The energy landscape is changing rapidly, but the path towards renewable energy will be long and challenging
In the second part of my contribution I pick out a couple more big themes of the past year on the climate change and energy front.
Renewable energy encounters head winds
The last five years have seen remarkable growth in renewables, especially wind, but also solar. The ‘feed-in tariff’ model championed by Germany has spread internationally, forcing utilities to abandon resistance to small-scale and distributed generation from intermittent sources and ushering in larger-scale deployment.
Some countries, such as Denmark and Germany, are increasingly wrestling with just how much intermittent renewable power they can successfully integrate on their grids. But this last year also saw a growing backlash against new renewables: not just in one or a few countries but more generally.
In the UK, for instance, opposition to further onshore wind is strong within the Conservative Party. In the Canadian province of Ontario the Conservatives criticised the ‘Green Energy and Economy Act’ and pledged to repeal feed-in tariffs if elected (they lost). And, even in Germany, there were complaints as German companies closed in the face of crashing prices for solar panels.
Feed-in tariffs were originally justified to encourage deployment of renewables at scale, to drive down prices, and to encourage learning by utilities, consumers, developers, and so on. But everyone bailed into the market, prices crashed and China undercut western producers.
It is not surprising that American and German producers are asking why their governments are financing China’s industrial development. It suggests that policy-makers must be more nimble in their use of technology-support measures at different phases of the industrial cycle and that the struggle to deploy renewables will be a long haul.
What about some of the other low-carbon supply options? Nuclear had a rough year with the Fukushima accident and the renewed German commitment to phase out nuclear power. Japan itself has been back and forth trying to accommodate public fears about relaunched nuclear generators and industry concerns about energy costs.
There was some talk of a crash transition to renewables. But, with the election of the new Conservative government, it looks like gas and another try at nuclear. Until the next big accident, of course, and then the politicians will be scrambling for cover. Even in France the Hollande government, supported by the younger generation of power engineers, appears worried by the country’s ‘over-dependence’ on nuclear and will make a more concerted effort to develop renewables.
And then there is carbon capture and storage (CCS). Here the story is that, despite putting hundreds of millions of dollars/Euros/pounds on the table, most of the large demonstration plants that the International Energy Agency (IEA), the EU and national governments have defined as critical to developing CCS as an emission-reduction option, have failed to materialise.
This is the case in the UK where industry pulled out of the Longannet coal-fired power plant project. Indeed, the whole EU has not so far succeeded in funding a single project. In Canada a large-scale demonstration project (ShellQuest) is going ahead on a hydrogen production facility in Alberta, associated with fossil fuel extraction in the oil sands.
In the same vein, it was not a good year for electric vehicles. There was weak demand for new models like the Chevy Volt. Looking forwards, we should not underestimate the potential of gasoline-fueled internal combustion engines to make further major efficiency gains, exerting continuing pressure against an electric, or plug-in-hybrid, breakthrough. And, for the oil companies, biofuels (blendable in any proportion with petrol) are the insurance policy, allowing lower emissions with minimum disruption to their existing liquid fuel infrastructure and road transport stranglehold.
International Energy Agency foresees US energy upsurge
The 2012 World Energy Report suggests that the US energy picture is undergoing a rapid turn-around. On the one hand, US oil usage may have peaked, with a saturated car market and new vehicle fuel efficiency standards coming into play. On the other, new shale gas and tight oil are transforming the supply side, leading to dramatic rises in domestic production. The IEA in fact expects the US to become the world’s largest oil producer by 2020, and North America a net oil exporter by 2030.
Not only might this energy boom revitalise the US economy (there is talk by some of a manufacturing renaissance), but there are also significant geopolitical ramifications for the Middle East where China and other Asian economies will replace the US as the main destination for Saudi oil. Of course, the US will remain connected to global oil markets and so would not be immune to price shocks or potential disruptions to global supply.
Despite discussion of ‘peak oil’ there are lots of fossil resources left. Not cheap and easily accessible fossil fuels, to be sure: they will only be won by moving further offshore, into the Arctic and other frontier areas at increased cost and environmental risk. But, if we really want to keep burning liquid fuels, coal-to-liquids is always an option. And there is still plenty of coal. The problem is the climate impact.
So what are the lessons of my observations in these two blogs?
First, the energy world is changing rapidly and will continue to offer surprises in the coming years. International developments and technological breakthroughs will shuffle the deck further.
Second, climate change is upon us and the consequences of a warmer world will increasingly shape politics – and not just to stimulate mitigation or defensive adaptation. In Canada, Greenland, Norway and Russia preparations are well underway for the resource boom to come.
Third, the transition to a low carbon emission society will be long, difficult and not without setbacks. Technological innovation will be important, but popular movements and direct action will have to play a key role in pushing things forward.