Global Energy Conversation II: Solutions to 2050

SolutionS to 2050

contents 2 Preface

8 new behavioursAlex Laskey, Opower

11 what role for biofuels?Allan Kardec Duailibe, Brazilian National Agency of Oil, Natural Gas and Biofuels

4 energy solutions to 2050 by the numbersFindings from a worldwide EIU survey on energy solutions

12 why economic growth is the new Priority for energyReg Platt, Institute for Public Policy Research

16 the case for Power storageTim Weiss and Ed Whittingham, Pembina Institute

3 introductionFrom the Economist Intelligence Unit

10 how can we use energy more efficiently?Gregory Kats, Capital E

15 the future of fossilsWim Thomas, Royal Dutch Shell

6 overcoming the energy trilemma Joan MacNaughton, World Energy Council

13 new Policies for new energy demandsJohn Norris, Federal Energy Regulatory Commission

17 the nuclear oPtion José Goldemberg, University of São Paulo

19 aPPendixSurvey results

Part ii: solutions to 2050

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the global energy conversation

Panelist articles

energy solutions to 2050 by the numbers

Panelist Quotes

online contributionsA selection of the

experts who participated in this debate have written articles for the follow-up report. These articles are highlighted by a green bar in the text.

To support the event, the Economist Intelligence Unit conducted a survey of 790 people around the world. The survey was carried out between September and October 2011 and respondents were drawn from the Americas (41%), Europe (20%), the Middle East and Africa (20%) and Asia-Pacific (19%).

Where points made by panelists during the event are relevant to articles written for the follow-up

report, these are noted in the text.

More than 1,600 people registered to watch the event live online and more

than 400 contributions were received via the event’s live feed. Where online contributions are

particularly relevant to the topic being addressed in an article, these are noted in the text.

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this report, edited by the economist intelligence unit and supported by shell, follows an event held in november 2011 that brought together energy experts based in london, washington and são Paulo for a live global conversation on the future of energy.

It invites the same group of experts who participated in the debate to explain their views on the most challenging questions that came up during their discussion, and it also highlights some of the best contributions made in the online debate that surrounded their conversation.

We would like to thank all of those who participated in the research.

If you would like to view the event, you can access it online by registering at http://live.economistconferences.co.uk

Preface


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the world faces two major energy challenges over the next 40 years. the first is to meet rapidly rising demand for energy, particularly in developing countries, by dramatically increasing supply. the second is to realise this goal while also achieving substantial reductions in carbon emissions. failure to meet the first objective will constrain economic growth. failure to meet the second will exacerbate climate change.

Research carried out for this report underlines how difficult it will be to achieve these two objectives. The latest figures show that nearly 90% of global energy comes from fossil fuels and that renewables (including hydro, solar, wind and others) still only account for a combined 8% of the total. The clear problem with this is that, while it might be possible to meet the world’s long-term energy supply challenge with this kind of energy mix, large-scale emissions reductions will not be achievable with such heavy use of fossil fuels.

To achieve both of its energy objectives, therefore, the world needs to switch to low-carbon sources of energy. According to an Economist Intelligence Unit poll of 790 business executives, however, that will be a slow process. Nearly two-thirds of respondents (65%) stated that they believe fossil fuels will still be the world’s primary energy source in 2030. If true, that will be a major source of concern for those wishing to prevent or at least limit the extent of dangerous climate change because it will see emissions continue to rise over the next couple of decades.

Against this difficult backdrop, the experts contributing to this report have been set the task of articulating their “energy solutions to 2050”. For the World Energy Council’s Joan MacNaughton (p. 6) the answer lies in a combination of innovation, partnership working between the public and private sectors and robust monitoring of impacts so that practitioners have “more reliable evidence on what works and what pitfalls to avoid”.

Alex Laskey (p. 8), president of Opower, a US firm which helps utility companies engage with their consumers to manage energy use, highlights how much energy is wasted by users and argues for the adoption of information tools that can support behaviour change and improve energy efficiency. Gregory Kats (p. 10) a clean energy advisor and investor, agrees with the need to boost energy efficiency, suggesting that “it is the largest, most cost-effective way we have of meeting energy needs and reducing carbon emissions”.

Moving on to other possible solutions, Allan Kardec Duailibe (p.11), Director of the Brazilian National Agency of Oil, Natural Gas and Biofuels, explains how Brazil has become a world leader in biofuels. Wim Thomas (p.15), Shell’s Chief Energy Advisor, argues that fossil fuels will remain a key part of the energy mix and makes the point that states can reduce emissions by switching from coal to gas and investing in carbon capture and storage. José Goldemberg (p.17), Brazil’s former secretary of state for science and technology, argues that the expected revitalisation of nuclear energy over the next few decades is now unlikely to happen in the wake of the Fukushima disaster in Japan last year and rising concerns about both the safety and cost of nuclear energy. Meanwhile, Tim Weiss and Ed Whittingham (p.16) of the Pembina Institute, a Canadian think-tank, suggest that power storage is a “key technological innovation that requires development and deployment to allow renewable energy to become the backbone of energy systems”.

On policy, Reg Platt (p.12), research fellow at the Institute for Public Policy Research, a British think-tank, argues that governments should start making low carbon energy investments “on the basis of the growth and jobs potential that these investments offer, not merely on account of which is cheapest”. Finally, John Norris (p.13), Commissioner at the Federal Energy Regulatory Commission in the US, explains that one of the biggest roles for government is to regulate energy markets more effectively by taking action to “eliminate unnecessary barriers and level the playing field for participation by different players and technologies in the market”.

As Joan McNaughton rightly points out in her article, there is no “silver bullet” for dealing with the world’s energy challenges, so on its own none of these individual ideas would be capable of meeting the world’s need for both more energy and reduced emissions. If states are to deliver on the demands being placed on them, therefore, an intelligent and pragmatic mixture of policies and investments will be required. This report helps decision-makers and other interested parties understand more about what this policy mix might look like.

introduction


international air travel increased by

over the same period

0

25

50

75

100

1990 2009

Which energy sources will allow us to increase supply and reduce carbon emissions between 2031 and 2050?

TECHNOLOGIES AND RESOURCES

BEHAVIOURS

Unless otherwise indicated, infographics depict the results of a survey of 790 people conducted by the Economist Intelligence Unit in September 2011.

ENERGy SOLUTIONS TO 2050 By THE NUmBERS

0

50

25

75

100

Solar Wind Nuclear CoalOilGas

2.5%

14%

35%44%

68%

2.4%

Source: World Bank. Source: World Bank.

think fossil fuels will be the world’s primary energy source in 2030

think that will still be the case in 2050

carbonemissionsincreased

between 1990 and 2009


are very concerned about the problem

0

25

50

75

100

POLICIES

think the world’s governments are committed to dealing

with climate change

think democracy stands in the way of climate change

Who should taKe the most resPonsibility For dealing With climate change?

NATION STATES: 41%

of people of people

While

would support reforms combating climate change if the changes had no effect on their real income

would agree that if these led to a decline in their real income of more than 5%

THE UNITED NATIONS: 20%

INDIVIDUALS: 17%

BUSINESSES: 13%OTHER/DON’T kNOw: 9%

Source: BP Statistical Review 2011. Due to rounding, the figures in this chart do not sum to 100%.

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COAL

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30%

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Until growth in energy demand can be uncoupled from economic growth, we will continue to see global energy demand rising, especially in emerging and developing countries. In the latter, a key priority will be expanding access to electricity for the 1.3bn who lack access today. As the outcome of the 17th Conference of the Parties (COP17) to the UN Framework Convention on Climate Change in Durban has shown, there remains broad commitment to global emissions reductions and indeed, 2012 has been declared the Year of Sustainable Energy for All.

The challenges are numerous. Energy must be accessible and affordable, contribute to the well-being of people and the environment, and enhance economic growth now and for the future. Policymakers must accommodate these multiple requirements while reducing the carbon intensity of energy and addressing this “trilemma of energy sustainability”.

There is no silver bullet of policy that addresses all needs simultaneously -

though carbon pricing is probably the most important single measure and

more national or regional moves

to encourage low carbon investment by valuing carbon are needed. This article addresses four key drivers of low carbon growth, applicable in both developed and developing countries.

getting the policy framework rightGovernments set the frameworks that enable markets to deliver and they also plan strategically for national or regional infrastructure needed to deliver it, and thereby keep costs lower than they would otherwise have been. It is important for governments to bear in mind that their intervention may create uncertainty and unintended consequences—stable, long-term, transparent policymaking can help to reduce this risk.

As highlighted in the 2011 Assessment by the World Energy Council (WEC) of country energy and climate policies, policy must be evidence-based and rooted in robust, independent analysis of the objectives of the policy intervention and the context in which it is made. Transparency is vital to help business and consumers to understand the trade-offs that may be involved in adopting specific policies and their broader implications.

This should also imply high standards of consultation and public engagement. This is to ensure that draft policies are subjected to rigorous and broad-based assessment, as well as giving those who will be affected by them enough notice to prepare themselves to adapt and comply.

Above all, implementation of the policy must be monitored to ensure that it is delivering as intended, including ensuring consistency across policy dossiers. Here it is vital that governments are able to balance the need to provide markets with long-term policy stability against the

necessary flexibility to adapt and change policies that may be failing.

UN mechanisms - such as Nationally Appropriate Mitigation Activities , the Technology Mechanism and the Green Climate Fund, among others – will play vital roles in assisting developing countries to adopt the cleanest technologies and where possible to “leap-frog” to lower-tech solutions.

the importance of supporting innovationPolicy needs to be tailored to support the whole innovation chain, from education in mathematics, science and engineering in schools to the competitive environment for businesses. This includes supporting invention through funding support for basic research in universities and the encouragement of international collaboration; supporting collaborative research by encouraging links between research organisations and the private sector to take inventions out of the lab and turn them into products and services; and supporting competition through protection of Intellectual Property Rights

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overcoming the energy trilemmaJoan macnaughton, executive chair of the 2011 energy Policies assessment report from the world energy council, reviews the options for driving low carbon growth.

gas is the dominant direction right now because of lower prices and the emerging shale gas industry, but in the long term we’re going to see more intermittent resources and a need for intelligent grid.

John NorrisCommissionerFederal Energy Regulatory Commission

we shouldn’t bet all our chips on one source of energy because we don’t know which one will be the most effective going forward. in the uK, we’re investing in a diverse energy supply but i’m concerned that there has been a drop in the funding of carbon capture and storage.

Reg PlattResearch FellowIPPR

2.

, executive chair of the 2011 energy Policies assessment report, world energy council


(IPR), and through putting in place the right regulatory frameworks to drive product development and lower costs.

IPR is important because it enables companies to place a value on innovation. This is critical not just for companies, but for emerging and developing economies, as they build knowledge-driven, high value-added economies and industries. It is also critical to achieving climate change and energy security goals, which cannot be accomplished without massive private-sector engagement and continuing innovation.

For example, the WEC policy assessment report highlighted the role of energy efficiency programmes, including labelling schemes such as the US Energy Star programme. This voluntary labelling scheme for household products and commercial building equipment is widely considered to be a success. Not only does it deliver substantial energy savings and emissions reductions, but it is also a considerable driving force behind important technological innovations, such as efficient fluorescent lighting, power management systems for office equipment, and low standby energy use.

enabling transformational technologiesInnovation can help us deliver both lower emissions and broader access, specifically via two transformational technologies: carbon capture and storage (CCS) and smart grid technology.

The World Energy Outlook 2011 of the International Energy Agency (IEA) places heavy reliance on CCS, which it estimates could deliver 18% of the emissions savings needed to stay within the 450ppm atmospheric limit. The IEA’s CCS Roadmap projects that 3,400 CCS plants will be needed globally by 2050 and expects that, by that time, developing countries will account for 64% of all captured carbon dioxide emissions. If these nations are not encouraged and assisted to adopt the cleanest technologies at this crucial stage of their development, they will “lock-in” sources of carbon dioxide emissions for

decades to come. To avoid this requires developing supportive policy frameworks and providing capital funding support as well as ongoing support through feed-in tariffs or similar measures.

Good energy policy should also enhance and increase mechanisms that incentivise energy efficiency in the power generation, transmission, and distribution context. In particular, regulators should consider the substantial capabilities of smart-grid technologies for achieving these objectives.

Smart grids help to manage electricity supply reliably and eff iciently. Without them we will neither be able to maximise the use of renewable power nor achieve effective demand management. Smart grids can also support action to reduce CO2 emissions. They help to manage intermittency and can facilitate connection in remote areas and for smaller generation sources. Through their enhanced data and information flows to end-users and network operators, they also offer greater flexibility in balancing electricity demand and supply – maximising eff iciency in dispatching generation, and minimising network losses.

When applied together with smart generation, electricity interconnectors, back-up capacity, storage options and demand-side response, smart grids can open up new possibilities in managing power supply and demand.

imperative to engage businessThese solutions will only be delivered through unprecedented levels of public-private partnership, based on clear commitments, transparent policies, agreed outcomes and, crucially, efficient and effective deployment of financial resources.

This means engaging business in the policy discussion to gather feedback and benchmark against global policy best practice. It also means collaborating to deliver, using public-private partnerships (PPPs) to attract private investment in major public infrastructure projects. PPPs offer the benefits of flexibility in securing diverse sources of up-front finance and funding, and help mitigate risk through sharing it between those partners best able to bear it. PPPs help most where projects are hard to finance on purely commercial terms, for example where technology is deployed for the first time in a country (especially where it can support capacity building), or where a government faces the challenge of simultaneously developing infrastructure, policy frameworks and supply chains.

The important thing is that governments should be active participants, co-funding projects, ensuring that they are aligned with national development priorities and implementation plans and encouraging early dialogue with private-sector partners.

any new energy technology needs a few years, sometimes decades, before it can take off and reach a substantial market share.

Wim ThomasChief Energy AdvisorRoyal Dutch Shell

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As we discuss the world in 2050, it is important to remember where we will see the biggest population and demographic changes. Policies must therefore be designed with the appropriate degrees of flexibility taking into consideration some insights about population, water, and other resources that are required to secure universal access to energy.

Lawrence Jones, Alstom Grid Inc, UNITED STATES


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Most people spend less time thinking about their energy use every year than it will take you to read this article – about six minutes for an average consumer in the industrialised world.1

Those six minutes largely go towards checking and paying utility bills. As a result, consumers are completely in the dark about their inefficient energy use, leading to massive amounts being wasted every year. According to a recent McKinsey and Company study, this waste amounts to an estimated £260bn (or US$400bn) a year globally, which equates to enough energy to power more than 330m homes. McKinsey also estimated that the US alone could reduce energy consumption by 23% and save families and businesses more than £130bn (or US$260bn) on their energy bills in the next ten years through increased energy efficiency.2

There is an immediate, cost-effective solution to this wastefulness: behaviour change. It can not only have a drastic impact on our environment, but can also accelerate the adoption of other impactful energy improvements such as deriving more power from renewable resources or making structural changes to peoples’ homes. Still, behaviour

change is often overlooked for several reasons.

Energy is relatively inexpensive. In the US, only 1.7% of an average household income is spent on energy bills. Most consumers aren’t motivated to make changes to save enough for an extra fast-food meal once a month. Even in the environmentally progressive US cities of Berkeley, California and Boulder, Colorado, a recent study found that only 0.18% and 0.64% of the population, respectively, participated in available energy efficiency programmes.3

Energy data generally aren’t interesting. Research shows that 90% of people say saving energy is important to them4, yet it’s a subject that most people spend very little time thinking about. Presenting an overwhelming amount of numbers and charts on energy usage won’t inspire change.

Energy is confusing and ambiguous. Most average consumers don’t know what a kilowatt hour (or therm) is, such that when they receive their bill, they don’t have the context to determine whether using 200 kwh per month is a high or low amount.

There are a lot of misconceptions about using energy. For example, research also shows that 81% of people leave their heating or cooling system running when they aren’t at home. They believe it takes more energy to turn the systems off and power them on again than it does to leave the systems running for an extended period of time, which simply isn’t true for most households. Similarly, 48% leave their lights on, thinking that the same phenomenon applies there as well.5

So the question is, how do we get consumers to think more about their energy usage and motivate them to make changes in their everyday lives?

In 2005 the world-renowned behavioural economist Dr Robert Cialdini, who is also the author of Influence, set out to answer this question. Dr Cialdini and his students at San Diego State University ran field tests during a hot summer in California, going door to door and putting notices on households’ door handles. The households received notices with one of four different messages printed on them. One group of homes received a notice that said: “Turn off your AC [air conditioning system] and turn on a fan

new behavioursbehaviour change is an immediate and cost-effective solution to inefficient energy use, argues alex laskey, president of opower.

As mentioned earlier, there are no single “silver bullet” instruments. But there are opportunities to learn from “best practice” policy. In order to do so, we need more rigorous evaluations of energy-policy instruments to bring to light more reliable evidence on what works and what pitfalls to avoid. It is necessary to translate global findings about successful policy instruments into local arrangements and settings that work. This translation works best as a

dialogue between international energy-policy experts, industry executives, and stakeholders and policymakers from relevant jurisdictions. The 2012 WEC Assessment of countries’ energy and climate policies will aim to contribute further to the better understanding of what constitutes successful policy and to deepen the policy dialogue between business and policymakers.

author biograPhy

Joan MacNaughton is Executive Chair of the 2011 Energy Policies Assessment Report from the World Energy Council. She is an influential figure in the energy and climate policy debate and holds a variety of UK, EU and international roles.


– you can save money.” Another group of homes received a notice that said: “Turn off your AC and turn on a fan – you can save the environment.” The third group of homes received a notice that said: “Turn off your AC and turn on a fan – it’s your civic duty.”

After three weeks, Dr Cialdini and his team analysed the homes’ energy consumption and found there was zero impact on any of the three groups’ consumption from receiving these notices. However, there was a fourth group. Their notice said: “4 in 10 of your neighbours turned off their AC and turned on a fan.” Homes that received this message used on average 6% less electricity than the control group.

This discovery of the impact of social norms was a catalyst for the creation of Opower. Since then, our work – now with more than 60 utilities, including nine of the ten largest in the US, and 10m homes across the country and in the UK – has led us to have a much deeper understanding of the mechanisms needed to harness the power of behaviour change to have a profound impact on energy usage, and therefore, the environment.

As Dr Cialdini’s study identified, normative comparisons (like the fourth example above) work well, as do other tools such as goal setting, usage ranking, and historical usage comparisons that tap into humans’ innate competitive nature. But it is the insights and actionable recommendations – not just the data – that must be presented.

While this is a relatively new concept in the utility industry, the general concept is not completely foreign. Personal finance tools like Mint.com provide users with reports on their spending and investments that are beyond the numbers. The service has evolved into personalised insights and recommendations on services and steps that people can take to save money.

At Opower, we have first-hand experience of the results this type of energy reporting can achieve. In the mid-western state of Minnesota, we work with ten regional utilities, and our home energy efficiency reports have saved individual customers more than £4m (or US$6m) on their energy bills and more than 110 gigawatts of electricity since 2009.

Providing contextualised and actionable energy usage information stimulates behaviour change, but must be coupled with continuous engagement strategies. Similarly to how speed limit notices are strategically placed every few miles on the roadway, the best way to sustain changes in energy behaviour is to use regular and subtle feedback loops. The new smart metering technologies being deployed now allow utilities the opportunity to prompt action when it counts; not at the end of the billing cycle, but in real time. Like the low balance account notice you might receive from your bank or the over use alerts you might receive from your

mobile service provider, utilities can now alert a customer if the home is on track for an irregularly high charge for that billing period and offer tips to avoid that outcome.

Energy-related behaviour change is a complex challenge and a global problem that creates an opportunity to activate energy users of all ages, interests and demographics by delivering the right messages at the right time across all communication channels. Social media are a particularly interesting medium to harness the power of networking and stimulate a global dialogue about energy consumption. While people spend six minutes a year thinking about their energy use, they spend one in every six minutes online accessing social media to share, comment, and engage with others. If even seconds of that minute were spent on energy-related topics, the impact would be tremendous.

As the international community continues to grapple with sustainability, energy security and concerns over global warming, enabling and empowering consumers to make simple behavioural changes can result in a windfall of savings. The impact on the economy and the environment is truly exciting – now, and for future generations to come.

1 Accenture. “ Engaging the New Energy Consumer.” 2010

2 McKinsey & Company. “Unlocking Energy Efficiency in the US Economy.” July 2009

3 Bailey, Mark and Johnson, Claire B. “Innovative Energy Efficiency Financing Approaches.” 1 June 2009

4 Research conducted by Opower. Summer 20105 Research conducted by Opower. Summer 2010

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The issue of inefficient energy use is a critical one in developing countries, particularly where grid supplies are intermittent, unreliable and often very expensive. The answer requires a mixture of consumer behavioural change, improvement of the quality of grid supply and a more developed off-grid response, particularly for the poorest and most isolated consumers.

Neil JefferyRenewable WorldUNITED KINGDOM

author biograPhyAlex Laskey is president of Opower and responsible for engaging utility and government partners with Opower’s purpose and products. He was invited to the White House to meet with President Obama to discuss innovation and job creation in the green economy.


How big a role do you think energy efficiency can play in helping the world reduce carbon emissions and meet the growing demand for energy?Energy efficiency is the largest, most cost-effective way we have of meeting energy needs and reducing carbon emissions. It decarbonises the energy system in that it allows us to switch to lower energy intensity and reduce the amount of waste. The explosion in energy efficiency funded by venture capital, in green building, smart grid and renewables technologies means that we can cut energy use/CO2 by half cost-effectively today in most buildings.

Many questions have been raised about the cost-effectiveness and merit of investing in energy efficiency. Corporations, cities and states that have adopted energy-efficiency funding strategies have had a positive return from a cost-effectiveness and job-creation perspective. For example, California’s sustained energy-efficiency strategy over the last three

decades has allowed households to save US$56bn in energy over

1972-2006, thus reducing the state’s energy import dependence.

Where are we making the most progress in being more efficient and which areas do we need to pay most attention to?The industry and owner-occupied buildings tend to be more energy efficient but we should be doing a lot more in terms of cogeneration and on-site generation to build energy-efficient buildings. We need to design our buildings better by harvesting daylight and reducing the artificial amount of lighting, through an integrated design approach. Energy efficiency provides building owners with the opportunity to lower operating costs, increase occupancy, enhance building quality and increase financial returns. The very rapid growth of green design standards that address health as well as energy and water are making green energy an important branding issue and a differentiation strategy for corporations, cities and universities.

What are the obstacles to fully realising the benefits of energy efficiency?We need to be a lot more transparent on the cost of energy. An individual who rents space and doesn’t pay the energy bill has no incentive in investing in energy efficiency. There are currently 15 to 20 American states that have no energy efficiency requirements, whereas we need to adopt standards for buildings and meter energy use more effectively. We are switching more to renewables – and their limits in terms of reliability and availability can be offset by

intelligent building monitoring and management systems such as Tendril and Building IQ.

Which measures, if any, should countries adopt to encourage energy efficiency?Countries should adopt deeper energy-efficiency standards, both for new constructions and retrofits. Companies should harness the power of social media by going through social media contacts and sharing information about energy use. Banks should structure large energy-efficiency funding that enables large-scale funding. Increasing energy-efficiency financing represents one of the largest and most important opportunities not only to meet our energy needs and reduce carbon emissions, but also to expand economic growth and job creation.

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what has been really neglected by policymakers is the supply side of energy efficiency in the commercial sector. you need mandatory standards to drive progress in this area.

Joan MacNaughtonExecutive Chair of the 2011 Energy Policies Assessment ReportWorld Energy Council

how can we use energy more efficiently?gregory Kats, President of capital e, answers questions about energy efficiency improvements and explains why countries should adopt deeper energy standards.

Demand-side management is key to increasing energy efficiency. Clear incentives and policy decisions towards higher effciency, will help bring about the convergence of introducing clean technologies and reducing waste. This is true in the residential as well as the commercial, services and transport sector, which will be the main areas of energy

growth.

Mourad Belguedj, World Bank, UNITED STATES

author biograPhyGregory Kats is President of Capital E, a national clean energy advisory firm, and is also Venture Partner at Good Energies, a billion-dollar global clean energy investor, where he leads investments in energy efficiency and high performance buildings.

The world faces a double challenge of guaranteeing energy supply to its population and providing a clean and sustainable environment for generations to come. To reach these objectives, the world’s energy mix must be diversified. Countries such as Brazil have applied technology to biofuels to address this challenge.

In the 1970’s, after the first oil price shock, Brazil strategically invested not only in exploring oil in the deep sea water, but also in clean energies. After three decades, the pre-salt oil reservoirs turned the country into a major oil exporter. However, investments

in hydraulic energy and biofuels have positioned Brazil as a reference

in clean energy. In the biofuels

area, sugarcane mills have been turned into bioenergy complexes, producing ethanol, sugar, electricity, carbon credits and, in some cases, biodiesel and green diesel fuel.

How did Brazil reach this point? The answer is an agenda that combines economic, energy, social, environment and technology policies, along with regulatory transparency and political leadership. According to Empresa de Planejamento Energético – EPE (a state-controlled enterprise that subsidises the planning of the energy sector), 43.9% of Brazilian domestic energy is generated from renewables, compared with the world and OECD average of respectively 14% and 6%. Currently, according to EPE, biomass-derived electrical energy accounts for 4.7% of electricity consumed in the country.

In this context, an important innovation in Brazil was the flex fuel – or dual fuel – vehicle in 2003, which is capable of running on ethanol, gasoline or

any mixture of the two fuels in any proportion. This innovation, which

let the consumer rather than

the state decide which type of fuel the car consumes, has boosted ethanol consumption in Brazil enough to balance the domestic consumption of gasoline and ethanol. In 2009 Brazilian vehicles consumed more ethanol than gasoline, and it is estimated that more than 50% of the entire automobile fleet in Brazil is made up of flex fuel vehicles.

Two significant results of the development of the biofuel industry in Brazil must be emphasised. First, the significant reduction of the country’s dependency on foreign oil. Ethanol production has saved over US$60bn in the foreign trade balance, without considering the earnings from ethanol exports. Second, the decrease of greenhouse gas emissions (specifically CO2), since a great part of the carbon emitted when ethanol is burned is captured from the atmosphere during sugarcane photosynthesis.

Biofuels (ethanol, biodiesel and biomass) have the competitive advantage of being produced in various regions in Brazil, meeting local needs and reducing transport and distribution costs. These strengths are key to a country of continental dimensions like Brazil. But although it is possible to grow sugarcane and oleaginous plants almost anywhere in Brazil, the Ecological Zoning Law approved by the National Congress prohibits agricultural and industry-related activities in protected areas such as forests and marshlands. Meeting the demand for ethanol by 2017 will require the use of only 2.56% of Brazil’s arable land.

The investment in research and development of new technologies is another important issue for biofuel policies in Brazil, which include the


what role for biofuels?biofuels have been a key component to diversify brazil’s energy mix, argues allan Kardec duailibe, director of the brazilian national agency of oil, natural gas and biofuels.

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brazil turned to biofuels to reduce its dependence on oil but it will need to diversify its energy supply further to meet growing energy demand.

the productivity of sugar cane is much higher than that of corn and wheat, and countries should encourage mandates to blend ethanol into gasoline.

brazil lacks an adequate strategy to address structural factors that have reduced the competitiveness of ethanol.

Marcos Sawaya Jank, President and Chief Executive Officer, UNICA

Affordable and sustainable energy solutions for emerging markets hold the key to elevating the standard of living for billions. This can reduce their dependence on fossil fuel imports, provide greater economic independence, and show a path to the developed world on how to move towards a sustainable

energy infrastructure.

Prof Deepak Divan, Georgia Institute of Technology, UNITED STATES

training of professionals working in the biofuel industry. The Science Growth Acceleration Programme (PAC) launched by the federal government has a budget of around US$22bn funded by public and private resources. The objective is to invest more than 1.4% of the country’s GDP in R&D, compared with current investment of 1.1% of GDP.

Biofuels have been a key component to diversify Brazil’s energy mix, and the country is widely recognised as a biofuel industry leader. However, Brazilian biofuel companies have suffered in 2011 from poor margins owing to rising prices for corn and sugarcane and will need to scale back their growth ambitions for the coming years.


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Last year closed on the back of two unusually optimistic pieces of news: first, the surprising, albeit limited, progress made at the international climate negotiations in Durban; second, the growth of clean energy investment beyond US$1trn worldwide. The low carbon transition has stepped up a gear, and with it the international race to develop and deploy low-carbon technologies is well and truly under way. Given the perilous state of the global economy, this timely shift provides huge opportunities for jobs and growth.

Clean energy sectors are already growing fast. In November 2011 Bloomberg New Energy Finance1 recorded the trillionth dollar of investment by governments,

corporate and private investors into renewable energy, energy efficiency

and smart energy technologies

since its records started in 2004. Annual clean energy investment has risen nearly five-fold, from US$52bn in 2004 to US$243bn in 2010, a compound annual growth rate of 29%. However, as recent experiences in the solar sector show, countries wishing to benefit from these growth industries will need to be both strategic and bullish. This means identifying sectors where they have a comparative advantage and entering these sectors with bold ambitions.

In recent years, as governments worldwide have piled support into their domestic solar industries, the price of panels has plummeted. The price of polysilicon, a core material, fell by 63% in 2011. While such transformational cost reductions are welcome, they mask how over, supply of panels has caused havoc in the sector - many companies have gone bust as a result. The most high-profile of these was Solyndra, whose bankruptcy involved defaulting on a US$528m loan from the US government2.

At the end of 2011 a number of US-based solar firms lodged a complaint with the US International Trade Commission (ITC) alleging that China was driving down prices by subsidising its solar exports and dumping panels on the US market (i.e. selling at prices below the costs of making and marketing panels) . In December the ITC found a “reasonable

indication that a US industry is materially injured” by the import of solar panels from China “that are allegedly subsidised and sold in the United States at less than fair value”3. The vote clears the way for additional steps by the commission and the Commerce Department that could result in heavy tariffs on Chinese imports4. The Ministry of Commerce in China has launched a retaliatory investigation into whether American subsidies and other policies in the solar, wind and hydroelectric sectors have unfairly hurt the industrial development of China’s renewable energy industries.

Putting potential breaches of World Trade Organisation (WTO) rules to one side, these events show the significance with which clean energy markets are increasingly viewed and how hard

An international deal could provide a global economic stimulus by providing green business with a clear commitment to emission reduction for the foreseeable future, helping boost the green economy.

Juliet Davenport, Good Energy, UNITED KINGDOM

Re Durban, the danger is that policy is moving too slowly. We have political consensus on a 2° temp rise (above pre-industrial levels) limit but continue to move further along a 4-6° degree pathway.

Brian Ó Gallachóir, University College Cork, IRELAND

why economic growth is the new Priority for energyreg Platt, research fellow at the institute for Public Policy research (iPPr), explains why governments that adopt ambitious and strategic energy policies with growth at their heart are likely to end up on top

author biograPhyAllan Kardec Duailibe is currently Director of the Brazilian National Agency of Oil, Natural Gas and Biofuels. He is a researcher and Professor of Electrical Engineering at the Federal University of Maranhão (UFMA).


countries are going to fight for the spoils. However, governments that are bound by outdated views of the energy sector may fail to capitalise on the opportunities.

Energy policy is regularly seen through the prism of a “trilemma” - that is, how to balance the needs for an energy system that is at once low-cost, low-carbon and secure. A new approach to this problem is required. Governments should make investments to create a low-carbon and secure energy system on the basis of the growth and jobs potential that these investments offer, not merely on account of which is the cheapest.

Forthcoming research from the IPPR will argue the case for countries like the UK to develop modern sectoral industrial policies. These policies should include the public and private sectors working together to identify opportunities in sectors where the UK has a comparative advantage and overcoming barriers to development. The report argues that, in the new global economy, characterised by the rise of Asia and decline of a single paradigm to organise our economic thinking, an activist government is

essential for returning the economy to a period of sustained growth.

What this means for energy policy is that governments, working with private-sector partners, must first identify sectors in which their country is likely to have a comparative advantage and then put in place the appropriate support. This could include investing in skills, training and R&D, providing tax credits and low-interest loans to support start-ups and the commercialisation and market breakthrough of new technologies. Comparative advantage will arise from a mixture of factors, including resource availability and the nature of the technologies. It will vary between countries - hence, while offshore wind is likely to be a key opportunity for the UK, concentrated solar power may be more appropriate in Spain. China with its cheap labour force has clear advantages in manufacturing but for emerging technologies which require high level engineering and scientific expertise, such as carbon capture and storage, the UK may be better placed. A complementary strategy for the UK would also be to play to its current strengths in

carbon finance, services and project management.

Prospects for the global economy in 2012 look bleak, but clean energy offers countries worldwide major opportunities. Not all countries can be winners from clean energy, but governments that adopt ambitious and strategic policies with growth at their heart are likely to end up on top.

1 http://bnef.com/PressReleases/view/1762 http://www.nytimes.com/2011/11/25/opinion/the-

solyndra-mess.html3 http://www.usitc.gov/press_room/news_

release/2011/er1202jj1.htm4 http://www.nytimes.com/2011/11/26/business/

energy-environment/china-looking-into-us-policies-in-renewable-energy-trade.html?_r=1&scp=3&sq=solarworld&st=cse

The energy industry is facing unprecedented and rapid change. From a US and international perspective, two of the most marked challenges that are driving this change stem from the need to expand our energy supply and the need to grapple with climate change. Meeting these challenges will increase costs to consumers as we look to replace cheap but carbon-intensive energy sources and also modernise ageing infrastructure that was designed to transport and utilise these old energy sources, all within the context

of meeting the energy needs for more people in the world than ever before.

And so a key question becomes, how do we spend money wisely? How do we ensure that increases in energy costs are no more than necessary to establish a clean and reliable supply of energy?

In an industry as capital-intensive as energy, governments cannot meet these challenges alone. This is particularly true in the current context of spiralling government deficits and mounting

new Policies for new energy demandsgovernment regulators and private investors should work together to establish a clean and reliable supply of energy, argues commissioner John norris of the federal energy regulatory commission

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author biograPhyReg Platt is a research fellow at the Institute for Public Policy Research (IPPR). He has responsibility for developing policy positions across a wide range of domestic climate and energy issues including micro-renewables, energy efficiency, behaviour change, community-led initiatives, clean tech and corporate sustainability.

carbon has costs. to allow the markets to work you need carbon pricing and companies should use it internally to make more rational investment decisions in energy.Gregory KatsPresident, Capital EVenture Partner, Good Energies


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calls for fiscal discipline. While government action will be one driver

of the coming change in our energy industry, private investors, market participants and technology developers will also need to answer the call.

Any basis for action must begin by addressing climate change. The science surrounding climate change is not going to suddenly change, nor will the issue of climate change suddenly solve itself. The US and other governments must address this issue head-on, because market action alone will not be able to stop or reverse climate change. Once governments establish the ground rules that require everyone to pay the full environmental cost of their energy usage, markets can be relied upon to make the extraordinary, long-term investments needed to reduce carbon emissions from the energy sector.

In the US, the lack of a national climate change policy has created a great

deal of uncertainty and inefficiency, which ultimately leads to higher costs for consumers. In some instances, policy uncertainty could lead entities to continue running older and less efficient plants until they are certain cleaner and more efficient generators will be required. While this could be cheaper in the short term and delay the investment in new infrastructure, in the end it will result in dirtier and less efficient units running longer at a cost both to consumers and to human health. While some are waiting until a national policy is established before acting to address the issue, other industry leaders are changing their practices in anticipation that Congress will eventually act to establish clean energy standards and a national climate change policy. In the interim, the only clear requirements are various state renewable energy standards and climate change initiatives. This has made states, rather than the federal government, a major driver of national energy policy. While states should be applauded for their leadership, the different rules that each state develops prevent markets from investing in efficient and cost-effective solutions that only a national policy on climate change can support.

While firm government action is needed to enable the markets to develop solutions to climate change, the appropriate role for government in expanding energy supply may be more subtle, but no less important. Here, government action is needed to eliminate unnecessary barriers and level the playing field for participation by different players and technologies in the market.

In the US, the Federal Energy Regulatory Commission is doing its part to remove barriers and ensure a level playing field in the electricity and natural gas wholesale markets and transmission networks that it regulates. On the network side, we continually work to remove barriers

to infrastructure development and ensure open access to the networks. On the markets side, we regularly review the rules and regulations that govern participation to ensure robust competition. For example, electricity market rules were largely designed with traditional thermal and hydroelectric generation units in mind. These rules may need to be re-examined in order to accommodate new market entry from intermittent renewable resources, electric storage providers, energy efficiency and demand resources, among others, that will all be needed to help expand energy supply and replace ageing infrastructure. Simply put, we need to modernise market rules to keep pace with the new realities of our expanding energy supply.

It is important to emphasise that efforts to expand energy supply will be all the more difficult in the absence of adequate action to address climate change. Clearly it is possible to expand energy supply in a way that is at odds with addressing climate change – in fact, it is happening every day. The investments needed to expand energy supply typically involve long-lived and capital-intensive assets that cannot be changed or replaced overnight. We need to make

It is absolutely vital that governments have a clear policy on energy strategy and this is communicated in a way that allows industry and capital to respond favourably and in a way that does not prejudice commitments already made. We recognise we are living in a time of limited government funding and concerns for the cost of energy, but capital is scarce and is subject to global competition. Those governments which do not create a workable policy framework that recognises this will see their energy infrastructure programme flounder.

Michelle Davies, Eversheds, UNITED KINGDOM

An important requirement for policies to have the desired effect is for their actions to have “tlc” - transparency, longevity and certainty/consistency. It makes it very hard for businesses to invest when policies change relatively frequently - and that’s happening or has happened recently in a number of countries.

David Elmes, Warwick Business School, UNITED KINGDOM


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What role do you see for fossil fuels in the energy mix in 2050?Fossil fuels will remain a very important part of the energy mix. Shell’s Blueprint scenario predicts that by 2050 renewables will account for 30% of the energy mix and fossil fuels 60%. The reason that fossil fuels will remain dominant is that the developing world needs energy to fuel its rapid economic growth, and fossil fuels are available now, whereas it takes decades to build new infrastructure for renewables at scale.

Of course, people will ask why we can’t switch to renewables even faster. Empirical evidence has shown that it takes about three decades for new technologies such as wind or solar to reach 1% of market share. That’s the level when government can stop subsidising them because it means that renewables have become competitive with the rest of the energy industry. It then takes another three decades before these technologies reach their full potential, that is say, 10% or 20% of the market share.

This really underlines the point that there’s a very long lead time for these types of investment. The decisions we make now will determine the energy

systems used by our children and grandchildren. That means if we truly want to move to a low-carbon energy system, we should make the decision now and not postpone it for a couple of years.

Do you think governments are prepared to invest in the expensive infrastructure required for a cleaner energy system?We need to distinguish what’s desirable and doable. You may desire to switch very fast to a low-carbon system but how much can you afford to accelerate that process? At the moment, it’s very difficult for countries with budget deficits to give a stronger stimulus for investment in renewables.

Is there a strong economic argument for retaining fossil fuels in the energy mix over the next 40 years? Are we sacrificing environmental goals for economic benefit?Not necessarily, we need to be pragmatic. Switching from coal to gas for example is very affordable, and reduces carbon emissions at the same time but a solution on carbon capture and sequestration is also needed in the near future. In the meantime, we still have to build wind and solar parks, with enough incentive for the industry to grow, but at a measured pace so that it doesn’t

overheat the market. So there’s a balance we need to play there.

Are energy industries investing enough in carbon capture and storage (CCS) technologies to make fossil fuels cleaner?Such technologies are very expensive to implement, so we need to learn more about how to make them cost-effective. How much as a company can you afford to spend your shareholders’ money on that investment for the greater good? We need public-private partnerships to make it happen. So far, there are precious few CCS projects around the world, and we will need more of these to gain experience and bring costs down before moving to a larger scale.

Will a transition to gas enable us to reduce carbon emissions quickly enough?It’s part of the solution. Gas is

the future of fossilswim thomas, chief energy advisor at shell, answers questions about fossil fuels and investment in a cleaner energy mix

author biograPhyCommissioner John Norris was nominated by President Barack Obama to the Federal Energy Regulatory Commission and confirmed by the US Senate for a term expiring in June 2012. Mr Norris, a lawyer, has years of experience in energy policy and regulatory affairs.

Even if oil spikes, carbon emissions from coal in the US, China and India must be addressed.

Jud Virden, Pacific Northwest National Laboratory, JAPAN

sure these investments are done right – the first time.

The US Congress needs to establish a national energy policy, clearly setting out the requirements that the energy industry must meet. Unfortunately, this does not seem likely in the foreseeable future. As a result, even without a clear national energy policy, government regulators must

continue to act to level the playing field to allow a greater diversity of resources to participate in energy markets. Once the playing field is more level and barriers are mitigated, the market can begin to efficiently allocate the capital that will be necessary to address the unprecedented challenges facing today’s industry. Private investment will be key to meeting these challenges.


Aiming to generate one-fifth of our electricity demand from renewable energy may have seemed impossible a decade ago — now it’s becoming the norm in North America. With almost half of the US states and Canadian provinces setting targets of at least 20% of their electricity coming from renewable resources by the year 2020, North America has joined the renewable energy revolution.

As long as renewable energy technologies were marginal players, the variability of their output was a manageable issue. However, as clean energy targets increase, this variability will start to pose more significant challenges for system operators and regulatory bodies more familiar with traditional sources of power, such as coal, natural gas and nuclear. Left unaddressed, variable output technologies like wind and solar will start to encounter barriers to high levels of market penetration.

Fewer and fewer technical challenges remain as obstacles to reaching renewable energy targets in North America and Europe. With experience and changes to the operating framework, electricity system operators in countries like Scotland and Denmark — which have remarkable targets of 100% renewables — have found that they can integrate

more variable output supply than they originally thought possible.

the case for power storageLarge-scale power storage is widely accepted as one key technological innovation that requires development and deployment to allow renewable energy to become the backbone of power systems. In many cases, current renewable energy targets require very little change to the overall system. Modest increases in targets will at first require only minor upgrades to transmission, smart grid investments and additional peaking power, while moving closer to a 100% renewable grid will require large-scale energy storage.

Numerous technologies exist to store electricity, including pumped hydro, compressed air, fuel cells and simply batteries, some of which are already in commercial operations around the world. In addition to improving technical integration, the ability to store large volumes of electricity generated from the wind, sun, tides and other variable output sources can also improve the economics. Storage systems can enable proponents or system operators to choose the timing, and therefore the price, of feeding renewable power into the grid. While it depends significantly on the local electricity market structure,

Alberta Innovates, a Canadian provincial government research arm, recently found that storing wind power generated at off-peak times can improve the economics of these wind projects by as much as 42%. Storage abilities will also increase and improve power quality and reliability, potentially reducing transmission requirements as well as peaking costs.

what’s still to comeMany questions about power storage remain unanswered, including which technologies are most appropriate in which markets, what scale of systems are optimal for different electricity supply systems, and what policies

Among all energy resources, solar energy is the most abundant one and compared to the rate at which all energy is used on this planet the rate at which solar energy is intercepted by the earth is about 10,000 times higher. There is a whole family of solar technologies which can deliver heat, cooling, electricity, lighting, and fuels for a host of applications.

Arnulf Jäger-Waldau, Institute for Energy and Transport, ITALY

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the case for Power storagelarge-scale power storage will be a key driver of the renewables revolution, argue tim weiss and ed whittingham from the Pembina institute

available, whereas CCS will take at least another ten years to take off on a large scale. But we will need to invest in other things such as energy efficiency and behavioural change as well.

Is there any role for energy producers to support people in changing their behaviour around energy?A very broad group of people have to

get involved—governments, companies, people—to change behaviours. I see a great role for built-in solutions in city design. About half of the world population now lives in cities, and many big cities will need to be built in the future. I think people will get on board with high-efficiency homes, a clever public transport system and so on because they’re more convenient.

author biograPhyWim Thomas is Chief Energy Advisor at Shell and heads the Energy Analysis Team in Shell’s Global Scenario Group, which is part of the Corporate Strategy Department. He and his team are responsible for worldwide energy analyses, long-term global energy scenarios, and advise Shell companies on a wide range of energy issues.


will help push these technologies to wide-spread commercialisation.

What is clear, however, is that to move storage technologies beyond their

current relatively limited levels of market penetration, some form of government support is required. This support — which is likely to be focused on technology demonstration and commercialisation — will still take years to result in significantly improved markets for the integration of renewables.

That said, waiting for these technologies should not be a reason to slow current development of clean energy. Many electricity grids can already accommodate additional renewable power using existing load-balancing measures, and often much more than originally expected, as shown by the Western Danish system operator

ELTRA. According to ELTRA’s chairman when presenting their 2003 annual report:

“[We] said that the electricity system could not function if wind power increased above 500 MW. Now we are handling almost five times as much. And I would like to tell the Government that we are ready to handle even more, but it requires that we are allowed to use the right [policy] tools to manage the system.”

canada’s roleThe storage technologies that will come to lead will depend significantly on local market structure. As a Canada-based think-tank, the Pembina Institute believes that Canada has an opportunity to play a leading global role given its expertise in key storage technologies including fuel cells, hydro-power (pumped storage), as well as drilling and geology (compressed air storage). Just as Canada currently stores natural gas for seasonal demand variations, storing electricity will become increasingly important for supply variations.

The Canadian government has taken some initial steps to foster this development through its Clean Energy Fund that has recently given support to individual electricity storage projects, such as Electrovaya’s demonstration project with automotive-scale lithium ion batteries, and New Brunswick Power’s research on load control in four Maritime communities.

However, there is still a need to move this development into widespread adoption.

Building on lessons from Canada’s Clean Energy Fund investments and the Canadian government’s success in catalysing wind energy through its production incentives, strategic investments in energy storage can help build Canada’s participation in the global clean energy economy, and provide federal support for all Canadian provinces toward achieving Canada’s goal of generating 90% of its electricity from non-emitting sources by 2020. Overall, the Pembina Institute thinks that Canada is well positioned to lead this “big idea” and to foster the next phase of the renewable energy revolution that is already underway.

There are currently 443 nuclear reactors operating around the world, providing approximately 15% of the world’s electricity supply. The great majority of these reactors were installed in OECD countries 30-40 years ago to improve energy security by reducing or eliminating the need for natural

gas or other fossil fuel imports used for electricity generation. There has been talk of a renaissance of nuclear power as a cost-effective means of decarbonising energy systems. However, a reconsideration of risks in the light of the Fukushima accident in Japan last year, combined with the rising costs

of nuclear reactors and the increasing attractiveness of alternative energy sources for developing countries, means that the resurgence of nuclear will be limited.

the possibility of a nuclear renaissance The declining cost of oil and gas and

authors’ biograPhiesDr Tim Weiss is a professional engineer and the director of renewable energy and efficiency policy at the Pembina Institute, a leading Canadian environmental think-tank. He specialises in clean energy policy design, research and strategic decision making.

Ed Whittingham is the Executive Director of the Pembina Institute. Through his work, Mr Whittingham regularly advises governments, transnational companies, NGOs and research networks on energy issues.

carbon capture and storage (ccs) is extremely important for gas and containing industrial emissions. the iea predicts that ccs can account for 18% of emissions reduction by 2050, but delaying action by 10 years would increase the cost of doing so by at least a us$1trn.

Joan MacNaughtonExecutive Chair of the 2011 Energy Policies Assessment ReportWorld Energy Council

the nuclear oPtionJosé goldemberg, Professor emeritus of the university of são Paulo, explains why he thinks it is unlikely we will see a resurgence of nuclear power

|17|


|18|

high-profile nuclear disasters at Three Mile Island (1979) and Chernobyl (1986) signalled the end of nuclear energy expansion some 20 years ago. More recently, however, concerns about rising greenhouse gas emissions (GHG) and effective lobbying by energy companies has sparked a government-subsidised revival of nuclear power. By the end of 2010 there were 64 new reactors under construction around the world, including 28 in China and Taiwan alone (see chart).

reconsidered risks and rising costsThis mini-revival of nuclear investment will be short-lived. One of the main reasons is that the Fukushima disaster, with its estimated cost of US$257bn, has severely dampened enthusiasm for a nuclear power and has directly led to a number of countries, including Germany, Japan, Belgium and Italy, taking the decision to phase out existing or planned nuclear reactors.

Another concern is that the cost of nuclear power has risen sharply in recent years. Nuclear power plants come with a price tag of around US$6-$10bn each, so are already much more expensive to build than plants powered by fossil fuels. Added to this, new reactors under construction in Finland and France have gone billions of dollars over budget, casting further doubt over affordability. Similarly, new regulation will inevitably increase the cost of nuclear power. Plants approaching the end of their initial 40-year license period and lacking certain modern safety features will face additional scrutiny in having their licenses extended. Little wonder that the International Energy Agency (IEA) has already reduced its projection for the number of new reactors to be installed up to 2035 by 50%.

alternative options for developing countriesOf the 52 countries - which include 40 developing countries - that expressed interest to the International Atomic Energy Agency (IAEA) in 2009 in acquiring their first nuclear power plant,

it is unlikely that countries with a GDP smaller than US$50bn would be able to purchase a nuclear reactor worth at least a few billion dollars. In addition to that, electric grids must have a minimum size to accommodate a large nuclear reactor, for technical reasons. Excluding the countries that do not meet these criteria leaves a shortlist of 16 countries that could be considered serious candidates for purchasing large nuclear reactors, including Kuwait, United Arab Emirates, Malaysia, Saudi Arabia, Greece, Chile, Portugal, Singapore and Poland.

A close examination of the potential resources of these 16 countries in oil, gas, biomass or hydroelectricity indicates that they have a number of other options to generate the electricity they need. In all of them, the cost of nuclear-generated electricity is significantly higher than other options, depending on the availability of gas or hydroelectric sites. Malaysia, for example, is the world’s second-largest producer and largest exporter of palm oil, and is therefore a strong advocate of biomass-derived energy.

Elsewhere, the IEA expects China’s gas demand to rise from about the level

of Germany in 2010 to match that of the entire European Union in 2035. Meanwhile, the Middle East’s demand for gas is expected to almost double to a level similar to that currently consumed by China. It is thus likely that nuclear energy will be a last-resort option for the supply of electricity, rather than a priority in economic terms.

The future of nuclear energy hinges on its expansion in developing countries, mainly China and India. However, the rising costs of nuclear power plants and alternative cost-effective sources of energy in developing countries mean that it is very unlikely we will see a widespread resurgence of nuclear energy.

author biograPhyA member of the Brazilian Academy of Sciences, Jose Goldemberg is presently Professor Emeritus of the University of São Paulo. Between 1990 and 1992 he was Brazil’s Secretary of State for Science and Technology and Minister of State for Education. More recently, between 2002 and 2006, he was Secretary for the Environment of the State of São Paulo.

Argentina

Source: International Atomic Energy Agency 2012

Brazil

BulgariaChina

Finland

France

India

Japan

South Korea

Pakistan

Russia

Slovakia

Taiwan

Ukraine US0

5

1 1 1 11 12 2 2 22

6

10

5

26

10

15

20

25

30

nuclear reactors under construction in 2012


these are the full results of a survey on energy challenges conducted by the economist intelligence unit and supported by shell. the survey was carried out in september 2011.

aPPendix: survey results

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1 Largest share 2 3 Smallest share Don’t know

Fossil fuels

Renewable energy

Nuclear energy

12

10

2

2

102465

4344

33552

(% respondents)

Rank the following energy sources according to how great a share of the world's energy you think they will be providing in 2030?Please rate on a scale of 1 to 3, where 1=Largest share and 3=Smallest share.

Fossil fuels

Renewable energy

Nuclear energy

21

49

21

33838

21435

43639

(% respondents)

Rank the following energy sources according to how great a share of the world's energy you think they will be providing in 2050?Please rate on a scale of 1 to 3, where 1=Largest share and 3=Smallest share.

1 Largest share 2 3 Smallest share Don’t know


|20|

Solar

Wind

Nuclear

Hydrogen

Geothermal

Hydro

Biofuels

Gas

Oil

Coal

Other

Don't know

68

44

35

27

25

23

20

14

3

2

5

2

(% respondents)

Which energy sources do you think offer the most potential to increase energy supply and reduce carbon emissions over thetime period of 2031-2050? Select three.

Solar

Wind

Nuclear

Gas

Hydro

Biofuels

Geothermal

Oil

Hydrogen

Coal

Other

Don't know

48

46

44

34

30

20

15

11

7

6

1

2

(% respondents)

Which energy sources do you think offer the most potential to increase energy supply and reduce carbon emissions over thetime period of 2011-2030? Select three.


|21|

Not at all supportive Somewhat unsupportive Neither supportive nor unsupportive Somewhat supportive Very supportive

Nuclear

Biofuels

Natural gas

“Unconventional” gas (eg gas which is accessed through “fracking”)

Wind

Solar

Oil

Coal

Geothermal

Hydro

Hydrogen

2032

2532

3041

122336

131816

18179

1991

1613

6026932

7516621

420263218

514172935

39

46

36

37

36

1861

1251

282664

(% respondents)How supportive are you about increased use of the following energy sources?

Yes

No

Don't know

52

32

16

(% respondents)Do you think improved access to "unconventional" gas supplies will slow the growth of renewable energy sources?

Yes No Don’t know

Research and development into renewable energy

Large scale deployment of renewable energy technologies

Nuclear power

Making fossil fuels cleaner (eg through carbon capture and storage)

Increasing access to fossil fuels

Other, please specify

560

766

860

1064

1241

35

28

32

26

47

562815

(% respondents) Is your government investing enough in the following technologies?


|22|

1 Hostile 2 3 Neither hostile nor supportive 4 5 Very supportive Don't know

No change in real income

Up to 1% decrease

Between 1-3% decrease

Between 3-5% decrease

More than a 5% decrease

5 3 11 6

6 6 14 22

8 10 23 24

16 19 20 20

273

152

134

224

31533 18 20 11

(% respondents)

Please indicate how hostile or supportive you would be of reforms aimed at combating climate change if they had thefollowing impacts on your real income:

Highly significant

Significant

Not significant

Don’t know

58

37

4

0

(% respondents)How significant a role do you think energy efficiency can play in reducing carbon emissions?

Not at all supportive Somewhat unsupportive Neither supportive nor unsupportive Somewhat supportive Very supportive

Information and advice

Regulation (eg of light bulbs or building standards)

Loans for energy efficient investments

R&D investments in energy efficient technologies

Rewards for energy efficient behaviour (eg tax breaks)

Energy efficient procurement policies


553 10 275

446 8 9 33

376 8 16 32

553 5 9 28

455 8 12 30

383 7 19 33

377 7 35 13

(% respondents)

How supportive are you of governments using the following tools to improve energy efficiency?Rate on a scale of 1 to 5 where 1 = Very supportive and 5 = Not at all supportive.


|23|

Already taking Would consider taking Would not consider taking

Switching off lights when not in use

Switching off electrical appliances when not in use

Turning down heating in winter

Buying more energy efficient appliances

Installing renewable domestic energy sources (eg, solar panels or wind turbines)

Flexible working (including working from home and using teleconferencing)

Driving less

Use public transport more

Taking fewer flights


1595

21385

142858

23068

1273

135136

144243

214237

3044

15

26

144838

(% respondents)Which of the following steps are you taking to conserve energy and reduce carbon emissions? Which would you consider taking?

Yes

No

Don't know

15

79

7

(% respondents)

Do you expect the international community to reach a meaningful deal on climate change at the UN’s climate changeconference in Durban later this year?

Nothing Up to 2% 2.1% - 5% 5.1% - 10% > 10%

You

Your company

5

5

12313319

11302826

(% respondents)

How much extra, if anything, would you be willing to pay for goods and services to cover the cost of CO2 emissions related totheir production? How much do you think your company would be willing to pay?


|24|

(% respondents)Who should take most responsibility for dealing with climate change?

20United Nations

41Nation states

4Regional organisations

1Non-governmental organisations

2Don't know

1Other

17Individuals

13Businesses

Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree

Democracy stands in the way of the world making headway with climate change policy.

Politicians should ignore citizens who do not agree with policies combating climate change.

Democratic states should reconsider their form of government to deal with climate change more effectively.

Some nation states, depending on size and pollution levels, should have more control over environmental policy making.

International organisations hold enough power to steer nation states toward effective climate change policy implementation.

2217183111

2123142913

3410142517

1212143230

2429151913

(% respondents)To what extent do you agree or disagree with the following statements?


|25|

United States of America

Brazil

India

United Kingdom

South Africa

Canada

Mexico

Nigeria

Australia

Singapore

United Arab Emirates

Germany

Argentina

Switzerland

Chile

Kenya

Spain

Italy

Netherlands

China

France

Ghana

Other

15

7

7

6

5

5

5

4

3

3

3

2

2

2

1

1

1

1

1

1

1

1

24

(% respondents)In which country are you personally located?


|26|

Latin America

Middle East and Africa

North America

Asia-Pacific

Western Europe

Eastern Europe

21

20

20

19

18

2

(% respondents)In which region are you personally based?

Financial services

Professional services

IT and technology

Energy and natural resources

Manufacturing

Education

Healthcare, pharmaceuticals and biotechnology

Government/Public sector

Entertainment, media and publishing

Construction and real estate

Agriculture and agribusiness

Telecommunications

Automotive

Chemicals

Consumer goods

Transportation, travel and tourism

Logistics and distribution

Retailing

Aerospace/Defence

25

13

8

8

2

2

2

1

7

5

4

4

4

3

3

3

2

2

2

(% respondents)What is your primary industry?


|27|

$50m or less

$50m to $100m

$100m to $250m

$250m to $500m

$500m to $1bn

$1bn to $5bn

$5bn to $10bn

$10bn or more

Don’t know

Not applicable

37

7

6

3

7

13

7

19

0

0

(% respondents)What are your company's annual global revenues in US dollars?

While every effort has been taken to verify the accuracy of the information in this report, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information opinions or conclusions set out in the white paper.

Board member7

CEO/President/Managing director29

CFO/Treasurer/Comptroller4

CIO/Technology director3

Other C-level executive5

SVP/VP/Director18

Head of business unit5

Head of department9

Manager16

Other3

(% respondents)Which of the following best describes your job title?

notes

|28|


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