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Steven E. KooninMarch 2007
Energy trends and technologies for the coming decades
Technology and policy
Demand Growth
• GDP & pop. growth
• urbanisation• demand mgmt.
Security of Supply
Environmental Impacts
Supply Challenges
key drivers of the energy future
0
50
100
150
200
250
300
350
400
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
GDP per capita (PPP, $2000)
Prim
ary
Ener
gy p
er c
api
ta (G
J)
Source: UN and DOE EIARussia data 1992-2004 only
energy use grows with economic development
US
Australia
Russia
BrazilChina
India
S. Korea
Mexico
Ireland
Greece
France
UKJapan
Malaysia
energy demand and GDP per capita (1980-2004)
demographic transformations
world population
0
2
4
6
8
10
1750 1800 1850 1900 1950 1998 2050
2003 2050
source: United Nations
6.3billion
8.9billion
Oceania
AfricaN-America
S-America
Europe
Asia
Oceania
AfricaN-America
S-America
Europe
Asia
energy demand – growth projections
Source: IEA World Energy Outlook 2006
Notes: 1. OECD refers to North America, W. Europe, Japan, Korea, Australia and NZ 2. Transition Economies refers to FSU and Eastern European nations 3. Developing Countries is all other nations including China, India etc.
Global Energy Demand Growth by Region (1971-2030)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1971 1990 2004 2015 2030
OECD Transition Economies Developing Countries
Ene
rgy
Dem
and
(Mto
e)
Global energy demand is projected to increase by just over one-half between now and 2030 – an average annual rate of 1.6%. Over 70% of this increased demand comes from developing countries
annual primary energy demand 1971-2003
Source IEA, 2004 (Excludes biomass)
0
10
20
30
40
50
60
70
80
90
100
110
120
130
1971 2002 2030
Source: IEA WEO 2004Notes: 1. Power includes heat generated at power plants 2. Other sectors includes residential, agricultural and service
Global Energy Demand Growth by Sector (1971-2030)
En
erg
y D
em
and (
bnboe)
growing energy demand is projected
Key: - industry- transport - power - other sectors
energy efficiency and conservation
• Demand depends upon more than GDP
− Multiple factors - geography, climate, demographics, urban planning, economic mix, technology choices, policy
− For example, US per capita transport energy is > 3 times Japan
• Efficiency through technology is about paying today vs tomorrow
− Must be cost effective to be attractive
− May not reduce demand through misuse or in supply-limited situations US Autos (1990-2001)
Net Miles per Gallon: +4.6%- engine efficiency: +23.0%- weight/performance: -18.4%
Annual Miles Driven: +16%Annual Fuel Consumption: +11%
Demand Growth
• GDP & pop. growth
• urbanisation• demand mgmt.
Security of Supply
Environmental
Constraints
Supply Challenges
• significant resources
• non-conventionals
key drivers of the energy future
Technology and policy
US energy supply since 1850
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1850 1880 1910 1940 1970 2000
RenewablesNuclearGasOilHydroCoalWood
Source: EIA
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1970 1975 1980 1985 1990 1995 2000 2005
27.8%
6.0%6.3%
23.5%
36.4%Oil
Natural gas
Coal
Hydro
Nuclear
global primary energy sources
Oil
Coal
Gas
Hydro
Nuclear
global energy supply & demand (total = 186 Mboe/d)
Source: World Energy Outlook 2004
Power Generation
Transportation
37Mboe/d
76Mboe/d
Buildings
56Mboe/d
Industry
45Mboe/d
14
Nuclear
14Mboe/d
5
Renewables
5Mboe/d
2
17
3
1
Biomass
23Mboe/d
33
8
2
Coal
43Mboe/d
11
1016
1
Gas
38Mboe/d
6
35
12
10
Oil
63Mboe/d
global energy supply & demand (total = 186 Mboe/d)
Source: World Energy Outlook 2004
Power Generation
Transportation
37Mboe/d
76Mboe/d
Buildings
56Mboe/d
Industry
45Mboe/d
11
16
14
Nuclear
14Mboe/d
5
Renewables
5Mboe/d
2
17
3
1
Biomass
23Mboe/d
33
8
2
Coal
43Mboe/d
11
1016
1
Gas
38Mboe/d
6
35
12
10
Oil
63Mboe/d
BAU projection of primary energy sources
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1980 2004 2010 2015 2030
MtoeOtherRenewables
Biomass &waste
Hydro
Nuclear
Gas
Oil
Coal
Source: IEA World Energy Outlook 2006 (Reference Case)
’04 – ’30 Annual Growth
Rate (%)
Total
6.5
1.3
2.0
0.7
2.0
1.3
1.8
1.6
Note: ‘Other renewables’ include geothermal, solar, wind, tide and wave energy for electricity generation
0
1,000
2,000
3,000
4,000
5,000
6,000
Oil Gas Coal
substantial global fossil resources
R/P Ratio 41 yrs.
R/P Ratio 67 yrs.
R/P Ratio 164 yrs.
Proven Proven
ProvenYet to Find
Yet to Find
Yet to Find
Source: World Energy Assessment 2001, HIS, WoodMackenzie, BP Stat Review 2005, BP estimates
Unconventional
Unconventional
Reserv
es &
Resou
rces (
bn
boe)
oil supply and cost curve
Availability of oil resources as a function of economic price
Source: IEA (2005)
Demand Growth
• GDP & pop. growth
• urbanisation• demand mgmt.
Security of Supply
• dislocation of resources
• import dependence
Environmental Impacts
Supply Challenges
• significant resources• non-conventionals
key drivers of the energy future
Technology and policy
Source: BP Data
significant hydrocarbon resource potential
0
200
400
600
800
1000
1200
South America
0
200
400
600
800
1000
1200 North America
Oil Gas Coal
Oil Gas CoalReso
urc
e P
ote
nti
al (b
nb
oe)
0
200
400
600
800
1000
1200
Africa
Oil Gas Coal
Reso
urc
e P
ote
nti
al (b
nb
oe)
Reso
urc
e P
ote
nti
al (b
nb
oe)
0
200
400
600
800
1000
1200 FSU
Oil Gas Coal
Reso
urc
e P
ote
nti
al (b
nb
oe)
Gas Europe
0
200
400
600
800
1000
1200
Reso
urc
e P
ote
nti
al (b
nb
oe)
Oil Gas Coal
0
200
400
600
800
1000
1200
Middle East
Oil Gas Coal
Reso
urc
e P
ote
nti
al (b
nb
oe)
0
200
400
600
800
1000
1200Asia
Pacific
Oil Gas CoalReso
urc
e P
ote
nti
al (b
nb
oe)
Key:
- unconventional oil
- conventional oil - gas
- coal
Oil, Gas and Coal Resources by Region (bnboe)
78%
10%
61%
15%
88%
65%
22%
90%
39%
85%
12%
35%
Consumption Reserves Consumption Reserves Consumption Reserves
OIL GAS COAL
3 Largets Energy Markets(N.America + Europe + Asia Pacific)
ROW
dislocation of fossil fuel supply & demand
Source: BP Statistical Review 2006
Demand Growth
• GDP & pop. growth
• urbanisation• demand mgmt.
Security of Supply
• dislocation of resources
• import dependence
Environmental Impacts
• local pollution• climate change
Supply Challenges
• significant resources• non-conventionals
key drivers of the energy future
Technology and policy
climate change and CO2 emissions
- CO2 concentration is rising due to fossil fuel use
- The global temperature is increasing
- other indicators of climate change
- There is a plausible causal connection
- but ~1% effect in a complex, noisy system
- scientific case is complicated by natural variability, ill-understood forcings
- Impacts of higher CO2 are uncertain
- ~ 2X pre-industrial is a widely discussed stabilization target (550 ppm)
- Reached by 2050 under BAU
- Precautionary action is warranted
- What could the world do?
- Will we do it?
crucial facts about CO2 science
• The earth absorbs anthropogenic CO2 at a limited rate
− Emissions would have to drop to about half of their current value by the end of this century to stabilize atmospheric concentration at 550 ppm
− This in the face of a doubling of energy demand in the next 50 years (1.5% per year emissions growth)
• The lifetime of CO2 in the atmosphere is ~ 1000 years
− The atmosphere will accumulate emissions during the 21st Century
− Near-term emissions growth can be offset by greater long-term reductions
− Modest emissions reductions only delay the growth of concentration (20% emissions reduction buys 15 years)
some stabilization scenarios
Emissions Concentration
social barriers to meaningful emissions reductions
• Climate threat is intangible and diffuse; can be obscured by natural variability
− contrast ozone, air pollution
• Energy is at the heart of economic activity
• CO2 timescales are poorly matched to the political process
− Buildup and lifetime are centennial scale
− Energy infrastructure takes decades to replace
− Power plants being planned now will be emitting in 2050
− Autos last 20 years; buildings 100 years
− Political cycle is ~6 years; news cycle ~1 day
• There will be inevitable distractions
− a few years of cooling
− economic downturns
− unforeseen expenses (e.g., Iraq, tsunamis, …)
• Emissions, economics, and the priority of the threat vary greatly around the world
0
5
10
15
20
25
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
GDP per capita (PPP, $2000)
CO
2 e
mis
sions
per
cap
ita
(tCO 2
)
CO2 emissions and GDP per capita (1980-2004)
US
Australia
Russia
Brazil
China
India
S. Korea
Mexico
Ireland
Greece
France
UK
JapanMalaysia
Source: UN and DOE EIARussia data 1992-2004 only
implications of emissions heterogeneities
• 21st Century emissions from the Developing World (DW) will be more important than those from the Industrialized World (IW)
− DW emissions growing at 2.8% vs IW growing at 1.2%
− DW will surpass IW during 2015 - 2025
• Sobering facts
− When DW ~ IW, each 10% reduction in IW emissions is compensated by < 4 years of DW growth
− If China’s (or India’s) per capita emissions were those of Japan, global emissions would be 40% higher
• Reducing emissions is an enormous, complex challenge; technology development will play a central role
t
EDW
IW
Emissions and Energy 1980-2004
0.00
5.00
10.00
15.00
20.00
25.00
0 100 200 300 400
Primary energy per capita (Gj)
CO
2 p
er c
apit
a (t
on
nes
)
USA
UK
France
Japan
China
Brazil
Ireland
Mexico
Malaysia
S. Korea
Greece
India
Australia
Russia
Thailand
Coal Oil
Gas
Current global average
CO2 emissions and Energy per capita (1980-2004)
Source: UN and DOE EIARussia data 1992-2004 only
greenhouse gas emissions in 2000 by source
Source: Stern Review, from data drawn from World Resources Institute Climate Analysis Indicators Tool (CAIT) on-line database version 3.0
historical and projected GHG emissions by sector
Source: Stern Review from WRI (2006), IEA (in press), IEA (2006), EPA (forthcoming), Houghton (2005).
Demand Growth
• GDP & pop. growth
• urbanisation• demand mgmt.
Security of Supply
• import dependence• competition
Environmental Impacts
• local pollution• climate change
Supply Challenges
• significant resources• non-conventionals
key drivers of the energy future
Technology and policy
some energy technologies
Primary Energy Sources:
•Light Crude•Heavy Oil•Tar Sands•Wet gas
•CBM•Tight gas•Nuclear
•Coal•Solar•Wind
•Biomass•Hydro
•Geothermal
Extraction & Conversion Technologies:
•Exploration•Deeper water
•Arctic•LNG
•Refining•Differentiated fuels
•Advantaged chemicals•Gasification
•Syngas conversion•Power generation
• Photovoltaics•Bio-enzyimatics
•H2 production & distribution•CO2 capture & storage
End Use Technologies:
•ICEs•Adv. Batteries•Hybridisation
•Fuel cells•Hydrogen storage
•Gas turbines•Building efficiency
•Urban infrastructure•Systems design• Other efficiency
technologies•Appliances
•Retail technologies
There are no “silver bullets”But some have a larger calibre than others !
evaluating energy technology options
• Current technology status and plausible technical headroom
• Budgets for the three E’s:
− Economic (cost relative to other options)
− Energy (output how many times greater than input)
− Emissions (pollution and CO2; operations and capital)
• Materiality (at least 1TW = 5% of 2050 BAU energy demand)
• Other costs - reliability, intermittency etc.
• Social and political acceptability
we also must know what problem we are trying to solve!
Concern relating to Threat of Climate
Change
Con
cern
over
Fu
ture
A
vailab
ilit
y o
f O
il a
nd
G
as
High
High
Low
Low
Adv. Biofuels
Carbon Free H2 for Transport
CTL
GTL
Heavy Oil
EnhancedRecovery
Ultra Deep Water
Arctic
Capture & Storage
Capture & Storage
CNG
Hybrids
C&S
Vehicle Efficiency (e.g. light weighting)
- supply side options
- demand side options
Key:Dieselisation
Conv. Biofuels
two key energy considerations – security & climate
the fungibility of carbon
Primary Carbon Source
Syngas Step Conversion Technology
Syngas(CO + H2)
LubesNaphthaDiesel
Syngas to Liquids (GTL) Process
Others (e.g. mixed alclohols, DME)
Syngas to Chemicals Technologies
Methanol
Coal
Natural Gas
BiomassHydrogen
Extra Heavy
Oil Combined Cycle Power Generation
Syngas to Power
what carbon “beyond petroleum”?
Fuel Fossil Agriculture Biomass
0
100
200
300
400
500
600
700
An
nu
al U
S C
arb
on
(M
t C
)
↑↑
15% of 15% of Transportation FuelsTransportation Fuels
1000
what carbon “beyond petroleum”?
Fuel Fossil Agriculture Biomass
0
500
1000
1500
2000
An
nu
al W
orl
d C
arb
on
(M
t C
)
↑↑
15% of 15% of Transportation FuelsTransportation Fuels
↑↑5300 Big!
biofuels today
• 2% of transportation pool
• (Mostly) Use with existing infrastructure & vehicles
• Growing support worldwide
• Conversion of food crops into ethanol or biodiesel
− US Corn ethanol economic for oil > $45 /bbl
− Brazilian sugarcane economic for oil > $22/bbl
Flex Fuel Offers in Brazil
Food Crops for Energy
key questions about biofuels
• Costs
− Biofuel production costs
− Infrastructure & vehicle costs
• Materiality
− Is there sufficient land after food needs?
− Are plant yields sufficiently high?
• Environmental sustainability
− Field-to-tank CO2 emissions relative to business as usual?
− Agricultural practice – water, nitrogen, ecosystem diversity and robustness, sustainability, food impact
• Energy balance
− More energy out than in?
− Does it matter?
corn ethanol is sub-optimal
• Production does not scale to material impact
− 20% of US corn production in 2006 (vs. 6% in 2000) was used to make ethanol displacing ~2.5% of petrol use
− 17% of US corn production was exported in 2006
• The energy and environmental benefits are limited
− To make 1 MJ of corn ethanol requires 0.9 MJ of other energy (0.4 MJ coal, 0.3 MJ gas, 0.04 MJ of nuclear/hydro, 0.05 MJ crude)
− Net CO2 emission of corn ethanol ~18% less than petrol
• Ethanol is not an optimal fuel molecule
− Energy density, water, corrosive,…
• There is tremendous scope to improve (energy, economics, emissions)
optimizing biofuels requires fusing the petroleum and agricultural value chains
•Species•Yield / Morphology / Development•Chemistry•Unnatural products•Stress tolerance • / Bio-overhead•Safety
•Tillage•Planting•Fertilizer•Water•Pest control•Crop rotation•Sustainability
•Optimal catchment•In-field processing (e.g., pelletizing)•Transport energetics•Storage•Waste utilization
•Cellulose (bugs/ enzymes/ chems)•Microbial engineering •Plant integration / optimization•Co-products•Role of gasification
•Blends•Additives•Distribution•Engine mods
Exploration Production Transport Refining Blending
Petroleum Value Chain:
Germplasm Cultivation Harvest/Transport
Processing A real fuel
Biofuels Value Chain:
Germplasm Cultivation Harvest Process Distribution
Agricultural Value Chain:
BP Energy Biosciences Institute to pursue these opportunities
• Dedicated research organization to explore application of biology and biotechnology to energy issues
• Sited at University of California – Berkeley and it’s partners, University of Illinois Urbana-Champagne and Lawrence Berkeley National Laboratory
• Open “basic” and proprietary “applied” research
• Initial focus on the entire biofuels production chain
− Smaller programmes in Oil Recovery, hydrocarbon conversion, carbon sequestration
• Involvement of BP, academia, biotechnology firms, government
• $500M, 10-year commitment; operations commencing June `07
evaluating power optionsC
on
cern
over
Fu
ture
A
vailab
ilit
y o
f O
il a
nd
G
as
High
High
Low
Low
Hydro
Nuclear
Solar
Wind
Biomass
power sector
Coal
Gas CCGT
Geothermal
Hydrogen Power
Unconventional Gas
- power generation options- supply option
Key:
Concern relating to Threat of Climate
Change
Source: IEA WEO 2006
Gas19.60%
Oil6.67%
Hydro16.14%
Biomass1.30%
Other2.13%
Coal39.73%
Nuclear15.74%
Geothermal0.32%
Wind0.47%
Solar0.02%Tidal/Wave
0.01%
electricity generation shares by fuel - 2004
0
25
50
75
100
125
150
175
200
225CCG
T, g
as$4
/mm
btu
Coal
$40
/tonne
Hyd
rogen
Pow
erG
as, $
4/m
mbtu
Hyd
rogen
Pow
erCoal
$40
/tonne
Nucl
ear
Onsh
ore
Win
d
Offsh
ore
Win
d
Bio
mas
sG
asifi
cation
Wav
e / Tid
al
Sola
r (R
etai
l Cost
)
levelised costs of electricity generation
Low/Zero carbon energy source Renewable energy sourceFossil energy source
Source: BP Estimates, Navigant Consulting
Cost
of
Ele
ctr
icit
y
Gen
era
tion
9%
IR
R
($/M
Wh
)
impact of CO2 cost on levelised Cost of Electricity
0
20
40
60
80
100
120
140
160
0 20 40 60 80 100 120
CO2 Cost ($/tonne)Source: IEA Technology Perspectives 2006, IEA WEO 2006 and BAH analysis
Notes: 1) Add solar 2) $40/tonne CO2 cost or tax is $0.35/gallon of gasoline or $0.09 (or 5p)/litre
Cos
t of E
lect
ricity
($/M
W-h
r)
Conventional Coal
Natural Gas ($5/MMBTU)
CCS
Nuclear
Onshore Wind
Area where options multiply
$0.35/gal or 5 p/l
Solar PV
~$250
potential of demand side reduction
Low Energy Buildings
• Buildings represent 40-50% of final energy consumption
• Technology exists to reduce energy demand by at least 50%
• Challenges are consumer behaviour, policy and business models
Urban Energy Systems
• 75% of the world’s population will be urbanised by 2030
• Are there opportunities to integrate and optimise energy use on a city wide basis?
likely 30-year energy future
• Hydrocarbons will continue to dominate transportation (high energy density)
− Conventional crude / heavy oils / biofuels / CTL and GTL ensure continuity of supply at reasonable cost
− Vehicle efficiency can be at least doubled (hybrids, plug-in hybrids, HCCI, diesel)
− local pollution controllable at cost; CO2 emissions now ~20% of the total
− Hydrogen in vehicles is a long way off, if it’s there at all
− No production method simultaneously satisfies economy, security, emissions
− Technical and economic barriers to distribution / on-board storage / fuel cells
− Benefits are largely realizable by plausible evolution of existing technologies
• Coal (security) and gas (cleanliness) will continue to dominate heat and power
− Capture and storage (H2 power) practiced if CO2 concern is to be addressed
− Nuclear (energy security, CO2) will be a fixed, if not growing, fraction of the mix
− Renewables will find some application but will remain a small fraction of the total
− Advanced solar a wildcard
• Demand reduction will happen where economically effective or via policy
• CO2 emissions (and concentrations) continue to rise absent dramatic global action
necessary steps around the technology
• Technically informed, coherent, stable government policies
− Educated decision-makers and public
− For short/mid-term technologies
− Avoid picking winners/losers (emissions trading)
− Level playing field for all applicable technologies
− For longer-term technologies
− Support for pre-competitive research
− Hydrates, fusion, advanced [fission, PV, biofuels, …]
• Business needs reasonable expectation of “price of carbon”
• Universities/labs must recognize and act on importance of energy research
− Technology and policy
Questions/Comments/Discussion