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WBCSD Electricity Utilities Sector Project
UN Commission on Sustainable Development14th session, New York, 8th May 2006
Sustainable Electricity Dialogue
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Introductory address
Raymond LEBANSenior Advisor, Prospective & International Relations, EDF, FranceProfessor & Dean, CNAM-Paris University
Wendy POULTONGeneral Manager, Corporate Sustainability, Eskom, South Africa
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Contents
Dramatic recent changes in the energy context (bad news) Electricity key to meeting energy challenges (good news) Debate, consistent public policies & increased international
cooperation needed A dialogue focusing on six objectives for concerted
action:Continuously improving energy efficiencyDiversifying & decarbonising the fuel mix Investing adequately in infrastructureBringing to market promising long-term technologies Providing wider access to electricityBuilding partnerships and developing public dialogue
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Dramatic changes in the energy context compared to 90’s
Formidable energy and electricity needs Population growth and development Energy demand from now to 2030 : + 60% ; Power
generating capacity additions up to 2030:+130% of installed capacity)
Scarcer and more expensive fossil fuels
All 2020 forecasts over 40$/b (oil) and 4.5$/Mbtu (gas) Peak-oil Increasing threat to security of supply
Obligation to reduce GHG emissions significantly Business as usual (7GtC now, 15 GtC in 2050) are
unacceptable Transformation is needed
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Electricity is key to meeting energy challenges…
Electricity is a highly efficient energy carrier with no environmental impact at the point of use (growing share)
Large part of the required investment is to be absorbed by the electricity sector (development – replacement, T&D)
Shares of electricity in finalenergy consumption (%)
2002 2025 20500
10
20
30
40
50
60
BAU
Pathways to 2050
Wide scale electrification is crucial to meeting the MDGs
Electricity is a major contributor to GHG emissions (40% of energy-related emissions)
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…provided that we make wise use of technologies
Highly efficient and low-carbon/carbon-free technologies are available End-use technologies (heat pumps, solar heating…) CO2-free generation technologies like renewables (including large hydro) and nuclear More efficient gas and coal technologies
To cut CO2 emissions significantly, we need all options Optimisation – Creation of success conditions
Promising technologies can be brought to market on time Carbon C & S - Gen 4 nuclear - Electricity storage -…
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Debate, public policies & international cooperation needed
Need to share facts on technologies Advantages & drawbacks - Timeframes - Success
conditions Need to discuss which policies to articulate
Support to R&D, Incentives to invest Need to boost cooperation between industrialised
& developing countries From “project” to “programme” CDMs
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The Electricity Utilities Sector Project
In view of the urgency to act on this challenge, the eight project member companies endeavour to:
Promote a better understanding of what are the key challenges, what are the key options and actions needed, and who is responsible for what
Develop an agenda for concerted action on sustainability - to be used as a communication tool with various stakeholders of the industry -> draft manifesto with 6 key objectives
Build a factual platform for discussion: issue briefs on key elements of the debate
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(1) Continuously improving energy efficiency
Energy efficiency helps address energy security, access, price and environmental challenges
Considerable potential : 40% less demand (over b.a.u) in 2050 is possible
Very significant and long lifetime investments -> quick start needed Cost- effective technologies do - or will - exist: heat pumps –
solar water heating & insulation – reloadable hybrid vehicles ... Shares of electricity consumption (%), 2002
Industry42%
Residential30%
Services27%
Others1%
Source: IEA World Energy Outlook 2004
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(1) Continuously improving energy efficiency
Policies must address barriers to investment Inadequate pricing Regulations restricting entry to efficiency markets « Split Incentive » issue: potential investors do not
fully receive benefits Lack of information, expertise and finance available to
customers
Labelling and standard policies will remain crucial in incentivising manufacturers
Broad partnerships in research for new energy efficiency equipment - including utilities - must be made to work
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(2) Diversifying & gradually decarbonising the fuel mix
Hydrocarbons Ensure world wide diffusion of efficient generating
technologies Master the links of the CCS chain – reduce costs radically and
find adequate storage sites; EOR important for technological learning
Renewable generation 2/3 hydro potential not realised (DC notably) Further incentivise solar, wind and others where they are not
already cost-competitive (but scalability until 2030 limited)
Nuclear energy Already proven, scale-up potential considerable Waste and proliferation issues to be solved Issues such as independent safety authorities, licensing, and
industrial organisation are crucial
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(3) Investing adequately in infrastructure
Unreliable and low-quality supply in many countries
Recent blackouts in developed countries: vulnerability of today’s grids, strained by decades of neglect and increased power trading
A real, interconnected grid is needed for Security of supply Integrated and competitive markets Backup between countries Optimisation of investments and services Renewable energy integration Minimisation of losses
Whether future investment needs can be met is uncertain (conditions needed)
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(4) Bringing to market promising technologies
Accelerate R&D now for longer-term options
Carbon Capture and Storage Nuclear Gen 4 3rd generation photovoltaic Electricity storage to enhance renewables Hydrogen Continuous research in efficiency improvements Fusion is currently no more than a possibility beyond
2050
Need for government funding and enhanced international cooperation
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(5) Providing wider access to electricity
Key lessons for future action Some current electrification schemes only have a
moderate impact on poverty alleviation; only affordable schemes are successful and sustainable over the long-term
Utilities to take the lead but partnerships are key for effectiveness
Financial government support may be required – account for market structure and institutions
Electrification schemes need business development Local businesses are crucial in sustaining real impact
on poverty alleviation Evaluation of programmes must account for quality of
life improvements and socio-economic development as well as financial cost-effectiveness
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(6) Building partnerships and pursuing dialogues
Electricity utilities are a powerful agent for change and can: Work with customers to promote sustainable consumption
and end-use efficiency Reduce carbon-intensity in their fuel combustion (increase
operational efficiency) Build the infrastructure needed Innovate to bring new technologies closer to maturity
BUT… Business cannot act alone
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(6) Building partnerships and pursuing dialogues
Policymakers:
While designing and regulating competitive markets, keep in mind other drivers for sustainability: incentives for R&D & energy efficiency, signals for long-term supply risks, and clarity on who takes overall system responsibility
Creating enabling framework conditions (incl. efficiency standards) including a practical roadmap for reducing CO2 and other pollutants, addressing regulatory barriers to low-carbon or carbon-free technologies
And YOU…
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Discussants and open discussion
Larisa Dobriansky, Deputy Assistant Secretary for National Energy Policy, US DoE
Li Junfeng, Chair of Academic Committee, Energy Research Institute, National Development and Reform Commission, China
Sarah Adams, Programme Coordinator, Global Village Energy Partnership
Discussion
Online dialogue at www.wbcsd.org/web/electricitydialogue.htm …from today until 4 June 2006