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3Energy Transitions
Welcome to The EU Energy Challenge: Can innovation fill the gap?—an
event we hope will be the right conversation at the right
time among the right people. It is the right conversation because
it is imperative
that the EU find the best energy solutions due to the centrality of
energy to its economy, its society and its future.
Today the EU consumes around 13 per cent of the world’s energy. Yet
it possesses less than one per cent of global oil and gas reserves.
Its recent economic growth has trailed that of the US and the Asian
giants. Its energy costs are higher than those of the US and its
labour costs are higher than those of China or India. Yet it
remains, laudably, committed to taking a leadership position on
climate change.
The EU therefore faces a complex problem. How can it secure
sufficient energy supplies, minimise energy costs and curb
greenhouse gas emissions, without further eroding its competiveness
in a fast- changing global landscape? There are gaps between these
different objectives—gaps which are not easily closed.
The potential solutions involve many elements— business efficiency,
infrastructure investment and international relations among them.
However, above all, the answers will require innovation in
technology and in policy and behaviour—the way we regulate and use
energy as policy-makers and citizens.
Innovation is not only the means by which we can reconcile the EU’s
multiple objectives. It is an area where Europe has led the world,
from the invention of the steam engine to advances in energy
efficiency.
As a result, the EU uses less energy per unit of wealth creation
than any other region. The fact that the EU’s economy is relatively
energy-light on a per capita basis is a critical advantage to
maintain. Energy efficiency is one tool which simultaneously
reduces both costs and emissions.
So it is the right time to ask ‘Can innovation fill the gap?’ As a
starting point, this magazine summarises the outcomes of eight
Science|Business symposia sponsored by BP aimed at informing
policy-makers on a diverse set of relevant energy innovation
topics.
This summit has attracted policy-makers, industry leaders, academic
experts, technology specialists and thinkers from across Europe and
beyond. We appreciate your time and we intend that it should be
time well spent.
European leaders have shown a strong aspiration to lead in energy
over the past decades, first developing a common vision of a
sustainable future and then experimenting with different targets,
mandates and technologies for achieving it.
I believe the next phase should be one of pragmatic action, with a
strong focus on competitiveness. Indeed, we can see that focus
developing in the European Commission’s 2030 framework for climate
and energy.
Our hope is that this forum will provide fresh thinking and
actionable ideas for a Europe where energy is a driver of a future
that is both competitive and sustainable—in other words, an event
that tackles the complex challenge head on and shows how innovation
can indeed fill the gap.
David Eyton, Group Head of Technology, BP
FOREWORD
06 ENERGY SYMPOSIA A series of high-level roundtables on low-carbon
technologies from 2011-2014 generated recommendations for
accelerating Europe’s energy transition
08 THE ENERGY DIFFERENCE Europe needs to increase investment and
lower bureaucratic hurdles for new energy technologies
10 BIOFUELS—THE NEXT GENERATION Funding and innovation progress
leads to cautious optimism among researchers, industry and
policy-makers
12 HOW TO PLAN EUROPE’S ENERGY FUTURE Energy system models help
governments cut through complexity when planning research
investments
14 GETTING CARBON CAPTURE AND STORAGE TO MARKET
EU’s CCS strategy needs serious rethinking if climate goals are to
be met
16 NEW IDEAS FOR MANAGING SCARCE RESOURCES AND ENERGY
In theory, the market should promote the efficient use of resources
and energy, but it doesn’t
18 THE RACE TO PRODUCE LOW-CARBON CARS What will it take to develop
a mass market for low-emission vehicles, and when are we likely to
see it?
22 GAS: TO MUCH OF A GOOD THING? Big in North America, energy from
shale faces a series of hurdles before it can have meaningful
impact in Europe
24 THE RENEWABLE POWER DILEMMA Renewable energies won’t lower
Europe’s carbon emissions until they are affordable and well
integrated into the energy system
CONTENTS
POLICY OVERVIEW
Europe needs to find a way of creating [a] kind of innovation
super-highway.
Experts at the biofuels symposium debate the challenges of getting
second-generation biofuels to market.
7Energy Transitions
Between 2011 and 2014, Science|Business organised a series of eight
high-level technology policy symposia on Europe’s energy future
with
the support of BP. The following articles give a flavour of the
discussions between leading research, industry and policy experts
at those events, in some cases updated to take account of more
recent developments, and at the same time offer an overview of
progress in key areas of Europe’s energy planning, whether R&D
policy, the development of alternative energy sources or
strategy.
Covering topics as diverse as second-generation biofuels, carbon
capture and storage, low-carbon cars, renewables and the grid, or
shale gas, each symposium yielded a set of recommendations for
technology policy-makers on how to help best develop Europe’s
energy future. This is a wide area and not all topics could be
covered; one notable omission is nuclear. Some recommendations were
unique to the topics under discussion and are listed within and
beneath the following eight articles. But others were of a more
universal nature. Here is a quick recap.
Take a holistic approach Europe’s energy is a complex matter and it
must be viewed as a whole. It’s not only about electricity, or
heat, or transport: it’s all connected and if you do anything on
one part, you affect the rest, so you’ve got to take an integrated
approach. In fact, the EU must take an even bigger- picture view,
not only confronting head-on issues like the intermittency of wind
and solar generation and the need for increased connectivity, and
harmonising standards and regulations across Europe, but
prioritising and managing the inevitable contradictions between
economic, social and climate needs.
Where’s Europe’s Silicon Valley? Europe lacks a coherent innovation
system to take ideas from the universities and other publicly
funded research organisations to commercial exploitation. The US,
in contrast, has a very well developed innovation pipeline,
integrating researchers—whether at
universities or in publicly funded laboratories— with venture
capital and private equity, industry and capital markets. In order
for the rapid development of ideas to be of benefit to society, and
to address pressing issues such as climate change, Europe needs to
find a way of creating this kind of innovation super-highway.
Developing energy technology options for market investors to select
Because of the importance of delivering energy affordably,
competitively, sustainably and securely, promising new and
low-carbon technologies and techniques justify enhanced support
from innovation and early deployment through to full
commercialisation. This needs a long-term framework approach which
utilises market forces wherever possible. It should include
fundamental scientific research programmes, the identification of
emerging technologies with the potential for significant cost and
greenhouse gas reduction when mature and deployed at scale,
transitional support for their demonstration and early deployment
that is highly targeted and time- and cost-limited, and a market
environment in which carbon is priced (via the ETS in the EU) to
balance important environmental objectives with the critical need
to maintain competitiveness, including appropriate protections for
energy- intensive and trade-exposed sectors.
Improve communications There have been too many examples where
policy-makers and innovators have failed in their communications
with the public. Inadequate explanation of the links between
biofuels and food prices was one notable case. Another is the
number of grassroots movements that have sprung up preventing wind
power installations. The lesson to be learned is not just to
communicate with, but wherever possible to also involve the public
in the policy challenge debate, especially when local communities
are particularly affected in some way or other.
A series of eight Science|Business energy symposia held across
Europe between 2011 and 2014 yielded a number of concrete
recommendations for policy-makers
8 Energy Transitions
The European energy market is complex—so complex, that even experts
don’t fully understand how
it works. So how should policymakers figure out which levers will
be the most effective in achieving the EU goal of reducing
greenhouse gas emissions by 80-95 per cent between 1990 and
2050?
Building a comprehensive model for a low-carbon economy is vital to
developing a more effective energy R&D policy. With the
publication of the EU’s Energy Roadmap 2050—which explores the
challenges posed by the EU’s decarbonisation objective while at the
same time ensuring security of energy supply and
competitiveness—the European Commission took a significant step
towards creating such a model.
But there are still major questions that need to be answered. In
particular, how can the private sector be persuaded to pursue
energy innovation more aggressively? And how can consumers be
persuaded to embrace the new technologies?
There is competition between the world’s major technology blocs in
renewable energy research and Europe is lagging its main economic
rivals, says
Reinhilde Veugelers, professor of economics at KU Leuven. “The EU
is not the frontrunner, with the exception of Germany, which is the
strongest player, along with the US and Japan. China and Korea are
making big jumps too.”
One of the reasons Europe is trailing in energy research is the
complexity of doing business in the EU, say industry leaders,
academics and even government officials. Investors must navigate a
myriad of EU, national and regional regulations, while other
countries have a highly centralised approach, enabling the fast
deployment of both demonstration and commercial power plants.
Another reason is a lack of investment. “Europe needs to raise the
level of investment and lower the bureaucratic hurdles to trialling
and implementing new technologies,” says Richard Templer, Hofmann
Professor of Chemistry at Imperial College in London.
The US and China are both less complex places to do R&D in
energy— the US because it is highly competitive, and China because
they can experiment at scale fairly inexpensively and very quickly,
says David Eyton, group head of research and technology at BP. “If
you are
looking for pace and cost-effectiveness, China is very
competitive.”
European R&D programmes requiring multiple national partners
and enormous paperwork have created a disincentive for industry
participation to date. “I would characterise the complexity of
trying to do R&D under the European Framework Programme as
having been something of a block for BP to invest,” says
Eyton.
Underinvestment “Uncertainties, both in Europe and globally, have
meant that there has been an underinvestment both in energy
generation and in networks,” admits Philip Lowe, director general
of DG Energy at the European Commission. The Commission’s roadmap
to 2050 is designed to give industry a clearer view of what lies
ahead and reduce uncertainty, he says.
But Lowe is concerned that governments will be pushed into
subsidies before the private sector starts investing—and that this
will in the end distort the market and undermine innovation rather
than encourage it.
At the same time, there is agreement
THE ENERGY DIFFERENCE: March 11 2011
Towards a more effective energy R&D policy Building a
comprehensive model for a low-carbon economy is vital to making the
right decisions
David Eyton Richard Templer
9Energy Transitions
that market forces alone are not up to the job. “We need to get
away from the notion that there is an invisible hand of the market
that will take care of it,” says Tom Kerr, senior energy analyst at
the International Energy Agency. Energy policy needs to be driven
by the highest levels of government, and be based on a strategic
plan developed in partnership with business “sitting as equals at
the table”, says Kerr.
One approach that could help square the circle is to make the
penalty for not innovating greater. “The amount of money required
for grants and subsidies would be much smaller with a strong carbon
price,” says Veugelers of KU Leuven.
The EU’s Strategic Energy Technology, or SET-Plan, adopted in 2008,
is the technology pillar of the Europe’s energy and climate policy.
Its goals are to accelerate knowledge development, technology
transfer and market up-take; maintain EU industrial leadership in
low- carbon energy technologies; foster science for transforming
energy technologies to achieve the 2020 Energy and Climate Change
goals; and contribute to the world-wide transition
to a low carbon economy by 2050. The only thing missing from the
SET-
Plan is the source of that funding, says the Commission’s Lowe.
Funding is, of course, key. Especially as some traditional sources
of funds for innovation may not be available.
When it comes to renewable energy technologies, conventional
sources of innovation funding are hard to tap. One answer could
stem from what is often perceived to be one of Europe’s weaknesses:
its ageing population. Europeans have accumulated a lot of savings,
says Luc Soete, professor of international economic relations at
Maastricht University. This, he suggests, could be applied to
developing the continent’s energy infrastructure. “The fundamental
challenge is: How do we re-allocate this huge amount of savings
into investments?”
Another solution could come from a reallocation of public funds.
“The SET- Plan needs to attract not just the very small amount of
EU money, but also greater focus from national research
organisations. I think that is possible, but it remains a
challenge,” says Lowe.
Philip Lowe Luc Soete Tom KerrReinhilde Veugelers
“Europe needs to raise the level of investment and lower the
bureaucratic hurdles to demonstrating
and implementing new technologies.”
RECOMMENDATIONS
Develop a systems approach to R&D policy that targets supply,
distribution and demand, and informs EU strategy.
Encourage private investment by engaging the highest levels of
government, pricing carbon emissions appropriately, making rules as
simple as possible and providing as much regulatory certainty as
possible.
Streamline processes for EU support for energy R&D.
Explore innovatory financing such as debt and long-term venture
capital financing, leaving the EU to cover projects too big and too
risky for nation states or companies.
Solar panels, wind turbines and electric cars have become the most
visible symbols of a global shift to
renewable energies. But bioenergy holds significant potential to
help speed the transition to a low-carbon energy system.
By 2050, a new generation of sustainable biofuels made from wastes,
crop residues and non-fuel crops could provide over a quarter of
the world’s total transport fuel, according to a report by the
International Energy Agency.
Support for first-generation biofuels, made from the fermentation
of sugar cane, sugar beet or cereals or the esterification of
vegetable oils, eroded as growing volumes of production in the US
and South America drove up food prices and sparked public concern
about over-use of water and biodiversity.
Second-generation biofuels are now seen as a key to Europe
attaining its energy security and greenhouse gas emission targets.
Biofuels, in particular offer the main alternative to the fossil
fuels consumed in cars, buses, trucks, tractors, planes and ships,
the motors of the continent’s economy
But technology challenges and policy
Stakes are high for next- generation biofuels
BIOFUELS—THE NEXT GENERATION: 28 June 2011
Funding and innovation progress leads to cautious optimism among
researchers, industry and policymakers
Novozymes Beta Renewables’ facility will produce up to 50 million
litres of cellulosic ethanol annually from agricultural
waste.
11Energy Transitions
genetically modified organisms (GMOs) runs strong in Europe.
Policy-makers may need to launch an informed public debate on
genetically modified organisms in relationship to biofuels,
particularly to allay concerns about the leakage of traits
conferred by the genetic modification of one species into others,
such as common weeds.
Some policymakers believe that Eastern Europe could be a more
willing testbed for biofuels from genetically modified crops than
many countries in the west of the continent. “There is a lot of
possible supply in Eastern Europe,” says Rudolf Strohmeier, deputy
director- general, DG Research and Innovation, the European
Commission. “In these countries, the GMO debate is not as strong as
elsewhere and they need investment... But we need to make it clear
that GMOs cannot enter the food chain. People are concerned about
what they eat.”
hurdles remain. The cost of producing second-generation fuels is
high, and investment in innovation and progress will depend on
Europe’s ability to develop a clear framework for industry to gauge
risks and returns.
The European Commission’s Strategic Energy Technology (SET) Plan
envisions bioenergy will contribute 14 per cent of Europe’s energy
mix by 2020, including up to 10 per cent of transport energy, up
from 4 per cent in 2009. In a key step forward, Novozymes
inaugurated in October 2013 the world’s first commercial-scale
advanced biofuel production plant in Northern Italy. The
multi-feedstock cellulosic ethanol plant can handle agricultural
waste from a variety of crops, including wheat straw and rice
straw, as well as giant cane.
“This is not about changing farm practice, it’s about taking waste
left to rot on fields and converting it to sugars,” says Peder Holk
Nielsen, president and CEO of Danish biotech company Novozymes,
which is looking to build five more plants by 2020. “The process
will be cost competitive soon,” says Nielsen.
Advanced biofuel initiatives are also now finding increasing
funding support. In July, the biofuel industry—alongside other
bio-industries in agriculture, agri- food, forestry/pulp and paper,
and chemicals—received a €3.7 billion boost in the form of a
public-private partnership to support research and innovation, just
under one billion euros from European Commission and €2.7 billion
from the Bio-based Industries Consortium.
Research funding will help drive costs down faster. The complex
structure of the feedstocks used in advanced biofuels—
such as corn cobs, wheat straw, woody biomass and municipal
waste—is more difficult to convert into ethanol than the
traditional starch-rich first-generation biofuel feedstocks—such as
the corns on the cob, sugar beets or cane. One consequence is that
higher quantities of enzymes are needed to convert biomass into the
cellulosic ethanol used as fuel. Novozymes, for example, is
developing technology to create higher-performing enzymes that
require significantly lower dosing and has reduced the necessary
amount of enzymes to just a few truckloads a week versus several
loads per day.
And scientists are also working at using genetically modified
organisms to assist with the creation of biofuels. For example,
they are looking at modifying some bacteria to ferment five-carbon
sugars as well as the six-carbon sugars that they are already able
to ferment.
“To exploit the full potential of these feedstocks will require the
more efficient degradation of lignocellulose,” says Christine
Raines, professor of plant biology at the University of Essex in
the UK.
Raines says researchers have developed a genetically modified
switchgrass with an altered lignocellulose structure. Its
bioethanol yield is 30 per cent more than conventional switchgrass,
she says, and the amount of cellulases needed to break down the
lignocellulose is only a quarter to a third that used for ordinary
switchgrass, meaning the conversion process requires less energy,
she adds.
But it’s not all about new technologies and bringing costs down.
Public controversy around bio-engineering and
“There is a lot of possible supply in Eastern Europe.”
Peder Holk Nielsen Christine Raines
RECOMMENDATIONS
Incentivise farmers to experiment with and produce biofuel
feedstocks.
Research the impact of biofuels on food prices.
Mandate the use of sustainable biofuels for transport.
Educate the public about genetically modified organisms.
12 Energy Transitions
Planning a sustainable future is a formidable task. Especially if
you are helping to shape the destiny of
500 million people in 28 countries. How on earth do you cover all
the possibilities in an area as complex either as the European
Union or as energy, let alone both at the same time?
An answer which is gaining momentum is to use systems-based
modelling—which has helped many fields of science probe complex
questions.
The systems approach was originally used to solve the puzzles of
life sciences but has since been extended to cover engineering,
computing, psychology, sociology and economics. Essentially, it
consists of feeding data into a computerised model that captures
all the different components of the problem at hand, and seeing how
they interact. The model can then be used to explore different
scenarios.
When it comes to energy in Europe, the kinds of things that may be
evaluated might include: What if more member countries decide to
abandon nuclear power? What would happen to the cost of energy if
Europe became reliant on biomass from overseas? What if solar
panels became twice as efficient as they are?
Both the UK and the US have built
sophisticated models of their energy sectors, and their governments
are using these models to help direct R&D spending and
subsidies, set energy policies and design regulation. Germany and
Japan are also embracing a systems approach to energy innovation.
Should the EU do the same?
The EU cannot afford to fully develop every promising new energy
technology. A systems approach could help it go beyond the
subjective views of technology advocates and make better informed
decisions.
In 2007, BP, Caterpillar, EDF, E.ON, Rolls- Royce, Shell and the UK
government set up the Energy Technologies Institute (ETI) to
accelerate the development of affordable clean-energy technologies.
Together they built a model of the UK energy system—the Energy
System Modelling Environment. ESME has played a significant role in
shaping the ETI’s strategy. For example, the ETI decided to invest
approximately €30 million in a carbon capture and storage
demonstration project, after ESME determined that the UK will
almost certainly need CCS to meet its emissions targets.
ESME helps to identify gaps in energy technologies and calculate
the cost at which a given technology could become a competitive
part of the energy system.
HOW TO PLAN EUROPE’S ENERGY FUTURE: 23 November 2012
Cutting through complexity to plan a better energy future Energy
system models help governments make more effective R&D
investments
13Energy Transitions
The modelling technique can also make clear the impact of removing
an energy source from the system. It showed, for example, that
removing biomass would add about £44 billion a year to the UK’s
energy costs, and that offshore wind would be an important hedge
technology.
The UK experience has shown that analysis of the detailed workings
of energy systems can produce unexpected conclusions about which
technologies work well together. “Our core model recommends you
make lots of hydrogen and store it, because that is easily the
cheapest way of storing energy,” says Andrew Haslett, director of
strategy development at the ETI.
It also showed that the marginal cost of cutting greenhouse gas
emissions in the UK is relatively low up until the country achieves
a reduction of about 50 per cent over 1990 levels.
“Priority-setting and performance indicators are something we can
really take from this exercise... that is certainly scalable,” says
Glyn Evans, head of unit, horizontal aspects, DG Research and
Innovation at the European Commission.
But the systems approach is far from infallible. Its performance
depends on the accuracy of underlying assumptions and the
reliability of the data fed into them. And different models will
produce
different conclusions. “The reality is when you come to
implement [policy], something will go wrong,” says David Clarke,
the ETI’s chief executive. The real value in modelling is in
getting industry, scientists and politicians to debate the various
topics, he says. “It helps you pinpoint issues.”
ESME, for instance, predicted that photovoltaic (PV) power would be
too expensive and intermittent to form a significant part of the
UK’s energy system in 2050. Modelling in the Netherlands came to a
very different conclusion.
“We did an exercise in the Netherlands and we came up with a lot of
PV,” says Ton van Dril, group manager, projections, evaluations and
industry at the Energy Research Centre of the Netherlands. Such
differences can help researchers drill down and identify the key
assumptions or data contributing to a model’s conclusions,
providing essential feedback to help guide better policy
decisions.
And, of course, models can’t assess the unknown. Between now and
2050, all experts seem to agree, completely unforeseen energy
supply chains may emerge. So even modelling enthusiasts caution
about their limitations and discourage policy-makers from relying
strictly on a model’s output.
“There is the huge role of cross- fertilisation in R&D,” says
Heinz
Ossenbrink, head of the renewable energies unit at the European
Commission’s Joint Research Centre. “The unthinkable will still
happen and it might come from outside the energy research and
demand.”
David ClarkeAndrew Haslett Heinz Ossenbrink
“Our core model recommends you make lots of hydrogen and store it,
because that is easily the cheapest way
of storing energy.”
RECOMMENDATIONS
Develop open models and keep a global perspective—the energy sector
is extraordinarily complex and cannot be considered in
isolation.
Aim for continual improvement and use multiple models to question
and refine data input and assumptions.
Make sure a model’s results are communicated together with key
assumptions—policymakers and business leaders need to recognise the
limits of models’ capabilities and to be able to challenge their
assumptions and input data.
Stay alert for breakthroughs not captured by today’s models—the
unthinkable will happen and it might come from a field outside of
energy.
14 Energy Transitions
Europe has vowed to create a low- carbon economy by 2050, when it
aims to have cut greenhouse gas
emissions by at least 80 per cent relative to 1990 levels. To reach
that ambitious goal, it is betting on a portfolio of new energy
technologies, including carbon capture and storage, or CCS, which
involves capturing the carbon dioxide emitted by power plants and
other industrial operations and permanently storing it deep
underground. But there’s a problem.
Although the technology has been proven to work, few businesses
have been willing to invest in CCS because the process is not
commercially viable. On average, implementing a CCS process will
increase the capital cost of a power station by 25 to 30 per cent
and reduce its operating efficiency from about 40 to 30 per cent,
says Ronald Oxburgh, member of the UK House of Lords Select
Committee on Science and Technology. And governments are reluctant
to subsidise CCS because the technology is poorly understood.
To complicate matters further, the huge size and cost of CCS
installations result in a slower learning curve. And different
capture technologies may be required in different circumstances,
reducing the scope for economies of scale and raising individual
project costs. Moreover, each potential storage site has different
geological characteristics and constraints. Offshore storage is
more costly than onshore storage, but it has
greater public acceptance. Despite those challenges, the
world’s
first commercial-scale CCS project, Boundary Dam, was launched by
SaskPower in Saskatchewan, Canada, in October, and three pilot
projects are moving forward in the US and Europe— underscoring the
need to collaborate beyond borders.
Policy-makers’ calls for no more than one per cent of the stored
CO2 to be lost in leaks over 1,000 years will be challenging to
guarantee because subsurface geological surveys aren’t that
accurate, says Stuart Haszeldine, Scottish Power professor of
carbon capture & storage at the School of GeoSciences,
University of Edinburgh. And the EU CSS directive’s requirement
about retained liability for the stored CO2 even after the CCS
operation has closed “needs to be underwritten by governments to
avoid a severe deterrent to investment in CCS,” he says.
One of the biggest obstacles faced by CCS, is the high capital cost
of building a demonstration project, says David Eyton, group head
of technology, BP. His company has made four serious attempts at
getting power projects with CCS up and running, he adds. “At least
two went
BREAKING THE DEADLOCK – GETTING CARBON CAPTURE AND STORAGE
TECHNOLOGIES TO MARKET: 27 April 2013
Europe needs to look beyond its borders for workable carbon
capture
David Eyton
Piotr Tulej
“There is no doubt that CCS can be made to work”
EU’s carbon capture and storage strategy needs serious rethinking
if climate goals are to be met
to the point of being fully designed, including investments of more
than $100 million, but they have all fallen at or before the last
hurdle. So we know how difficult it is to take the next
step.”
The European Commission’s plans to support 10 to 12 CCS
demonstration projects with the goal of achieving commercialisation
by 2020 have also proven overly ambitious. Only three projects are
likely to be launched, due to lack of funding in EU member
countries to support the programme and due to technical and
commercial challenges.
“The goal of 2020 for a convincing [EU] demonstration of CCS for
commercial viability is probably already unobtainable,” says Ernest
J. Moniz, professor of physics and director of the Laboratory for
Energy and the Environment at the Massachusetts Institute of
Technology. It’s now time for the EU to rethink its entire approach
to CCS, he adds.
Rather than trying to implement a dozen CCS demonstration projects
in Europe, Moniz thinks the EU needs to work with governments in
other regions to set up a “small number of first-rate projects,
with global coordination and cost-sharing”, focused on answering
the question: “What does an informed regulator need to know?”
While acknowledging the issues facing its demonstration programme,
the European Commission remains committed to the large-scale
introduction of CCS before 2030, says Piotr Tulej, head of unit,
Low Carbon Technologies, DG Climate Action at the European
Commission. “We think that a full-scale demonstration is needed at
this point in time,” he said. “We are expecting that large-scale
deployment of CCS will happen between 2020 and 2030. We need to
talk about how we can stick to that timeframe.”
“The elephant in the room is that we have no global agreement on
climate change,” says Jon Gibbins, professor of power plant
engineering and carbon capture at the University of Edinburgh.
“Whatever cost you have for CCS, it will
always be too high if there is no underlying rationale for doing
it. The only rationale for doing CCS in any quantity would be
having a global agreement on climate change.”
Europe now risks a major delay in bringing CCS technologies to
market, and the inability to tap CCS will hit its ambitious carbon
reduction goals.
Given the scale of the climate challenge and Europe’s economic
travails, now may be the time for the EU to push for much greater
global coordination and cooperation around CCS, says BP’s Eyton.
“It feels to me like there is a huge opportunity here to
collaborate. “Otherwise we will all perform the same experiment to
obtain the same learnings about capture and storage technologies...
we need to make sure that we do not duplicate experiments.”
“There is no doubt that CCS can be made to work. All of the bits
are there, all of the bits have been demonstrated,” says Lord
Oxburgh. “We are really just waiting to put the bits
together.”
RECOMMENDATIONS
Drop the target of 12 demonstration plants in favour of a few
high-quality, well-instrumented projects; relax the onerous
requirements of the EU CCS Directive.
Work towards global coordination and governance to avoid
replication of trials and demonstrations.
Create a financial framework, including instruments such as limited
liability, carbon pricing, contracts for difference or feed-in
tariffs, to help industries build a business case to invest in the
first large-scale CCS plants.
Encourage “low-cost CCS”, linking purer streams of CO2 to storage
in oil and gas reservoirs offshore, where public acceptance is less
of an issue.
16 Energy Transitions
“We cannot go on producing and consuming in the same way,” said
Janez
Potonik, European Commissioner for the Environment, in the days
running up to the symposium on New Ideas for Managing Resources and
Energy, held on 28 September, 2012, in Brussels.
In theory, of course, the market should act as a corrective or
balancing force. As resources become increasingly scarce, prices
should rise and both companies and consumers should have an
incentive to cut their consumption. But in practice, the rational
choices that individuals and companies make in their own self-
interest end up depleting the overall resources available.
Hence, there is a need for government involvement, said Potonik.
“We need to change what we finance and what we reward.”
Resource efficiency has become a top policy priority. In its
Roadmap for a Resource Efficient Europe, the European Commission
notes that if the world continues using resources at the current
rate, by 2050 we will need the equivalent of more than two planets
to sustain us. But it isn’t all about saving the planet. Countries
that innovate to reduce energy, raw materials and water
use will become more competitive and cut dependence on
imports.
The European Union aims to be a global leader in resource
innovation. Creating a resource-efficient Europe is one of seven
flagship initiatives in the €80 billion Horizon 2020 research and
innovation programme for 2014-2020.
In the Science|Business symposium, two main messages emerged:
Europe needs to take a holistic approach to resource innovation
that fully accounts for the interrelationships between energy,
minerals, land and water. And it needs to focus on
scale—innovations, sectors and materials that will make a major
difference to resource efficiency and deliver large-scale
gains
Water is a growing issue for European Union countries. EU water
systems are estimated to lose 6 to 40 per cent of volume in
transit. Over the past 30 years, droughts across the EU have
dramatically increased in number and intensity, affecting 11 per
cent of the population
and costing the continent €100 billion, according to the
Commission. By 2030, 45 per cent of the EU will suffer from
stressed water supplies.
To help national governments put a more accurate value on water,
the Commission is looking to create a database tracking how the
water in individual river basins across Europe is used. “The way
the climate is changing over the Alps has major consequences in
terms of water flow,” says Alan Seatter, deputy director-general,
DG Environment at the European Commission. “For many river basins,
we don’t even know the quantitative flows and who is using
them.”
There may also be a case for more consistent pricing of water
across Europe to generate the investments needed to ensure that the
supply of water keeps up with demand. “We have over 40 per cent
leakage in parts of Europe, but only six to seven per cent in
Denmark,” Seatter notes. “We do not
NEW IDEAS FOR MANAGING SCARCE RESOURCES AND ENERGY: 28 September
2012
How to live better on less Alan Seatter Julian M. AllwoodJanez
Potonik
In theory, the market should promote the efficient use of resources
and energy, but it doesn’t
“We could live well with half the steel we are using now. We could
make products lighter, keep products longer, and reduce the yield
losses.”
David Victor
17Energy Transitions
have a proper value on water services... That is only going to
happen by introducing charges.” In surveys of European citizens run
by the Commission, 80 per cent of respondents have said they
support some form of water pricing, but half of this group also
said there would need to be a support mechanism for people unable
to pay.
One way for Europe to boost resource efficiency would be to recycle
far more waste than it does today, managing it as a resource.
“Recycling can cover more than half of our raw-material needs,”
says Gwenole Cozigou, director, chemicals, metals, mechanical,
electrical and construction industries, raw materials, DG
Enterprise and Industry, European Commission. Besides reducing the
need to source primary raw materials, recycling also cuts energy
usage. Recycling aluminium, for example, takes just five per cent
of the energy it takes to produce aluminium from scratch from
bauxite.
To encourage more recycling, Europe could develop technical
criteria for waste, such as copper and aluminium, to certify that a
specific stock is good enough to be used as a secondary raw
material. Europe also needs more inspectors checking the quality of
waste. One way to facilitate recycling is to encourage consumers
and companies to rent, rather than buy, products and equipment.
Renting would greatly increase recycling as end-of-life equipment
is returned to the manufacturer. Some companies already provide
their products as a service. Rolls- Royce, for example, leases its
engines to customers who pay according to how much time their
aircraft spend in the air.
Another major opportunity to cut resource consumption lies in
reducing the volume of materials wasted by
industry. “We could live well with half the steel we are using now.
We could make products lighter, keep products longer, and reduce
the yield losses,” says Julian M. Allwood, professor of engineering
and the environment at the University of Cambridge.
A study Allwood conducted found that one-quarter of the steel
produced annually never makes it into a product. As labour is far
more expensive than raw materials, the steel industry makes an
intermediary product from which its customers can cut out the
specific components they need, says the report of the study. The
residual scrap is recycled, but this requires a great deal of
energy, the report continues, but new processes could potentially
create less waste.
“Techniques developed in the textile industry to make the maximum
use of the material could be applied,” says Allwood.
And there would be energy benefits in other ways too. In cars and
trucks, for example, energy usage is directly proportional to the
mass of vehicles. The average vehicle in the UK, for example,
achieves 35 miles per gallon, even though Volkswagen has developed
several concept versions of a one-litre- engine car with a
carbon-fibre body that achieves 235 miles per gallon, or 1.2 litres
per 100 kilometres.
“Light weighting needs to be introduced with a very short
timeframe. We need to overcome lobbying to make sure this happens,”
says John Barrett, professor of sustainability research at the
University of Leeds.
Policy-makers can influence the supply of, and demand for,
resources in a myriad of ways, such as through regulation, feed- in
tariffs, taxation, targeted research, international cooperation
and, to some
extent, by guiding market forces through communication campaigns
and public- private partnerships. But to be effective, they need to
focus on programmes and policies that generate the largest gains,
at every stage considering the knock-on effects on the supply and
availability of other resources.
And they also need to be decisive and clear, said Commissioner
Potonik ahead of the event. Suggesting a Europe-wide ban on
landfills would galvanise innovative solutions and waste recycling,
he suggested: “Taxing landfill is soft policy. If we would
introduce a ban on landfilling, we then create a very clear case
for investing in recycling... That will move the industry exactly
in the right direction.”
RECOMMENDATIONS
Use systems analysis to identify the biggest opportunities and
market failures and prioritise actions.
Tackle key market failures such as the pricing of carbon and water,
the fragmentation of construction supply chains, and designs that
inhibit recycling.
Introduce greater incentives to develop and buy lightweight
vehicles and renovate buildings, and to rent rather than buy
products, making it easier to recycle raw materials.
Encourage recycling by ensuring consumers and companies pay the
real cost of landfill.
Base policies on a full and objective assessment of technology
maturity. Don’t seek to scale solutions too early, but rather
conduct experiments and learn from these.
18 Energy Transitions
Many contenders but no clear winner in race to make the low- carbon
car What will it take to develop a mass market for low-emission
vehicles, and when are we likely to see it?
19Energy Transitions
The race is on to become the car technology of the future. The
prize is a global market in which
70 million vehicles are sold a year but more importantly, a
significant contribution to the climate goals set by the world’s
governments.
The contenders to replace the petrol or diesel internal combustion
engine are electrical vehicles, hydrogen fuel cells, biofuels and
compressed natural gas. There are no clear frontrunners and
alternative automotive fuels and technologies still lag
conventional internal combustion engines in a number of key
areas—including driving range, cost, and the availability of
refuelling infrastructure.
At the same time, petrol and diesel engines are becoming more
energy efficient, resulting in lower CO2 emissions. But the real
clincher is that the alternative technologies are more
expensive—for the people developing them and for the consumer.
Electrical vehicles or EVs, for example, need batteries that cost
around $500 per kilowatt-hour of storage capacity. The battery in a
Tesla Model S, for example, is either 60 or 85 kilowatt-hours
depending on the model.
The prospects of getting the costs down to mass market levels are
far from certain. Lewis Fulton, codirector of the NextSTEPS Program
at the Institute of Transportation Studies, University of
California, Davis, points out that the cost of batteries has come
down from around $800 per kilowatt-hour to $500 per kilowatt-hour
in the past three years. But Carlo Pettinelli, director of
industrial policy and economic analysis, sustainable growth and EU
2020, at DG Enterprise and Industry, European Commission, stresses
that much of the cost lies in raw material and we are not going to
get economies of scale. In fact, “more demand could send up
prices,” he notes. He is also concerned that a major shift to
alternative fuels could open a hole in public budgets. Petrol and
diesel taxes deliver over €200
billion a year to EU nations. One answer is to continue to
provide
public support to buyers, but even this is unlikely to be enough.
Hefty subsidies on electric vehicles in the UK, for example, have
failed to attract many buyers.
A more strategic approach, suggests John Polak, professor of
transport demand, and head of the Centre for Transport Studies,
Imperial College London, would be to sell to fleet managers, who
are more likely to assess the total cost of ownership, than to
consumers fixated with the upfront cost.
A different angle of attack would be to punish users of vehicles
with high emissions with higher taxes. “This has had a major impact
in Norway and the Netherlands,” says Didier Stevens, senior
manager, European and government affairs, Toyota.
Another factor holding back sales is the lack of suitable
refuelling stations. Compounding the problem, different European
countries favour different fuels, meaning it could be difficult for
international travellers to refuel an alternative technology
vehicle once they have crossed a border.
The European Commission’s new Clean Power for Transport policy
tries to solve this problem by mandating a minimum coverage of
infrastructure for each alternative fuel. But this approach is too
complex and costly, says Horst Fehrenbach, biologist researcher,
sustainability assessment for bioenergy, life-cycle assessments,
energy and waste
management at the Institute for Energy and Environmental Research
in Heidelberg, Germany. He argues that Europe must significantly
narrow the number of green car technologies it aims to support by
2020.
It’s clear that the race is far from over. But Europe now has an
opportunity to review its policies and adopt a smart approach to
investing in R&D for sustainable road transport. It certainly
does not lack options.
THE RACE TO PRODUCE LOW-CARBON CARS—WHICH TECHNOLOGY WILL WIN? 21
June 2013
Didier Stevens Horst FehrenbachJohn Polak
RECOMMENDATIONS
Continue with current efforts to drive energy efficiency through
setting and enforcing tailpipe emission standards.
Focus subsidies and other economic incentives on fleets in urban
environments.
Pay attention to the full life-cycle analysis of carbon, from
source to use. Electricity and hydrogen, for example, need to be
produced, and their impact on the environment depends heavily on
the source of energy used.
Plan for the fiscal gap that will open when the public embraces the
technologies and fuel taxes fall.
20 Energy Transitions
Electric vehicles
The technology is improving and the cost of batteries is falling,
but electric cars remain too expensive:
• Electric vehicles could start to take off after 2025 and become a
more dominant market force after 2030. • The range of EVs remains
short and best suited for city use, rather than longer journeys. •
The acceptance of plug-in hybrids varies by market and is heavily
influenced by tax policies.
“If I only cared about the next seven years, I wouldn’t invest in
electric vehicles... The people who are pushing EVs hard are
thinking about a market evolution toward where EVs only achieve a
sizeable share of car sales (e.g. 25 per cent) after 2030.”
Lewis Fulton, co-director of the NextSTEPS Program at the Institute
of Transportation Studies, University of California, Davis.
Hydrogen fuel cells
Expensive but maybe worth it if customer fears about safety can be
allayed. Toyota is launching a car next year:
• In the long term, hydrogen is potentially a clean form of
transport energy storage. • It is competitive in terms of range,
performance and refuelling time, but is very expensive. • There is
a perception that hydrogen may not be sufficiently safe. •
Hydrogen-powered cars will go on sale in the next few years, but
are unlikely to have a mass-market presence until 2025 to 2030. •
Hydrogen fuel should be produced using renewable energy or natural
gas.
“What are the customers’ expectations of a future vehicle? It needs
to have the driving performance of today, it should be zero
emissions, independent of fossil fuel, recharge in five minutes and
have a 500-kilometre range and be economically feasible... Hydrogen
meets those criteria except for cost... Customer acceptance that
hydrogen is safe... that is the biggest challenge we have ahead of
us.”
Didier Stevens, senior manager, European and government affairs,
Toyota.
The contenders
21Energy Transitions
Well-proven technology but only delivers modest carbon
savings:
• Dual-fuel cars that can run both CNG and petrol or diesel are
becoming available. • Using CNG is estimated to lower CO2 emissions
by up to a quarter over petrol or diesel (not a whole life-cycle
calculation). • If the consumer takes the cost of fuel into
account, CNG can be cheaper than petrol or diesel. • The refuelling
infrastructure is patchy across the EU.
“CNG is a really strategic [transport] energy carrier for 2020 and
beyond.... We will launch a CNG model this year on our Golf- MQB
platform, which could be used for 40 models in the group... The
price gap is between €1500 to €2000... but after 30,000 kilometres
of driving, CNG is generally cheaper (depending on taxes and the
vehicle model). We need to convince the customer that CNG is really
the most economical fuel and it is really safe... We are starting
to do a good job.”
Stefan Schmerbeck, manager future technologies and energy,
Volkswagen AG.
Biofuels
The winner in the race right now is biofuels. In Austria, it is 7
per cent of the market. In Germany a little below that:
• Biofuels are gaining traction in some markets, such as Austria
and Germany, supported by the local policy framework. • They are
compatible with existing refuelling infrastructure. • There are
minimal consumer- acceptance issues—biofuels can be mixed easily
with regular petrol or diesel. • Second-generation biofuels based
on straw and wood (requiring less agricultural land) are under
development, but it is not clear whether there will be sufficient
biofuels available for widespread use in EU vehicles.
“The technology is ready, the political framework is there and the
greenhouse gas and share of renewable transportation fuels targets
give the investors the security to invest... You don’t need new
cars, new filling stations, you just blend biofuels in. Consumers
don’t know they have it in the tank.”
Gerfried Jungmeier, senior researcher, Joanneum Research Institute
for Water, Energy and Sustainability in Graz, Austria.
“Consumer acceptance is the biggest challenge ahead of us.”
22 Energy Transitions
Between 2005 and 2012 the gas price paid by US consumers fell 66
per cent. In Europe it rose 35 per
cent. Now, how could that be? The US shale gas revolution has
transformed energy economics in the US, thanks to new technologies
bringing down the cost of tapping oil and gas buried in shale. The
technique is hydraulic fracturing, or fracking as it is also known.
Some experts believe half the Earth’s crust could contain shale
gas, suggesting the world’s recoverable hydrocarbon reserves are
far greater than was thought a decade ago. Yet many Europeans
remain opposed to fracking.
The reason lies at least in part within the haste with which the US
adopted the new techniques, says Robert H. Socolow, director of the
Climate and Energy Challenge at the Princeton Environmental
Institute. “There was a lot of goodwill from the environmental
community in the beginning... but the industry was evasive when
asked to disclose chemicals, and combative about regulations,” he
says. He feels the gas industry squandered a good opportunity and
that European governments should do their best to avoid repeating
the same mistakes.
Europe has a big interest in getting the
debate right. It is a large net energy importer. Some of its energy
sources are far from secure but the well-being of its people as
well as the functioning of its industry depend heavily on energy
prices and availability. At the same time, it is taking a lead in
addressing climate concerns, many of which are closely related to
energy policy.
Herein lie a series of contradictions, says Frank Umbach, associate
director at the European Centre for Energy and Resource Security,
King’s College London. For example, the EU has set a target of
raising industry’s share of GDP from 15 per cent to 20 per cent by
2020 to enhance economic competitiveness. But that policy
contradicts environmental and climate policy objectives, he
says.
Europe is already at a competitive disadvantage to its major
rivals. “Energy prices are three to four times higher in Europe
than in the US and labour costs are often 10 times higher here than
in China,” says Tudor Constantinescu, principal adviser to Philip
Lowe, director- general of DG Energy at the European Commission.
And without access to lower-cost energy, things are likely to get
worse.
“European energy-intensive industry is feeling the heat from the
boost in
competition,” says Umbach. And lower energy prices aren’t the only
benefits from fracking. Chemical manufacturing costs in Germany,
for example, are 29 per cent higher than in the US, partly because
the shale gas extraction process also generates raw materials for
the chemical industry, he says.
At the same time US companies are investing heavily in
next-generation technology, increasing the competitive challenge to
Europe. “Super-fracking technology is emerging which will drive
down the drilling prices per well by up to 70 per cent,” Umbach
says.
There are still significant obstacles to developing shale gas in
Europe. It must be integrated into a coherent energy system, and
regulations must be adopted to ensure water and soil pollution is
minimal.
Europe also must assess how much shale gas and oil can be extracted
cost- effectively. “The first explorations in some member states
are showing mixed results… It will easily take us a decade, if not
more, before we see a quantitative impact,” says Jos Delbeke,
director- general of DG Climate Action at the European
Commission.
Yet another challenge for Europe is access to reserves. In the US,
landowners
GAS: TOO MUCH OF A GOOD THING? 1 October 2013
Striking a very delicate balance
Vladimir Sucha Jos DelbekeRobert H. Socolow Frank Umbach
Big in North America, energy from shale faces a series of hurdles
before it can have meaningful impact in Europe
23Energy Transitions
generally have the rights to the minerals beneath their property,
and companies have been able to strike deals directly with them to
exploit reserves. In Europe, landowners typically don’t own the
minerals under their property, so energy companies need to deal
with governments, potentially limiting the speed at which shale gas
can be exploited.
Also, Europe is populated more densely and shale gas deposits may
be close to nature reserves or major population centres, requiring
additional safeguards and increasing costs. “Costs in Europe a
factor of two or higher than those in the US are being referenced,
although we don’t have much experience yet,” says Rene Peters,
director gas technology at TNO Energy in the Netherlands and
coordinator of the European Energy Research Alliance (EERA) Joint
Programme on Shale Gas.
Another obstacle may be Europe’s intensive support for renewables.
“If we continue to subsidise renewables... we basically crowd out
gas,” says Marc Oliver Bettzüge, professor and chair of energy
economics at the University of Cologne.
The good news for shale’s backers is that Europe can benefit from
the knowledge gained in the US and the declining cost of extraction
technologies. Research commissioned by BP shows that water
consumption used in shale gas extraction is less than that used in
coal extraction, for the same amount of energy. And fracking has
not been a major cause of aquifer pollution in the US, as had been
feared by some.
Fracking could even have positive environmental impacts. If CO2
were used in place of water, it could lessen the amount released
into the atmosphere. “If you put in CO2, you only get half of it
back. That is not a bad bit of sequestration,” says Peter Styles,
professor of applied and environmental geophysics at the University
of Keele.
There will, however, be a need for large-scale carbon capture and
storage if shale gas becomes a major component of Europe’s energy
mix. If we are to avoid catastrophic climate change, the world will
have to stay within a carbon budget, says Princeton’s
Socolow.
RECOMMENDATIONS
Use rigorous monitoring of well operations to enforce environmental
regulations protecting against water and land contamination.
Learn from the US and ensure industry doesn’t drill in haste.
Companies should comply with environmental regulation before
drilling starts.
Ensure industry representatives are engaged with local communities
and transparent. Industry should pay compensation to communities
affected by the extraction of shale gas and encourage citizen
science and engagement, particularly with respect to monitoring
methane leakage.
Support additional research into potentially recoverable
hydrocarbon resources in Europe and create a common methodology for
estimates across Europe.
Europe is determined to lead the world in the shift to green
energy. But rising volumes of renewables
pose a dilemma. Wind and sunshine are not always available when we
want them, or where we need them, making the task of balancing
supply and demand a formidable one.
While the contribution of wind and solar power to total energy
supply remained below 10 per cent, the issue was not as pressing.
But that is changing. Ireland, Germany, Portugal, Spain, Sweden and
the UK already generate more than 15 per cent of their power needs
from wind and solar, and Denmark has surpassed 30 per cent from
wind power alone.
In Germany the situation is acute. Billions of euros in subsidies
have prompted heavy investment in wind and solar power, and
renewables now account for 25 per cent of power generation, but on
windy days turbines in the north must be shut down or disconnected
because there is no way to get the power to southern Germany, where
it might be
THE RENEWABLE POWER DILEMMA: 18 March 2014
The real challenge of wind and solar: grid integration Renewable
energies won’t lower Europe’s carbon emissions until they are
affordable and well integrated into the energy system
25Energy Transitions
interest of cost competitiveness, Spain’s power plant operators
have developed a more integrated and efficient approach to grid
management. What’s key, says Gagné of Rolls-Royce, is making sure
the management incentives are aimed at a “total system
approach”.
The long-term prize is a common European energy market. But that
ambitious outcome will remain elusive until policy-makers find ways
of enrolling consumers in the development of a low- carbon energy
system. They need to be convinced that the cost of renewables,
which in the short term, as the German case demonstrates, can be
quite high, is justified. Policy-makers should shield the public
from the more volatile aspects of market behaviour, and speed the
implementation of a more integrated EU energy market.
Smart policies and a whole-system approach can accelerate the
transition to a decarbonised electricity system. Europe still
needs, however, to overcome the political barriers. “We need a
paradigm shift,” says the IEA’s Müller. “A shift towards thinking
about value, rather than just pushing down generation costs.”
used. And when power from wind farms or solar panels ebbs,
utilities must use polluting coal-fired power plants to meet
demand.
Part of the problem is that we do not have a full enough
understanding of the energy system in its entirety, says Martine
Gagné, Head of the Strategic Research Centre at Rolls-Royce plc.
“The whole system must be looked at in more detail. We’ve been
bringing on renewables without thinking about the system
implications.” Such a systems approach is also critical to
persuading investors that flexibility really can deliver
value.
Europe also needs to fund more objective overall analysis in order
to understand current complexities better. For example, Europe may
be underestimating how flexible its energy systems already are,
says Mark O’Malley, professor of electrical engineering at
University College Dublin, and director of Ireland’s Electricity
Research Centre. He also argues demand-side management
may be an overrated tool. “Unless you can couple heat and
electricity, which would create real volume, as the Danes are in
the process of doing, the synergies are just too small.”
Whole-system research is the only way to test such hypotheses—and
it is key to significant potential savings in infrastructure build
and operational efficiencies, O’Malley says.
One of the biggest challenges is communicating the complexities
of
renewable energy generation to consumers. Policymakers need to
convince consumers that because the value of energy in different
places will differ at different times, locational marginal pricing
will be critical if a pan- European system incorporating renewables
is to function successfully.
“Having the same price zone masks subsidies,” says Simon Müller,
energy analyst for the system integration of renewables at the
Renewable Energy Division of the International Energy Agency. “If
you put locational marginal pricing in, you immediately see
them.”
As it stands, the German government has yet to find a
cost-effective solution to integrating renewable power. “The
Energiewende [the government’s 2011 policy to transition to 100 per
cent climate friendly technologies by 2050] has deteriorated into a
cost discussion,” says Stephan Reimelt, president and CEO of GE
Energy, Germany. “Consumers are asking if we’re doing the right
thing.”
As Europe struggles to develop a systems approach to renewables
integration, it has much to learn from the US experience, as well
as from energy system (or policy) innovators within Europe, such as
Denmark, Spain and Ireland.
The US, for example, has instituted locational energy pricing
across multiple states and multiple ownership models. Denmark has
developed an interconnected energy network incorporating both heat
and power, a pioneering move which enables the efficient management
of a variable energy supply from renewable sources. And Spain
allows the developers of flexible-generation power plants to also
operate renewables installations. In the
“We’ve been bringing on renewables without thinking about the
system implications.”
RECOMMENDATIONS
Reward investment in flexible, integrated, cross-border energy
generation and transmission systems and stimulate investment in
smart technologies to improve the balance of energy demand and
supply and more efficient use of assets.
Communicate better with consumers to help them understand the
long-term value of renewables integration.
Enable consumers to benefit from sharp energy price fluctuations
prompted by a rising proportion of renewable wind and solar
power.
Encourage pricing that reflects the value of energy at a specific
location when it is delivered.
Mark O’MalleyGoran Strbac Georg Menzen
26 Energy Transitions
(From the top clockwise): Participants in the June 2013 symposium
on low-carbon cars debate technology and policy options; David
Eyton, group head of technology, BP; Karl-Friedrich Ziegahn, chief
science officer, Karlsruhe Institute of Technology, and head of
division, Natural and Built Environment; Marie C. Donnelly,
director, new and renewable sources of energy, energy efficiency
and innovation, European Commission.
Avenue des Nerviens 79, Box 22 1040 Brussels, Belgium
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