appetite for expensive solutions to climate change, particularly after successive cold winters in Northern Europe made people there wish for a few degrees of warming.
Energy departments, and particularly the sections that worked on climate mitigation, weren't spared the budget cuts that most governments were forced to implement, and many low-carbon R&D efforts were canceled or deferred. The programs that escaped the ax were mostly focused on getting more energy out of today's resources even quicker, or on low-cost energy efficiency improvements. The UNFCCC continued to hold COP meetings, but attendance fell steadily as growing numbers of past delegates found themselves in new professions. Progress in these diminished talks was elusive, except on the most immediately practical issues, such as the lowest-cost adaptation options.
Energy security, not climate change, was the issue that preoccupied most governments. By 2017 it was apparent that renewable energy sources that had been touted as addressing both emissions and security of supply tended
to do little for the latter, and that at an uncompetitive price. By comparison, countries that had welcomed shale gas production were faring much better in this regard than those that had elected to impose moratoria or to study hydraulic fracturing impacts for years. It took the threat of the EU and Russia coming to blows over natural gas contracts for most European countries to unshackle shale gas development, and even then it unleashed a wave of protests across the Continent.
By the 2020s climate change was still a source of concern, though most of the institutions that had been created to address it had withered for lack of funding and attention. When they were interested at all, governments typically wanted help with adaptation and "silver bullets", including geoengineering. All but a half-dozen super-green countries had received temporary waivers from the EU's Emissions Trading Scheme, which was finally terminated in 2022.
The more mature renewable energy technologies like wind and solar power were able to survive; manufacturers and project developers had gotten enough help in the fatter years to move well down their costs curves and could manage with little or no incentives, provided they had both good resources and access to markets. Technologies that were earlier in the development process or higher cost weren't as lucky. That left CCS and enhanced geothermal systems, for example, competing for scarce support along with trendier technologies like "air capture", and especially with those that didn't entail significant NIMBY problems. Even conventional geothermal struggled in that regard.
It turned out that old-fashioned energy sources couldn't be beaten for energy density and limited footprint, unless you had the bad luck of having a pipeline or gas well in your back yard. The further away the resource, the more attractive it became: arctic resources were suddenly "cool", while onshore wind turbines in Germany and elsewhere were targeted by a new breed of environmentalists who wanted them removed because they were so footprint-inefficient.
In the late 2020s the effects of climate change were becoming increasingly visible. Droughts and other changes affecting agriculture and livestock were sending tens of millions of migrants across land borders and seas, while methane releases from melting permafrost had scientists alarmed about signaled potential tipping points. As momentum began to build for a
renewed focus on climate mitigation, the handful of companies that had kept their experts and knowhow for CCS on life support as window dressing or to stave off environmental, social and governance (ESG) investors started to view the technology as a potentially valuable option again.
Scenario 4: "Father Knows Best"
(Advancing/Favorable Energy and Environmental Policy & "Uncool" Technology Acceptance)
In this scenario a global political consensus to address climate change results in policies and regulatory overreach that alienate consumers and voters, leaving technologies like CCS caught between supportive governments and concerned stakeholders.
In his Inaugural Address, the US President promised to put climate change and other environmental issues at the top of his agenda. That didn't surprise anyone who had watched the US delegation at the recently concluded UN climate conference in Qatar. Fresh from a landslide victory that had handed his party control of both Houses of the US Congress, the President's team could promise not just more negotiating flexibility but quick ratification of a new climate treaty. If the US economy hadn't delivered such an impressive growth and job-creation performance throughout most of 2012, the outcome might have been very different.
The Warsaw Protocol of 2013 didn't disappoint. Its targets for deep emissions cuts in the developed world and lighter--and later--but still meaningful reductions in developing countries came packaged with major steps forward on accountability, technology transfer and financial aid. The US was first to ratify, followed by the EU, China, Australia and most other countries/blocs. Only Canada, Russia and India rejected it, though for very different reasons.
A few years of healthier global economic growth were hardly sufficient to erase the national debt burdens that had been accumulating since before the recession. However, with unemployment falling and tax revenues rising again, shrinking deficits gave governments around the world the leeway they needed to redouble their R&D funding for climate-related technology and to renew generous cleantech subsidies. With the costs of crop failures and
property damage from altered weather patterns mounting, they felt justified in enacting carbon taxation measures with which to fund these programs, over the protests of many voters who had expected this shift towards green to cost them little or nothing, personally. The US President's "temporary carbon tax" was probably the issue that cost his party the 2014 Congressional election, but the incoming Congress didn't have a large enough majority to overturn it.
Funding for energy and environmental technology in the EU, US and China soared, in parallel with new environmental regulations. Carbon capture and storage (CCS) and the groups that promoted it were major beneficiaries, with a number of demonstration projects receiving rapid approvals and financing, while shale gas development fell afoul of new restrictions on fugitive emissions, local air quality, and groundwater protection. It didn't take long for natural gas and electricity prices to rise, compounded by the new carbon taxes.
When the US Environmental Protection Agency in late 2016 required all new coal power plants to be built with essentially 100% CCS, rather than the effective 50% or so required under its 2012 rule, and all new gas-fired plants to be constructed as "CCS-ready", a coalition of utilities and gas producers sued to block the measure, but the courts ultimately upheld the government. Early the next year the UK government passed legislation creating an expedited approval process--with minimal public input--for CCS facilities and prospective carbon storage sites. Greenpeace leaders vowed civil disobedience, if necessary, to block such projects.
Supporters of CCS were in a quandary. They had received sufficient support to demonstrate the technology, and with the combination of a price on carbon, rising natural gas prices, and the growing political infeasibility of nuclear power in most countries, CCS was looking like utilities' best choice for new baseload power stations. Yet at the same time the increasing unpopularity of high energy prices, green policies and the projects that were linked with them in the public's mind had raised the profile of their technology in very unhelpful ways. In many locations they didn't just face NIMBY but NUMBY, Not Under My Back Yard. To a growing number of opponents, who worried about the possibilities of drilling-stimulated earthquakes and migrating underground CO2, CCS was shale gas on steroids.
In the 2020s such grumbling became visible backlash as many large-scale clean energy projects, including most CCS projects, faced site protests and, in isolated instances, sabotage. Voters and consumers who just a decade earlier had been eager for cleaner fuel and power options and a quick end to "yesterday's energy" didn't like the consequences of their choices. Governments had no choice but to listen. Emissions were actually falling, yet renewables suddenly faced retroactive subsidy cuts for the first time since the recession, and CCS project developers found the status of their permits less settled than they had been led to believe.
In 2027 Shell became the first company to shut down an operating CCS project voluntarily, when it suspended operations at its Quest project in the Canadian oil sands, in response to overwhelming opposition. By the end of the decade China was the only major country still aggressively pursuing CCS, and its companies' low-cost retrofit process for coal power plants ultimately dominated the remaining global market for technology.
IEAGHG Strategy Workshop San Ramon, California 27-28 February 2012
Facilitated by: Geoffrey Styles
GSW Strategy Group LLC
Purpose
• Enable systematic review of strategies, and • Development of potential new strategies • Recommendations for re-balancing goals &
activities (if appropriate) • Assumption: Not a zero sum game
Desired Outcomes
• Thorough discussion of current SWOT • Scenario framework to asses structure and
strategies, identify new strategies
Overall Process
SWOT Scenarios
Strategy
Ground Rules
• Add flipchart info to slides • Identify ourselves for phone participation • One at a time • Participate eagerly • Phones off in the room • Non-attributable remarks from meeting • Organizational issues, how the IEA GHG
Programme is run, best left here in the room • Ad hoc breaks
Preliminary Discussion of Competition
• Structure creates competition with Clean Coal Center
• Others well-differentiated from IEA GHG • Members can be competitors • Universities / government centers of excellence • Contractors • …from whose perspective?
– Funders? – Consumers of output (CP’s)
SWOT
SWOT Framework
Strengths What does IEAGHG do well? Unique advantages
Weaknesses What could IEAGHG improve? Unique disadvantages
Opportunities What are our opportunities?
Threats What threatens IEAGHG’s success or survival?
Inte
rnal
Ex
tern
al
Overview of Interview Feedback - SWOT
• IEAGHG has a strong reputation for leadership on CCS from producing high-quality studies and conferences and building valuable networks.
• Its large and growing membership provides resources and positive interactions that enhance the value of the organization to members.
• However, IEAGHG’s tight focus on the technological aspects of CCS and dependence on the uncertain pace and extent of its adoption put its continued success at risk.
Interviews: Top Strengths • Consistent high quality of studies over 2 decades
• Broad coverage and objective analysis • Quick studies for urgent topics
• Reputation for quality and objectivity • “First source” on CCS
• Diversity of membership • Interaction among company and company members
• Quality of management and permanent staff • Skill in managing contractor engagements
• Networks expand IEAGHG’s reach with relevant/timely conferences • Concentrated exposure to specific topics
• Large, growing membership (and resources) • Enhanced financial security
• Success of GCHT conference – “The Standard” • Structure and organization (stability) • Value for money
• Volume of reports from limited budget
Interviews: Other Strengths • Reaches multiple audiences • Originality of group’s work (especially compared to Clean Coal) • Quick review process for non-time-sensitive issues • Especially strong on carbon capture • Emerging strength on policy • Strategic plan (scope/balance) • Communications • Coverage of material • Summer school program • Attract key players from industry and research community • Meeting expectations and maintaining a lead on CCS • Executive meetings twice a year • First class reporting on all aspects
Interviews: Top Weaknesses • Repetition of previous work while awaiting deployment
• Hard to find new breakthrough research • Relationship with IEA (Paris) and numerous IAs • Studies weak on finance and commercial aspects • Narrow focus on CCS • Reliance on contractors for studies
• Need wider contractor net • Staff retention & pipeline • Interaction with policy makers
• Influence on policy but not politics • Differentiating IEAGHG from other CO2 groups
• Distribution of workload with other CO2 groups • Process for selecting report topics (and helpers) • Imbalance between company and country members
Interviews: Other Weaknesses • Unwieldiness of Executive Committee meetings • Delays in starting and completing some contracts/projects • Cost of membership • Transparency and accountability questions • Not reaching broader audience beyond research community • Accessibility of reports outside narrow community • Balance & competition between country and company members • Project participation hasn't always been as useful as expected • Some reports "indifferent" • More communication needed • Perceptions of problems with demo projects, e.g. CO2 leaks • Breadth of talent required to cover subject matter • Work overload • Focused on oil & gas, power industries
Interviews: Opportunities • Push into other technology areas
• Look at other alternatives, especially to storage (e.g., EOR, other CO2 utilization) • More focus on gas and gas power generation • Consider mobile source capture and air capture
• Broaden into other industries (steel, cement, methane) • Do more committee work in smaller groups • Competitors could be partners – improvement opportunity • Engage younger people more via social media • Use growing resources to expand capabilities, accelerate development • Be vigilant and proactive about CCS’s public image
Interviews: Threats • Uncertainty of path forward • What is role after CCS deployment? • Tensions within implementing group and operating agent • Push for EOR competes with storage and shifts priorities away from studying storage • Keeping at top vs. competitors
• Competition from private sector as CCS takes off
Additional Strengths/Weaknesses
• Strengths – Ability to hire best contractors – Ability to call on scientific experts – IEA brand/framework – Current size: well-positioned for “watch & see”
• Weaknesses – IEA perception in China – Limited application of remit to CCS – Restrictiveness of IEA
Additional Opportunities • Expand to fulfill remit
– Renewables, energy carriers (H2, methanol), infrastructure – Unconventional gas – Sustainability, including water issues – Fugitive emissions – Consequences of large roll-out (technology adaptation,
“penetration/ integration”) • Expand topics to encompass performance of CCS to be
useful in different scenarios • Expand the U in CCUS (utilization of CO2) • Role of CCS as “baseload” changes, dispatchability
Additional Threats
• Cheap natural gas • Economy • Regulations • EOR vs. Utilization discriminate between them • Creep of work / overlap/ interface with CCC. • Pipeline of talent (in the long interviewed items) • Existing staff level spread too thinly on many
things (weakness? Or threat, which is external.)
Critical Issues from SWOT (to address at next workshop)
• Finding ways to work around limitations of IEA structure.
• Staffing to deliver desired mix of activities – Succession planning is one aspect of staffing – while retaining membership (member engagement
strategy especially re sponsors vs. CPs) • Does Clean Coal Center have a future? • Public acceptance – role?
– Information role: Trustworthy (focus on risk) – Influencers: media, policy makers – Public affected by projects – Maintain high level of trustworthiness
Key Themes of SWOT (to address at next workshop)
• Expansion of coverage and activities. • Competition within IEA structure /
organization. • Continued focus on technical aspects • Mix of activities – balanced with mix of
members • Competition among different dispositions of
CO2 and mitigation
Parking Lot Issues
• Key staff vacancies • Competitiveness of remuneration
SCENARIOS
What do scenarios do?
– Shift our viewpoint beyond current problems and assumptions
– Propose plausible alternative futures – Provide new perspective on current
trends and events – Create broader basis for strategy and
action – Distinct from one-off, “what if” scenarios
Scenario Process Steps
• Understand the question we are asking • Understand the uncertainties governing it • Turn the uncertainties into possible futures • Ask what these futures could mean for us • Assess their impact on strategy (Workshop 2)
Scenario Process
Scenario Question
Identify Uncertainties
Boil Down Uncertainties
Structure Scenarios
Fill In Details
Find Implications
Develop Responses
Boundary Conditions
• What are we willing to consider? • What’s off the table?
– Changes to IEAGHG’s remit? included – Beyond what timeframe?
• 2035? – too long and risk conflict w/ IEA and other views
• 5 years too short – longer opens up more options 15 years (with insights at 5 and 10 year milestones)
Scenario Process
Scenario Question
Identify Uncertainties
Boil Down Uncertainties
Structure Scenarios
Fill In Details
Find Implications
Develop Responses
Scenario Focal Question • Business problem:
– Test and refine IEAGHG’s strategic direction and strategies
• Scenario Focal Question: – Broader than CCS?
• Encompass CO2 utilization? Renewables? – Timeframe?
• Strategic Plan? Longer? • Need to be able to define focus of organization • “What is the future of technologies for mitigating
GHG emissions from fossil fuels?”
Refining the Focal Question
– Is this a workable Focal Question for scenarios? • Is it clear? y • Is it an open question? y • What is the timeframe? 5/10/15 years • Can we work within the boundaries? y
Scenario Process
Scenario Question
Identify Uncertainties
Boil Down Uncertainties
Structure Scenarios
Fill In Details
Find Implications
Develop Responses
Uncertainties
– What would we need to know, in order to answer the focal question?
– Sources of uncertainties: • Background presentations • Articles and reports • Business unit perspective • Personal experience or knowledge
– What is not uncertain in this timeframe?
CLUSTERS OF UNCERTAINTIES
Scenario Process
Scenario Question
Identify Uncertainties
Boil Down Uncertainties
Structure Scenarios
Fill In Details
Find Implications
Develop Responses
Key Uncertainties (in voted order) after Clustering
1. Energy & Emissions Policy (6 votes) 2. Technology Acceptance (5) 3. Mitigation Technology Advances (3) 4. Enablers of Deployment (2) 5. Economy (2) 6. Sustainability (1) 7. Energy & Environmental Markets (1) 8. CO2 Storage (1)
Overall Scenario Process
Scenario Question
Identify Uncertainties
Boil Down Uncertainties
Structure Scenarios
Fill In Details
Find Implications
Develop Responses
Our top 3 uncertainties are bundles of more granular uncertainties
1. Energy & Emissions Policy a) Global emissions policies b) Renewables mandates (RPS, Clean Energy Std) c) Energy policy (e.g., exiting nuclear) d) Technology-neutral support for energy technology e) Relationship between energy use and wealth
2. Technology Acceptance a) Public awareness/acceptance of energy technologies b) Social license to operate c) Attitude, receptiveness of industry management d) Pick up of CCS in industry e) Sufficient learnings from projects
3. Mitigation Technology Advances a) Performance of large-scale CCS demos validating the technology b) Advanced CCS technology c) Cost/efficiency improvement in energy technologies d) Advanced fossil generation e) Uptake of energy efficiency f) Sustained, successful R&D g) Future cost of technology (CO2 transport/capture/storage) h) What mitigation technologies are available? i) Progress of alternatives to CCS
Possible Scenario Axes
• For each key driver, describe attributes of its polar opposite extremes.
Energy & Emissions Policy Strong Advancing Affordable Global Aligned Favorable
Weak Retreating Unwinding Fiscally constrained Checkerboard Unfavorable
Possible Scenario Axes
Technology Acceptance Low cost Embracing Attractive “Cool” Sustainable Low-Maslow Energy of the Future Small is beautiful Clean & Green Safe
High cost Rejection BANANA “Uncool” High-Maslow Hierarchy Yesterday’s energy Big business Not green Risky
Possible Scenario Axes
Mitigation Technology Advances
Cheap Demonstrated Efficient At scale Broad Market pull Low risk Reliable Proven
Expensive Not demonstrated Stalled Inefficient Bench-scale Narrow Chasing a market Technology push High risk Unreliable
Test first combination of axes
Mitigation Tech- nology Advances
Energy &
Em
issions Policy
“Proven”
“Advancing”
“High risk”
“Retreating”
Ingredients for success Focus on acceptance Where?
“Death” No market-pull No incentive for R&D
No deployment No carbon price No economics Today
R&D opportunities Carbon price
Test next axis combination
Technology Acceptance
Mitigation A
dvances
“Cool”
“Proven”
“Uncool”
“High Risk”
Venture capitalists like this world R&D Institutions like this
“Death”
Site wars Policies?
What policies? Can you make money?
Test last axis combination (This is the one we chose)
Technology Acceptance
Energy &
Em
issions Policy
“Cool”
“Advancing/Favorable”
“Uncool”
“Retreating/ Unfavorable”
Lots of technologies Real emissions reductions Intensity declining Developing countries engaged + + world for CCS
Difficult Public interest Little activity + - world for CCS
Technology advances Hard for everyone - world for CCS
Stalled Today - - world for CCS
Scenario Process
Scenario Question
Identify Uncertainties
Boil Down Uncertainties
Structure Scenarios
Fill In Details
Find Implications
Develop Responses
Final Scenario Framework for 2027
Technology Acceptance
Energy &Em
issions Policy
Cool
Advancing/Favorable
Uncool
Retreating/ Unfavorable
“Happy Days”
“Spinning the Wheels”
“Father Knows Best”
“Against All Odds”
“Happy Days”: Advancing/Favorable E&E Policies + “Cool” Technology Acceptance
– Economy conducive affordable policies – Policies are reducing emissions – Global climate accord / regulations of regional/ local – Technology of mitigation commercially ready – Consider lots of technologies to play a part – Fossil still big in mix and accepted – Policy keeps R&D pipeline full – Storage resource proven / available – Projects up and running at commercial scale – On path to large-scale deployment – Constraint on carbon carbon price – Public and investors’ money flowing in – Skilled labor is a challenge – Not uniform across all regions (e.g., we talked about China, capture technology advances
and manufacturing, where is the geologic expertise?) – Blueprint for regional energy system integration – Vehicle electrification technology – Big electrification push (centralized + distributed) – Liability issues resolved- one example: governments own the liability – EOR has to be credited as storage – High oil price world – Greenfields more than retrofits
“Happy Days”: Advancing/Favorable E&E Policies + “Cool” Technology Acceptance
Implications – IEA GHG gets more members to identify and develop
new information • Broader spectrum of technologies, other mitigation
technologies. – CCC’s role diminished. – Less of a role for CCS advocacy (applies to all CCS
advocacy organizations) – Fossil fuel with CCS continues among many options in
portfolio; climate change no longer a factor, now just competing on price.
– Favors more centralized baseload power generation with CCS.
– Encourages more diversification of transport technologies
“Spinning the Wheels”: Retreating/Unfavorable E&E Policies + “Cool” Technology Acceptance
– Climate policy stalled – No incentive for implementation – CO2 price uncertain, volatile – Heterogeneous adoption of nuclear, unconventional gas,
etc. – Select and limited development of mitigation
technology R&D, slowed and stalled – More fundamental research is done rather than large-
scale deployment due to funding limitations – Non-government funding difficult to get – Storage buy and hold (purchase the access options) – Saline aquifers storage is stalled – EOR in niche markets
“Spinning the Wheels”: Retreating/Unfavorable E&E Policies + “Cool” Technology Acceptance
Implications – IEA remains as like today, fewer voluntary contributions
for specialist tasks – More focus on technology and technology R&D aspects
by CCS organizations – More competition from other groups – CCC would be ok. – IEA GHG would be ok. – IEA GHG might need to re-focus on activity mix.
“Against All Odds”: Retreating/Unfavorable E&E Policies + “Uncool” Technology Acceptance
– Economic growth stalled – Climate policy stalled – No incentive for implementation – Carbon price patchy and volatile – Heterogeneous adoption of nuclear, unconventional gas, etc. – Development of mitigation technology R&D slowed and
stalled – Research focus shifted from mitigation to something else
(e.g., adaptation) – Funding difficult to get – Saline aquifers storage is stalled – EOR in niche markets – BANANA: “Build absolutely nothing anywhere near anybody”
“Against All Odds”: Retreating/Unfavorable E&E Policies + “Uncool” Technology Acceptance
Implications – IEA focuses on energy statistics, markets, energy policy – CCC shrinks because of fewer industrial sponsors, their
remit focuses on other pollutants, coal markets. – The threat to CCC is from Coal Industry Advisory Board
and World Coal Institute. • Gas is competitive with coal.
– CSLF and CCSA face difficult times – IEA GHG smaller, task-sharing agreement, becomes a
knowledge sharing body.
“Father Knows Best”: Advancing/Favorable E&E Policies + “Uncool” Technology Acceptance
– Economy conducive affordable policies – Policies are reducing emissions – Global climate accord / regulations of regional/ local – Technology driven top-down, mandated changes in
technologies – CO2 storage mandated across developed and developing
countries, but developed countries slower to deploy. – Policy keeps R&D pipeline full – Storage resource proven / available – Projects up and running at commercial scale – Rate of large-scale deployment slow and uncertain – Public backlash – Durability of policies questionable
“Father Knows Best”: Advancing/Favorable E&E Policies + “Uncool” Technology Acceptance
Implications – IEA GHG objective assessments are high in demand. – More need in this world for risk management – Priority for work to address underlying issues about
technology acceptance… – CCC’s work faces more challenges – CSLF focuses more on public acceptance, capacity
building in developing countries. – More networking opportunities with other international
organizations for technology deployment.
Work Plan until 2nd Workshop
Get slides/files out to team • Develop stories (Geoff) • Review scenario drafts with team • Get more specific about what’s happening to the individual
mitigation technologies (John C., Peter, Jay) • Categorize recent/current IEAGHG activities (John G.) • Look at implications slides – narrative/themes (Geoff)
Updated IEAGHG Strategy Recommendations
IEAGHG Ad Hoc Committee on Strategy 9 May 2012
Key Outcomes Findings:
• IEAGHG’s strategy was reaffirmed through a rigorous process of review. Other key findings include:
• Technology acceptance is a major obstacle or enabler of deployment and need to review our activities in this area.
• As a result, IEAGHG should broaden and strengthen communications and engagement, both within IEA and externally. • Revise communications/engagement plan • Maintain an appropriate skill base in this context
• IEAGHG should enhance its monitoring of external market and policy trends. • IEAGHG should pursue turning our scenarios into a rigorous method for
monitoring policy and market trends.
These recommendations emerged from a systematic look at the uncertainties and trends in the external environment. A full report on the resulting scenarios and findings will follow.
Overall Process
SWOT Scenarios
Strategy
Scenario Focal Question: “What is the future of technologies for mitigating GHG emissions from fossil fuels in the next 15 years?
Key Uncertainties (in voted order) after Clustering 1. Energy & Emissions Policy 2. Technology Acceptance 3. Mitigation Technology Advances 4. Enablers of Deployment 5. Economy 6. Sustainability 7. Energy & Environmental Markets 8. CO2 Storage
Final Scenario Framework for 2012-2027
Technology Acceptance
Energy &Em
issions Policy
Cool
Advancing/Favorable
Uncool
Retreating/ Unfavorable
“Happy Days”
“Spinning the Wheels”
“Father Knows Best”
“Against All Odds”
Comparing the Scenarios Happy Days Spinning the
Wheels Against All Odds
Father Knows Best
Economy Sustained growth
Weak Weak Sustained growth
Climate Policy Proactive Stalled Stalled Progressive
Technology Advances
Advancing Slower, R&D emphasis
Shrinking Advancing strongly (deployment problems)
Public Acceptance
Strong Good but mixed
Negative Negative
Industry Appetite
Strong Weak Nonexistent Required or incentives
IEAGHG result Peaking (then declining)
OK Challenged Good but new challenges
Critical Issues from SWOT and Scenarios
• Finding ways to work within limitations of IEA structure and with other Implementing Agreements
• Prioritization of activities based on timing/interdependence. • Balance of activities • What needs to happen, when?
• Technology acceptance – What is IEAGHG’s role? • Information role: Maintain high level of trustworthiness • With key influencers: media, policy makers • Public affected by projects
• Staffing to deliver desired mix of activities • Staff capabilities must align with member priorities to help ensure
member satisfaction/retention. • Succession planning and training are aspects of staffing
New/Revised Strategies • Within the framework of the IEA, IEAGHG studies and evaluates
technologies that can reduce greenhouse gas emissions derived from the use of fossil fuels. The Programme aims to provide its members with definitive information on the role that technology can take in reducing greenhouse gas emissions. • Communicate and engage with IEA and other Implementing
Agreements to improve the effectiveness of pursuing the primary objective.
• Ensure that the information provided is objective, timely and reflects the highest priorities by maintaining market and policy awareness.
• Communicate and engage with key influencers of technology acceptance and deployment.
• IEAGHG will ensure that its staff reflects the Programme’s desire to be the preeminent organization providing such information.
Discussion Going Forward
• The ad hoc committee on strategy intends to continue this process. • Flesh out details relating to the operations of the
Programme • Develop method for tracking scenario “signposts”
and other key trends • Revise the communications plan
• The ad hoc committee will carry out this work by email and teleconference and bring it to the 42nd meeting for concurrence.
